##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the Fiscal Year Ended June 30, 2006                                                     
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from          to                                              

Commission file number: 001-32875





BURGER KING HOLDINGS, INC.


(Exact name of Registrant as specified in its charter)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Delaware                                                           |  | 75-3095469                                 
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification Number)
|5505 Blue Lagoon Drive, Miami, Florida                             |  | 33126                                      
|(Address of principal executive offices)                           |  | (Zip Code)                                 

Registrants telephone number, including area code


(305) 378-3000


Securities registered pursuant to Section 12(b) of the
Act:


|                                        |  |                                          
|--------------------------------------- |  | -----------------------------------------
|Title of Each Class                     |  | Name of Each Exchange on Which Registered
|                                        |  |                                          
|Common Stock, par value $0.01 per share |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the
Act:


None





o þ


o þ


þ o


S-K 10-K 10-K. o


12b-2


o o þ


12b-2 o þ






DOCUMENTS INCORPORATED BY REFERENCE:












---



##### 










BURGER KING HOLDINGS, INC.


2006 FORM 10-K
ANNUAL REPORT


TABLE OF CONTENTS


|                                                          |  |                                                                                                                      |  |      |     |  |  | 
|--------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ---- | --- |  |  | 
|                                                          |  |                                                                                                                      |  | Page |    
|                                                          |  |                                                                                                                      |  |      |    
|PART I                                                   
|Item 1.                                                   |  | Business                                                                                                             |  |      | 3   | 
|Item 1A.                                                  |  | Risk Factors                                                                                                         |  |      | 13  | 
|Item 1B.                                                  |  | Unresolved Staff Comments                                                                                            |  |      | 25  | 
|Item 2.                                                   |  | Properties                                                                                                           |  |      | 25  | 
|Item 3.                                                   |  | Legal Proceedings                                                                                                    |  |      | 26  | 
|Item 4.                                                   |  | Submission of Matters to a Vote of Security
    Holders                                                              |  |      | 27  | 
|                                                         
|PART II                                                  
|Item 5.                                                   |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |  |      | 27  | 
|Item 6.                                                   |  | Selected Financial Data                                                                                              |  |      | 29  | 
|Item 7.                                                   |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |  |      | 36  | 
|Item 7A.                                                  |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                       |  |      | 63  | 
|Item 8.                                                   |  | Financial Statements and Supplementary
    Data                                                                      |  |      | 65  | 
|Item 9.                                                   |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |  |      | 105 | 
|Item 9A.                                                  |  | Controls and Procedures                                                                                              |  |      | 105 | 
|Item 9B.                                                  |  | Other Information                                                                                                    |  |      | 105 | 
|PART III                                                 
|Item 10.                                                  |  | Directors and Executive Officers of the
    Registrant                                                               |  |      | 105 | 
|Item 11.                                                  |  | Executive Compensation                                                                                               |  |      | 107 | 
|Item 12.                                                  |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |  |      | 107 | 
|Item 13.                                                  |  | Certain Relationships and Related
    Transactions                                                                   |  |      | 107 | 
|Item 14.                                                  |  | Principal Accounting Fees and Services                                                                               |  |      | 107 | 
|                                                         
|PART IV                                                  
|Item 15.                                                  |  | Exhibits and Financial Statement
    Schedules                                                                       |  |      | 107 | 
|EX-3.1 Amended and Restated Certificate of Incorporation 
|EX-3.2 Amended and Restated By-Laws                      
|EX-14 Code of Business Ethics and Conduct                
|EX-21.1 List of Subsidiaries of the Registrant           
|EX-31.1 Section 302 Chief Executive Officer Certification
|EX-31.2 Section 302 Chief Financial Officer Certification
|EX-32.1 Section 906 Chief Executive Officer Certification
|EX-32.2 Section 906 Chief Financial Officer Certification



Burger
King®,
Whopper®,
Have It Your
Way®
and the Burger King Bun Halves and Crescent Logo are registered
trademarks of Burger King Brands, Inc., a wholly-owned
subsidiary of Burger King Holdings, Inc. References to fiscal
2006, fiscal 2005 and fiscal 2004 in this section and elsewhere
in this Form 10-K
are to the fiscal years ended June 30, 2006, 2005 and 2004,
respectively.


In this document, we rely on and refer to information
regarding the restaurant industry, the quick service restaurant
segment and the fast food hamburger restaurant category that has
been prepared by industry research firms, including NPD Group,
Inc. (which prepares and disseminates Consumer Reported Eating
Share Trends, or CREST data) and Research International (which
provides us with proprietary National Adult Tracking data) or
compiled from market research reports, research analyst reports
and other publicly available information. All industry and
market data that are not cited as being from a specified source
are from internal analyses based upon data available from known
sources or other proprietary research and analysis.


2



---



##### Table of Contents






Part I







|        |         
|------- | --------
|Item 1. | Business

Overview




Burger King


Our History


Burger King Whopper Have It Your Way on-the




Our Industry




3



---



##### Table of Contents









Our Competitive Strengths






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Distinctive brand with global platform.We believe
    that our Burger Kingand Whopperbrands are two of
    the most widely-recognized consumer brands in the world. In
    2005, Brandweekmagazine ranked Burger Kingnumber
    15 among the top 2,000 brands in the United States. We also
    believe that consumers associate our brands with our signature
    flame-broiled products and Have It Your Waybrand
    promise. According to National Adult Tracking data, our
    flame-broiled preparation method is preferred over frying, and
    our flagship product, the Whoppersandwich, is the number
    one large branded burger in the United States. We believe the
    ability of our major competitors to duplicate our flame-broiled
    method is limited by the substantial cost necessary to convert
    their existing systems and retrain their staff.                                                                                                                          
|
| |  | Attractive business model.Approximately 90% of
    our restaurants are franchised, which is a higher percentage
    than our major competitors in the fast food hamburger restaurant
    category. We believe that our franchise restaurants will
    generate a consistent, profitable royalty stream to us, with
    minimal associated capital expenditures or incremental expense
    by us. We also believe this will provide us with significant
    cash flow to reinvest in strengthening our brand and enhancing
    shareholder value.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Established and scalable international business.We have one of the largest restaurant networks in the
    world, with more than 3,900 franchise and company-owned
    restaurants located in our international markets. We believe
    that the demand for new international franchise restaurants is
    growing and our established infrastructure is capable of
    supporting substantial restaurant expansion in the years ahead.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Experienced management team with significant ownership.We have assembled a seasoned management team with
    significant experience. John Chidsey, our Chief Executive
    Officer, has extensive experience in managing franchised and
    branded businesses, including Avis Rent-A-Car and Budget
    Rent-A-Car systems, Jackson Hewitt Tax Services and PepsiCo.
    Russ Klein, our President, Global Marketing Strategy and
    Innovation, has 26 years of retail and consumer marketing
    experience, including at 7-Eleven Inc. Ben Wells, our Chief
    Financial Officer and Treasurer, has 25 years of finance
    experience, including at Compaq Computer Corporation and British
    Petroleum. Jim Hyatt, our Chief Operations Officer, has more
    than 30 years of brand experience as both a franchisee and
    senior executive of the Company. In addition, other members of
    our management team have worked at McDonalds, Taco Bell,
    The Coca-Cola Company and KFC.

Global Operations




4



---



##### Table of Contents



Managements Discussion and Analysis of Financial
Condition and Results of Operations Segment Reporting 10-K.




| |                         
| | ------------------------
| | United States and Canada



| |                      
| | ---------------------
| | Restaurant Operations



Operating Procedures. Burger King Burger King


Management. day-to


Restaurant Menu.


Restaurant Design and Image. Burger King


New Restaurant Development and Renewals.


5



---



##### Table of Contents





Managements Discussion and Analysis of Financial
Condition and Results of Operations  Factors
Affecting Comparability of Results  Historical
Franchisee Financial Distress.


20-year




| |                    
| | -------------------
| | Company Restaurants

Burger King




| |                      
| | ---------------------
| | Franchise Restaurants

General. Burger King


Burger King


Franchise Agreement Terms. 20-year




6



---



##### Table of Contents





.




| |                    
| | -------------------
| | Property Operations







| |                                                                      
| | ---------------------------------------------------------------------
| | Europe, Middle East and Africa/ Asia Pacific (EMEA/ APAC)
    Regions



| |                      
| | ---------------------
| | Restaurant Operations



EMEA. Burger King


APAC. Hungry Jacks Burger King.




Management Structure.


7



---



##### Table of Contents



Menu and Restaurant Design. Burger King


New Restaurant Development.




| |                      
| | ---------------------
| | Franchise Restaurants







| |                    
| | -------------------
| | Property Operations



25-year




| |              
| | -------------
| | Latin America





8



---



##### Table of Contents





Advertising and Promotion






Have It Your Way


Supply and Distribution


Burger King Burger King


Burger King Burger King




9



---



##### Table of Contents



Burger King


Burger King


Research and Development


Burger King


Burger King


Management Information Systems




Quality Assurance


Burger King




10



---



##### Table of Contents



Burger King


Intellectual Property


Burger King


Competition


Burger King


Burger King Burger
King


Government Regulation


Burger King




11



---



##### Table of Contents







Working Capital


Consolidated Statements of Cash Flows


Tax Matters




Environmental Matters




Customers




Government Contracts




Seasonal Operations




Our Employees




12



---



##### Table of Contents





Financial Information about Business Segments and Geographic
Areas


Selected
Financial Data Managements Discussion and Analysis of Financial
Condition and Results of Operations Financial Statements and
Supplementary Data


Available Information


10-K, 10-Q, 8-K,









|         |             
|-------- | ------------
|Item 1A. | Risk Factors

Special Note Regarding Forward-Looking Statements


This Annual Report on
Form 10-K includes
forward-looking statements under the captions
Business, Risk Factors,
Managements Discussion and Analysis of Financial
Condition and Results of Operations and in other sections
of this Form 10-K.
In some cases, you can identify these statements by
forward-looking words such as may,,
might, will,, should,
expect, plan, anticipate,
believe, estimate, predict,
potential or continue, the negative of
these terms and other comparable terminology. These
forward-looking statements, which are subject to risks,
uncertainties and assumptions about us, may include projections
of our future financial performance, based on our growth
strategies and anticipated trends in our business. These
statements are only predictions based on our current
expectations and projections about future events. There are
important factors that could cause our actual results, level of
activity, performance or achievements to differ materially from
the results, level of activity, performance or achievements
expressed or implied by the forward-looking statements,
including, but not limited to, the risks and uncertainties
discussed below.


Our operating results may fluctuate significantly and
could fall below expectations of securities analysts and
investors due to various factors.


10-K,


13



---



##### Table of Contents



Our success depends on our ability to compete with our
major competitors.




Burger King




Our operating results are closely tied to the success of
our franchisees. Over the last several years, many franchisees
in the United States, Canada and the United Kingdom have
experienced severe financial distress, and our franchisees may
experience financial distress in the future.




Managements


14



---



##### Table of Contents



Discussion and Analysis of Financial Condition and Results of
Operations  Factors Affecting Comparability of
Results  Historical Franchisee Financial
Distress.




Approximately 90% of our restaurants are franchised and
this restaurant ownership mix presents a number of disadvantages
and risks.








If we fail to successfully implement our international
growth strategy, our ability to increase our revenues and
operating profits could be adversely affected and our overall
business could be adversely affected.






| |   |                                                                 
| | - | ----------------------------------------------------------------
| |  | the selection and availability of suitable restaurant locations;
|
| |  | the negotiation of acceptable lease terms;                      
|
| |  | the ability of franchisees to obtain acceptable financing terms;

15



---



##### Table of Contents





| |   |                                                              
| | - | -------------------------------------------------------------
| |  | securing required foreign governmental permits and approvals;
|
| |  | securing acceptable suppliers; and                           
|
| |  | employing and training qualified personnel.                  





Our operating results depend on the effectiveness of our
marketing and advertising programs and franchisee support of
these programs.






We recently promoted members of our existing senior
management team as a result of the departure of our Chairman and
Chief Executive Officer; failure to manage a smooth transition
of those senior management into their new positions, the loss of
key management personnel or our inability to attract and retain
new qualified personnel could hurt our business and inhibit our
ability to operate and grow successfully.




16



---



##### Table of Contents







Incidents of food-borne illnesses or food tampering could
materially damage our reputation and reduce our restaurant
sales.


e-coli,




Our business is affected by changes in consumer
preferences and consumer discretionary spending.






17



---



##### Table of Contents



A substantial number of franchise agreements will expire
in the next five years and there can be no assurance that the
franchisees can or will renew their franchise agreements with
us.


20-year


20-year 20-year






Increases in the cost of food, paper products and energy
could harm our profitability and operating results.






18



---



##### Table of Contents







We rely on distributors of food, beverages and other
products that are necessary for our and our franchisees
operations. If these distributors fail to provide the necessary
products in a timely fashion, our business would face supply
shortages and our results of operations might be adversely
affected.




Labor shortages or increases in labor costs could slow our
growth or harm our business.




Our international operations subject us to additional
risks and costs and may cause our profitability to
decline.






| |   |                                                                                                
| | - | -----------------------------------------------------------------------------------------------
| |  | economic recessions;                                                                           
|
| |  | changing labor conditions and difficulties in staffing and
    managing our foreign operations;
|
| |  | increases in the taxes we pay and other changes in applicable
    tax laws;                    

19



---



##### Table of Contents





| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | legal and regulatory changes and the burdens and costs of our
    compliance with a variety of foreign laws;
|
| |  | changes in inflation rates;                                                                                 
|
| |  | changes in exchange rates;                                                                                  
|
| |  | difficulty in collecting our royalties and longer payment cycles;                                           
|
| |  | expropriation of private enterprises;                                                                       
|
| |  | political and economic instability and anti-American
    sentiment; and                                     
|
| |  | other external factors.                                                                                     



Our business is subject to fluctuations in foreign
currency exchange and interest rates.






We or our franchisees may not be able to renew leases or
control rent increases at existing restaurant locations or
obtain leases for new restaurants.




Current restaurant locations may become unattractive, and
attractive new locations may not be available for a reasonable
price, if at all.




20



---



##### Table of Contents





We may not be able to adequately protect our intellectual
property, which could harm the value of our brand and branded
products and adversely affect our business.






Our indebtedness under our senior secured credit facility
is substantial and could limit our ability to grow our
business.








| |   |                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increase our vulnerability to general adverse economic and
    industry conditions;                                                                                                                                                                  
|
| |  | require us to dedicate a substantial portion of our cash flow
    from operations to payments on our indebtedness if we do not
    maintain specified financial ratios, thereby reducing the
    availability of our cash flow for other purposes; or
|
| |  | limit our flexibility in planning for, or reacting to, changes
    in our business and the industry in which we operate, thereby
    placing us at a competitive disadvantage compared to our
    competitors that may have less indebtedness.       



Our senior secured credit facility has restrictive terms
and our failure to comply with any of these terms could put us
in default, which would have an adverse effect on our business
and prospects.






| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | incur additional indebtedness;                                            
|
| |  | make capital expenditures and other investments above a certain
    level;

21



---



##### Table of Contents





| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | merge, consolidate or dispose of our assets or the capital stock
    or assets of any subsidiary;
|
| |  | pay dividends, make distributions or redeem capital stock in
    certain circumstances;          
|
| |  | enter into transactions with our affiliates;                                                     
|
| |  | grant liens on our assets or the assets of our subsidiaries;                                     
|
| |  | enter into the sale and subsequent lease-back of real
    property; and                          
|
| |  | make or repay intercompany loans.                                                                



We face risks of litigation and pressure tactics, such as
strikes, boycotts and negative publicity from customers,
franchisees, suppliers, employees and others, which could divert
our financial and management resources and which may negatively
impact our financial condition and results of operations.










Our failure to comply with existing or increased
government regulations or becoming subject to future regulation
relating to the products that we sell could adversely affect our
business and operating results.




22



---



##### Table of Contents













Compliance with or cleanup activities required by
environmental laws may hurt our business.






Regulation of genetically modified food products may force
us to find alternative sources of supply.




23



---



##### Table of Contents





Our current principal stockholders have significant
influence over us, and they could delay, deter or prevent a
change of control or other business combination or otherwise
cause us to take action with which you may disagree.




We are a controlled company within the meaning
of the New York Stock Exchange rules, and, as a result, qualify
for, and intend to rely on, exemptions from certain corporate
governance requirements that provide protection to stockholders
of other companies.






| |   |                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | that a majority of our board of directors consists of
    independent directors;                                                                                                                 
|
| |  | that we have a nominating and governance committee that is
    composed entirely of independent directors with a written
    charter addressing the committees purpose and
    responsibilities;
|
| |  | that we have a compensation committee that is composed entirely
    of independent directors with a written charter addressing the
    committees purpose and responsibilities; and             
|
| |  | for an annual performance evaluation of the nominating and
    governance committee and compensation committee.                                                                                  



Your percentage ownership in us may be diluted by future
issuances of capital stock, which could reduce your influence
over matters on which stockholders vote.




24



---



##### Table of Contents



The sale of a substantial number of shares of our common
stock may cause the market price of shares of our common stock
to decline.


lock-up


Provisions in our certificate of incorporation could make
it more difficult for a third party to acquire us and could
discourage a takeover and adversely affect existing
stockholders.




We currently do not intend to pay dividends on our common
stock and consequently, your only opportunity to achieve a
return on your investment is if the price of our common stock
appreciates.









|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments








|        |           
|------- | ----------
|Item 2. | Properties

15-year




25



---



##### Table of Contents





|                          |                                    |          |  |        |      |           |  |          |       |  |        |     |     |       |  |     |       |  |  |     |       | 
|------------------------- | ---------------------------------- | -------- |  | ------ | ---- | --------- |  | -------- | ----- |  | ------ | --- | --- | ----- |  | --- | ----- |  |  | --- | ----- | 
|                          |                                    |          |  | Leased |      |           | 
|                          |                                    |          |  |        |      |           | 
|                          |                                    |          |  |        |      | Building/ |  |          |       |  |       
|                          |                                    |          |  |        |      | Land &    |  |          | Total |  |        |    
|                          |                                    | Owned(1) |  |        | Land |           |  | Building |       |  | Leases |     |     | Total | 
|                          |                                    |          |  |        |      |           |  |          |       |  |        |     |     |       | 
|United States and Canada: |                                    |          |  |        |      |           |  |          |       |  |        |     |     |       |  |     |       |  |  |    
|                          | Company restaurants                |          |  | 337    |      |           |  | 187      |       |  |        | 354 |     |       |  | 541 |       |  |  | 878 |      
|                          | Franchisee-operated properties     |          |  | 466    |      |           |  | 263      |       |  |        | 198 |     |       |  | 461 |       |  |  | 927 |      
|                          | Non-operating restaurant locations |          |  | 35     |      |           |  | 31       |       |  |        | 12  |     |       |  | 43  |       |  |  | 78  |      
|                          | Offices                            |          |  |       |      |           |  |         |       |  |        | 7   |     |       |  | 7   |       |  |  | 7   |      
|                          |                                    |          |  |        |      |           |  |          |       |  |        |     |     |       | 
|                          |                                    | Total    |  |        | 838  |           |  |          | 481   |  |        |     | 571 |       |  |     | 1,052 |  |  |     | 1,890 | 
|                          |                                    |          |  |        |      |           |  |          |       |  |        |     |     |       | 
|International:            |                                    |          |  |        |      |           |  |          |       |  |        |     |     |       |  |     |       |  |  |    
|                          | Company restaurants                |          |  | 20     |      |           |  | 35       |       |  |        | 310 |     |       |  | 345 |       |  |  | 365 |      
|                          | Franchisee-operated properties     |          |  | 4      |      |           |  |         |       |  |        | 135 |     |       |  | 135 |       |  |  | 139 |      
|                          | Non-operating restaurant locations |          |  | 1      |      |           |  |         |       |  |        | 28  |     |       |  | 28  |       |  |  | 29  |      
|                          | Offices                            |          |  |       |      |           |  | 3        |       |  |        | 7   |     |       |  | 10  |       |  |  | 10  |      
|                          |                                    |          |  |        |      |           |  |          |       |  |        |     |     |       | 
|                          |                                    | Total    |  |        | 25   |           |  |          | 38    |  |        |     | 480 |       |  |     | 518   |  |  |     | 543   | 
|                          |                                    |          |  |        |      |           |  |          |       |  |        |     |     |       | 






|    |                                                                       
|--- | ----------------------------------------------------------------------
|(1) | Owned refers to properties where we own the land and the
    building.






|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

Litigation






Whopper.


26



---



##### Table of Contents





Proposition 65 Notices


CERT 60-day


60-day Burger King 60-day











|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | By written consent dated April 7, 2006, the holders of
    approximately 97% of the common stock of the Company elected
    John W. Chidsey to serve on the Board of Directors of the
    Company, effective as of April 7, 2006. The Company did not
    solicit proxies.                                                                                                                                                                                                                                                                                                                                        
|
| | By written consent dated May 1, 2006, the holders of
    approximately 97% of the common stock of the Company approved
    the amended and restated certificate of incorporation and
    bylaws, elected all of the nominees to the Board, approved a
    26.34608 for 1 stock split of the Companys common stock
    and approved and adopted the Burger King Holdings, Inc. 2006
    Omnibus Incentive Plan and reservation of shares to be issued
    under the plan. The Company did not solicit proxies and the
    board of directors as previously reported to the SEC was
    re-elected in its entirety.
|
| | By written consent dated May 15, 2006, the holders of
    approximately 97% of the common stock of the Company approved
    and adopted the Burger King Holdings, Inc. Amended and Restated
    Equity Incentive Plan. The Company did not solicit proxies.                                                                                                                                                                                                                                                                                                                                                       
|
| | Information regarding executive officers is contained in
    Part III, Item 10 of this
    Form 10-K under
    the heading Executive Officers of the
    Registrant.                                                                                                                                                                                                                                                                                                                                                                                                                                            




Part II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Market for Our Common Stock




27



---



##### Table of Contents





Recent Sales of Unregistered Securities




Dividend Policy




Securities Authorized for Issuance Under Equity Compensation
Plans




|                                                                          |       |                      |           |           |                      |   |       |                      |  |  |           |            | 
|------------------------------------------------------------------------- | ----- | -------------------- | --------- | --------- | -------------------- | - | ----- | -------------------- |  |  | --------- | ---------- | 
|                                                                          |       | Number of Securities |           |           |                      |   |      
|                                                                          |       | to be Issued Upon    |           |           | Weighted-Average     |   |       |                     
|                                                                          |       | Exercise of          |           |           | Exercise Price of    |   |       | Number of Securities | 
|                                                                          |       | Outstanding Options, |           |           | Outstanding Options, |   |       | Remaining Available  | 
|                                                                          |       | Warrants and Rights  |           |           | Warrants and Rights  |   |       | for Future Issuance  | 
|                                                                          |       | (a)                  |           |           | (b)                  |   |       | (c)                  | 
|                                                                          |       |                      |           |           |                      |   |       |                      | 
|Plan Category                                                             |       |                      |           |           |                      |   |       |                      |  |  |           |           
|Equity Compensation Plans Approved by Security Holders:                   |       |                      |           |           |                      |   |       |                      |  |  |           |           
|Burger King Holdings, Inc. 2006 Omnibus Incentive Plan                    |       |                      | 226,634   |           |                      | $ | 17.13 |                      |  |  | 6,886,808 |           
|Burger King Holdings, Inc. Amended and Restated Equity Incentive
    Plan |       |                      | 8,138,991 |           |                      | $ | 7.62  |                      |  |  | 5,545,427 |           
|Equity Compensation Plans Not Approved by Security Holders                |       |                      |          |           |                      |   |       |                      |  |  |          |           
|                                                                          |       |                      |           |           |                      |   |       |                      | 
|                                                                          | TOTAL |                      |           | 8,365,625 |                      |   | $     | 7.88                 |  |  |           | 12,432,235 | 
|                                                                          |       |                      |           |           |                      |   |       |                      | 

Use of Proceeds from Sale of Registered Securities


S-1, 333-131897)


28



---



##### Table of Contents







|                                           |  |   |     | 
|------------------------------------------ |  | - | --- | 
|Aggregate offering proceeds to the Company |  | $ | 425 | 
|Underwriting discounts and commissions     |  |   | 28  | 
|Other fees and expenses                    |  |   | 5   | 
|                                           |  |   |    
|Total Expenses                             |  |   | 33  | 
|                                           |  |   |    
|Net Proceeds to the Company                |  | $ | 392 | 
|                                           |  |   |    

Dividend Policy







|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

On December 13, 2002, we acquired BKC through private
equity funds controlled by the Sponsors. In this report, unless
the context otherwise requires, all references to
we, us and our refer to
Burger King Holdings, Inc. and its subsidiaries, including BKC,
for all periods subsequent to our December 13, 2002
acquisition of BKC. All references to our
predecessor refer to BKC and its subsidiaries for
all periods prior to the acquisition, which operated under a
different ownership and capital structure. In addition, the
acquisition was accounted for under the purchase method of
accounting and resulted in purchase accounting allocations that
affect the comparability of results of operations between
periods before and after the acquisition.






