DELAWARE | 75-1914582 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
3000 OLYMPUS BLVD, DALLAS, TEXAS | 75019 | |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Trading Symbol(s) | Name of exchange on which registered |
Common Stock, $0.10 par value | EAT | New York Stock Exchange |
Large accelerated filer | x | Accelerated filer | o | |
Non-accelerated filer | o | Smaller reporting company | o | |
Emerging growth company | o |
Class | Outstanding at August 12, 2019 |
Common Stock, $0.10 par value | 37.5 million shares |
Page | |
PART I | |
PART II | |
PART III | |
PART IV | |
• | trade area demographics, such as target population density and household income levels; |
• | physical site characteristics, such as visibility, accessibility and traffic volume; |
• | relative proximity to activity centers, such as shopping centers, hotel and entertainment complexes and office buildings; and |
• | supply and demand trends, such as proposed infrastructure improvements, new developments and existing and potential competition. |
Fiscal 2019 | Fiscal 2020 | ||||
Fiscal Year Openings | Full Year Projected Openings | ||||
New Openings | |||||
Company-owned restaurants | |||||
Chili’s domestic | 4 | 9-11 | |||
Chili’s international | — | — | |||
Maggiano’s | — | — | |||
Total company-owned | 4 | 9-11 | |||
Relocation Openings | |||||
Chili’s domestic company-owned relocations | 5 | 0-2 |
Fiscal 2019 | Fiscal 2020 | ||||
Fiscal Year Openings | Full Year Projected Openings | ||||
New Openings | |||||
Franchise restaurants | |||||
Chili’s domestic | 4 | 3 | |||
Chili’s international | 18 | 27-32 | |||
Maggiano’s | 1 | 1 | |||
Total franchise | 23 | 31-36 |
Percentage of Franchise Operated Restaurants | ||||||||
Domestic(1) | International(2) | Overall(3) | ||||||
Brinker | 23 | % | 99 | % | 40 | % | ||
Chili’s | 24 | % | 99 | % | 41 | % | ||
Maggiano’s | 2 | % | — | % | 2 | % |
(1) | Domestic - the percentages in this column are based on number of domestic franchised restaurants versus total domestic restaurants. |
(2) | International - the percentages in this column are based on number of international franchised restaurants versus total international restaurants. |
(3) | Overall - the percentages in this column are based on the total number of franchised restaurants (domestic and international) versus total system-wide number of restaurants. |
• | inaccurate assessment of the value, future growth potential, strengths, weaknesses, contingent and other liabilities and potential profitability of such strategic initiatives; |
• | damaging our reputation if the strategic initiatives result in products or services that are not of the same quality that our customers associate with our brands; |
• | diversion of management’s attention and focus from existing operations to the strategic initiative; |
• | inability to achieve projected economic and operating synergies; |
• | challenges in successfully integrating an acquired business and instilling our Company culture in new management and team members; |
• | potential loss of key personnel of any acquired business; and |
• | unanticipated changes in business and economic conditions affecting an acquired business or the completion of a divestiture. |
• | increase gross sales and operating profits at existing restaurants with food and beverage options desired by our guests; |
• | evolve our marketing and branding strategies in order to appeal to guests; |
• | innovate and implement technology initiatives that provide a unique digital guest experience; |
• | identify adequate sources of capital to fund and finance strategic initiatives, including reimaging of existing restaurants, new restaurant development and new restaurant equipment; |
• | grow and expand operations, including identifying available, suitable and economically viable locations for new restaurants; and |
• | improve the speed and quality of our service. |
• | difficulties in achieving consistency of product quality and service as compared to United States operations; |
• | changes to recipes and menu offerings to meet cultural norms; |
• | challenges to obtain adequate and reliable supplies necessary to provide menu items and maintain food quality; and |
• | differences, changes or uncertainties in economic, regulatory, legal, cultural, social and political conditions. |
• | increase our cost of borrowing; |
• | limit our ability to access capital; |
• | result in more restrictive covenants in agreements governing the terms of any future indebtedness that we may incur, including restrictions on our ability to pay distributions or repurchase shares; |
• | require us to provide collateral for any future borrowings; and |
• | adversely affect the market price of our outstanding debt securities. |
June 26, 2019 | ||||||||
Domestic | International | Total | ||||||
Chili’s | ||||||||
Company-owned | 944 | 5 | 949 | |||||
Franchise | 298 | 365 | 663 | |||||
1,242 | 370 | 1,612 | ||||||
Maggiano’s | ||||||||
Company-owned | 52 | — | 52 | |||||
Franchise | 1 | — | 1 | |||||
53 | — | 53 | ||||||
System-wide | 1,295 | 370 | 1,665 |
June 26, 2019 | |||||
Domestic | International | ||||
No. of States | No. of countries and U.S. territories | ||||
Chili’s | 49 | 31 | |||
Maggiano’s | 23 & D.C. | — |
Chili’s | Maggiano’s | ||
Square feet | 4,300-6,000 | 8,000-24,800 | |
Dining seats | 150-250 | 260-900 | |
Dining tables | 35-54 | 35-150 |
2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||
Brinker International | $ | 115.41 | $ | 95.08 | $ | 80.86 | $ | 109.63 | $ | 87.62 | |||||||||
S&P 500 | $ | 107.42 | $ | 111.71 | $ | 131.70 | $ | 150.64 | $ | 166.33 | |||||||||
S&P Restaurants(1) | $ | 113.90 | $ | 125.93 | $ | 151.75 | $ | 150.83 | $ | 223.34 |
(1) | The S&P Restaurants Index is comprised of Chipotle Mexican Grill, Inc., Darden Restaurants, Inc., McDonald’s Corp., Starbucks Corporation and Yum! Brands, Inc. |
Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value that May Yet be Purchased Under the Program(2) | ||||||||||
March 28, 2019 through May 1, 2019 | — | $ | — | — | $ | 197.8 | |||||||
May 2, 2019 through May 29, 2019 | 0.0 | $ | 43.48 | — | $ | 197.8 | |||||||
May 30, 2019 through June 26, 2019 | 0.0 | $ | 38.24 | — | $ | 197.8 | |||||||
Total | 0.0 | $ | 43.13 | — |
(1) | These amounts include shares purchased as part of our publicly announced programs and shares owned and tendered by team members to satisfy tax withholding obligations on the vesting of restricted share awards, which are not deducted from shares available to be purchased under publicly announced programs. Unless otherwise indicated, shares owned and tendered by team members to satisfy tax withholding obligations were purchased at the average of the high and low prices of the Company’s shares on the date of vesting. In the fourth quarter of fiscal 2019, 1.0 thousand shares were tendered by team members at an average price of $43.13. |
(2) | The final amount shown is as of June 26, 2019. |
