Basis of Presentation and Consolidation

6 Months Ended

Jun. 30, 2011

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation and Consolidation

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 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 Standard 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.

     During the quarter ended June 30, 2011, the Company adjusted its preliminary estimate of the fair value of net assets acquired. The allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed remains preliminary and reflects various revised fair value estimates and analyses as of June 30, 2011, including work performed by third-party valuation specialists. The preliminary computations of consideration and the allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed as of June 30, 2011 are presented in the tables below (in millions) and remain subject to revision as valuations are finalized and the Company completes its review of the valuations.

	As of 10/19/2010
Cash paid for shares outstanding (1)	$	3,277.3
Settlement of outstanding stock-based compensation		48.1
Total consideration	$	3,325.4

Preliminary Allocation of Consideration:

	As of 10/19/2010
Current assets	$	508.1
Property and equipment		1,168.7
Intangible assets		2,929.4
Net investment in property leased to franchisees		258.4
Other assets, net		87.4
Current liabilities		(458.1	)
Term debt		(667.4	)
Capital leases		(99.9	)
Other liabilities		(390.6	)
Deferred income taxes, net		(645.0	)
Net assets acquired	$	2,691.0
Excess purchase price attributed to goodwill	$	634.4

(1) Represents cash paid, based on a $24.00 per share price, for 136,555,642 outstanding shares.

     The adjustment to the Company’s preliminary estimate of net assets acquired resulted in a corresponding $104.1 million increase in estimated goodwill due to the following changes to preliminary estimates of fair values and allocation of purchase price (in millions):

	Increase (Decrease) in
	Goodwill
Change in:
Property and equipment	$	31.3
Intangible assets		53.1
Net investment in property leased to franchisees		(118.1	)
Other assets, net		(0.2	)
Current liabilities		(2.1	)
Capital lease obligation		35.5
Deferred income taxes, net		(71.7	)
Other, net		176.3
Total increase in goodwill	$	104.1

     All purchase price allocation adjustments have been reflected on a retrospective basis as of the Merger Date. Additionally, the Company’s results of operations were retrospectively adjusted to reflect the effects of these revisions to the Company’s preliminary purchase price allocation.

     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 our “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.