Burger King Holdings, Inc. Reports First Quarter Fiscal 2009 Results

Positive Comparable Sales and Net Restaurant Expansion Drive Strong Revenue Performance

Confirms Full-Year EPS Growth Forecast of 12 to 15 percent

MIAMI--(BUSINESS WIRE)--Oct. 31, 2008--Burger King Holdings, Inc. (NYSE:BKC):


Highlights:

-- Revenues up 12 percent to $674 million

-- 19th consecutive quarter of worldwide positive comparable
sales; 3.6 percent

-- 18th consecutive quarter of United States and Canada positive
comparable sales; 3.0 percent

-- Trailing 12-month (TTM) average restaurant sales (ARS) up 8
percent, to $1.32 million - a new record high

-- TTM net restaurant count increases by 342 - on target to meet
annual guidance

-- EPS and adjusted EPS results as outlined below:

Three Months Ended
September 30,
2008 2007 % change
-------------------------------------------------------
EPS $0.36 $0.35 3%
Adjustments(1) $0.02 $- NM
Adjusted EPS $0.38 $0.35 9%

Burger King Holdings, Inc. delivered robust revenue growth led by an increased number of company restaurants, positive worldwide comparable sales in all segments and significant worldwide net restaurant expansion.

Comparable sales were up 3.6 percent, marking the 19th consecutive quarter of worldwide same-store-sales growth. In the United States and Canada, comparable sales were up 3.0 percent, the 18th consecutive quarter of same-store-sales growth. Additionally, the system opened 67 net new restaurants, the highest number of first quarter net restaurant openings in seven years.

As a result, the company posted strong revenues for the first quarter of $674 million, up 12 percent from $602 million in the same quarter last year.

"The global strength of our business is evidenced by our solid top-line expansion," said John Chidsey, chairman and chief executive officer. "We delivered strong revenues even with mounting economic and consumer uncertainties by successfully executing on our multiple growth strategies, including net restaurant growth, product innovation, marketing leadership, longer competitive hours and operational excellence."

Comparable sales worldwide were fueled primarily by the implementation of strategic pricing as well as a strong mix of high demand indulgent and value product offerings and promotional tie-ins. Results were also aided by regionally based offerings such as the successful introduction of an innovative and healthy kids meal, which includes BK(TM) Fresh Apple Fries and nutritionally fortified Kraft(R) Macaroni and Cheese in the U.S. and Whopper(R) sandwich limited time offers in both Europe and Latin America. Also contributing to sales were family promotions used throughout many markets including Pokemon(TM), Crayola(TM) and Neopets(R).

"We significantly expanded our revenue as we leveraged our global footprint and broad-based consumer appeal. Our guests continue to seek our affordable pricing, elevated quality and convenience. We believe our brand is positioned to perform well in spite of the current economic slowdown as proven by our track record of continued sales increases," Chidsey added.

Worldwide trailing 12-month ARS reached a record high - posting an 8 percent increase to $1.32 million compared to $1.22 million in the same period last year. Worldwide first quarter fiscal 2009 ARS increased 5 percent to $343,000 compared to $327,000 in the same quarter last year.

"We are very pleased with our top-line performance; however, we recognize company restaurant margins were significantly pressured by record high commodity costs, expenses related to our U.S. and Canada reimaging program and acquisition start-up costs," Chidsey said.

The company's earnings were also impacted by an incremental $9 million of expenses recorded in Other Income and Expense as compared to the same period last year. Five million (equaling $0.02 of EPS) of the increase consisted of primarily non-cash expenses resulting from volatility in foreign currencies and interest rate markets.

Chidsey continued: "Going forward, we expect earnings will benefit from already moderating food and energy costs, expected sales lifts from the newly reimaged company restaurants and the elimination of acquisition expenses."

For the quarter, the company reported earnings per share of $0.36 compared to $0.35 in the same quarter last year. Adjusted earnings per share, excluding $3 million of adjustments, increased 9% percent to $0.38 compared to $0.35 in the year ago period. These adjustments consisted of expenses related to the previously announced acquisition of 72 franchise restaurants, specifically settlement charges and start-up costs.

Development

In the first quarter, the company increased its worldwide net restaurant count by 67, led by its international markets in Europe and the Middle East. During the last 12 months, the company opened a total of 342 net new restaurants.

"The momentum of our global development pipeline is confirmed by our solid quarterly and trailing 12-month net restaurant growth," Chidsey said. "Given our strong development activity and our first quarter net restaurant growth, we expect to achieve our planned 350 to 400 net new restaurants in fiscal 2009 as we expand our brand in North America and around the world."

