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Press release from Business Wire

Burger King Worldwide, Inc. Reports Second Quarter 2012 Results

<p class='bwalignc'> <i>Burger King Worldwide Expands Menu and Grows System-wide Comparable Sales by 4.4%</i> </p>

Wednesday, August 01, 2012

Burger King Worldwide, Inc. Reports Second Quarter 2012 Results07:01 EDT Wednesday, August 01, 2012 MIAMI (Business Wire) -- Burger King Worldwide, Inc. (NYSE: BKW) today reported financial results for its second quarter ended June 30, 2012. Second Quarter Highlights: System-wide comparable sales increased 4.4% and system-wide sales increased 6.4% on a constant currency basis Adjusted EBITDA increased 19% on an organic basis to $172.0 million Adjusted diluted EPS increased 29% to $0.17 Established master franchise joint ventures in Russia and China to aggressively expand brand presence Listed Burger King Worldwide on NYSE “I am pleased with the progress made this quarter, with system-wide comparable sales up 4.4% and adjusted EBITDA up 19% year over year on an organic basis,” said Bernardo Hees, chief executive officer. “In the U.S. and Canada, our focus on menu, restaurant image, operations, and marketing communication is beginning to generate tangible results. Internationally, we are laying the foundation for accelerated development worldwide through the formation of partnerships in Russia and China. We are excited to have listed on the NYSE this quarter and believe BKW is well positioned for long-term growth.” Consolidated Financial Highlights     Results   VarianceThree Months Ended June 30,$   %2012   2011Favorable / (Unfavorable)   System-wide Comparable Sales Growth1 4.4% (2.2%) System-wide Sales Growth1 6.4% 0.4%   Net Restaurant Growth 70 35 35 100.0%   Total Revenues $540.8 $595.4 ($54.6) (9.2%) Adjusted EBITDA2 $172.0 $149.9 $22.1 14.7% Adjusted EBITDA Margin2 31.8% 25.2% nm 6.6% Adjusted Net Income2 $61.3 $46.5 $14.8 31.8% Diluted Adjusted Earnings Per Share2 $0.17 $0.13 $0.04 29.5% Net Income $48.2 $30.2 $18.0 59.6% Diluted Earnings Per Share $0.14 $0.09 $0.05 56.8%   (1) System-wide comparable sales growth and system-wide sales growth are calculated on a constant currency basis and include sales at franchise restaurants and company-owned restaurants. (2) Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Diluted Adjusted Earnings Per Share are non-GAAP financial measures. Please refer to “Non-GAAP Reconciliations” for further detail. Organic revenue growth was 5.4%, excluding the impact of refranchising and FX headwinds. On a reported basis, total revenues decreased 9.2% to $540.8 million, compared to $595.4 million in the prior year period due to refranchising transactions in the U.S. and Canada and EMEA and unfavorable FX impact, partially offset by comparable sales growth across all segments and increased franchise and property revenues. Organic Adjusted EBITDA growth was 19.0%, excluding the impact of refranchising and FX headwinds. On a reported basis, Adjusted EBITDA increased 14.7% to $172.0 million, compared to $149.9 million in the prior year period due to improved results in all operating segments. Results were particularly strong in the U.S. and Canada due to the positive impact from our new product launches and accompanying advertising campaign. Adjusted net income and diluted adjusted EPS increased 31.8% and 29.5%, respectively, compared to the prior year, primarily due to an increase in income from operations, partially offset by increases in interest expense and income tax expense. Operational and Segment Highlights System-wide comparable sales growth was positive across all segments. The U.S. and Canada delivered 4.4% comparable sales growth driven by strong sales and product volumes from the largest expansion of menu items in BKW's history, including smoothies, frappes, and wraps, introduced in April. Latin America and the