Burger King 2013 Annual Report Download - page 55

Table of Contents
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Cash dividends paid to shareholders of common stock were $84.3 million in 2013, $14.0 million in 2012 and $393.4 million in 2011. On
December 16, 2011, we paid a dividend to our shareholders, principally 3G, in the amount of $393.4 million, representing the net proceeds from the sale of
the Discount Notes.
On April 10, 2013, our Board of Directors authorized the repurchase of up to $200.0 million of our common stock. The repurchase authorization will
remain in effect until May 31, 2016 or when the share repurchase limit is reached. The amount and timing of the repurchases will be determined by
management. The share repurchases may be suspended or discontinued at any time. During 2013, we repurchased 342,843 shares of common stock under
this program at an aggregate cost of $7.3 million, which we will retain in treasury for future use.
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We believe that our results of operations are not materially impacted by moderate changes in the inflation rate. Inflation did not have a material impact on
our operations in 2013, 2012 or 2011. Severe increases in inflation, however, could affect the global and U.S. economies and could have an adverse impact on
our business, financial condition and results of operations.
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This discussion and analysis of financial condition and results of operations is based on our audited Consolidated Financial Statements, which have
been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires our management to
make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosures of contingent assets
and liabilities. We evaluate our estimates on an ongoing basis and we base our estimates on historical experience and various other assumptions we deem
reasonable to the situation. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Volatile credit, equity, foreign currency and energy markets, and declines in consumer spending have increased and
may continue to create uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual
results could differ significantly from these estimates. Changes in our estimates could materially impact our results of operations and financial condition in
any particular period.
We consider our critical accounting policies and estimates to be as follows based on the high degree of judgment or complexity in their application:
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Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in connection with the 3G Acquisition.
Our indefinite-lived intangible asset consists of the Burger King brand (the “Brand”). We test goodwill and the Brand for impairment on an annual basis and
more often if an event occurs or circumstances change that indicates impairment might exist. Our impairment review for goodwill consists of a qualitative
assessment of whether it is more-likely-than-not that a reporting unit’s fair value is less than its carrying amount, and if required, followed by a two-step
process of determining the fair value of the reporting unit and comparing it to the carrying value of the net assets allocated to the reporting unit. If the qualitative
assessment demonstrates that it is more-likely-than-not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to
perform the two-step goodwill impairment test. We may elect to bypass the qualitative assessment and proceed directly to the two-step process, for any
reporting unit, in any period. We can resume the qualitative assessment for any reporting unit in any subsequent period. When performing the two-step
process, if the fair value of the reporting unit exceeds its carrying value, no further analysis or write-down of goodwill is required. If the fair value of the
reporting unit is less than the carrying value of its net assets, the estimated fair value of the reporting unit is allocated to all its underlying assets and liabilities,
including both recognized and unrecognized tangible and intangible assets, based on their fair value. If necessary, goodwill is then written down to its implied
fair value. Our impairment review for the Brand consists of a qualitative assessment similar to goodwill and if necessary, a comparison of the fair value of the
Brand with its carrying amount. If the carrying amount exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If the fair
value exceeds its carrying amount, the Brand is not considered impaired.
Goodwill and our Brand are tested for impairment at least annually as of October 1 of each year. During the year ended December 31, 2013, we
performed a qualitative assessment of whether it was more-likely-than-not that our reporting units’ fair values were less than their carrying values. Based on
this analysis, we determined it was not more-likely-than-not that any of our reporting units had a
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Source: Burger King Worldwide, Inc., 10-K, February 21, 2014 Powered by Morningstar® Document Research℠
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