Exhibit | Description | |
Certificate of Incorporation of the Registrant, as amended(1) | ||
Bylaws of the Registrant(2) | ||
Form of 3.875% Note due 2023(3) | ||
Indenture dated as of April 30, 2013 between the Registrant and Wilmington Trust, National Association, as Trustee(4) | ||
Second Supplemental Indenture dated as of May 15, 2013 between the Registrant and Wilmington Trust, National Association(3) | ||
Form of 5.000% Senior Note due 2024(5) |
Senior Notes Indenture dated as of September 23, 2016, by and among the Registrant, the Guarantors named therein and U.S. Bank National Association, as trustee(5) | ||
Description of Registered Securities* | ||
Registrant’s Stock Option and Incentive Plan, as amended(6) | ||
Registrant’s 1999 Stock Option and Incentive Plan for Non-Employee Directors and Consultants(7) | ||
Credit Agreement dated as of March 12, 2015, by and among the Registrant, Brinker Restaurant Corporation, Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities, LLC, Regions Capital Markets, a Division of Regions Bank, Wells Fargo Securities, LLC, J.P. Morgan Chase Bank, N.A., Regions Bank, Compass Bank, Wells Fargo Bank, National Association, The Bank of Tokyo - Mitsubishi UFJ, Ltd., U.S. Bank National Association and Greenstone Farm Credit Services(8) | ||
Second Amendment to Credit Agreement dated September 13, 2016, by and among the Registrant and its wholly-owned subsidiaries, Brinker Restaurant Corporation, Brinker Florida, Inc., Brinker Texas, Inc., Bank of America, N.A., JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association, Regions Bank, Compass Bank, Greenstone Farm Credit Services ACA, SunTrust Bank, and Barclays Bank PLC(9) | ||
Third Amendment to Credit Agreement dated April 30, 2018, by and among the Registrant and its wholly-owned subsidiaries, Brinker Restaurant Corporation, Brinker Florida, Inc., Brinker Texas, Inc., Bank of America, N.A., JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A., MUFG Bank, Ltd., SunTrust Bank, U.S. Bank National Association, Barclays Bank PLC, Regions Bank, Compass Bank, and Associated Bank National Association.(10) | ||
Registrant’s 2017 Performance Share Plan Description(11) | ||
CEO Severance and Change in Control Agreement(12) | ||
Executive Severance Benefits Plan and Summary Plan Description(12) | ||
NEO Change in Control Severance Agreement(12) | ||
Registrant’s Performance Share Plan Description* | ||
Registrant’s Terms of Stock Option Award* | ||
Registrant’s Terms of Retention Stock Unit Award* | ||
Registrant’s Terms of Restricted Stock Unit Award* | ||
Registrant’s Terms of Special Equity Award(13) | ||
Registrant’s Maggiano’s Performance Share Plan Description* | ||
2019 Annual Report to Shareholders* | ||
Subsidiaries of the Registrant* | ||
Consent of Independent Registered Public Accounting Firm* | ||
Certification by Wyman T. Roberts, President and Chief Executive Officer of the Registrant, pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a)* | ||
Certification by Joseph G. Taylor, Executive Vice President and Chief Financial Officer of the Registrant, pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a)* | ||
Certification by Wyman T. Roberts, President and Chief Executive Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | ||
Certification by Joseph G. Taylor, Executive Vice President and Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | ||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH | XBRL Schema Document | |
101.CAL | XBRL Calculation Linkbase Document | |
101.DEF | XBRL Definition Linkbase Document | |
101.LAB | XBRL Label Linkbase Document | |
101.PRE | XBRL Presentation Linkbase | |
104 | The cover page from the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 26, 2019 is formatted in Inline XBRL. |
(1) | Filed as an exhibit to annual report on Form 10-K for year ended June 28, 1995 and incorporated herein by reference. |
(2) | Filed as an exhibit to annual report on Form 10-K for year ended June 27, 2018 and incorporated herein by reference. |
(3) | Filed as an exhibit to current report on Form 8-K dated May 15, 2013 and incorporated herein by reference. |
(4) | Filed as an exhibit to registration statement on Form S-3 filed April 30, 2013, SEC File No. 333-188252, and incorporated herein by reference. |
(5) | Filed as an exhibit to current report on Form 8-K dated September 23, 2016 and incorporated herein by reference. |
(6) | Filed as an Appendix A to Proxy Statement of Registrant filed on October 5, 2018 and incorporated herein by reference. |
(7) | Filed as an exhibit to quarterly report on Form 10-Q for quarter ended December 28, 2005 and incorporated herein by reference. |
(8) | Filed as an exhibit to current report on Form 8-K dated March 12, 2015 and incorporated herein by reference. |
(9) | Filed as an exhibit to quarterly report on Form 10-Q for quarter ended September 28, 2016 and incorporated herein by reference. |
(10) | Filed as an exhibit to quarterly report on Form 10-Q for quarter ended March 28, 2018 and incorporated herein by reference. |
(11) | Filed as an exhibit to current report on Form 8-K dated August 18, 2016 and incorporated herein by reference. |
(12) | Filed as an exhibit to quarterly report on Form 10-Q for quarter ended March 29, 2017 and incorporated herein by reference. |
(13) | Filed as an exhibit to annual report on Form 10-K for year ended June 28, 2017 and incorporated herein by reference. |
BRINKER INTERNATIONAL, INC., a Delaware corporation | |||
By: | /S/ JOSEPH G. TAYLOR | ||
Joseph G. Taylor Executive Vice President and Chief Financial Officer |
Name | Title | |
/S/ WYMAN T. ROBERTS | Chief Executive Officer and President of Brinker International, Inc. and President of Chili’s Grill & Bar (Principal Executive Officer) and Director | |
Wyman T. Roberts | ||
/S/ JOSEPH G. TAYLOR | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | |
Joseph G. Taylor | ||
/S/ JOSEPH M. DEPINTO | Chairman of the Board | |
Joseph M. DePinto | ||
/S/ JOHN W. CHIDSEY | Director | |
John W. Chidsey | ||
/S/ CINDY L. DAVIS | Director | |
Cindy L. Davis | ||
/S/ HARRIET EDELMAN | Director | |
Harriet Edelman | ||
/S/ MICHAEL A. GEORGE | Director | |
Michael A. George | ||
/S/ WILLIAM T. GILES | Director | |
William T. Giles | ||
/S/ JAMES C. KATZMAN | Director | |
James C. Katzman | ||
/S/ GEORGE R. MRKONIC | Director | |
George R. Mrkonic | ||
/S/ PRASHANT N. RANADE | Director | |
Prashant N. Ranade | ||
• | authorize our board of directors to establish one or more series or classes of undesignated preferred stock, the terms of which can be determined by the board of directors at the time of issuance; |
• | do not authorize cumulative voting; |
• | do not authorize stockholders to call special meetings of the stockholders or fill vacancies on the board of directors; |
• | authorize the Board to alter, amend or repeal our Bylaws or adopt new Bylaws; and |
