Burger King Worldwide, Inc. Reports Third Quarter 2012 Results

MIAMI--(BUSINESS WIRE)--Burger King Worldwide, Inc. (NYSE: BKW) today reported financial results for its third quarter ended September 30, 2012.

“We are excited to begin returning cash to our shareholders with the initiation of a quarterly cash dividend, underscoring our confidence in BKW’s business model and commitment to disciplined capital allocation.”

Third Quarter Highlights:

System-wide comparable sales increased 1.4% and system-wide sales increased 3.9% on a constant currency basis
Adjusted EBITDA increased 6% on an organic basis to $162.0 million
Adjusted Diluted EPS increased 11% to $0.17
Refinanced Term Loan B, lowering annualized cash interest costs by approximately $25 million
Initiated new quarterly cash dividend of $0.04 per share

BKW Chief Executive Officer Bernardo Hees said, “We completed our first full quarter as a public company with continued positive momentum despite the challenging global economic environment. BKW is fortunate to have one of the most widely recognized and resilient brands in the global QSR industry and we are proud of the hard work and dedication of our employees and franchisees who are striving to deliver a strong finish to a critical year for the BURGER KING® system. In the U.S. and Canada, we are executing on our four pillar strategy, while internationally we completed additional refranchisings and development agreements that we believe will accelerate restaurant growth in the years to come.” Chief Financial Officer Daniel Schwartz added, “We are excited to begin returning cash to our shareholders with the initiation of a quarterly cash dividend, underscoring our confidence in BKW’s business model and commitment to disciplined capital allocation.”

Consolidated Financial Highlights

	Results				Variance
	Three Months Ended September 30,				$		%
	2012		2011		Favorable / (Unfavorable)
	($ in millions, except per share data)

System-wide Comparable Sales Growth¹	1.4	%	1.6	%
System-wide Sales Growth¹	3.9	%	3.6	%

Net Restaurant Growth	63		59		4		6.8%

Total Revenues	$451.1		$607.7		($156.6	)	(25.8%)
Adjusted EBITDA²	$162.0		$161.0		$1.0		0.6%
Adjusted EBITDA Margin²	35.9	%	26.5	%	nm		9.4%
Adjusted Net Income²	$61.1		$54.2		$6.9		12.7%
Adjusted Diluted Earnings Per Share²	$0.17		$0.16		$0.02		10.6%
Net Income	$6.6		$38.8		($32.2	)	(83.0%)
Diluted Earnings Per Share	$0.02		$0.11		($0.09	)	(83.3%)

(1) System-wide comparable sales growth and system-wide sales growth are calculated on a constant currency basis and include sales at franchise restaurants and company-owned restaurants.

(2) Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Diluted Earnings Per Share are non-GAAP financial measures. Please refer to “Non-GAAP Reconciliations” for further detail.

Organic revenue growth was 0.2%, excluding the impact of refranchising and FX headwinds. On a reported basis, total revenues decreased 25.8% to $451.1 million, compared to $607.7 million in the prior year period due to refranchising transactions in the U.S. and Canada, EMEA and APAC as well as unfavorable FX impact, partially offset by comparable sales growth and increased franchise and property revenues.

Organic Adjusted EBITDA growth was 6.3%, excluding the impact of refranchising and FX headwinds. On a reported basis, Adjusted EBITDA increased 0.6% to $162.0 million, compared to $161.0 million in the prior year period. Organic growth was driven by comparable sales and net restaurant growth, as well as G&A cost control, while growth was lower on a reported basis due to significant progress on our global refranchising initiative and FX headwinds primarily related to a weaker Euro. Year to date, Adjusted EBITDA grew 11%.

Adjusted net income and Adjusted Diluted EPS increased 12.7% and 10.6%, respectively, compared to the prior year, primarily due to an increase in Adjusted EBITDA, lower Depreciation and Amortization and lower interest expense. Year to date, Adjusted Net Income increased 26% and Adjusted Diluted EPS grew 25%.