Managements Discussion and Analysis of Financial
Condition and Results of Operations


29



---



##### Table of Contents



|                                                |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |      |   |      |       |     |   |     |       |       | 
|----------------------------------------------- | -------------------------------------------- | ------------------------------------ | --- | ----- | -------------- | ----------- | ------------------ | ---------------- | ----- | ----------- | --------------- | ----- | ----- | -------------- | ---- | ----- | ----- | - | --- | ----- | ---- | - | ---- | ----- | --- | - | --- | ----- | ----- | 
|                                                |                                              |                                      |     |       |                | Burger King |                    |                  |       |             |                
|                                                |                                              | Burger King Holdings, Inc.           |     |       |                |             | Holdings, Inc. and |                  |       |            
|                                                |                                              | and Subsidiaries                     |     |       |                |             | Subsidiaries       |                  |       | Predecessor |                
|                                                |                                              |                                      |     |       |                |             |                    |                  |       |             |                
|                                                |                                              | For the                              |     |       | Combined       |             |                    | For the          |       |             | For the         |       |       |               
|                                                |                                              | Fiscal Years                         |     |       | Twelve         |             |                    | Period from      |       |             | Period from     |       |       | For the        |     
|                                                |                                              | Ended June 30,                       |     |       | Months         |             |                    | December 13,     |       |             | July 1, 2002    |       |       | Fiscal Year    |     
|                                                |                                              |                                      |     |       | Ended June 30, |             |                    | 2002 to June 30, |       |             | to December 12, |       |       | Ended June 30, |     
|                                                |                                              | 2006                                 |     |       | 2005           |             |                    | 2004             |       |             | 2003            |       |       | 2003           |      |       | 2002  |   |     | 2002  |     
|                                                |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |     
|                                                |                                              | (In millions, except per share data) |    
|Income Statement Data:                          |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |      |   |      |       |     |   |     |      
|Revenues:                                       |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |      |   |      |       |     |   |     |      
|                                                | Company restaurant revenues                  |                                      | $   | 1,516 |                |             | $                  | 1,407            |       |             | $               | 1,276 |       |                | $    | 1,174 |       |   | $   | 648   |      |   | $    | 526   |     |   | $   | 1,130 |      
|                                                | Franchise revenues                           |                                      |     | 420   |                |             |                    | 413              |       |             |                 | 361   |       |                |      | 368   |       |   |     | 198   |      |   |      | 170   |     |   |     | 392   |      
|                                                | Property revenues                            |                                      |     | 112   |                |             |                    | 120              |       |             |                 | 117   |       |                |      | 115   |       |   |     | 60    |      |   |      | 55    |     |   |     | 124   |      
|                                                |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |     
|                                                |                                              | Total revenues                       |     |       | 2,048          |             |                    |                  | 1,940 |             |                 |       | 1,754 |                |      |       | 1,657 |   |     |       | 906  |   |      |       | 751 |   |     |       | 1,646 | 
|Company restaurant expenses:                    |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |      |   |      |       |     |   |     |      
|                                                | Food, paper and product costs                |                                      |     | 470   |                |             |                    | 437              |       |             |                 | 391   |       |                |      | 359   |       |   |     | 197   |      |   |      | 162   |     |   |     | 354   |      
|                                                | Payroll and employee benefits                |                                      |     | 446   |                |             |                    | 415              |       |             |                 | 382   |       |                |      | 349   |       |   |     | 192   |      |   |      | 157   |     |   |     | 335   |      
|                                                | Occupancy and other operating costs          |                                      |     | 380   |                |             |                    | 343              |       |             |                 | 314   |       |                |      | 314   |       |   |     | 168   |      |   |      | 146   |     |   |     | 298   |      
|                                                |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |     
|                                                |                                              | Total company restaurant expenses    |     |       | 1,296          |             |                    |                  | 1,195 |             |                 |       | 1,087 |                |      |       | 1,022 |   |     |       | 557  |   |      |       | 465 |   |     |       | 987   | 
|Selling, general and administrative expenses(1) |                                              |                                      | 488 |       |                |             | 487                |                  |       |             | 474             |       |       |                | 472  |       |       |   | 248 |       |      |   | 224  |       |     |   | 422 |      
|Property expenses                               |                                              |                                      | 57  |       |                |             | 64                 |                  |       |             | 58              |       |       |                | 55   |       |       |   | 28  |       |      |   | 27   |       |     |   | 58  |      
|Fees paid to affiliates(2)                      |                                              |                                      | 39  |       |                |             | 9                  |                  |       |             | 8               |       |       |                | 6    |       |       |   | 5   |       |      |   | 1    |       |     |   | 7   |      
|Impairment of goodwill(3)                       |                                              |                                      |    |       |                |             |                   |                  |       |             |                |       |       |                | 875  |       |       |   |    |       |      |   | 875  |       |     |   | 5   |      
|Other operating (income) expenses, net(3)       |                                              |                                      | (2  | )     |                |             | 34                 |                  |       |             | 54              |       |       |                | 32   |       |       |   | (7  | )     |      |   | 39   |       |     |   | 45  |      
|                                                |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |     
|                                                | Total operating costs and expenses           |                                      |     | 1,878 |                |             |                    | 1,789            |       |             |                 | 1,681 |       |                |      | 2,462 |       |   |     | 831   |      |   |      | 1,631 |     |   |     | 1,524 |      
|Income (loss) from operations                   |                                              |                                      | 170 |       |                |             | 151                |                  |       |             | 73              |       |       |                | (805 | )     |       |   | 75  |       |      |   | (880 | )     |     |   | 122 |      
|                                                | Interest expense, net                        |                                      |     | 72    |                |             |                    | 73               |       |             |                 | 64    |       |                |      | 81    |       |   |     | 35    |      |   |      | 46    |     |   |     | 105   |      
|                                                | Loss on early extinguishment of debt         |                                      |     | 18    |                |             |                    |                 |       |             |                 |      |       |                |      |      |       |   |     |      |      |   |      |      |     |   |     |      |      
|                                                |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |     
|Income (loss) before income taxes               |                                              |                                      | 80  |       |                |             | 78                 |                  |       |             | 9               |       |       |                | (886 | )     |       |   | 40  |       |      |   | (926 | )     |     |   | 17  |      
|                                                | Income tax expense (benefit)                 |                                      |     | 53    |                |             |                    | 31               |       |             |                 | 4     |       |                |      | (18   | )     |   |     | 16    |      |   |      | (34   | )   |   |     | 54    |      
|                                                |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |     
|Net income (loss)                               |                                              | $                                    | 27  |       |                | $           | 47                 |                  |       | $           | 5               |       |       | $              | (868 | )     |       | $ | 24  |       |      | $ | (892 | )     |     | $ | (37 | )    
|                                                |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |     
|Per common share:                               |                                              |                                      |     |       |                |             |                    |                  |       |             |                 |       |       |                |      |       |       |   |     |       |      |   |      |       |     |   |     |      
|                                                |                                              | Earnings per share  basic           |     | $     | 0.24           |             |                    | $                | 0.44  |             |                 | $     | 0.05  |                |      |       | *     |   |     | $     | 0.23 |   |      |       | *   |   |     |       | *     | 
|                                                |                                              | Earnings per share  diluted         |     | $     | 0.24           |             |                    | $                | 0.44  |             |                 | $     | 0.05  |                |      |       | *     |   |     | $     | 0.23 |   |      |       | *   |   |     |       | *     | 
|                                                | Weighted average shares outstanding, basic   |                                      |     | 110.3 |                |             |                    | 106.5            |       |             |                 | 106.1 |       |                |      | *     |       |   |     | 104.7 |      |   |      | *     |     |   |     | *     |      
|                                                | Weighted average shares outstanding, diluted |                                      |     | 114.7 |                |             |                    | 106.9            |       |             |                 | 106.1 |       |                |      | *     |       |   |     | 104.7 |      |   |      | *     |     |   |     | *     |      






|  |               
|- | --------------
|* | Not meaningful

30



---



##### Table of Contents



|                                                     |  |                            |      |          |                |             |                    |                  |  |             |                 |   |  |                |      |   |      |   |      |      |  |   |      |   |  |   |      |  
|---------------------------------------------------- |  | -------------------------- | ---- | -------- | -------------- | ----------- | ------------------ | ---------------- |  | ----------- | --------------- | - |  | -------------- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                                     |  |                            |      |          |                | Burger King |                    |                  |  |             |                
|                                                     |  | Burger King Holdings, Inc. |      |          |                |             | Holdings, Inc. and |                  |  |            
|                                                     |  | and Subsidiaries           |      |          |                |             | Subsidiaries       |                  |  | Predecessor |                
|                                                     |  |                            |      |          |                |             |                    |                  |  |             |                
|                                                     |  |                            |      | Combined |                |             | For the            |                  |  | For the     |                 |   | 
|                                                     |  | For the Fiscal Year Ended  |      |          | Twelve         |             |                    | Period from      |  |             | Period from     |   |  | For the        |     
|                                                     |  | June 30,                   |      |          | Months         |             |                    | December 13,     |  |             | July 1, 2002    |   |  | Fiscal Year    |     
|                                                     |  |                            |      |          | Ended June 30, |             |                    | 2002 to June 30, |  |             | to December 12, |   |  | Ended June 30, |     
|                                                     |  | 2006                       |      |          | 2005           |             |                    | 2004             |  |             | 2003            |   |  | 2003           |      |   | 2002 |   |      | 2002 | 
|                                                     |  |                            |      |          |                |             |                    |                  |  |             |                 |   |  |                |      |   |      |   |      |      | 
|                                                     |  | (In millions)              |     
|Other Financial Data:                                |  |                            |      |          |                |             |                    |                  |  |             |                 |   |  |                |      |   |      |   |      |      |  |   |      |   |  |   |      |  
|Net cash provided by operating activities            |  | $                          | 74   |          |                | $           | 218                |                  |  | $           | 199             |   |  | $              | 82   |   |      | $ | 81   |      |  | $ | 1    |   |  | $ | 212  |  
|Net cash used for investing activities               |  |                            | (74  | )        |                |             | (5                 | )                |  |             | (184            | ) |  |                | (587 | ) |      |   | (485 | )    |  |   | (102 | ) |  |   | (349 | )
|Net cash (used for) provided by financing activities |  |                            | (173 | )        |                |             | (2                 | )                |  |             | 3               |   |  |                | 719  |   |      |   | 607  |      |  |   | 112  |   |  |   | 155  |  
|Capital expenditures                                 |  |                            | 85   |          |                |             | 93                 |                  |  |             | 81              |   |  |                | 142  |   |      |   | 47   |      |  |   | 95   |   |  |   | 325  |  
|EBITDA(3)(4)                                         |  | $                          | 258  |          |                | $           | 225                |                  |  | $           | 136             |   |  | $              | (719 | ) |      | $ | 118  |      |  | $ | (837 | ) |  | $ | 283  |  

|                    |                                          |                                             |   |       |                |  |   |       |  |  |      |       |  |      |   |       |  |  |   |       | 
|------------------- | ---------------------------------------- | ------------------------------------------- | - | ----- | -------------- |  | - | ----- |  |  | ---- | ----- |  | ---- | - | ----- |  |  | - | ----- | 
|                    |                                          | Burger King Holdings, Inc. and Subsidiaries |   |       | Predecessor    | 
|                    |                                          |                                             |   |       |                | 
|                    |                                          | As of June 30,                              |   |       |               
|                    |                                          |                                             |   |       | As of June 30, | 
|                    |                                          | 2006                                        |   |       | 2005           |  |   | 2004  |  |  | 2003 |       |  | 2002 |  
|                    |                                          |                                             |   |       |                |  |   |       |  |  |      |       |  |      |  
|                    |                                          | (In millions)                               |  
|Balance Sheet Data: |                                          |                                             |   |       |                |  |   |       |  |  |      |       |  |      |   |       |  |  |   |      
|                    | Cash and cash equivalents                |                                             | $ | 259   |                |  | $ | 432   |  |  | $    | 221   |  |      | $ | 203   |  |  | $ | 54    | 
|                    | Total assets                             |                                             |   | 2,552 |                |  |   | 2,723 |  |  |      | 2,665 |  |      |   | 2,458 |  |  |   | 3,329 | 
|                    | Total debt and capital lease obligations |                                             |   | 1,065 |                |  |   | 1,339 |  |  |      | 1,294 |  |      |   | 1,251 |  |  |   | 1,323 | 
|                    | Total liabilities                        |                                             |   | 1,985 |                |  |   | 2,246 |  |  |      | 2,241 |  |      |   | 2,026 |  |  |   | 2,186 | 
|                    | Total stockholders equity               |                                             | $ | 567   |                |  | $ | 477   |  |  | $    | 424   |  |      | $ | 432   |  |  | $ | 1,143 | 

|                                          |                          |                                |       |       |        |   |       |       |        |   |       |       |        | 
|----------------------------------------- | ------------------------ | ------------------------------ | ----- | ----- | ------ | - | ----- | ----- | ------ | - | ----- | ----- | ------ | 
|                                          |                          | Burger King Holdings, Inc. and |      
|                                          |                          | Subsidiaries                   |      
|                                          |                          |                                |      
|                                          |                          | For the Years Ended June 30,   |      
|                                          |                          |                                |      
|                                          |                          | 2006                           |       |       | 2005   |   |       | 2004  |       
|                                          |                          |                                |       |       |        |   |       |       |       
|Other System-Wide Operating Data:         |                          |                                |       |       |        |   |       |       |        |   |       |      
|Comparable sales growth(5)(6)             |                          |                                | 1.9   | %     |        |   | 5.6   | %     |        |   | 1.0   | %    
|System-wide sales growth(5)               |                          |                                | 2.1   | %     |        |   | 6.1   | %     |        |   | 1.2   | %    
|Average restaurant sales (in millions)(5) |                          | $                              | 1.126 |       |        | $ | 1.104 |       |        | $ | 1.014 |      
|Number of company restaurants:            |                          |                                |       |       |        |   |       |       |        |   |       |      
|                                          | United States and Canada |                                |       | 878   |        |   |       | 844   |        |   |       | 759   |       
|                                          | EMEA/ APAC(7)            |                                |       | 293   |        |   |       | 283   |        |   |       | 277   |       
|                                          | Latin America(8)         |                                |       | 69    |        |   |       | 60    |        |   |       | 51    |       
|                                          |                          |                                |       |       |        |   |       |       |       
|                                          |                          | Total company restaurants      |       |       | 1,240  |   |       |       | 1,187  |   |       |       | 1,087  | 
|Number of franchise restaurants:          |                          |                                |       |       |        |   |       |       |        |   |       |      
|                                          | United States and Canada |                                |       | 6,656 |        |   |       | 6,876 |        |   |       | 7,217 |       
|                                          | EMEA/ APAC(7)            |                                |       | 2,494 |        |   |       | 2,373 |        |   |       | 2,308 |       
|                                          | Latin America(8)         |                                |       | 739   |        |   |       | 668   |        |   |       | 615   |       
|                                          |                          |                                |       |       |        |   |       |       |       
|                                          |                          | Total franchise restaurants    |       |       | 9,889  |   |       |       | 9,917  |   |       |       | 10,140 | 
|                                          |                          |                                |       |       |        |   |       |       |       
|                                          |                          | Total system-wide restaurants  |       |       | 11,129 |   |       |       | 11,104 |   |       |       | 11,227 | 
|                                          |                          |                                |       |       |        |   |       |       |       

31



---



##### Table of Contents



|                                           |                                 |                                   |        |       |       |   |        |      |       |   |        |      |       | 
|------------------------------------------ | ------------------------------- | --------------------------------- | ------ | ----- | ----- | - | ------ | ---- | ----- | - | ------ | ---- | ----- | 
|                                           |                                 | Burger King Holdings, Inc. and    |       
|                                           |                                 | Subsidiaries                      |       
|                                           |                                 |                                   |       
|                                           |                                 | For the Years Ended June 30,      |       
|                                           |                                 |                                   |       
|                                           |                                 | 2006                              |        |       | 2005  |   |        | 2004 |      
|                                           |                                 |                                   |        |       |       |   |        |      |      
|Segment Data:                              |                                 |                                   |        |       |       |   |        |      |       |   |        |     
|Operating income (in millions):            |                                 |                                   |        |       |       |   |        |      |       |   |        |     
|                                           | United States and Canada        |                                   | $      | 295   |       |   | $      | 255  |       |   | $      | 115  |      
|                                           | EMEA/ APAC(7)                   |                                   |        | 62    |       |   |        | 36   |       |   |        | 95   |      
|                                           | Latin America(8)                |                                   |        | 29    |       |   |        | 25   |       |   |        | 26   |      
|                                           | Unallocated(9)                  |                                   |        | (216  | )     |   |        | (165 | )     |   |        | (163 | )    
|                                           |                                 |                                   |        |       |       |   |        |      |      
|                                           |                                 | Total operating income            |        | $     | 170   |   |        | $    | 151   |   |        | $    | 73    | 
|                                           |                                 |                                   |        |       |       |   |        |      |      
|Company Restaurant Revenues (in millions): |                                 |                                   |        |       |       |   |        |      |       |   |        |     
|                                           | United States and Canada        |                                   | $      | 1,032 |       |   | $      | 923  |       |   | $      | 802  |      
|                                           | EMEA/ APAC(7)                   |                                   |        | 428   |       |   |        | 435  |       |   |        | 429  |      
|                                           | Latin America(8)                |                                   |        | 56    |       |   |        | 49   |       |   |        | 45   |      
|                                           |                                 |                                   |        |       |       |   |        |      |      
|                                           |                                 | Total company restaurant revenues |        | $     | 1,516 |   |        | $    | 1,407 |   |        | $    | 1,276 | 
|                                           |                                 |                                   |        |       |       |   |        |      |      
|Company Restaurant Margin:                 |                                 |                                   |        |       |       |   |        |      |       |   |        |     
|                                           | United States and Canada        |                                   |        | 14.1  | %     |   |        | 14.2 | %     |   |        | 11.3 | %    
|                                           | EMEA/ APAC(7)                   |                                   |        | 13.8  | %     |   |        | 15.2 | %     |   |        | 18.9 | %    
|                                           | Latin America(8)                |                                   |        | 26.8  | %     |   |        | 30.6 | %     |   |        | 37.8 | %    
|                                           | Total company restaurant margin |                                   |        | 14.5  | %     |   |        | 15.1 | %     |   |        | 14.8 | %    
|Franchise Revenues (in millions):          |                                 |                                   |        |       |       |   |        |      |       |   |        |     
|                                           | United States and Canada        |                                   | $      | 267   |       |   | $      | 269  |       |   | $      | 234  |      
|                                           | EMEA/ APAC(7)                   |                                   |        | 119   |       |   |        | 114  |       |   |        | 102  |      
|                                           | Latin America(8)                |                                   |        | 34    |       |   |        | 30   |       |   |        | 25   |      
|                                           |                                 |                                   |        |       |       |   |        |      |      
|                                           |                                 | Total franchise revenues          |        | $     | 420   |   |        | $    | 413   |   |        | $    | 361   | 
|                                           |                                 |                                   |        |       |       |   |        |      |      
|Franchise sales (in millions)(10)          |                                 | $                                 | 10,903 |       |       | $ | 10,817 |      |       | $ | 10,055 |     






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Selling, general and administrative expenses included
    $72 million of intangible asset amortization in the fiscal
    year ended June 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(2) | Fees paid to affiliates are comprised primarily of management
    fees we paid to the Sponsors and fees paid by our predecessor to
    Diageo plc under management agreements. Fees paid to affiliates
    in fiscal 2006 also include a $30 million fee that we paid
    to terminate the management agreement with the Sponsors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(3) | In connection with our acquisition of BKC, our predecessor
    recorded $35 million of intangible asset impairment charges
    within other operating (income) expenses, net and goodwill
    impairment charges of $875 million during the period from
    July 1, 2002 to December 12, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(4) | 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 that EBITDA incorporates certain operating drivers of
    our business such as sales growth, operating costs, general and
    administrative expenses and other income and expense. Capital
    expenditures, which impact depreciation and amortization,
    interest expense and income tax expense, are reviewed separately
    by management. EBITDA is also one of the measures used by us to
    calculate incentive compensation for management and
    corporate-level employees. Further, management believes that
    EBITDA is a useful measure as it improves comparability of
    predecessor and successor results of operations, as purchase
    accounting renders depreciation and amortization non-comparable
    between predecessor and successor

32



---



##### Table of Contents



| |                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | periods. See Part II, Item 7
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Factors
    Affecting Comparability of Results  Purchase
    Accounting.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | While EBITDA is not a recognized measure under generally
    accepted accounting principles, we believe EBITDA is useful to
    investors because it is frequently used by security analysts,
    investors and other interested parties to evaluate us and other
    companies in our industry. EBITDA is not intended to be a
    measure of liquidity or cash flows from operations nor a measure
    comparable to net income as it does not consider certain
    requirements such as capital expenditures and related
    depreciation, principal and interest payments and tax payments.



|                                      |  |                            |     |          |                |             |                    |                  |  |             |                 |  |  |                |      |   |      |   |     |      |  |   |      |   |  |   |     |  
|------------------------------------- |  | -------------------------- | --- | -------- | -------------- | ----------- | ------------------ | ---------------- |  | ----------- | --------------- |  |  | -------------- | ---- | - | ---- | - | --- | ---- |  | - | ---- | - |  | - | --- | -
|                                      |  |                            |     |          |                | Burger King |                    |                  |  |             |                
|                                      |  | Burger King Holdings, Inc. |     |          |                |             | Holdings, Inc. and |                  |  |            
|                                      |  | and Subsidiaries           |     |          |                |             | Subsidiaries       |                  |  | Predecessor |                
|                                      |  |                            |     |          |                |             |                    |                  |  |             |                
|                                      |  |                            |     | Combined |                |             | For the            |                  |  | For the     |                 |  | 
|                                      |  | For the Fiscal Year Ended  |     |          | Twelve         |             |                    | Period from      |  |             | Period from     |  |  | For the        |     
|                                      |  | June 30,                   |     |          | Months         |             |                    | December 13,     |  |             | July 1, 2002    |  |  | Fiscal Year    |     
|                                      |  |                            |     |          | Ended June 30, |             |                    | 2002 to June 30, |  |             | to December 12, |  |  | Ended June 30, |     
|                                      |  | 2006                       |     |          | 2005           |             |                    | 2004             |  |             | 2003            |  |  | 2003           |      |   | 2002 |   |     | 2002 | 
|                                      |  |                            |     |          |                |             |                    |                  |  |             |                 |  |  |                |      |   |      |   |     |      | 
|                                      |  | (In millions)              |    
|Net income (loss)                     |  | $                          | 27  |          |                | $           | 47                 |                  |  | $           | 5               |  |  | $              | (868 | ) |      | $ | 24  |      |  | $ | (892 | ) |  | $ | (37 | )
|Interest expense, net                 |  |                            | 72  |          |                |             | 73                 |                  |  |             | 64              |  |  |                | 81   |   |      |   | 35  |      |  |   | 46   |   |  |   | 105 |  
|Loss on early distinguishment of debt |  |                            | 18  |          |                |             |                   |                  |  |             |                |  |  |                |     |   |      |   |    |      |  |   |     |   |  |   |    |  
|Income tax expense (benefit)          |  |                            | 53  |          |                |             | 31                 |                  |  |             | 4               |  |  |                | (18  | ) |      |   | 16  |      |  |   | (34  | ) |  |   | 54  |  
|                                      |  |                            |     |          |                |             |                    |                  |  |             |                 |  |  |                |      |   |      |   |     |      | 
|Income (loss) from operations         |  |                            | 170 |          |                |             | 151                |                  |  |             | 73              |  |  |                | (805 | ) |      |   | 75  |      |  |   | (880 | ) |  |   | 122 |  
|Depreciation and amortization         |  |                            | 88  |          |                |             | 74                 |                  |  |             | 63              |  |  |                | 86   |   |      |   | 43  |      |  |   | 43   |   |  |   | 161 |  
|                                      |  |                            |     |          |                |             |                    |                  |  |             |                 |  |  |                |      |   |      |   |     |      | 
|EBITDA                                |  | $                          | 258 |          |                | $           | 225                |                  |  | $           | 136             |  |  | $              | (719 | ) |      | $ | 118 |      |  | $ | (837 | ) |  | $ | 283 |  
|                                      |  |                            |     |          |                |             |                    |                  |  |             |                 |  |  |                |      |   |      |   |     |      | 



| |                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | This presentation of EBITDA may not be directly comparable to
    similarly titled measures of other companies, since not all
    companies use identical calculations.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | These are our key business measures. System-wide sales measures
    include sales at both company restaurants and franchise
    restaurants. We do not record franchise restaurant sales as
    revenues. However, our royalty revenues are calculated based on
    a percentage of franchise restaurant sales. Comparable sales
    growth and system-wide sales growth are analyzed on a constant
    currency basis, which means they are calculated using the prior
    year average exchange rates, to remove the effects of currency
    fluctuations from these trend analyses. We believe these
    constant currency measures provide a more meaningful analysis of
    our business by identifying the underlying business trend,
    without distortion from the effect of foreign currency
    movements. See Part II, Item 7
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Key Business
    Measures.
|   
|(6) | Comparable sales growth refers to the change in restaurant sales
    in one period from a comparable period for restaurants that have
    been open for thirteen months or longer. Comparable sales growth
    includes sales at company restaurants and franchise restaurants.
    We do not record franchise restaurant sales as revenues.
    However, our royalty revenues are calculated based on a
    percentage of franchise restaurant sales.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(7) | Refers to our operations in Europe, the Middle East, Africa,
    Asia, Australia, New Zealand and Guam.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(8) | Refers to our operations in Mexico, Central and South America,
    the Caribbean and Puerto Rico.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

33



---



##### Table of Contents





|    |                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(9) | Unallocated includes corporate support costs in areas such as
    facilities, finance, human resources, information technology,
    legal, marketing and supply chain management.



|     |                                                                                                                                                                                                                                                                
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Franchise sales represent sales at franchise restaurants and
    revenue to our franchisees. We do not record franchise
    restaurant sales as revenues. However, our royalty revenues are
    calculated based on a percentage of franchise restaurant sales.

Burger King Holdings, Inc. and Subsidiaries Restaurant Count
Analysis






| |          
| | ---------
| | Worldwide

|                               |                                     |         |       |     |           |  |        |       |   |  |        |      |  
|------------------------------ | ----------------------------------- | ------- | ----- | --- | --------- |  | ------ | ----- | - |  | ------ | ---- | -
|                               |                                     | Company |       |     | Franchise |  |        | Total |  
|                               |                                     |         |       |     |           |  |        |       |  
|Beginning Balance July 1, 2003 |                                     |         | 1,061 |     |           |  | 10,274 |       |   |  | 11,335 |     
|                               | Openings                            |         |       | 29  |           |  |        | 275   |   |  |        | 304  |  
|                               | Closings                            |         |       | (20 | )         |  |        | (392  | ) |  |        | (412 | )
|                               | Acquisitions, net of refranchisings |         |       | 17  |           |  |        | (17   | ) |  |        |     |  
|                               |                                     |         |       |     |           |  |        |       |  
|Ending Balance June 30, 2004   |                                     |         | 1,087 |     |           |  | 10,140 |       |   |  | 11,227 |     
|                               |                                     |         |       |     |           |  |        |       |  
|                               | Openings                            |         |       | 63  |           |  |        | 251   |   |  |        | 314  |  
|                               | Closings                            |         |       | (23 | )         |  |        | (414  | ) |  |        | (437 | )
|                               | Acquisitions, net of refranchisings |         |       | 60  |           |  |        | (60   | ) |  |        |     |  
|                               |                                     |         |       |     |           |  |        |       |  
|Ending Balance June 30, 2005   |                                     |         | 1,187 |     |           |  | 9,917  |       |   |  | 11,104 |     
|                               |                                     |         |       |     |           |  |        |       |  
|                               | Openings                            |         |       | 23  |           |  |        | 326   |   |  |        | 349  |  
|                               | Closings                            |         |       | (14 | )         |  |        | (310  | ) |  |        | (324 | )
|                               | Acquisitions, net of refranchisings |         |       | 44  |           |  |        | (44   | ) |  |        |     |  
|                               |                                     |         |       |     |           |  |        |       |  
|Ending Balance June 30, 2006   |                                     |         | 1,240 |     |           |  | 9,889  |       |   |  | 11,129 |     
|                               |                                     |         |       |     |           |  |        |       |  



| |                       
| | ----------------------
| | United States & Canada

|                               |                                     |         |     |     |           |  |       |       |   |  |       |      |  
|------------------------------ | ----------------------------------- | ------- | --- | --- | --------- |  | ----- | ----- | - |  | ----- | ---- | -
|                               |                                     | Company |     |     | Franchise |  |       | Total |  
|                               |                                     |         |     |     |           |  |       |       |  
|Beginning Balance July 1, 2003 |                                     |         | 735 |     |           |  | 7,529 |       |   |  | 8,264 |     
|                               | Openings                            |         |     | 3   |           |  |       | 43    |   |  |       | 46   |  
|                               | Closings                            |         |     | (16 | )         |  |       | (318  | ) |  |       | (334 | )
|                               | Acquisitions, net of refranchisings |         |     | 37  |           |  |       | (37   | ) |  |       |     |  
|                               |                                     |         |     |     |           |  |       |       |  
|Ending Balance June 30, 2004   |                                     |         | 759 |     |           |  | 7,217 |       |   |  | 7,976 |     
|                               |                                     |         |     |     |           |  |       |       |  
|                               | Openings                            |         |     | 33  |           |  |       | 21    |   |  |       | 54   |  
|                               | Closings                            |         |     | (9  | )         |  |       | (301  | ) |  |       | (310 | )
|                               | Acquisitions, net of refranchisings |         |     | 61  |           |  |       | (61   | ) |  |       |     |  
|                               |                                     |         |     |     |           |  |       |       |  
|Ending Balance June 30, 2005   |                                     |         | 844 |     |           |  | 6,876 |       |   |  | 7,720 |     
|                               |                                     |         |     |     |           |  |       |       |  
|                               | Openings                            |         |     | 4   |           |  |       | 55    |   |  |       | 59   |  
|                               | Closings                            |         |     | (10 | )         |  |       | (235  | ) |  |       | (245 | )
|                               | Acquisitions, net of refranchisings |         |     | 40  |           |  |       | (40   | ) |  |       |     |  
|                               |                                     |         |     |     |           |  |       |       |  
|Ending Balance June 30, 2006   |                                     |         | 878 |     |           |  | 6,656 |       |   |  | 7,534 |     
|                               |                                     |         |     |     |           |  |       |       |  

34



---



##### Table of Contents





| |           
| | ----------
| | EMEA/ APAC

|                               |                                     |         |     |     |           |  |       |       |   |  |       |      |  
|------------------------------ | ----------------------------------- | ------- | --- | --- | --------- |  | ----- | ----- | - |  | ----- | ---- | -
|                               |                                     | Company |     |     | Franchise |  |       | Total |  
|                               |                                     |         |     |     |           |  |       |       |  
|Beginning Balance July 1, 2003 |                                     |         | 280 |     |           |  | 2,179 |       |   |  | 2,459 |     
|                               | Openings                            |         |     | 21  |           |  |       | 177   |   |  |       | 198  |  
|                               | Closings                            |         |     | (4  | )         |  |       | (68   | ) |  |       | (72  | )
|                               | Acquisitions, net of refranchisings |         |     | (20 | )         |  |       | 20    |   |  |       |     |  
|                               |                                     |         |     |     |           |  |       |       |  
|Ending Balance June 30, 2004   |                                     |         | 277 |     |           |  | 2,308 |       |   |  | 2,585 |     
|                               |                                     |         |     |     |           |  |       |       |  
|                               | Openings                            |         |     | 21  |           |  |       | 165   |   |  |       | 186  |  
|                               | Closings                            |         |     | (14 | )         |  |       | (101  | ) |  |       | (115 | )
|                               | Acquisitions, net of refranchisings |         |     | (1  | )         |  |       | 1     |   |  |       |     |  
|                               |                                     |         |     |     |           |  |       |       |  
|Ending Balance June 30, 2005   |                                     |         | 283 |     |           |  | 2,373 |       |   |  | 2,656 |     
|                               |                                     |         |     |     |           |  |       |       |  
|                               | Openings                            |         |     | 10  |           |  |       | 191   |   |  |       | 201  |  
|                               | Closings                            |         |     | (4  | )         |  |       | (66   | ) |  |       | (70  | )
|                               | Acquisitions, net of refranchisings |         |     | 4   |           |  |       | (4    | ) |  |       |     |  
|                               |                                     |         |     |     |           |  |       |       |  
|Ending Balance June 30, 2006   |                                     |         | 293 |     |           |  | 2,494 |       |   |  | 2,787 |     
|                               |                                     |         |     |     |           |  |       |       |  



| |              
| | -------------
| | Latin America

|                               |                                     |         |    |   |           |  |     |       |   |  |     |     |  
|------------------------------ | ----------------------------------- | ------- | -- | - | --------- |  | --- | ----- | - |  | --- | --- | -
|                               |                                     | Company |    |   | Franchise |  |     | Total |  
|                               |                                     |         |    |   |           |  |     |       |  
|Beginning Balance July 1, 2003 |                                     |         | 46 |   |           |  | 566 |       |   |  | 612 |    
|                               | Openings                            |         |    | 5 |           |  |     | 55    |   |  |     | 60  |  
|                               | Closings                            |         |    |  |           |  |     | (6    | ) |  |     | (6  | )
|                               | Acquisitions, net of refranchisings |         |    |  |           |  |     |      |   |  |     |    |  
|                               |                                     |         |    |   |           |  |     |       |  
|Ending Balance June 30, 2004   |                                     |         | 51 |   |           |  | 615 |       |   |  | 666 |    
|                               |                                     |         |    |   |           |  |     |       |  
|                               | Openings                            |         |    | 9 |           |  |     | 65    |   |  |     | 74  |  
|                               | Closings                            |         |    |  |           |  |     | (12   | ) |  |     | (12 | )
|                               | Acquisitions, net of refranchisings |         |    |  |           |  |     |      |   |  |     |    |  
|                               |                                     |         |    |   |           |  |     |       |  
|Ending Balance June 30, 2005   |                                     |         | 60 |   |           |  | 668 |       |   |  | 728 |    
|                               |                                     |         |    |   |           |  |     |       |  
|                               | Openings                            |         |    | 9 |           |  |     | 80    |   |  |     | 89  |  
|                               | Closings                            |         |    |  |           |  |     | (9    | ) |  |     | (9  | )
|                               | Acquisitions, net of refranchisings |         |    |  |           |  |     |      |   |  |     |    |  
|                               |                                     |         |    |   |           |  |     |       |  
|Ending Balance June 30, 2006   |                                     |         | 69 |   |           |  | 739 |       |   |  | 808 |    
|                               |                                     |         |    |   |           |  |     |       |  

35



---



##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

You should read the following discussion together with
Part II, Item 6 Selected Financial Data
and our audited consolidated financial statements and the
related notes thereto included in Item 8 Financial
Statements and Supplementary Data. In addition to
historical consolidated financial information, this discussion
contains forward-looking statements that reflect our plans,
estimates and beliefs. Actual results could differ from these
expectations as a result of factors including those described
under Item 1A, Risk Factors, Special
Note Regarding Forward-Looking Statements and
elsewhere in this
Form 10-K.


