UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2011

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from                      to

Commission file number: 001-32875

BURGER KING HOLDINGS, INC.

Delaware		75-3095469
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

5505 Blue Lagoon Drive, Miami, Florida		33126
(Address of Principal Executive Offices)		(Zip Code)

(305) 378-3000
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o     No þ*

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o     No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one);

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o     No þ

As of May 13, 2011, there were 100,000 shares of the Registrant’s Common Stock outstanding, all of which were owned by Burger King Capital Holdings, LLC, the Registrant’s parent holding company. The registrant’s Common Stock is not publicly traded.

*The registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, but is not subject to such filing requirements.

 

 

BURGER KING HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

				Page
PART I — Financial Information
Item 1.		Financial Statements			3
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			32
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			48
Item 4.		Controls and Procedures			48
PART II — Other Information
Item 1.		Legal Proceedings			50
Item 1A.		Risk Factors			51
Item 5.		Other Information			52
Item 6.		Exhibits			56
		Signatures			57
		Index to Exhibits			58
EX-10.76
EX-10.77
EX-31.1
EX-31.2

PART I — Financial Information

Item 1. Financial Statements

BURGER KING HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

		As of				As of
		March 31,				December 31,
		2011				2010
		(Unaudited)
		(In millions, except share data)
ASSETS
Current assets:
Cash and cash equivalents		$	267.1			$	207.0
Trade and notes receivable, net			139.1				148.0
Prepaids and other current assets, net			173.6				159.2
Deferred income taxes, net			26.4				23.2
Total current assets			606.2				537.4
Property and equipment, net of accumulated depreciation of $57.9 million and $26.1 million, respectively			1,171.7				1,193.6
Intangible assets, net			2,976.8				2,931.9
Goodwill			529.0				529.9
Net investment in property leased to franchisees			138.2				140.0
Other assets, net			231.1				226.6
Total assets		$	5,653.0			$	5,559.4
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts and drafts payable		$	75.2			$	90.2
Accrued advertising			90.5				82.5
Other accrued liabilities			263.6				249.4
Current portion of long-term debt and capital leases			30.4				32.9
Total current liabilities			459.7				455.0
Long-term debt, net of current portion			2,689.4				2,652.0
Capital leases, net of current portion			62.7				63.7
Other liabilities, net			201.2				208.2
Deferred income taxes, net			744.5				725.5
Total liabilities			4,157.5				4,104.4
Commitments and Contingencies (Note 15)
Subsequent event (Note 18)
Stockholder’s equity:
Common stock, $0.01 par value; 200,000 shares authorized at March 31, 2011 and December 31, 2011; 100,000 shares issued and outstanding at March 31, 2011 and December 31, 2010			—				—
Additional paid-in capital			1,563.5				1,563.5
(Accumulated deficit)/retained earnings			(112.4	)			(105.6	)
Accumulated other comprehensive income (loss)			44.4				(2.9	)
Total stockholder’s equity			1,495.5				1,455.0
Total liabilities and stockholder’s equity		$	5,653.0			$	5,559.4

See accompanying notes to condensed consolidated financial statements.

BURGER KING HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)

		Successor				Predecessor
		Three Months Ended
		March 31,
		2011				2010
		(In millions)
Revenues:
Company restaurant revenues		$	392.5			$	439.2
Franchise revenues			132.2				129.9
Property revenues			27.3				27.8
Total revenues			552.0				596.9
Company restaurant expenses:
Food, paper and product costs			126.7				138.0
Payroll and employee benefits			120.0				138.2
Occupancy and other operating costs			110.8				113.3
Total company restaurant expenses			357.5				389.5
Selling, general and administrative expenses			109.2				117.8
Property expenses			17.9				15.2
Other operating (income) expense, net			5.0				(4.5	)
Total operating costs and expenses			489.6				518.0
Income from operations			62.4				78.9
Interest expense			51.7				12.2
Interest income			(1.3	)			(0.3	)
Total interest expense, net			50.4				11.9
Loss on early extinguishment of debt			19.6				—
Income (loss) before income taxes			(7.6	)			67.0
Income tax expense (benefit)			(0.8	)			26.0
Net income (loss)		$	(6.8	)		$	41.0

See accompanying notes to condensed consolidated financial statements.

BURGER KING HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)

		Successor				Predecessor
		Three Months Ended
		March 31,
		2011				2010
		(In millions)
Cash flows from operating activities:
Net income (loss)		$	(6.8	)		$	41.0
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			40.5				27.5
Loss on early extinguishment of debt			19.6				—
Gain on hedging activities			—				(0.4	)
Amortization of deferred financing cost and debt issuance discount			3.3				0.5
Loss on remeasurement of foreign denominated transactions			2.4				20.3
Gain on refranchisings, dispositions of assets and release of unfavorable lease obligation			—				(2.8	)
Impairment of non-restaurant properties			—				0.2
Bad debt expense, net of recoveries			—				0.1
Share-based compensation			0.2				4.3
Deferred income taxes			13.1				(1.7	)
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Trade and notes receivables			11.6				(7.8	)
Prepaids and other current assets			(10.3	)			(3.7	)
Accounts and drafts payable			(16.2	)			(32.8	)
Accrued advertising			6.6				12.3
Other accrued liabilities			8.2				25.0
Other long-term assets and liabilities			(6.2	)			(4.8	)
Net cash provided by operating activities			66.0				77.2
Cash flows from investing activities:
Payments for property and equipment			(9.7	)			(26.3	)
Proceeds from refranchisings, disposition of assets and restaurant closures			7.9				4.7
Payments for acquired franchisee operations, net of cash acquired			—				(12.8	)
Return of investment on direct financing leases			2.0				2.2
Other investing activities			(0.1	)			0.9
Net cash provided by (used for) investing activities			0.1				(31.3	)
Cash flows from financing activities:
Proceeds from term debt			1,857.6				—
Repayments of term debt and capital leases			(1,844.0	)			(17.0	)
Borrowings under revolving credit facility			—				9.0
Repayments of revolving credit facility			—				(9.0	)
Payment of financing costs			(23.1	)			—
Dividends paid on common stock			—				(8.5	)
Proceeds from stock option exercises			—				2.4
Excess tax benefits from share-based compensation			—				1.1
Net cash used for financing activities			(9.5	)			(22.0	)
Effect of exchange rates on cash and cash equivalents			3.5				(5.7	)
Increase in cash and cash equivalents			60.1				18.2
Cash and cash equivalents at beginning of period			207.0				139.9
Cash and cash equivalents at end of period		$	267.1			$	158.1

See accompanying notes to condensed consolidated financial statements.

BURGER KING HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)

		Successor				Predecessor
		Three Months Ended
		March 31,
		2011				2010
		(In millions)
Supplemental cash flow disclosures:
Interest paid		$	29.5			$	11.9
Income taxes paid		$	6.6			$	9.2
Non-cash investing and financing activities:
Acquisition of property with capital lease obligations		$	—			$	0.2
Net investment in direct financing leases		$	—			$	4.3

See accompanying notes to condensed consolidated financial statements.