• | provide an advanced written notice procedure with respect to stockholder proposals and stockholder nomination of candidates for election as directors. |
• | our board of directors approved the business combination or the transaction in which the person became an interested stockholder prior to the date the person attained this status; |
• | upon consummation of the transaction that resulted in the person becoming an interested stockholder, the person owned at least 85 percent of our voting stock outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers and issued under employee stock plans under which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
• | on or subsequent to the date the person became an interested stockholder, our board of directors approved the business combination and the stockholders other than the interested stockholder authorized the transaction at an annual or special meeting of stockholders by the affirmative vote of at least 66 2/3 percent of the outstanding stock not owned by the interested stockholder. |
• | any merger or consolidation involving us and the interested stockholder; |
• | any sale, transfer, pledge or other disposition involving the interested stockholder of 10 percent or more of our assets; |
• | in general, any transaction that results in the issuance or transfer by us of any of our stock to the interested stockholder; |
• | any transaction involving us that has the effect of increasing the proportionate share of our stock owned by the interested stockholders; and |
• | the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges, or other financial benefits provided by or through us. |
1 | Ale House Restaurant | 29 | Landry's Seafood |
2 | Applebee's | 30 | Legal Sea Foods |
3 | Beef O'Brady's | 31 | Longhorn Steakhouse |
4 | Bennigan's Tavern | 32 | McCormick & Schmick's |
5 | BJ's Restaurant and Brewhouse | 33 | McDonald's |
6 | Bonefish Grill | 34 | Miller's Ale House Restaurant |
7 | BRAVO! Cucina Italiana | 35 | Morton's of Chicago |
8 | Brio Tuscan Grille | 36 | O'Charleys |
9 | Buca di Beppo | 37 | Olive Garden |
10 | Buffalo Wild Wings | 38 | On The Border |
11 | California Pizza Kitchen | 39 | Outback Steakhouse |
12 | Carino's Italian Grill | 40 | Palm Restaurant |
13 | Carraba's Italian Grill | 41 | Panera |
14 | Champps Americana | 42 | Pappadeaux Seafood Kitchen |
15 | Cheddar's Casual Café | 43 | PF Chang's China Bistro |
16 | Cheesecake Factory | 44 | Pizza Hut |
17 | Chipotle Mexican Grill | 45 | Red Robin |
18 | Chuy's | 46 | Romano's Macaroni Grill |
19 | Cracker Barrel | 47 | Ruby Tuesday |
20 | Dave & Busters | 48 | Ruth's Chris Steak House |
21 | Fogo De Chao | 49 | Seasons 52 |
22 | Fuddruckers | 50 | Taco Bell |
23 | Hooters | 51 | Texas Roadhouse |
24 | Houlihans | 52 | TGI Fridays |
25 | Houston's/Hillstone | 53 | Uno Chicago Grill |
26 | Il Fornaio Restaurant | 54 | Wendy's |
27 | J Alexanders | 55 | Yard House |
28 | KFC |
If Option Holder remains continuously in the employ of the Company or a Related Company through the dates below (each a “Vesting Date”): | Then the following portion of the Option will vest on each of the Vesting Dates (each portion referred to as a “Vesting Tranche”): |
First Anniversary of Grant Date | 25% of Option |
Second Anniversary of Grant Date | Additional 25% of Option |
Third Anniversary of Grant Date | Additional 25% of Option |
Fourth Anniversary of Grant Date | Additional 25% of Option |
1 | Ale House Restaurant | 29 | Landry's Seafood |
2 | Applebee's | 30 | Legal Sea Foods |
3 | Beef O'Brady's | 31 | Longhorn Steakhouse |
4 | Bennigan's Tavern | 32 | McCormick & Schmick's |
5 | BJ's Restaurant and Brewhouse | 33 | McDonald's |
6 | Bonefish Grill | 34 | Miller's Ale House Restaurant |
7 | BRAVO! Cucina Italiana | 35 | Morton's of Chicago |
8 | Brio Tuscan Grille | 36 | O'Charleys |
9 | Buca di Beppo | 37 | Olive Garden |
10 | Buffalo Wild Wings | 38 | On The Border |
11 | California Pizza Kitchen | 39 | Outback Steakhouse |
12 | Carino's Italian Grill | 40 | Palm Restaurant |
13 | Carraba's Italian Grill | 41 | Panera |
14 | Champps Americana | 42 | Pappadeaux Seafood Kitchen |
15 | Cheddar's Casual Café | 43 | PF Chang's China Bistro |
16 | Cheesecake Factory | 44 | Pizza Hut |
17 | Chipotle Mexican Grill | 45 | Red Robin |
18 | Chuy's | 46 | Romano's Macaroni Grill |
19 | Cracker Barrell | 47 | Ruby Tuesday |
20 | Dave & Busters | 48 | Ruth's Chris Steak House |
21 | Fogo De Chao | 49 | Seasons 52 |
22 | Fuddruckers | 50 | Taco Bell |
23 | Hooters | 51 | Texas Roadhouse |
24 | Houlihans | 52 | TGI Fridays |
25 | Houston's/Hillstone | 53 | Uno Chicago Grill |
26 | Il Fornaio Restaurant | 54 | Wendy's |
27 | J Alexanders | 55 | Yard House |
28 | KFC |
1 | Ale House Restaurant | 29 | Landry's Seafood |
2 | Applebee's | 30 | Legal Sea Foods |
3 | Beef O'Brady's | 31 | Longhorn Steakhouse |
4 | Bennigan's Tavern | 32 | McCormick & Schmick's |
5 | BJ's Restaurant and Brewhouse | 33 | McDonald's |
6 | Bonefish Grill | 34 | Miller's Ale House Restaurant |
7 | BRAVO! Cucina Italiana | 35 | Morton's of Chicago |
8 | Brio Tuscan Grille | 36 | O'Charleys |
9 | Buca di Beppo | 37 | Olive Garden |
10 | Buffalo Wild Wings | 38 | On The Border |
11 | California Pizza Kitchen | 39 | Outback Steakhouse |
12 | Carino's Italian Grill | 40 | Palm Restaurant |
13 | Carraba's Italian Grill | 41 | Panera |
14 | Champps Americana | 42 | Pappadeaux Seafood Kitchen |
15 | Cheddar's Casual Café | 43 | PF Chang's China Bistro |
16 | Cheesecake Factory | 44 | Pizza Hut |
17 | Chipotle Mexican Grill | 45 | Red Robin |
18 | Chuy's | 46 | Romano's Macaroni Grill |
19 | Cracker Barrel | 47 | Ruby Tuesday |
20 | Dave & Busters | 48 | Ruth's Chris Steak House |
21 | Fogo De Chao | 49 | Seasons 52 |
22 | Fuddruckers | 50 | Taco Bell |
23 | Hooters | 51 | Texas Roadhouse |
24 | Houlihans | 52 | TGI Fridays |
25 | Houston's/Hillstone | 53 | Uno Chicago Grill |
26 | Il Fornaio Restaurant | 54 | Wendy's |
27 | J Alexanders | 55 | Yard House |
28 | KFC |
1 | Ale House Restaurant | 29 | Landry's Seafood |
2 | Applebee's | 30 | Legal Sea Foods |
3 | Beef O'Brady's | 31 | Longhorn Steakhouse |
4 | Bennigan's Tavern | 32 | McCormick & Schmick's |
5 | BJ's Restaurant and Brewhouse | 33 | McDonald's |
6 | Bonefish Grill | 34 | Miller's Ale House Restaurant |
7 | BRAVO! Cucina Italiana | 35 | Morton's of Chicago |
8 | Brio Tuscan Grille | 36 | O'Charleys |
9 | Buca di Beppo | 37 | Olive Garden |
10 | Buffalo Wild Wings | 38 | On The Border |
11 | California Pizza Kitchen | 39 | Outback Steakhouse |
12 | Carino's Italian Grill | 40 | Palm Restaurant |
13 | Carraba's Italian Grill | 41 | Panera |
14 | Champps Americana | 42 | Pappadeaux Seafood Kitchen |
15 | Cheddar's Casual Café | 43 | PF Chang's China Bistro |
16 | Cheesecake Factory | 44 | Pizza Hut |
17 | Chipotle Mexican Grill | 45 | Red Robin |
18 | Chuy's | 46 | Romano's Macaroni Grill |
19 | Cracker Barrel | 47 | Ruby Tuesday |
20 | Dave & Busters | 48 | Ruth's Chris Steak House |
