Delaware | 1-10275 | 75-1914582 | ||
(State of Incorporation) | (Commission File Number) | (IRS Employment Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). |
BRINKER INTERNATIONAL, INC. | |||
Dated: August 7, 2014 | By: | /s/ Wyman T. Roberts | |
Wyman T. Roberts, | |||
Chief Executive Officer and | |||
President and President of Chili’s Grill and Bar | |||
(Principal Executive Officer) |
Contacts: Greg Artkop, Media Relations | Chris Bremer, Investor Relations | ||
(800) 775-7290 | (972) 980-9917 |
• | Earnings per diluted share, excluding special items, increased 10.4 percent to $0.85 compared to $0.77 for the fourth quarter of fiscal 2013. Earnings per diluted share, excluding special items, increased 15.8 percent to $2.71 compared to $2.34 for the full year fiscal 2013 (see non-GAAP reconciliation below) |
• | On a GAAP basis, earnings per diluted share decreased to $0.43 compared to $0.64 for the fourth quarter of fiscal 2013 driven primarily by pre-tax charges of $39.5 million recorded to establish reserves for the potential settlement of various litigation matters. On a GAAP basis, earnings per diluted share increased to $2.26 compared to $2.20 for the full year fiscal 2013 |
• | Brinker International company sales increased 3.7 percent to $735.0 million and comparable restaurant sales at company-owned restaurants increased 2.3 percent |
• | Chili’s company-owned comparable restaurant sales increased 2.5 percent |
• | Maggiano’s comparable restaurant sales increased 0.9 percent, representing the 18th consecutive quarterly increase |
• | Chili's franchise comparable restaurant sales increase of 1.2 percent includes a 1.4 percent increase for U.S. franchise restaurants and a 0.8 percent increase for international franchise restaurants, representing the 18th consecutive quarterly increase for international franchise restaurants |
• | For fiscal 2014, cash flows provided by operating activities were $359.8 million and capital expenditures totaled $161.1 million |
• | The company repurchased approximately 0.9 million shares of its common stock for $47.8 million in the fourth quarter and a total of approximately 5.1 million shares for $239.6 million year-to-date |
• | The company paid a dividend of 24 cents per share in the fourth quarter, an increase of 20 percent over the prior year fourth quarter |
April | May | June | Q4 14 | Q4 13 | FY 14 | FY 13 | |||||||||||||||
Brinker International | 2.1 | 3.0 | 1.7 | 2.3 | (0.5 | ) | 0.6 | 0.5 | |||||||||||||
Chili’s Company-Owned1 | |||||||||||||||||||||
Comparable Restaurant Sales | 2.4 | 3.3 | 1.7 | 2.5 | (0.6 | ) | 0.6 | 0.5 | |||||||||||||
Pricing Impact | 1.2 | 1.2 | 1.2 | 1.2 | 1.3 | 1.2 | 1.4 | ||||||||||||||
Mix-Shift | 1.3 | 2.3 | 2.3 | 1.9 | 0.2 | 1.2 | 0.9 | ||||||||||||||
Traffic | (0.1 | ) | (0.2 | ) | (1.8 | ) | (0.6 | ) | (2.1 | ) | (1.8 | ) | (1.8 | ) | |||||||
Maggiano’s | |||||||||||||||||||||
Comparable Restaurant Sales | 0.6 | 0.7 | 1.6 | 0.9 | 0.2 | 0.6 | 0.5 | ||||||||||||||
Pricing Impact | 1.7 | 2.4 | 2.5 | 2.2 | 0.5 | 1.5 | 1.8 | ||||||||||||||
Mix-Shift | (2.3 | ) | (2.1 | ) | (2.9 | ) | (2.5 | ) | 1.1 | (0.7 | ) | 0.5 | |||||||||
Traffic | 1.2 | 0.4 | 2.0 | 1.2 | (1.4 | ) | (0.2 | ) | (1.8 | ) | |||||||||||
Chili's Franchise2 | 1.2 | 1.0 | 0.2 | 1.9 | |||||||||||||||||
U.S. Comparable Restaurant Sales | 1.4 | 0.5 | (0.3 | ) | 1.6 | ||||||||||||||||
International Comparable Restaurant Sales | 0.8 | 2.3 | 1.6 | 2.7 | |||||||||||||||||
Chili's Domestic3 | 2.1 | (0.3 | ) | 0.3 | 0.8 | ||||||||||||||||
System-wide4 | 1.9 | 0.0 | 0.5 | 1.0 |