Caribbean (“LAC”) delivered double-digit comparable sales growth of 10.5%, driven by strong performance in Brazil and Mexico. EMEA delivered comparable sales growth of 3.3%, driven by successful promotions in Germany, and APAC delivered comparable sales growth of 2.1%, primarily driven by the impact of an extra trading week in the quarter in Australia. As part of BKW's global refranchising strategy, the company refranchised 386 company-owned restaurants domestically and 78 company-owned restaurants internationally during the quarter. This includes 278 restaurants that were sold to Carrols Restaurant Group, BKW's largest franchisee, in return for a 28.9% equity stake and total cash payments of approximately $16.2 million. In connection with this quarter's refranchising transactions, BKW's U.S. and Canadian franchisees have agreed to remodel 564 restaurants, bringing the total remodel commitment in the region to more than 1,500 restaurants as of June 30, 2012. As part of BKW's international expansion strategy, the company announced the establishment of two joint ventures with proven franchisees in Russia and China. In Russia, the joint venture has committed to open several hundred restaurants over the next few years. In China, the joint venture has committed to open 1,000 restaurants over the next five to seven years, representing the largest multi-unit development agreement in the brand's history. Cash and Liquidity At quarter end, total debt was $3.1 billion and net debt was $2.7 billion. During the six months ended June 30, 2012, BKW repurchased and retired Senior Notes with an aggregate face value of $3.0 million and repurchased Discount Notes with an aggregate accreted value of $61.1 million, which represents 13.6% of the original issuance. As a result of the improvement in net debt and in trailing twelve month adjusted EBITDA, the net debt to adjusted EBITDA ratio improved to 4.2x at June 30, 2012 from 4.6x at December 31, 2011. Public Offering On June 20, 2012, Burger King Worldwide Holdings, Inc. announced the consummation of its business combination with a subsidiary of Justice Holdings Limited. As a result of this transaction, the shares of Burger King Worldwide were listed on the New York Stock Exchange under the ticker symbol “BKW.” Following the listing, the investment fund affiliated with 3G Capital Partners Ltd. continued to hold approximately 71% of the outstanding shares. Investor Conference Call The company will host an investor conference call and webcast at 9:00 a.m. EDT, Wednesday, August 1, 2012, to review financial results for the quarter ended June 30, 2012. The earnings call will be broadcast live via the company's investor relations website at http://investor.bk.com and will be available for replay. The dial-in number is 866.244.4576 for U.S. callers and 703.639.1174 for international callers. About Burger King Worldwide Founded in 1954, BURGER KING® (NYSE: BKW) is the second largest fast food hamburger chain in the world. The original HOME OF THE WHOPPER®, the BURGER KING® system operates in over 12,600 locations serving over 11 million guests daily in 86 countries and territories worldwide. Approximately 94 percent of BURGER KING® restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades. To learn more about Burger King Worldwide, please visit the company's website at www.bk.com or follow us on Facebook and Twitter. Forward-Looking StatementsThis press release contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. These forward-looking statements include statements about the Company's expectations and belief regarding its ability to lay the foundation for accelerated development through strategic partnerships and capitalize on future opportunities in high growth markets; its expectations and belief regarding its ability to remain focused on its core business strategies; its expectations and belief regarding its