21 | Fogo De Chao | 49 | Seasons 52 |
22 | Fuddruckers | 50 | Taco Bell |
23 | Hooters | 51 | Texas Roadhouse |
24 | Houlihans | 52 | TGI Fridays |
25 | Houston's/Hillstone | 53 | Uno Chicago Grill |
26 | Il Fornaio Restaurant | 54 | Wendy's |
27 | J Alexanders | 55 | Yard House |
28 | KFC |
Page | |
Fiscal Years Ended | |||||||||||||||||||
6/26/2019(1) | 6/27/2018 | 6/28/2017 | 6/29/2016(2) | 6/24/2015 | |||||||||||||||
Income Statement Data: | |||||||||||||||||||
Revenues | |||||||||||||||||||
Company sales | $ | 3,106.2 | $ | 3,041.5 | $ | 3,062.5 | $ | 3,166.7 | $ | 2,904.7 | |||||||||
Franchise and other revenues | 111.7 | 93.9 | 88.3 | 90.8 | 97.6 | ||||||||||||||
Total revenues | 3,217.9 | 3,135.4 | 3,150.8 | 3,257.5 | 3,002.3 | ||||||||||||||
Operating costs and expenses | |||||||||||||||||||
Company restaurants (excluding depreciation and amortization) | |||||||||||||||||||
Cost of sales | 823.0 | 796.0 | 791.3 | 840.2 | 775.1 | ||||||||||||||
Restaurant labor | 1,059.7 | 1,033.9 | 1,017.9 | 1,036.0 | 929.2 | ||||||||||||||
Restaurant expenses | 812.3 | 757.5 | 773.5 | 762.7 | 703.3 | ||||||||||||||
Company restaurant expenses | 2,695.0 | 2,587.4 | 2,582.7 | 2,638.9 | 2,407.6 | ||||||||||||||
Depreciation and amortization | 147.6 | 151.4 | 156.4 | 156.4 | 145.2 | ||||||||||||||
General and administrative | 149.1 | 136.0 | 132.8 | 127.6 | 133.5 | ||||||||||||||
Other (gains) and charges | (4.5 | ) | 34.5 | 22.7 | 17.1 | 4.8 | |||||||||||||
Total operating costs and expenses | 2,987.2 | 2,909.3 | 2,894.6 | 2,940.0 | 2,691.1 | ||||||||||||||
Operating income | 230.7 | 226.1 | 256.2 | 317.5 | 311.2 | ||||||||||||||
Interest expenses | 61.6 | 59.0 | 49.6 | 32.6 | 29.0 | ||||||||||||||
Other (income), net | (2.7 | ) | (3.1 | ) | (1.9 | ) | (1.5 | ) | (2.1 | ) | |||||||||
Income before provision for income taxes | 171.8 | 170.2 | 208.5 | 286.4 | 284.3 | ||||||||||||||
Provision for income taxes | 16.9 | 44.3 | 57.7 | 85.8 | 89.6 | ||||||||||||||
Net income | $ | 154.9 | $ | 125.9 | $ | 150.8 | $ | 200.6 | $ | 194.7 | |||||||||
Basic net income per share | $ | 4.04 | $ | 2.75 | $ | 2.98 | $ | 3.47 | $ | 3.09 | |||||||||
Diluted net income per share | $ | 3.96 | $ | 2.72 | $ | 2.94 | $ | 3.42 | $ | 3.02 | |||||||||
Basic weighted average shares outstanding | 38.3 | 45.7 | 50.6 | 57.9 | 63.1 | ||||||||||||||
Diluted weighted average shares outstanding | 39.1 | 46.3 | 51.2 | 58.7 | 64.4 | ||||||||||||||
Balance Sheet Data: | |||||||||||||||||||
Working capital | $ | (244.6 | ) | $ | (278.0 | ) | $ | (292.0 | ) | $ | (257.2 | ) | $ | (233.3 | ) | ||||
Total assets(3) | 1,258.3 | 1,347.3 | 1,403.6 | 1,458.5 | 1,421.5 | ||||||||||||||
Long-term obligations(3) | 1,206.6 | 1,631.3 | 1,461.0 | 1,248.4 | 1,091.7 | ||||||||||||||
Shareholders’ deficit | (778.2 | ) | (718.3 | ) | (493.6 | ) | (225.6 | ) | (90.8 | ) | |||||||||
Dividends per share | $ | 1.52 | $ | 1.52 | $ | 1.36 | $ | 1.28 | $ | 1.12 | |||||||||
Number of Restaurants Open (End of Year): | |||||||||||||||||||
Company-owned | 1,001 | 997 | 1,003 | 1,001 | 888 | ||||||||||||||
Franchise | 664 | 689 | 671 | 659 | 741 | ||||||||||||||
Total | 1,665 | 1,686 | 1,674 | 1,660 | 1,629 | ||||||||||||||
Revenues of Franchisees(4) | $ | 1,311.3 | $ | 1,309.4 | $ | 1,331.9 | $ | 1,348.6 | $ | 1,644.0 |
(1) | Fiscal 2019 reflects the impact of the adoption of the new revenue recognition accounting standard using the modified retrospective transition method. All other periods presented have not been restated. Refer to Note 1 - Nature of Operations and Summary of Significant Accounting Policies and Note 2 - Revenue Recognition in our Notes to the Consolidated Financial Statements for information regarding our adoption of the new revenue standard. |
(2) | Fiscal 2016 consisted of 53 weeks while all other periods presented consisted of 52 weeks. |
(3) | Debt issuance costs are presented in the Consolidated Balance Sheets as a direct deduction from the associated debt liability. Amounts presented for fiscal years prior to fiscal 2017 were reclassified from Other assets to Long-term debt to conform to the current presentation. |
(4) | Revenues of Franchisees represent the gross sales reported by our franchisees. Royalty revenues recognized by us are based on these sales generated and reported to us by franchisees. |
• | Overview - a general description of our business and the casual dining segment of the restaurant industry |
• | Results of Operations - an analysis of the Consolidated Statements of Comprehensive Income included in the Consolidated Financial Statements |
• | Liquidity and Capital Resources - an analysis of cash flows, including capital expenditures, aggregate contractual obligations, share repurchase activity, known trends that may impact liquidity, and the impact of inflation |
• | Impact of Inflation - a discussion of the effect of inflation on our business |
• | Off-Balance Sheet Arrangements - a discussion of the off-balance sheet arrangements entered into by us |
• | Critical Accounting Estimates - a discussion of accounting policies that require critical judgments and estimates including recent accounting pronouncements |
• | Quantitative and Qualitative Disclosures about Market Risk - a discussion of our exposure to market risks |
Fiscal Years Ended | |||||
June 26, 2019 | June 27, 2018 | ||||
Revenues | |||||
Company sales | 96.5 | % | 97.0 | % | |
Franchise and other revenues | 3.5 | % | 3.0 | % | |
Total revenues | 100.0 | % | 100.0 | % | |
Operating costs and expenses | |||||
Company restaurants (excluding depreciation and amortization) | |||||
Cost of sales(1) | 26.5 | % | 26.2 | % | |
Restaurant labor(1) | 34.1 | % | 34.0 | % | |
Restaurant expenses(1) | 26.2 | % | 24.9 | % | |
Company restaurant expenses(1) | 86.8 | % | 85.1 | % | |
Depreciation and amortization | 4.6 | % | 4.8 | % | |
General and administrative | 4.6 | % | 4.3 | % | |
Other (gains) and charges | (0.1 | )% | 1.1 | % | |
Total operating costs and expenses | 92.8 | % | 92.8 | % | |
Operating income | 7.2 | % | 7.2 | % | |
Interest expense | 1.9 | % | 1.9 | % | |
Other (income), net | 0.0 | % | (0.1 | )% | |
Income before provision for income taxes | 5.3 | % | 5.4 | % | |
Provision for income taxes | 0.5 | % | 1.4 | % | |
Net income | 4.8 | % | 4.0 | % |
(1) | As a percentage of Company sales |
Total Revenues | |||||||||||
Chili’s | Maggiano’s | Total Revenues | |||||||||
Fiscal year ended June 27, 2018 (Legacy GAAP) | $ | 2,700.2 | $ | 435.2 | $ | 3,135.4 | |||||
Change from: | |||||||||||
Restaurant closings | (8.0 | ) | (1.6 | ) | (9.6 | ) | |||||
Restaurant openings | 11.1 | (0.3 | ) | 10.8 | |||||||
Restaurant relocations | 2.4 | — | 2.4 | ||||||||
Comparable restaurant sales | 58.8 | 2.3 | 61.1 | ||||||||
Company sales | 64.3 | 0.4 | 64.7 | ||||||||
Franchise and other revenues(1) | 17.7 | 0.1 | 17.8 | ||||||||
Fiscal year ended June 26, 2019 (ASC 606) | $ | 2,782.2 | $ | 435.7 | $ | 3,217.9 |