1 | Chili's company-owned comparable restaurant sales do not include sales generated by the 11 restaurants acquired in Canada in June 2013. Acquired or newly opened restaurants are not included in this calculation until 18 months of operations are completed. | |
2 | Revenues generated by franchisees are not included in revenues on the consolidated statements of comprehensive income; however, we generate royalty revenue and advertising fees based on franchisee revenues, where applicable. We believe including franchisee comparable restaurant sales provides investors information regarding brand performance that is relevant to current operations and may impact future restaurant development. | |
3 | Chili's Domestic comparable restaurant sales percentages are derived from sales generated by company-owned and franchise operated Chili's restaurants in the United States. | |
4 | System-wide comparable restaurant sales are derived from sales generated by company-owned Chili’s and Maggiano’s restaurants in addition to the sales generated at franchise operated restaurants. |
1 | Royalty revenues are recognized based on the sales generated and reported to the company by franchisees. |
Q4 14 | EPS Q4 14 | Q4 13 | EPS Q4 13 | |||||||||
Net Income | 28.8 | 0.43 | 46.4 | 0.64 | ||||||||
Other (Gains) and Charges, net of taxes1 | 27.8 | 0.42 | 9.3 | 0.13 | ||||||||
Adjustment for Tax Items | — | — | (0.6 | ) | 0.00 | |||||||
Net Income excluding Special Items | 56.6 | 0.85 | 55.1 | 0.77 |
FY 14 | EPS FY 14 | FY 13 | EPS FY 13 | |||||||||
Net Income | 154.0 | 2.26 | 163.4 | 2.20 | ||||||||
Other (Gains) and Charges, net of taxes1 | 30.4 | 0.45 | 10.7 | 0.14 | ||||||||
Adjustment for Tax Items | — | — | (0.6 | ) | 0.00 | |||||||
Net Income excluding Special Items | 184.4 | 2.71 | 173.5 | 2.34 |
1 | Pre-tax Other gains and charges were $44.9 million and $15.1 million in the fourth quarter of fiscal 2014 and 2013, respectively, and $49.2 million and $17.3 million in fiscal 2014 and 2013, respectively. The charges in the fiscal 2014 periods include approximately $39.5 million of charges related to litigation reserves. |
• | Comparable restaurant sales are expected to increase one to two percent |
• | Company-owned new restaurant development is expected to add year-over-year capacity growth of about one percent |
• | Restaurant operating margin is expected to improve 25 to 50 basis points year-over-year |
• | Depreciation expense is expected to increase $10 to $12 million, assuming capital expenditures of $130 to $140 million |
• | General and administrative expense is expected to be $10 million higher on a dollar basis due to planning incentive compensation at target coupled with information technology expenses related to sales driving initiatives |
• | Interest expense is expected to increase slightly due to a higher debt balance in fiscal 2015 |
• | Excluding the impact of special items, and assuming governmental renewal of the work opportunity tax credit retroactive to January 2014, the effective income tax rate is projected to be approximately 31 percent |
• | Free cash flow is expected to be $180 to $190 million |
• | Diluted weighted average shares outstanding is expected to be 64 to 66 million |
Thirteen Week Periods Ended | Fifty-Two Week Periods Ended | |||||||||||||||
June 25, 2014 | June 26, 2013 | June 25, 2014 | June 26, 2013 | |||||||||||||
Revenues: | ||||||||||||||||
Company sales | $ | 734,982 | $ | 709,128 | $ | 2,823,069 | $ | 2,766,618 | ||||||||
Franchise and other revenues (a) | 23,743 | 20,940 | 82,383 | 79,480 | ||||||||||||