Uses of Cash

During the first quarter, the company generated $52 million of cash flow from operations, which was used for key strategic purposes targeted at enhancing shareholder value. The company declared and paid a cash dividend totaling $8 million and opportunistically repurchased $18 million of its shares. The company also invested $4 million on its U.S. and Canada reimaging program which is expected to generate attractive returns.

"Even amidst the current economic slowdown, our ability to generate solid cash flow is a fundamental benefit of our highly franchised business model," said Ben Wells, chief financial officer. "And our strong balance sheet uniquely positions us to invest in the brand, driving future growth."

Future growth

The product and promotional calendar for the second quarter is structured to continue the company's multi-year positive comparable sales trend. Scheduled marketing initiatives include a soon-to-be announced interactive gaming promotion. Other campaigns slated to increase SuperFamily sales include iDog(TM) and The Simpsons(TM). In addition, the company will strategically focus on expanding the breakfast and late-night dayparts with competitive hours advertising and will continue to build upon its successful barbell menu strategy.

Chidsey concluded: "Our business fundamentals remain strong and we believe that our brand is well positioned to drive future profitability as we continue to execute on our proven strategies: expanding our global footprint; accelerating our company restaurant reimaging program; providing our guests with an exceptional dining experience; and maintaining our industry-leading marketing. Our strategies remain on course; therefore, we are reaffirming our full-year EPS forecast of $1.54 to $1.59 for 12 to 15 percent EPS growth based on our outlook for continued positive comparable sales, significant restaurant development and increased income from operations."

About Burger King Holdings, Inc.

The BURGER KING(R) system operates more than 11,600 restaurants in all 50 states and in 73 countries and U.S. territories worldwide. Approximately 90 percent of BURGER KING(R) 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. among America's 1,000 largest corporations. 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 first quarter earnings call for fiscal year 2009 on Friday, Oct. 31, at 10 a.m. (Eastern time) following the release of its first 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, President, Global Marketing, Strategy, and Innovation Russ Klein and Senior Vice President of Investor Relations and Global Communications Amy Wagner will discuss the company's first quarter results.

This call is being Web cast and may be accessed via the company's Web site at www.bk.com through the Investor Relations link.

U.S. participants may also access the earnings call by dialing (888) 679-8035; participants outside the United States may access the call by dialing (617) 213-4848. The participant passcode is 29706352. The call will be available for replay under the company's Web site at www.bk.com through the Investor Relations link for a period of 30 days.

Participants may also pre-register for the conference call at https://www.theconferencingservice.com/prereg/key.process?key=P4GA4MN7 9 (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists).

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 expectations regarding the strength and momentum of our worldwide business: our expectations regarding worldwide net restaurant growth, our global development pipeline and our ability to execute on our development strategy; our beliefs regarding our guests' expectations; our expectations regarding the ability of the Burger King(R) brand to perform well and generate continued sales increases and solid cash flow in spite of the current economic slowdown; our expectations that our earnings will benefit from moderating food and energy costs, expected sales lifts from newly reimaged Company restaurants and the elimination of acquisition expenses; our expectations regarding our ability to use our balance sheet to drive future growth; our expectations regarding the success of our promotional calendar for the second quarter of fiscal 2009; our expectations regarding the ability of our reimaging program to increase sales and generate attractive returns; our ability to continue to capture a larger market of the breakfast and late night dayparts and continue to build upon our barbell menu strategy; our beliefs and expectations regarding fiscal 2009; our ability to execute on our strategic initiatives to drive future profitability and deliver our earnings per share guidance and net new restaurant forecast for fiscal 2009; 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:

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

-- Our ability to successfully implement our international growth
strategy;

-- Our ability to manage increases in our operating costs,
including costs of food and paper products, rent expense,
energy costs and labor costs, which can adversely affect our
operating margins and financial results, particularly in an
environment of declining sales or challenging macroeconomic
conditions, if we choose not to pass, or cannot pass, these
increased costs to our guests;

-- Risks related to our international operations;

-- 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;

-- Our continued good relationship with, and the success of, our
franchisees;

-- The ability of our franchisees to obtain financing for new
development, restaurant remodels and equipment initiatives on
acceptable terms or at all given the current turmoil in the
global credit markets;

-- Our continued ability, and the ability of our franchisees, to
obtain suitable locations for new restaurant development;

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

-- Risks related to franchisee financial distress 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;

-- Risks related to the renewal of franchise agreements by our
franchisees;

-- The ability of franchisees who are experiencing losses from
their other businesses to continue to make payments to us and
invest in our brand;

-- Risks related to food safety, including foodborne illness and
food tampering;

-- 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 of
necessary products to us;