(1) | With the adoption of ASC 606, beginning in fiscal 2019, Franchise and other revenues was further disaggregated prospectively into Royalties and Franchise fees and other revenues. The fiscal 2018 year was not restated. |
Percentage Change in the Fiscal Year Ended June 26, 2019 versus June 27, 2018 | ||||||||||||||
Comparable Sales(1) | Price Impact | Mix Shift(2) | Traffic | Restaurant Capacity(3) | ||||||||||
Company-owned | 2.1 | % | 1.7 | % | (1.7 | )% | 2.1 | % | (0.2 | )% | ||||
Chili’s | 2.3 | % | 1.7 | % | (1.7 | )% | 2.3 | % | (0.1 | )% | ||||
Maggiano’s | 0.6 | % | 1.5 | % | (0.5 | )% | (0.4 | )% | (0.4 | )% | ||||
Chili’s franchise(4) | 0.1 | % | ||||||||||||
United States | 2.0 | % | ||||||||||||
International | (3.0 | )% | ||||||||||||
Chili’s domestic(5) | 2.2 | % | ||||||||||||
System-wide(6) | 1.5 | % |
(1) | Comparable restaurant sales include all restaurants that have been in operation for more than 18 months. Amounts are calculated based on comparable current period versus same period a year ago. |
(2) | Mix-shift is calculated as the year-over-year percentage change in Company sales resulting from the change in menu items ordered by guests. |
(3) | Restaurant capacity is measured by sales weeks. Amounts are calculated based on comparable 52 weeks in each fiscal year. |
(4) | Chili’s franchise sales generated by franchisees are not included in revenues in the Consolidated Statements of Comprehensive Income; however, we generate royalty revenues and advertising fees based on franchisee revenues, where applicable. We believe including franchise comparable restaurant sales provides investors information regarding brand performance that is relevant to current operations. |
(5) | 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. |
(6) | 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 Chili’s restaurants. |
Fiscal Years Ended | (Favorable) Unfavorable Variance | |||||||||||||||||||
June 26, 2019 | June 27, 2018 | |||||||||||||||||||
Dollars | % of Company Sales | Dollars | % of Company Sales | Dollars | % of Company Sales | |||||||||||||||
Cost of sales | $ | 823.0 | 26.5 | % | $ | 796.0 | 26.2 | % | $ | 27.0 | 0.3 | % | ||||||||
Restaurant labor | 1,059.7 | 34.1 | % | 1,033.9 | 34.0 | % | 25.8 | 0.1 | % | |||||||||||
Restaurant expenses | 812.3 | 26.2 | % | 757.5 | 24.9 | % | 54.8 | 1.3 | % | |||||||||||
Depreciation and amortization | 147.6 | 151.4 | (3.8 | ) | ||||||||||||||||
General and administrative | 149.1 | 136.0 | 13.1 | |||||||||||||||||
Other (gains) and charges | (4.5 | ) | 34.5 | (39.0 | ) | |||||||||||||||
Interest expense | 61.6 | 59.0 | 2.6 | |||||||||||||||||
Other (income), net | (2.7 | ) | (3.1 | ) | 0.4 |
General and Administrative | |||
Fiscal year ended June 27, 2018 | $ | 136.0 | |
Change from: | |||
Performance-based compensation | 7.6 | ||
Legal and professional fees | 2.2 | ||
Stock-based compensation | 1.9 | ||
Payroll-related expenses | 0.9 | ||
Other | 0.5 | ||
Fiscal year ended June 26, 2019 | $ | 149.1 |
• | Sale leaseback (gain), net of transaction charges during fiscal 2019 included gains of $35.2 million, less transaction costs of $7.9 million related to professional services, legal and accounting fees. |
• | (Gain) on sale of assets, net during fiscal 2019 primarily included $5.8 million for the net gain recognized on the sale of the owned-portion of our previous corporate headquarters building. |
• | Property damages, net of (insurance recoveries) during fiscal 2018 of $5.1 million primarily included expenses associated with Hurricanes Harvey and Irma primarily related to employee relief payments and inventory spoilage. |
• | Restaurant impairment charges during fiscal 2019 included $10.8 million primarily related to the long-lived assets and reacquired franchise rights of 11 underperforming Chili’s restaurants. During fiscal 2018, Restaurant impairment charges totaling $10.9 million primarily included charges of $7.2 million associated with the closure of nine Canadian Chili’s restaurants, and $3.7 million related to other restaurant impairment charges. |
• | Remodel-related costs during fiscal 2019 totaled $7.7 million and were related to write-offs associated with the Chili’s remodel project. During fiscal 2018 Remodel-related costs of $1.5 million were written-off. |
• | Corporate headquarters relocation charges during fiscal 2019 of $5.3 million included lease reserve and other closure costs associated with the leased portion of our previous corporate headquarters location, in addition to moving and certain readiness costs of transition to the new corporate headquarters location during fiscal 2019. |
• | Restaurant closure charges during fiscal 2019 were $4.3 million which primarily related to Chili’s lease termination charges and certain Chili’s restaurant closure costs. During fiscal 2018, Restaurant closure charges of $7.5 million primarily included expenses of $4.6 million associated with the Canada closures and related lease termination charges, $1.8 million in lease termination expenses related to sublet Macaroni Grill locations. Additionally, during fiscal 2018 we recorded $1.1 million primarily related to lease termination charges and closure costs associated with certain Chili’s restaurants closed during fiscal 2018. |
Fiscal Years Ended | Favorable (Unfavorable) Variance | ||||||||||
June 26, 2019 | June 27, 2018 | ||||||||||
ASC 606 | Legacy GAAP | ||||||||||
Company sales | $ | 2,692.6 | $ | 2,628.3 | $ | 64.3 | |||||
Franchise and other revenues(1) | 89.6 | 71.9 | 17.7 | ||||||||
Total revenues | 2,782.2 | 2,700.2 | 82.0 | ||||||||
Company restaurant expenses(2)(3) | 2,329.6 | 2,224.0 | (105.6 | ) | |||||||
Depreciation and amortization | 120.1 | 125.0 | 4.9 | ||||||||
General and administrative | 38.7 | 39.6 | 0.9 | ||||||||
Other gains and charges | (6.4 | ) | 24.5 | 30.9 | |||||||
Total operating costs and expenses | 2,482.0 | 2,413.1 | (68.9 | ) | |||||||
Operating income | $ | 300.2 | $ | 287.1 | $ | 13.1 | |||||
Operating income as a percentage of Total revenues | 10.8 | % | 10.6 | % | 0.2 | % |
(1) | With the adoption of ASC 606, beginning in fiscal 2019, Franchise and other revenues was further disaggregated prospectively into Royalties and Franchise fees and other revenues. The fiscal 2018 year was not restated. |
(2) | Advertising contributions received from franchisees are recorded within Franchise fees and other revenues within Total revenues, which differs from fiscal 2018 that includes advertising contributions recorded net within Company restaurant expenses. |
(3) | Company restaurant expenses include Cost of sales, Restaurant labor, and Restaurant expenses, including advertising. |
Fiscal Years Ended | Favorable (Unfavorable) Variance | ||||||||||
June 26, 2019 | June 27, 2018 | ||||||||||
ASC 606 | Legacy GAAP | ||||||||||
Company sales | $ | 413.6 | $ | 413.2 | $ | 0.4 | |||||
Franchise and other revenues(1) | 22.1 | 22.0 | 0.1 | ||||||||
Total revenues | 435.7 | 435.2 | 0.5 | ||||||||
Company restaurant expenses(2) | 364.8 | 362.8 | (2.0 | ) | |||||||
