Burger King 2009 Annual Report Download - page 65

Table of Contents
Contractual Obligations and Commitments
The following table presents information relating to our contractual obligations as of June 30, 2009:
Payment Due by Period
Less Than More Than
Contractual
Obligations Total 1 Year 1−3 Years 3−5 Years 5 Years
(In millions)
Capital lease obligations $ 138.1 $ 14.4 $ 28.6 $ 28.0 $ 67.1
Operating lease obligations 1,628.0 167.1 304.1 323.3 833.5
Unrecognized tax benefits 19.5 3.4 7.2 4.2 4.7
Long−term debt, including current portion and
interest(1) 917.0 101.7 813.8 0.4 1.1
Purchase commitments(2) 81.2 80.6 0.6 — —
Total $ 2,783.8 $ 367.2 $ 1,154.3 $ 355.9 $ 906.4
(1) We have estimated our interest payments based on (i) current LIBOR rates, (ii) the portion of our debt we converted to fixed rates through interest rate swaps
and (iii) the amortization schedule in our credit agreement.
(2) Includes open purchase orders, as well as commitments to purchase advertising and other marketing services from third parties in advance on behalf of the
Burger King system and obligations related to information technology and service agreements.
See Notes 15 and 17 to our audited consolidated financial statements in Part II, Item 8 of this Form 10−K for information about
unrecognized tax benefits and our leasing arrangements, respectively.
As of June 30, 2009, the projected benefit obligation of our U.S. and international defined benefit pension plans exceeded pension
assets by $77.2 million. The discount rate used in the calculation of the benefit obligation at June 30, 2009 for the U.S. Plans is derived
from a yield curve comprised of the yields of an index of 250 equally−weighted corporate bonds, rated AA or better by Moody’s, which
approximates the duration of the U.S. Plans. We made contributions totaling $25.7 million into our pension plans and estimated benefit
payments of $6.4 million out of these plans during fiscal 2009. Estimates of reasonably likely future pension contributions are
dependent on pension asset performance, future interest rates, future tax law changes, and future changes in regulatory funding
requirements.
Other Commercial Commitments and Off−Balance Sheet Arrangements
We have commitments outstanding and contingent obligations relating to our FFRP Program, guarantees and letters of credit
issued in our normal course of business, vendor relationships, litigation and our insurance programs. For information on these
commitments and contingent obligations, see Note 21 to the Consolidated Financial Statements in Part II, Item 8 of this Form 10−K.
Impact of Inflation
We believe that our results of operations are not materially impacted by moderate changes in the inflation rate. Inflation did not
have a material impact on our operations in fiscal 2009, fiscal 2008 or fiscal 2007. Severe increases in inflation, however, could affect
the global and U.S. economies and could have an adverse impact on our business, financial condition and results of operations.
Critical Accounting Policies and Estimates
This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements,
which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial
statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues,
and expenses, as well as related disclosures of contingent assets and liabilities. We evaluate our estimates on an ongoing basis and we
base our estimates on historical experience and various other assumptions we deem reasonable to the situation. These estimates and
assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from
other
63