ability to position itself for long-term growth; and its expectations and beliefs regarding the success of its newly-established joint-ventures in Russia and China. The factors that could cause actual results to differ materially from the Company's expectations are detailed in the Company's filings with the Securities and Exchange Commission, such as its annual and quarterly reports and current reports on Form 8-K, including the following:risks related to the Company's ability to successfully implement its domestic and international growth strategy; risks related to global economic or other business conditions that may affect the desire or ability of customers to purchase the Company's products;risks related to the financial strength of the Company's franchisees; risks related to the Company's ability to compete domestically and internationally in an intensely competitive industry; and risks related to the effectiveness of the Company's marketing and advertising programs.BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited)           Three Months EndedJune 30,Increase / (Decrease)20122011$% (In millions, except %'s) Revenues: Company restaurant revenues $ 345.9 $ 419.0 $ (73.1 ) (17.4 )% Franchise and property revenues   194.9     176.4   18.5   10.5 % Total revenues 540.8 595.4 (54.6 ) (9.2 )% Company restaurant expenses: Food, paper and product costs 115.0 135.4 (20.4 ) (15.1 )% Payroll and employee benefits 100.2 122.2 (22.0 ) (18.0 )% Occupancy and other operating costs   90.5     111.6   (21.1 ) (18.9 )% Total Company restaurant expenses 305.7 369.2 (63.5 ) (17.2 )% Franchise and property expenses 28.5 23.2 5.3 22.8 % Selling, general and administrative expenses 95.8 99.3 (3.5 ) (3.5 )% Other operating (income) expense, net   (17.1 )   4.7   (21.8 ) NM   Total operating costs and expenses   412.9     496.4   (83.5 ) (16.8 )% Income from operations   127.9     99.0   28.9   29.2 % Total interest expense, net 57.2 56.1 1.1 2.0 % Loss on early extinguishment of debt   7.7     -   7.7   NM   Income before income taxes 63.0 42.9 20.1 46.9 % Income tax expense   14.8     12.7   2.1   16.5 % Net income $ 48.2   $ 30.2 $ 18.0   59.6 %   NM - not meaningful   BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited)   Six Months EndedJune 30,Increase / (Decrease)20122011$% (In millions, except %'s) Revenues: Company restaurant revenues $ 742.1 $ 811.5 $ (69.4 ) (8.6 )% Franchise and property revenues   368.6     335.9   32.7   9.7 % Total revenues 1,110.7 1,147.4 (36.7 ) (3.2 )% Company restaurant expenses: Food, paper and product costs 245.0 262.4 (17.4 ) (6.6 )% Payroll and employee benefits 219.7 242.2 (22.5 ) (9.3 )% Occupancy and other operating costs   195.0     221.3   (26.3 ) (11.9 )% Total Company restaurant expenses 659.7 725.9 (66.2 ) (9.1 )% Franchise and property expenses 52.3 46.3 6.0 13.0 % Selling, general and administrative expenses 190.8 199.7 (8.9 ) (4.5 )% Other operating (income) expense, net   (4.1 )   12.5   (16.6 ) NM   Total operating costs and expenses   898.7     984.4   (85.7 ) (8.7 )% Income from operations   212.0     163.0   49.0   30.1 % Total interest expense, net 116.3 106.3 10.0 9.4 % Loss on early extinguishment of debt   11.2     19.6   (8.4 ) (42.9 )% Income before income taxes 84.5 37.1 47.4 127.8 % Income tax expense   22.0     12.8   9.2   71.9 % Net income $ 62.5   $ 24.3 $ 38.2   157.2 %   NM - not meaningful BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited)       As ofJune 30,December 31,20122011ASSETS (In millions, except share data) Current assets: Cash and cash equivalents $ 377.7 $ 459.0 Trade and notes receivable, net 150.5 152.8 Prepaids and other current assets, net 146.1 69.2 Deferred income taxes, net   22.9     43.1   Total current assets 697.2 724.1   Property and equipment, net of accumulated depreciation of $193.6 million and $150.1 million, respectively 906.9 1,026.5 Intangible