References to fiscal 2006, fiscal 2005 and fiscal 2004 in
this section are to the fiscal years ended June 30, 2006,
2005 and 2004, respectively.


Overview






Fiscal 2006 Highlights and Fiscal 2007 Outlook


Fire-up




| |   |                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | ten consecutive quarters of positive system-wide comparables
    sales growth for the first time in more than a decade;                                                                                                                                              
|
| |  | nine straight quarters of positive comparable sales growth in
    United States and Canada, as compared to negative comparable
    sales growth in the previous seven consecutive quarters;                                                                          
|
| |  | all-time high annual revenues of $2.05 billion;                                                                                                                                                                                                                      
|
| |  | all-time high average restaurant sales of $1.13 million;                                                                                                                                                                                                             
|
| |  | openings of 290 new restaurants in two of our business segments,
    EMEA/ APAC and Latin America;                                                                                                                                                                   
|
| |  | system-wide net restaurant growth of 25, the first year of
    net growth in four years;                                                                                                                                                                             
|
| |  | significant improvement in the financial health of our franchise
    system in the United States and Canada as demonstrated by
    improved royalty and rent collection rates and our substantially
    completed Franchisee Financial Restructuring Program or FFRP;
|
| |  | award-winning advertising and promotional programs focused on
    our core customer, the SuperFan;                                                                                                                                                                   
|
| |  | robust pipeline of new products;                                                                                                                                                                                                                                     

36



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | improved relationships with our franchisees in the United States;                                                                                                                                                                                     
|
| |  | all-time high restaurant guest satisfaction scores, as well as
    record speed of service and cleanliness scores;                                                                                                                                    
|
| |  | Decrease in total debt by $285 million from
    $1.283 billion at June 30, 2005 to $998 million
    at June 30, 2006; and                                                                                                                             
|
| |  | Increase in EBITDA by 15% from $225 million in fiscal 2005
    to $258 million in fiscal 2006. See Part II,
    Item 6, Selected Financial Datafor a definition of
    EBITDA, its calculation and an explanation of its usefulness to
    management.







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Drive sales growth and profitability of our
    U.S. business. We have achieved nine consecutive
    quarters of comparable sales growth and increased average
    restaurant sales by 14% since fiscal 2003 in our
    U.S. business, but we believe that we have a long way to go
    to reach our comparable sales and average restaurant sales
    (ARS) growth potential in the United States. We also
    believe that our purchasing scale, coupled with our initiatives
    to promote restaurant efficiency, including our new batch
    broiler, our improved labor scheduling system and our kitchen
    minder platform, will further improve restaurant profitability.
    We will continue to emphasize extending our hours of operations
    with our U.S. franchisees to close the competitive hour gap
    both in the breakfast and late night day parts. We have reduced
    the capital costs to build a restaurant which, together with the
    improved financial health of our franchise system in the United
    States, is leading to increased restaurant development in our
    U.S. business. During fiscal 2007, we anticipate opening
    more than 100 new restaurants in the United States.
|
| |  | Expand our large international platform. We will
    continue to build upon our substantial international
    infrastructure, franchise network and restaurant base, focusing
    mainly on under-penetrated markets where we already have a
    presence. Internationally, we are about one-fourth the size of
    our largest competitor, which we believe demonstrates
    significant growth opportunities for us. We have developed a
    detailed global development plan to seed worldwide growth over
    the next five years. We expect that most of this growth will
    come from franchisees in our established markets, particularly
    in Germany, Spain and Mexico, although we also intend to
    aggressively pursue market expansion opportunities in Brazil. In
    addition, we will focus on expanding our presence in many of our
    under-penetrated European and Asian markets. During fiscal 2007,
    we anticipate opening more than 250 new restaurants in EMEA/APAC
    and more than 80 new restaurants in Latin America.                                                                                                                                                                  
|
| |  | Continue to build relationships with franchisees.
    We succeed when our franchisees succeed, and we will continue
    building our relationships with our franchisees. In the past
    three years, we have held regional conferences with franchisees
    to promote our operations and marketing initiatives and share
    best practices, and we intend to continue holding these
    conferences in the future. We have established quarterly officer
    and director visits to franchisees, which have more closely
    aligned the people in our company to our franchise base. We have
    implemented advisory committees for marketing, operations,
    finance and people, which we believe will ensure that franchisee
    expertise and best practices are incorporated into all
    U.S. system initiatives prior to rollout. We will continue
    to dedicate resources toward the creation of a cohesive
    organization that is focused on supporting the Burger Kingbrand globally.                                                                                                                                                                                                                   
|
| |  | Become a world-class global company. Since 2004,
    we have integrated our domestic and international operations
    into one global company. For fiscal 2007, we have developed a
    global marketing calendar to create more consistent advertising
    and brand positioning strategies across our markets. We have
    also established a global product development team to reduce
    complexity and increase consistency in our                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

37



---



##### Table of Contents



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | worldwide menu. We expect to leverage our global purchasing
    power to negotiate lower product costs and savings for our
    restaurants outside of the United States and Canada. We believe
    that the organizational realignments that we have implemented
    will position us to execute our global growth strategy, while
    remaining responsive to national differences in consumer
    preferences and local requirements.

Our Business




| |         
| | --------
| | Revenues





| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| |  | sales at our company restaurants;                                             
|
| |  | royalties and franchise fees paid to us by our
    franchisees; and           
|
| |  | property income from restaurants that we lease or sublease to
    franchisees.









| |                   
| | ------------------
| | Costs and Expenses





| |   |                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | food, paper and product costs, which represent the costs of the
    food and beverages that we sell to consumers in company
    restaurants;                                                                                                                                                                                        
|
| |  | payroll and employee benefits costs, which represent the wages
    paid to company restaurant managers and staff, as well as the
    cost of their health insurance, other benefits and
    training; and                                                                                                                           
|
| |  | occupancy and other operating costs, which represent all other
    direct costs of operating our company restaurants, including the
    cost of rent or real estate depreciation (for restaurant
    properties owned by us), depreciation on equipment, repairs and
    maintenance, insurance, restaurant supplies, and utilities.

38



---



##### Table of Contents





Results of Operations  Fees
Paid to Affiliates.












| |                  
| | -----------------
| | Advertising Funds

Burger King


Key Business Measures




39



---



##### Table of Contents







| |                        
| | -----------------------
| | Comparable Sales Growth



|                         |                          |                          |  |      |      |  |  |      |      |  |  |      |     |  
|------------------------ | ------------------------ | ------------------------ |  | ---- | ---- |  |  | ---- | ---- |  |  | ---- | --- | -
|                         |                          | For the                  | 
|                         |                          | Fiscal Year Ended        | 
|                         |                          | June 30,                 | 
|                         |                          |                          | 
|                         |                          | 2006                     |  |      | 2005 |  |  | 2004 |     
|                         |                          |                          |  |      |      |  |  |      |     
|                         |                          | (In constant currencies) | 
|Comparable Sales Growth: |                          |                          |  |      |      |  |  |      |      |  |  |     
|                         | United States and Canada |                          |  | 2.5% |      |  |  | 6.6% |      |  |  | (0.5 | )% 
|                         | EMEA/ APAC               |                          |  | 0.0% |      |  |  | 2.8% |      |  |  | 5.4  | %  
|                         | Latin America            |                          |  | 2.5% |      |  |  | 5.5% |      |  |  | 4.0  | %  
|                         |                          | Total System-Wide        |  |      | 1.9% |  |  |      | 5.6% |  |  |      | 1.0 | %











| |                         
| | ------------------------
| | Average Restaurant Sales



|                         |  |                   |       |  |      |   |       |      |  |   |       | 
|------------------------ |  | ----------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                         |  | For the           |      
|                         |  | Fiscal Year Ended |      
|                         |  | June 30,          |      
|                         |  |                   |      
|                         |  | 2006              |       |  | 2005 |   |       | 2004 | 
|                         |  |                   |       |  |      |   |       |      | 
|                         |  | (In thousands)    |      
|Average Restaurant Sales |  | $                 | 1,126 |  |      | $ | 1,104 |      |  | $ | 1,014 | 



40



---



##### Table of Contents







| |                         
| | ------------------------
| | System-Wide Sales Growth





| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | the overall direction and trends of sales and operating income
    on a system-wide basis; and
|
| |  | the effectiveness of our advertising and marketing initiatives.                               

|                          |                          |                          |  |       |      |  |  |       |      |  |  |      |     |  
|------------------------- | ------------------------ | ------------------------ |  | ----- | ---- |  |  | ----- | ---- |  |  | ---- | --- | -
|                          |                          | For the                  | 
|                          |                          | Fiscal Year Ended        | 
|                          |                          | June 30,                 | 
|                          |                          |                          | 
|                          |                          | 2006                     |  |       | 2005 |  |  | 2004  |     
|                          |                          |                          |  |       |      |  |  |       |     
|                          |                          | (In constant currencies) | 
|System-Wide Sales Growth: |                          |                          |  |       |      |  |  |       |      |  |  |     
|                          | United States and Canada |                          |  | 0.2%  |      |  |  | 4.9%  |      |  |  | (2.2 | )% 
|                          | EMEA/ APAC               |                          |  | 5.0%  |      |  |  | 7.9%  |      |  |  | 11.5 | %  
|                          | Latin America            |                          |  | 13.0% |      |  |  | 14.5% |      |  |  | 8.4  | %  
|                          |                          | Total System-Wide        |  |       | 2.1% |  |  |       | 6.1% |  |  |      | 1.2 | %











41



---



##### Table of Contents





Factors Affecting Comparability of Results




| |                    
| | -------------------
| | Purchase Accounting

Business Combinations.








| |                                         
| | ----------------------------------------
| | Historical Franchisee Financial Distress

Other
Commercial Commitments and Off-Balance Sheet Arrangements


42



---



##### Table of Contents







|                                        |                                                            |                   |   |    |      |   |    |      |   |   |     |    | 
|--------------------------------------- | ---------------------------------------------------------- | ----------------- | - | -- | ---- | - | -- | ---- | - | - | --- | -- | 
|                                        |                                                            | For the           |  
|                                        |                                                            | Fiscal Year Ended |  
|                                        |                                                            | June 30,          |  
|                                        |                                                            |                   |  
|                                        |                                                            | 2006              |   |    | 2005 |   |    | 2004 |  
|                                        |                                                            |                   |   |    |      |   |    |      |  
|                                        |                                                            | (In millions)     |  
|Revenues:                               |                                                            |                   |   |    |      |   |    |      |   |   |     |   
|                                        | Revenue not recognized(1)                                  |                   | $ |   |      |   | $  | (3   | ) |   | $   | 22 | 
|Selling, general and administrative:    |                                                            |                   |   |    |      |   |    |      |   |   |     |   
|                                        | Bad debt expense                                           |                   |   | (1 | )    |   |    | 1    |   |   |     | 11 | 
|                                        | Incremental advertising contributions                      |                   |   | 1  |      |   |    | 15   |   |   |     | 41 | 
|                                        | Internal and external costs of FFRP program administration |                   |   |   |      |   |    | 12   |   |   |     | 11 | 
|                                        |                                                            |                   |   |    |      |   |    |      |  
|                                        | Total effect on selling, general and administrative        |                   | $ |   |      |   | $  | 28   |   |   | $   | 63 | 
|Other operating expenses (income), net: |                                                            |                   |   |    |      |   |    |      |   |   |     |   
|                                        | Reserves (recoveries) on acquired debt, net                |                   |   | (2 | )    |   |    | 4    |   |   |     | 19 | 
|                                        | Other, net                                                 |                   |   | 2  |      |   |    | 4    |   |   |     | 1  | 
|                                        |                                                            |                   |   |    |      |   |    |      |  
|                                        | Total effect on other operating (income) expenses, net     |                   | $ |   |      |   | $  | 8    |   |   | $   | 20 | 
|                                        |                                                            |                   |   |    |      |   |    |      |  
|Total effect on income from operations  |                                                            | $                 |  |    |      | $ | 33 |      |   | $ | 105 |   
|                                        |                                                            |                   |   |    |      |   |    |      |  






|    |                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------
|(1) | Fiscal 2005 reflects the collection and recognition of revenue
    that was not recognized in fiscal 2004.

Accounting for
Franchise Fee Revenue






43



---



##### Table of Contents







| |                                          
| | -----------------------------------------
| | Our Global Reorganization and Realignment

Liquidity and Capital
Resources  Realignment of our European and Asian
businesses.




|                                                     |       |                   |    |    |      |   |    |      |  |   |    |    | 
|---------------------------------------------------- | ----- | ----------------- | -- | -- | ---- | - | -- | ---- |  | - | -- | -- | 
|                                                     |       | For the           |   
|                                                     |       | Fiscal Year Ended |   
|                                                     |       | June 30,          |   
|                                                     |       |                   |   
|                                                     |       | 2006              |    |    | 2005 |   |    | 2004 | 
|                                                     |       |                   |    |    |      |   |    |      | 
|                                                     |       | (In millions)     |   
|Consulting fees                                      |       | $                 | 10 |    |      | $ | 2  |      |  | $ | 14 |   
|Severance-related costs of the global reorganization |       |                   |   |    |      |   | 15 |      |  |   | 8  |   
|                                                     |       |                   |    |    |      |   |    |      | 
|                                                     | Total |                   | $  | 10 |      |   | $  | 17   |  |   | $  | 22 | 
|                                                     |       |                   |    |    |      |   |    |      | 

44



---



##### Table of Contents



Results of Operations




|                                             |                                      |                                                      |       |           |            |  |      |        |           |   |            |       |       |        |     |     |    |   |       |       |       | 
|-------------------------------------------- | ------------------------------------ | ---------------------------------------------------- | ----- | --------- | ---------- |  | ---- | ------ | --------- | - | ---------- | ----- | ----- | ------ | --- | --- | -- | - | ----- | ----- | ----- | 
|                                             |                                      | For the                                              |      
|                                             |                                      | Fiscal Year Ended                                    |      
|                                             |                                      | June 30,                                             |      
|                                             |                                      |                                                      |      
|                                             |                                      | 2006                                                 |       |           | 2005       |  |      | 2004   |          
|                                             |                                      |                                                      |       |           |            |  |      |        |          
|                                             |                                      |                                                      |       | Increase/ |            |  |      |        | Increase/ |   |            |      
|                                             |                                      | Amount                                               |       |           | (Decrease) |  |      | Amount |           |   | (Decrease) |       |       | Amount |    
|                                             |                                      |                                                      |       |           |            |  |      |        |           |   |            |       |       |        |    
|                                             |                                      | (In millions, except percentages and per share data) |      
|Revenues:                                    |                                      |                                                      |       |           |            |  |      |        |           |   |            |       |       |        |     |     |    |   |       |      
|                                             | Company restaurant revenues          |                                                      | $     | 1,516     |            |  |      | 8      | %         |   | $          | 1,407 |       |        |     | 10  | %  |   | $     | 1,276 |      
|                                             | Franchise revenues                   |                                                      |       | 420       |            |  |      | 2      | %         |   |            | 413   |       |        |     | 14  | %  |   |       | 361   |      
|                                             | Property revenues                    |                                                      |       | 112       |            |  |      | (7     | )%        |   |            | 120   |       |        |     | 3   | %  |   |       | 117   |      
|                                             |                                      |                                                      |       |           |            |  |      |        |           |   |            |       |       |        |    
|                                             |                                      | Total revenues                                       |       |           | 2,048      |  |      |        | 6         | % |            |       | 1,940 |        |     |     | 11 | % |       |       | 1,754 | 
|Company restaurant expenses                  |                                      |                                                      | 1,296 |           |            |  | 8    | %      |           |   | 1,195      |       |       |        | 10  | %   |    |   | 1,087 |      
|Selling, general and administrative expenses |                                      |                                                      | 488   |           |            |  | *    |        |           |   | 487        |       |       |        | 3   | %   |    |   | 474   |      
|Property expenses                            |                                      |                                                      | 57    |           |            |  | (11  | )%     |           |   | 64         |       |       |        | 10  | %   |    |   | 58    |      
|Fees paid to affiliates                      |                                      |                                                      | 39    |           |            |  | 333  | %      |           |   | 9          |       |       |        | 13  | %   |    |   | 8     |      
|Other operating (income) expenses, net       |                                      |                                                      | (2    | )         |            |  | (106 | )%     |           |   | 34         |       |       |        | (37 | )%  |    |   | 54    |      
|                                             |                                      |                                                      |       |           |            |  |      |        |           |   |            |       |       |        |    
|                                             | Total operating costs and expenses   |                                                      |       | 1,878     |            |  |      | 5      | %         |   |            | 1,789 |       |        |     | 6   | %  |   |       | 1,681 |      
|                                             |                                      |                                                      |       |           |            |  |      |        |           |   |            |       |       |        |    
|Income from operations                       |                                      |                                                      | 170   |           |            |  | 13   | %      |           |   | 151        |       |       |        | 107 | %   |    |   | 73    |      
|                                             | Interest expense, net                |                                                      |       | 72        |            |  |      | (1     | )%        |   |            | 73    |       |        |     | 14  | %  |   |       | 64    |      
|                                             | Loss on early extinguishment of debt |                                                      |       | 18        |            |  |      | *      |           |   |            |      |       |        |     | *   |    |   |       |      |      
|                                             |                                      |                                                      |       |           |            |  |      |        |           |   |            |       |       |        |    
|Income before income taxes                   |                                      |                                                      | 80    |           |            |  | 3    | %      |           |   | 78         |       |       |        | *   |     |    |   | 9     |      
|                                             | Income tax expense                   |                                                      |       | 53        |            |  |      | 71     | %         |   |            | 31    |       |        |     | *   |    |   |       | 4     |      
|                                             |                                      |                                                      |       |           |            |  |      |        |           |   |            |       |       |        |    
|Net income                                   |                                      | $                                                    | 27    |           |            |  | (43  | )%     |           | $ | 47         |       |       |        | *   |     |    | $ | 5     |      
|                                             |                                      |                                                      |       |           |            |  |      |        |           |   |            |       |       |        |    
|                                             | Earnings per common share  diluted  |                                                      | $     | 0.24      |            |  |      | (45    | )%        |   | $          | 0.44  |       |        |     | 780 | %  |   | $     | 0.05  |      






|  |                
|- | ---------------
|* | Not meaningful.



| |         
| | --------
| | Revenues







45



---



##### Table of Contents





















| |                             
| | ----------------------------
| | Operating Costs and Expenses



| |                            
| | ---------------------------
| | Company restaurant expenses



46



---



##### Table of Contents





















47



---



##### Table of Contents

















| |                                                       
| | ------------------------------------------------------
| | Worldwide selling, general and administrative expenses









48



---



##### Table of Contents









| |                  
| | -----------------
| | Property expenses





| |                        
| | -----------------------
| | Fees paid to affiliates





| |                                                 
| | ------------------------------------------------
| | Worldwide other operating (income) expenses, net



|                                                                         |  |               |    |   |      |   |    |      |  |   |    | 
|------------------------------------------------------------------------ |  | ------------- | -- | - | ---- | - | -- | ---- |  | - | -- | 
|                                                                         |  | For the       |   
|                                                                         |  | Fiscal Ended  |   
|                                                                         |  | June 30,      |   
|                                                                         |  |               |   
|                                                                         |  | 2006          |    |   | 2005 |   |    | 2004 | 
|                                                                         |  |               |    |   |      |   |    |      | 
|                                                                         |  | (In millions) |   
|(Gains) losses on closures, asset disposals, and refranchisings,
    net |  | $             | (3 | ) |      | $ | 13 |      |  | $ | 15 | 
|Impairment of long-lived assets                                          |  |               |   |   |      |   | 4  |      |  |   |   | 
|(Recovery) impairment of investments in franchisee debt                  |  |               | (2 | ) |      |   | 4  |      |  |   | 19 | 
|Impairment of investments in unconsolidated companies                    |  |               |   |   |      |   |   |      |  |   | 4  | 
|Litigation settlements and reserves                                      |  |               |   |   |      |   | 2  |      |  |   | 4  | 
|Other, net                                                               |  |               | 3  |   |      |   | 11 |      |  |   | 12 | 
|                                                                         |  |               |    |   |      |   |    |      | 
|Total other operating (income) expenses, net                             |  | $             | (2 | ) |      | $ | 34 |      |  | $ | 54 | 
|                                                                         |  |               |    |   |      |   |    |      | 



49



---



##### Table of Contents











| |                 
| | ----------------
| | Operating income

Disclosures about Segments
of an Enterprise and Related Information (SFAS No 131)








50



---



##### Table of Contents







| |                      
| | ---------------------
| | Interest expense, net

payment-in




| |                                     
| | ------------------------------------
| | Loss on early extinguishment of debt





