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Burger King Worldwide, Inc. Reports Fourth Quarter And Full Year 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 defined as net income excluding the impact of those same items excluded from Adjusted EBITDA. Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by the number of diluted shares of the Company during the reporting period. Adjusted net income and Adjusted Diluted EPS are used by management to evaluate the core operating performance. 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 and Fiscal Year Ended
December 31, 2012

(Unaudited)

 

 
  $ in millions                  
    Refran. Adjusted FX
Actual Q4 '12 vs. Q4 '11 Impact Q4 '11 Impact Organic Growth
Q4 '12 Q4 '11 $ % $ $ $ $ %

Calculation:

A B C A+C=D E B-C-E=F F/D

Revenue

North America $233.4 $383.1 ($149.7) (39.1%)

($160.8)

$222.3

$1.1

$10.0

4.5%

EMEA $118.7 $134.7 ($16.0) (11.9%)

($17.6)

$117.1

($4.1)

$5.7

4.9%

LAC $38.1 $32.9 $5.2 15.8% - $32.9 $0.8 $4.4 13.4%
APAC $14.3 $29.9 ($15.6) (52.2%)

($17.2)

$12.7

-

$1.6

12.2%

Consolidated $404.5 $580.6 ($176.1) (30.3%)

($195.6)

$385.0

($2.2)

$21.7

5.6%

 

Adjusted EBITDA

North America $116.1 $113.7 $2.4 2.1%

($11.7)

$102.0

$0.1

$14.0

13.7%

EMEA $47.7 $40.3 $7.4 18.4%

($1.6)

$38.7

($1.5)

$10.5

27.2%

LAC $23.0 $18.3 $4.7 25.7% - $18.3 - $4.7 25.7%
APAC $12.4 $5.8 $6.6 113.8%

$3.1

$8.9

-

$3.5

39.3%

Unallocated Management G&A ($24.3) ($24.0) ($0.3)

1.3%

- ($24.0) - ($0.3) 1.2%
Consolidated $174.9 $154.1 $20.8 13.5%

($10.2)

$143.9

($1.4)

$32.4

22.5%

 
 
 
 
$ in millions
Refran. Adjusted FX
Actual   2012 vs. 2011   Impact 2011 Impact Organic Growth
2012 2011 $ % $ $ $ $ %

Calculation:

A B C A+C=D E B-C-E=F F/D
 

Revenue

North America $1,261.1 $1,569.1 ($308.0) (19.6%) ($337.6) $1,231.5 ($1.6) $31.2 2.5%
EMEA $472.9 $525.6 ($52.7) (10.0%) ($42.4) $483.2 ($35.9) $25.6 5.3%
LAC $134.4 $128.1 $6.3 4.9% - $128.1 ($3.7) $10.0 7.8%
APAC $97.9 $112.9 ($15.0) (13.3%) ($23.5) $89.4 ($0.1) $8.6 9.6%
Consolidated $1,966.3 $2,335.7 ($369.4) (15.8%) ($403.5) $1,932.2 ($41.3) $75.4 3.9%
 

Adjusted EBITDA

North America $471.0 $459.9 $11.1 2.4% ($17.0) $442.9 $0.3 $27.8 6.3%
EMEA $166.1 $146.0 $20.1 13.8% ($1.6) $144.4 ($12.7) $34.4 23.8%
LAC $73.2 $63.9 $9.3 14.6% - $63.9 ($0.4) $9.7 15.2%
APAC $41.1 $26.7 $14.4 53.9% $3.7 $30.4 - $10.7 35.2%
Unallocated Management G&A ($99.3) ($111.5) $12.2 (10.9%) - ($111.5) - $12.2 (10.9%)
Consolidated $652.1 $585.0 $67.1 11.5% ($14.9) $570.1 ($12.8) $94.8 16.6%
 
Non-GAAP Financial Measures
Reconciliation of EBITDA and Adjusted EBITDA to Net Income
     
 
 
Three Months Ended Twelve Months Ended

Decemeber 31,

Decemeber 31,

Decemeber 31,

Decemeber 31,

2012 2011 2012 2011
EBITDA and adjusted EBITDA: (In millions)
 