Total revenues | 758,725 | 730,068 | 2,905,452 | 2,846,098 | ||||||||||||
Operating costs and expenses: | ||||||||||||||||
Company restaurants (excluding depreciation and amortization) | ||||||||||||||||
Cost of sales | 196,752 | 190,775 | 758,028 | 758,377 | ||||||||||||
Restaurant labor | 233,064 | 224,548 | 905,589 | 892,413 | ||||||||||||
Restaurant expenses | 173,866 | 165,433 | 682,271 | 655,214 | ||||||||||||
Company restaurant expenses | 603,682 | 580,756 | 2,345,888 | 2,306,004 | ||||||||||||
Depreciation and amortization | 35,169 | 32,651 | 136,081 | 131,481 | ||||||||||||
General and administrative | 33,302 | 32,249 | 132,094 | 134,538 | ||||||||||||
Other gains and charges (c) | 44,909 | 15,073 | 49,224 | 17,300 | ||||||||||||
Total operating costs and expenses | 717,062 | 660,729 | 2,663,287 | 2,589,323 | ||||||||||||
Operating income | 41,663 | 69,339 | 242,165 | 256,775 | ||||||||||||
Interest expense | 6,963 | 8,078 | 28,091 | 29,118 | ||||||||||||
Other, net | (478 | ) | (562 | ) | (2,214 | ) | (2,658 | ) | ||||||||
Income before provision for income taxes | 35,178 | 61,823 | 216,288 | 230,315 | ||||||||||||
Provision for income taxes | 6,358 | 15,456 | 62,249 | 66,956 | ||||||||||||
Net income | $ | 28,820 | $ | 46,367 | $ | 154,039 | $ | 163,359 | ||||||||
Basic net income per share | $ | 0.44 | $ | 0.67 | $ | 2.33 | $ | 2.28 | ||||||||
Diluted net income per share | $ | 0.43 | $ | 0.64 | $ | 2.26 | $ | 2.20 | ||||||||
Basic weighted average shares outstanding | 65,009 | 69,607 | 66,251 | 71,788 | ||||||||||||
Diluted weighted average shares outstanding | 66,824 | 71,999 | 68,152 | 74,158 | ||||||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustment (b) | $ | 922 | $ | — | $ | (940 | ) | $ | — | |||||||
Other comprehensive income (loss) | 922 | — | (940 | ) | — | |||||||||||
Comprehensive income | $ | 29,742 | $ | 46,367 | $ | 153,099 | $ | 163,359 |
(a) | Franchise and other revenues primarily includes royalties, development fees and franchise fees, banquet service charge income, gift card activity (breakage and discounts) and Ziosk gaming revenue. |
(b) | The company’s Canadian operation uses the Canadian dollar as its functional currency. The foreign currency translation adjustment included in the company’s comprehensive income represents the unrealized impact of translating the financial statements of the Canadian entity to U.S. dollars. This amount is not included in net income and would only be realized upon disposition of the business. |
(c) | Other gains and charges include: |
Thirteen Week Periods Ended | Fifty-Two Week Periods Ended | ||||||||||||||
June 25, 2014 | June 26, 2013 | June 25, 2014 | June 26, 2013 | ||||||||||||
Litigation reserves | $ | 39,500 | $ | — | $ | 39,500 | $ | — | |||||||
Restaurant impairment charges | 3,217 | 4,615 | 4,502 | $ | 5,276 | ||||||||||
Restaurant closure charges | 1,083 | 750 | 3,413 | 3,637 | |||||||||||
Severance and other benefits | 1,030 | 966 | 2,140 | 2,235 | |||||||||||
Gains on the sale of assets, net | (29 | ) | (8,798 | ) | (608 | ) | (11,228 | ) | |||||||
Loss on extinguishment of debt | — | 15,768 | — | 15,768 | |||||||||||
Other | 108 | 1,772 | 277 | 1,612 | |||||||||||
$ | 44,909 | $ | 15,073 | $ | 49,224 | $ | 17,300 |
June 25, 2014 | June 26, 2013 | |||||||
ASSETS | ||||||||
Current assets | $ | 210,854 | $ | 198,591 | ||||
Net property and equipment (a) | 1,056,454 | 1,035,815 | ||||||
Total other assets | 223,296 | 218,197 | ||||||
