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Burger King Worldwide, Inc. Reports Third Quarter 2012 Results

(Unaudited)

To supplement its condensed consolidated financial statements presented on a U.S. Generally Accepted Accounting Principles (“GAAP”) basis, the Company reports the following non-GAAP financial measures: EBITDA, Adjusted EBITDA, Adjusted Net Income, adjusted income before income taxes, adjusted income tax expense, net debt, TTM Adjusted EBITDA, net debt to TTM Adjusted EBITDA ratio, Organic revenue growth and Organic Adjusted EBITDA growth.

EBITDA is defined as earnings (net income or loss) before interest, taxes, depreciation and amortization, and is used by management to measure operating performance of the business.

Adjusted EBITDA is defined as EBITDA excluding the impact of share-based compensation, other operating (income) expenses, net, and all other specifically identified costs associated with non-recurring projects, including Transaction costs, global restructuring and related professional fees, field optimization project costs, global portfolio realignment project costs and Business Combination Agreement expenses. Adjusted EBITDA is used by management to measure operating performance of the business, excluding specifically identified items that management believes do not directly reflect our core operations, and represents our measure of segment income.

Adjusted Net Income is used by management to evaluate and forecast earnings from ongoing operations excluding the impact of unusual items. This measure is used by management to evaluate and forecast earnings from ongoing operations, as further defined in the non-GAAP reconciliations. Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by the number of diluted shares of the Company during the reporting period. Net debt to TTM Adjusted EBITDA ratio is used by management to evaluate the Company’s current and prospective financial position.

Organic revenue growth and Organic Adjusted EBITDA growth are non-GAAP measures that exclude both FX Impact and net refranchisings. Management believes that organic growth is an important metric for measuring the core operating performance of the business as it excludes the impact of our refranchising activities and foreign currency exchange rates.

                 

BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES

Organic growth in Revenue and Adjusted EBITDA for the Three Months Ended

September 30, 2012

(Unaudited)

 
$ in millions
Refran. Adjusted FX
Actual Q3 '12 vs. Q3 '11 Impact Q3 '11 Impact Organic Growth
Q3 '12 Q3 '11 $ % $ $ $ $ %
Calculation: A B C A+C=D E B-C-E=F F/D
Revenue
North America $ 283.4 $ 406.0 ($122.6 ) (30.2%) ($119.1 ) $ 286.9 ($0.6 ) ($2.9 ) (1.0%)
EMEA $ 111.7 $ 138.8 ($27.1 ) (19.5%) ($16.5 ) $ 122.3 ($13.8 ) $ 3.2 2.6%
LAC $ 33.5 $ 33.9 ($0.4 ) (1.2%) - $ 33.9 ($1.1 ) $ 0.7 2.1%
APAC $ 22.5   $ 29.0     ($6.5 ) (22.4%)   ($6.3 ) $ 22.7   ($0.2 )   -   -
Consolidated $ 451.1 $ 607.7 ($156.6 ) (25.8%) ($141.9 ) $ 465.8 ($15.7 ) $ 1.0 0.2%
 
Adjusted EBITDA
North America $ 113.5 $ 121.4 ($7.9 ) (6.5%) ($3.6 ) $ 117.8 ($0.1 ) ($4.2 ) (3.6%)
EMEA $ 42.8 $ 43.7 ($0.9 ) (2.1%) ($0.6 ) $ 43.1 ($5.2 ) $ 4.9 11.4%
LAC $ 17.2 $ 15.9 $ 1.3 8.2% - $ 15.9 - $ 1.3 8.2%
APAC $ 9.9 $ 7.9 $ 2.0 25.3% $ 0.6 $ 8.5 - $ 1.4 16.5%
Unallocated Management G&A   ($21.4 )   ($27.9 ) $ 6.5   (23.3%)   -     ($27.9 ) -   $ 6.5   (23.3%)
Consolidated $ 162.0 $ 161.0 $ 1.0 0.6% ($3.6 ) $ 157.4 ($5.3 ) $ 9.9 6.3%
 
           

Non-GAAP Financial Measures

Reconciliation of EBITDA and Adjusted EBITDA to Net Income

 
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30, September 30, September 30, December 31,
EBITDA and adjusted EBITDA: 2012 2011 2012 2011 2012 2011
(In millions)
 