assets, net 2,784.6 2,823.3 Goodwill 639.8 657.7 Net investment in property leased to franchisees 232.9 242.2 Other assets, net   185.1     134.6   Total assets $ 5,446.5   $ 5,608.4   LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts and drafts payable $ 82.1 $ 98.4 Accrued advertising 93.8 97.4 Other accrued liabilities 192.5 242.7 Current portion of long term debt and capital leases   35.9     33.5   Total current liabilities 404.3 472.0   Term debt, net of current portion 2,911.7 3,010.3 Capital leases, net of current portion 106.1 95.4 Other liabilities, net 360.9 366.2 Deferred income taxes, net   568.3     615.3   Total liabilities   4,351.3     4,559.2     Commitments and Contingencies   Stockholders' equity: Preferred stock, $0.01 par value; 200,000,000 shares authorized; no shares issued or outstanding - - Common stock, $0.01 par value; 2,000,000,000 shares authorized; 350,025,166 shares issued and outstanding at June 30, 2012; 348,245,293 shares issued and outstanding at December 31, 2011 3.5 3.5 Additional paid-in capital 1,199.6 1,186.6 Retained earnings (accumulated deficit) 34.9 (27.6 ) Accumulated other comprehensive loss   (142.8 )   (113.3 ) Total stockholders' equity   1,095.2     1,049.2   Total liabilities and stockholders' equity $ 5,446.5   $ 5,608.4     BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited)   Six Months EndedJune 30,2012   2011Cash flows from operating activities: (In millions) Net income $ 62.5 $ 24.3 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 67.4 68.8 Loss on early extinguishment of debt 11.2 19.6 Amortization of deferred financing cost and debt issuance discount 29.4 15.8 Loss (gain) on remeasurement of foreign denominated transactions (3.6 ) 1.5 Amortization of prior service costs (0.9 ) - Realized loss on terminated caps/swaps 0.9 - Gain on refranchisings and dispositions of assets (2.7 ) (1.7 ) Bad debt expense, net of recoveries 1.5 1.1 Share-based compensation 7.6 0.6 Deferred income taxes 8.0 17.7 Changes in current assets and liabilities, excluding acquisitions and dispositions: Trade and notes receivables (4.2 ) 8.7 Prepaids and other current assets (35.1 ) 19.4 Accounts and drafts payable (15.8 ) (33.0 ) Accrued advertising (45.4 ) 4.1 Other accrued liabilities (47.1 ) (35.3 ) Other long-term assets and liabilities   3.2     (16.7 ) Net cash provided by operating activities   36.9     94.9   Cash flows from investing activities: Payments for property and equipment (13.8 ) (23.5 ) Proceeds from refranchisings, disposition of assets and restaurant closures 36.5 11.7 Payments for acquired franchisee operations, net of cash acquired (15.3 ) - Return of investment on direct financing leases 6.6 7.3 Other investing activities   -     (4.4 ) Net cash provided by (used for) investing activities   14.0     (8.9 ) Cash flows from financing activities: Proceeds from term debt - 1,860.0 Proceeds from discount notes - 401.5 Repayments of term debt and capital leases (19.0 ) (1,852.4 ) Extinguishment of debt (105.9 ) - Payment of financing costs - (32.6 ) Proceeds from issuance of shares   -     1.8   Net cash provided by (used for) financing activities   (124.9 )   378.3   Effect of exchange rates on cash and cash equivalents (7.3 ) 5.1 Increase (decrease) in cash and cash equivalents (81.3 ) 469.4 Cash and cash equivalents at beginning of period   459.0     207.0   Cash and cash equivalents at end of period $ 377.7   $ 676.4     BURGER KING Worldwide, INC. AND SUBSIDIARIES Key Business Metrics We evaluate our restaurants and assess our business based on the following operating metrics. System-wide sales growth refers to the change in sales at all Company-owned and franchise restaurants in one period from the same period in the prior year. System-wide comparable sales growth refers to the change in restaurant sales in one period from the same prior year period for restaurants