Burger King Holdings Inc (BKC)

Worldwide Net Restaurant Expansion Continues

Earnings Per Share Increase 12 Percent Year-over-Year

MIAMI--(BUSINESS WIRE)--
Burger King Holdings Inc. (NYSE:BKC) today reported results for the
second quarter of fiscal 2010. Key highlights of the company????s second
quarter results include:

• 
  Robust development growth across all business segments as net
  restaurant count increased by 95 restaurants. International segments
  accounted for over 90 percent of the net restaurant increase compared
  to the same quarter last year;
  


• 
  Celebrated the grand opening of the brand????s 12,000^th
  restaurant, located in Beijing;
  


• 
  Worldwide comparable sales were negative 2.0 percent compared to
  positive 2.9 percent in the same period last year;
  


• 
  U.S. and Canada comparable sales were negative 3.3 percent compared to
  positive 1.9 percent in the same period last year;
  


• 
  Worldwide company restaurant margin improved 20 basis points to 13.8
  percent from 13.6 percent in the same period last year;
  


• 
  U.S. and Canada company restaurant margin improved 160 basis points to
  14.4 percent from 12.8 percent in the same period last year; and
  


• 
  Earnings per share were $0.37 compared to earnings per share of $0.33
  in the same period last year; up 12 percent.
  

In the second quarter of fiscal 2010, the company continued to face a
challenging operating and consumer environment. Quick Service Restaurant
(QSR) traffic in the U.S. fell 3.0 percent in the quarter ended November
2009¹ as a result of continued adverse macroeconomic
conditions including high unemployment levels.

????The industry and our brand continued to experience weak consumer
spending as global unemployment levels remained high,????? said Chairman and
Chief Executive Officer John W. Chidsey. ????However, we continue to
tactically respond to the current consumer need for extreme
affordability with our value promotions while remaining focused on
managing the brand for the long-term and investing in the future.

????We added 95 net new restaurants, increased worldwide company restaurant
margin and continued to invest in our infrastructure with our North
America reimaging program and advanced Point of Sales systems,????? Chidsey
added.

Revenues for the second quarter of fiscal 2010 were up 2 percent at
$645.4 million, compared to $634.1 million in the same quarter last
year. Revenues were aided by a worldwide net restaurant growth rate of
2.7 percent, among the highest in the industry, and by currency
translation, which positively impacted quarterly revenues by $22.8
million.

Second quarter worldwide comparable sales were negative 2.0 percent
compared to positive 2.9 percent in the same quarter last year.
Comparable sales were negatively impacted by a continued weak labor
market, lower discretionary spending and competitive discounting.
Worldwide traffic was positive and increased quarter-over-quarter
largely driven by the brand????s popular $1 ???? lb. Double Cheeseburger
promotion in the U.S. The promotion????s performance was in-line with the
company????s expectations, positively impacting traffic and gross profit
dollars. The company posted positive comparable sales of 0.9 percent in
its EMEA/APAC business segment lapping a strong same-store-sales
comparison of 5.0 percent in the same period last year. Leading this
performance were the U.K., Spain and the company????s major APAC markets
including Korea, Australia and New Zealand offset by negative comparable
sales in Germany and the Netherlands.

Marketing in the U.S. continued to focus on value with the six month
limited-time-offer (LTO) national launch of the $1 ???? lb. Double
Cheeseburger on October 19^th. The company augmented this
promotion during the busy holiday season with 'BK???? Dollar Holidays'
featuring 20 greeting cards containing a dollar bill for a $1 ???? lb.
Double Cheeseburger. The company also continued its product innovation
efforts adding new Funnel Cake Sticks to the menu aimed at driving
profitable breakfast and dessert sales.

Other marketing initiatives during the second quarter included a U.S.
campaign with NASCAR^???? Sprint Cup Series driver Tony Stewart,
and a multifaceted promotion with The Twilight Saga: New Moon
aimed at female SuperFans of all ages. In the U.S. and Canada, marketing
efforts also included SuperFamily promotions such as SpongeBob
SquarePants^TM, Planet 51^TM and
FurReal/Super Hero Squad, which were also leveraged across many
international markets.