-- Our ability to execute on our reimaging program in the U.S.
and Canada to increase sales and profitability, and the short
term impact of our reimaging program on revenues and operating
margins due to temporary restaurant closures and accelerated
depreciation of assets;

-- Our ability to identify and consummate successfully
acquisition and development opportunities in new and existing
markets;

-- Our ability to refinance or modify our bank debt or obtain
additional financing to fund our future cash needs given the
current lending environment;

-- Risks related to the impact of the global financial and credit
crisis on the restaurant industry in general and on our
business and results of operations;

-- 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 due to disruptions in the global credit markets,
including the bankruptcy or restructuring of certain financial
institutions;

-- Fluctuations in currency exchange and interest rates, and
their impact on both pretax income and the income tax
provision, and our ability to successfully manage the impact
of volatility in foreign currencies and interest rate markets;

-- 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 operations, at
least in the U.S. and Canada, to capture a larger market 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;

-- Our ability to utilize foreign tax credits to offset our U.S.
income taxes due to continuing losses in the U.K. and other
factors and risks related to the impact of changes in
statutory tax rates in foreign jurisdictions on our deferred
taxes and effective tax rate;

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

-- Changes in demographic patterns of current restaurant
locations;

-- Our ability to adequately protect our intellectual property;

-- Risks related to market conditions, including the market price
and trading volume of our common stock, that would affect the
volume of purchases, if any, made under our Share Repurchase
Program;

-- Our ability to manage changing labor conditions and
difficulties in staffing our international operations;

-- Risks related to disruptions and catastrophic events,
including disruption in the financial markets, war, terrorism
and other international conflicts, public health issues and
natural disasters;

-- 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.

Burger King Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Dollars and shares in millions, except for per share data)

Increase /
(Decrease)
------------
Three Months Ended September 30, 2008 2007 $ %
------- ------- ------ -----
Revenues:
Company restaurant revenues $ 497 $ 441 $ 56 13%
Franchise revenues 146 131 15 11%
Property revenues 31 30 1 3%
------- ------- ------
Total revenues 674 602 72 12%

Company restaurant expenses 435 373 62 17%
Selling, general and administrative
expenses 125 119 6 5%
Property expenses 15 14 1 7%
Other operating (income) expense, net 9 - 9 NM
------- ------- ------
Total operating costs and expenses 584 506 78 15%
------- ------- ------
Income from operations 90 96 (6) (6)%

Interest expense 15 18 (3) (17)%
Interest income (1) (2) 1 (50)%
------- ------- ------
Interest expense, net 14 16 (2) (13)%
------- ------- ------
Income before income taxes 76 80 (4) (5)%
Income tax expense 26 31 (5) (16)%
------- ------- ------
Net income $ 50 $ 49 $ 1 2%
======= ======= ======

Earnings per share - basic (1) $ 0.37 $ 0.36 $0.01 3%
Earnings per share - diluted (1) $ 0.36 $ 0.35 $0.01 3%

Weighted average shares - basic 135.0 135.2
Weighted average shares - diluted 137.3 137.7

(1) Calculated using whole dollars and
shares.
NM - Not meaningful

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(R) 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 net income 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. 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. EBITDA is also one of the measures used by the Company to calculate incentive compensation for management and corporate-level employees.

Adjusted EBITDA for the three months ended September 30, 2008 excludes $2 million of charges associated with the acquisition of franchise restaurants from a large franchisee in the U.S. and $1 million of start up charges associated with acquired restaurants. There were no adjustments to EBITDA for the three months ended September 30, 2007.

While EBITDA and adjusted EBITDA are not recognized measures under GAAP, management uses these financial measures to evaluate and forecast the Company's business performance. These non-GAAP financial measures have certain material limitations, including:

-- they do not include net interest expense. As the Company has
borrowed money for general corporate purposes, interest
expense is a necessary element of its costs and ability to
generate profits and cash flows;

-- they do not include depreciation and amortization expenses. As
the Company uses capital assets, depreciation and amortization
are necessary elements of its costs and ability to generate
profits; and

-- they do not include provision for taxes. The payment of taxes
is a necessary element of the Company's operations.

Management compensates for these limitations by using EBITDA and adjusted EBITDA as only two of several measures for evaluating the Company's business performance. In addition, capital expenditures, which impact depreciation and amortization, interest expense and income tax expense, are reviewed separately by management. Management believes these non-GAAP measures provide both management and investors with a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of the Company's financial performance and prospects for the future. EBITDA and adjusted EBITDA are not intended to be measures of liquidity or cash flows from operations or measures comparable to net income as they do not take into account certain requirements such as capital expenditures and related depreciation, principal and interest payments and tax payments.