| |                   
| | ------------------
| | Income Tax Expense







| |           
| | ----------
| | Net Income





51



---



##### Table of Contents



Quarterly Financial Data




|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |      |  |   |      |      |  |   |      |      | 
|-------------------------------------------- | ----------------------------------- | ------------------------------------ | ---- | ----- | ------- | - | ---- | ------- | - | - | ------- | ---- |  | ------- | ---- | ---- | ------- | - | ---- | ------- |  | - | ------- | ---- |  | - | ---- | ---- |  | - | ---- | ---- | 
|                                             |                                     | For the Quarters Ended               |     
|                                             |                                     |                                      |     
|                                             |                                     | Jun 30,                              |      |       | Mar 31, |   |      | Dec 31, |   |   | Sep 30, |      |  | Jun 30, |      |      | Mar 31, |   |      | Dec 31, |  |   | Sep 30, |     
|                                             |                                     | 2006                                 |      |       | 2006    |   |      | 2005    |   |   | 2005    |      |  | 2005    |      |      | 2005    |   |      | 2004    |  |   | 2004    |     
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|                                             |                                     | (In millions, except per share data) |     
|Company restaurant revenues                  |                                     | $                                    | 394  |       |         | $ | 368  |         |   | $ | 379     |      |  | $       | 375  |      |         | $ | 364  |         |  | $ | 339     |      |  | $ | 354  |      |  | $ | 350  |     
|Franchise revenues                           |                                     |                                      | 111  |       |         |   | 100  |         |   |   | 104     |      |  |         | 105  |      |         |   | 107  |         |  |   | 100     |      |  |   | 104  |      |  |   | 102  |     
|Property revenues                            |                                     |                                      | 28   |       |         |   | 27   |         |   |   | 29      |      |  |         | 28   |      |         |   | 32   |         |  |   | 29      |      |  |   | 30   |      |  |   | 29   |     
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|                                             | Total revenues                      |                                      |      | 533   |         |   |      | 495     |   |   |         | 512  |  |         |      | 508  |         |   |      | 503     |  |   |         | 468  |  |   |      | 488  |  |   |      | 481  | 
|Company restaurant expenses:                 |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |      |  |   |      |      |  |   |      |     
|                                             | Food, paper and product costs       |                                      |      | 119   |         |   |      | 114     |   |   |         | 119  |  |         |      | 118  |         |   |      | 115     |  |   |         | 104  |  |   |      | 110  |  |   |      | 108  | 
|                                             | Payroll and employee benefits       |                                      |      | 116   |         |   |      | 111     |   |   |         | 109  |  |         |      | 110  |         |   |      | 107     |  |   |         | 104  |  |   |      | 101  |  |   |      | 103  | 
|                                             | Occupancy and other operating costs |                                      |      | 100   |         |   |      | 96      |   |   |         | 93   |  |         |      | 91   |         |   |      | 87      |  |   |         | 88   |  |   |      | 81   |  |   |      | 87   | 
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|                                             | Total company restaurant expenses   |                                      |      | 335   |         |   |      | 321     |   |   |         | 321  |  |         |      | 319  |         |   |      | 309     |  |   |         | 296  |  |   |      | 292  |  |   |      | 298  | 
|Selling, general and administrative expenses |                                     |                                      | 135  |       |         |   | 146  |         |   |   | 109     |      |  |         | 98   |      |         |   | 131  |         |  |   | 124     |      |  |   | 123  |      |  |   | 109  |     
|Property expenses                            |                                     |                                      | 15   |       |         |   | 14   |         |   |   | 14      |      |  |         | 14   |      |         |   | 21   |         |  |   | 14      |      |  |   | 15   |      |  |   | 14   |     
|Fees paid to affiliates                      |                                     |                                      | 31   |       |         |   | 2    |         |   |   | 3       |      |  |         | 3    |      |         |   | 2    |         |  |   | 2       |      |  |   | 2    |      |  |   | 3    |     
|Other operating expenses (income), net       |                                     |                                      | 3    |       |         |   | (2   | )       |   |   | (5      | )    |  |         | 2    |      |         |   | 16   |         |  |   | 15      |      |  |   | 2    |      |  |   | 1    |     
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|                                             | Total operating costs and expenses  |                                      |      | 519   |         |   |      | 481     |   |   |         | 442  |  |         |      | 436  |         |   |      | 479     |  |   |         | 451  |  |   |      | 434  |  |   |      | 425  | 
|Income from operations                       |                                     |                                      | 14   |       |         |   | 14   |         |   |   | 70      |      |  |         | 72   |      |         |   | 24   |         |  |   | 17      |      |  |   | 54   |      |  |   | 56   |     
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|Net (loss) income                            |                                     | $                                    | (10  | )     |         | $ | (12  | )       |   | $ | 27      |      |  | $       | 22   |      |         | $ | 2    |         |  | $ | 1       |      |  | $ | 23   |      |  | $ | 21   |     
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|                                             | Earnings per common share  Diluted |                                      | $    | (0.08 | )       |   | $    | (0.11   | ) |   | $       | 0.24 |  |         | $    | 0.20 |         |   | $    | 0.02    |  |   | $       | 0.01 |  |   | $    | 0.21 |  |   | $    | 0.20 | 
|Segment Data                                 |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |      |  |   |      |      |  |   |      |     
|Operating Income:                            |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |      |  |   |      |      |  |   |      |     
|United States and Canada                     |                                     | $                                    | 76   |       |         | $ | 67   |         |   | $ | 74      |      |  | $       | 78   |      |         | $ | 63   |         |  | $ | 55      |      |  | $ | 65   |      |  | $ | 72   |     
|EMEA/ APAC                                   |                                     |                                      | 11   |       |         |   | 9    |         |   |   | 21      |      |  |         | 21   |      |         |   | 1    |         |  |   | (1      | )    |  |   | 19   |      |  |   | 17   |     
|Latin America                                |                                     |                                      | 7    |       |         |   | 7    |         |   |   | 8       |      |  |         | 7    |      |         |   | 6    |         |  |   | 6       |      |  |   | 7    |      |  |   | 6    |     
|Unallocated                                  |                                     |                                      | (80  | )     |         |   | (69  | )       |   |   | (33     | )    |  |         | (34  | )    |         |   | (46  | )       |  |   | (43     | )    |  |   | (37  | )    |  |   | (39  | )   
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|                                             | Total Operating Income              |                                      | $    | 14    |         |   | $    | 14      |   |   | $       | 70   |  |         | $    | 72   |         |   | $    | 24      |  |   | $       | 17   |  |   | $    | 54   |  |   | $    | 56   | 
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|Company Restaurant Revenues:                 |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |      |  |   |      |      |  |   |      |     
|United States and Canada                     |                                     | $                                    | 271  |       |         | $ | 254  |         |   | $ | 254     |      |  | $       | 253  |      |         | $ | 245  |         |  | $ | 220     |      |  | $ | 229  |      |  | $ | 229  |     
|EMEA/ APAC                                   |                                     |                                      | 109  |       |         |   | 100  |         |   |   | 110     |      |  |         | 109  |      |         |   | 106  |         |  |   | 107     |      |  |   | 113  |      |  |   | 109  |     
|Latin America                                |                                     |                                      | 14   |       |         |   | 14   |         |   |   | 15      |      |  |         | 13   |      |         |   | 13   |         |  |   | 12      |      |  |   | 12   |      |  |   | 12   |     
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|                                             | Total Company Restaurant Revenues   |                                      | $    | 394   |         |   | $    | 368     |   |   | $       | 379  |  |         | $    | 375  |         |   | $    | 364     |  |   | $       | 339  |  |   | $    | 354  |  |   | $    | 350  | 
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|Company Restaurant Margin:                   |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |      |  |   |      |      |  |   |      |     
|United States and Canada                     |                                     |                                      | 15.1 | %     |         |   | 12.2 | %       |   |   | 14.2    | %    |  |         | 14.2 | %    |         |   | 15.1 | %       |  |   | 11.4    | %    |  |   | 17.0 | %    |  |   | 13.1 | %   
|EMEA/ APAC                                   |                                     |                                      | 12.8 | %     |         |   | 12.0 | %       |   |   | 15.5    | %    |  |         | 15.6 | %    |         |   | 13.2 | %       |  |   | 13.1    | %    |  |   | 17.7 | %    |  |   | 16.5 | %   
|Latin America                                |                                     |                                      | 28.6 | %     |         |   | 28.6 | %       |   |   | 33.3    | %    |  |         | 23.1 | %    |         |   | 30.8 | %       |  |   | 33.3    | %    |  |   | 25.0 | %    |  |   | 33.3 | %   
|Company Restaurant Margin                    |                                     |                                      | 15.0 | %     |         |   | 12.8 | %       |   |   | 15.3    | %    |  |         | 14.9 | %    |         |   | 15.1 | %       |  |   | 12.7    | %    |  |   | 17.5 | %    |  |   | 14.9 | %   
|Franchise Revenues:                          |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |      |  |   |      |      |  |   |      |     
|United States and Canada                     |                                     | $                                    | 70   |       |         | $ | 65   |         |   | $ | 66      |      |  | $       | 67   |      |         | $ | 70   |         |  | $ | 66      |      |  | $ | 67   |      |  | $ | 67   |     
|EMEA/ APAC                                   |                                     |                                      | 32   |       |         |   | 27   |         |   |   | 29      |      |  |         | 30   |      |         |   | 29   |         |  |   | 27      |      |  |   | 29   |      |  |   | 28   |     
|Latin America                                |                                     |                                      | 9    |       |         |   | 8    |         |   |   | 9       |      |  |         | 8    |      |         |   | 8    |         |  |   | 7       |      |  |   | 8    |      |  |   | 7    |     
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     
|                                             | Total Franchise Revenues            |                                      | $    | 111   |         |   | $    | 100     |   |   | $       | 104  |  |         | $    | 105  |         |   | $    | 107     |  |   | $       | 100  |  |   | $    | 104  |  |   | $    | 102  | 
|                                             |                                     |                                      |      |       |         |   |      |         |   |   |         |      |  |         |      |      |         |   |      |         |  |   |         |     

52



---



##### Table of Contents



|                         |                       |                                      |       |       |         |   |       |         |  |   |         |       |  |         |       |       |         |   |       |         |  |   |         |       |  |   |       |       |  |   |       |       | 
|------------------------ | --------------------- | ------------------------------------ | ----- | ----- | ------- | - | ----- | ------- |  | - | ------- | ----- |  | ------- | ----- | ----- | ------- | - | ----- | ------- |  | - | ------- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                         |                       | For the Quarters Ended               |      
|                         |                       |                                      |      
|                         |                       | Jun 30,                              |       |       | Mar 31, |   |       | Dec 31, |  |   | Sep 30, |       |  | Jun 30, |       |       | Mar 31, |   |       | Dec 31, |  |   | Sep 30, |      
|                         |                       | 2006                                 |       |       | 2006    |   |       | 2005    |  |   | 2005    |       |  | 2005    |       |       | 2005    |   |       | 2004    |  |   | 2004    |      
|                         |                       |                                      |       |       |         |   |       |         |  |   |         |       |  |         |       |       |         |   |       |         |  |   |         |      
|                         |                       | (In millions, except per share data) |      
|Franchise Sales:         |                       |                                      |       |       |         |   |       |         |  |   |         |       |  |         |       |       |         |   |       |         |  |   |         |       |  |   |       |       |  |   |       |      
|United States and Canada |                       | $                                    | 1,914 |       |         | $ | 1,795 |         |  | $ | 1,850   |       |  | $       | 1,923 |       |         | $ | 1,956 |         |  | $ | 1,761   |       |  | $ | 1,877 |       |  | $ | 1,961 |      
|EMEA/ APAC               |                       |                                      | 695   |       |         |   | 632   |         |  |   | 680     |       |  |         | 708   |       |         |   | 671   |         |  |   | 640     |       |  |   | 667   |       |  |   | 662   |      
|Latin America            |                       |                                      | 187   |       |         |   | 172   |         |  |   | 179     |       |  |         | 168   |       |         |   | 163   |         |  |   | 153     |       |  |   | 159   |       |  |   | 147   |      
|                         |                       |                                      |       |       |         |   |       |         |  |   |         |       |  |         |       |       |         |   |       |         |  |   |         |      
|                         | Total Franchise Sales |                                      | $     | 2,796 |         |   | $     | 2,599   |  |   | $       | 2,709 |  |         | $     | 2,799 |         |   | $     | 2,790   |  |   | $       | 2,554 |  |   | $     | 2,703 |  |   | $     | 2,770 | 
|                         |                       |                                      |       |       |         |   |       |         |  |   |         |       |  |         |       |       |         |   |       |         |  |   |         |      



start-up


53



---



##### Table of Contents





|                                                |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |    |    |  |   |    |    |   |   |   |    | 
|----------------------------------------------- | -------------------------------------------- | ------------------------------------------ | - | -- | ------- |  | - | ------- | -- | - | ------- | - | - | ------- | -- | - | ------- |  | - | ------- | -- |  | ------- | -- | -- |  | - | -- | -- | - | - | - | -- | 
|                                                |                                              | For the Quarters Ended                     |  
|                                                |                                              |                                            |  
|                                                |                                              | Jun 30,                                    |   |    | Mar 31, |  |   | Dec 31, |    |   | Sep 30, |   |   | Jun 30, |    |   | Mar 31, |  |   | Dec 31, |    |  | Sep 30, |   
|                                                |                                              | 2006                                       |   |    | 2006    |  |   | 2005    |    |   | 2005    |   |   | 2005    |    |   | 2005    |  |   | 2004    |    |  | 2004    |   
|                                                |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |   
|                                                |                                              | (In millions)                              |  
|Revenues:                                       |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |    |    |  |   |    |    |   |   |  
|                                                | Franchise system distress impact(a)          |                                            | $ |   |         |  | $ |        |    |   | $       |  |   |         | $  |  |         |  | $ | (3      | )  |  | $       | (1 | )  |  | $ |   |    |   | $ | 1 |   
|Selling, general and administrative:            |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |    |    |  |   |    |    |   |   |  
|                                                | Franchise system distress impact(b)          |                                            |   | (1 | )       |  |   |        |    |   |         |  |   |         |    | 1 |         |  |   | 2       |    |  |         | 9  |    |  |   | 9  |    |   |   | 8 |   
|                                                | Global reorganization and realignment        |                                            |   | 7  |         |  |   | 2       |    |   |         | 1 |   |         |    |  |         |  |   | 7       |    |  |         | 4  |    |  |   | 3  |    |   |   | 3 |   
|                                                | Compensatory make-whole payment              |                                            |   |   |         |  |   | 34      |    |   |         |  |   |         |    |  |         |  |   |        |    |  |         |   |    |  |   |   |    |   |   |  |   
|                                                | Executive severance                          |                                            |   | 5  |         |  |   |        |    |   |         |  |   |         |    |  |         |  |   |        |    |  |         |   |    |  |   |   |    |   |   |  |   
|                                                |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |   
|                                                |                                              | Total effect on SG&A                       |   |    | 11      |  |   |         | 36 |   |         |   | 1 |         |    |   | 1       |  |   |         | 9  |  |         |    | 13 |  |   |    | 12 |   |   |   | 11 | 
|Fees paid to affiliates:                        |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |    |    |  |   |    |    |   |   |  
|                                                | Management fee                               |                                            |   | 1  |         |  |   | 2       |    |   |         | 3 |   |         |    | 3 |         |  |   | 2       |    |  |         | 2  |    |  |   | 2  |    |   |   | 3 |   
|                                                | Management agreement termination fee         |                                            |   | 30 |         |  |   |        |    |   |         |  |   |         |    |  |         |  |   |        |    |  |         |   |    |  |   |   |    |   |   |  |   
|                                                |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |   
|                                                |                                              | Total fees paid to affiliates              |   |    | 31      |  |   |         | 2  |   |         |   | 3 |         |    |   | 3       |  |   |         | 2  |  |         |    | 2  |  |   |    | 2  |   |   |   | 3  | 
|Other operating (income) expenses: (OIE), net |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |    |    |  |   |    |    |   |   |  
|                                                | Franchise system distress impact(c)          |                                            |   | 1  |         |  |   | (2      | )  |   |         | 1 |   |         |    |  |         |  |   |        |    |  |         | 7  |    |  |   |   |    |   |   | 1 |   
|                                                | Loss on asset disposals and asset impairment |                                            |   |   |         |  |   |        |    |   |         |  |   |         |    |  |         |  |   | 9       |    |  |         | 13 |    |  |   | (4 | )  |   |   |  |   
|                                                |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |   
|                                                |                                              | Total effect on OIE, net                   |   |    | 1       |  |   |         | (2 | ) |         |   | 1 |         |    |   |        |  |   |         | 9  |  |         |    | 20 |  |   |    | (4 | ) |   |   | 1  | 
|                                                |                                              | Total effect on income from operations     |   |    | 43      |  |   |         | 36 |   |         |   | 5 |         |    |   | 4       |  |   |         | 17 |  |         |    | 34 |  |   |    | 10 |   |   |   | 16 | 
|                                                |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |   
|Interest on $350 million loan paid-off at IPO   |                                              |                                            | 3 |    |         |  | 3 |         |    |   |        |   |   |         |   |   |         |  |  |         |    |  |        |    |    |  |  |    |    |   |  |  
|Loss on early extinguishment of debt            |                                              |                                            | 4 |    |         |  | 1 |         |    |   |        |   |   |         | 13 |   |         |  |  |         |    |  |        |    |    |  |  |    |    |   |  |  
|                                                |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |   
|                                                |                                              | Total effect on income before income taxes |   | $  | 50      |  |   | $       | 40 |   |         | $ | 5 |         |    | $ | 17      |  |   | $       | 17 |  |         | $  | 34 |  |   | $  | 10 |   |   | $ | 16 | 
|                                                |                                              |                                            |   |    |         |  |   |         |    |   |         |   |   |         |    |   |         |  |   |         |    |  |         |   




(a) Represents revenues not recognized and
(recoveries) of revenues previously not recognized.




|    |  |                                                                                                                                                            
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Represents bad debt expense (recoveries), incremental
    advertising contributions and the internal and external costs of
    FFRP program administration.
|   
|(c) |  | Represents (recoveries) reserves on acquired debt, net
    and other items included within operating (income) expenses,
    net.                           

54



---



##### Table of Contents





|                         |                          |                          |  |      |         |  |  |         |     |   |         |      |      |         |  |      |         |   |  |         |      |  |         |      |      |  |  |      |      |  |  |      |      | 
|------------------------ | ------------------------ | ------------------------ |  | ---- | ------- |  |  | ------- | --- | - | ------- | ---- | ---- | ------- |  | ---- | ------- | - |  | ------- | ---- |  | ------- | ---- | ---- |  |  | ---- | ---- |  |  | ---- | ---- | 
|                         |                          | For the Quarters Ended   | 
|                         |                          |                          | 
|                         |                          | Jun 30,                  |  |      | Mar 31, |  |  | Dec 31, |     |   | Sep 30, |      |      | Jun 30, |  |      | Mar 31, |   |  | Dec 31, |      |  | Sep 30, |     
|                         |                          | 2006                     |  |      | 2006    |  |  | 2005    |     |   | 2005    |      |      | 2005    |  |      | 2005    |   |  | 2004    |      |  | 2004    |     
|                         |                          |                          |  |      |         |  |  |         |     |   |         |      |      |         |  |      |         |   |  |         |      |  |         |     
|                         |                          | (In constant currencies) |  |      |        
|Comparable Sales Growth: |                          |                          |  |      |         |  |  |         |     |   |         |      |      |         |  |      |         |   |  |         |      |  |         |      |      |  |  |      |      |  |  |     
|                         | United States and Canada |                          |  | 2.0% |         |  |  | 4.9     | %   |   |         | 2.3% |      |         |  | 1.1  | %       |   |  | 1.2%    |      |  |         | 8.8% |      |  |  | 9.1% |      |  |  | 7.7% |     
|                         | EMEA/ APAC               |                          |  | 0.2% |         |  |  | (0.4    | )%  |   |         | 1.3% |      |         |  | (0.7 | )%      |   |  | 2.5%    |      |  |         | 2.8% |      |  |  | 1.7% |      |  |  | 4.1% |     
|                         | Latin America            |                          |  | 5.0% |         |  |  | 1.5     | %   |   |         | 1.6% |      |         |  | 1.5  | %       |   |  | 2.2%    |      |  |         | 5.6% |      |  |  | 8.2% |      |  |  | 6.4% |     
|                         |                          | Total System-Wide        |  |      | 1.7%    |  |  |         | 3.3 | % |         |      | 2.0% |         |  |      | 0.7     | % |  |         | 1.6% |  |         |      | 7.1% |  |  |      | 7.2% |  |  |      | 6.8% | 

Liquidity and Capital Resources




| |         
| | --------
| | Overview









| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | July 2005 Refinancing, February 2006 Financing and
    Dividend and the Compensatory Make-Whole Payment

payment-in






55



---



##### Table of Contents





B-1








Term Debt 10-K




| |                       
| | ----------------------
| | Comparative Cash Flows

Operating Activities.


Investing Activities.




56



---



##### Table of Contents





|                           |       |                   |    |    |      |   |    |      |  |   |    |    | 
|-------------------------- | ----- | ----------------- | -- | -- | ---- | - | -- | ---- |  | - | -- | -- | 
|                           |       | For the           |   
|                           |       | Fiscal Year Ended |   
|                           |       | June 30,          |   
|                           |       |                   |   
|                           |       | 2006              |    |    | 2005 |   |    | 2004 | 
|                           |       |                   |    |    |      |   |    |      | 
|                           |       | (In millions)     |   
|New restaurants            |       | $                 | 25 |    |      | $ | 26 |      |  | $ | 22 |   
|Real estate purchases      |       |                   | 6  |    |      |   | 5  |      |  |   | 5  |   
|Maintenance capital        |       |                   | 40 |    |      |   | 44 |      |  |   | 43 |   
|Other, including corporate |       |                   | 14 |    |      |   | 18 |      |  |   | 11 |   
|                           |       |                   |    |    |      |   |    |      | 
|                           | Total |                   | $  | 85 |      |   | $  | 93   |  |   | $  | 81 | 
|                           |       |                   |    |    |      |   |    |      | 

point-of




Financing Activities.




| |                                                 
| | ------------------------------------------------
| | Realignment of our European and Asian businesses



Burger
King




57



---



##### Table of Contents





Consolidated Financial Statements




Contractual Obligations and Commitments




|                                                          |       |                       |       |           |        |   |     |           |           |   |           |     |  |         |     |     |  |   |     |       | 
|--------------------------------------------------------- | ----- | --------------------- | ----- | --------- | ------ | - | --- | --------- | --------- | - | --------- | --- |  | ------- | --- | --- |  | - | --- | ----- | 
|                                                          |       | 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                                 |       | $                     | 134   |           |        | $ | 13  |           |           | $ | 25        |     |  | $       | 22  |     |  | $ | 74  |      
|Operating lease obligations(1)                            |       |                       | 1,391 |           |        |   | 153 |           |           |   | 275       |     |  |         | 231 |     |  |   | 732 |      
|Long-term debt, including current portion and interest(2) |       |                       | 1,354 |           |        |   | 64  |           |           |   | 164       |     |  |         | 273 |     |  |   | 853 |      
|Purchase commitments(3)                                   |       |                       | 56    |           |        |   | 56  |           |           |   |          |     |  |         |    |     |  |   |    |      
|                                                          |       |                       |       |           |        |   |     |           |           |   |           |     |  |         |    
|                                                          | Total |                       | $     | 2,935     |        |   | $   | 286       |           |   | $         | 464 |  |         | $   | 526 |  |   | $   | 1,659 | 
|                                                          |       |                       |       |           |        |   |     |           |           |   |           |     |  |         |    






|    |                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Operating lease obligations include lease payments for company
    restaurants and franchise restaurants that sublease the property
    from us. Rental income from these franchisees was
    $88 million and $91 million for fiscal 2006 and fiscal
    2005, respectively.
|   
|(2) | We have estimated our interest payments based on
    (i) projected LIBOR rates, (ii) the portion of our
    debt we converted to fixed rates through interest rate swaps and
    (iii) the amortization schedule of the debt.                                               
|   
|(3) | Includes commitments to purchase advertising and other marketing
    services from third parties in advance on behalf of the
    Burger Kingsystem and obligations related to information
    technology service agreements.                                                





58



---



##### Table of Contents





Other Commercial Commitments and Off-Balance Sheet
Arrangements




| |                                 
| | --------------------------------
| | Franchisee Restructuring Program





| |           
| | ----------
| | Guarantees







| |                  
| | -----------------
| | Letters of Credit







| |                     
| | --------------------
| | Vendor Relationships

Burger King


59



---



##### Table of Contents





| |                        
| | -----------------------
| | New Global Headquarters

Properties Commitments and Contingencies .




| |      
| | -----
| | Other





Impact of Inflation




Critical Accounting Policies and Estimates








| |                                            
| | -------------------------------------------
| | Business Combinations and Intangible Assets

Business Combinations.


60



---



##### Table of Contents







| |                  
| | -----------------
| | Long-Lived Assets





| |   |                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | management views profitability of the restaurants within the
    operating markets as a whole, based on cash flows generated by a
    portfolio of restaurants, rather than by individual restaurants
    and area managers receive incentives on this basis; and
|
| |  | we do not evaluate individual restaurants to build, acquire or
    close independent of an analysis of other restaurants in these
    operating markets.                                                                                                         







| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | significant under-performance relative to expected and/or
    historical results (negative comparable sales or cash flows for
    two years);
|
| |  | significant negative industry or economic trends; or                                                                                         
|
| |  | knowledge of transactions involving the sale of similar property
    at amounts below our carrying value.                                    

Accounting for the Impairment or
Disposal of Long-Lived Assets.




| |                                                 
| | ------------------------------------------------
| | Impairment of Indefinite-Lived Intangible Assets



61



---



##### Table of Contents



Goodwill and Other Intangible Assets.




| |                                                                
| | ---------------------------------------------------------------
| | Reserves for Uncollectible Accounts and Revenue
    Recognition





| |                            
| | ---------------------------
| | Accounting for Income Taxes







| |                        
| | -----------------------
| | Self-Insurance Programs





Newly Issued Accounting Standards


Share-Based Payment Accounting for Stock-Based
Compensation


62



---



##### Table of Contents



Accounting for Stock Issued to Employees


S-1






Accounting for Uncertainty in Income Taxes







|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk

Market Risk




63



---



##### Table of Contents





Foreign Currency Exchange Risk






Interest Rate Risk




Accounting for Derivative Instruments and Hedging
Activities.


Commodity Price Risk






64



---



##### Table of Contents








|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                                                                                                           |  |      |    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                                                           |  | Page |   
|                                                                                                                                                           |  |      |   
|Report of Independent Registered Public Accounting Firm                                                                                                    |  |      | 66 | 
|                                                                                                                                                          
|Consolidated Balance Sheets as of June 30, 2006 and 2005                                                                                                   |  |      | 67 | 
|                                                                                                                                                          
|Consolidated Statements of Operations for each of the years in
    the three-year period ended June 30, 2006                                               |  |      | 68 | 
|                                                                                                                                                          
|Consolidated Statements of Stockholders Equity and
    Comprehensive Income (Loss) for each of the years in the
    three-year period ended June 30, 2006 |  |      | 69 | 
|                                                                                                                                                          
|Consolidated Statements of Cash Flows for each of the years in
    the three-year period ended June 30, 2006                                               |  |      | 70 | 
|                                                                                                                                                          
|Notes to Consolidated Financial Statements                                                                                                                 |  |      | 71 | 

65



---



##### Table of Contents



Report of Independent Registered Public Accounting
Firm




















66



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Consolidated Balance Sheets


|                                                 |                                                                                                                                                                                      |                                            |     |     |       |  |       |     |       | 
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | --- | --- | ----- |  | ----- | --- | ----- | 
|                                                 |                                                                                                                                                                                      | As of June 30,                             |    
|                                                 |                                                                                                                                                                                      |                                            |    
|                                                 |                                                                                                                                                                                      | 2006                                       |     |     | 2005  | 
|                                                 |                                                                                                                                                                                      |                                            |     |     |       | 
|                                                 |                                                                                                                                                                                      | (In millions, except                       |    
|                                                 |                                                                                                                                                                                      | share data)                                |    
|ASSETS                                          
|Current assets:                                  |                                                                                                                                                                                      |                                            |     |     |       |  |       |    
|                                                 | Cash and cash equivalents                                                                                                                                                            |                                            | $   | 259 |       |  | $     | 432 |      
|                                                 | Trade and notes receivable, net                                                                                                                                                      |                                            |     | 109 |       |  |       | 110 |      
|                                                 | Prepaids and other current assets, net                                                                                                                                               |                                            |     | 40  |       |  |       | 35  |      
|                                                 | Deferred income taxes, net                                                                                                                                                           |                                            |     | 45  |       |  |       | 57  |      
|                                                 |                                                                                                                                                                                      |                                            |     |     |       | 
|                                                 |                                                                                                                                                                                      | Total current assets                       |     |     | 453   |  |       |     | 634   | 
|Property and equipment, net                      |                                                                                                                                                                                      |                                            | 886 |     |       |  | 899   |    
|Intangible assets, net                           |                                                                                                                                                                                      |                                            | 975 |     |       |  | 995   |    
|Goodwill                                         |                                                                                                                                                                                      |                                            | 20  |     |       |  | 17    |    
|Net investment in property leased to franchisees |                                                                                                                                                                                      |                                            | 148 |     |       |  | 149   |    
|Other assets, net                                |                                                                                                                                                                                      |                                            | 70  |     |       |  | 29    |    
|                                                 |                                                                                                                                                                                      |                                            |     |     |       | 
|                                                 |                                                                                                                                                                                      | Total assets                               |     | $   | 2,552 |  |       | $   | 2,723 | 
|                                                 |                                                                                                                                                                                      |                                            |     |     |       | 
|                                                
|LIABILITIES AND STOCKHOLDERS EQUITY            
|Current liabilities:                             |                                                                                                                                                                                      |                                            |     |     |       |  |       |    
|                                                 | Accounts and drafts payable                                                                                                                                                          |                                            | $   | 100 |       |  | $     | 83  |      
|                                                 | Accrued advertising                                                                                                                                                                  |                                            |     | 49  |       |  |       | 59  |      
|                                                 | Other accrued liabilities                                                                                                                                                            |                                            |     | 338 |       |  |       | 248 |      
|                                                 | Current portion of long term debt and capital leases                                                                                                                                 |                                            |     | 5   |       |  |       | 4   |      
|                                                 |                                                                                                                                                                                      |                                            |     |     |       | 
|                                                 |                                                                                                                                                                                      | Total current liabilities                  |     |     | 492   |  |       |     | 394   | 
|Term debt, net of current portion                |                                                                                                                                                                                      |                                            | 997 |     |       |  | 1,282 |    
|Capital leases, net of current portion           |                                                                                                                                                                                      |                                            | 63  |     |       |  | 53    |    
|Other deferrals and liabilities                  |                                                                                                                                                                                      |                                            | 349 |     |       |  | 375   |    
|Deferred income taxes, net                       |                                                                                                                                                                                      |                                            | 84  |     |       |  | 142   |    
|                                                 |                                                                                                                                                                                      |                                            |     |     |       | 
|                                                 |                                                                                                                                                                                      | Total liabilities                          |     |     | 1,985 |  |       |     | 2,246 | 
|Commitments and Contingencies (Note 19)          |                                                                                                                                                                                      |                                            |     |     |       |  |       |    
|Stockholders equity:                            |                                                                                                                                                                                      |                                            |     |     |       |  |       |    
|                                                 | Preferred stock, $0.01 par value; 10,000,000 shares
    authorized; no shares issued or outstanding                                                                                  |                                            |     |    |       |  |       |    |      
|                                                 | Common stock, $0.01 par value; 300,000,000 shares
    authorized; 133,058,640 and 106,734,893 shares issued and
    outstanding at June 30, 2006 and June 30, 2005,
    respectively |                                            |     | 1   |       |  |       | 1   |      
|                                                 | Restricted stock units                                                                                                                                                               |                                            |     | 5   |       |  |       | 2   |      
|                                                 | Additional paid-in capital                                                                                                                                                           |                                            |     | 545 |       |  |       | 406 |      
|                                                 | Retained earnings                                                                                                                                                                    |                                            |     | 3   |       |  |       | 76  |      
|                                                 | Accumulated other comprehensive income (loss)                                                                                                                                        |                                            |     | 15  |       |  |       | (6  | )    
|                                                 | Treasury stock, at cost; 590,841 shares, at June 30,
    2006 and June 30, 2005, respectively                                                                                        |                                            |     | (2  | )     |  |       | (2  | )    
|                                                 |                                                                                                                                                                                      |                                            |     |     |       | 
|                                                 |                                                                                                                                                                                      | Total stockholders equity                 |     |     | 567   |  |       |     | 477   | 
|                                                 |                                                                                                                                                                                      |                                            |     |     |       | 
|                                                 |                                                                                                                                                                                      | Total liabilities and stockholders equity |     | $   | 2,552 |  |       | $   | 2,723 | 
|                                                 |                                                                                                                                                                                      |                                            |     |     |       | 