U.S. and Canada $ 113.5 $ 121.4 $ 354.9 $ 346.2 $ 468.6 $ 459.9
EMEA 42.8 43.7 118.4 105.7 158.7 146.0
LAC 17.2 15.9 50.2 45.6 68.5 63.9
APAC 9.9 7.9 28.7 20.9 34.5 26.7
Unallocated Management G&A   (21.4 )   (27.9 )   (75.0 )   (87.5 )   (99.0 )   (111.5 )
Adjusted EBITDA 162.0 161.0 477.2 430.9 631.3 585.0
Share-based compensation (1) 1.7 0.3 3.4 0.9 8.9 6.4
2010 Transaction costs (2) - 1.0 - 2.1 1.6 3.7
Global restructuring and related professional fees (3) - 10.5 - 32.7 13.8 46.5
Field optimization project costs (4) - 5.5 - 7.2 3.4 10.6
Global portfolio realignment project (5) 7.0 0.5 20.1 0.5 27.2 7.6
Business combination agreement expenses (6) 0.6 - 25.7 - 25.7 -
Other operating (income) expense, net   30.3     (2.7 )   26.2     9.8     27.7     11.3  
EBITDA 122.4 145.9 401.8 377.7 523.0 498.9
Depreciation and amortization   28.6     34.3     96.0     103.1     129.3     136.4  
Income from operations 93.8 111.6 305.8 274.6 393.7 362.5
Interest expense, net 57.3 59.4 173.6 165.7 234.6 226.7
Loss on early extinguishment of debt 23.0 - 34.2 19.6 35.7 21.1
Income tax expense   6.9     13.4     28.9     26.2     29.3     26.6  
Net income $ 6.6   $ 38.8   $ 69.1   $ 63.1   $ 94.1   $ 88.1  
 
   

Non-GAAP Financial Measures

Reconciliation of Net Income to Adjusted Net Income

 
Three Months Ended Nine Months Ended
September 30,   September 30, September 30,   September 30,
2012 2011 2012 2011
Adjusted net income (In millions) (In millions)
 
Net income $ 6.6 $ 38.8 $ 69.1 $ 63.1
Income tax expense   6.9   13.4     28.9   26.2
Income before income taxes 13.5 52.2 98.0 89.3
Adjustments:
Franchise agreement amortization 5.1 5.3 15.4 16.4

Amortization of deferred financing costs and original issue discount

3.6 3.6 10.6 10.5
Loss on early extinguishment of debt 23.0 - 34.2 19.6
Other operating (income) expense, net 30.3 (2.7 ) 26.2 9.8
2010 Transaction costs (2) - 1.0 - 2.1
Global restructuring and related professional fees (3) - 10.5 - 32.7
Field optimization project costs (4) - 5.5 - 7.2
Global portfolio realignment project costs (5) 7.0 0.5 20.1 0.5
Business combination agreement expenses (6)   0.6   -     25.7   -
Total adjustments 69.6 23.7 132.2 98.8
 
Adjusted income before income taxes   83.1   75.9     230.2   188.1
 
Adjusted income tax expense (7)   22.0   21.7     68.0   59.8
 
Adjusted net income $ 61.1 $ 54.2   $ 162.2 $ 128.3
 
 
Diluted- EPS (Adjusted Net Income) $ 0.17 $ 0.16   $ 0.46 $ 0.37
Diluted Weighted Average Shares   355.0   348.3     353.3   348.2
 
   

Non-GAAP Financial Measures

Reconciliation of Adjusted Net Income and Net Income, Net Debt / TTM Adj. EBITDA

 
As of
September 30, December 31,
2012 2011
Net debt to adjusted EBITDA (In millions, except ratios)
 
Long term debt, net of current portion $ 2,910.5 $ 3,010.3
Capital leases, net of current portion 98.0 95.4
Current portion of long term debt and capital leases   50.0   33.5
Total Debt 3,058.5 3,139.2
 
Cash and cash equivalents 482.8 459.0
Net debt 2,575.7 2,680.2
TTM adjusted EBITDA 631.3 585.0
   
Net debt / TTM adjusted EBITDA 4.1x 4.6x
 
 

Non-GAAP Financial Measures

Reconciliation of Net Income to TTM Adjusted EBITDA

 
Twelve Months Ended

September 30, 2012

 

December 31, 2011

EBITDA and adjusted EBITDA (In millions)
 
Net income $ 94.1 $ 88.1
Interest expense, net 234.6 226.7
Loss on early extinguishment of debt 35.7 21.1
Income tax expense 29.3 26.6
Depreciation and amortization 129.3 136.4
EBITDA 523.0 498.9
Adjustments:
Share-based compensation (1) 8.9 6.4
Other operating (income) expense, net 27.7 11.3
2010 Transaction costs (2) 1.6 3.7
Global restructuring and related professional fees (3) 13.8 46.5
Field optimization project costs (4) 3.4 10.6
Global portfolio realignment project costs (5) 27.2 7.6
Business combination agreement expenses (6) 25.7 -
Total adjustments 108.3 86.1
 
Adjusted EBITDA $ 631.3 $ 585.0
 

Non-GAAP Financial Measures

Footnotes to Reconciliation Tables

6 of 7

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