Depreciation and amortization | 16.2 | 15.9 | (0.3 | ) | |||||||
General and administrative | 6.1 | 5.5 | (0.6 | ) | |||||||
Other gains and charges | 1.0 | 1.1 | 0.1 | ||||||||
Total operating costs and expenses | 388.1 | 385.3 | (2.8 | ) | |||||||
Operating income | $ | 47.6 | $ | 49.9 | $ | (2.3 | ) | ||||
Operating income as a percentage of Total revenues | 10.9 | % | 11.4 | % | (0.5 | )% |
(1) | With the adoption of ASC 606, beginning in fiscal 2019, Franchise and other revenues was further disaggregated prospectively into Royalties and Franchise fees and other revenues. The fiscal 2018 year was not restated. |
(2) | Company restaurant expenses includes Cost of sales, Restaurant labor, and Restaurant expenses, including advertising expenses. |
Fiscal Years Ended | ||||||||
June 26, 2019 | June 27, 2018 | Change | ||||||
Effective income tax rate | 9.8 | % | 26.0 | % | (16.2 | )% |
Fiscal Years Ended | |||||||
June 26, 2019 | June 27, 2018 | ||||||
Net cash provided by operating activities | $ | 212.7 | $ | 284.5 |
Fiscal Years Ended | |||||||
June 26, 2019 | June 27, 2018 | ||||||
Cash flows from investing activities | |||||||
Payments for property and equipment | $ | (167.6 | ) | $ | (101.3 | ) | |
Payments for franchise restaurant acquisitions | (3.1 | ) | — | ||||
Proceeds from sale of assets | 1.6 | 19.9 | |||||
Insurance recoveries | 1.7 | 1.7 | |||||
Proceeds from note receivable | 2.8 | 1.9 | |||||
Proceeds from sale leaseback transactions, net of related expenses | 485.9 | — | |||||
Net cash provided by (used in) investing activities | $ | 321.3 | $ | (77.8 | ) |
Fiscal Years Ended | |||||||
June 26, 2019 | June 27, 2018 | ||||||
Cash flows from financing activities | |||||||
Borrowings on revolving credit facility | $ | 853.0 | $ | 1,016.0 | |||
Payments on revolving credit facility | (1,150.0 | ) | (588.0 | ) | |||
Purchases of treasury stock | (167.7 | ) | (303.2 | ) | |||
Payments on long-term debt | (9.5 | ) | (260.3 | ) | |||
Payments of dividends | (60.3 | ) | (70.0 | ) | |||
Proceeds from issuances of treasury stock | 3.0 | 2.3 | |||||
Payments for debt issuance costs | — | (1.6 | ) | ||||
Net cash used in financing activities | $ | (531.5 | ) | $ | (204.8 | ) |
Payments Due by Period | |||||||||||||||||||
Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | Total | |||||||||||||||
Long-term debt(1) | $ | — | $ | 523.3 | $ | 300.0 | $ | 350.0 | $ | 1,173.3 | |||||||||
Interest(2) | 51.4 | 62.4 | 46.6 | 8.8 | 169.2 | ||||||||||||||
Capital leases | 12.3 | 18.3 | 12.7 | 17.4 | 60.7 | ||||||||||||||
Operating leases | 156.8 | 303.1 | 265.3 | 771.7 | 1,496.9 | ||||||||||||||
Purchase obligations(3) | 31.6 | 55.0 | 29.2 | 26.7 | 142.5 |
(1) | Long-term debt consists of principal amounts owed on the revolving credit facility, 3.875% and 5.00% notes. As of June 26, 2019, $476.7 million of credit is available under the revolving credit facility. |
(2) | Interest consists of remaining interest payments on the 3.875% and 5.00% notes totaling $142.8 million and remaining interest payments on the revolver totaling $26.4 million. The interest rates on the notes are fixed whereas the interest rate on the revolver is variable based on LIBOR and our applicable margin. We have assumed that the revolver balance carried will be $589.0 million in fiscal 2020 and $524.3 million in fiscal 2021 until the maturity date of September 12, 2021 using the interest rate as of June 26, 2019, which was approximately 3.78%. LIBOR is set to terminate in December 2021, however our revolver will expire before this date and we anticipate any new financings will be at the applicable interest rates. |
(3) | Purchase obligations are defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our purchase obligations primarily consist of long-term obligations for the purchase of fountain beverages and professional services contracts and exclude agreements that are cancelable without significant penalty. |
Amount of Revolving Credit Facility Expiration by Period | |||||||||||||||||||
Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | Total Commitment | |||||||||||||||
Revolving credit facility | $ | 110.0 | $ | 890.0 | $ | — | $ | — | $ | 1,000.0 |
Fiscal Years Ended | |||||||||||
June 26, 2019 | June 27, 2018 | June 28, 2017 | |||||||||
Revenues | |||||||||||
Company sales | $ | $ | $ | ||||||||
Franchise and other revenues (Note1) | |||||||||||
Total revenues | |||||||||||
Operating costs and expenses | |||||||||||
Company restaurants (excluding depreciation and amortization) | |||||||||||
Cost of sales | |||||||||||
Restaurant labor | |||||||||||
Restaurant expenses (Note1) | |||||||||||
Company restaurant expenses | |||||||||||
Depreciation and amortization | |||||||||||
General and administrative | |||||||||||
Other (gains) and charges | ( | ) | |||||||||
Total operating costs and expenses | |||||||||||
Operating income | |||||||||||
Interest expense | |||||||||||
Other (income), net | ( | ) | ( | ) | ( | ) | |||||
Income before provision for income taxes | |||||||||||
Provision for income taxes | |||||||||||
Net income | $ | $ | $ | ||||||||
Basic net income per share | $ | $ | $ | ||||||||
Diluted net income per share | $ | $ | $ | ||||||||
Basic weighted average shares outstanding | |||||||||||
Diluted weighted average shares outstanding | |||||||||||
Other comprehensive income (loss) | |||||||||||
Foreign currency translation adjustment | $ | $ | $ | ( | ) | ||||||
Other comprehensive income (loss) | ( | ) | |||||||||
Comprehensive income | $ | $ | $ |
June 26, 2019 | June 27, 2018 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net | |||||||
Inventories | |||||||
Restaurant supplies | |||||||
Prepaid expenses | |||||||
Income taxes receivable, net | |||||||
Total current assets | |||||||
Property and equipment, at cost | |||||||
Land | |||||||
Buildings and leasehold improvements | |||||||
Furniture and equipment | |||||||
Construction-in-progress | |||||||
Less accumulated depreciation and amortization | ( | ) | ( | ) | |||
Net property and equipment | |||||||
Other assets | |||||||
Goodwill | |||||||
Deferred income taxes, net | |||||||
Intangibles, net | |||||||
Other | |||||||
Total other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | |||||||
Current liabilities | |||||||
Current installments of long-term debt | $ | $ | |||||
Accounts payable | |||||||
Gift card liability | |||||||
Accrued payroll | |||||||
Other accrued liabilities | |||||||
Income taxes payable, net | |||||||
Total current liabilities | |||||||
Long-term debt, less current installments | |||||||
Deferred gain on sale leaseback transactions | |||||||
Other liabilities | |||||||
Commitments and contingencies (Note 10 and Note 15) | |||||||
Shareholders’ deficit | |||||||
Common stock (250.0 million authorized shares; $0.10 par value; 176.2 million shares issued and 37.5 million shares outstanding at June 26, 2019, and 176.2 million shares issued and 40.8 million shares outstanding at June 27, 2018) | |||||||
