Burger King 2013 Annual Report Download - page 21

Table of Contents

Unforeseen events, such as adverse weather conditions, natural disasters or catastrophic events, can adversely impact our restaurant sales. Natural
disasters such as earthquakes, hurricanes, and severe adverse weather conditions and health pandemics whether occurring in the United States or abroad, can
keep customers in the affected area from dining out and result in lost opportunities for our restaurants. Because a significant portion of our restaurant
operating costs is fixed or semi-fixed in nature, the loss of sales during these periods hurts our operating margins and can result in restaurant operating losses.

We and our franchisees are dependent upon third parties to make frequent deliveries of perishable food products that meet our specifications. Shortages
or interruptions in the supply of food items and other supplies to our restaurants could adversely affect the availability, quality and cost of items we buy and
the operations of our restaurants. Such shortages or disruptions could be caused by inclement weather, natural disasters such as floods, drought and
hurricanes, increased demand, problems in production or distribution, the inability of our vendors to obtain credit, food safety warnings or advisories or the
prospect of such pronouncements, or other conditions beyond our control. A shortage or interruption in the availability of certain food products or supplies
could increase costs and limit the availability of products critical to restaurant operations.
Four distributors service approximately 86% of our U.S. system restaurants and in many of our international markets, we have a single distributor that
delivers products to all of our restaurants. Our distributors operate in a competitive and low-margin business environment. If one of our principal distributors
is in financial distress and therefore unable to continue to supply us and our franchisees with needed products, we may need to take steps to ensure the
continued supply of products to restaurants in the affected markets, which could result in increased costs to distribute needed products. If a principal
distributor for our Company restaurants and/or our franchisees fails to meet its service requirements for any reason, it could lead to a disruption of service or
supply until a new distributor is engaged, which could have an adverse effect on our business.


We are dependent on the efforts and abilities of our senior management, and our success will also depend on our ability to attract and retain additional
qualified employees. Failure to attract personnel sufficiently qualified to execute our strategy, or to retain existing key personnel, could have a material adverse
effect on our business.

We are subject to income and other taxes in the United States and numerous foreign jurisdictions. Our federal income tax returns for fiscal years 2009,
2010, the period from July 1, 2010 to October 18, 2010 and the period from October 19, 2010 to December 31, 2010 are currently under audit by the Internal
Revenue Service 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 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.
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Source: Burger King Worldwide, Inc., 10-K, February 21, 2014 Powered by Morningstar® Document Research℠
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