Adjusted net income for the three months ended September 30, 2008 excludes the after tax effects of $2 million of charges associated with the acquisition of franchise restaurants from a large franchisee in the U.S. and $1 million of start up charges associated with acquired restaurants. Adjusted income tax expense for the three months ended September 30, 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 34.2%. Adjusted earnings per share is calculated using adjusted net income divided by weighted average shares outstanding. These non-GAAP measures allow management to measure performance on a more comparable basis. There were no adjustments to net income or earnings per share for the three months ended September 30, 2007.

Non-GAAP Reconciliations
(In millions except per share data)

Reconciliations for EBITDA, adjusted EBITDA, adjusted net income and
adjusted earnings per share are as follows:

Three Months Ended
September 30,
2008 2007
----------- ---------
EBITDA and adjusted EBITDA

Net income $ 50 $ 49
Interest expense, net 14 16
Income tax expense 26 31
Depreciation and amortization 26 21
----------- ---------
EBITDA 116 117
Adjustments:
Restaurant acquisition charges 2 -
Acquisition start up charges 1 -
----------- ---------
Total adjustments 3 -
----------- ---------
Adjusted EBITDA $ 119 $ 117
=========== =========



Three Months Ended
September 30,
2008 2007
----------- ---------
Adjusted net income
Net Income $ 50 $ 49
Income tax expense 26 31
----------- ---------
Income before income taxes 76 80
Adjustments:
Restaurant acquisition charges 2 -
Acquisition start up charges 1 -
---------- --------
Total Adjustments 3 -

Adjusted Income before income taxes 79 80
----------- ---------

Adjusted income tax expense (1) 27 31

----------- ---------
Adjusted net income $ 52 $ 49
=========== =========

Weighted average shares outstanding -
diluted 137.3 137.7

Earnings per share- diluted (2) $ 0.36 $ 0.35
Adjusted earnings per share- diluted (2)
(3) $ 0.38 $ 0.35

(1) Adjusted income tax expense for the three months ended September
30, 2008 is calculated by using the Company's actual tax rate for
all items with the exception of the adjustments listed above to
which a U.S. federal and state tax rate of 36.5% has been
applied.
(2) Diluted earnings per share is calculated using whole dollars and
diluted weighted average shares outstanding.
(3) Adjusted diluted earnings per share is calculated using adjusted
net income divided by diluted weighted average shares
outstanding.

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

Comparable sales growth Refers to the change in restaurant sales
in one period from the comparable prior
year period for restaurants that have
been open for thirteen months or
longer, excluding the impact of
currency translation.

Sales growth Refers to the change in restaurant sales
from one period to another, excluding
the impact of currency translation.

Constant Currencies Excludes impact of changes in currency
exchange rates.

Actual Currencies Includes impact of changes in currency
exchange rates.

Average restaurant sales Refers to average restaurant sales for
the defined period. It is calculated as
the total sales averaged over total
store months for all restaurants open
during that period.

Worldwide Refers to measures for all geographic
locations on a combined basis.

System or system-wide Refers to measures with Company and
franchise restaurants combined. Unless
otherwise stated, sales growth,
comparable sales growth and average
restaurant sales are presented on a
system-wide basis.

Franchise sales Refers to sales at all franchise
restaurants. Although the Company does
not record franchise sales as
revenues, royalty revenues are based
on a percentage of sales from
franchise restaurants and are reported
as franchise revenues by the Company.

Company restaurant revenues Consists of sales at Company
restaurants.

Franchise revenues Consists primarily of royalties earned
on franchise sales and franchise fees.
Royalties earned are based on a
percentage of franchise sales.

Property revenues Includes property income from real
estate that the Company leases or
subleases to franchisees.

Company restaurant expenses Consists of all costs necessary to
manage and operate Company restaurants
including (a) food, paper and product
costs, (b) payroll and employee
benefits, and (c) occupancy and other
operating expenses, which include rent,
utility costs, insurance, repair and
maintenance costs, depreciation for
restaurant property and other operating
costs.

Company restaurant margin Represents Company restaurant revenues
less Company restaurant expenses.
Company restaurant margin is calculated
using dollars expressed in hundreds of
thousands.

Property expenses Includes rent and depreciation expense
related to properties leased or
subleased by the Company to franchisees
and the cost of building and equipment
leased by the Company to franchisees.

Selling, general and Comprised of advertising and promotional
administrative expenses expenses and general and administrative
(SG&A) expenses, such as costs of field
management for Company and franchise
restaurants and corporate overhead,
including corporate salaries and
facilities.