67



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Consolidated Statements of Operations


|                                             |                                      |                                   |     |       |       |   |     |       |       |   |     |       |       | 
|-------------------------------------------- | ------------------------------------ | --------------------------------- | --- | ----- | ----- | - | --- | ----- | ----- | - | --- | ----- | ----- | 
|                                             |                                      | Fiscal Years Ended June 30,       |    
|                                             |                                      |                                   |    
|                                             |                                      | 2006                              |     |       | 2005  |   |     | 2004  |      
|                                             |                                      |                                   |     |       |       |   |     |       |      
|                                             |                                      | (In millions, except              |    
|                                             |                                      | per share data)                   |    
|Revenues:                                    |                                      |                                   |     |       |       |   |     |       |       |   |     |      
|                                             | Company restaurant revenues          |                                   | $   | 1,516 |       |   | $   | 1,407 |       |   | $   | 1,276 |      
|                                             | Franchise revenues                   |                                   |     | 420   |       |   |     | 413   |       |   |     | 361   |      
|                                             | Property revenues                    |                                   |     | 112   |       |   |     | 120   |       |   |     | 117   |      
|                                             |                                      |                                   |     |       |       |   |     |       |      
|                                             |                                      | Total revenues                    |     |       | 2,048 |   |     |       | 1,940 |   |     |       | 1,754 | 
|Company restaurant expenses:                 |                                      |                                   |     |       |       |   |     |       |       |   |     |      
|                                             | Food, paper and product costs        |                                   |     | 470   |       |   |     | 437   |       |   |     | 391   |      
|                                             | Payroll and employee benefits        |                                   |     | 446   |       |   |     | 415   |       |   |     | 382   |      
|                                             | Occupancy and other operating costs  |                                   |     | 380   |       |   |     | 343   |       |   |     | 314   |      
|                                             |                                      |                                   |     |       |       |   |     |       |      
|                                             |                                      | Total company restaurant expenses |     |       | 1,296 |   |     |       | 1,195 |   |     |       | 1,087 | 
|Selling, general and administrative expenses |                                      |                                   | 488 |       |       |   | 487 |       |       |   | 474 |      
|Property expenses                            |                                      |                                   | 57  |       |       |   | 64  |       |       |   | 58  |      
|Fees paid to affiliates                      |                                      |                                   | 39  |       |       |   | 9   |       |       |   | 8   |      
|Other operating (income) expenses, net       |                                      |                                   | (2  | )     |       |   | 34  |       |       |   | 54  |      
|                                             |                                      |                                   |     |       |       |   |     |       |      
|                                             | Total operating costs and expenses   |                                   |     | 1,878 |       |   |     | 1,789 |       |   |     | 1,681 |      
|                                             |                                      |                                   |     |       |       |   |     |       |      
|Income from operations                       |                                      |                                   | 170 |       |       |   | 151 |       |       |   | 73  |      
|                                             |                                      |                                   |     |       |       |   |     |       |      
|                                             | Interest expense                     |                                   |     | 81    |       |   |     | 82    |       |   |     | 68    |      
|                                             | Interest income                      |                                   |     | (9    | )     |   |     | (9    | )     |   |     | (4    | )    
|                                             |                                      |                                   |     |       |       |   |     |       |      
|                                             |                                      | Total interest expense, net       |     |       | 72    |   |     |       | 73    |   |     |       | 64    | 
|                                             | Loss on early extinguishment of debt |                                   |     | 18    |       |   |     |      |       |   |     |      |      
|                                             |                                      |                                   |     |       |       |   |     |       |      
|Income before income taxes                   |                                      |                                   | 80  |       |       |   | 78  |       |       |   | 9   |      
|                                             | Income tax expense                   |                                   |     | 53    |       |   |     | 31    |       |   |     | 4     |      
|                                             |                                      |                                   |     |       |       |   |     |       |      
|Net income                                   |                                      | $                                 | 27  |       |       | $ | 47  |       |       | $ | 5   |      
|                                             |                                      |                                   |     |       |       |   |     |       |      
|Earnings per share:                          |                                      |                                   |     |       |       |   |     |       |       |   |     |      
|                                             | Basic                                |                                   | $   | 0.24  |       |   | $   | 0.44  |       |   | $   | 0.05  |      
|                                             | Diluted                              |                                   | $   | 0.24  |       |   | $   | 0.44  |       |   | $   | 0.05  |      
|Weighted average shares outstanding:         |                                      |                                   |     |       |       |   |     |       |       |   |     |      
|                                             | Basic                                |                                   |     | 110.3 |       |   |     | 106.5 |       |   |     | 106.1 |      
|                                             | Diluted                              |                                   |     | 114.7 |       |   |     | 106.9 |       |   |     | 106.1 |      



68



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Consolidated Statements of Stockholders Equity and
Comprehensive Income (Loss)


|                          |                                    |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |   |     |   |    |    |   |   |     |      |     |     |  
|------------------------- | ---------------------------------- | -------------------------------------------------------- | -------------------- | ------ | ------ | - | - | ---------- | - | - | ---------- | - | - | -------- | --- | ------------ | ------------- | - | -- | -------- | -- | - | ----- | - | --- | - | -- | -- | - | - | --- | ---- | --- | --- | -
|                          |                                    |                                                          |                      | Issued |        |   |   |            |   |   |            |   |   |          |     |              |              
|                          |                                    | Issued                                                   |                      |        | Common |   |   | Restricted |   |   | Additional |   |   |          |     | Accum. Other |               |   |    |          |   
|                          |                                    | Common                                                   |                      |        | Stock  |   |   | Stock      |   |   | Paid-In    |   |   | Retained |     |              | Comprehensive |   |    | Treasury |    |   |      
|                          |                                    | Stock Shares                                             |                      |        | Amount |   |   | Units      |   |   | Capital    |   |   | Earnings |     |              | Income (Loss) |   |    | Stock    |    |   | Total |  
|                          |                                    |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |  
|                          |                                    | (In millions)                                            |                     
|Balances at June 30, 2003 |                                    |                                                          | 107                  |        |        | $ | 1 |            |   | $ |           |   |   | $        | 397 |              |               | $ | 24 |          |    | $ | 10    |   |     | $ |   |    |   | $ | 432 |     
|                          | Sale of common stock               |                                                          |                      |       |        |   |   |           |   |   |            |  |   |          |     | 6            |               |   |    |         |    |   |       |  |     |   |    |   |   |   |     | 6    |    
|                          | Comprehensive loss:                |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |   |     |   |    |    |   |   |     |      |    
|                          |                                    | Net income                                               |                      |        |        |   |   |            |  |   |            |   |  |          |     |              |              |   |    |          | 5  |   |       |   |    |   |    |    |  |   |     |      | 5   |    
|                          |                                    | Translation adjustment                                   |                      |        |        |   |   |            |  |   |            |   |  |          |     |              |              |   |    |          |   |   |       |   | (19 | ) |    |    |  |   |     |      | (19 | )  
|                          |                                    |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |  
|                          |                                    |                                                          | Comprehensive loss   |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |   |     |   |    |    |   |   |     |      |     | (14 | )
|                          |                                    |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |  
|Balances at June 30, 2004 |                                    |                                                          | 107                  |        |        |   | 1 |            |   |   |           |   |   |          | 403 |              |               |   | 29 |          |    |   | (9    | ) |     |   |   |    |   |   | 424 |     
|                          | Sale of common stock               |                                                          |                      |       |        |   |   |           |   |   |            |  |   |          |     | 3            |               |   |    |         |    |   |       |  |     |   |    |   |   |   |     | 3    |    
|                          | Treasury stock purchases           |                                                          |                      |       |        |   |   |           |   |   |            |  |   |          |     |             |               |   |    |         |    |   |       |  |     |   |    | (2 | ) |   |     | (2   | )  
|                          | Issuance of restricted stock units |                                                          |                      |       |        |   |   |           |   |   |            | 2 |   |          |     |             |               |   |    |         |    |   |       |  |     |   |    |   |   |   |     | 2    |    
|                          | Comprehensive income:              |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |   |     |   |    |    |   |   |     |      |    
|                          |                                    | Net income                                               |                      |        |        |   |   |            |  |   |            |   |  |          |     |              |              |   |    |          | 47 |   |       |   |    |   |    |    |  |   |     |      | 47  |    
|                          |                                    | Translation adjustment                                   |                      |        |        |   |   |            |  |   |            |   |  |          |     |              |              |   |    |          |   |   |       |   | 6   |   |    |    |  |   |     |      | 6   |    
|                          |                                    | Minimum pension liability adjustment, net of tax of $2   |                      |        |        |   |   |            |  |   |            |   |  |          |     |              |              |   |    |          |   |   |       |   | (3  | ) |    |    |  |   |     |      | (3  | )  
|                          |                                    |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |  
|                          |                                    |                                                          | Comprehensive income |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |   |     |   |    |    |   |   |     |      |     | 50  |  
|                          |                                    |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |  
|Balances at June 30, 2005 |                                    |                                                          | 107                  |        |        |   | 1 |            |   |   | 2          |   |   |          | 406 |              |               |   | 76 |          |    |   | (6    | ) |     |   | (2 | )  |   |   | 477 |     
|                          | Sale of common stock               |                                                          |                      | 26     |        |   |   |           |   |   |            |  |   |          |     | 399          |               |   |    |         |    |   |       |  |     |   |    |   |   |   |     | 399  |    
|                          | Stock option tax benefits          |                                                          |                      |       |        |   |   |           |   |   |            |  |   |          |     | 7            |               |   |    |         |    |   |       |  |     |   |    |   |   |   |     | 7    |    
|                          | Issuance of restricted stock units |                                                          |                      |       |        |   |   |           |   |   |            | 3 |   |          |     |             |               |   |    |         |    |   |       |  |     |   |    |   |   |   |     | 3    |    
|                          | Dividend paid on common shares     |                                                          |                      |        |        |   |   |           |   |   |            |  |   |          |     | (267         | )             |   |    | (100     | )  |   |       |  |     |   |    |   |   |   |     | (367 | )  
|                          | Comprehensive income:              |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |   |     |   |    |    |   |   |     |      |    
|                          |                                    | Net income                                               |                      |        |        |   |   |            |  |   |            |   |  |          |     |              |              |   |    |          | 27 |   |       |   |    |   |    |    |  |   |     |      | 27  |    
|                          |                                    | Translation adjustment                                   |                      |        |        |   |   |            |  |   |            |   |  |          |     |              |              |   |    |          |   |   |       |   | 2   |   |    |    |  |   |     |      | 2   |    
|                          |                                    | Unrealized gain on hedging activity, net of tax of $(10) |                      |        |        |   |   |            |  |   |            |   |  |          |     |              |              |   |    |          |   |   |       |   | 16  |   |    |    |  |   |     |      | 16  |    
|                          |                                    | Minimum pension liability adjustment, net of tax of $(2) |                      |        |        |   |   |            |  |   |            |   |  |          |     |              |              |   |    |          |   |   |       |   | 3   |   |    |    |  |   |     |      | 3   |    
|                          |                                    |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |  
|                          |                                    |                                                          | Comprehensive income |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |   |     |   |    |    |   |   |     |      |     | 48  |  
|                          |                                    |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |  
|Balances at June 30, 2006 |                                    |                                                          | 133                  |        |        | $ | 1 |            |   | $ | 5          |   |   | $        | 545 |              |               | $ | 3  |          |    | $ | 15    |   |     | $ | (2 | )  |   | $ | 567 |     
|                          |                                    |                                                          |                      |        |        |   |   |            |   |   |            |   |   |          |     |              |               |   |    |          |    |   |       |  



69



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Consolidated Statements of Cash Flows


|                                             |                                                                                       |                                                                                                   |   |        |      |   |   |      |     |   |   |      |     |  
|-------------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | - | ------ | ---- | - | - | ---- | --- | - | - | ---- | --- | -
|                                             |                                                                                       | Years Ended June 30,                                                                              |  
|                                             |                                                                                       |                                                                                                   |  
|                                             |                                                                                       | 2006                                                                                              |   |        | 2005 |   |   | 2004 |    
|                                             |                                                                                       |                                                                                                   |   |        |      |   |   |      |    
|                                             |                                                                                       | (In millions)                                                                                     |  
|Cash flows from operating activities:        |                                                                                       |                                                                                                   |   |        |      |   |   |      |     |   |   |     
|                                             | Net income                                                                            |                                                                                                   | $ | 27     |      |   | $ | 47   |     |   | $ | 5    |    
|                                             | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                                                                   |   |        |      |   |   |      |     |   |   |      |    
|                                             |                                                                                       | Depreciation and amortization                                                                     |   |        | 88   |   |   |      | 74  |   |   |      | 63  |  
|                                             |                                                                                       | Interest expense payable in kind                                                                  |   |        |     |   |   |      | 45  |   |   |      | 41  |  
|                                             |                                                                                       | (Gain) loss on asset disposals                                                                    |   |        | (1   | ) |   |      | (4  | ) |   |      | 12  |  
|                                             |                                                                                       | (Recoveries) provision for bad debt expense, net                                                  |   |        | (2   | ) |   |      | 1   |   |   |      | 11  |  
|                                             |                                                                                       | Impairment of debt investments and investments in unconsolidated
    companies and joint ventures |   |        |     |   |   |      | 4   |   |   |      | 24  |  
|                                             |                                                                                       | Impairment of long-lived assets                                                                   |   |        |     |   |   |      | 4   |   |   |      |    |  
|                                             |                                                                                       | Pension curtailment gain                                                                          |   |        | (6   | ) |   |      |    |   |   |      |    |  
|                                             |                                                                                       | Loss on early extinguishment of debt                                                              |   |        | 18   |   |   |      |    |   |   |      |    |  
|                                             |                                                                                       | Amortization of unearned compensation                                                             |   |        | 1    |   |   |      |    |   |   |      |    |  
|                                             |                                                                                       | Deferred income tax (benefit) expense                                                             |   |        | 68   |   |   |      | 9   |   |   |      | (12 | )
|                                             | Changes in current assets and liabilities, net of acquisitions:                       |                                                                                                   |   |        |      |   |   |      |     |   |   |      |    
|                                             |                                                                                       | Trade and notes receivables                                                                       |   |        | 7    |   |   |      | (2  | ) |   |      | (8  | )
|                                             |                                                                                       | Prepaids and other current assets                                                                 |   |        | (4   | ) |   |      | (2  | ) |   |      | (6  | )
|                                             |                                                                                       | Accounts and drafts payable                                                                       |   |        | 8    |   |   |      | (21 | ) |   |      | 23  |  
|                                             |                                                                                       | Accrued advertising                                                                               |   |        | (10  | ) |   |      | 7   |   |   |      | (3  | )
|                                             |                                                                                       | Other accrued liabilities                                                                         |   |        | (30  | ) |   |      | 48  |   |   |      | 28  |  
|                                             | Payment of interest on PIK notes                                                      |                                                                                                   |   | (103   | )    |   |   |     |     |   |   |     |    
|                                             | Other long-term assets and liabilities, net                                           |                                                                                                   |   | 13     |      |   |   | 8    |     |   |   | 21   |    
|                                             |                                                                                       |                                                                                                   |   |        |      |   |   |      |    
|                                             | Net cash provided by operating activities                                             |                                                                                                   |   | 74     |      |   |   | 218  |     |   |   | 199  |    
|                                             |                                                                                       |                                                                                                   |   |        |      |   |   |      |    
|Cash flows from investing activities:        |                                                                                       |                                                                                                   |   |        |      |   |   |      |     |   |   |     
|                                             | Purchases of available for sale securities                                            |                                                                                                   |   |       |      |   |   | (768 | )   |   |   | (308 | )  
|                                             | Proceeds from available for sale securities                                           |                                                                                                   |   |       |      |   |   | 890  |     |   |   | 186  |    
|                                             | Payments for property and equipment                                                   |                                                                                                   |   | (85    | )    |   |   | (93  | )   |   |   | (81  | )  
|                                             | Proceeds from asset disposals and restaurant closures                                 |                                                                                                   |   | 18     |      |   |   | 18   |     |   |   | 26   |    
|                                             | Payments for acquired franchisee operations                                           |                                                                                                   |   | (8     | )    |   |   | (28  | )   |   |   | (6   | )  
|                                             | Investment in franchisee debt                                                         |                                                                                                   |   | (4     | )    |   |   | (27  | )   |   |   | (22  | )  
|                                             | Repayments of franchisee debt                                                         |                                                                                                   |   | 5      |      |   |   | 3    |     |   |   | 3    |    
|                                             | Net proceeds for purchase of BKC                                                      |                                                                                                   |   |       |      |   |   |     |     |   |   | 5    |    
|                                             | Release from restricted cash/escrow account                                           |                                                                                                   |   |       |      |   |   |     |     |   |   | 13   |    
|                                             |                                                                                       |                                                                                                   |   |        |      |   |   |      |    
|                                             | Net cash used for investing activities                                                |                                                                                                   |   | (74    | )    |   |   | (5   | )   |   |   | (184 | )  
|                                             |                                                                                       |                                                                                                   |   |        |      |   |   |      |    
|Cash flows from financing activities:        |                                                                                       |                                                                                                   |   |        |      |   |   |      |     |   |   |     
|                                             | Proceeds from term debt and credit facility                                           |                                                                                                   |   | 2,143  |      |   |   |     |     |   |   |     |    
|                                             | Repayments of term debt, credit facility and capital leases                           |                                                                                                   |   | (2,329 | )    |   |   | (3   | )   |   |   | (3   | )  
|                                             | Payments for financing costs                                                          |                                                                                                   |   | (19    | )    |   |   |     |     |   |   |     |    
|                                             | Proceeds from sale of common stock, net                                               |                                                                                                   |   | 399    |      |   |   | 3    |     |   |   | 6    |    
|                                             | Dividends paid on common stock                                                        |                                                                                                   |   | (367   | )    |   |   |     |     |   |   |     |    
|                                             | Treasury stock purchases                                                              |                                                                                                   |   |       |      |   |   | (2   | )   |   |   |     |    
|                                             |                                                                                       |                                                                                                   |   |        |      |   |   |      |    
|                                             | Net cash (used for) provided by financing activities                                  |                                                                                                   |   | (173   | )    |   |   | (2   | )   |   |   | 3    |    
|                                             |                                                                                       |                                                                                                   |   |        |      |   |   |      |    
|                                             | (Decrease) increase in cash and cash equivalents                                      |                                                                                                   |   | (173   | )    |   |   | 211  |     |   |   | 18   |    
|                                             | Cash and cash equivalents at beginning of period                                      |                                                                                                   |   | 432    |      |   |   | 221  |     |   |   | 203  |    
|                                             |                                                                                       |                                                                                                   |   |        |      |   |   |      |    
|                                             | Cash and cash equivalents at end of period                                            |                                                                                                   | $ | 259    |      |   | $ | 432  |     |   | $ | 221  |    
|                                             |                                                                                       |                                                                                                   |   |        |      |   |   |      |    
|Supplemental cash-flow disclosures:          |                                                                                       |                                                                                                   |   |        |      |   |   |      |     |   |   |     
|                                             | Interest paid(1)                                                                      |                                                                                                   | $ | 180    |      |   | $ | 26   |     |   | $ | 21   |    
|                                             | Income taxes paid                                                                     |                                                                                                   | $ | 16     |      |   | $ | 14   |     |   | $ | 13   |    
|Non-cash investing and financing activities: |                                                                                       |                                                                                                   |   |        |      |   |   |      |     |   |   |     
|                                             | Acquisition of franchisee operations                                                  |                                                                                                   | $ |       |      |   | $ | 16   |     |   | $ | 3    |    
|                                             | Acquisition of property with capital lease obligations                                |                                                                                                   | $ | 13     |      |   | $ |     |     |   | $ |     |    






|    |                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amount for the year ended June 30, 2006 includes
    $103 million of interest paid on PIK notes which was
    included in term debt at June 30, 2005.



70



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial Statements




|        |                                         
|------- | ----------------------------------------
|Note 1. | Description of Business and Organization



| |                        
| | -----------------------
| | Description of Business

Burger King






| |             
| | ------------
| | Organization





payment-in






Business Combinations




71



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






| |                        
| | -----------------------
| | Initial Public Offering





|        |                                           
|------- | ------------------------------------------
|Note 2. | Summary of Significant Accounting Policies



| |                                        
| | ---------------------------------------
| | Basis of Presentation and Consolidation



Consolidation of Variable Interest Entities  an
interpretation of ARB No. 51






72



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




| |                       
| | ----------------------
| | Concentrations of Risk



Burger King




| |                 
| | ----------------
| | Use of Estimates





| |                             
| | ----------------------------
| | Foreign Currency Translation





| |                                            
| | -------------------------------------------
| | Foreign Currency Transaction Gain or Losses





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                                 
| | --------------------------------
| | Investment in Auction Rate Notes

Statement of Cash Flows




| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts



73



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




Accounting by Creditors
for Impairment of a Loan Accounting by Creditors for Impairment of a
Loan  Income Recognition and Disclosures.




| |            
| | -----------
| | Inventories

(first-in,




| |                            
| | ---------------------------
| | Property and Equipment, net







| |       
| | ------
| | Leases

Accounting for Leases






74



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






| |                               
| | ------------------------------
| | Goodwill and Intangible Assets

Burger King Goodwill and Other Intangible Assets






| |                  
| | -----------------
| | Long-Lived Assets

Accounting for the
Impairment or Disposal of Long-Lived Assets




| |   |                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | management views profitability of the restaurants within the
    operating markets as a whole, based on cash flows generated by a
    portfolio of restaurants, rather than by individual restaurants,
    and area managers receive incentives on this basis; and
|
| |  | the Company does not evaluate individual restaurants to build,
    acquire or close independent of an analysis of other restaurants
    in these operating markets.                                                                                               





| |                                  
| | ---------------------------------
| | Other Comprehensive Income (Loss)



75



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






| |                                 
| | --------------------------------
| | Derivative Financial Instruments

Accounting for Derivative Instruments
and Hedging Activities






| |                                                          
| | ---------------------------------------------------------
| | Disclosures About Fair Value of Financial
    Instruments

Cash and cash equivalents, trade and notes receivable:


Debt, including current maturities:




| |                    
| | -------------------
| | Revenue Recognition

Accounting for Franchise Fee Revenue






| |                                  
| | ---------------------------------
| | Advertising and Promotional Costs

Reporting on Advertising
Costs.




76



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)










| |             
| | ------------
| | Income Taxes

Accounting for Income Taxes




| |                   
| | ------------------
| | Earnings per Share





| |                         
| | ------------------------
| | Stock-based Compensation

Accounting for
Stock Issued to Employees Accounting for Stock Based
Compensation Share-Based Payment S-1


77



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                         |  |                      |      |   |      |  |      |      |  |  |      |  
|------------------------ |  | -------------------- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                         |  | Years Ended June 30, |     
|                         |  |                      |     
|                         |  | 2006                 |      |   | 2005 |  |      | 2004 | 
|                         |  |                      |      |   |      |  |      |      | 
|Risk-free interest rate  |  |                      | 4.78 | % |      |  | 3.88 | %    |  |  | 3.98 | %
|Expected term (in years) |  |                      | 5.0  |   |      |  | 5.0  |      |  |  | 5.0  |  
|Expected volatility      |  |                      | 0.0  | % |      |  | 0.0  | %    |  |  | 0.0  | %
|Expected dividend yield  |  |                      | 0.0  | % |      |  | 0.0  | %    |  |  | 0.0  | %

Accounting for Stock-Based
Compensation Transition and Disclosure


|                                        |                                                                                                   |                      |      |    |      |   |      |      |   |   |      |    |  
|--------------------------------------- | ------------------------------------------------------------------------------------------------- | -------------------- | ---- | -- | ---- | - | ---- | ---- | - | - | ---- | -- | -
|                                        |                                                                                                   | Years Ended June 30, |     
|                                        |                                                                                                   |                      |     
|                                        |                                                                                                   | 2006                 |      |    | 2005 |   |      | 2004 |  
|                                        |                                                                                                   |                      |      |    |      |   |      |      |  
|Net income, as reported                 |                                                                                                   | $                    | 27   |    |      | $ | 47   |      |   | $ | 5    |   
|                                        | less: Stock-based compensation expense under minimum value
    method, net of related tax effects |                      |      | (2 | )    |   |      | (1   | ) |   |      | (1 | )
|                                        |                                                                                                   |                      |      |    |      |   |      |      |  
|Net income, pro forma                   |                                                                                                   | $                    | 25   |    |      | $ | 46   |      |   | $ | 4    |   
|                                        |                                                                                                   |                      |      |    |      |   |      |      |  
|Basic earnings per share, as reported   |                                                                                                   | $                    | 0.24 |    |      | $ | 0.44 |      |   | $ | 0.05 |   
|Basic earnings per share, pro forma     |                                                                                                   | $                    | 0.23 |    |      | $ | 0.43 |      |   | $ | 0.04 |   
|Diluted earnings per share, as reported |                                                                                                   | $                    | 0.24 |    |      | $ | 0.44 |      |   | $ | 0.05 |   
|Diluted earnings per share, pro forma   |                                                                                                   | $                    | 0.22 |    |      | $ | 0.43 |      |   | $ | 0.04 |   



| |                  
| | -----------------
| | Reclassifications





|        |                                        
|------- | ---------------------------------------
|Note 3. | Acquisitions, Closures and Dispositions



| |             
| | ------------
| | Acquisitions



|                                     |                      |                      |    |   |      |   |     |      |  |   |    |   | 
|------------------------------------ | -------------------- | -------------------- | -- | - | ---- | - | --- | ---- |  | - | -- | - | 
|                                     |                      | Years Ended June 30, |   
|                                     |                      |                      |   
|                                     |                      | 2006                 |    |   | 2005 |   |     | 2004 | 
|                                     |                      |                      |    |   |      |   |     |      | 
|Number of restaurants acquired       |                      |                      | 50 |   |      |   | 101 |      |  |   | 38 |  
|                                    
|Inventory                            |                      | $                    |   |   |      | $ | 1   |      |  | $ |   |  
|Property and equipment, net          |                      |                      | 5  |   |      |   | 34  |      |  |   | 4  |  
|Goodwill and other intangible assets |                      |                      | 7  |   |      |   | 12  |      |  |   | 5  |  
|Assumed liabilities                  |                      |                      | (4 | ) |      |   | (3  | )    |  |   |   |  
|                                     |                      |                      |    |   |      |   |     |      | 
|                                     | Total purchase price |                      | $  | 8 |      |   | $   | 44   |  |   | $  | 9 | 
|                                     |                      |                      |    |   |      |   |     |      | 