BURGER KING HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1. Organization

     Burger King Holdings, Inc. (“BKH” or the “Company”) is a Delaware corporation formed on July 23, 2002. The Company is the parent of Burger King Corporation (“BKC”), a Florida corporation that franchises and operates fast food hamburger restaurants, principally under the Burger King^® brand (the “Brand”).

     The Company generates revenues from three sources: (i) retail sales at Company restaurants; (ii) franchise revenues, consisting of royalties based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; and (iii) property income from restaurants that the Company leases or subleases to franchisees.

     On September 2, 2010, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Burger King Worldwide Holdings, Inc., formerly known as Blue Acquisition Holding Corporation, a Delaware corporation (“Parent”) and Blue Acquisition Sub, Inc., a Delaware corporation (“Merger Sub”), a wholly owned subsidiary of Parent established as an acquisition vehicle for the purpose of acquiring the Company. In accordance with the terms of the Merger Agreement, on October 19, 2010 (the “Merger Date”), Merger Sub completed its acquisition of 100% of the Company’s equity (the “Acquisition”) and merged with and into the Company, with the Company continuing as the surviving corporation (the “Merger”). Parent is wholly-owned by 3G Special Situations Fund II, L.P. (“3G”), which is an affiliate of 3G Capital Partners, Ltd., a private equity investment firm based in New York (“3G Capital” or the “Sponsor”). The common stock of BKH ceased to be traded on the New York Stock Exchange after close of market on October 19, 2010 and BKH continues operations as a privately-held company. The Acquisition, Merger and related financing transactions are collectively referred to as the “Transactions”.

     On April 8, 2011, Parent transferred 100% of the stock of the Company to Burger King Capital Holdings, LLC, a Delaware limited liability company (“BKCH”), in exchange for membership interests in BKCH. As a result, BKCH became a wholly-owned subsidiary of Parent and the Company became a wholly-owned subsidiary of BKCH. See Note 18.

Note 2. Basis of Presentation and Consolidation

     The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (“GAAP”) for complete financial statements. Therefore, the Financial Statements should be read in conjunction with the audited Consolidated Financial Statements contained in Part II, Item 8 of the Company’s Transition Report on Form 10-K for the six-month period ended December 31, 2010 filed with the SEC on March 23, 2011. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods do not necessarily indicate the results that may be expected for any other interim period or for the full year.

     The Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

     As discussed in Note 1, the Company was acquired by an affiliate of 3G Capital in a transaction accounted for as a business combination using the acquisition method of accounting. In addition, Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805-50-S99-1 “Business Combinations — Related Issues” requires the application of push down accounting in situations where the ownership of an entity has changed. As a result, the post-merger financial statements of the Company reflect the new basis of accounting.

     The preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed as of March 31, 2011 and December 31, 2010 reflects various preliminary fair value estimates and analyses, including preliminary work performed by third-party valuation specialists, which are subject to change within the measurement period as valuations are finalized. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair values of certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, income and non-income based taxes and goodwill. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired at the Merger Date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the Merger Date.

     Unless the context otherwise requires, all references to the “Successor” refer to Burger King Holdings, Inc. and all its subsidiaries, including BKC, for the period subsequent to the Acquisition. All references to “Predecessor” refer to Burger King Holdings, Inc. and all its subsidiaries, including BKC, for all periods prior to the Acquisition, which operated under a different ownership and capital structure. In addition, the Acquisition was accounted for under the acquisition method of accounting, which resulted in purchase price allocations that affect the comparability of results of operations for periods before and after the Acquisition.

     Certain prior year amounts in the accompanying Financial Statements and Notes to the Financial Statements have been reclassified in order to be comparable with the current year classifications. These reclassifications had no effect on previously reported net income.

Change in Fiscal Year End

     On November 5, 2010, the BKH Board of Directors approved a change in fiscal year-end from June 30 to December 31. The change became effective at the end of the quarter ended December 31, 2010.

Use of Estimates

     The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s Financial Statements and Notes to the Financial Statements. Management adjusts such estimates and assumptions when facts and circumstances dictate. Such estimates and assumptions may be affected by volatile credit, equity, foreign currency and energy markets, and declines in consumer spending. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

New Financial Accounting Standards Board (FASB) Updates Issued But Not Yet Adopted

     In July 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. This ASU amends ASC Topic 310 by requiring additional disclosures about the credit quality of financing receivables and the related allowance for credit losses. The disclosures required by this ASU are effective for non-public entities for annual reporting periods ending on or after December 15, 2011, which for the Company will be December 31, 2011. The amendments in this ASU will affect only disclosures and are not expected to have a significant impact on the Company.

     On December 20, 2010, the FASB issued ASU No. 2010-28, Intangibles-Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. This ASU is a consensus of the FASB Emerging Issues Task Force (EITF) and requires an entity to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists for reporting units with zero or negative carrying amounts. An entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. If the entity determines that it is more likely than not that the goodwill is impaired, Step 2 should be performed. Any resulting goodwill impairment should be recorded as a cumulative-effect adjustment to beginning retained earnings in the period of adoption. Any impairments occurring after initial adoptions should be included in earnings. The amendments in this ASU are effective for non-public entities for fiscal years, and interim periods, beginning after December 15, 2011, which for the Company will be January 1, 2012. Early adoption is not permitted. The Company has not yet determined the impact, if any, that the adoption of this ASU will have on the Company.

Note 3. Share-based Compensation

Successor

     On February 2, 2011, the Board of Directors of Parent approved and adopted the Burger King Worldwide Holdings, Inc. 2011 Omnibus Incentive Plan (the “Omnibus Plan”). The Omnibus Plan generally provides for the grant of awards to employees, directors, consultants and other persons who provide services to Parent and its subsidiaries, with respect to an aggregate of 5,000 shares (5 million millishares or .001 of one full share) of common stock. The Omnibus Plan permits the grant of several types of awards with respect to the common stock, including stock options, restricted stock units, restricted stock and performance shares.

     On February 3, 2011, Parent granted options to purchase up to 3,634 shares (3,634,616 millishares) to key employees of BKC and its subsidiaries and members of the Board of Directors of Parent. The exercise price per millishare is $15.82, and the options vest 100% on October 19, 2015, provided the employee is continuously employed by BKC or one of its subsidiaries and the director remains on the board of Parent. The grant date fair value of the options granted was $1.96 per millishare and was estimated using the Black-Scholes option pricing model based on the following weighted-average input assumptions: exercise price of $15.82 per share; risk-free interest rate of 1.93%; expected term of 5.0 years; expected volatility of 35.0%; and expected dividend yield of zero. The compensation cost related to these granted options will be recognized ratably over the requisite service period.

     The Company recorded $0.2 million of share-based compensation expense in selling, general and administrative expenses for the three months ended March 31, 2011 as a result of the option grants described above. No stock options were exercised during the three months ended March 31, 2011.