Other operating (income) Includes income and expenses that are
expense, net not directly derived from the Company's
primary business such as gains and
losses on asset and business disposals,
write-offs associated with Company
restaurant closures, impairment
charges, charges recorded in connection
with acquisitions of franchise
operations, gains and losses on
currency transactions, gain and losses
on foreign currency forward contracts
and other miscellaneous items.

SUPPLEMENTAL INFORMATION
The following supplemental information relates to Burger King Holdings, Inc.'s results for the three months ended September 30, 2008.

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.

Revenues (Dollars in millions)

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

Three Months Ended
September 30,
--------------------

% Increase
2008 2007 (Decrease)
---- ---- ----------
Company restaurant revenues:
U.S. & Canada $340 $290 17%
EMEA/APAC 138 135 2%
Latin America 19 16 19%
---- ----
Total Company restaurant revenues 497 441 13%
---- ----
Franchise revenues:
U.S. & Canada 84 79 6%
EMEA/APAC 49 41 20%
Latin America 13 11 18%
---- ----
Total franchise revenues 146 131 11%
---- ----
Property revenues:
U.S. & Canada 23 23 0%
EMEA/APAC 8 7 14%
Latin America - - NA
---- ----
Total property revenues 31 30 3%
---- ----
Total revenues:
U.S. & Canada 447 392 14%
EMEA/APAC 195 183 7%
Latin America 32 27 19%
---- ----
Total revenues $674 $602 12%
==== ====

NA - Not applicable

Total Revenues

Total revenues increased by $72 million, or 12%, to $674 million for the three months ended September 30, 2008, primarily as a result of increases in both Company restaurant revenues and franchise revenues. Company restaurant revenues increased by $56 million, or 13%, to $497 million during the three months ended September 30, 2008 compared to the same period in the prior year, primarily as a result of the addition of 145 Company restaurants (net of closures and sales of Company restaurants to franchisees, or "refranchisings") during the twelve months ended September 30, 2008 and worldwide Company comparable sales growth of 1.9%. The net increase of 145 Company restaurants includes the net acquisition of 130 franchise restaurants, primarily in the U.S. and Canada. Revenues from the acquired restaurants totaled $42 million for the period. Approximately $9 million, or 16%, of the increase in Company restaurant revenues was generated by the favorable impact from the movement of currency exchange rates, primarily in EMEA.

Total franchise revenues increased by $15 million, or 11%, to $146 million during the three months ended September 30, 2008, compared to the same period in the prior year, driven by a net addition of 197 franchise restaurants during the twelve months ended September 30, 2008, worldwide franchise comparable sales growth of 3.9% for the period, higher effective royalty rates in the U.S. and approximately a $3 million favorable impact from the movement of currency exchange rates, primarily in EMEA. This increase was partially offset by a reduction in royalty payments due to the Company's net acquisition of 130 franchise restaurants during the twelve months ended September 30, 2008.

Positive comparable sales of 3.6% for the period were driven by our strategic pricing initiatives, our barbell menu strategy of innovative indulgent products and value menu items, and the continued development of our breakfast and late night dayparts.

For the three months ended September 30, 2008, the favorable impact on revenues from the movement of currency exchange rates was substantially offset by the unfavorable impact of exchange rates on Company restaurant expenses and selling, general and administrative expenses, resulting in a net favorable impact on income from operations of $2 million.

U.S. and Canada

In the U.S. and Canada, Company restaurant revenues increased by $50 million, or 17%, to $340 million during the three months ended September 30, 2008 compared to the same period in the prior year, primarily as a result of a net increase of 155 Company restaurants during the twelve months ended September 30, 2008, including the net acquisition of 141 franchise restaurants, and Company comparable sales growth of 1.3% for the period in this segment. Revenues from the acquired restaurants totaled $42 million for the period.

In the U.S. and Canada, franchise revenues increased by $5 million, or 6%, to $84 million during the three months ended September 30, 2008, compared to the same period in the prior year, primarily as a result of franchise comparable sales growth of 3.2% in this segment and higher effective royalty rates in the U.S. This increase was partially offset by the elimination of royalties from 129 fewer franchise restaurants compared to the same period in the prior year due to the net acquisition of 141 franchise restaurants by the Company, offset by the net opening of 12 new franchise restaurants during the twelve months ended September 30, 2008.

Positive comparable sales in the U.S. and Canada of 3.0% for the period were driven primarily by our strategic pricing initiatives as well as successful product promotions, such as the Steakhouse Burger in the U.S., the introduction of the new BK(TM) Kids Meal (including Kraft(R) Macaroni and Cheese and BK(TM) Fresh Apple Fries) and the Spicy Chicken BK Wrapper(TM) offering on the BK(R) Value Menu. Promotional tie-ins with marketing properties, such as Pokemon(TM), Neopets(R) and Crayola(TM), also positively impacted comparable sales.