Operational and Segment Highlights

System-wide comparable sales growth was positive across all segments except APAC. The U.S. and Canada delivered 1.6% comparable sales growth driven by the company’s Summer BBQ and Chicken offerings. The company was pleased with the results of its limited time offerings and progress in attracting a more diverse customer base, but experienced a deceleration in comparable sales growth due to more challenging prior year comparisons and the loss of some value based traffic.

EMEA delivered comparable sales growth of 1.8%, driven by double digit comparable store sales growth in the company’s expanding Russian market, continued success of “Kings of the Day” promotions in the United Kingdom, and “King of the Month” deals in Germany. Performance in Southern Europe was softer, with the company’s key Spain market showing deceleration as economic conditions deteriorated during the quarter.

Latin America and the Caribbean (“LAC”) delivered comparable sales growth of 2.7%, despite challenging prior year comparisons in each of the company’s key markets. BKW has implemented new value initiatives in Brazil and Mexico in October to balance its menu options and complement premium offerings such as the Picanha burger in Brazil, and is seeing initial signs of success in driving incremental traffic.

APAC comparable sales declined by 2.2%, driven by weaker results in Australia and Korea as well as a particularly challenging prior year comparison in New Zealand, which hosted the rugby world cup in 2011.

As part of BKW’s global refranchising strategy, the company refranchised 221 company-owned restaurants during the quarter, including 182 restaurants in the U.S. and 39 restaurants internationally. In connection with this quarter’s refranchising transactions, BKW received cash proceeds of $31.6 million, development commitments both domestically and internationally, and domestic re-imaging commitments for 356 restaurants.

As part of BKW’s international expansion strategy, the company announced new Master Franchise and Development agreements with our existing Malaysian franchisee, Rancak Selera, to support the acceleration of restaurant growth in Singapore and Malaysia. Rancak Selera is a portfolio company of Ekuiti Nasional Berhad (Ekuinas), a government-linked private equity fund management company established to create the next generation of leading Malaysian companies. In connection with the Master Franchise and Development agreements, BKW refranchised 38 restaurants in Singapore to Rancak Selera and received a development commitment that is expected to more than double the BURGER KING® brand’s restaurant count in Singapore and Malaysia over the next 5 years.

Cash and Liquidity

At quarter end, total debt was $3.1 billion and net debt was $2.6 billion. During the quarter, BKW refinanced its existing Term Loan B facility with a new $1,735 million Term Loan A and Term Loan B facility. The new Term Loan A pays interest at LIBOR plus 2.25% and the new Term Loan B pays interest at LIBOR plus 2.75% with a 1.00% LIBOR floor. As a result of the refinancing transaction and based on three month LIBOR at the time of closing, BKW expects to realize annualized cash interest savings of approximately $25 million. Due to the improvement in net debt and in trailing twelve month Adjusted EBITDA, the net debt to Adjusted EBITDA ratio improved to 4.1x at September 30, 2012 from 4.6x at December 31, 2011.

Initiation of Quarterly Cash Dividend

The company also announced that its Board of Directors has approved the initiation of a quarterly cash dividend. On October 28, 2012, the Board declared the company’s first quarterly cash dividend of $0.04 per share, which will be paid on November 29, 2012 to shareholders of record at the close of business on November 9, 2012. Future dividends will be determined at the discretion of the Board of Directors.

Investor Conference Call

The company will host an investor conference call and webcast at 9:00 a.m. EDT, Monday, October 29, 2012, to review financial results for the quarter ended September 30, 2012. The earnings call will be broadcast live via the company's investor relations website at http://investor.bk.com and will be available for replay. The dial-in number is 866.244.6521 for U.S. callers and 703.639.1157 for international callers.

About Burger King Worldwide

Founded in 1954, BURGER KING^® (NYSE: BKW) is the second largest fast food hamburger chain in the world. The original HOME OF THE WHOPPER^®, the BURGER KING^® system operates in over 12,600 locations serving over 11 million guests daily in 83 countries and territories worldwide. Approximately 95 percent of BURGER KING^® restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades. To learn more about Burger King Worldwide, please visit the company's website at www.bk.com or follow us on Facebook and Twitter.