     As a result of the Acquisition, the Predecessor’s unvested share-based compensation awards were accelerated to vest and, together with previously vested awards, were cancelled and settled in cash using the $24.00 purchase price per share of common stock paid by 3G in the Acquisition. Cash payments totaling $10.1 million related to certain equity grants made in August 2010 (the “August 2010 Equity Grants”) were put in trust for each employee, the proceeds of which are payable over a two-year period, subject to his or her continued employment on the applicable payment date. These amounts were recorded as deferred compensation cost and are classified as an asset (current and long term) at the Merger Date. As of March 31, 2011, $1.1 million of deferred compensation cost remains as an asset in the consolidated balance sheets as the Company’s recent restructuring plan resulted in the reduction of employees whose funds were held in trust. This amount will be amortized as compensation expense on a straight-line basis over the requisite service period of two years.

     In addition to the options granted, as described above, on March 1, 2011, Parent offered officers of the Company who had proceeds from the August 2010 Equity Grants deposited into trust a one-time opportunity, until April 19, 2011, to purchase millishares of common stock of Parent under the Omnibus Plan (“Investment Shares”) at a purchase price of $15.82 per millishare. Any officer who elects to purchase Investment Shares will also receive an option to purchase two millishares for each Investment Share purchased, at an exercise price of $15.82 per millishare. The options cliff vest on October 19, 2015. The grant date fair value of the options granted was the same as the option grants noted above and the valuation was also based on the Black-Scholes option pricing model using the same weighted-average input assumptions.

Predecessor

     The Predecessor recorded $4.3 million of share-based compensation expense for the three months ended March 31, 2010 in selling, general and administrative expenses. Excess tax benefits from stock options exercised of $1.1 million in the three months ended March 31, 2010 were reported as financing cash flows in the accompanying condensed consolidated statements of cash flows.

Note 4. Restaurant Acquisitions, Closures and Dispositions

     Acquisitions

     Restaurant acquisitions are summarized as follows:

		Successor				Predecessor
		Three Months Ended
		March 31,
		2011				2010
		(In millions, except restaurant count)
Number of restaurants acquired			—				35
Prepaids and other current assets		$	—			$	4.0
Property and equipment, net			—				4.9
Goodwill and other intangible assets			—				6.4
Assumed liabilities			—				(2.5	)
Total purchase price		$	—			$	12.8

     Closures and Dispositions

     Gains and losses on closures and dispositions represent sales of Company properties and other costs related to restaurant closures and sales of Company restaurants to franchisees, referred to as “refranchisings,” and are recorded in other operating (income) expenses, net in the accompanying condensed consolidated statements of operations (See Note 14). Gains and losses recognized in the current period may reflect closures and refranchisings that occurred in previous periods.

     Closures and dispositions are summarized as follows:

		Successor				Predecessor
		Three Months Ended
		March 31,
		2011				2010
		(In millions, except restaurant count)
Number of restaurant closures			7				5
Number of refranchisings			3				—
Net (gains) losses on disposal of assets, restaurant closures and refranchisings		$	0.4			$	(3.2	)

Note 5. Prepaids and Other Current Assets, net

     Included in prepaids and other current assets, net, were prepaid expenses of $50.3 million and $38.7 million, inventories totaling $13.9 million and $15.6 million, foreign currency forward contracts of $6.9 million and $7.9 million, and refundable income taxes of $101.5 million and $85.9 million as of March 31, 2011 and December 31, 2010, respectively.

Note 6. Intangible Assets, net and Goodwill

     As a result of the Merger on the Merger Date, and the related application of acquisition accounting, the Company completed a preliminary valuation of the Brand and other identifiable intangible assets as of that date. As of March 31, 2011 and December 31, 2010, the Brand, the Company’s only intangible asset with an indefinite life, had a carrying value of $2.1 billion. As of March 31, 2011 and December 31, 2010, goodwill had a carrying value of $529.0 million and $529.9 million, respectively. The goodwill is attributable to preliminary acquisition accounting and will be allocated to reporting units upon completion of the fair value studies in 2011.

     The tables below present intangible assets subject to amortization:

		As of				As of
		March 31,				December 31,
		2011				2010
		(In millions)
Franchise agreements		$	880.5			$	859.4
Accumulated amortization			(16.8	)			(7.2	)
Total, Net		$	863.7			$	852.2

		As of				As of
		March 31,				December 31,
		2011				2010
		(In millions)
Favorable leases		$	26.8			$	26.8
Accumulated amortization			(1.2	)			(0.7	)
Total, Net		$	25.6			$	26.1

     The Company recorded amortization expense on intangible assets of $10.1 million during the three months ended March 31, 2011. The Predecessor recorded amortization expense on intangible assets of $1.9 million during the three months ended March 31, 2010.

     Franchise agreements and favorable leases have weighted average amortization periods of approximately 23 years and 12 years, respectively. The total intangible asset weighted average amortization period is approximately 23 years.

Note 7. Comprehensive Income

     The components of total comprehensive income are as follows:

		Successor				Predecessor
		Three Months Ended
		March 31,
		2011				2010
		(In millions)
Net income (loss)		$	(6.8	)		$	41.0
Translation adjustment			45.6				1.9
Net change in fair value of derivatives (1)			2.3				1.1
Amounts reclassified to earnings during the period from terminated caps/swaps (2)			(0.6	)			(0.2	)
Pension and post-retirement benefit plans (3)			—				0.5
Total other comprehensive income (loss)			47.3				3.3
Total comprehensive income (loss)		$	40.5			$	44.3

Note 8. Other Accrued Liabilities and Other Liabilities

     Included in other accrued liabilities (current), as of March 31, 2011 and December 31, 2010, were accrued payroll and employee-related benefits costs totaling $43.6 million and $34.4 million, respectively; accrued severance of $38.4 million and $46.8 million, respectively; interest payable of $36.1 million and $16.2 million, respectively; foreign currency forward contracts of $6.4 million and $7.6 million, respectively; gift card liabilities of $13.7 million and $17.4 million, respectively; and sales tax payable of $15.3 million and $12.6 million, respectively.

     Included in other liabilities (non-current), as of March 31, 2011 and December 31, 2010, were accrued pension liabilities of $58.8 million and $60.1 million, respectively; liabilities for unfavorable leases of $35.9 million and $38.6 million, respectively; casualty insurance reserves of $21.8 million and $22.3 million, respectively; retiree health benefits of $25.6 million and $25.1 million, respectively; deferred income of $13.1 million and $13.3 million, respectively; liability under the Executive Retirement Plan (the “ERP” liability) of $22.0 million and $25.6 million, respectively; and income tax payable of $13.3 million and $15.4 million, respectively.