EMEA/APAC

In EMEA/APAC, Company restaurant revenues increased by $3 million, or 2%, to $138 million during the three months ended September 30, 2008, compared to the same period in the prior year, primarily as a result of Company comparable sales growth of 3.4% for the period in this segment and an $8 million favorable impact from the movement of currency exchange rates in EMEA. Partially offsetting these factors was a decrease in revenues from a net reduction of 18 Company restaurants during the twelve months ended September 30, 2008, due to the refranchising of 11 Company restaurants in Germany and the net closure of 7 Company restaurants in the U.K.

In EMEA/APAC, franchise revenues increased by $8 million, or 20%, to $49 million during the three months ended September 30, 2008, compared to the same period in the prior year, driven by a net increase of 232 franchise restaurants during the twelve months ended September 30, 2008, franchise comparable sales growth of 5.0% for the period in this segment and a $3 million favorable impact from the movement of currency exchange rates.

Positive comparable sales in the EMEA/APAC segment of 4.8% for the period were driven primarily by our strategic pricing initiatives as well as successful product promotions, such as Whopper(R) sandwich limited time offers throughout the region, BK Fusion(TM) Real Ice Cream and the Long Chicken sandwich limited time offer in Spain.

Latin America

In Latin America, Company restaurant revenues increased by $3 million, or 19%, to $19 million during the three months ended September 30, 2008, compared to the same period in the prior year, primarily as a result of a net increase of eight Company restaurants during the twelve months ended September 30, 2008, Company comparable sales growth of 2.3% for the period in this segment and a $1 million favorable impact from the movement of currency exchange rates.

Latin America franchise revenues increased by $2 million, or 18%, to $13 million during the three months ended September 30, 2008 compared to the same period in the prior year, as a result of the net addition of 94 franchise restaurants during the twelve months ended September 30, 2008 and franchise comparable sales growth of 5.4% for the period in this segment.

Positive comparable sales in this segment of 5.2% for the period reflect continued strength in Central and South America, as well as our Caribbean markets. This was driven by our barbell menu strategy featuring an everyday value platform such as our new 'Come Como Rey' (Eat Like A King) value menu in Mexico, plus indulgent products, such as our new Steakhouse burger rolled out in Central America and the Caribbean. Successful promotional tie-ins with movie properties, such as Indiana Jones(TM) and the Kingdom of the Crystal Skull(TM) with our Adventure Whopper(R) sandwich, and Batman(TM) the Dark Knight with our Hero BK Stacker(TM) combo meal also positively impacted comparable sales.

Additional information regarding the key performance measures discussed above is as follows:

Key Revenue Performance Measures

As of September 30,
------------------------

Increase/
2008 2007 (Decrease)
------ ------ ----------
Number of Company restaurants:
U.S. & Canada 1,056 901 155
EMEA/APAC 293 311 (18)
Latin America 85 77 8
------ ------ ----------
Total 1,434 1,289 145
====== ====== ==========

Number of franchise restaurants:
U.S. & Canada 6,452 6,581 (129)
EMEA/APAC 2,813 2,581 232
Latin America 933 839 94
------ ------ ----------
Total 10,198 10,001 197
====== ====== ==========

Number of system restaurants:
U.S. & Canada 7,508 7,482 26
EMEA/APAC 3,106 2,892 214
Latin America 1,018 916 102
------ ------ ----------
Total 11,632 11,290 342
====== ====== ==========


Three Months Ended
September 30,
------------------
2008 2007
----------- ------
(In Constant
Currencies)
Company Comparable Sales Growth:
U.S. & Canada 1.3 % 3.6 %
EMEA / APAC 3.4 % 2.5 %
Latin America 2.3 % (0.6)%
Total Company Comparable Sales Growth 1.9 % 3.1 %

Franchise Comparable Sales Growth:
U.S. & Canada 3.2 % 7.0 %
EMEA / APAC 5.0 % 4.9 %
Latin America 5.4 % 4.2 %
Total Franchise Comparable Sales Growth 3.9 % 6.3 %

System Comparable Sales Growth:
U.S. & Canada 3.0 % 6.6 %
EMEA/APAC 4.8 % 4.6 %
Latin America 5.2 % 3.8 %
Total System Comparable Sales Growth 3.6 % 5.9 %

Sales Growth:
U.S. & Canada 3.7 % 6.7 %
EMEA/APAC 10.7 % 11.6 %
Latin America 16.3 % 14.4 %
Total worldwide sales growth 6.5 % 8.5 %

(In Actual
Currencies)
Worldwide average restaurant sales (In thousands) $343 $327

The following table represents sales at franchise restaurants. Although the Company does not record franchise sales as revenues, royalty revenues are based on a percentage of franchise sales and are reported as franchise revenues by the Company.