EMEA/APAC focused on promoting the company????s barbell menu strategy
throughout the quarter with a combination of value and premium offerings
such as value-oriented King Deals^TM and Stunner Deals
and indulgent products such as various angus burger builds and Whopper????
sandwich LTOs. The Latin America business segment also continued to
leverage the barbell menu strategy, promoting everyday value platforms
such as the Come Como Rey^TM (Eat Like a King) and BK?????
Ofertas (King Deals),
along with affordably indulgent LTO
product offerings including the Mega Angus XT????? Furioso sandwich.

In the second quarter, the company increased its worldwide net
restaurant count by 95 and reached a significant milestone with the
grand opening of its 12,000^th restaurant located in Beijing????s
Joy City. The company also unveiled its new 20/20 restaurant design at
Schiphol Airport in Amsterdam, which features a fresh, eye-catching
sleek d????cor, and opened its first Whopper^TM Bar in
both the Asia-Pacific and Latin America regions. During the last 12
months, the company opened a total of 321 net new restaurants and is on
target to open 250 to 300 net new restaurants during fiscal 2010.

During the second quarter, the company posted worldwide company
restaurant margins of 13.8 percent, a 20 basis point improvement over
the prior year and a sequential improvement of 80 basis points from the
fiscal 2010 first quarter. Worldwide company restaurant margins
benefited from lower food, paper and product costs in the U.S. and
Canada segment. Company restaurant margin in the U.S. and Canada segment
increased 160 basis points compared to the same period last year driven
by lower commodity and other operating costs. Lower company restaurant
margin in EMEA/APAC and Latin America segments as compared to the same
period last year partially offset the improvements realized in the U.S.
and Canada. Company restaurant margins in the international business
segments were primarily negatively impacted by increased occupancy and
other operating costs.

General and administrative (G&A) expenses increased by $3.3 million
compared to the same period last year. Currency translation negatively
impacted G&A by $4.1 million, which was partially offset by reductions
in corporate expenses and bad debt recoveries. Net of currency
translation, G&A decreased 1 percent compared to the same quarter last
year.

The company reported second quarter earnings per share of $0.37,
including a $0.02 favorable impact due to currency translation, compared
to earnings per share of $0.33 in the same quarter last year.

Looking ahead

????The QSR industry is expected to face strong macroeconomic headwinds
throughout 2010, as unemployment conditions are not likely to improve,?????
Chidsey said. ????Therefore, we will continue to focus on our guests????
desire for extreme affordability with promotions such as the $1 ???? lb.
Double Cheeseburger and other value promotions we will be introducing in
the near-term. We will balance those offerings with a strong indulgent
product mix including our Steakhouse XT????? burger, which launches
nationally this month with the full implementation of our new batch
broilers across the U.S. system. And we continue to invest in the brand
with initiatives such as our advanced point-of-sales system roll-out,
which is enhancing order taking, inventory control, labor costs, cash
management and our market research with the availability of
transactional level data.

????Our development plans, including our North America reimaging program
and portfolio management strategy, are expected to remain on track,?????
Chidsey said. ????In fact, this month, we signed an agreement to acquire 35
restaurants in Singapore, which will become our second company market in
Asia Pacific and the center of development and product innovation for
the region. And we entered the Russian market with the opening of two
restaurants in January, an important step in our expansion efforts in
the EMEA region.?????

Chidsey concluded: ????The fundamentals of our True North plan remain
intact as we grow the brand, run great restaurants, invest wisely and
focus on our people including working collaboratively with our
franchisees. And while we continue to nimbly respond to the current
consumer environment, we are committed to managing the brand for the
long-term, making the right decisions to drive the business forward."

About Burger King Holdings, Inc.

The BURGER KING???? system operates more than 12,000 restaurants in all 50
states and in 73 countries and U.S. territories worldwide. Approximately
90 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. In 2008, Fortune magazine ranked
Burger King Corp. (BKC) among America's 1,000 largest corporations and
in 2010, Standard & Poor's????included shares????of Burger King Holdings,
Inc.????in the????S&P MidCap 400 index. BKC was recently recognized by
Interbrand on its top 100 ????Best Global Brands????? list and Ad Week has
named it one of the top three industry-changing advertisers within
the last three decades. To learn more about Burger King Corp., please
visit the company's Web site at www.bk.com.