78



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




| |                          
| | -------------------------
| | Closures and Dispositions



|                                                 |  |                      |    |   |      |   |    |      |  |   |    | 
|------------------------------------------------ |  | -------------------- | -- | - | ---- | - | -- | ---- |  | - | -- | 
|                                                 |  | Years Ended June 30, |   
|                                                 |  |                      |   
|                                                 |  | 2006                 |    |   | 2005 |   |    | 2004 | 
|                                                 |  |                      |    |   |      |   |    |      | 
|Number of restaurant closures                    |  |                      | 14 |   |      |   | 23 |      |  |   | 20 | 
|(Gains) losses on closures and dispositions, net |  | $                    | (3 | ) |      | $ | 6  |      |  | $ | 12 | 
|                                                
|Number of refranchisings                         |  |                      | 6  |   |      |   | 11 |      |  |   | 21 | 
|Loss on refranchisings                           |  | $                    |   |   |      | $ | 7  |      |  | $ | 3  | 



|        |                   
|------- | ------------------
|Note 4. | Franchise Revenues



|                       |       |                      |     |     |      |   |     |      |  |   |     |     | 
|---------------------- | ----- | -------------------- | --- | --- | ---- | - | --- | ---- |  | - | --- | --- | 
|                       |       | Years Ended June 30, |    
|                       |       |                      |    
|                       |       | 2006                 |     |     | 2005 |   |     | 2004 | 
|                       |       |                      |     |     |      |   |     |      | 
|Franchise royalties    |       | $                    | 401 |     |      | $ | 396 |      |  | $ | 346 |    
|Initial franchise fees |       |                      | 10  |     |      |   | 9   |      |  |   | 7   |    
|Other                  |       |                      | 9   |     |      |   | 8   |      |  |   | 8   |    
|                       |       |                      |     |     |      |   |     |      | 
|                       | Total |                      | $   | 420 |      |   | $   | 413  |  |   | $   | 361 | 
|                       |       |                      |     |     |      |   |     |      | 





|        |                                
|------- | -------------------------------
|Note 5. | Trade and Notes Receivable, Net



|                                                                          |            |             |     |     |      |   |     |     | 
|------------------------------------------------------------------------- | ---------- | ----------- | --- | --- | ---- | - | --- | --- | 
|                                                                          |            | Years Ended |    
|                                                                          |            | June 30,    |    
|                                                                          |            |             |    
|                                                                          |            | 2006        |     |     | 2005 |  
|                                                                          |            |             |     |     |      |  
|Trade accounts receivable                                                 |            | $           | 134 |     |      | $ | 133 |    
|Notes receivable, current portion                                         |            |             | 7   |     |      |   | 6   |    
|                                                                          |            |             |     |     |      |  
|                                                                          |            |             | 141 |     |      |   | 139 |    
|Allowance for doubtful accounts and notes receivable, current
    portion |            |             | (32 | )   |      |   | (29 | )  
|                                                                          |            |             |     |     |      |  
|                                                                          | Total, net |             | $   | 109 |      |   | $   | 110 | 
|                                                                          |            |             |     |     |      |  



79



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                       |  |                      |    |   |      |  |     |      |  |  |     |  
|------------------------------------------------------ |  | -------------------- | -- | - | ---- |  | --- | ---- |  |  | --- | -
|                                                       |  | Years Ended June 30, |   
|                                                       |  |                      |   
|                                                       |  | 2006                 |    |   | 2005 |  |     | 2004 | 
|                                                       |  |                      |    |   |      |  |     |      | 
|Beginning balance                                      |  |                      | 29 |   |      |  | 79  |      |  |  | 106 |  
|Bad debt expense, net of recoveries                    |  |                      | (2 | ) |      |  | 1   |      |  |  | 11  |  
|Write-offs and transfers to/from notes receivable, net |  |                      | 5  |   |      |  | (51 | )    |  |  | (38 | )
|                                                       |  |                      |    |   |      |  |     |      | 
|Ending balance                                         |  |                      | 32 |   |      |  | 29  |      |  |  | 79  |  
|                                                       |  |                      |    |   |      |  |     |      | 



|        |                            
|------- | ---------------------------
|Note 6. | Property and Equipment, Net



|                                          |                             |  |                 |             |  |   |       |     |  |   |       |     | 
|----------------------------------------- | --------------------------- |  | --------------- | ----------- |  | - | ----- | --- |  | - | ----- | --- | 
|                                          |                             |  |                 | Years Ended | 
|                                          |                             |  |                 | June 30,    | 
|                                          |                             |  |                 |             | 
|                                          |                             |  |                 | 2006        |  |   | 2005  |    
|                                          |                             |  |                 |             |  |   |       |    
|Land                                      |                             |  |                 |             |  | $ | 379   |     |  | $ | 384   |    
|Buildings and improvements                |                             |  | (up to 40 years | )           |  |   | 517   |     |  |   | 470   |    
|Machinery and equipment                   |                             |  | (up to 18 years | )           |  |   | 228   |     |  |   | 234   |    
|Furniture, fixtures, and other            |                             |  | (up to 10 years | )           |  |   | 85    |     |  |   | 37    |    
|Construction in progress                  |                             |  |                 |             |  |   | 34    |     |  |   | 26    |    
|                                          |                             |  |                 |             |  |   |       |     | 
|                                          |                             |  |                 |             |  |   | 1,243 |     |  |   | 1,151 |    
|Accumulated depreciation and amortization |                             |  |                 |             |  |   | (357  | )   |  |   | (252  | )  
|                                          |                             |  |                 |             |  |   |       |     | 
|                                          | Property and equipment, net |  |                 |             |  |   | $     | 886 |  |   | $     | 899 | 
|                                          |                             |  |                 |             |  |   |       |     | 







|        |                                    
|------- | -----------------------------------
|Note 7. | Intangible Assets, Net and Goodwill

Burger King


80



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                          |                     |  |                |             |  |   |      |    |  |   |     |    | 
|------------------------- | ------------------- |  | -------------- | ----------- |  | - | ---- | -- |  | - | --- | -- | 
|                          |                     |  |                | Years Ended | 
|                          |                     |  |                | June 30,    | 
|                          |                     |  |                |             | 
|                          |                     |  |                | 2006        |  |   | 2005 |   
|                          |                     |  |                |             |  |   |      |   
|Franchise agreements      |                     |  | 26 years       |             |  | $ | 68   |    |  | $ | 65  |   
|Favorable lease contracts |                     |  | Up to 20 years |             |  |   | 32   |    |  |   | 36  |   
|                          |                     |  |                |             |  |   |      |    | 
|                          |                     |  |                |             |  |   | 100  |    |  |   | 101 |   
|Accumulated amortization  |                     |  |                |             |  |   | (21  | )  |  |   | (15 | ) 
|                          |                     |  |                |             |  |   |      |    | 
|                          | Net carrying amount |  |                |             |  |   | $    | 79 |  |   | $   | 86 | 
|                          |                     |  |                |             |  |   |      |    | 







|        |                   
|------- | ------------------
|Note 8. | Earnings Per Share



|                                                    |                        |                      |             |           |      |   |             |         |  |   |             |   | 
|--------------------------------------------------- | ---------------------- | -------------------- | ----------- | --------- | ---- | - | ----------- | ------- |  | - | ----------- | - | 
|                                                    |                        | Years Ended June 30, |            
|                                                    |                        |                      |            
|                                                    |                        | 2006                 |             |           | 2005 |   |             | 2004    | 
|                                                    |                        |                      |             |           |      |   |             |         | 
|Numerator:                                          |                        |                      |             |           |      |   |             |         |  |   |             |  
|Numerator for basic and diluted earnings per share: |                        |                      |             |           |      |   |             |         |  |   |             |  
|Net income                                          |                        | $                    | 27          |           |      | $ | 47          |         |  | $ | 5           |  
|                                                    |                        |                      |             |           |      |   |             |         | 
|Denominator:                                        |                        |                      |             |           |      |   |             |         |  |   |             |  
|Denominator for basic earnings per share:           |                        |                      |             |           |      |   |             |         |  |   |             |  
|Weighted average shares                             |                        |                      | 110,327,949 |           |      |   | 106,499,866 |         |  |   | 106,061,888 |  
|Effect of dilutive securities:                      |                        |                      |             |           |      |   |             |         |  |   |             |  
|                                                    | Restricted stock units |                      |             | 707,836   |      |   |             | 410,261 |  |   |             |  | 
|                                                    | Employee stock options |                      |             | 3,654,800 |      |   |             |        |  |   |             |  | 
|                                                    |                        |                      |             |           |      |   |             |         | 
|Denominator for diluted earnings per share          |                        |                      | 114,690,585 |           |      |   | 106,910,127 |         |  |   | 106,061,888 |  
|                                                    |                        |                      |             |           |      |   |             |         | 
|Basic earnings per share                            |                        | $                    | 0.24        |           |      | $ | 0.44        |         |  | $ | 0.05        |  
|Diluted earnings per share                          |                        | $                    | 0.24        |           |      | $ | 0.44        |         |  | $ | 0.05        |  



81



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|        |                          
|------- | -------------------------
|Note 9. | Other Accrued Liabilities





|         |          
|-------- | ---------
|Note 10. | Term Debt



|                               |                                       |             |     |    |      |   |       |    |  
|------------------------------ | ------------------------------------- | ----------- | --- | -- | ---- | - | ----- | -- | -
|                               |                                       | Years Ended |    
|                               |                                       | June 30,    |    
|                               |                                       |             |    
|                               |                                       | 2006        |     |    | 2005 |  
|                               |                                       |             |     |    |      |  
|PIK notes                      |                                       | $           |    |    |      | $ | 528   |   
|Term loan                      |                                       |             |    |    |      |   | 750   |   
|Term loan A                    |                                       |             | 185 |    |      |   |      |   
|Term loan B-1                  |                                       |             | 809 |    |      |   |      |   
|Other                          |                                       |             | 4   |    |      |   | 5     |   
|                               |                                       |             |     |    |      |  
|Total term debt                |                                       |             | 998 |    |      |   | 1,283 |   
|                               | Less: current maturities of term debt |             |     | (1 | )    |   |       | (1 | )
|                               |                                       |             |     |    |      |  
|Long term portion of term debt |                                       | $           | 997 |    |      | $ | 1,282 |   
|                               |                                       |             |     |    |      |  









82



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)














|           |  |   |     | 
|---------- |  | - | --- | 
|2007       |  | $ | 1   | 
|2008       |  |   | 1   | 
|2009       |  |   | 35  | 
|2010       |  |   | 63  | 
|2011       |  |   | 88  | 
|Thereafter |  |   | 810 | 
|           |  |   |    
|           |  | $ | 998 | 
|           |  |   |    





83



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|         |                       
|-------- | ----------------------
|Note 11. | Derivative Instruments



| |                    
| | -------------------
| | Interest rate swaps







| |                  
| | -----------------
| | Forward Contracts





84



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|         |                 
|-------- | ----------------
|Note 12. | Interest Expense



|                          |       |                      |    |    |      |   |    |      |  |   |    |    | 
|------------------------- | ----- | -------------------- | -- | -- | ---- | - | -- | ---- |  | - | -- | -- | 
|                          |       | Years Ended June 30, |   
|                          |       |                      |   
|                          |       | 2006                 |    |    | 2005 |   |    | 2004 | 
|                          |       |                      |    |    |      |   |    |      | 
|Term loans and PIK Notes  |       | $                    | 72 |    |      | $ | 74 |      |  | $ | 61 |   
|Capital lease obligations |       |                      | 9  |    |      |   | 8  |      |  |   | 7  |   
|                          |       |                      |    |    |      |   |    |      | 
|                          | Total |                      | $  | 81 |      |   | $  | 82   |  |   | $  | 68 | 
|                          |       |                      |    |    |      |   |    |      | 





|         |             
|-------- | ------------
|Note 13. | Income Taxes



|         |                            |                      |    |    |      |   |     |      |  |   |     |   | 
|-------- | -------------------------- | -------------------- | -- | -- | ---- | - | --- | ---- |  | - | --- | - | 
|         |                            | Years Ended June 30, |   
|         |                            |                      |   
|         |                            | 2006                 |    |    | 2005 |   |     | 2004 | 
|         |                            |                      |    |    |      |   |     |      | 
|Domestic |                            | $                    | 79 |    |      | $ | 93  |      |  | $ | (25 | )
|Foreign  |                            |                      | 1  |    |      |   | (15 | )    |  |   | 34  |  
|         |                            |                      |    |    |      |   |     |      | 
|         | Income before income taxes |                      | $  | 80 |      |   | $   | 78   |  |   | $   | 9 | 
|         |                            |                      |    |    |      |   |     |      | 



|          |          |                                          |     |    |      |   |    |      |    |   |     |    |     |  
|--------- | -------- | ---------------------------------------- | --- | -- | ---- | - | -- | ---- | -- | - | --- | -- | --- | -
|          |          | Years Ended June 30,                     |    
|          |          |                                          |    
|          |          | 2006                                     |     |    | 2005 |   |    | 2004 |   
|          |          |                                          |     |    |      |   |    |      |   
|Current:  |          |                                          |     |    |      |   |    |      |    |   |     |   
|          | Domestic |                                          |     |    |      |   |    |      |    |   |     |    |    
|          |          | Federal                                  |     | $  | (16  | ) |    | $    | 18 |   |     | $  | 10  |  
|          |          | State, net of federal income tax benefit |     |    | (1   | ) |    |      | 2  |   |     |    | 5   |  
|          | Foreign  |                                          |     | 2  |      |   |    | 2    |    |   |     | 1  |    
|          |          |                                          |     |    |      |   |    |      |   
|          |          |                                          | (15 | )  |      |   | 22 |      |    |   | 16  |   
|          |          |                                          |     |    |      |   |    |      |   
|Deferred: |          |                                          |     |    |      |   |    |      |    |   |     |   
|          | Domestic |                                          |     |    |      |   |    |      |    |   |     |    |    
|          |          | Federal                                  |     |    | 50   |   |    |      | 13 |   |     |    | (22 | )
|          |          | State, net of federal income tax benefit |     |    | 5    |   |    |      | (3 | ) |     |    |    |  
|          | Foreign  |                                          |     | 13 |      |   |    | (1   | )  |   |     | 10 |    
|          |          |                                          |     |    |      |   |    |      |   
|          |          |                                          | 68  |    |      |   | 9  |      |    |   | (12 | ) 
|          |          |                                          |     |    |      |   |    |      |   
|Total     |          | $                                        | 53  |    |      | $ | 31 |      |    | $ | 4   |   
|          |          |                                          |     |    |      |   |    |      |   

85



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                      |                           |                      |      |      |      |  |       |      |   |  |       |      |  
|----------------------------------------------------- | ------------------------- | -------------------- | ---- | ---- | ---- |  | ----- | ---- | - |  | ----- | ---- | -
|                                                      |                           | Years Ended June 30, |     
|                                                      |                           |                      |     
|                                                      |                           | 2006                 |      |      | 2005 |  |       | 2004 |  
|                                                      |                           |                      |      |      |      |  |       |      |  
|U.S. Federal income tax rate                          |                           |                      | 35.0 | %    |      |  | 35.0  | %    |   |  | 35.0  | %   
|State income taxes, net of federal income tax benefit |                           |                      | 2.8  |      |      |  | 2.8   |      |   |  | 25.2  |     
|Benefit and taxes related to foreign operations       |                           |                      | 11.1 |      |      |  | (12.2 | )    |   |  | (28.8 | )   
|Foreign exchange differential on tax benefits         |                           |                      | (1.9 | )    |      |  | 4.8   |      |   |  | (87.2 | )   
|Change in valuation allowance                         |                           |                      | 0.9  |      |      |  | 10.1  |      |   |  | 80.4  |     
|Change in accrual for tax uncertainties               |                           |                      | 18.4 |      |      |  | 4.4   |      |   |  | 33.7  |     
|Other                                                 |                           |                      |     |      |      |  | (5.2  | )    |   |  | (13.9 | )   
|                                                      |                           |                      |      |      |      |  |       |      |  
|                                                      | Effective income tax rate |                      |      | 66.3 | %    |  |       | 39.7 | % |  |       | 44.4 | %
|                                                      |                           |                      |      |      |      |  |       |      |  







|                                                                               |  |                      |     |   |      |   |    |      |  |   |    |  
|------------------------------------------------------------------------------ |  | -------------------- | --- | - | ---- | - | -- | ---- |  | - | -- | -
|                                                                               |  | Years Ended June 30, |    
|                                                                               |  |                      |    
|                                                                               |  | 2006                 |     |   | 2005 |   |    | 2004 | 
|                                                                               |  |                      |     |   |      |   |    |      | 
|Income tax expense from continuing operations                                  |  | $                    | 53  |   |      | $ | 31 |      |  | $ | 4  |  
|Interest rate swaps in accumulated other comprehensive income
    (loss)       |  |                      | 10  |   |      |   |   |      |  |   |   |  
|Minimum pension liability in accumulated other comprehensive
    income (loss) |  |                      | 2   |   |      |   | (2 | )    |  |   |   |  
|Adjustments to deferred income taxes related to brand                          |  |                      | (6  | ) |      |   |    |      |  |   |    |  
|Adjustments to the valuation allowance related to brand (See
    note 7)       |  |                      | (12 | ) |      |   |   |      |  |   | (2 | )
|                                                                               |  |                      |     |   |      |   |    |      | 
|                                                                               |  | $                    | 47  |   |      | $ | 29 |      |  | $ | 2  |  
|                                                                               |  |                      |     |   |      |   |    |      | 

86



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                                                                  |       |                      |    |    |      |   |    |      |  |   |     |     |  
|------------------------------------------------------------------------------------------------- | ----- | -------------------- | -- | -- | ---- | - | -- | ---- |  | - | --- | --- | -
|                                                                                                  |       | Years Ended June 30, |   
|                                                                                                  |       |                      |   
|                                                                                                  |       | 2006                 |    |    | 2005 |   |    | 2004 | 
|                                                                                                  |       |                      |    |    |      |   |    |      | 
|Deferred income tax expense (benefit) (exclusive of the effects
    of components listed below)   |       | $                    | 67 |    |      | $ | 2  |      |  | $ | (20 | )  
|Change in valuation allowance, net of amounts allocated as
    adjustments to purchase accounting |       |                      | 1  |    |      |   | 8  |      |  |   | 8   |    
|Change in effective state income tax rate                                                         |       |                      |   |    |      |   | (1 | )    |  |   |    |    
|                                                                                                  |       |                      |    |    |      |   |    |      | 
|                                                                                                  | Total |                      | $  | 68 |      |   | $  | 9    |  |   | $   | (12 | )
|                                                                                                  |       |                      |    |    |      |   |    |      | 

Burger King




|                               |                                                                                    |             |     |     |      |  |     |     | 
|------------------------------ | ---------------------------------------------------------------------------------- | ----------- | --- | --- | ---- |  | --- | --- | 
|                               |                                                                                    | Years Ended |    
|                               |                                                                                    | June 30,    |    
|                               |                                                                                    |             |    
|                               |                                                                                    | 2006        |     |     | 2005 | 
|                               |                                                                                    |             |     |     |      | 
|Deferred tax assets:           |                                                                                    |             |     |     |      |  |     |    
|                               | Trade and notes receivable, principally due to allowance for
    doubtful accounts |             | $   | 28  |      |  | $   | 36  | 
|                               | Accrued employee benefits                                                          |             |     | 31  |      |  |     | 29  | 
|                               | Unfavorable leases                                                                 |             |     | 101 |      |  |     | 106 | 
|                               | Liabilities not currently deductible for tax                                       |             |     | 45  |      |  |     | 70  | 
|                               | Tax loss and credit carryforwards                                                  |             |     | 38  |      |  |     | 79  | 
|                               | Property and equipment, principally due to differences in
    depreciation         |             |     | 61  |      |  |     | 49  | 
|                               | Other                                                                              |             |     | 7   |      |  |     | 1   | 
|                               |                                                                                    |             |     |     |      | 
|                               |                                                                                    |             | 311 |     |      |  | 370 |    
|Valuation allowance            |                                                                                    |             | (89 | )   |      |  | (78 | )  
|                               |                                                                                    |             |     |     |      | 
|                               |                                                                                    |             | 222 |     |      |  | 292 |    
|Less deferred tax liabilities: |                                                                                    |             |     |     |      |  |     |    
|                               | Intangible assets                                                                  |             |     | 212 |      |  |     | 328 | 
|                               | Leases                                                                             |             |     | 49  |      |  |     | 49  | 
|                               |                                                                                    |             |     |     |      | 
|                               |                                                                                    |             | 261 |     |      |  | 377 |    
|                               |                                                                                    |             |     |     |      | 
|                               | Net deferred tax liability                                                         |             | $   | 39  |      |  | $   | 85  | 
|                               |                                                                                    |             |     |     |      | 

87



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






|                  |                                                                              |                      |    |     |      |   |    |      |  |   |    |    |  
|----------------- | ---------------------------------------------------------------------------- | -------------------- | -- | --- | ---- | - | -- | ---- |  | - | -- | -- | -
|                  |                                                                              | Years Ended June 30, |   
|                  |                                                                              |                      |   
|                  |                                                                              | 2006                 |    |     | 2005 |   |    | 2004 | 
|                  |                                                                              |                      |    |     |      |   |    |      | 
|Beginning balance |                                                                              | $                    | 78 |     |      | $ | 65 |      |  | $ | 22 |   
|                  | Purchase accounting adjustments                                              |                      |    |    |      |   |    |     |  |   |    | 31 |  
|                  | Change in estimates recorded to deferred income tax expense                  |                      |    | 1   |      |   |    | 8    |  |   |    | 8  |  
|                  | Change in estimates in valuation allowance recorded to
    intangible assets |                      |    | (12 | )    |   |    |     |  |   |    | (2 | )
|                  | Change due to increase in deferred tax assets that are fully
    reserved    |                      |    | 20  |      |   |    | 5    |  |   |    |   |  
|                  | Changes from foreign currency exchange rates                                 |                      |    | 2   |      |   |    |     |  |   |    | 6  |  
|                  |                                                                              |                      |    |     |      |   |    |      | 
|Ending balance    |                                                                              | $                    | 89 |     |      | $ | 78 |      |  | $ | 65 |   
|                  |                                                                              |                      |    |     |      |   |    |      | 







Consolidated Financial Statements




|         |                           
|-------- | --------------------------
|Note 14. | Related Party Transactions



88



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


out-of out-of out-of


payment-in








|         |       
|-------- | ------
|Note 15. | Leases





|                                                                                                     |  |             |     |   |      |   |     |  
|---------------------------------------------------------------------------------------------------- |  | ----------- | --- | - | ---- | - | --- | -
|                                                                                                     |  | Years Ended |    
|                                                                                                     |  | June 30,    |    
|                                                                                                     |  |             |    
|                                                                                                     |  | 2006        |     |   | 2005 |  
|                                                                                                     |  |             |     |   |      |  
|Land                                                                                                 |  | $           | 196 |   |      | $ | 201 |  
|Buildings and improvements                                                                           |  |             | 78  |   |      |   | 67  |  
|Restaurant equipment                                                                                 |  |             | 2   |   |      |   | 2   |  
|                                                                                                     |  |             |     |   |      |  
|                                                                                                     |  |             | 276 |   |      |   | 270 |  
|Accumulated depreciation                                                                             |  |             | (23 | ) |      |   | (18 | )
|                                                                                                     |  |             |     |   |      |  
|Property and equipment, net leased to franchisees and other
    third parties under operating leases |  | $           | 253 |   |      | $ | 252 |  
|                                                                                                     |  |             |     |   |      |  

89



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                  |  |             |      |   |      |   |      |  
|------------------------------------------------- |  | ----------- | ---- | - | ---- | - | ---- | -
|                                                  |  | Years Ended |     
|                                                  |  | June 30,    |     
|                                                  |  |             |     
|                                                  |  | 2006        |      |   | 2005 |  
|                                                  |  |             |      |   |      |  
|Future minimum rents to be received               |  | $           | 353  |   |      | $ | 373  |  
|Estimated unguaranteed residual value             |  |             | 4    |   |      |   | 4    |  
|Unearned income                                   |  |             | (200 | ) |      |   | (218 | )
|Allowance on direct financing leases              |  |             | (2   | ) |      |   | (2   | )
|                                                  |  |             |      |   |      |  
|                                                  |  |             | 155  |   |      |   | 157  |  
|Current portion included within trade receivables |  |             | (7   | ) |      |   | (8   | )
|                                                  |  |             |      |   |      |  
|Net investment in property leased to franchisees  |  | $           | 148  |   |      | $ | 149  |  
|                                                  |  |             |      |   |      |  





|           |       |                |     |     |                   |   |     |         |  |   |           |     |  |   |     |       | 
|---------- | ----- | -------------- | --- | --- | ----------------- | - | --- | ------- |  | - | --------- | --- |  | - | --- | ----- | 
|           |       | Lease Receipts |     |     |                  
|           |       |                |     |     | Lease Commitments |  
|           |       | Direct         |     |     |                   |   |     |        
|           |       | Financing      |     |     | Operating         |   |     | Capital |  |   | Operating |    
|           |       | Leases         |     |     | Leases            |   |     | Leases  |  |   | Leases    |    
|           |       |                |     |     |                   |   |     |         |  |   |           |    
|2007       |       | $              | 30  |     |                   | $ | 73  |         |  | $ | 13        |     |  | $ | 153 |      
|2008       |       |                | 30  |     |                   |   | 68  |         |  |   | 13        |     |  |   | 145 |      
|2009       |       |                | 30  |     |                   |   | 62  |         |  |   | 12        |     |  |   | 130 |      
|2010       |       |                | 30  |     |                   |   | 58  |         |  |   | 11        |     |  |   | 121 |      
|2011       |       |                | 28  |     |                   |   | 54  |         |  |   | 11        |     |  |   | 110 |      
|Thereafter |       |                | 205 |     |                   |   | 352 |         |  |   | 74        |     |  |   | 732 |      
|           |       |                |     |     |                   |   |     |         |  |   |           |    
|           | Total |                | $   | 353 |                   |   | $   | 667     |  |   | $         | 134 |  |   | $   | 1,391 | 
|           |       |                |     |     |                   |   |     |         |  |   |           |    





|                                         |                         |                     |    |     |      |  |    |      |    |  |    |     |    | 
|---------------------------------------- | ----------------------- | ------------------- | -- | --- | ---- |  | -- | ---- | -- |  | -- | --- | -- | 
|                                         |                         | Years Ended         |   
|                                         |                         | June 30,            |   
|                                         |                         |                     |   
|                                         |                         | 2006                |    |     | 2005 |  |    | 2004 |   
|                                         |                         |                     |    |     |      |  |    |      |   
|Rental income:                           |                         |                     |    |     |      |  |    |      |    |  |    |    
|                                         | Minimum                 |                     | $  | 74  |      |  | $  | 78   |    |  | $  | 78  |   
|                                         | Contingent              |                     |    | 14  |      |  |    | 13   |    |  |    | 10  |   
|                                         |                         |                     |    |     |      |  |    |      |   
|                                         |                         | Total rental income |    |     | 88   |  |    |      | 91 |  |    |     | 88 | 
|Earned income on direct financing leases |                         |                     | 24 |     |      |  | 29 |      |    |  | 29 |    
|                                         |                         |                     |    |     |      |  |    |      |   
|                                         | Total property revenues |                     | $  | 112 |      |  | $  | 120  |    |  | $  | 117 |   
|                                         |                         |                     |    |     |      |  |    |      |   

90



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                               |                      |             |     |     |      |  |     |      |  |  |     |     | 
|-------------------------------------------------------------- | -------------------- | ----------- | --- | --- | ---- |  | --- | ---- |  |  | --- | --- | 
|                                                               |                      | Years Ended |    
|                                                               |                      | June 30,    |    
|                                                               |                      |             |    
|                                                               |                      | 2006        |     |     | 2005 |  |     | 2004 | 
|                                                               |                      |             |     |     |      |  |     |      | 
|Rental expense:                                                |                      |             |     |     |      |  |     |      |  |  |     |    
|                                                               | Minimum              |             | $   | 151 |      |  | $   | 145  |  |  | $   | 137 | 
|                                                               | Contingent           |             |     | 6   |      |  |     | 6    |  |  |     | 5   | 
|Amortization of favorable and unfavorable lease contracts, net |                      |             | (24 | )   |      |  | (29 | )    |  |  | (52 | )  
|                                                               |                      |             |     |     |      |  |     |      | 
|                                                               | Total rental expense |             | $   | 133 |      |  | $   | 122  |  |  | $   | 90  | 
|                                                               |                      |             |     |     |      |  |     |      | 









|         |                     
|-------- | --------------------
|Note 16. | Stockholders equity



| |              
| | -------------
| | Capital Stock







| |                                     
| | ------------------------------------
| | Dividends Paid and Return of Capital



91



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




| |                         
| | ------------------------
| | Stock-Based Compensation



| |                                                       
| | ------------------------------------------------------
| | Burger King Holdings, Inc. 2006 Omnibus Incentive Plan





| |                                                 
| | ------------------------------------------------
| | Burger King Holdings, Inc. Equity Incentive Plan