Three Months Ended
September 30,
-------------------------
% Increase/
2008 2007 (Decrease)
------ ------ -----------
Franchise sales: (Dollars in millions)
U.S. & Canada $2,120 $2,083 2 %
EMEA/APAC 1,082 921 17 %
Latin America 260 222 17 %
------ ------
Total worldwide $3,462 $3,226 7 %
====== ======

Company Restaurant Margin (Dollars in millions)

Percent of
Revenues (1) Amount
------------- ---------
Three Months Ended September 30, 2008 2007 2008 2007
------ ------ ---- ----
Company restaurants:
U.S. & Canada 12.1 % 15.3 % $41 $44
EMEA/APAC 12.9 % 14.4 % 17 20
Latin America 18.8 % 23.8 % 4 4
---- ----
Total 12.6 % 15.3 % $62 $68
==== ====

(1) Calculated using dollars expressed in hundreds of
thousands.


Three
Months
Ended
September
30,
-----------
Company restaurant expenses as a percentage of revenues:
(1) 2008 2007
----- -----
Food, paper and product costs 32.6% 31.1%
Payroll and employee benefits 30.3% 29.7%
Occupancy and other operating costs 24.5% 23.9%
----- -----

Total Company restaurant expenses 87.4% 84.7%
===== =====

(1) Calculated using dollars expressed in the hundreds of
thousands.

Total Company Restaurant Margin

Total Company restaurant margin dollars decreased by $6 million, or 7%, to $62 million for the three months ended September 30, 2008, compared to the same period in the prior year. This decrease primarily reflects the impact of significant increases in commodity costs, accelerated depreciation expense and lost net revenues due to temporary restaurant closures associated with the Company's reimaging program in the U.S. and Canada, a $1 million decrease from the refranchising of 11 high margin Company restaurants in EMEA in the prior year, as well as increased labor costs in EMEA. This decrease was partially offset by $6 million of incremental margin dollars derived from the net acquisition of 141 Company restaurants in the U.S. and Canada during the twelve months ended September 30, 2008 and worldwide Company comparable sales growth of 1.9%. The movement of currency exchange rates also had a $1 million favorable impact on Company restaurant margin, primarily in EMEA.

As a percentage of revenues, Company restaurant margin decreased by 2.7 percentage points for the three month period, reflecting increased commodity costs, costs associated with our restaurant reimaging program in the U.S. and Canada and increased labor costs in EMEA. This decrease was partially offset by the benefits realized from the closure and refranchising of under-performing Company restaurants in the U.K. in the prior year and positive worldwide Company comparable sales.

Commodity costs have increased significantly across all segments, with the cost of many of our core commodities reaching historical highs during the first quarter of fiscal 2009. However, since the end of July 2008, we have seen a significant reduction in the price of several of these commodities.

U.S. & Canada

Company restaurant margin decreased by $3 million, or 7%, to $41 million in the U.S. and Canada for the three months ended September 30, 2008, compared to the same period in the prior year. This decrease reflects the impact of significant increases in commodity costs, as well as costs associated with the reimaging of Company restaurants, including accelerated depreciation expense and lost net revenues due to temporary restaurant closures. In addition, Company restaurant margin was affected by increases in rent and utility costs. These factors were partially offset by $6 million of incremental margin dollars derived from the net acquisition of 141 Company restaurants during the twelve months ended September 30, 2008 and positive Company comparable sales of 1.3% in this segment. In addition, Company restaurant margin benefited from the net addition of 155 Company restaurants, which includes the net acquisition of 141 franchise restaurants, during the twelve months ended September 30, 2008.

As a percentage of revenues, Company restaurant margin decreased by 3.2 percentage points, reflecting increased commodity costs and costs associated with our restaurant reimaging program, partially offset by the benefits realized from positive Company comparable sales of 1.3% in this segment.

The pricing index of our core commodities, as provided by our purchasing agent in the U.S. and Canada, increased by 17.0% during the first quarter of fiscal 2009 compared to the same period in the prior year. Prices of beef, cheese and oils reached their historical highs during the first quarter of fiscal 2009 and have significantly decreased since the end of July 2008.

