Burger King 2009 Annual Report Download - page 100
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Table of Contents
BURGER KING HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
The U.S. Federal tax statutory rate reconciles to the effective tax rate as follows:
Years Ended June 30,
2009 2008 2007
U.S. Federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal income tax benefit 2.8 2.6 2.1
Costs/(Benefits) and taxes related to foreign operations (4.7) 7.4 (1.5)
Foreign tax rate differential (4.9) (5.3) (2.0)
Foreign exchange differential on tax benefits 0.7 (0.6) (0.5)
Change in valuation allowance 1.1 (3.1) 3.1
Change in accrual for tax uncertainties (1.3) (0.1) (2.0)
Other 1.0 (0.6) 0.5
Effective income tax rate 29.7% 35.3% 34.7%
The Company’s effective tax rate was 29.7% for the fiscal year ended June 30, 2009, primarily as a result of the resolution of
federal and state audits and tax benefits realized from the dissolution of dormant foreign entities.
Income tax expense includes an increase in valuation allowance related to deferred tax assets in foreign countries of $3.0 million
for the year ended June 30, 2009, a decrease of $7.1 million for the year ended June 30, 2008 and an increase of $5.0 million for the
year ended June 30, 2007. The increase in valuation allowance for the year ended June 30, 2009 is a result of operating losses in certain
foreign jurisdictions.
The following table provides the amount of income tax expense (benefit) allocated to continuing operations and amounts
separately allocated to other items (in millions):
Years Ended June 30,
2009 2008 2007
Income tax expense from continuing operations $ 84.7 $ 103.4 $ 78.7
Interest rate swaps in accumulated
other comprehensive income (loss) (11.0) (5.0) (4.9)
Pension liability in accumulated
other comprehensive income (loss) (9.4) (4.5) 3.7
Adjustments to deferred income taxes related to Brand (0.2) (2.4) —
Adjustments to the valuation allowance
related to Brand (0.3) (6.5) (2.5)
Stock option tax benefit in additional paid−in capital (3.3) (9.3) (13.5)
$ 60.5 $ 75.7 $ 61.5
97