Note 9. Long-Term Debt

     Long-term debt is comprised of the following:

				Principal								Interst rates (a)
				As of				As of
				March 31,				December 31,
												Three Months Ended
		Maturity dates		2011				2010				March 31, 2011
				(In millions)
Secured Term Loan — USD tranche (b)		2016		$	1,596.0			$	1,510.0			6.2%
Secured Term Loan — Euro tranche (b)		2016			282.7				334.2			6.4%
9 7/8 % Senior Notes		2018			800.0				800.0			10.3%
Deferred Premiums on interest rate caps — USD (See Note 11)		2016			40.8				42.4			2.5%
Deferred Premiums on interest rate caps — EUR (See Note 11)		2016			9.1				11.1			2.9%
Revolving Credit Facility		2015			—				—			N/A
Other		N/A			1.3				1.4
Total debt					2,729.9				2,699.1
Less: current maturities of debt					(24.4	)			(27.0	)
Total long-term debt				$	2,705.5			$	2,672.1

     Amended Credit Agreement

     On February 15, 2011, BKC entered into a credit agreement dated as of October 19, 2010, as amended and restated as of February 15, 2011 (the “Amended Credit Agreement”), with JPMorgan Chase Bank, N.A., as administrative agent, Barclays Capital, as syndication agent, and the lenders party thereto from time to time. Under the Amended Credit Agreement, the aggregate principal amount of secured term loans denominated in U.S. dollars was increased to $1,600.0 million and the amount of secured term loans denominated in Euros was reduced to €200.0 million (the “Term Loan Facility”). The Amended Credit Agreement also provides for a senior secured revolving credit facility for up to $150.0 million of revolving extensions of credit outstanding at any time (including revolving loans, swingline loans and letters of credit), the amount of which was unchanged by the February 15, 2011 amendment (the “Revolving Credit Facility”, together with the Term Loan Facility, the “Credit Facilities”).

     Under the Amended Credit Agreement, at BKC’s election, the interest rate per annum applicable to the loans is based on a fluctuating rate of interest determined by reference to either (i) a base rate determined by reference to the higher of (a) the prime rate of JPMorgan Chase Bank, N.A., (b) the federal funds effective rate plus 0.50% and (c) the Eurocurrency rate applicable for an interest period of one month plus 1.00%, plus an applicable margin equal to 2.00% for loans under the U.S. dollar denominated tranche of the Term Loan Facility and 2.25% for loans under the Revolving Credit Facility, or (ii) a Eurocurrency rate determined by reference to EURIBOR for the Euro denominated tranche and LIBOR for the U.S. dollar denominated tranche and Revolving Credit Facility, adjusted for statutory reserve requirements, plus an applicable margin equal to 3.25% for loans under the Euro denominated tranche of the Term Loan Facility, 3.00% for loans under the U.S. dollar denominated tranche of the Term Loan Facility and 3.25% for loans under the Revolving Credit Facility. Term Loan borrowings under the Amended Credit Agreement are subject to a LIBOR floor of 1.50%.

     In connection with the Amended Credit Agreement, the Company recorded a $19.6 million loss on early extinguishment of debt during the three months ended March 31, 2011.

     As of March 31, 2011, the Company had $26.0 million in irrevocable standby letters of credit outstanding, which were issued primarily to certain insurance carriers to guarantee payments of deductibles for various insurance programs, such as health and commercial liability insurance. Such letters of credit are secured by the collateral under the Company’s Revolving Credit Facility. As of March 31, 2011, no amounts had been drawn on any of these irrevocable standby letters of credit.

     The financial covenants, negative covenants, affirmative covenants, maturity dates, prepayment events and events of default, as described in the Company’s Transition Report on Form 10-K for the six-month period ended December 31, 2010, were unchanged by the February 15, 2011 amendment. As of March 31, 2011, the Company was in compliance with all covenants of the Amended Credit Agreement.

     9 7/8% Senior Notes

     On October 19, 2010, Merger Sub, as the initial issuer, and Wilmington Trust FSB, as trustee, executed an indenture pursuant to which the senior notes (the “Senior Notes”) were issued (the “Senior Notes Indenture”). Upon the consummation of the Merger, Merger Sub, BKC, the Company, as a guarantor, and the other guarantors entered into a supplemental indenture (the “Supplemental Indenture”) pursuant to which BKC assumed the obligations of Merger Sub under the Senior Notes Indenture and the Senior Notes and the Company and the other guarantors guaranteed the Senior Notes on a senior basis. The Senior Notes bear interest at a rate of 9.875% per annum, which is payable semi-annually on October 15 and April 15 of each year, commencing on April 15, 2011. The Senior Notes mature on October 15, 2018.

     The Senior Notes are general unsecured senior obligations of BKC that rank pari passu in right of payment with all existing and future senior indebtedness of BKC. The Senior Notes are effectively subordinated to all secured indebtedness of BKC (including the Credit Facilities) to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities, including preferred stock, of non-guarantor subsidiaries.

     The Senior Notes are guaranteed by BKH and all existing direct and indirect subsidiaries that borrow under or guarantee any indebtedness or indebtedness of another guarantor. Under certain circumstances, subsidiary guarantors may be released from their guarantees without the consent of the holders of the Senior Notes.

     The Senior Notes Indenture contains certain covenants that the Company must meet during the term of the Senior Notes, including, but not limited to, limitations on restricted payments (as defined in the Senior Notes Indenture), incurrence of indebtedness, issuance of disqualified stock and preferred stock, asset sales, mergers and consolidations, transactions with affiliates, guarantees of indebtedness by subsidiaries and activities of BKH. As of March 31, 2011, the Company was in compliance with all covenants of the Senior Notes Indenture.

     Other

     The Company has lines of credit with foreign banks, which can also be used to provide guarantees, in the amount of $3.5 million and $3.3 million as of March 31, 2011 and December 31, 2010, respectively. There were $2.4 million and $1.2 million of guarantees issued against these lines of credit as of March 31, 2011 and December 31, 2010, respectively.

     Interest Expense

     Interest expense consists of the following:

		Successor				Predecessor
		Three Months Ended
		March 31,
		2011				2010
		(In millions)
Secured Term Loan — USD tranche		$	21.1			$	—
Secured Term Loan — Euro tranche			4.5				—
Interest Rate Caps — USD and Euro			0.3				—
9 7/8 % Senior Notes			19.8				—
Amortization on original debt issuance discount, deferred financing costs and other			3.6				6.2
Predecessor term loans (a)			—				3.5
Capital lease obligations			2.4				2.5
Total		$	51.7			$	12.2

Note 10. Fair Value Measurements

     Fair Value Measurements

     The following table presents financial assets and liabilities measured at fair value on a recurring basis, which include derivatives designated as cash flow hedging instruments, derivatives not designated as hedging instruments and other investments, which consist of money market accounts and mutual funds held in a rabbi trust established by the Company to fund a portion of the Company’s current and future obligations under its Executive Retirement Plan, as well as their location on the Company’s condensed consolidated balance sheets as of March 31, 2011 and December 31, 2010:

		As of March 31, 2011																Fair Value Measurements at March 31, 2011
		Carrying Value and Balance Sheet Location																Assets (Liabilities)
																		Quoted Prices
																		in Active				Significant
																		Markets for				Other				Significant
		Prepaid and																Identical				Observable				Unobservable
		Other Current								Other Accrued				Other				Instruments				Inputs				Inputs
Description		Assets				Other Assets				Liabilities				liabilities				(Level 1)				(Level 2)				(Level 3)
		(In millions)
Derivatives designated as cash flow hedging instruments:
Interest rate caps		$	1.0			$	92.4			$	—			$	—			$	—			$	93.4			$	—
Foreign currency forward contracts (liability)			—				—				(0.1	)			—				—				(0.l	)			—
Total		$	1.0			$	92.4			$	(0.1	)		$	—			$	—			$	93.3			$	—
Derivatives not designated as hedging instruments:
Interest rate swaps		$	—			$	—			$	(1.7	)		$	—			$	—			$	(1.7	)		$	—
Foreign currency forward contracts (asset)			6.9				—				—				—				—				6.9				—
Foreign currency forward contracts (liability)			—				—				(6.3	)			—				—				(6.3	)			—
Total		$	6.9			$	—			$	(8.0	)		$	—			$	—			$	(1.1	)		$	—
Other investments:
Investments held in a rabbi trust		$	—			$	21.5			$	—			$	—			$	21.5			$	—			$	—
Total		$	—			$	21.5			$	—			$	—			$	21.5			$	—			$	—

		As of December 31, 2010																Fair Value Measurements at December 31, 2010
		Carrying Value and Balance Sheet Location																Assets (Liabilities)
																		Quoted Prices
																		in Active				Significant
																		Markets for				Other				Significant
		Prepaid and																Identical				Observable				Unobservable
		Other Current								Other Accrued				Other				Instruments				Inputs				Inputs
Description		Assets				Other Assets				Liabilities				liabilities				(Level 1)				(Level 2)				(Level 3)
		(In millions)
Derivatives designated as cash flow hedging instruments:
Interest rate caps		$	11.1			$	80.0			$	—			$	—			$	—			$	91.1			$	—
Foreign currency forward contracts (asset)			0.1				—				—				—				—				0.1				—
Total		$	11.2			$	80.0			$	—			$	—			$	—			$	91.2			$	—
Derivatives not designated as hedging instruments:
Interest rate swaps		$	—			$	—			$	(2.6	)		$	—			$	—			$	(2.6	)		$	—
Foreign currency forward contracts (asset)			7.8				—				—				—				—				7.8				—
Foreign currency forward contracts (liability)			—				—				(7.6	)			—				—				(7.6	)			—
Total		$	7.8			$	—			$	(10.2	)		$	—			$	—			$	(2.4	)		$	—
Other investments:
Investments held in a rabbi trust		$	—			$	22.2			$	—			$	—			$	22.2			$	—			$	—
Total		$	—			$	22.2			$	—			$	—			$	22.2			$	—			$	—

     The Company’s derivatives are valued using a discounted cash flow analysis that incorporates observable market parameters, such as interest rate yield curves and currency rates, classified as Level 2 within the valuation hierarchy. Derivative valuations incorporate credit risk adjustments that are necessary to reflect the probability of default by the counterparty or the Company.

     At March 31, 2011, the fair value of the Company’s variable rate term debt and the Senior Notes was estimated at $2,723.5 million, compared to a carrying amount of $2,662.7 million. At December 31, 2010, the fair value of the Company’s variable rate term debt and the Senior Notes was estimated at $2,731.0 million, compared to a carrying amount of $2,624.1 million. Fair value of variable rate term debt was estimated using inputs based on bid and offer prices and are Level 2 inputs within the fair value hierarchy. Fair value of the Senior Notes was estimated using quoted market prices and are Level 1 inputs within the fair value hierarchy.

     Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to periodic impairment tests. For the Company, these items primarily include long-lived assets, the Brand and other intangible assets.

Note 11. Derivative Instruments

     Disclosures about Derivative Instruments and Hedging Activities

     The Company enters into derivative instruments for risk management purposes, including derivatives designated as hedging instruments and those utilized as economic hedges. The Company uses derivatives to manage exposure to fluctuations in interest rates and currency exchange rates.

     Interest Rate Caps

     Following the Transactions, the Company entered into two deferred premium interest rate caps, one of which was denominated in U.S. dollars (notional amount of $1.5 billion) and the other denominated in Euros (notional amount of €250 million) (the “Cap Agreements”). The six year Cap Agreements are a series of 25 individual caplets that reset and settle on the same dates as the Term Loan Facility. The deferred premium associated with the Cap Agreements was $47.7 million for the U.S. dollar denominated exposure and €9.4 million for the Euro denominated exposure. In connection with the Amended Credit Agreement, the Company modified its interest rate cap denominated in Euros to reduce its notional amount by €50 million throughout the life of the caplets. Additionally, the Company entered into a new interest rate cap agreement denominated in U.S. dollars (notional amount of $90 million) with a strike price of 1.50% (the “New Cap Agreement”). The terms of the New Cap Agreement are substantially similar to those described above and the Cap Agreements were not otherwise revised by these modifications.

     Under the terms of the Cap Agreements, if LIBOR/EURIBOR resets above a strike price of 1.75% (1.50% for the New Cap Agreement), the Company will receive the net difference between the rate and the strike price. In addition, on the quarterly settlement dates, the Company will remit the deferred premium payment (plus interest) to the counterparty. If LIBOR/EURIBOR resets below the strike price no payment is made by the counterparty. However, the Company would still be responsible for the deferred premium and interest.

     The interest rate cap contracts are designated as cash flow hedges and to the extent they are effective in offsetting the variability of the variable rate interest payments, changes in the derivatives’ fair value are not included in current earnings but are included in accumulated other comprehensive income (AOCI) in the accompanying condensed consolidated balance sheets. At each cap maturity date, the portion of fair value attributable to the matured cap will be reclassified from AOCI into earnings as a component of interest expense.

     Interest Rate Swaps

     The Predecessor entered into receive-variable, pay-fixed interest rate swap contracts to hedge a portion of the Predecessor’s forecasted variable-rate interest payments on its underlying Term Loan A and Term Loan B-1 debt (the “Predecessor’s Term Debt”). Interest payments on the Predecessor’s Term Debt were made quarterly and the variable rate on the Predecessor’s Term Debt was reset at the end of each fiscal quarter. The interest rate swap contracts were designated as cash flow hedges and to the extent they were effective in offsetting the variability of the variable-rate interest payments, changes in the derivatives’ fair value were not included in current earnings but in accumulated other comprehensive income (AOCI) in the accompanying condensed consolidated balance sheets. These changes in fair value were subsequently reclassified into earnings as a component of interest expense each quarter as interest payments were made on the Predecessor’s Term Debt.

     In connection with the Transactions, interest rate swaps with a notional value of $500 million were terminated by counterparties. The remaining interest rate swaps that were not terminated by counterparties have a notional value of $75 million and remain classified as a liability on the Company’s condensed consolidated balance sheet as of March 31, 2011. Future fluctuations in the fair value of remaining interest rate swaps will be included in the determination of net income (loss) until the final contract expires in September 2011.

