Burger King 2012 Annual Report Download - page 25

Table of Contents
and from time to time, we are subject to additional U.S. state and local income tax audits, international income tax audits and sales, franchise and VAT tax
audits. Our effective income tax rate and tax payments in the future could be adversely affected by a number of factors, including: changes in the mix of
earnings in countries with different statutory tax rates; changes in the valuation of deferred tax assets and liabilities; continued losses in certain international
Company restaurant markets that could trigger a valuation allowance; changes in tax laws; the outcome of income tax audits in various jurisdictions around
the world; taxes imposed upon sales of Company restaurants to franchisees; and any repatriation of non-U.S. earnings or our determination that unremitted
earnings from foreign subsidiaries for which we have not previously provided for U.S. taxes were no longer permanently reinvested outside the U.S.
Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from our
historical income tax provisions and accruals. The results of a tax audit or related litigation could have a material effect on our income tax provision, net
income (loss) or cash flows in the period or periods for which that determination is made.


Many of our Company and franchise restaurants are presently located on leased premises. As leases underlying our Company and franchisee
restaurants expire, we or our franchisees may be unable to negotiate a new lease or lease extension, either on commercially acceptable terms or at all, which
could cause us or our franchisees to close restaurants in desirable locations. As a result, our sales and our brand building initiatives could be adversely
affected. We generally cannot cancel these leases; therefore, if an existing or future restaurant is not profitable, and we decide to close it, we may nonetheless be
committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term.


We depend in large part on our brand, which represents 40% of the total assets on our balance sheet as of December 31, 2012, and we believe that our
brand is very important to our success and our competitive position. We rely on a combination of trademarks, copyrights, service marks, trade secrets,
patents and other intellectual property rights to protect our brand and branded products. The success of our business depends on our continued ability to use
our existing trademarks and service marks in order to increase brand awareness and further develop our branded products in both domestic and international
markets. We have registered certain trademarks and have other trademark registrations pending in the United States and foreign jurisdictions. Not all of the
trademarks that we currently use have been registered in all of the countries in which we do business, and they may never be registered in all of these
countries. We may not be able to adequately protect our trademarks, and our use of these trademarks may result in liability for trademark infringement,
trademark dilution or unfair competition. The steps we have taken to protect our intellectual property in the United States and in foreign countries may not be
adequate and our proprietary rights could be challenged, circumvented, infringed or invalidated. In addition, the laws of some foreign countries do not protect
intellectual property rights to the same extent as the laws of the United States.
We may not be able to prevent third parties from infringing our intellectual property rights, and we may, from time to time, be required to institute
litigation to enforce our trademarks or other intellectual property rights or to protect our trade secrets. Further, third parties may assert or prosecute
infringement claims against us and we may or may not be able to successfully defend these claims. Any such litigation could result in substantial costs and
diversion of resources and could negatively affect our revenue, profitability and prospects regardless of whether we are able to successfully enforce our rights.
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Source: Burger King Worldwide, Inc., 10-K, February 22, 2013 Powered by Morningstar® Document Research℠
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