Burger King 2013 Annual Report Download - page 41

Table of Contents
Our effective tax rate was 26.3% in 2012, primarily as a result of the mix of income from multiple tax jurisdictions, the release of a valuation allowance
and the impact of costs on refranchisings primarily in foreign jurisdictions.
Our effective tax rate was 23.2% in 2011, primarily as a result of the mix of income from multiple tax jurisdictions and the 2010 Transactions.
Net Income
Our net income increased by $116.0 million in 2013, primarily as a result of a $104.5 million increase in our income from operations, which was
driven by an increase in franchise and property revenues, decreases in SG&A and decreases in other operating (income) expenses, net, partially offset by a
decrease in CRM and an increase in franchise and property expenses, as discussed above. Additionally, interest expense, net decreased by $23.8 million and
we did not incur any loss on early extinguishment of debt in 2013. These factors were partially offset by a $46.5 million increase in income tax expense.
Our net income increased by $29.6 million in 2012, primarily as a result of a $55.2 million increase in our income from operations, which was driven
by an increase in franchise and property revenues and decreases in SG&A, partially offset by a decrease in CRM, an increase in franchise and property
expenses and an increase in other operating (income) expenses, net, as discussed above. Additionally, interest expense, net decreased by $2.9 million in
2012. These factors were partially offset by a $13.1 million increase in loss on early extinguishment of debt and a $15.4 million increase in income tax
expense.
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The table below contains information regarding EBITDA and Adjusted EBITDA, which are non-GAAP measures. EBITDA is defined as net income
before depreciation and amortization, interest expense, net, loss on early extinguishment of debt and income tax expense. Adjusted EBITDA is defined as
EBITDA excluding the impact of share-based compensation and non-cash incentive compensation expense, other operating expenses (income), net, and all
other specifically identified costs associated with unusual or non-recurring projects, including global portfolio realignment project costs, business combination
agreement expenses, field optimization project costs, global restructuring and related professional fees and 2010 Transaction costs. Adjusted EBITDA is used
by management to measure operating performance of the business, excluding specifically identified items that management believes do not directly reflect our
core operations, and represents our measure of segment income.
 
      

Segment income:
U.S. and Canada $ 436.7 $ 447.0 $ 436.6 $ (10.3) (2.3)% $ 10.4 2.4%
EMEA 189.4 166.1 146.0 23.3 14.0% 20.1 13.8%
Latin America 67.7 73.2 63.9 (5.5) (7.5)% 9.3 14.6%
APAC 49.3 41.1 26.7 8.2 20.0% 14.4 53.9%
Total 743.1 727.4 673.2 15.7 2.2% 54.2 8.1%
Unallocated Management G&A (77.5) (75.3) (88.2) (2.2) (2.9)% 12.9 14.6%
Adjusted EBITDA 665.6 652.1 585.0 13.5 2.1% 67.1 11.5%
Share-based compensation and non-cash incentive compensation
expense 17.6 10.2 6.4 (7.4) (72.5)% (3.8) (59.4)%
Global portfolio realignment project costs 26.2 30.2 7.6 4.0 13.2% (22.6) (297.4)%
Business combination agreement expenses — 27.0 — 27.0 NM (27.0) NM
Field optimization project costs — — 10.6 — NM 10.6 100.0%
Global restructuring and related professional fees — — 46.5 — NM 46.5 100.0%
2010 Transaction costs — — 3.7 — NM 3.7 100.0%
Other operating (income) expenses, net 34.0 53.3 11.3 19.3 36.2% (42.0) (371.7)%
EBITDA 587.8 531.4 498.9 56.4 10.6% 32.5 6.5%
Depreciation and amortization 65.6 113.7 136.4 48.1 42.3% 22.7 16.6%
Income from operations 522.2 417.7 362.5 104.5 25.0% 55.2 15.2%
Interest expense, net 200.0 223.8 226.7 23.8 10.6% 2.9 1.3%
Loss on early extinguishment of debt — 34.2 21.1 34.2 100.0% (13.1) (62.1)%
Income tax expense 88.5 42.0 26.6 (46.5) (110.7)% (15.4) (57.9)%
Net income $233.7 $117.7 $ 88.1 $116.0 98.6% $29.6 33.6%
NM – Not Meaningful
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Source: Burger King Worldwide, Inc., 10-K, February 21, 2014 Powered by Morningstar® Document Research℠
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