Additional paid-in capital | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Retained earnings | |||||||
Less treasury stock, at cost (138.7 million shares at June 26, 2019, and 135.4 million shares at June 27, 2018) | ( | ) | ( | ) | |||
Total shareholders’ deficit | ( | ) | ( | ) | |||
Total liabilities and shareholders’ deficit | $ | $ |
Fiscal Years Ended | |||||||||||
June 26, 2019 | June 27, 2018 | June 28, 2017 | |||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | $ | $ | ||||||||
Adjustments to reconcile Net income to Net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation | |||||||||||
Restructure charges and other impairments | |||||||||||
Net (gain) loss on disposal of assets | ( | ) | ( | ) | |||||||
Undistributed loss on equity investments | |||||||||||
Other | |||||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable, net | ( | ) | ( | ) | |||||||
Inventories | |||||||||||
Restaurant supplies | ( | ) | ( | ) | ( | ) | |||||
Prepaid expenses | ( | ) | ( | ) | ( | ) | |||||
Deferred income taxes, net | ( | ) | ( | ) | |||||||
Other assets | |||||||||||
Accounts payable | ( | ) | |||||||||
Gift card liability | ( | ) | ( | ) | |||||||
Accrued payroll | ( | ) | |||||||||
Other accrued liabilities | ( | ) | ( | ) | ( | ) | |||||
Current income taxes | ( | ) | ( | ) | ( | ) | |||||
Other liabilities | ( | ) | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities | |||||||||||
Payments for property and equipment | ( | ) | ( | ) | ( | ) | |||||
Payments for franchise restaurant acquisitions | ( | ) | |||||||||
Proceeds from sale of assets | |||||||||||
Proceeds from note receivable | |||||||||||
Insurance recoveries | |||||||||||
Proceeds from sale leaseback transactions, net of related expenses | |||||||||||
Net cash provided by (used in) investing activities | ( | ) | ( | ) | |||||||
Cash flows from financing activities | |||||||||||
Borrowings on revolving credit facility | |||||||||||
Payments on revolving credit facility | ( | ) | ( | ) | ( | ) | |||||
Purchases of treasury stock | ( | ) | ( | ) | ( | ) | |||||
Payments of dividends | ( | ) | ( | ) | ( | ) | |||||
Payments on long-term debt | ( | ) | ( | ) | ( | ) | |||||
Proceeds from issuances of treasury stock | |||||||||||
Payments for debt issuance costs | ( | ) | ( | ) | |||||||
Proceeds from issuance of long-term debt | |||||||||||
Net cash used in financing activities | ( | ) | ( | ) | ( | ) | |||||
Net change in cash and cash equivalents | ( | ) | |||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | $ |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive (Loss) Income | Total | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balances at June 29, 2016 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||
Net income | — | |||||||||||||||||||||||||
Other comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||||||||
Dividends ($1.36 per share) | — | ( | ) | ( | ) | |||||||||||||||||||||
Stock-based compensation | — | |||||||||||||||||||||||||
Purchases of treasury stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Issuances of common stock | ( | ) | ||||||||||||||||||||||||
Excess tax benefit from stock-based compensation | — | |||||||||||||||||||||||||
Balances at June 28, 2017 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Net income | — | |||||||||||||||||||||||||
Other comprehensive income | — | |||||||||||||||||||||||||
Dividends ($1.52 per share) | — | ( | ) | ( | ) | |||||||||||||||||||||
Stock-based compensation | — | |||||||||||||||||||||||||
Purchases of treasury stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Issuances of common stock | ( | ) | ||||||||||||||||||||||||
Disposition of equity method investment | — | |||||||||||||||||||||||||
Balances at June 27, 2018 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Adoption of new accounting standards | — | ( | ) | ( | ) | |||||||||||||||||||||
Net income | — | |||||||||||||||||||||||||
Other comprehensive income | — | |||||||||||||||||||||||||
Dividends ($1.52 per share) | — | ( | ) | ( | ) | |||||||||||||||||||||
Stock-based compensation | — | |||||||||||||||||||||||||
Purchases of treasury stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Issuances of common stock | ( | ) | ||||||||||||||||||||||||
Balances at June 26, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
• | Level 1 - inputs are quoted prices in active markets for identical assets or liabilities. |
• | Level 2 - inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities. |
• | Level 3 - inputs are unobservable and reflect our own assumptions. |
Fiscal Years Ended | ||||||||
June 26, 2019 | June 27, 2018 | June 28, 2017 | ||||||
Expected volatility | % | % | % | |||||
Risk-free interest rate | % | % | % | |||||
Expected lives | ||||||||
Dividend yield | % | % | % |
June 26, 2019 | June 27, 2018 | June 28, 2017 | ||||||
Basic weighted average shares outstanding | ||||||||
Dilutive stock options | ||||||||
Dilutive restricted shares | ||||||||
Diluted weighted average shares outstanding | ||||||||
Awards excluded due to anti-dilutive effect on earnings per share |
Deferred Development and Franchise Fees | |||
Balance at June 27, 2018 | $ | ||
Cumulative effect adjustment from adoption of ASC 606 | |||
Additions | |||
Amount recognized to Franchise and other revenues | ( | ) | |
Balance at June 26, 2019 | $ |
Fiscal Year | Development and Franchise Fees Revenue Recognition | ||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
$ |
June 27, 2018 | ASC 606 Cumulative Effect Adjustments | June 28, 2018 | |||||||||
ASSETS | |||||||||||
Other assets | |||||||||||
Deferred income taxes, net(1) | $ | $ | $ | ||||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | |||||||||||
Current liabilities | |||||||||||
Gift card liability(2) | ( | ) | |||||||||
Other accrued liabilities(3) | |||||||||||
Other liabilities(3) | |||||||||||
Shareholders’ deficit(2) (3) | ( | ) | ( | ) | ( | ) |
(1) | Deferred income taxes, net adjustment relates to the net change in liabilities and equity as a result of the adoption of ASC 606 described in notes (2) and (3) below. |
(2) | Gift card liability is adjusted for the ASC 606 adoption impact of the change to recognize gift card breakage proportionate to the pattern of related gift card redemption. Under Legacy GAAP, gift card breakage was recognized when the likelihood of redemption was deemed remote. The cumulative effect of applying ASC 606 accounting to gift card balances outstanding at June 28, 2018 resulted in an $ |
(3) | Other liabilities $ |
Fiscal Year Ended June 26, 2019 | |||||||||||
As Reported ASC 606 Amounts | Adjustments | Legacy GAAP Amounts | |||||||||
Revenues | |||||||||||
Company sales | $ | $ | $ | ||||||||
Franchise and other revenues | ( | ) | |||||||||
Total revenues | ( | ) | |||||||||
Operating costs and expenses | |||||||||||
Company restaurants (excluding depreciation and amortization) | |||||||||||