that have been open for thirteen months or longer. Comparable sales and sales growth are measured on a constant currency basis, which means that results exclude the effect of foreign currency translation and are calculated by translating current year results at prior year exchange rates. We analyze key operating metrics on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements (“FX Impact”). Franchise sales represent sales at all franchised restaurants and are revenues to our franchisees. We do not record franchise sales as revenues; however, our franchise revenues include royalties based on a percentage of franchise sales. Average restaurant sales refer to the total sales divided by total store months for all Company-owned and franchise restaurants open during the period. Net refranchisings refer to sales of Company-owned restaurants to franchisees, net of acquisitions of franchise restaurants by us. Consolidated BKW           Key Business Metrics   Three Months Ended June 30,20122011   System-wide sales growth 6.4 % 0.4 % Franchise sales $ 3,636.3 $ 3,449.0 Comparable sales growth Company 5.1 % (1.6 )% Franchise 4.3 % (2.2 )% System 4.4 % (2.2 )% Average restaurant sales (in thousands) $ 319.1 $ 314.5 Net Restaurant Growth (NRG) Company (3 ) (3 ) Franchise 73 38 System 70 35 Net refranchisings 464 6 Restaurant counts at period end Company 818 1,330 Franchise 11,786 11,006 System 12,604 12,336 CRM % 11.6 % 11.9 %   U.S. & Canada                 Key Business Metrics   Three Months Ended June 30,20122011Favorable / (Unfavorable) System-wide sales growth 3.9 % (5.5 )% Comparable sales growth Company 4.5 % (3.7 )% Franchise 4.4 % (5.5 )% System 4.4 % (5.3 )% NRG Company (2 ) (1 ) Franchise (17 ) (17 ) System (19 ) (18 ) Net refranchisings 386 2 Restaurant counts at period end Company 546 978 Franchise 6,923 6,550 System 7,469 7,528     Three Months Ended June 30,Variance20122011Favorable / (Unfavorable)   Company: Company restaurant revenues $ 242.4 $ 302.1 $ (59.7 ) CRM 29.3 37.9 (8.6 ) CRM % 12.1 % 12.5 % (0.4 )% Company restaurant expenses as a % of Company restaurant revenue: Food and paper 33.7 % 32.8 % (0.9 )% Payroll and benefits 29.9 % 30.0 % 0.1 % Depreciation and amortization 5.5 % 5.6 % 0.1 % Other occupancy and operating 18.8 % 19.0 % 0.2 %   Franchise: Franchise and property revenues $ 115.3 $ 102.3 $ 13.0 Franchise and property expenses 21.7 16.3 (5.4 ) Franchise sales 2,052.3 1,910.6 141.7 Segment income 128.5 122.0 6.5 Segment margin 35.9 % 30.2 % 5.7 %   EMEA                 Key Business Metrics     Three Months Ended June 30,20122011 System-wide sales growth 12.7 % 3.6 % Comparable sales growth Company 6.2 % 4.9 % Franchise 3.1 % 3.1 % System 3.3 % 3.2 % NRG Company - (1 ) Franchise 45 32 System 45 31 Net refranchisings 56 4 Restaurant counts at period end Company 134 193 Franchise 2,827 2,603 System 2,961 2,796     Three Months Ended June 30,Variance20122011Favorable / (Unfavorable)   Company: Company restaurant revenues $ 67.6 $ 81.6 $ (14.0 ) CRM 7.3 7.7 (0.4 ) CRM % 10.8 % 9.4 % 1.4 % Company restaurant expenses as a % of Company restaurant revenue: Food and paper 30.3 % 28.9 % (1.4 )% Payroll and benefits 32.7 % 32.1 % (0.6 )% Depreciation and amortization 3.6 % 3.7 % 0.1 % Other occupancy and operating 22.6 % 25.9 % 3.3 %   Franchise: Franchise and property revenues $ 51.6 $ 49.3 $ 2.3 Franchise and property expenses 6.6 6.3 (0.3 ) Franchise sales 935.1 922.7 12.4 Segment income 42.8 35.3 7.5 Segment margin 35.9 % 27.0 % 8.9 %   LAC                 Key Business Metrics     Three Months Ended June 30,20122011 System-wide sales growth 9.4 % 16.6 % Comparable sales growth Company 5.8 % 4.6 % Franchise 10.8 % 6.9 % System 10.5 % 6.8 % NRG Company - - Franchise 27 15 System 27 15 Net refranchisings - - Restaurant counts at period end Company 97 97 Franchise 1,158 1,068 System 1,255 1,165     Three Months Ended June 