10-year




|                             |           |           |           |            |                |   |      |       | 
|---------------------------- | --------- | --------- | --------- | ---------- | -------------- | - | ---- | ----- | 
|                             |           |           |           | Weighted   |               
|                             |           | Number of |           |            | Average        |  
|                             |           | Options   |           |            | Exercise Price |  
|                             |           |           |           |            |                |  
|Outstanding at June 30, 2003 |           |           |          |            |                | $ |     |      
|                             | Granted   |           |           | 8,787,366  |                |   |      | 4.86  | 
|                             | Forfeited |           |           | (1,969,211 | )              |   |      | 5.16  | 
|                             |           |           |           |            |                |  
|Outstanding at June 30, 2004 |           |           | 6,818,155 |            |                |   | 4.78 |      
|                             | Granted   |           |           | 5,142,728  |                |   |      | 4.28  | 
|                             | Exercised |           |           | (21,446    | )              |   |      | 3.80  | 
|                             | Forfeited |           |           | (2,930,316 | )              |   |      | 4.62  | 
|                             |           |           |           |            |                |  
|Outstanding at June 30, 2005 |           |           | 9,009,121 |            |                |   | 4.55 |      
|                             | Granted   |           |           | 2,247,383  |                |   |      | 13.69 | 
|                             | Exercised |           |           | (1,247,776 | )              |   |      | 4.78  | 
|                             | Forfeited |           |           | (2,600,489 | )              |   |      | 4.50  | 
|                             |           |           |           |            |                |  
|Outstanding at June 30, 2006 |           |           | 7,408,239 |            |                | $ | 7.75 |      
|                             |           |           |           |            |                |  

92



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|               |  |           |           |           |             |  |          |                |  |   |       | 
|-------------- |  | --------- | --------- | --------- | ----------- |  | -------- | -------------- |  | - | ----- | 
|               |  |           |           | Weighted  |             |  |         
|               |  |           |           | Average   |             |  |         
|               |  |           |           | Remaining |             |  | Weighted |               
|               |  | Number of |           |           | Contractual |  |          | Average        | 
|Exercise Price |  | Options   |           |           | Life        |  |          | Exercise Price | 
|               |  |           |           |           |             |  |          |                | 
|$ 3.80         |  |           | 4,686,502 |           |             |  | 6.29     |                |  | $ | 3.80  | 
|7.59           |  |           | 263,250   |           |             |  | 0.77     |                |  |   | 7.59  | 
|10.25          |  |           | 830,709   |           |             |  | 9.16     |                |  |   | 10.25 | 
|11.39          |  |           | 384,522   |           |             |  | 7.74     |                |  |   | 11.39 | 
|17.00          |  |           | 447,886   |           |             |  | 9.88     |                |  |   | 17.00 | 
|18.91          |  |           | 29,007    |           |             |  | 9.92     |                |  |   | 18.91 | 
|$21.64         |  |           | 766,363   |           |             |  | 9.54     |                |  | $ | 21.64 | 
|               |  |           |           |           |             |  |          |                | 
|               |  |           | 7,408,239 |           |             |  |          |                |  |   |       | 
|               |  |           |           |           |             |  |          |                | 



| |                       
| | ----------------------
| | Restricted Stock Units





| |                                
| | -------------------------------
| | Compensatory Make-Whole-Payment





|         |                                                  
|-------- | -------------------------------------------------
|Note 17. | Retirement Plan and Other Postretirement Benefits







93



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)












| |                              
| | -----------------------------
| | Obligations and Funded Status



|                                         |                                                |            |     |     |          |  |     |      |   |  |      |     |   |  |     |     |  
|---------------------------------------- | ---------------------------------------------- | ---------- | --- | --- | -------- |  | --- | ---- | - |  | ---- | --- | - |  | --- | --- | -
|                                         |                                                | Retirement |     |     | Other    | 
|                                         |                                                | Benefits   |     |     | Benefits | 
|                                         |                                                |            |     |     |          | 
|                                         |                                                | June 30,   |     |     | June 30, | 
|                                         |                                                |            |     |     |          | 
|                                         |                                                | 2006       |     |     | 2005     |  |     | 2006 |   |  | 2005 |    
|                                         |                                                |            |     |     |          |  |     |      |   |  |      |    
|Change in benefit obligation             |                                                |            |     |     |          |  |     |      |   |  |      |     |   |  |     |    
|                                         | Benefit obligation at beginning of year        |            | $   | 181 |          |  | $   | 167  |   |  | $    | 22  |   |  | $   | 21  |  
|                                         | Service cost                                   |            |     | 5   |          |  |     | 6    |   |  |      | 1   |   |  |     | 1   |  
|                                         | Interest cost                                  |            |     | 10  |          |  |     | 10   |   |  |      | 1   |   |  |     | 1   |  
|                                         | Actuarial (gain) loss                          |            |     | (9  | )        |  |     | 3    |   |  |      | (1  | ) |  |     | (1  | )
|                                         | Curtailment (gain)                             |            |     | (21 | )        |  |     |     |   |  |      |    |   |  |     |    |  
|                                         | Benefits paid                                  |            |     | (4  | )        |  |     | (5   | ) |  |      | (1  | ) |  |     |    |  
|                                         |                                                |            |     |     |          |  |     |      |   |  |      |    
|Benefit obligation at end of year        |                                                |            | 162 |     |          |  | 181 |      |   |  | 22   |     |   |  | 22  |    
|                                         |                                                |            |     |     |          |  |     |      |   |  |      |    
|Change in fair value of plan assets      |                                                |            |     |     |          |  |     |      |   |  |      |     |   |  |     |    
|                                         | Fair value of plan assets at beginning of year |            |     | 93  |          |  |     | 86   |   |  |      |    |   |  |     |    |  
|                                         | Actual return on plan assets                   |            |     | 10  |          |  |     | 4    |   |  |      |    |   |  |     |    |  
|                                         | Company contributions                          |            |     | 11  |          |  |     | 8    |   |  |      |    |   |  |     |    |  
|                                         | Benefits paid                                  |            |     | (4  | )        |  |     | (5   | ) |  |      |    |   |  |     |    |  
|                                         |                                                |            |     |     |          |  |     |      |   |  |      |    
|Fair value of plan assets at end of year |                                                |            | 110 |     |          |  | 93  |      |   |  |     |     |   |  |    |    
|                                         |                                                |            |     |     |          |  |     |      |   |  |      |    
|Accrued benefit cost                     |                                                |            |     |     |          |  |     |      |   |  |      |     |   |  |     |    
|                                         | Funded status of plan                          |            |     | (52 | )        |  |     | (88  | ) |  |      | (22 | ) |  |     | (22 | )
|                                         | Unrecognized net actuarial (gain) loss         |            |     | (2  | )        |  |     | 23   |   |  |      | (2  | ) |  |     | (1  | )
|                                         | Minimum pension liability adjustment           |            |     |    |          |  |     | (5   | ) |  |      |    |   |  |     |    |  
|                                         | Other                                          |            |     |    |          |  |     | 10   |   |  |      |    |   |  |     |    |  
|                                         |                                                |            |     |     |          |  |     |      |   |  |      |    
|Net accrued benefit cost                 |                                                |            | (54 | )   |          |  | (60 | )    |   |  | (24  | )   |   |  | (23 | )  
|                                         |                                                |            |     |     |          |  |     |      |   |  |      |    

94



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


|                                              |                                      |            |     |     |          |   |     |      |   |   |      |     |   |   |     |     |  
|--------------------------------------------- | ------------------------------------ | ---------- | --- | --- | -------- | - | --- | ---- | - | - | ---- | --- | - | - | --- | --- | -
|                                              |                                      | Retirement |     |     | Other    |  
|                                              |                                      | Benefits   |     |     | Benefits |  
|                                              |                                      |            |     |     |          |  
|                                              |                                      | June 30,   |     |     | June 30, |  
|                                              |                                      |            |     |     |          |  
|                                              |                                      | 2006       |     |     | 2005     |   |     | 2006 |   |   | 2005 |    
|                                              |                                      |            |     |     |          |   |     |      |   |   |      |    
|Recognized in Statement of Financial Position |                                      |            |     |     |          |   |     |      |   |   |      |     |   |   |     |    
|                                              | Accrued benefit liability            |            |     | (54 | )        |   |     | (55  | ) |   |      | (24 | ) |   |     | (23 | )
|                                              | Accumulated other comprehensive loss |            |     |    |          |   |     | (5   | ) |   |      |    |   |   |     |    |  
|                                              |                                      |            |     |     |          |   |     |      |   |   |      |    
|Net accrued benefit cost                      |                                      | $          | (54 | )   |          | $ | (60 | )    |   | $ | (24  | )   |   | $ | (23 | )  
|                                              |                                      |            |     |     |          |   |     |      |   |   |      |    



| |                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------
| | Additional year-end information for Pension Plans with
    accumulated benefit obligations in excess of plan assets



|                               |  |             |     |  |      |   |     | 
|------------------------------ |  | ----------- | --- |  | ---- | - | --- | 
|                               |  | Years Ended |    
|                               |  | June 30,    |    
|                               |  |             |    
|                               |  | 2006        |     |  | 2005 |  
|                               |  |             |     |  |      |  
|Projected benefit obligation   |  | $           | 162 |  |      | $ | 181 | 
|Accumulated benefit obligation |  |             | 155 |  |      |   | 153 | 
|Fair value of plan assets      |  | $           | 110 |  |      | $ | 93  | 



| |                                        
| | ---------------------------------------
| | Components of Net Periodic Benefit Cost



|                                                        |  |                      |    |   |                      |   |    |      |  |   |      |   |  |      |   |  |      |   |   |  |  |   |   | 
|------------------------------------------------------- |  | -------------------- | -- | - | -------------------- | - | -- | ---- |  | - | ---- | - |  | ---- | - |  | ---- | - | - |  |  | - | - | 
|                                                        |  | Retirement Benefits  |    |   | Other Benefits       |  
|                                                        |  |                      |    |   |                      |  
|                                                        |  | Years Ended June 30, |    |   | Years Ended June 30, |  
|                                                        |  |                      |    |   |                      |  
|                                                        |  | 2006                 |    |   | 2005                 |   |    | 2004 |  |   | 2006 |   |  | 2005 |   |  | 2004 |  
|                                                        |  |                      |    |   |                      |   |    |      |  |   |      |   |  |      |   |  |      |  
|Service cost-benefits earned during the period          |  | $                    | 5  |   |                      | $ | 6  |      |  | $ | 6    |   |  | $    | 1 |  |      | $ | 1 |  |  | $ | 1 | 
|Interest costs on projected benefit obligations         |  |                      | 10 |   |                      |   | 10 |      |  |   | 9    |   |  |      | 1 |  |      |   | 1 |  |  |   | 1 | 
|Expected return on plan assets                          |  |                      | (9 | ) |                      |   | (7 | )    |  |   | (6   | ) |  |      |  |  |      |   |  |  |  |   |  | 
|Curtailment gain                                        |  |                      | (6 | ) |                      |   |   |      |  |   |     |   |  |      |  |  |      |   |  |  |  |   |  | 
|Recognized net actuarial loss                           |  |                      | 1  |   |                      |   | 1  |      |  |   |     |   |  |      |  |  |      |   |  |  |  |   |  | 
|                                                        |  |                      |    |   |                      |   |    |      |  |   |      |   |  |      |   |  |      |  
|Net periodic benefit cost and total annual pension cost |  | $                    | 1  |   |                      | $ | 10 |      |  | $ | 9    |   |  | $    | 2 |  |      | $ | 2 |  |  | $ | 2 | 
|                                                        |  |                      |    |   |                      |   |    |      |  |   |      |   |  |      |   |  |      |  



| |            
| | -----------
| | Assumptions



|                                    |  |                      |      |   |                      |  |      |      |  |  |      |   |  |      |      |   |      |  |      |   |  |  |      |  
|----------------------------------- |  | -------------------- | ---- | - | -------------------- |  | ---- | ---- |  |  | ---- | - |  | ---- | ---- | - | ---- |  | ---- | - |  |  | ---- | -
|                                    |  | Retirement Benefits  |      |   | Other Benefits       | 
|                                    |  |                      |      |   |                      | 
|                                    |  | Years Ended June 30, |      |   | Years Ended June 30, | 
|                                    |  |                      |      |   |                      | 
|                                    |  | 2006                 |      |   | 2005                 |  |      | 2004 |  |  | 2006 |   |  | 2005 |      |   | 2004 | 
|                                    |  |                      |      |   |                      |  |      |      |  |  |      |   |  |      |      |   |      | 
|Discount rate as of year-end        |  |                      | 6.09 | % |                      |  | 5.86 | %    |  |  | 6.00 | % |  |      | 6.09 | % |      |  | 5.86 | % |  |  | 6.00 | %
|Range of compensation rate increase |  |                      | 4.75 | % |                      |  | 4.75 | %    |  |  | 4.75 | % |  |      | 0.00 | % |      |  | 0.00 | % |  |  | 0.00 | %



95



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                 |  |                      |      |   |                      |  |      |      |  |  |      |   |  |      |      |   |      |  |      |   |  |  |      |  
|------------------------------------------------ |  | -------------------- | ---- | - | -------------------- |  | ---- | ---- |  |  | ---- | - |  | ---- | ---- | - | ---- |  | ---- | - |  |  | ---- | -
|                                                 |  | Retirement Benefits  |      |   | Other Benefits       | 
|                                                 |  |                      |      |   |                      | 
|                                                 |  | Years Ended June 30, |      |   | Years Ended June 30, | 
|                                                 |  |                      |      |   |                      | 
|                                                 |  | 2006                 |      |   | 2005                 |  |      | 2004 |  |  | 2006 |   |  | 2005 |      |   | 2004 | 
|                                                 |  |                      |      |   |                      |  |      |      |  |  |      |   |  |      |      |   |      | 
|Discount rate                                    |  |                      | 5.86 | % |                      |  | 6.00 | %    |  |  | 6.25 | % |  |      | 5.86 | % |      |  | 6.00 | % |  |  | 6.25 | %
|Range of compensation rate increase              |  |                      | 4.75 | % |                      |  | 4.75 | %    |  |  | 4.75 | % |  |      | 0.00 | % |      |  | 0.00 | % |  |  | 0.00 | %
|Expected long-term rate of return on plan assets |  |                      | 8.75 | % |                      |  | 8.75 | %    |  |  | 8.75 | % |  |      | 0.00 | % |      |  | 0.00 | % |  |  | 0.00 | %





|                                                                                      |  |                      |       |   |      |  |      |      |  |  |      |  
|------------------------------------------------------------------------------------- |  | -------------------- | ----- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                                                      |  | Years Ended June 30, |      
|                                                                                      |  |                      |      
|                                                                                      |  | 2006                 |       |   | 2005 |  |      | 2004 | 
|                                                                                      |  |                      |       |   |      |  |      |      | 
|Healthcare cost trend rate assumed for next year                                      |  |                      | 10.00 | % |      |  | 9.00 | %    |  |  | 9.50 | %
|Rate to which the cost trend rate is assumed to decline (the
    ultimate trend rate) |  |                      | 5.00  | % |      |  | 5.00 | %    |  |  | 5.00 | %
|Year that the rate reaches the ultimate trend rate                                    |  |                      | 2016  |   |      |  | 2013 |      |  |  | 2013 |  





| |            
| | -----------
| | Plan Assets





|                       |  |             |     |   |      |  |     |  
|---------------------- |  | ----------- | --- | - | ---- |  | --- | -
|                       |  | Retirement  |    
|                       |  | Benefits    |    
|                       |  |             |    
|                       |  | Years Ended |    
|                       |  | June 30,    |    
|                       |  |             |    
|                       |  | 2006        |     |   | 2005 | 
|                       |  |             |     |   |      | 
|Equity securities      |  |             | 72  | % |      |  | 71  | %
|Debt securities        |  |             | 27  | % |      |  | 28  | %
|Short-term investments |  |             | 1   | % |      |  | 1   | %
|                       |  |             |     |   |      | 
|                       |  |             | 100 | % |      |  | 100 | %
|                       |  |             |     |   |      | 



96



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




| |                            
| | ---------------------------
| | Estimated Future Cash Flows





|                                                             |             |                     |     |      |        |   |     |       |  |   |          |      |  |   |     |     | 
|------------------------------------------------------------ | ----------- | ------------------- | --- | ---- | ------ | - | --- | ----- |  | - | -------- | ---- |  | - | --- | --- | 
|                                                             |             | Retirement Benefits |     |      |       
|                                                             |             |                     |     |      | Other  |  
|                                                             |             | Qualified           |     |      | Excess |   |     | Total |  |   | Benefits |     
|                                                             |             |                     |     |      |        |   |     |       |  |   |          |     
|Estimated net employer contributions during fiscal 2007      |             | $                   | 4.2 |      |        | $ | 0.6 |       |  | $ | 4.8      |      |  | $ | 0.8 |    
|Estimated future fiscal year benefit payments during fiscal: |             |                     |     |      |        |   |     |       |  |   |          |      |  |   |     |    
|                                                             | 2007        |                     | $   | 4.1  |        |   | $   | 0.6   |  |   | $        | 4.7  |  |   | $   | 0.8 | 
|                                                             | 2008        |                     |     | 4.4  |        |   |     | 0.5   |  |   |          | 4.9  |  |   |     | 1.0 | 
|                                                             | 2009        |                     |     | 4.5  |        |   |     | 0.5   |  |   |          | 5.0  |  |   |     | 1.1 | 
|                                                             | 2010        |                     |     | 4.7  |        |   |     | 0.5   |  |   |          | 5.2  |  |   |     | 1.2 | 
|                                                             | 2011        |                     |     | 4.9  |        |   |     | 0.5   |  |   |          | 5.4  |  |   |     | 1.3 | 
|                                                             | 2012 - 2016 |                     | $   | 32.6 |        |   | $   | 3.1   |  |   | $        | 35.7 |  |   | $   | 8.8 | 



|         |                                       
|-------- | --------------------------------------
|Note 18. | Other Operating Expenses (Income), Net



|                                                                |  |                      |    |   |      |   |    |      |  |   |    | 
|--------------------------------------------------------------- |  | -------------------- | -- | - | ---- | - | -- | ---- |  | - | -- | 
|                                                                |  | Years Ended June 30, |   
|                                                                |  |                      |   
|                                                                |  | 2006                 |    |   | 2005 |   |    | 2004 | 
|                                                                |  |                      |    |   |      |   |    |      | 
|(Gains) losses on asset acquisitions, closures and dispositions |  | $                    | (3 | ) |      | $ | 13 |      |  | $ | 15 | 
|Impairment of long-lived assets                                 |  |                      |   |   |      |   | 4  |      |  |   |   | 
|(Recovery) impairment of investments in franchisee debt         |  |                      | (2 | ) |      |   | 4  |      |  |   | 19 | 
|Impairment of investments in unconsolidated companies           |  |                      |   |   |      |   |   |      |  |   | 4  | 
|Litigation settlements and reserves                             |  |                      |   |   |      |   | 2  |      |  |   | 4  | 
|Other, net                                                      |  |                      | 3  |   |      |   | 11 |      |  |   | 12 | 
|                                                                |  |                      |    |   |      |   |    |      | 
|Other operating expenses (income), net                          |  | $                    | (2 | ) |      | $ | 34 |      |  | $ | 54 | 
|                                                                |  |                      |    |   |      |   |    |      | 



| |                                                                    
| | -------------------------------------------------------------------
| | (Gains) Losses on Asset Acquisitions, Closures and
    Dispositions





| |                                    
| | -----------------------------------
| | Litigation Settlements and Reserves



97



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






| |                                                           
| | ----------------------------------------------------------
| | (Recovery) Impairment of Investment in Franchisee
    Debt





| |           
| | ----------
| | Other, net





|         |                              
|-------- | -----------------------------
|Note 19. | Commitments and Contingencies



| |                                 
| | --------------------------------
| | Franchisee Restructuring Program



10-year






98



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






| |           
| | ----------
| | Guarantees







| |                  
| | -----------------
| | Letters of Credit







| |                     
| | --------------------
| | Vendor Relationships

Burger King






99



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




| |                        
| | -----------------------
| | New Global Headquarters





| |      
| | -----
| | Other







|         |                  
|-------- | -----------------
|Note 20. | Segment Reporting







|                         |                |                      |       |       |      |   |       |       |  |   |       |       | 
|------------------------ | -------------- | -------------------- | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|                         |                | Years Ended June 30, |      
|                         |                |                      |      
|                         |                | 2006                 |       |       | 2005 |   |       | 2004  | 
|                         |                |                      |       |       |      |   |       |       | 
|Revenues:                |                |                      |       |       |      |   |       |       |  |   |       |      
|United States and Canada |                | $                    | 1,382 |       |      | $ | 1,275 |       |  | $ | 1,117 |      
|EMEA/ APAC               |                |                      | 576   |       |      |   | 586   |       |  |   | 566   |      
|Latin America            |                |                      | 90    |       |      |   | 79    |       |  |   | 71    |      
|                         |                |                      |       |       |      |   |       |       | 
|                         | Total revenues |                      | $     | 2,048 |      |   | $     | 1,940 |  |   | $     | 1,754 | 
|                         |                |                      |       |       |      |   |       |       | 



100



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


|                         |                                       |                      |      |     |      |   |      |      |  |   |      |    | 
|------------------------ | ------------------------------------- | -------------------- | ---- | --- | ---- | - | ---- | ---- |  | - | ---- | -- | 
|                         |                                       | Years Ended June 30, |     
|                         |                                       |                      |     
|                         |                                       | 2006                 |      |     | 2005 |   |      | 2004 | 
|                         |                                       |                      |      |     |      |   |      |      | 
|Operating Income:        |                                       |                      |      |     |      |   |      |      |  |   |      |   
|United States and Canada |                                       | $                    | 295  |     |      | $ | 255  |      |  | $ | 115  |   
|EMEA/ APAC               |                                       |                      | 62   |     |      |   | 36   |      |  |   | 95   |   
|Latin America            |                                       |                      | 29   |     |      |   | 25   |      |  |   | 26   |   
|Unallocated              |                                       |                      | (216 | )   |      |   | (165 | )    |  |   | (163 | ) 
|                         |                                       |                      |      |     |      |   |      |      | 
|                         | Total operating income                |                      |      | 170 |      |   |      | 151  |  |   |      | 73 | 
|                         | Interest expense, net                 |                      |      | 72  |      |   |      | 73   |  |   |      | 64 | 
|                         | Loss on early distinguishment of debt |                      |      | 18  |      |   |      |     |  |   |      |   | 
|                         |                                       |                      |      |     |      |   |      |      | 
|                         | Income before income taxes            |                      |      | 80  |      |   |      | 78   |  |   |      | 9  | 
|                         | Income tax expense                    |                      |      | 53  |      |   |      | 31   |  |   |      | 4  | 
|                         |                                       |                      |      |     |      |   |      |      | 
|                         | Net income                            |                      | $    | 27  |      |   | $    | 47   |  |   | $    | 5  | 
|                         |                                       |                      |      |     |      |   |      |      | 

|                               |                                     |                      |    |    |      |   |    |      |  |   |     |    | 
|------------------------------ | ----------------------------------- | -------------------- | -- | -- | ---- | - | -- | ---- |  | - | --- | -- | 
|                               |                                     | Years Ended June 30, |   
|                               |                                     |                      |   
|                               |                                     | 2006                 |    |    | 2005 |   |    | 2004 | 
|                               |                                     |                      |    |    |      |   |    |      | 
|Depreciation and Amortization: |                                     |                      |    |    |      |   |    |      |  |   |     |   
|United States and Canada       |                                     | $                    | 60 |    |      | $ | 52 |      |  | $ | 56  |   
|EMEA/ APAC                     |                                     |                      | 9  |    |      |   | 4  |      |  |   | (13 | ) 
|Latin America                  |                                     |                      | 3  |    |      |   | 2  |      |  |   | (1  | ) 
|Unallocated                    |                                     |                      | 16 |    |      |   | 16 |      |  |   | 21  |   
|                               |                                     |                      |    |    |      |   |    |      | 
|                               | Total depreciation and amortization |                      | $  | 88 |      |   | $  | 74   |  |   | $   | 63 | 
|                               |                                     |                      |    |    |      |   |    |      | 



|                         |              |             |       |       |      |   |       |       | 
|------------------------ | ------------ | ----------- | ----- | ----- | ---- | - | ----- | ----- | 
|                         |              | Years Ended |      
|                         |              | June 30,    |      
|                         |              |             |      
|                         |              | 2006        |       |       | 2005 |  
|                         |              |             |       |       |      |  
|Assets:                  |              |             |       |       |      |   |       |      
|United States and Canada |              | $           | 1,978 |       |      | $ | 2,433 |      
|EMEA/ APAC               |              |             | 498   |       |      |   | 220   |      
|Latin America            |              |             | 45    |       |      |   | 47    |      
|Unallocated              |              |             | 31    |       |      |   | 23    |      
|                         |              |             |       |       |      |  
|                         | Total assets |             | $     | 2,552 |      |   | $     | 2,723 | 
|                         |              |             |       |       |      |  

101



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


|                         |                         |             |     |       |      |   |     |       | 
|------------------------ | ----------------------- | ----------- | --- | ----- | ---- | - | --- | ----- | 
|                         |                         | Years Ended |    
|                         |                         | June 30,    |    
|                         |                         |             |    
|                         |                         | 2006        |     |       | 2005 |  
|                         |                         |             |     |       |      |  
|Long-Lived Assets:       |                         |             |     |       |      |   |     |      
|United States and Canada |                         | $           | 854 |       |      | $ | 892 |      
|EMEA/ APAC               |                         |             | 114 |       |      |   | 102 |      
|Latin America            |                         |             | 35  |       |      |   | 31  |      
|Unallocated              |                         |             | 31  |       |      |   | 23  |      
|                         |                         |             |     |       |      |  
|                         | Total long-lived assets |             | $   | 1,034 |      |   | $   | 1,048 | 
|                         |                         |             |     |       |      |  



|                         |                            |             |    |    |      |   |    |      |  |   |    |    | 
|------------------------ | -------------------------- | ----------- | -- | -- | ---- | - | -- | ---- |  | - | -- | -- | 
|                         |                            | Years Ended |   
|                         |                            | June 30,    |   
|                         |                            |             |   
|                         |                            | 2006        |    |    | 2005 |   |    | 2004 | 
|                         |                            |             |    |    |      |   |    |      | 
|Capital Expenditures:    |                            |             |    |    |      |   |    |      |  |   |    |   
|United States and Canada |                            | $           | 43 |    |      | $ | 40 |      |  | $ | 36 |   
|EMEA/ APAC               |                            |             | 17 |    |      |   | 27 |      |  |   | 28 |   
|Latin America            |                            |             | 10 |    |      |   | 8  |      |  |   | 6  |   
|Unallocated              |                            |             | 15 |    |      |   | 18 |      |  |   | 11 |   
|                         |                            |             |    |    |      |   |    |      | 
|                         | Total capital expenditures |             | $  | 85 |      |   | $  | 93   |  |   | $  | 81 | 
|                         |                            |             |    |    |      |   |    |      | 



|         |                                     
|-------- | ------------------------------------
|Note 21. | Quarterly Financial Data (Unaudited)



|                                  |  |                    |      |  |                   |   |      |                |  |   |               |   |  |   |       |  
|--------------------------------- |  | ------------------ | ---- |  | ----------------- | - | ---- | -------------- |  | - | ------------- | - |  | - | ----- | -
|                                  |  | Quarters Ended     |     
|                                  |  |                    |     
|                                  |  | September 30, 2005 |      |  | December 31, 2005 |   |      | March 31, 2006 |  |   | June 30, 2006 |  
|                                  |  |                    |      |  |                   |   |      |                |  |   |               |  
|Revenue                           |  | $                  | 508  |  |                   | $ | 512  |                |  | $ | 495           |   |  | $ | 533   |  
|Operating income                  |  |                    | 72   |  |                   |   | 70   |                |  |   | 14            |   |  |   | 14    |  
|Net income (loss)                 |  |                    | 22   |  |                   |   | 27   |                |  |   | (12           | ) |  |   | (10   | )
|Basic earnings (loss) per share   |  |                    | 0.21 |  |                   |   | 0.25 |                |  |   | (0.11         | ) |  |   | (0.08 | )
|Diluted earnings (loss) per share |  | $                  | 0.20 |  |                   | $ | 0.24 |                |  | $ | (0.11         | ) |  | $ | (0.08 | )

|                           |  |                    |      |  |                   |   |      |                |  |   |               |  |  |   |      | 
|-------------------------- |  | ------------------ | ---- |  | ----------------- | - | ---- | -------------- |  | - | ------------- |  |  | - | ---- | 
|                           |  | Quarters Ended     |     
|                           |  |                    |     
|                           |  | September 30, 2004 |      |  | December 31, 2004 |   |      | March 31, 2005 |  |   | June 30, 2005 | 
|                           |  |                    |      |  |                   |   |      |                |  |   |               | 
|Revenue                    |  | $                  | 481  |  |                   | $ | 488  |                |  | $ | 468           |  |  | $ | 503  | 
|Operating income           |  |                    | 56   |  |                   |   | 54   |                |  |   | 17            |  |  |   | 24   | 
|Net income                 |  |                    | 21   |  |                   |   | 23   |                |  |   | 1             |  |  |   | 2    | 
|Basic earnings per share   |  |                    | 0.20 |  |                   |   | 0.22 |                |  |   | 0.01          |  |  |   | 0.02 | 
|Diluted earnings per share |  | $                  | 0.20 |  |                   | $ | 0.21 |                |  | $ | 0.01          |  |  | $ | 0.02 | 