Related Communication

Burger King Holdings Inc. (NYSE:BKC) will hold its second quarter
earnings call for fiscal year 2010 on Thursday, February 4, at 11 a.m.
EST following the release of its second quarter results before the stock
market opens on the same day. During the call, Chairman and Chief
Executive Officer John Chidsey; Chief Financial Officer Ben Wells;
Senior Vice President Global Business Intelligence and Strategy Mike
Kappitt; and Senior Vice President of Investor Relations and Global
Communications Amy Wagner will discuss the company's second quarter
results.

The earnings call will be webcast live via the company's investor
relations Web site at http://investor.bk.com
and available for replay for 30 days.

¹ According to The NPD Group, Inc., which prepares and
disseminates CREST???? data, QSR traffic in the U.S. declined -3% versus a
year ago in the quarter ended November 2009.

FORWARD-LOOKING STATEMENTS

Certain statements made in this report that reflect management's
expectations regarding future events and economic performance are
forward-looking in nature and, accordingly, are subject to risks and
uncertainties. These forward-looking statements include statements
regarding our ability to open an additional 250 to 300 net new
restaurants during fiscal 2010 and otherwise execute on our development
plans, including our North America reimaging program and portfolio
management strategy; our expectations regarding macroeconomic conditions
and their impact on the QSR industry in 2010; our expectations regarding
our expansion efforts in the EMEA/APAC segment, including markets such
as Singapore and Russia; our expectations regarding our ability to
nimbly respond to the current consumer environment and our guests????
desire for extreme affordability by offering promotions such as the $1 ????
lb. Double Cheeseburger and other value promotions, while remaining
focused on managing the brand for the long-term and investing in the
future; our belief and expectations regarding our ability to drive
profitable snacking and dessert sales; our expectations regarding our
ability to balance our value offerings with a strong indulgent product
mix, including our Steakhouse XT????? burger; our expectations regarding the
impact and benefits of our Point-of-Sales system; our ability to
continue to execute on the fundamentals of our True North plan of
growing the brand, running great restaurants, investing wisely and
focusing on our people, including working collaboratively with our
franchisees; our expectations regarding our ability to manage the brand
for the long-term and to make the right decisions to drive the business
forward; our expectations regarding worldwide comparable sales, our
normalized effective tax rate and capital expenditures for fiscal 2010;
our expectations regarding the completion of a pending acquisition in
Singapore during the third quarter of fiscal 2010; and other
expectations regarding our future financial and operational results.
These forward-looking statements are only predictions based on our
current expectations and projections about future events.
Important
factors could cause our actual results, level of activity, performance
or achievements to differ materially from those expressed or implied by
these forward-looking statements.

These factors include those risk factors set forth in filings with the
Securities and Exchange Commission, including our annual and quarterly
reports, and the following:

• 
  Global economic or other business conditions that may affect the
  desire or ability of our customers to purchase our products such as
  inflationary pressures, higher unemployment rates, increases in gas
  prices, declines in median income growth, consumer confidence and
  consumer discretionary spending and changes in consumer preferences,
  and the impact of negative sales and traffic on our business,
  including the risk that we will be required to incur non-cash
  impairment or other charges that reduce our earnings;
  


• 
  Risks????arising from the significant and rapid fluctuations in
  the????currency????exchange markets and the decisions and positions that we
  take to hedge such volatility;
  


• 
  Our ability to compete domestically and internationally in an
  intensely competitive industry;
  


• 
  Our ability to successfully implement our international growth
  strategy and risks related to our international operations;
  


• 
  Risks related to continued losses in our German business, including
  the potential for an impairment of our long-lived assets and a
  valuation allowance on a portion of our deferred tax asset balance,
  which would have a negative impact on our future effective income tax
  rate, operating results and financial condition;
  


• 
  Our ability and the ability of our franchisees to manage increases in
  operating costs, including health care costs if Congress passes
  employer mandated health care, if we or our franchisees choose not to
  pass, or cannot pass, these increased costs on to our guests;
  


• 
  Our relationship with, and the success of, our franchisees;
  