30,Variance20122011Favorable / (Unfavorable)   Company: Company restaurant revenues $ 16.1 $ 17.6 $ (1.5 ) CRM 2.8 3.4 (0.6 ) CRM % 17.4 % 19.3 % (1.9 )% Company restaurant expenses as a % of Company restaurant revenue: Food and paper 39.1 % 37.5 % (1.6 )% Payroll and benefits 11.8 % 11.9 % 0.1 % Depreciation and amortization 9.3 % 9.7 % 0.4 % Other occupancy and operating 22.4 % 21.6 % (0.8 )%   Franchise: Franchise and property revenues $ 16.2 $ 14.6 $ 1.6 Franchise and property expenses (0.2 ) - 0.2 Franchise sales 323.7 295.3 28.4 Segment income 17.1 14.5 2.6 Segment margin 52.9 % 45.0 % 7.9 %   APAC                 Key Business Metrics     Three Months Ended June 30,20122011 System-wide sales growth 2.1 % 19.4 % Comparable sales growth Company 8.6 % 7.0 % Franchise 2.0 % (0.9)% System 2.1 % (0.6)% NRG Company (1) (1) Franchise 18 8 System 17 7 Net refranchisings 22 - Restaurant counts at period end Company 41 62 Franchise 878 785 System 919 847     Three Months Ended June 30,Variance20122011Favorable / (Unfavorable)   Company: Company restaurant revenues $ 19.8 $ 17.7 $ 2.1 CRM 0.8 0.8 - CRM % 4.0 % 4.5 % (0.5)% Company restaurant expenses as a % of Company restaurant revenue: Food and paper 34.3% 33.3% (1.0)% Payroll and benefits 18.2% 18.1% (0.1)% Depreciation and amortization 6.6% 6.2% (0.4)% Other occupancy and operating 36.9% 37.9% 1.0 %   Franchise: Franchise and property revenues $ 11.8 $ 10.2 $ 1.6 Franchise and property expenses 0.4 0.6 0.2 Franchise sales 325.2 320.4 4.8 Segment income 11.0 6.7 4.3 Segment margin 34.8% 24.0 % 10.8 %   Organic growth in Revenue and Adjusted EBITDA for the Three Months Ended June 30, 2012(Unaudited)                     $ in millions Refran. Adjusted FX ActualQ2 '12 vs. Q2 '11ImpactQ2 '11ImpactOrganic GrowthQ2 '12Q2 '11$%$$$$% Calculation: ABCA+C=DEB-C-E=FF/DRevenue North America $ 357.7 $ 404.5 ($46.8 ) (11.6 %) ($57.7 ) $ 346.8 ($1.6 ) $ 12.5 3.6 % EMEA $ 119.2 $ 131.0 ($11.8 ) (9.0 %) ($8.3 ) $ 122.7 ($13.2 ) $ 9.7 7.9 % LAC $ 32.3 $ 32.1 $ 0.2 0.6 % - $ 32.1 ($2.3 ) $ 2.5 7.8 % APAC $31.6   $27.8   $3.8   13.7%   -   $27.8   ($0.2)$4.014.4% Consolidated $ 540.8 $ 595.4 ($54.6 ) (9.2 %) ($66.0 ) $ 529.4 ($17.3 ) $ 28.7 5.4 %   Adjusted EBITDA North America $ 128.5 $ 122.0 $ 6.5 5.3 % ($1.7 ) $ 120.3 ($0.1 ) $ 8.3 6.9 % EMEA $ 42.8 $ 35.3 $ 7.5 21.2 % $ 0.6 $ 35.9 ($4.6 ) $ 11.5 32.0 % LAC $ 17.1 $ 14.5 $ 2.6 17.9 % - $ 14.5 ($0.3 ) $ 2.9 20.0 % APAC $ 11.0 $ 6.7 $ 4.3 64.2 % - $ 6.7 - $ 4.3 64.2 % Unallocated Management G&A   ($27.4)   ($28.6)$1.2   (4.2%)   -     ($28.6)-   $1.2(4.2%) Consolidated $ 172.0 $ 149.9 $ 22.1 14.7 % ($1.1 ) $ 148.8 ($5.0 ) $ 28.2 19.0 %   BURGER KING Worldwide, INC. AND SUBSIDIARIES Non-GAAP Financial Measures (Unaudited) To supplement its condensed consolidated financial statements presented on a U.S. Generally Accepted Accounting Principles (“GAAP”) basis, the Company reports the following non-GAAP financial measures: EBITDA, adjusted EBITDA, adjusted net income, adjusted income before income taxes, adjusted income tax expense, net debt, TTM adjusted EBITDA, net debt to TTM adjusted EBITDA ratio, Organic revenue growth and Organic Adjusted EBITDA growth. EBITDA is defined as earnings (net income or loss) before interest, taxes, depreciation and amortization, and is used by management to measure operating performance of the business. Adjusted EBITDA is defined as EBITDA excluding the impact of share-based compensation, other operating (income) expenses, net, and all other specifically identified costs associated with non-recurring projects, including Transaction costs, global restructuring and related professional fees, global portfolio realignment project costs and Business Combination Agreement expenses. 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. Adjusted net income is used by management to evaluate and forecast earnings from ongoing operations excluding the impact of unusual items. This measure is used by management to evaluate and forecast earnings from ongoing operations, as further defined in the non-GAAP reconciliations. Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by the number of diluted shares of the Company during the reporting period. Net debt to TTM adjusted EBITDA ratio is used by management to evaluate the Company's current and prospective financial position. Organic revenue growth and Organic Adjusted EBITDA growth are non-GAAP measures that exclude both FX Impact and refranchisings.     Non-GAAP Financial MeasuresReconciliation of EBITDA and Adjusted EBITDA to Net Income   Three Months EndedSix Months EndedJune 30,June 30,2012   201120122011EBITDA and adjusted EBITDA: U.S. and Canada $ 128.5 $ 122.0 $ 241.4 $ 224.8 EMEA 42.8 35.3 75.6 62.0 LAC 17.1 14.5 33.0 29.7 APAC 11.0 6.7 18.8 13.0 Unallocated Management G&A   (27.4 )   (28.6 )   (53.6 )   (59.6 ) Adjusted EBITDA 172.0 149.9 315.2 269.9 Share-based compensation (1) 0.3 0.4 1.7 0.6 2010 Transaction costs (2) - 0.3 - 1.1 Global restructuring and related professional fees (3) - 10.0 - 22.2 Field optimization project costs (4) - 1.7 - 1.7 Global portfolio realignment project (5) 9.4 - 13.1 - Business combination agreement expenses (6) 18.1 - 25.1 - Other operating (income) expense, net   (17.1 )   4.7     (4.1 )   12.5   EBITDA 161.3 132.8 279.4 231.8 Depreciation and amortization   33.4     33.8     67.4     68.8   Income from operations 127.9 99.0 212.0 163.0 Interest expense, net 57.2 56.1 116.3 106.3 Loss on early extinguishment of debt 7.7 - 11.2 19.6 Income tax expense   14.8     12.7     22.0     12.8   Net income $ 48.2   $ 30.2   $ 62.5   $ 24.3       Twelve Months EndedJune 30,   December 31,20122011EBITDA and adjusted EBITDA: U.S. and Canada $ 472.8 $ 456.2 EMEA 159.6 146.0 LAC 67.2 63.9 APAC 32.5 26.7 Unallocated Management G&A   (101.8 )   (107.8 ) Adjusted EBITDA 630.3 585.0 Share-based compensation (1) 7.5 6.4 2010 Transaction costs (2) 2.6 3.7 Global restructuring and related professional fees (3) 24.3 46.5 Field optimization project costs (4) 8.9 10.6 Global portfolio realignment project (5) 20.7 7.6 Business combination agreement expenses (6) 25.1 - Other operating (income) expense, net   (5.3 )   11.3   EBITDA 546.5 498.9 Depreciation and amortization   135.0     136.4   Income from operations 411.5 362.5 Interest expense, net 236.7 226.7 Loss on early extinguishment of debt 12.7 21.1 Income tax expense   35.8     26.6   Net income $ 126.3   $ 88.1     Non-GAAP Financial MeasuresReconciliation of Net Income to Adjusted Net Income   Three Months Ended June 30,2012     2011Adjusted net income (In millions)   Net income$48.2$30.2 Income tax expense   14.8     12.7 Income before income taxes 63.0 42.9 Adjustments: Franchise agreement amortization 5.1 5.6 Amortization of deferred financing costs and original issue discount 3.5 3.5 Loss on early extinguishment of debt 7.7 - Other operating (income) expense, net (17.1 ) 4.7 2010 Transaction costs(2) - 0.3 Global restructuring and related professional fees(3) - 10.0 Field optimization project costs(4) - 1.7 Global portfolio realignment project costs(5) 9.4 - Business combination agreement expenses(6)   18.1     - Total adjustments26.725.8   Adjusted income before income taxes   89.7     68.7   Adjusted income tax expense (7)   28.4     22.2   Adjusted net income$61.3   $46.5   Non-GAAP Financial MeasuresReconciliation of Adjusted Net Income and Net Income, Net Debt / TTM Adj. EBITDA   Six Months Ended June 30,2012     2011Adjusted net income (In millions)   Net income$62.5$24.3 Income tax expense   22.0     12.8 Income before income taxes 84.5 37.1 Adjustments: Franchise agreement amortization 10.3 11.1 Amortization of deferred financing costs and original issue discount 7.0 6.9 Loss on early extinguishment of debt 11.2 19.6 Other operating (income) expense, net (4.1 ) 12.5 