Burger King 2010 Annual Report Download - page 56

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Table of Contents
decrease in franchise revenues of $8.5 million and a reduction in net property income of $1.6 million. The increase also reflects a
$0.3 million favorable impact from the movement of currency exchange rates in Canada.
In EMEA/APAC, income from operations increased by $1.0 million, or 1%, to $84.6 million during the fiscal year ended June 30,
2010, compared to the prior fiscal year, primarily as a result of, a $12.8 million increase in franchise revenues, a $2.3 million decrease
in selling, general and administrative expenses and an increase in net property income of $0.5 million, partially offset by a $12.7 million
decrease in Company restaurant margin and a $1.9 million decrease in other operating income, net. The decrease also reflects a
$0.8 million of favorable impact from the movement of currency exchange rates.
In Latin America, income from operations increased by $0.4 million, or 1%, to $38.2 million during the fiscal year ended June 30,
2010, compared to the prior fiscal year, primarily as a result of an increase in franchise revenues of $1.5 million partially offset by a
$0.7 million increase in selling, general and administrative expenses and $0.4 million increase in other operating expense, net due to the
reversal of a litigation reserve in fiscal 2009. The increase also reflects a $0.3 million favorable impact from the movement of currency
exchange rates.
Our unallocated corporate expenses increased by $8.9 million for the fiscal year ended June 30, 2010, compared to the prior fiscal
year, primarily as a result of a $6.6 million increase in unallocated payroll and other expenses that benefit the entire system, a
$2.4 million increase in depreciation expense for corporate assets, a $1.9 million increase in employee benefits and severance expense
and a $0.8 million increase in share−based compensation expense, partially offset by a $2.4 million reduction in incentive compensation
and a $0.4 million decrease in professional fees, primarily related to information technology initiatives.
Interest Expense, net
Interest expense, net decreased by $6.0 million for the fiscal year ended June 30, 2010, compared to the prior fiscal year, reflecting
a decrease in borrowings and rates paid on borrowings during the period. The weighted average interest rates for the fiscal years ended
June 30, 2010 and 2009 were 4.7% and 5.1% respectively, which included the effect of interest rate swaps on an average of 73% and
71% of our term debt, respectively.
Income Tax Expense
Income tax expense was $97.5 million for the fiscal year ended June 30, 2010, resulting in an effective tax rate of 34.3%,
primarily as a result of the current mix of income from multiple tax jurisdictions and currency fluctuations.
Net Income
Our net income decreased by $13.3 million, or 7%, to $186.8 million for the fiscal year ended June 30, 2010, compared to the
prior fiscal year, primarily as a result of a $12.8 million increase in income tax expense, a decrease in Company restaurant margin of
$12.3 million, a $1.5 million increase in selling, general and administrative expenses and a reduction in net property revenue of
$1.1 million. These factors were partially offset by a $6.0 million decrease in interest expense, net, an increase in franchise revenues of
$5.8 million and a $2.6 million improvement in other operating (income) expense, net.
Fiscal Year Ended June 30, 2009 compared to Fiscal Year Ended June 30, 2008
Revenues
Company Restaurant Revenues
Company restaurant revenues increased by $84.6 million, or 5%, to $1,880.5 million for the fiscal year ended June 30, 2009,
compared to the prior fiscal year. This increase was primarily due to a net increase of 69 Company restaurants (net of closures and sales
of Company restaurants to franchisees, or “refranchisings”), including the net acquisition of 36 franchise restaurants during fiscal 2009,
partially offset by $80.5 million of unfavorable impact from the significant movement of currency exchange rates.
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