• 
  The effectiveness of our marketing and advertising programs and
  franchisee support of these programs;
  


• 
  Risks related to franchisee financial distress due to issues arising
  with their Burger King???? restaurants or losses from other
  businesses, which could result in, among other things, restaurant
  closures, delayed or reduced payments to us of royalties and rents and
  increased exposure to third parties, such as landlords;
  


• 
  The ability of our franchisees to refinance their business or to
  obtain new financing for development, restaurant remodels and
  equipment initiatives on acceptable terms or at all, and the strength
  of the financial institutions that have historically provided
  financing to franchisees;
  

• 
  Risks related to disruptions and catastrophic events, including
  disruption in the financial markets, war, terrorism and other
  international conflicts, public health issues such as the H1N1 flu
  pandemic, and natural disasters, and the impact of such events on our
  operating results;
  


• 
  Risks related to food safety, including foodborne illness and food
  tampering, and the safety of toys and other promotional items
  available in our restaurants;
  


• 
  Risks related to the loss of any of our major distributors,
  particularly in those international markets where we have a single
  distributor, and interruptions in the supply, or increases in the
  cost, of necessary products to us due to adverse weather and climate
  conditions or otherwise;
  


• 
  Our ability to execute on our reimaging program in the U.S. and Canada
  to increase sales and profitability and our ability to successfully
  execute our portfolio management strategy;
  


• 
  Our ability to implement our growth strategy and strategic initiatives
  given restrictions imposed by our senior credit facility;
  


• 
  Risks related to the ability of counterparties to our secured credit
  facility, interest rate swaps and foreign currency forward contracts
  to fulfill their commitments and/or obligations;
  


• 
  Risks related to interruptions or security breaches of our computer
  systems and risks related to the lack of integration of our worldwide
  technology systems;
  


• 
  Our ability to continue to extend our hours of operation, at least in
  the U.S. and Canada, to capture a larger share of both the breakfast
  and late night dayparts;
  


• 
  Changes in consumer perceptions of dietary health and food safety and
  negative publicity relating to our products;
  


• 
  Our ability to retain or replace executive officers and key members of
  management with qualified personnel;
  


• 
  Risks related to changes in the mix of earnings in countries with
  different statutory tax rates, changes in the valuation of deferred
  tax assets and liabilities and continued losses in certain
  international Company restaurant markets that could trigger a
  valuation allowance or negatively impact our ability to utilize
  foreign tax credits to offset our U.S. income taxes;
  


• 
  Risks related to the reasonableness of our tax estimates, including
  sales, excise, GST, VAT and other taxes;
  


• 
  Our ability to realize our expected tax benefits from the realignment
  of our European and Asian businesses;
  


• 
  Our ability to manage changing labor conditions in the U.S. and
  internationally;
  


• 
  Adverse legal judgments, settlements or pressure tactics; and
  


• 
  Adverse legislation or regulation.
  

These risks are not exhaustive and may not include factors which could
adversely impact our business and financial performance. Moreover, we
operate in a very competitive and rapidly changing environment. New risk
factors emerge from time to time and it is not possible for our
management to predict all risk factors, nor can we assess the impact of
all factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.

Although we believe the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, level of
activity, performance or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy or completeness of
any of these forward-looking statements. You should not rely upon
forward-looking statements as predictions of future events. We do not
undertake any responsibility to update any of these forward-looking
statements to conform our prior statements to actual results or revised
expectations.

PERFORMANCE INDICATORS AND USE OF NON-GAAP FINANCIAL MEASURES

To supplement the Company????s condensed consolidated financial statements
presented on a U.S. Generally Accepted Accounting Principles (GAAP)
basis, the Company uses three key business measures as indicators of the
Company????s operational performance: sales growth, comparable sales growth
and average restaurant sales. These measures are important indicators of
the overall direction, trends of sales and the effectiveness of the
Company????s advertising, marketing and operating initiatives and the
impact of these on the entire Burger King???? system. System-wide
data represent measures for both Company and franchise restaurants.
Unless otherwise stated, sales growth, comparable sales growth and
average restaurant sales are presented on a system-wide basis.

The Company also provides certain non-GAAP financial measures, including
EBITDA, adjusted EBITDA, adjusted income from operations, adjusted net
income, adjusted income tax expense and adjusted earnings per share.

