Burger King 2012 Annual Report Download - page 75

Table of Contents
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Burger King Worldwide, Inc. (“BKW”, the “Company” or “we”) is a Delaware corporation formed on April 2, 2012, and is the indirect parent of
Burger King Corporation (“BKC”), a Florida corporation that franchises and operates fast food hamburger restaurants, principally under the 
brand. We are the world’s second largest fast food hamburger restaurant, or FFHR, chain as measured by the total number of restaurants. As of December 31,
2012, we owned or franchised a total of 12,997 restaurants in 86 countries and U.S. territories. Of these restaurants, 418 were Company restaurants and
12,579, or approximately 97% of all  restaurants, were owned by our franchisees.
We generate revenue from three sources: (1) retail sales at Company restaurants, (2) franchise revenues, consisting primarily of royalties based on a
percentage of sales reported by franchise restaurants and initial and renewal fees paid by franchisees, and (3) property income from properties that we lease or
sublease to franchisees.
Restaurant sales are affected by the timing and effectiveness of our advertising, new products and promotional programs. Our results of operations also
fluctuate from quarter to quarter as a result of seasonal trends and other factors, such as the timing of restaurant openings and closings and the refranchising
or acquisition of franchise restaurants, as well as variability of the weather. Restaurant sales are typically higher in the spring and summer months when the
weather is warmer than in the fall and winter months. Restaurant sales during the winter are typically highest in December, during the holiday shopping
season. Our restaurant sales and Company restaurant margin are typically lowest during the winter months, which include February, the shortest month of the
year. The timing of religious holidays may also impact restaurant sales.
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On October 19, 2010 (referred to as the “3G Acquisition Date”), 3G Capital Partners Ltd., an investment firm based in New York City (referred to as
“3G Capital”, or “Sponsor”), completed its acquisition of 100% (referred to as the “3G Acquisition”) of the equity of Burger King Holdings, Inc. (“Holdings”)
through 3G Special Situations Fund II, LLP, an investment vehicle controlled by the Sponsor (“3G”). The 3G Acquisition was accounted for as a business
combination using the acquisition method of accounting. As a result, our post-3G Acquisition financial statements reflect a new basis of accounting.
The 3G Acquisition and related financing transactions (collectively referred to as the “2010 Transactions”) required total cash of approximately
$4.3 billion, including transaction costs. The 2010 Transactions were financed with $1.56 billion in equity contributed by 3G, proceeds from the issuance of
new term loans consisting of a $1.51 billion tranche denominated in U.S. dollars and a €250 million tranche denominated in Euros, the net proceeds from the
issuance of $800 million of Senior Notes and $69.4 million of cash on hand.
In 2010, fees and expenses related to the 2010 Transactions totaled $94.9 million, including (1) $43.2 million consisting principally of investment
banking fees and legal fees (which are classified as selling, general and administrative expenses), (2) compensation related expenses of $38.2 million (which
are classified as selling, general and administrative expenses) and (3) commitment fees of $13.5 million associated with the bridge loan available at the closing
of the 2010 Transactions (which are classified as interest expense during the period of October 19, 2010 to December 31, 2010). Debt issuance costs
capitalized in connection with the issuance of debt to fund the 2010 Transactions totaled $69.2 million which were classified as Other Assets.
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Source: Burger King Worldwide, Inc., 10-K, February 22, 2013 Powered by Morningstar® Document Research℠
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