     Foreign Currency Forward Contracts

     The Company enters into foreign currency forward contracts, which typically have maturities between one and fifteen months, to economically hedge the remeasurement of certain foreign currency-denominated intercompany loans receivable and other foreign-currency denominated assets recorded in the Company’s condensed consolidated balance sheets. Remeasurement represents changes in the expected amount of cash flows to be received or paid upon settlement of the intercompany loan receivables and other foreign-currency denominated assets and liabilities resulting from a change in currency exchange rates. The Company also enters into foreign currency forward contracts in order to manage the foreign exchange variability in forecasted royalty cash flows due to fluctuations in exchange rates. Foreign currency forward contracts with a net notional amount of $2.1 million were outstanding at March 31, 2011 and December 31, 2010. On October 19, 2010, the Company notified certain counterparties to its foreign currency forward contracts that a termination event had occurred, giving these counterparties the right to terminate the forward contracts.

     Credit Risk

     By entering into derivative instrument contracts, the Company exposes itself, from time to time, to counterparty credit risk. Counterparty credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is in an asset position, the counterparty has a liability to the Company, which creates credit risk for the Company. The Company attempts to minimize this risk by selecting counterparties with investment grade credit ratings and regularly monitoring its market position with each counterparty.

     Credit-Risk Related Contingent Features

     The Company’s derivative instruments do not contain any credit-risk related contingent features.

     The following table presents the required quantitative disclosures for the Company’s derivative instruments:

		Successor																Predecessor
		For the Three Months Ended																For the Three Months Ended
		March 31, 2011																March 31, 2010
										Foreign												Foreign
										Currency												Currency
		Interest				Interest				Forward								Interest				Foward
		Rate Caps				Rate Swaps				Contracts				Total				Rate Swaps				Contracts				Total
		(In millions)
Derivatives designated as cash flow hedging instruments:
Gain (loss) recognized in other comprehensive income (effective portion)		$	4.2			$	—			$	(0.1	)		$	4.1			$	(4.1	)		$	0.2			$	(3.9	)
Gain (loss) reclassified from AOCI into interest expense, net (1)		$	1.0			$	—			$	0.1			$	1.1			$	(5.3	)		$	—			$	(5.3	)
Gain (loss) reclassified from AOCI into royalty income		$	—			$	—			$	—			$	—			$	—			$	(0.3	)		$	(0.3	)
Gain (loss) recognized in interest expense, net (ineffective portion) (2)		$	—			$	—			$	—			$	—			$	—			$	—			$	—
Gain (loss) recognized in royalty income, net (ineffective portion)(2)		$	—			$	—			$	—			$	—			$	—			$	—			$	—
																						$	—			$	—
Derivatives not designated as hedging instruments:
Gain (loss) recognized in other operating expense, net		$	—			$	—			$	0.2			$	0.2			$	—			$	21.7			$	21.7
Gain (loss) recognized in interest expense, net		$	—			$	1.0			$	—			$	1.0			$	—			$	—			$	—

     The net amount of pre-tax gains and losses in accumulated other comprehensive income (loss) as of March 31, 2011, that the Company expects to be reclassified into earnings within the next 12 months is $0.9 million of gains.

Note 12. Income Taxes

     The U.S. Federal tax statutory rate reconciles to the effective tax rate as follows:

		Successor					Predecessor
		Three Months Ended
		March 31,
		2011					2010
U.S. federal income tax rate			35.0	%				35.0	%
State income taxes, net of federal income tax benefit			1.1					3.0
Costs/(Benefits) and taxes related to foreign operations			(25.9	)				0.2
Foreign tax differential			(23.7	)				(2.0	)
Foreign exchange differential on tax benefits			1.3					0.7
Change in valuation allowance			13.6					0.9
Change in accrual for tax uncertainties			11.1					0.7
Other			(2.0	)				0.3
Effective income tax rate			(10.5	)%				38.8	%

     Income tax benefit was $0.8 million for the three months ended March 31, 2011, resulting in an effective tax rate of 10.5%, primarily as a result of the exclusion of the tax benefit of foreign ordinary losses not expected to be realized, the current mix of income from multiple tax jurisdictions and the resolution of state tax audits. Income tax expense was $26.0 million for the three months ended March 31, 2010, resulting in an effective tax rate of 38.8%, primarily as a result of the mix of income from multiple tax jurisdictions and currency fluctuations.

     The Company had $10.5 million and $12.2 million of unrecognized tax benefits at March 31, 2011 and December 31, 2010, respectively, which if recognized, would affect the effective income tax rate.

     In the next twelve months, it is reasonably possible that the Company’s unrecognized tax benefits will not significantly change.

     The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. The total amount of accrued interest and penalties at March 31, 2011 and December 31, 2010 was $2.8 million and $3.2 million, respectively. Potential interest and penalties associated with uncertain tax positions recognized during the three months ended March 31, 2011 and 2010 were $0.2 million and $0.1 million. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

     The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign jurisdictions. Generally, the Company is subject to routine examination by taxing authorities in these jurisdictions, including significant international tax jurisdictions, such as the United Kingdom, Germany, Spain, Switzerland, Singapore and Mexico. None of the foreign jurisdictions should be individually material. The Company also has various state and foreign income tax returns in the process of examination. From time to time, these audits result in proposed assessments where the ultimate resolution may result in the Company owing additional taxes. The Company believes that its tax positions comply with applicable tax law and that it has adequately provided for these matters.

Note 13. Retirement Plan and Other Postretirement Benefits

     The Company’s liability under its Executive Retirement Plan (the “ERP liability”) was $26.4 million and $27.0 million at March 31, 2011 and December 31, 2010, respectively. The value of investments held in a rabbi trust (the “rabbi trust”) established to fund a portion of the ERP liability was $21.5 million and $22.2 million at March 31, 2011 and December 31, 2010, respectively.

     A summary of the components of net periodic benefit cost for the Company’s pension plans (retirement benefits) is presented below:

		Successor					Predecessor
		Retirement Benefits
		Three Months Ended
		March 31,
		2011					2010
		(In millions)
Service cost-benefits earned during the period		$	0.4				$	0.9
Interest costs on projected benefit obligations			2.7					2.9
Expected return on plan assets			(2.6	)				(2.6	)
Recognized net actuarial loss			—					(0.1	)
Net periodic benefit cost		$	0.5				$	1.1

     Other benefits costs were less than $0.5 million for each of the three months ended March 31, 2011 and March 31, 2010, respectively.

Note 14. Other Operating (Income) Expense, Net

		Successor					Predecessor
		Three Months Ended
		March 31,
		2011					2010
		(In millions)
Net (gains) losses on disposal of assets, restaurant closures and refranchisings		$	0.4				$	(3.2	)
Litigation settlements and reserves, net			0.4					(0.6	)
Foreign exchange net (gains) losses			3.2					(1.9	)
Other, net			1.0					1.2
Other operating (income) expense, net		$	5.0				$	(4.5	)

Note 15. Commitments and Contingencies

     In some of the matters described below, loss contingencies are not both probable and estimable in the view of management and, accordingly, reserves have not been established for those matters. However, information is provided below or included in Note 21, “Commitments and Contingencies” to the Consolidated Financial Statements contained in Part II, Item 8 of the Company’s Transition Report on Form 10-K for the six-month period ended December 31, 2010 regarding the nature of the contingency and, where specified, the amount of the claim associated with the loss contingency.