Forward-Looking Statements

This press release contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. These forward-looking statements include statements about the company’s expectations and belief regarding its ability to deliver a strong finish to a critical year for the BURGER KING® system; its expectations and belief regarding its ability to execute on its four pillar strategy in the U.S. and Canada and accelerate restaurant growth internationally; its expectations and belief regarding the cash flow generated by its business model and its ability to achieve annualized cash interest savings of approximately $25 million; its expectations and belief regarding the company’s ability to drive incremental traffic in Brazil and Mexico and its expectations regarding its ability to double its restaurant count in Singapore and Malaysia over the next five years. The factors that could cause actual results to differ materially from the company’s expectations are detailed in the company's filings with the Securities and Exchange Commission, such as its annual and quarterly reports and current reports on Form 8-K, including the following: risks related to the company’s ability to successfully implement its domestic and international growth strategy; risks related to global economic or other business conditions that may affect the desire or ability of customers to purchase the company’s products; risks related to the financial strength of the company’s franchisees; risks related to the company’s substantial indebtedness; risks related to the company’s ability to compete domestically and internationally in an intensely competitive industry; and risks related to the effectiveness of the company’s marketing and advertising programs.


BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)

	Three Months Ended
	September 30,					Increase / (Decrease)
	2012		2011			$			%
	(In millions, except per share data)
Revenues:
Company restaurant revenues	$	244.6	$	422.8		$	(178.2	)	(42.1)%
Franchise and property revenues		206.5		184.9			21.6		11.7%
Total revenues		451.1		607.7			(156.6	)	(25.8)%
Company restaurant expenses:
Food, paper and product costs		79.7		134.9			(55.2	)	(40.9)%
Payroll and employee benefits		71.9		122.3			(50.4	)	(41.2)%
Occupancy and other operating costs		64.7		113.0			(48.3	)	(42.7)%
Total Company restaurant expenses		216.3		370.2			(153.9	)	(41.6)%
Franchise and property expenses		34.7		25.3			9.4		37.2%
Selling, general and administrative expenses		76.0		103.3			(27.3	)	(26.4)%
Other operating (income) expense, net		30.3		(2.7	)		33.0		NM
Total operating costs and expenses		357.3		496.1			(138.8	)	(28.0)%
Income from operations		93.8		111.6			(17.8	)	(15.9)%
Total interest expense, net		57.3		59.4			(2.1	)	(3.5)%
Loss on early extinguishment of debt		23.0		-			23.0		NM
Income before income taxes		13.5		52.2			(38.7	)	(74.1)%
Income tax expense		6.9		13.4			(6.5	)	(48.5)%
Net income	$	6.6	$	38.8		$	(32.2	)	(83.0)%

Earnings per share:
Basic	$	0.02	$	0.11		$	(0.09	)	(83.1)%
Diluted	$	0.02	$	0.11		$	(0.09	)	(83.3)%
Weighted average shares outstanding
Basic		350.0		348.3			1.7		0.5%
Diluted		355.0		348.3			6.8		1.9%

NM - not meaningful


BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)

	Nine Months Ended
	September 30,				Increase / (Decrease)
	2012		2011		$			%
	(In millions, except per share data)
Revenues:
Company restaurant revenues	$	986.7	$	1,234.3	$	(247.6	)	(20.1)%
Franchise and property revenues		575.1		520.8		54.3		10.4%
Total revenues		1,561.8		1,755.1		(193.3	)	(11.0)%
Company restaurant expenses:
Food, paper and product costs		324.7		397.3		(72.6	)	(18.3)%
Payroll and employee benefits		291.6		364.5		(72.9	)	(20.0)%
Occupancy and other operating costs		259.7		334.3		(74.6	)	(22.3)%
Total Company restaurant expenses		876.0		1,096.1		(220.1	)	(20.1)%
Franchise and property expenses		87.0		71.6		15.4		21.5%
Selling, general and administrative expenses		266.8		303.0		(36.2	)	(11.9)%
Other operating (income) expense, net		26.2		9.8		16.4		NM
Total operating costs and expenses		1,256.0		1,480.5		(224.5	)	(15.2)%
Income from operations		305.8		274.6		31.2		11.4%
Total interest expense, net		173.6		165.7		7.9		4.8%
Loss on early extinguishment of debt		34.2		19.6		14.6		74.5%
Income before income taxes		98.0		89.3		8.7		9.7%
Income tax expense		28.9		26.2		2.7		10.3%
Net income	$	69.1	$	63.1	$	6.0		9.5%