2010 Transaction costs(2) - 1.1 Global restructuring and related professional fees(3) - 22.2 Field optimization project costs(4) - 1.7 Global portfolio realignment project costs(5) 13.1 - Business combination agreement expenses(6)   25.1     - Total adjustments62.675.1   Adjusted income before income taxes   147.1     112.2   Adjusted income tax expense (7)   46.0     38.1   Adjusted net income$101.1   $74.1     As ofJune 30,December 31,20122011Net debt to adjusted EBITDA (In millions, except ratios)   Long term debt, net of current portion $2,911.7$3,010.3 Capital leases, net of current portion 106.1 95.4 Current portion of long term debt and capital leases   35.9     33.5 Total Debt3,053.73,139.2   Cash and cash equivalents 377.7 459.0 Net debt 2,676.0 2,680.2 TTM adjusted EBITDA 630.3 585.0     Net debt / TTM adjusted EBITDA4.2x4.6x   Non-GAAP Financial MeasuresReconciliation of Net Income to TTM Adjusted EBITDA   Twelve Months EndedJune 30, 2012     December 31, 2011EBITDA and adjusted EBITDA (In millions)   Net income$126.3$88.1 Interest expense, net 236.7 226.7 Loss on early extinguishment of debt 12.7 21.1 Income tax expense 35.8 26.6 Depreciation and amortization   135.0     136.4 EBITDA546.5498.9Adjustments: Share-based compensation (1) 7.5 6.4 Other operating (income) expense, net (5.3 ) 11.3 2010 Transaction costs(2) 2.6 3.7 Global restructuring and related professional fees(3) 24.3 46.5 Field optimization project costs(4) 8.9 10.6 Global portfolio realignment project costs(5) 20.7 7.6 Business combination agreement expenses(6)   25.1     - Total adjustments   83.8     86.1   Adjusted EBITDA$630.3   $585.0   Non-GAAP Financial Measures Footnotes to Reconciliation Tables (1) Represents share-based compensation expense associated with employee stock options, and for the twelve months ended June 30, 2012 and December 31, 2011, also includes the portion of annual non-cash incentive compensation that eligible employees elected to receive as common equity in lieu of their 2011 cash bonus. (2) Represents expenses incurred related to 3G's acquisition of Burger King Holdings, Inc., the Company's indirect wholly-owned subsidiary, in October 2010. (3) Represents severance benefits, other severance-related costs incurred in connection with the Company's global restructuring efforts, the voluntary resignation severance program offered for a limited time to eligible employees based at its Miami headquarters and additional reductions in corporate and field positions in the U.S. This restructuring plan was completed in 2011. (4) Represents severance-related costs, compensation costs for overlap staffing, travel expenses, consulting and training costs incurred in connection with the Company's efforts to expand and enhance its U.S. field organization. This project was completed in 2011. (5) Represents costs associated with an ongoing project to realign the Company's global restaurant portfolio by refranchising Company-owned restaurants and establishing strategic partners and joint ventures to accelerate development. These costs primarily include severance related costs and fees for professional services. (6) Represents share-based compensation expense related to awards granted during the three and six months ended June 30, 2012 resulting from the increase in equity value of Burger King Worldwide Holdings, Inc. implied by the Business Combination Agreement and professional fees and other transaction costs associated with the Business Combination Agreement. (7) Adjusted income tax expense for the three and six months ended June 30, 2012 and 2011 is calculated using the Company's statutory tax rate in the jurisdiction in which the costs were incurred. Burger King Worldwide, Inc.InvestorsJosh Kobza, 305-378-7696Director, Investor Relationsinvestor@whopper.comorMediaMiguel Piedra, 305-378-7277Vice President, Global Communicationsmediainquiries@whopper.com