102



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |    |    |  |   |    |    |   |   |    |    | 
|----------------------------------------------- | -------------------------------------------- | ----------------------------- | - | -- | ------- |  | - | ------- | -- | - | ------- | - | - | ------- | -- | -- | ------- |  | - | ------- | - |  | ------- | -- | -- |  | - | -- | -- | - | - | -- | -- | 
|                                                |                                              | For the Quarters Ended        |  
|                                                |                                              |                               |  
|                                                |                                              | Jun 30,                       |   |    | Mar 31, |  |   | Dec 31, |    |   | Sep 30, |   |   | Jun 30, |    |    | Mar 31, |  |   | Dec 31, |   |  | Sep 30, |   
|                                                |                                              | 2006                          |   |    | 2006    |  |   | 2005    |    |   | 2005    |   |   | 2005    |    |    | 2005    |  |   | 2004    |   |  | 2004    |   
|                                                |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |   
|                                                |                                              | (In millions)                 |  
|Revenues:                                       |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |    |    |  |   |    |    |   |   |   
|                                                | Franchise system distress impact(a)          |                               | $ |   |         |  | $ |        |    |   | $       |  |   |         | $  |   |         |  | $ | (3      | ) |  | $       | (1 | )  |  | $ |   |    |   | $ | 1  |   
|Selling, general and administrative:            |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |    |    |  |   |    |    |   |   |   
|                                                | Franchise system distress impact(b)          |                               |   | (1 | )       |  |   |        |    |   |         |  |   |         |    | 1  |         |  |   | 2       |   |  |         | 9  |    |  |   | 9  |    |   |   | 8  |   
|                                                | Global reorganization and realignment        |                               |   | 7  |         |  |   | 2       |    |   |         | 1 |   |         |    |   |         |  |   | 7       |   |  |         | 4  |    |  |   | 3  |    |   |   | 3  |   
|                                                | Compensatory make-whole payment              |                               |   |   |         |  |   | 34      |    |   |         |  |   |         |    |   |         |  |   |        |   |  |         |   |    |  |   |   |    |   |   |   |   
|                                                | Executive severance                          |                               |   | 5  |         |  |   |        |    |   |         |  |   |         |    |   |         |  |   |        |   |  |         |   |    |  |   |   |    |   |   |   |   
|                                                |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |   
|                                                |                                              | Total effect on SG&A          |   |    | 11      |  |   |         | 36 |   |         |   | 1 |         |    |    | 1       |  |   |         | 9 |  |         |    | 13 |  |   |    | 12 |   |   |    | 11 | 
|Fees paid to affiliates:                        |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |    |    |  |   |    |    |   |   |   
|                                                | Management fee                               |                               |   | 1  |         |  |   | 2       |    |   |         | 3 |   |         |    | 3  |         |  |   | 2       |   |  |         | 2  |    |  |   | 2  |    |   |   | 3  |   
|                                                | Management agreement termination fee         |                               |   | 30 |         |  |   |        |    |   |         |  |   |         |    |   |         |  |   |        |   |  |         |   |    |  |   |   |    |   |   |   |   
|                                                |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |   
|                                                |                                              | Total fees paid to affiliates |   |    | 31      |  |   |         | 2  |   |         |   | 3 |         |    |    | 3       |  |   |         | 2 |  |         |    | 2  |  |   |    | 2  |   |   |    | 3  | 
|Other operating (income) expenses (OIE), net: |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |    |    |  |   |    |    |   |   |   
|                                                | Franchise system distress impact(c)          |                               |   | 1  |         |  |   | (2      | )  |   |         | 1 |   |         |    |   |         |  |   |        |   |  |         | 7  |    |  |   |   |    |   |   | 1  |   
|                                                | Loss on asset disposals and asset impairment |                               |   |   |         |  |   |        |    |   |         |  |   |         |    |   |         |  |   | 9       |   |  |         | 13 |    |  |   | (4 | )  |   |   |   |   
|                                                |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |   
|                                                |                                              | Total effect on OIE, net      |   |    | 1       |  |   |         | (2 | ) |         |   | 1 |         |    |    |        |  |   |         | 9 |  |         |    | 20 |  |   |    | (4 | ) |   |    | 1  | 
|                                                | Total effect on income from operations       |                               |   | 43 |         |  |   | 36      |    |   |         | 5 |   |         |    | 4  |         |  |   | 17      |   |  |         | 34 |    |  |   | 10 |    |   |   | 16 |   
|                                                |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |   
|Interest on $350 million loan paid-off at IPO   |                                              |                               | 3 |    |         |  | 3 |         |    |   |        |   |   |         |   |    |         |  |  |         |   |  |        |    |    |  |  |    |    |   |  |   
|Loss on early extinguishment of debt            |                                              |                               | 4 |    |         |  | 1 |         |    |   |        |   |   |         | 13 |    |         |  |  |         |   |  |        |    |    |  |  |    |    |   |  |   
|                                                |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |   
|                                                | Total effect on income before income taxes   |                               | $ | 50 |         |  | $ | 40      |    |   | $       | 5 |   |         | $  | 17 |         |  | $ | 17      |   |  | $       | 34 |    |  | $ | 10 |    |   | $ | 16 |   
|                                                |                                              |                               |   |    |         |  |   |         |    |   |         |   |   |         |    |    |         |  |   |         |   |  |         |   






|    |  |                                                                                                                                                            
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Represents revenues not recognized and (recoveries) of
    revenues previously not recognized.                                                             
|   
|(b) |  | Represents bad debt expense (recoveries), incremental
    advertising contributions and the internal and external costs of
    FFRP program administration.
|   
|(c) |  | Represents (recoveries) reserves on acquired debt, net
    and other items included within operating (income) expenses,
    net.                           



|         |                              
|-------- | -----------------------------
|Note 22. | New Accounting Pronouncements

Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees


103



---



##### Table of Contents



BURGER KING HOLDINGS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)












|         |                 
|-------- | ----------------
|Note 23. | Subsequent Event



104



---



##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures




Section 404 Compliance Project


10-K.




Inherent Limitation of the Effectiveness of Internal
Control









|         |                  
|-------- | -----------------
|Item 9B. | Other Information






Part III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant

S-K,


105



---



##### Table of Contents



EXECUTIVE OFFICERS OF THE REGISTRANT


|                        |  |     |    |  |          |                                                    
|----------------------- |  | --- | -- |  | -------- | ---------------------------------------------------
|Name                    |  | Age |    |  | Position
|                        |  |     |    |  |         
|John W. Chidsey         |  |     | 44 |  |          | Chief Executive Officer and Director               
|Russell B. Klein        |  |     | 49 |  |          | President, Global Marketing Strategy and Innovation
|Ben K. Wells            |  |     | 52 |  |          | Chief Financial Officer and Treasurer              
|James F. Hyatt          |  |     | 50 |  |          | Chief Operations Officer                           
|Peter C. Smith          |  |     | 50 |  |          | Chief Human Resources Officer                      
|Anne Chwat              |  |     | 47 |  |          | General Counsel and Secretary                      
|Charles M. Fallon, Jr.  |  |     | 43 |  |          | President, North America                           
|Amy Wagner              |  |     | 40 |  |          | Senior Vice President, Investor Relations          
|Christopher M. Anderson |  |     | 39 |  |          | Vice President and Controller                      

John W. Chidsey


Russell B. Klein


Ben K. Wells 10-year


James F. Hyatt Burger King


Peter C. Smith


Anne Chwat


Charles M. Fallon, Jr.


Amy Wagner


106



---



##### Table of Contents





Christopher M. Anderson







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services






Part IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules



|    |                         
|--- | ------------------------
|(1) | All Financial Statements

10-K.




|    |                              
|--- | -----------------------------
|(2) | Financial Statement Schedules





|    |         
|--- | --------
|(3) | Exhibits



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | -- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 3  | .1          |  | Amended and Restated Certificate of Incorporation of Burger King
    Holdings, Inc.                                                                                                                                                                                                                                                                                                                  
|        | 3  | .2          |  | Amended and Restated By-Laws of Burger King Holdings, Inc.                                                                                                                                                                                                                                                                                                                                           
|        | 4  | .1*         |  | Form of Common Stock Certificate                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .1*         |  | Amended and Restated Credit Agreement, dated February 15,
    2006, among Burger King Corporation, Burger King Holdings, Inc.,
    the lenders party thereto, JPMorgan Chase Bank, N.A., as
    administrative agent, Citicorp North America, Inc., as
    syndication agent, and Bank of America, N.A., RBC Capital
    Markets and Wachovia Bank, National Association, as
    documentation agents

107



---



##### Table of Contents



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | -- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .2*         |  | Form of Amended and Restated Shareholders Agreement by and
    among Burger King Holdings, Inc., Burger King Corporation, TPG
    BK Holdco LLC, GS Capital Partners 2000, L.P., GS Capital
    Partners 2000 Offshore, L.P., GS Capital Partners 2000
    GmbH & Co. Beteiligungs KG, GS Capital Partners 2000
    Employee Fund, L.P., Bridge Street Special Opportunities
    Fund 2000, L.P., Stone Street Fund 2000, L.P., Goldman
    Sachs Direct Investment Fund 2000, L.P., GS Private Equity
    Partners 2000, L.P., GS Private Equity Partners 2000 Offshore
    Holdings, L.P., GS Private Equity Partners 2000-Direct
    Investment Fund, L.P., Bain Capital Integral Investors, LLC,
    Bain Capital VII Coinvestment Fund, LLC and BCIP TCV, LLC                                                
|        | 10 | .3*         |  | Form of Management Subscription and Shareholders Agreement
    among Burger King Holdings, Inc., Burger King Corporation and
    its officers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .4*         |  | Form of Board Member Subscription and Shareholders
    Agreement among Burger King Holdings, Inc., Burger King
    Corporation and its directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .5*         |  | Amendment to the Management Subscription and Shareholders
    Agreement among Burger King Holdings, Inc., Burger King
    Corporation and John W. Chidsey                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 10 | .6*         |  | Management Subscription and Shareholders Agreement among
    Burger King Holdings, Inc., Burger King Corporation and Gregory
    D. Brenneman                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .7*         |  | Management Agreement, dated December 13, 2002, among Burger
    King Corporation, Bain Capital Partners, LLC, Bain Capital
    Integral Investors, LLC, Bain Capital VII Coinvestment Fund,
    LLC, BCIP TCV, LLC, Goldman, Sachs & Co., Goldman Sachs
    Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore,
    L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs
    KG, GS Capital Partners 2000 Employee Fund, L.P., Bridge Street
    Special Opportunities Fund 2000, L.P., Stone Street
    Fund 2000, L.P., Goldman Sachs Direct Investment
    Fund 2000, L.P., GS Private Equity Partners 2000, L.P., GS
    Private Equity Partners 2000 Offshore Holdings, L.P., GS Private
    Equity Partners 2000  Direct Investment Fund, L.P.,
    TPG GenPar III, L.P. and TPG BK Holdco LLC
|        | 10 | .8*         |  | Letter Agreement Terminating the Management Agreement, dated as
    of February 3, 2006, among Burger King Corporation, Bain
    Capital Partners, LLC, Bain Capital Integral Investors, LLC,
    Bain Capital VII Coinvestment Fund, LLC, BCIP TCV, LLC, Goldman,
    Sachs & Co., Goldman Sachs Capital Partners 2000, L.P.,
    GS Capital Partners 2000 Offshore, L.P., GS Capital Partners
    2000 GmbH & Co. Beteiligungs KG, GS Capital Partners
    2000 Employee Fund, L.P., Bridge Street Special Opportunities
    Fund 2000, L.P., GS Private Equity Partners 2000, L.P., GS
    Private Equity Partners 2000 Offshore Holdings, L.P., GS Private
    Equity Partners 2000  Direct Investment Fund, L.P.,
    TPG GenPar III, L.P. and TPG BK Holdco LLC                                             
|        | 10 | .9*         |  | Lease Agreement, dated as of May 10, 2005, between CM
    Lejeune, Inc. and Burger King Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10 | .10*        |  | Burger King Holdings, Inc. Equity Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10 | .11*        |  | Burger King Holdings, Inc. 2006 Omnibus Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .12*        |  | Burger King Corporation Fiscal Year 2006 Executive Team
    Restaurant Support Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .13*        |  | Form of Management Restricted Unit Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10 | .14*        |  | Form of Amendment to Management Restricted Unit Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10 | .15*        |  | Management Restricted Unit Agreement among John W. Chidsey,
    Burger King Holdings, Inc. and Burger King Corporation, dated as
    of October 8, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .16*        |  | Special Management Restricted Unit Agreement among Peter C.
    Smith, Burger King Holdings, Inc. and Burger King Corporation,
    dated as of December 1, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10 | .17*        |  | Form of 2003 Management Stock Option Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .18*        |  | Form of 2005 Management Stock Option Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .19*        |  | Form of Board Member Stock Option Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10 | .20*        |  | Form of Special Management Stock Option Agreement among John W.
    Chidsey, Burger King Holdings, Inc. and Burger King Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10 | .21*        |  | Management Stock Option Agreement among Gregory D. Brenneman,
    Burger King Holdings, Inc. and Burger King Corporation, dated as
    of August 1, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

108



---



##### Table of Contents



|        |    |             |  |                                                                                                                                             
|------- | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .22*        |  | Stock Option Agreement among Armando Codina, Burger King
    Holdings, Inc. and Burger King Corporation, dated as of
    February 14, 2006  
|        | 10 | .23*        |  | Employment Agreement between John W. Chidsey and Burger King
    Corporation, dated as of April 7, 2006                                     
|        | 10 | .24*        |  | Employment Agreement between Russell B. Klein and Burger King
    Corporation, dated as of April 20, 2006                                   
|        | 10 | .25*        |  | Employment Agreement between Ben K. Wells, and Burger King
    Corporation, dated as of April 7, 2006                                       
|        | 10 | .26*        |  | Employment Agreement between James F. Hyatt and Burger King
    Corporation, dated as of April 20, 2006                                     
|        | 10 | .27*        |  | Employment Agreement between Peter C. Smith and Burger King
    Corporation, dated as of April 20, 2006                                     
|        | 10 | .28*        |  | Separation and Consulting Services Agreement between Gregory D.
    Brenneman and Burger King Corporation, dated as of April 6,
    2006    
|        | 10 | .29*        |  | Separation Agreement between Bradley Blum and Burger King
    Corporation, dated as of July 30, 2004                                        
|        | 10 | .30*        |  | Restricted Stock Unit Award Agreement between Burger King
    Holdings, Inc. and John W. Chidsey, dated as of May 2006                      
|        | 10 | .31*        |  | Form of Restricted Stock Unit Award Agreement under the Burger
    King Holdings, Inc. 2006 Omnibus Incentive Plan                          
|        | 10 | .32*        |  | Form of Restricted Stock Unit Award Agreement under the Burger
    King Holdings, Inc. 2006 Equity Incentive Plan                           
|        | 10 | .33*        |  | Form of Option Award Agreement under the Burger King Holdings,
    Inc. 2006 Omnibus Incentive Plan                                         
|        | 10 | .34*        |  | Form of Option Award Agreement under the Burger King Holdings,
    Inc. Equity Incentive Plan                                               
|        | 10 | .35**       |  | Form of Performance Awards Agreement under the Burger King
    Holdings, Inc. 2006 Omnibus Incentive Plan                                   
|        | 14 |             |  | Burger King Code of Business Ethics and Conduct                                                                                             
|        | 21 | .1          |  | List of Subsidiaries of the Registrant                                                                                                      
|        | 31 | .1          |  | Certification of Chief Executive Officer of Burger King
    Holdings, Inc. pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002    
|        | 31 | .2          |  | Certification of Chief Financial Officer of Burger King
    Holdings, Inc. pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002    
|        | 32 | .1          |  | Certification of Chief Executive Officer of Burger King
    Holdings, Inc. pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002    
|        | 32 | .2          |  | Certification of the Chief Financial Officer of Burger King
    Holdings, Inc. pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002






|  |                                                                                                                                        
|- | ---------------------------------------------------------------------------------------------------------------------------------------
|* | Incorporated herein by reference to the Burger King Holdings,
    Inc. Registration Statement on
    Form S-1 (File
    No. 333-131897)



|   |                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------
|** | Incorporated herein by reference to the Burger King Holdings,
    Inc. Current Report on
    Form 8-K dated
    August 14, 2006

109



---



##### Table of Contents



Signatures






| |                           
| | --------------------------
| | BURGER KING HOLDINGS, INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ John W. Chidsey

| |                      
| | ---------------------
| |                      
| | Name: John W. Chidsey

| |        |                                     
| | ------ | ------------------------------------
| | Title: | Chief Executive Officer and Director

| |       |                
| | ----- | ---------------
| | Date: | August 31, 2006



|                                                       |  |                                                                         |  |                 |  | 
|------------------------------------------------------ |  | ----------------------------------------------------------------------- |  | --------------- |  | 
|Signature                                              |  | Title                                                                   |  | Date           
|                                                       |  |                                                                         |  |                
|                                                      
|/s/ John W. ChidseyJohn
    W. Chidsey                 |  | Chief Executive Officer and Director (principal executive
    officer)  |  | August 31, 2006
|                                                      
|/s/ Ben K. WellsBen
    K. Wells                       |  | Chief Financial Officer and Treasurer (principal financial
    officer) |  | August 31, 2006
|                                                      
|/s/ Christopher M. AndersonChristopher
    M. Anderson |  | Vice President and Controller (principal accounting officer)            |  | August 31, 2006
|                                                      
|/s/ Brian Thomas SwetteBrian
    Thomas Swette         |  | Non-Executive Chairman                                                  |  | August 31, 2006
|                                                      
|/s/ Andrew B. BalsonAndrew
    B. Balson               |  | Director                                                                |  | August 31, 2006
|                                                      
|/s/ David BondermanDavid
    Bonderman                 |  | Director                                                                |  | August 31, 2006
|                                                      
|/s/ Richard W. BoyceRichard
    W. Boyce               |  | Director                                                                |  | August 31, 2006
|                                                      
|/s/ David A. BrandonDavid
    A. Brandon               |  | Director                                                                |  | August 31, 2006
|                                                      
|/s/ Armando CodinaArmando
    Codina                   |  | Director                                                                |  | August 31, 2006
|                                                      
|/s/ Peter Raemin FormanekPeter
    Raemin Formanek     |  | Director                                                                |  | August 31, 2006
|                                                      
|/s/ Manny GarciaManny
    Garcia                       |  | Director                                                                |  | August 31, 2006

110



---



##### Table of Contents



|                                                     |  |          |  |                 |  | 
|---------------------------------------------------- |  | -------- |  | --------------- |  | 
|Signature                                            |  | Title    |  | Date           
|                                                     |  |          |  |                
|                                                    
|/s/ Adrian JonesAdrian
    Jones                     |  | Director |  | August 31, 2006
|                                                    
|/s/ Sanjeev k. MehraSanjeev
    k. Mehra             |  | Director |  | August 31, 2006
|                                                    
|/s/ Stephen G. PagliucaStephen
    G. Pagliuca       |  | Director |  | August 31, 2006
|                                                    
|/s/ Kneeland C. YoungbloodKneeland
    C. Youngblood |  | Director |  | August 31, 2006

111



---



##### Table of Contents



EXHIBITS


|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | -- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 3  | .1          |  | Amended and Restated Certificate of Incorporation of Burger King
    Holdings, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 3  | .2          |  | Amended and Restated By-Laws of Burger King Holdings, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 4  | .1*         |  | Form of Common Stock Certificate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10 | .1*         |  | Amended and Restated Credit Agreement, dated February 15,
    2006, among Burger King Corporation, Burger King Holdings, Inc.,
    the lenders party thereto, JPMorgan Chase Bank, N.A., as
    administrative agent, Citicorp North America, Inc., as
    syndication agent, and Bank of America, N.A., RBC Capital
    Markets and Wachovia Bank, National Association, as
    documentation agents                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 10 | .2*         |  | Form of Amended and Restated Shareholders Agreement by and
    among Burger King Holdings, Inc., Burger King Corporation, TPG
    BK Holdco LLC, GS Capital Partners 2000, L.P., GS Capital
    Partners 2000 Offshore, L.P., GS Capital Partners 2000
    GmbH & Co. Beteiligungs KG, GS Capital Partners 2000
    Employee Fund, L.P., Bridge Street Special Opportunities
    Fund 2000, L.P., Stone Street Fund 2000, L.P., Goldman
    Sachs Direct Investment Fund 2000, L.P., GS Private Equity
    Partners 2000, L.P., GS Private Equity Partners 2000 Offshore
    Holdings, L.P., GS Private Equity Partners 2000-Direct
    Investment Fund, L.P., Bain Capital Integral Investors, LLC,
    Bain Capital VII Coinvestment Fund, LLC and BCIP TCV, LLC                                                
|        | 10 | .3*         |  | Form of Management Subscription and Shareholders Agreement
    among Burger King Holdings, Inc., Burger King Corporation and
    its officers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .4*         |  | Form of Board Member Subscription and Shareholders
    Agreement among Burger King Holdings, Inc., Burger King
    Corporation and its directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .5*         |  | Amendment to the Management Subscription and Shareholders
    Agreement among Burger King Holdings, Inc., Burger King
    Corporation and John W. Chidsey                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 10 | .6*         |  | Management Subscription and Shareholders Agreement among
    Burger King Holdings, Inc., Burger King Corporation and Gregory
    D. Brenneman                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .7*         |  | Management Agreement, dated December 13, 2002, among Burger
    King Corporation, Bain Capital Partners, LLC, Bain Capital
    Integral Investors, LLC, Bain Capital VII Coinvestment Fund,
    LLC, BCIP TCV, LLC, Goldman, Sachs & Co., Goldman Sachs
    Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore,
    L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs
    KG, GS Capital Partners 2000 Employee Fund, L.P., Bridge Street
    Special Opportunities Fund 2000, L.P., Stone Street
    Fund 2000, L.P., Goldman Sachs Direct Investment
    Fund 2000, L.P., GS Private Equity Partners 2000, L.P., GS
    Private Equity Partners 2000 Offshore Holdings, L.P., GS Private
    Equity Partners 2000  Direct Investment Fund, L.P.,
    TPG GenPar III, L.P. and TPG BK Holdco LLC
|        | 10 | .8*         |  | Letter Agreement Terminating the Management Agreement, dated as
    of February 3, 2006, among Burger King Corporation, Bain
    Capital Partners, LLC, Bain Capital Integral Investors, LLC,
    Bain Capital VII Coinvestment Fund, LLC, BCIP TCV, LLC, Goldman,
    Sachs & Co., Goldman Sachs Capital Partners 2000, L.P.,
    GS Capital Partners 2000 Offshore, L.P., GS Capital Partners
    2000 GmbH & Co. Beteiligungs KG, GS Capital Partners
    2000 Employee Fund, L.P., Bridge Street Special Opportunities
    Fund 2000, L.P., GS Private Equity Partners 2000, L.P., GS
    Private Equity Partners 2000 Offshore Holdings, L.P., GS Private
    Equity Partners 2000  Direct Investment Fund, L.P.,
    TPG GenPar III, L.P. and TPG BK Holdco LLC                                             
|        | 10 | .9*         |  | Lease Agreement, dated as of May 10, 2005, between CM
    Lejeune, Inc. and Burger King Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10 | .10*        |  | Burger King Holdings, Inc. Equity Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10 | .11*        |  | Burger King Holdings, Inc. 2006 Omnibus Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .12*        |  | Burger King Corporation Fiscal Year 2006 Executive Team
    Restaurant Support Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .13*        |  | Form of Management Restricted Unit Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10 | .14*        |  | Form of Amendment to Management Restricted Unit Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10 | .15*        |  | Management Restricted Unit Agreement among John W. Chidsey,
    Burger King Holdings, Inc. and Burger King Corporation, dated as
    of October 8, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .16*        |  | Special Management Restricted Unit Agreement among Peter C.
    Smith, Burger King Holdings, Inc. and Burger King Corporation,
    dated as of December 1, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10 | .17*        |  | Form of 2003 Management Stock Option Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

112



---



##### Table of Contents



|        |    |             |  |                                                                                                                                                         
|------- | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .18*        |  | Form of 2005 Management Stock Option Agreement                                                                                                          
|        | 10 | .19*        |  | Form of Board Member Stock Option Agreement                                                                                                             
|        | 10 | .20*        |  | Form of Special Management Stock Option Agreement among John W.
    Chidsey, Burger King Holdings, Inc. and Burger King Corporation                     
|        | 10 | .21*        |  | Management Stock Option Agreement among Gregory D. Brenneman,
    Burger King Holdings, Inc. and Burger King Corporation, dated as
    of August 1, 2004
|        | 10 | .22*        |  | Stock Option Agreement among Armando Codina, Burger King
    Holdings, Inc. and Burger King Corporation, dated as of
    February 14, 2006              
|        | 10 | .23*        |  | Employment Agreement between John W. Chidsey and Burger King
    Corporation, dated as of April 7, 2006                                                 
|        | 10 | .24*        |  | Employment Agreement between Russell B. Klein and Burger King
    Corporation, dated as of April 20, 2006                                               
|        | 10 | .25*        |  | Employment Agreement between Ben K. Wells, and Burger King
    Corporation, dated as of April 7, 2006                                                   
|        | 10 | .26*        |  | Employment Agreement between James F. Hyatt and Burger King
    Corporation, dated as of April 20, 2006                                                 
|        | 10 | .27*        |  | Employment Agreement between Peter C. Smith and Burger King
    Corporation, dated as of April 20, 2006                                                 
|        | 10 | .28*        |  | Separation and Consulting Services Agreement between Gregory D.
    Brenneman and Burger King Corporation, dated as of April 6,
    2006                
|        | 10 | .29*        |  | Separation Agreement between Bradley Blum and Burger King
    Corporation, dated as of July 30, 2004                                                    
|        | 10 | .30*        |  | Restricted Stock Unit Award Agreement between Burger King
    Holdings, Inc. and John W. Chidsey, dated as of May 2006                                  
|        | 10 | .31*        |  | Form of Restricted Stock Unit Award Agreement under the Burger
    King Holdings, Inc. 2006 Omnibus Incentive Plan                                      
|        | 10 | .32*        |  | Form of Restricted Stock Unit Award Agreement under the Burger
    King Holdings, Inc. 2006 Equity Incentive Plan                                       
|        | 10 | .33*        |  | Form of Option Award Agreement under the Burger King Holdings,
    Inc. 2006 Omnibus Incentive Plan                                                     
|        | 10 | .34*        |  | Form of Option Award Agreement under the Burger King Holdings,
    Inc. Equity Incentive Plan                                                           
|        | 10 | .35**       |  | Form of Performance Awards Agreement under the Burger King
    Holdings, Inc. 2006 Omnibus Incentive Plan                                               
|        | 14 |             |  | Burger King Code of Business Ethics and Conduct                                                                                                         
|        | 21 | .1          |  | List of Subsidiaries of the Registrant                                                                                                                  
|        | 31 | .1          |  | Certification of Chief Executive Officer of Burger King
    Holdings, Inc. pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002                
|        | 31 | .2          |  | Certification of Chief Financial Officer of Burger King
    Holdings, Inc. pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002                
|        | 32 | .1          |  | Certification of Chief Executive Officer of Burger King
    Holdings, Inc. pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002                
|        | 32 | .2          |  | Certification of the Chief Financial Officer of Burger King
    Holdings, Inc. pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002            






|  |                                                                                                                                        
|- | ---------------------------------------------------------------------------------------------------------------------------------------
|* | Incorporated herein by reference to the Burger King Holdings,
    Inc. Registration Statement on
    Form S-1 (File
    No. 333-131897)



|   |                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------
|** | Incorporated herein by reference to the Burger King Holdings,
    Inc. Current Report on
    Form 8-K dated
    August 14, 2006

113