Earnings per share:
Basic	$	0.20	$	0.18	$	0.02		9.1%
Diluted	$	0.20	$	0.18	$	0.01		7.9%
Weighted average shares outstanding
Basic		349.4		348.2		1.2		0.4%
Diluted		353.3		348.2		5.2		1.5%

NM - not meaningful


BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)

	As of
	September 30,			December 31,
	2012			2011
ASSETS	(In millions, except share data)
Current assets:
Cash and cash equivalents	$	482.8		$	459.0
Trade and notes receivable, net		156.5			152.8
Prepaids and other current assets, net		107.3			69.2
Deferred income taxes, net		26.5			43.1
Total current assets		773.1			724.1

Property and equipment, net of accumulated depreciation of $190.4 million and $150.1 million, respectively		878.5			1,026.5
Intangible assets, net		2,789.7			2,823.3
Goodwill		640.6			657.7
Net investment in property leased to franchisees		229.1			242.2
Other assets, net		169.2			134.6
Total assets	$	5,480.2		$	5,608.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and drafts payable	$	62.0		$	98.4
Accrued advertising		87.4			97.4
Other accrued liabilities		212.8			242.7
Current portion of long term debt and capital leases		50.0			33.5
Total current liabilities		412.2			472.0

Term debt, net of current portion		2,910.5			3,010.3
Capital leases, net of current portion		98.0			95.4
Other liabilities, net		372.0			366.2
Deferred income taxes, net		566.6			615.3
Total liabilities		4,359.3			4,559.2

Commitments and Contingencies

Stockholders' equity:
Preferred stock, $0.01 par value; 200,000,000 shares authorized; no shares issued or outstanding		-			-
Common stock, $0.01 par value; 2,000,000,000 shares authorized; 350,113,909 shares issued and outstanding at September 30, 2012; 348,245,293 shares issued and outstanding at December 31, 2011

		3.5			3.5
Additional paid-in capital		1,201.3			1,186.6
Retained earnings (accumulated deficit)		41.5			(27.6	)
Accumulated other comprehensive loss		(125.4	)		(113.3	)
Total stockholders' equity		1,120.9			1,049.2
Total liabilities and stockholders' equity	$	5,480.2		$	5,608.4


BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	Nine Months Ended
	September 30,
	2012			2011
Cash flows from operating activities:	(In millions)
Net income	$	69.1		$	63.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		96.0			103.1
Loss on early extinguishment of debt		34.2			19.6
Amortization of deferred financing costs and debt issuance discount		43.6			30.7
Loss (gain) on remeasurement of foreign denominated transactions		(5.4	)		4.4
Amortization of prior service costs		(1.8	)		-
Realized loss on terminated caps/swaps		10.7			0.3
Net loss (gain) on refranchisings and dispositions of assets		10.4			(2.9	)
Bad debt expense, net of recoveries		2.9			3.9
Share-based compensation		9.3			0.9
Deferred income taxes		8.0			(16.3	)
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Trade and notes receivables		(4.1	)		8.6
Prepaids and other current assets		(8.9	)		91.9
Accounts and drafts payable		(34.7	)		(5.0	)
Accrued advertising		(31.0	)		7.2
Other accrued liabilities		(47.7	)		(9.0	)
Other long-term assets and liabilities		(6.0	)		14.2
Net cash provided by operating activities		144.6			314.7
Cash flows from investing activities:
Payments for property and equipment		(37.7	)		(42.0	)
Proceeds from refranchisings, disposition of assets and restaurant closures		70.0			23.2
Investment in/advances to unconsolidated affiliates		-			(4.5	)
Payments for acquired franchisee operations, net of cash acquired		(15.3	)		-
Return of investment on direct financing leases		10.4			7.8
Restricted cash		-			(4.3	)
Other investing activities		-			0.5
Net cash provided by (used for) investing activities		27.4			(19.3	)
Cash flows from financing activities:
Proceeds from term debt		1,733.5			1,860.0
Proceeds from discount notes		-			401.5
Repayments of term debt and capital leases		(1,754.7	)		(1,866.3	)
Extinguishment of debt		(112.8	)		-
Payment of financing costs		(16.0	)		(32.6	)
Proceeds from issuance of shares		1.3			1.8
Net cash provided by (used for) financing activities		(148.7	)		364.4
Effect of exchange rates on cash and cash equivalents		0.5			(4.2	)
Increase (decrease) in cash and cash equivalents		23.8			655.6
Cash and cash equivalents at beginning of period		459.0			207.0
Cash and cash equivalents at end of period	$	482.8		$	862.6

BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES

Key Business Metrics

We evaluate our restaurants and assess our business based on the following operating metrics.

System sales growth refers to the change in sales at all company-owned and franchise restaurants in one period from the same period in the prior year. Comparable sales growth refers to the change in restaurant sales in one period from the same prior year period for restaurants that have been open for thirteen months or longer. Company-owned restaurants refranchised during a quarterly period are included with franchise restaurants for the purpose of calculating comparable sales growth for the quarter. Comparable sales and sales growth are measured on a constant currency basis, which means that results exclude the effect of foreign currency translation and are calculated by translating current year results at prior year exchange rates. We analyze key operating metrics on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements (“FX Impact”).

Franchise sales represent sales at all franchise restaurants and are revenues to our franchisees. We do not record franchise sales as revenues; however, our franchise revenues include royalties based on a percentage of franchise sales. Average restaurant sales refer to the total sales divided by total store months for all company-owned and franchise restaurants open during the period. Net refranchisings refer to sales of company-owned restaurants to franchisees, net of acquisitions of franchise restaurants by us.

Consolidated BKW

Key Business Metrics

	Three Months Ended September 30,
	2012			2011

System sales growth ⁽¹⁾		3.9	%		3.6	%
Franchise sales ⁽²⁾	$	3,830.0		$	3,634.0
Comparable sales growth ⁽³⁾
Company		0.4	%		3.2	%
Franchise		1.5	%		1.4	%
System		1.4	%		1.6	%
Average restaurant sales (in thousands) ⁽⁴⁾	$	326.4		$	331.2
Net Restaurant Growth (NRG)
Company		(2	)		-
Franchise		65			59
System		63			59
Net refranchisings ⁽⁵⁾		221			35
Restaurant counts at period end
Company		595			1,295
Franchise		12,072			11,100
System		12,667			12,395
CRM %		11.6	%		12.4	%


U.S. & Canada

Key Business Metrics

	Three Months Ended
	September 30,
	2012			2011
	Favorable / (Unfavorable)
Systemwide sales growth		1.3	%		(0.4	)%
Comparable sales growth
Company		0.7	%		1.8	%
Franchise		1.7	%		(0.6	)%
System		1.6	%		(0.3	)%
NRG
Company		(3	)		(1	)
Franchise		(13	)		(4	)
System		(16	)		(5	)
Net Refranchisings		182			35
Restaurant counts at period end
Company		361			942
Franchise		7,092			6,581
System		7,453			7,523


	Three Months Ended						Variance
	September 30,						Favorable/
	2012			2011			(Unfavorable)

Company:
Company restaurant revenues	$	159.9		$	302.2		$	(142.3	)
CRM		18.3			37.6			(19.3	)
CRM %		11.4	%		12.4	%		(1.0	)%
Company restaurant expenses as a % of Company restaurant revenue:
Food and paper		32.9	%		32.2	%		(0.7	)%
Payroll and benefits		30.2	%		30.1	%		(0.1	)%
Depreciation and amortization		5.5	%		5.6	%		0.1	%
Other occupancy and operating		20.0	%		19.7	%		(0.3	)%