U.S. and Canada $ 116.1 $ 113.7 $ 471.0 $ 459.9
EMEA 47.7 40.3 166.1 146.0
LAC 23.0 18.3 73.2 63.9
APAC 12.4 5.8 41.1 26.7
Unallocated Management G&A   (24.3 )   (24.0 )   (99.3 )   (111.5 )
Adjusted EBITDA 174.9 154.1 652.1 585.0
Share-based compensation and non-cash

incentive compensation expense (1)

6.8 5.5 10.2 6.4
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) 10.1 7.1 30.2 7.6
Business combination agreement expenses (6) 1.3 - 27.0 -
Other operating (income) expense, net   27.1     1.5     53.3     11.3  
EBITDA 129.6 121.2 531.4 498.9
Depreciation and amortization   17.7     33.3     113.7     136.4  
Income from operations 111.9 87.9 417.7 362.5
Interest expense, net 50.2 61.0 223.8 226.7
Loss on early extinguishment of debt - 1.5 34.2 21.1
Income tax expense   13.1     0.4     42.0     26.6  
Net income $ 48.6   $ 25.0   $ 117.7   $ 88.1  
 
Non-GAAP Financial Measures
Reconciliation of Net Income to Adjusted Net Income
 
  Three Months Ended   Twelve Months Ended
December 31,   December 31, December 31,   December 31,
2012   2011 2012   2011

 

(In millions, except per share data)

 
Net income $ 48.6 $ 25.0 $ 117.7 $ 88.1
Income tax expense   13.1   0.4   42.0   26.6
Income before income taxes 61.7 25.4 159.7 114.7
Adjustments:
Franchise agreement amortization 5.2 5.4 20.6 21.8
Amortization of deferred financing costs and

original issue discount

2.6 4.0 13.2 14.5
Loss on early extinguishment of debt - 1.5 34.2 21.1
Other operating (income) expense, net 27.1 1.5 53.3 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) 10.1 7.1 30.2 7.6
Business combination agreement expenses (6)   1.3   -   27.0   -
Total adjustments 46.3 38.3 178.5 137.1
 
Adjusted income before income taxes   108.0   63.7   338.2   251.8
 
Adjusted income tax expense (7)   26.8   13.4   94.8   73.2
 
Adjusted net income $ 81.2 $ 50.3 $ 243.4 $ 178.6
 
 
Diluted- EPS (Adjusted Net Income) $ 0.23 $ 0.14 $ 0.69 $ 0.51
Diluted Weighted Average Shares   356.4   348.2   354.1   348.2
Non-GAAP Financial Measures

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

 

 
  As of
December 31,   December 31,
2012 2011
Net debt to adjusted EBITDA (In millions, except ratios)
 
Long term debt, net of current portion $ 2,905.1 $ 3,010.3
Capital leases, net of current portion 88.4 95.4
Current portion of long term debt and capital leases   55.8   33.5
Total Debt 3,049.3 3,139.2
 
Cash and cash equivalents 546.7 459.0
Net debt 2,502.6 2,680.2
TTM adjusted EBITDA 652.1 585.0
   
Net debt / TTM adjusted EBITDA 3.8x 4.6x
Non-GAAP Financial Measures
Reconciliation of Net Income to TTM Adjusted EBITDA
 
Twelve Months Ended

December 31,

2012

 

December 31,

2011

EBITDA and adjusted EBITDA (In millions)
 
Net income $ 117.7 $ 88.1
Interest expense, net 223.8 226.7
Loss on early extinguishment of debt 34.2 21.1
Income tax expense 42.0 26.6
Depreciation and amortization   113.7   136.4
EBITDA 531.4 498.9
Adjustments:
Share-based compensation and non-cash

incentive compensation expense (1)

10.2 6.4
Other operating (income) expense, net 53.3 11.3
2010 Transaction costs (2) - 3.7
Global restructuring and related professional fees (3) - 46.5
Field optimization project costs (4) - 10.6
Global portfolio realignment project costs (5) 30.2 7.6
Business combination agreement expenses (6)   27.0   -
Total adjustments   120.7   86.1
 
Adjusted EBITDA $ 652.1 $ 585.0

Non-GAAP Financial Measures

Footnotes to Reconciliation Tables

6 of 7

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