     Litigation

     On July 30, 2008, BKC was sued by four Florida franchisees over its decision to mandate extended operating hours in the United States. The plaintiffs seek damages, declaratory relief and injunctive relief. The court dismissed the plaintiffs’ original complaint in November 2008. In December 2008, the plaintiffs filed an amended complaint. In August 2010, the court entered an order reaffirming the legal bases for dismissal of the original complaint, again holding that BKC had the authority under its franchise agreements to mandate extended operating hours. The court held a hearing on December 7, 2010 and stated that, in light of the ruling that the hours clause was unambiguous, it would grant BKC’s motion to dismiss, with prejudice, on seven of the eight claims in the amended complaint. The court denied the motion to dismiss on one claim in the amended complaint, that the hours clause was “unconscionable” under Florida law. The case will now continue through the discovery process on that remaining claim.

     On September 10, 2008, a class action lawsuit was filed against the Company in the United States District Court for the Northern District of California. The complaint alleged that all 96 Burger King restaurants in California leased by the Company and operated by franchisees violate accessibility requirements under federal and state law. In September 2009, the court issued a decision on the plaintiffs’ motion for class certification. In its decision, the court limited the class action to the 10 restaurants visited by the named plaintiffs, with a separate class of plaintiffs for each of the 10 restaurants and 10 separate trials. In March 2010, the Company agreed to settle the lawsuit with respect to the 10 restaurants and, in July 2010, the court gave final approval to the settlement. In February 2011, a class action lawsuit was filed with respect to the other 86 restaurants. The Company intends to vigorously defend against all claims in the lawsuit, but the Company is unable to predict the ultimate outcome of this litigation.

     The National Franchisee Association, Inc. (NFA) and several individual franchisees filed two class action lawsuits on November 10, 2009, and June 15, 2010, respectively, claiming to represent Burger King franchisees. The lawsuits seek a judicial declaration that the franchise agreements between BKC and its franchisees do not obligate the franchisees to comply with maximum price points set by BKC for products on the BK Value Menu sold by the franchisees, specifically the 1/4 lb. Double Cheeseburger and the Buck Double. The Family Dining plaintiffs also seek monetary damages for financial loss incurred by franchisees who were required to sell those products for no more than $1.00. In May 2010, the court entered an order in the National Franchisee Association case granting in part BKC’s motion to dismiss. The court held that BKC had the authority under its franchise agreements to set maximum prices but that, for purposes of a motion to dismiss, the NFA had asserted a “plausible” claim that BKC’s decision may not have been made in good faith. Both cases were consolidated into a single consolidated class action complaint which BKC moved to dismiss on September 22, 2010. On November 19, 2010, the court issued an order granting BKC’s motion to dismiss on all claims in the consolidated complaint with prejudice. On December 14, 2010, the plaintiffs filed a motion asking the court to reconsider its decision, and on December 17, 2010, the plaintiffs filed a notice of appeal to the U.S. Circuit Court of Appeals. On February 2, 2011, the court permitted the plaintiffs to file an amended complaint. On April 18, 2011, BKC and the NFA agreed to settle the lawsuit. The settlement does not include any financial compensation to either side.

     On September 3, 2010, four purported class action complaints were filed in the Circuit Court for the County of Miami-Dade, Florida, by purported shareholders of the Company, in connection with the tender offer and the merger. Each of the four complaints (collectively, the “Florida Actions”) names as defendants the Company, each member of the Company’s board of directors (the “Individual Defendants”) and 3G Capital. The suits generally allege that the Individual Defendants breached their fiduciary duties to the Company’s shareholders in connection with the proposed sale of the Company and that 3G Capital and the Company aided and abetted the purported breaches of fiduciary duties.

     On September 8, 2010, another putative shareholder class action suit was filed in the Delaware Court of Chancery against the Individual Defendants, the Company, 3G, 3G Capital, Blue Acquisition Holding Corporation and Blue Acquisition Sub, Inc. The complaint generally alleges that the Individual Defendants breached their fiduciary duty to maximize shareholder value by entering into the proposed transaction via an unfair process and at an unfair price, and that the merger agreement contains provisions that unreasonably dissuade potential suitors from making competing offers. On September 27, 2010, another putative shareholder class action suit was filed in the Delaware Court of Chancery against the Individual Defendants. Like the first Delaware Action, the Debardelaben complaint asserts that the Company’s directors breached their fiduciary duties in connection with the tender offer, and that the Company and 3G Capital aided and abetted that breach. This action also seeks both monetary and injunctive relief. On September 29, 2010, the Delaware court entered an order consolidating the Debardelaben and Queiroz actions (“Delaware Actions”).

     On December 30, 2010, a proposed settlement was reached with the plaintiffs in the Florida Actions and Delaware Actions. The principal terms of the proposed settlement include additional disclosures about the Merger that were provided to Burger King shareholders in the Company’s 14D-9, dismissal of the Florida and Delaware actions, mutual releases and the payment of up to $1 million in attorneys’ fees and expenses to Plaintiffs’ counsel.

     On March 16, 2011, the Florida court gave preliminary approval of the proposed settlement. The court has scheduled a hearing on June 15, 2011 to determine whether to finally approve the settlement.

     From time to time, the Company is involved in other legal proceedings arising in the ordinary course of business relating to matters including, but not limited to, disputes with franchisees, suppliers, employees and customers, as well as disputes over our intellectual property.

     At March 31, 2011 and December 31, 2010, liabilities totaling $3.5 million and $3.2 million, respectively, were included in the Company’s consolidated balance sheets to reflect the Company’s best estimate of the loss to be incurred in connection with the disposition of the matters noted above. Although it is reasonably possible that the loss will exceed this amount, the Company does not believe any such matter currently being reviewed will have a material adverse effect on its financial condition or results of operations.

Note 16. Segment Reporting

     The Company operates in the fast food hamburger restaurant category of the quick service restaurant segment of the restaurant industry. Revenues include retail sales at Company restaurants, franchise revenues, consisting of royalties based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees, and property revenues. The business is managed in three distinct geographic segments: (1) United States (“U.S.”) and Canada; (2) Europe, the Middle East and Africa and Asia Pacific (“EMEA/APAC”); and (3) Latin America.