Franchise:
Franchise and property revenues	$	123.5		$	103.8		$	19.7
Franchise and property expenses		26.4			17.5			(8.9	)
Franchise sales		2,139.0			1,968.8			170.2
Segment SG&A		23.8			27.8			4.0
Segment depreciation and amortization		21.9			25.3			3.4
Segment income		113.5			121.4			(7.9	)
Segment margin		40.0	%		29.9	%		10.1	%


EMEA

Key Business Metrics

	Three Months Ended
	September 30,
	2012			2011
	Favorable / (Unfavorable)
Systemwide sales growth		11.0	%		5.8	%
Comparable sales growth
Company		2.1	%		6.1	%
Franchise		1.8	%		4.6	%
System		1.8	%		4.7	%
NRG
Company		-			(1	)
Franchise		33			40
System		33			39
Net Refranchisings		1			0
Restaurant counts at period end
Company		133			192
Franchise		2,861			2,643
System		2,994			2,835


	Three Months Ended						Variance
	September 30,						Favorable/
	2012			2011			(Unfavorable)

Company:
Company restaurant revenues	$	57.9		$	84.8		$	(26.9	)
CRM		7.3			10.6			(3.3	)
CRM %		12.6	%		12.5	%		0.1	%
Company restaurant expenses as a % of Company restaurant revenue:
Food and paper		29.9	%		29.1	%		(0.8	)%
Payroll and benefits		33.6	%		30.5	%		(3.1	)%
Depreciation and amortization		2.4	%		3.4	%		1.0	%
Other occupancy and operating		21.5	%		24.5	%		3.0	%

Franchise:
Franchise and property revenues	$	53.8		$	54.0		$	(0.2	)
Franchise and property expenses		7.8			6.5			(1.3	)
Franchise sales		1,017.2			1,008.3			8.9
Segment SG&A		14.5			19.9			5.4
Segment depreciation and amortization		4.0			5.5			1.5
Segment income		42.8			43.7			(0.9	)
Segment margin		38.3	%		31.5	%		6.8	%


LAC

Key Business Metrics

	Three Months Ended
	September 30,
	2012			2011
	Favorable / (Unfavorable)
Systemwide sales growth		4.3	%		15.6	%
Comparable sales growth
Company		(5.5	)%		12.1	%
Franchise		3.1	%		10.5	%
System		2.7	%		10.5	%
NRG
Company		1			-
Franchise		24			11
System		25			11
Net Refranchisings		-			-
Restaurant counts at period end
Company		98			97
Franchise		1,182			1,079
System		1,280			1,176


	Three Months Ended						Variance
	September 30,						Favorable/
	2012			2011			(Unfavorable)

Company:
Company restaurant revenues	$	15.8		$	17.9		$	(2.1	)
CRM		2.1			3.7			(1.6	)
CRM %		13.3	%		20.7	%		(7.4	)%
Company restaurant expenses as a % of Company restaurant revenue:
Food and paper		39.7	%		38.7	%		(1.0	)%
Payroll and benefits		12.9	%		11.8	%		(1.1	)%
Depreciation and amortization		9.9	%		8.9	%		(1.0	)%
Other occupancy and operating		24.2	%		19.9	%		(4.3	)%

Franchise:
Franchise and property revenues	$	17.7		$	16.0		$	1.7
Franchise and property expenses		-			0.5			0.5
Franchise sales		338.5			322.7			15.8
Segment SG&A		4.2			5.0			0.8
Segment depreciation and amortization		1.6			1.7			0.1
Segment income		17.2			15.9			1.3
Segment margin		51.3	%		46.9	%		4.4	%


APAC

Key Business Metrics

	Three Months Ended
	September 30,
	2012			2011
	Favorable / (Unfavorable)
Systemwide sales growth		(1.5	)%		14.5	%
Comparable sales growth
Company		(2.4	)%		7.0	%
Franchise		(2.2	)%		(1.8	)%
System		(2.2	)%		(1.5	)%
NRG
Company		-			2
Franchise		21			12
System		21			14
Net Refranchisings		38			-
Restaurant counts at period end
Company		3			64
Franchise		937			797
System		940			861


	Three Months Ended						Variance
	September 30,						Favorable/
	2012			2011			(Unfavorable)

