Burger King 2012 Annual Report Download - page 58

Table of Contents
• it is less than 6% per annum of the net cash proceeds received by or contributed to BKC from a public offering of BKC’s common stock or the
common stock of any of its direct or indirect parent companies;
• it is used to fund certain operational expenditures of any of BKC’s direct or indirect parent companies; or
• it, when combined with all other Restricted Payments (as defined in the Senior Notes Indenture) that rely upon this exception, does not exceed $75
million (the transactions described in these four bullet points, collectively, the “Permitted Distributions”).
Finally, pursuant to the Discount Notes Indenture, BKCH is restricted from paying any dividend or making any payment or distribution on account of
its equity interests unless, among other things, (i) the dividend, payment or distribution (together with all other such dividends, payments or distributions
made since October 19, 2010) is less than an amount calculated based in part on the Consolidated Net Income (as defined in the Discount Notes Indenture) of
BKCH and its restricted subsidiaries since October 1, 2010, or (ii) the dividend, payment or distribution fits within one or more exceptions, including the
Permitted Distributions.
The restrictions under the 2012 Credit Agreement and the Indentures have resulted in the restricted net assets of each of BKC and BKCH exceeding 25%
of our consolidated net assets. Our restricted net assets at December 31, 2012 totaled $1,012.4 million.
As of December 31, 2012, we were in compliance with all covenants of the 2012 Credit Agreement and Indentures, and there were no limitations on our
ability to draw on the remaining availability under our 2012 Revolving Credit Facility.
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At December 31, 2012, we had interest rate cap agreements (notional amount of $1.4 billion), (the “Cap Agreements”) to effectively cap the LIBOR
applicable to our variable rate borrowings at a weighted-average rate of 1.74% for U.S. Dollar denominated borrowings. The six year interest rate cap
agreements are a series of individual caplets that reset and settle quarterly consistent with the payment dates of our LIBOR-based term debt.
Under the terms of the Cap Agreements, if LIBOR resets above the strike price, we will receive the net difference between the rate and the strike price. In
addition, on quarterly settlement dates, we remit the deferred premium payment (plus interest) to the counterparty, whether LIBOR resets above or below the
strike price.
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Cash provided by operating activities was $224.4 million in 2012 compared to cash provided by operating activities of $406.2 million in 2011. The
decrease in cash provided by operating activities resulted primarily from the refranchising of Company restaurants in 2012, a $75.9 million federal tax
refund received in 2011 and higher income taxes paid in 2012, partially offset by lower interest payments in 2012. The decrease in operating cash flows
attributable to the refranchisings reflects use of cash to settle the negative working capital positions of the restaurants refranchised in the period of
refranchising.
Cash provided by operating activities was $406.2 million in 2011 compared to cash provided by operating activities of $183.1 million in 2010. The
increase in cash provided by operating activities resulted primarily from a $75.9 million federal tax refund, a $107.2 million reduction in Management G&A,
a $95.2 million decrease in 2010 Transaction costs and a $35.9 million decrease in tax payments. These factors were partially offset by a $117.5 million
increase in interest payments and $10.6 million of field optimization project costs.
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Source: Burger King Worldwide, Inc., 10-K, February 22, 2013 Powered by Morningstar® Document Research℠
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