     The following tables present revenues and income from operations by geographic segment:

		Successor					Predecessor
		Three Months Ended
		March 31,
		2011					2010
		(In millions)
Revenues:
U.S. and Canada		$	375.4				$	407.1
EMEA/APAC			147.4					163.8
Latin America			29.2					26.0
Total revenues		$	552.0				$	596.9

     Other than the U.S., no other individual country represented 10% or more of the Company’s total revenue during the three months ended March 31, 2011. Other than the U.S. and Germany, no other individual country represented 10% or more of the Company’s total revenues during the three months ended March 31, 2010. Revenues in the U.S. totaled $338.0 million and $372.0 million for the three months ended March 31, 2011 and 2010, respectively. Revenues in Germany totaled $52.5 million and $66.1 million for the three months ended March 31, 2011 and 2010, respectively.

     The unallocated amounts reflected in the table below include corporate support costs in areas such as facilities, finance, human resources, information technology, legal, marketing and supply chain management, which benefit all of the Company’s geographic segments and system wide restaurants and are not allocated specifically to any of the geographic segments.

		Successor				Predecessor
		Three Months Ended
		March 31,
		2011				2010
		(In millions)
Income from Operations:
U.S. and Canada		$	70.2			$	85.8
EMEA/APAC			18.8				16.6
Latin America			13.3				8.5
Unallocated			(39.9	)			(32.0	)
Total income from operations			62.4				78.9
Interest expense, net			50.4				11.9
Loss on early extinguishment of debt			19.6				—
Income before income taxes			(7.6	)			67.0
Income tax expense (benefit)			(0.8	)			26.0
Net income (loss)		$	(6.8	)		$	41.0

Note 17. Supplemental Financial Information

     On October 19, 2010, BKC issued the Senior Notes. The Senior Notes are irrevocably and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by the Company and the domestic subsidiaries of BKC (the “Guarantors”).

     The following is the condensed consolidating financial information for the Issuer, the Guarantors and the non-U.S. subsidiaries of BKC (the “Non-Guarantors”), together with eliminations, as of and for the periods indicated. The consolidating financial information may not necessarily be indicative of the financial position, results of operations or cash flows had BKC, Guarantors and Non-Guarantors operated as independent entities.

BURGER KING HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidating Balance Sheet
As of March 31, 2011

(In millions)
(Unaudited)

										Non-
		Issuer				Guarantors				Guarantors				Eliminations				Consolidated
Assets
Current assets:
Cash and cash equivalents		$	160.4			$	0.7			$	106.0				—			$	267.1
Trade and notes receivable, net			86.4				—				52.7				—				139.1
Prepaids and other current assets			150.8				—				22.8				—				173.6
Deferred income taxes, net			25.5				—				0.9				—				26.4
Total current assets			423.1				0.7				182.4				—				606.2
Property and equipment, net of accumulated depreciation			956.9				—				214.8				—				1,171.7
Intangible assets, net			1,816.7				—				1,160.1				—				2,976.8
Goodwill			529.0				—				—				—				529.0
Net investment in property leased to franchisees			126.6				—				11.6				—				138.2
Intercompany receivable			384.6				—				—				(384.6	)			—
Investment in subsidiaries			962.9				1,495.5				—				(2,458.4	)			—
Other assets, net			192.3				—				38.8				—				231.1
Total assets		$	5,392.1			$	1,496.2			$	1,607.7			$	(2,843.0	)		$	5,653.0
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts and drafts payable		$	40.6			$	—			$	34.6				—			$	75.2
Accrued advertising			60.3				—				30.2				—				90.5
Other accrued liabilities			196.3				—				67.3				—				263.6
Current portion of long-term debt and capital leases			28.5				—				1.9				—				30.4
Total current liabilities			325.7				—				134.0				—				459.7
Long-term debt, net of current portion			2,689.4				—				—				—				2,689.4
Capital leases, net of current portion			44.2				—				18.5				—				62.7
Other liabilities, net			182.0				—				19.2				—				201.2
Payables to affiliates			—				0.7				383.9				(384.6	)			—
Deferred income taxes, net			655.3				—				89.2				—				744.5
Total liabilities			3,896.6				0.7				644.8				(384.6	)			4,157.5
Stockholder’s equity:
Additional paid-in capital			1,562.5				1,563.5				965.7				(2,528.2	)			1,563.5
Accumulated deficit			(111.4	)			(112.4	)			(17.5	)			128.9				(112.4	)
Accumulated other comprehensive income (loss)			44.4				44.4				14.7				(59.1	)			44.4
Total stockholder’s equity			1,495.5				1,495.5				962.9				(2,458.4	)			1,495.5
Total liabilities and stockholder’s equity		$	5,392.1			$	1,496.2			$	1,607.7			$	(2,843.0	)		$	5,653.0

BURGER KING HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidating Balance Sheet
As of December 31, 2010
(In millions)

										Non-
		Issuer				Guarantors				Guarantors				Eliminations				Consolidated
Assets
Current assets:
Cash and cash equivalents		$	132.9			$	0.7			$	73.4				—			$	207.0
Trade and notes receivable, net			94.4				—				53.6				—				148.0
Prepaids and other current assets			131.5				—				27.7				—				159.2
Deferred income taxes, net			22.3				—				0.9				—				23.2
Total current assets			381.1				0.7				155.6				—				537.4
Property and equipment, net of accumulated depreciation			973.8				—				219.8				—				1,193.6
Intangible assets, net			1,817.0				—				1,114.9				—				2,931.9
Goodwill			529.9				—				—				—				529.9
Net investment in property leased to franchisees			128.4				—				11.6				—				140.0
Intercompany receivable			369.5				—				—				(369.5	)			—
Investment in subsidiaries			911.8				1,455.0				—				(2,366.8	)			—
Other assets, net			194.5				—				32.1				—				226.6
Total assets		$	5,306.0			$	1,455.7			$	1,534.0			$	(2,736.3	)		$	5,559.4
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts and drafts payable		$	58.5			$	—			$	31.7				—			$	90.2
Accrued advertising			62.6				—				19.9				—				82.5
Other accrued liabilities			166.3				0.1				83.0				—				249.4
Current portion of long-term debt and capital leases			31.0				—				1.9				—				32.9
Total current liabilities			318.4				0.1				136.5				—				455.0
Long-term debt, net of current portion			2,652.0				—				—				—				2,652.0
Capital leases, net of current portion			45.2				—				18.5				—				63.7
Other liabilities, net			191.3				0.1				16.8				—				208.2
Payables to affiliates			—				0.5				369.0				(369.5	)			—
Deferred income taxes, net			644.1				—				81.4				—				725.5
Total liabilities			3,851.0				0.7				622.2				(369.5	)			4,104.4
Stockholder’s equity:
Additional paid-in capital			1,562.5				1,563.5				965.7				(2,528.2	)			1,563.5
Accumulated deficit			(104.6	)			(105.6	)			(23.6	)			128.2				(105.6	)
Accumulated other comprehensive income (loss)			(2.9	)			(2.9	)			(30.3	)			33.2				(2.9	)
Total stockholder’s equity			1,455.0				1,455.0				911.8				(2,366.8	)			1,455.0
Total liabilities and stockholder’s equity		$	5,306.0			$	1,455.7			$	1,534.0			$	(2,736.3	)		$	5,559.4