EBITDA is defined as earnings (net income) before interest, taxes,
depreciation and amortization, and is used by management to measure
operating performance of the business. The Company also uses EBITDA as a
measure to calculate certain incentive based compensation and certain
financial covenants related to the Company's credit facility and as a
factor in the Company's tangible and intangible asset impairment test.
Management believes EBITDA is a useful measure as it reflects certain
operating drivers of the Company????s business, such as sales growth,
operating costs, selling, general and administrative expenses and other
operating income and expense.

There were no adjustments to EBITDA for the three and six months ended
December 31, 2009. Adjusted EBITDA for the three months ended December
31, 2008 excludes $0.5 million of start up expenses associated with
franchise restaurants acquired by the Company in the second quarter of
fiscal 2009. Adjusted EBITDA for the six months ended December 31, 2008
excludes $1.5 million of expenses associated with the acquisition of
franchise restaurants from a large franchisee in the U.S. and $2.0
million of start up expenses associated with acquired restaurants.

There were no adjustments to income from operations, net income, income
tax expense or earnings per share for the three and six months ended
December 31, 2009. However, adjusted income from operations and adjusted
net income for the three months ended December 31, 2008 excludes $0.5
million of start up expenses associated with franchise restaurants
acquired by the Company in the second quarter of fiscal 2009. Adjusted
income from operations and adjusted net income for the six months ended
December 31, 2008 excludes the after tax effects of $1.5 million of
expenses associated with the acquisition of franchise restaurants from a
large franchisee in the U.S. and $2.0 million of start up expenses
associated with acquired restaurants. Adjusted income tax expense for
the three and six months ended December 31, 2008 is calculated by using
the Company????s actual tax rate for all items with the exception of the
adjustments described above to which a U.S. federal and state rate of
36.5% has been applied, resulting in an adjusted effective tax rate of
37.8% and 35.9%, respectively. Adjusted earnings per share were
calculated using adjusted net income divided by weighted average shares
outstanding. Management believes that these non-GAAP financial measures
are important as they provide investors and management with additional
metrics to measure comparable Company performance against prior year
periods by excluding expenses associated with certain significant
acquisitions.

THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED THROUGHOUT
THIS RELEASE

SUPPLEMENTAL INFORMATION

The following supplemental information relates to Burger King Holdings,
Inc.????s results for the three and six months ended December 31, 2009.

Our business operates in three reportable business segments: (1) the
United States (U.S.) and Canada; (2) Europe, the Middle East, Africa and
Asia Pacific, or EMEA/APAC; and (3) Latin America.

Seasonality

Restaurant sales are typically higher in the spring and summer months
(our fourth and first fiscal quarters) when the weather is warmer than
in the fall and winter months (our second and third fiscal quarters).
Restaurant sales during the winter are typically highest in December,
during the holiday shopping season. Our restaurant sales and Company
restaurant margin are typically lowest during our third fiscal quarter,
which occurs during the winter months and includes February, the
shortest month of the year. The timing of religious holidays may also
impact restaurant sales.

Impact of Foreign Currency Translation

Our international operations are impacted by fluctuations in currency
exchange rates. In Company markets located outside of the U.S., we
generate revenues and incur expenses denominated in local currencies.
These revenues and expenses are translated using the average rates
during the period in which they are recognized, and are impacted by
changes in currency exchange rates. In many of our franchise markets,
our franchisees pay royalties to us in currencies other than the local
currency in which they operate; however, as the royalties are calculated
based on local currency sales, our revenues are still impacted by
fluctuations in currency exchange rates.

Management reviews and analyzes business results excluding the effect of
currency translation and calculates certain incentive compensation for
management and corporate-level employees based on these results
believing this better represents our underlying business trends. Results
excluding the effect of currency translation are calculated by
translating current year results at prior year average exchange rates.

The table below represents the change in selected items of or derived
from our consolidated income statement compared to the same period in
the prior year, and the impact from the movement of currency exchange
rates on these items (in millions, except per share data):

Revenues (Dollars in millions)

Revenues consist of Company restaurant revenues, franchise revenues and
property revenues.