EMEA/APAC

Company restaurant margin decreased by $3 million, or 8%, to $17 million in EMEA/APAC for the three months ended September 30, 2008 compared to the same period in the prior year. This decrease reflects the impact of government mandated and contractual increases in hourly wages in Germany, significant increases in commodity costs and a $1 million decrease from the refranchising of 11 high margin Company restaurants in Germany in the prior year. These factors were partially offset by the benefits realized from positive Company comparable sales of 3.4% in this segment and the favorable impact from currency exchange rates of $1 million in EMEA.

As a percentage of revenues, Company restaurant margin decreased in EMEA/APAC by 1.5 percentage points for the three months ended September 30, 2008 from the prior year period due to the negative impact from increases in hourly wages in Germany, significant increases in commodity costs and the refranchising of 11 high margin Company restaurants in Germany in the prior year. These factors were partially offset by positive Company comparable sales of 3.4% in this segment and the benefits realized from the closure and refranchising of under-performing Company restaurants in the U.K. in the prior year.

Latin America

Company restaurant margin remained relatively unchanged at $4 million in Latin America for the three months ended September 30, 2008 as compared to the same period in the prior year. This reflects a net increase of eight Company restaurants during the twelve months ended September 30, 2008, and positive Company comparable sales in this segment, offset by an increase in the cost of commodities and accelerated depreciation related to an anticipated restaurant closure.

As a percentage of revenues, Company restaurant margin decreased by 5.0 percentage points, reflecting the unfavorable impact from accelerated depreciation on an anticipated restaurant closure and increased commodity costs, partially offset by positive Company comparable sales of 2.3% in this segment.

Selling, General and Administrative Expenses (Dollars in millions):

Three Months Ended
September 30,
-----------------------
% Increase/
2008 2007 (Decrease)
----- ----- -----------

Selling Expenses $ 24 $ 23 4%
General and Administrative Expenses 101 96 5%
----- -----
Total Selling, General and Administrative
Expenses $ 125 $ 119 5%
===== =====

Selling expenses increased by $1 million, or 4%, to $24 million for the three months ended September 30, 2008, compared to the same period in the prior year. The increase is primarily attributable to $1 million of additional sales promotions and advertising expenses generated by higher Company restaurant revenues. The impact from currency exchange rates was not significant.

General and administrative expenses increased by $5 million, or 5%, to $101 million for the three months ended September 30, 2008, compared to the same period in the prior year. The increase is primarily attributable to a $1 million increase in corporate salary and other fringe benefits, $1 million in stock-based compensation, $2 million of incremental amortization expense related to re-acquired franchise rights from restaurant acquisitions, and $3 million of unfavorable impact from currency exchange rates. These increases were partially offset by $2 million in net miscellaneous cost savings.

Other Operating (Income) Expense, Net

Other operating expense, net for the three months ended September 30, 2008 was $9 million, compared to zero for the same period in the prior year. This includes a $3 million charge related to the remeasurement of foreign denominated assets and $2 million of net charges from the use of foreign currency forward contracts. It also includes $2 million of charges associated with the acquisition of franchise restaurants from a large franchisee in the U.S.

Income from Operations (by Segment) (Dollars in millions):

Three Months Ended
September 30,
--------------------------
% Increase /
2008 2007 (Decrease)
------ ------ ------------

U.S. & Canada $ 85 $ 97 (12)%
EMEA/APAC 23 20 15%
Latin America 10 9 11%
Unallocated (28) (30) (7)%
------ ------
Total $ 90 $ 96 (6)%
====== ======


Interest Expense, Net

Interest expense, net decreased by $2 million during the three months ended September 30, 2008 compared to the same period in the prior year, reflecting a decrease in rates paid on borrowings during the period. The weighted average interest rates for the three months ended September 30, 2008 and 2007 were 5.4% and 6.8%, respectively, which included the impact of interest rate swaps on 76% and 51% of our term debt, respectively.

Income Taxes

Income tax expense was $26 million for the three months ended September 30, 2008, resulting in an effective tax rate of 34.2% primarily due to currency fluctuations and the current mix of income from multiple tax jurisdictions.

Income tax expense was $31 million for the three months ended September 30, 2007 resulting in an effective tax rate of 38.8%. During the three months ended September 30, 2007, we recorded a tax charge of $6 million related to law changes in various foreign jurisdictions and a tax benefit of $3 million due to the release in valuation allowance as it was determined that certain deferred tax assets would be realized.


CONTACT: Burger King Holdings, Inc., Miami
BKC Media Relations
Michelle Miguelez, 305-378-7277
mmiguelez@whopper.com
or
BKC Investor Relations
Amy Wagner, 305-378-7696
awagner@whopper.com

SOURCE: Burger King Holdings, Inc.


###

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