Total assets | $ | 1,490,604 | $ | 1,452,603 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current installments of long-term debt | $ | 27,884 | $ | 27,596 | ||||
Current liabilities | 438,226 | 363,636 | ||||||
Long-term debt, less current installments | 832,302 | 780,121 | ||||||
Other liabilities | 129,098 | 131,893 | ||||||
Total shareholders’ equity | 63,094 | 149,357 | ||||||
Total liabilities and shareholders’ equity | $ | 1,490,604 | $ | 1,452,603 |
(a) | At June 25, 2014, the company owned the land and buildings for 189 of the 884 company-owned restaurants. The net book values of the land and buildings associated with these restaurants totaled $143.3 million and $119.5 million, respectively. |
Fifty-Two Week Periods Ended | ||||||||
June 25, 2014 | June 26, 2013 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net income | $ | 154,039 | $ | 163,359 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 136,081 | 131,481 | ||||||
Stock-based compensation | 16,074 | 15,909 | ||||||
Restructure charges and other impairments | 48,033 | 11,425 | ||||||
Net loss (gain) on disposal of assets | 5,161 | (6,905 | ) | |||||
Changes in assets and liabilities | 454 | (24,581 | ) | |||||
Net cash provided by operating activities | 359,842 | 290,688 | ||||||
Cash Flows from Investing Activities: | ||||||||
Payments for property and equipment | (161,066 | ) | (131,531 | ) | ||||
Proceeds from sale of assets | 888 | 17,157 | ||||||
Payment for purchase of restaurants | — | (24,622 | ) | |||||
Insurance recoveries | — | 1,152 | ||||||
Net cash used in investing activities | (160,178 | ) | (137,844 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Purchases of treasury stock | (239,597 | ) | (333,384 | ) | ||||
Borrowings on revolving credit facility | 120,000 | 110,000 | ||||||
Payments on revolving credit facility | (40,000 | ) | (150,000 | ) | ||||
Payments of dividends | (63,395 | ) | (56,343 | ) | ||||
Excess tax benefits from stock-based compensation | 18,872 | 8,778 | ||||||
Payments on long-term debt | (26,521 | ) | (316,380 | ) | ||||
Proceeds from issuances of treasury stock | 29,295 | 41,190 | ||||||
Proceeds from issuance of long-term debt | — | 549,528 | ||||||
Payments for deferred financing costs | — | (5,969 | ) | |||||
Net cash used in financing activities | (201,346 | ) | (152,580 | ) | ||||
Net change in cash and cash equivalents | (1,682 | ) | 264 | |||||
Cash and cash equivalents at beginning of period | 59,367 | 59,103 | ||||||
Cash and cash equivalents at end of period | $ | 57,685 | $ | 59,367 |
Fourth Quarter Openings Fiscal 2014 | Total Restaurants June 25, 2014 | Openings Fiscal 2014 | Projected Openings Fiscal 2015 | |||||||||
Company-Owned Restaurants: | ||||||||||||
Chili’s Domestic | 5 | 824 | 10 | 8-10 | ||||||||
Chili’s International | 2 | 14 | 3 | 1 | ||||||||
Maggiano’s | 1 | 46 | 2 | 4 | ||||||||
8 | 884 | 15 | 13-15 | |||||||||
Franchise Restaurants: | ||||||||||||
Chili’s Domestic | 1 | 438 | 2 | 5 | ||||||||
Chili's International | 8 | 293 | 29 | 34-38 | ||||||||
9 | 731 | 31 | 39-43 | |||||||||
Total Restaurants: | ||||||||||||
Chili’s Domestic | 6 | 1,262 | 12 | 13-15 | ||||||||
Chili's International | 10 | 307 | 32 | 35-39 | ||||||||
Maggiano’s | 1 | 46 | 2 | 4 | ||||||||
17 | 1,615 | 46 | 52-58 |
7!E96YU;0````I%4VQI8V54>7!E`````$EM9R`````&8F]U;F1S3V)J8P``
M``$```````!28W0Q````!`````!4;W`@;&]N9P``````````3&5F=&QO;F<`
M`````````$)T;VUL;VYG````5`````!29VAT;&]N9P```%,````#=7)L5$58
M5`````$```````!N=6QL5$585`````$```````!- '!A8VME="!B96=I;CTG[[N_)R!I
M9#TG5S5-,$UP0V5H:4AZ^_/L3:K/9SAY
M[ZQ@7LE56827U@H&02K--`HHPK-",LIOT]Y[]