Burger King 2012 Annual Report Download - page 124

Table of Contents
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$25.3 million, assuming full utilization of all borrowing capacity. As of December 31, 2012, the liability reflecting the fair value of these guarantee obligations
was $2.7 million. No events of default have occurred and no payments have been made by us in connection with these guarantees through December 31,
2012.
Other commitments arising out of normal business operations were $4.9 million as of December 31, 2012, of which over 99% was guaranteed under
bank guarantee arrangements.
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As of December 31, 2012, we had $24.6 million in irrevocable standby letters of credit outstanding, which were issued primarily to certain insurance
carriers to guarantee payments of deductibles for various insurance programs, such as health and commercial liability insurance. Of these letters of credit
outstanding, $11.6 million are secured by the collateral under our 2012 Revolving Credit Facility. As of December 31, 2012, no amounts had been drawn on
any of these irrevocable standby letters of credit.
As of December 31, 2012, we had posted bonds totaling $1.2 million, which related to certain utility deposits and capital projects.
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During the fiscal year ended June 30, 2000, we entered into long-term, exclusive contracts with soft drink vendors to supply Company and franchise
restaurants with their products and obligating Burger King restaurants in the United States to purchase a specified number of gallons of soft drink syrup.
These volume commitments are not subject to any time limit and as of December 31, 2012, we estimate it will take approximately 12 years for these purchase
commitments to be completed.
During 2011, we entered into a five-year contract with a vendor to supply Company and franchise restaurants in certain countries in LAC with soft
drink products on an exclusive basis and to supply Company and franchise restaurants in the United States with food products. We received upfront fees and
contributions to our marketing funds in connection with this agreement and may receive additional fees in the future in connection with the achievement of
certain milestones. We recognize the fees earned in connection with milestone achievement as franchise and property revenue when it is reasonably estimable
and probable. Upfront fees are amortized as franchise and property revenue over the term of the contract. As of December 31, 2012, the deferred income
associated with this contract totaled $3.6 million. Revenue recognized in connection with this arrangement was $1.9 million in 2012 and not material 2011.
In the event of early termination of these arrangements, we may be required to make termination payments that could be material to our financial
position, results of operations and cash flows.
As of December 31, 2012, we had $10.8 million in aggregate contractual obligations for the year ended December 31, 2012 with vendors providing
information technology and telecommunication services under multiple arrangements. These contracts extend up to three years with termination fees ranging
from $1.0 million to $1.2 million during those years. We also have separate arrangements for telecommunication services with an aggregate contractual
obligation of $3.9 million over the next two years with no early termination fee.
We also enter into commitments to purchase advertising. As of December 31, 2012, commitments to purchase advertising totaled $108.3 million and run
through September 2013.
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Source: Burger King Worldwide, Inc., 10-K, February 22, 2013 Powered by Morningstar® Document Research℠
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