Company:
Company restaurant revenues	$	11.0		$	17.9		$	(6.9	)
CRM		0.6			0.7			(0.1	)
CRM %		5.5	%		3.9	%		1.6	%
Company restaurant expenses as a % of Company restaurant revenue:
Food and paper		31.8	%		33.9	%		2.1	%
Payroll and benefits		19.6	%		19.3	%		(0.3	)%
Depreciation and amortization		4.7	%		6.0	%		1.3	%
Other occupancy and operating		38.4	%		36.9	%		(1.5	)%

Franchise:
Franchise and property revenues	$	11.4		$	11.1		$	0.3
Franchise and property expenses		0.5			0.8			0.3
Franchise sales		335.3			334.2			1.1
Segment SG&A		2.7			4.9			2.2
Segment depreciation and amortization		1.1			1.8			0.7
Segment income		9.9			7.9			2.0
Segment margin		44.2	%		27.2	%		17.0	%


BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES Supplemental Disclosure

Other Operating (Income) Expense, net

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net (gains) losses on disposal of assets, restaurant closures and refranchisings	$	14.1		$	(2.7	)	$	15.2		$	-
Litigation settlements and reserves, net		0.8			0.1			1.3			0.7
Foreign exchange net (gains) losses		1.5			(0.1	)		(5.3	)		6.7
Loss on termination of interest rate cap		8.7			-			8.7			-
Equity in net (income) loss from unconsolidated affiliates		(0.4	)		0.2			1.4			0.9
Other, net		5.6			(0.2	)		4.9			1.5
Other operating (income) expense, net	$	30.3		$	(2.7	)	$	26.2		$	9.8


Selling, general and administrative expenses


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011

Selling expenses	$	10.4	$	18.7	$	40.5	$	58.1
Management general and administrative expenses		52.2		62.7		164.3		189.6
Share-based compensation		1.7		0.3		3.4		0.9
Depreciation and amortization		4.1		4.1		12.8		11.9
2010 Transaction costs		-		1.0		-		2.1
Global restructuring and related professional fees		-		10.5		-		32.7
Field optimization project costs		-		5.5		-		7.2
Global portfolio realignment project costs		7.0		0.5		20.1		0.5
Business combination agreement expenses		0.6		-		25.7		-
Total general and administrative expenses		65.6		84.6		226.3		244.9
Selling, general and administrative expenses	$	76.0	$	103.3	$	266.8	$	303.0

BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES

Non-GAAP Financial Measures

(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
EBITDA and adjusted EBITDA:	(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

(1) Represents share-based compensation expense associated with employee stock options, and for the twelve months ended September 30, 2012 and December 31, 2011, also includes the portion of annual non-cash incentive compensation that eligible employees elected to receive as common equity in lieu of their 2011 cash bonus.

(2) Represents expenses incurred related to 3G’s acquisition of Burger King Holdings, Inc., the Company’s indirect wholly-owned subsidiary, in October 2010.

(3) Represents severance benefits, other severance-related costs incurred in connection with the Company’s global restructuring efforts, the voluntary resignation severance program offered for a limited time to eligible employees based at its Miami headquarters and additional reductions in corporate and field positions in the U.S. This restructuring plan was completed in 2011.

(4) Represents severance-related costs, compensation costs for overlap staffing, travel expenses, consulting and training costs incurred in connection with the Company’s efforts to expand and enhance its U.S. field organization. This project was completed in 2011.

(5) Represents costs associated with an ongoing project to realign the Company’s global restaurant portfolio by refranchising Company-owned restaurants and establishing strategic partners and joint ventures to accelerate development. These costs primarily include severance related costs and fees for professional services.

(6) Represents share-based compensation expense related to awards granted during the three and nine months ended September 30, 2012 resulting from the increase in equity value of Burger King Worldwide Holdings, Inc. implied by the business combination agreement and professional fees and other transaction costs associated with the business combination agreement.

(7) Adjusted income tax expense for the three and nine months ended September 30, 2012 and 2011 is calculated using the Company’s statutory tax rate in the jurisdiction in which the costs were incurred.