However, our royalty revenues are calculated based on a percentage of franchise restaurant sales. In fiscal 2005, franchise restaurants generated approximately 90% of system-wide sales. In addition, our industry has long been subject to the threat of food tampering by suppliers, employees or guests, such as the addition of foreign objects in the food that we sell. We believe that our high percentage of franchise restaurants provides us with a strategic advantage because the capital required to grow and maintain the Burger King ® system is funded primarily by franchisees. Furthermore, if we are in default under our credit facility, our ability to pay cash dividends will be limited in the absence of a waiver of that default or an amendment to that facility. Since June 2003, most new franchise restaurants opened and franchise agreements renewed in the United States generated royalties at the rate of 4. .
Australia is the only market in which we operate under a brand other than Burger King. Increases in the cost of food, paper products and energy could harm our profitability and operating results. The success of our business depends on our continued ability to use our existing trademarks and service marks in order to increase brand awareness and further develop our branded products in both domestic and international markets. A financial ratio is a relationship that indicates something about a company's activities, such as the ratio between the company's current assets and current liabilities or between its accounts receivable and its annual sales. The shares of our common stock outstanding prior to this offering will be eligible for sale in the public market at various times in the future. The Moodys Aa rate as of the March 31, 2005 measurement date for fiscal 2006 was 5.
Franchisees who lease land only or land and building from us do so on a triple net basis. This report will contribute additional knowledge on how to analyze the financial position of a company to determine if it is earning or losing. We generate revenues from three sources: sales at our company restaurants; royalties and franchise fees paid to us by our franchisees; and property income from certain franchise restaurants that lease or sublease property from us. Franchise fees and franchise renewal fees are recorded as revenues in the year received. The Test Period is defined in the Credit Agreement as the most recently completed four consecutive fiscal quarters ending on such date. See Certain Relationships and Related Transactions New Global Headquarters.
In addition, as a result of our recent issuance of high yield notes and our new credit facility, our effective tax rate and our ability to utilize our foreign tax credits may be adversely impacted. Certain long-lived assets and related liabilities are grouped together for impairment testing at the operating market level based on geographic areas in the case of the United States, Canada, the U. Income tax benefits credited to stockholders equity relate to tax benefits associated with amounts that are deductible for income tax purposes but do not affect earnings. Such concentration of voting power could have the effect of delaying, deterring or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders. Have It Your Way is increasingly relevant as consumers continue to demand personalization and choice over mass production. We will discuss some of the simple ratios of a company and talk about their significance. As our competitors expand their operations, including through acquisitions or otherwise, we expect competition to intensify.
Moreover, the adoption of new or more stringent environmental laws or regulations could result in a material environmental liability to us and the current environmental condition of the properties could be harmed by tenants or other third parties or by the condition of land or operations in the vicinity of our properties. Although we believe we have adequately accounted for our uncertain tax positions, from time to time, audits result in proposed assessments where the ultimate resolution may result in us owing additional taxes. Our growth and success have been built, in significant part, upon our substantial franchise operations. Such competition may adversely affect our revenues and profits by reducing revenues of Company restaurants and royalty payments from franchise restaurants. Field Optimization Project During 2011, we initiated a project to significantly expand and enhance our U. In many cases, however, we agreed to extend the existing franchise agreements to avoid the closing of restaurants by giving franchisees additional time to comply with our renewal requirements. Consequently, your only opportunity to achieve a return on your investment in our company will be if the market price of our common stock appreciates.
Much has changed in the half century since our founders sold the first Whopper ® sandwiches in a Miami drive-up hamburger stand in 1957, but these core principles have remained. From time to time, we are involved in other legal proceedings arising in the ordinary course of business relating to matters including, but not limited to, disputes with franchisees, suppliers, employees and customers, as well as disputes over our intellectual property. All material intercompany balances and transactions have been eliminated in consolidation. 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. This program, known as softscape, includes repainting the dining rooms and removing old wallpaper and outdated artwork and replacing it with décor elements that will highlight our core message of Have It Your Way. In the United States, over 50% of our Company restaurants are located in three states, Florida, North Carolina and Indiana.
Our results can be adversely affected by unforeseen events, such as adverse weather conditions, natural disasters or catastrophic events. Men and women alike are drawn to the ad because they are either attracted to it or offended by it. Franchise and property revenues primarily include royalties, initial and renewal franchise fees and rental income from operating lease rentals and earned income on direct financing leases on property leased or subleased to franchisees. When we determine that deferred tax assets could be realized in greater or lesser amounts than recorded, the asset balance and income statement reflect the change in the period such determination is made. Chidsey has extensive experience in managing and leading franchised and branded businesses through his long tenures at Cendant and PepsiCo, and Mr.