Cost of sales | |||||||||||
Restaurant labor | |||||||||||
Restaurant expenses | ( | ) | |||||||||
Company restaurant expenses | ( | ) | |||||||||
Depreciation and amortization | |||||||||||
General and administrative | |||||||||||
Other (gains) and charges | ( | ) | ( | ) | |||||||
Total operating costs and expenses | ( | ) | |||||||||
Operating income | ( | ) | |||||||||
Interest expense | |||||||||||
Other (income), net | ( | ) | ( | ) | |||||||
Income before provision for income taxes | ( | ) | |||||||||
Provision for income taxes | ( | ) | |||||||||
Net income | $ | $ | ( | ) | $ | ||||||
Basic net income per share | $ | $ | ( | ) | $ | ||||||
Diluted net income per share | $ | $ | ( | ) | $ |
June 26, 2019 | |||||||||||
As Reported ASC 606 Amounts | Adjustments | Legacy GAAP Amounts | |||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Total current assets | $ | $ | $ | ||||||||
Property and equipment, at cost | |||||||||||
Net property and equipment | |||||||||||
Other assets | |||||||||||
Goodwill | |||||||||||
Deferred income taxes, net | ( | ) | |||||||||
Intangibles, net | |||||||||||
Other | |||||||||||
Total other assets | ( | ) | |||||||||
Total assets | $ | $ | ( | ) | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | |||||||||||
Current liabilities | |||||||||||
Current installments of long-term debt | $ | $ | $ | ||||||||
Accounts payable | |||||||||||
Gift card liability | |||||||||||
Accrued payroll | |||||||||||
Other accrued liabilities | ( | ) | |||||||||
Total current liabilities | |||||||||||
Long-term debt, less current installments | |||||||||||
Deferred gain on sale leaseback transactions | |||||||||||
Other liabilities | ( | ) | |||||||||
Shareholders’ deficit | |||||||||||
Common stock | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||||||
Retained earnings | |||||||||||
Less treasury stock, at cost | ( | ) | ( | ) | |||||||
Total shareholders’ deficit | ( | ) | ( | ) | |||||||
Total liabilities and shareholders’ deficit | $ | $ | ( | ) | $ |
Fiscal Year Ended June 26, 2019 | |||||||||||
As Reported ASC 606 Amounts | Adjustments | Legacy GAAP Amounts | |||||||||
Net income | $ | $ | ( | ) | $ | ||||||
Adjustments to reconcile Net income to Net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation | |||||||||||
Restructure charges and other impairments | |||||||||||
Net (gain) loss on disposal of assets | ( | ) | ( | ) | |||||||
Other | |||||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable, net | ( | ) | ( | ) | |||||||
Inventories | |||||||||||
Restaurant supplies | ( | ) | ( | ) | |||||||
Prepaid expenses | ( | ) | ( | ) | |||||||
Deferred income taxes, net | ( | ) | ( | ) | ( | ) | |||||
Other assets | |||||||||||
Accounts payable | ( | ) | ( | ) | |||||||
Gift card liability | ( | ) | ( | ) | |||||||
Accrued payroll | |||||||||||
Other accrued liabilities | ( | ) | ( | ) | |||||||
Current income taxes | ( | ) | ( | ) | |||||||
Other liabilities | |||||||||||
Net cash provided by operating activities | $ | $ | $ |
Fiscal Years Ended | |||||||||||
June 26, 2019 | June 27, 2018 | June 28, 2017 | |||||||||
Sale leaseback (gain), net of transaction charges | $ | ( | ) | $ | $ | ||||||
(Gain) on sale of assets, net | ( | ) | ( | ) | ( | ) | |||||
Foreign currency transaction (gain) loss | ( | ) | |||||||||
Property damages, net of (insurance recoveries) | ( | ) | |||||||||
Lease guarantee charges (credits) | ( | ) | |||||||||
Restaurant impairment charges | |||||||||||
Remodel-related costs | |||||||||||
Corporate headquarters relocation charges | |||||||||||
Restaurant closure charges | |||||||||||
Accelerated depreciation | |||||||||||
Severance and other benefit charges | |||||||||||
Cyber security incident charges | |||||||||||
Information technology restructuring | |||||||||||
Other | |||||||||||
$ | ( | ) | $ | $ |
• | Sale leaseback (gain), net of transaction charges during the fiscal year ended June 26, 2019 included gains of $ |
• | (Gain) on sale of assets, net during the fiscal year ended June 26, 2019 primarily included $ |
• | Foreign currency transaction (gain) loss during the fiscal year ended June 26, 2019 included a gain of $ |
• | Property damages, net of (insurance recoveries) during the fiscal year ended June 26, 2019 included $ |
• | Lease guarantee charges (credits) during the fiscal year ended June 26, 2019 of a $ |
• | Restaurant impairment charges during the fiscal year ended June 26, 2019 included $ |
• | Remodel-related costs during the fiscal year ended June 26, 2019 totaled $ |
• | Corporate headquarters relocation charges during the fiscal year ended June 26, 2019 of $ |
• | Restaurant closure charges during the fiscal year ended June 26, 2019 totaling $ |
• | Accelerated depreciation during the fiscal year ended June 26, 2019 included $ |
• | Severance and other benefit charges during the fiscal year ended June 26, 2019 of $ |
• | Cyber security incident charges during the fiscal year ended June 26, 2019 of $ |
• | Restaurant impairment charges during the fiscal year ended June 27, 2018 totaling $ |
• | Restaurant closure charges during the fiscal year ended June 27, 2018 totaling $ |
• | Property damages, net of (insurance recoveries) include incurred expenses associated with Hurricanes Harvey and Irma primarily related to employee relief payments and inventory spoilage. Our restaurants were closed in the areas affected by these disasters and our team members were unable to work. Payments were made to assist our team members during these crises and to promote retention. We carry insurance coverage for these types of natural disasters. It was determined that Hurricane Irma damage was below insurance claim deductible limits, and we did not have any insurance proceeds related to this storm. During fiscal 2018, we received insurance proceeds related to certain Hurricane Harvey property damage of $ |
• | Cyber security incident charges during the fiscal year ended June 27, 2018 totaling $ |
• | Sale leaseback (gain), net of transaction charges during the fiscal year ended June 27, 2018 totaling $ |
• | Lease guarantee charges (credits) during the fiscal year ended June 27, 2018 totaling $ |
• | Accelerated depreciation during the fiscal year ended June 27, 2018 totaling $ |
• | Remodel-related costs during the fiscal year ended June 27, 2018 totaling $ |
• | Foreign currency transaction (gain) loss during the fiscal year ended June 27, 2018 relates to our sold equity interest in our Mexico joint venture that we received a note as consideration denominated in Mexican pesos which is re-measured to United States dollars at the end of each period resulting in a gain or loss from foreign currency exchange rate changes. For fiscal 2018 a net loss of $ |
• | During fiscal 2017, we completed a reorganization of the Chili’s restaurant operations team and certain departments at the corporate headquarters to better align our staffing with the current management strategy and resource needs. This employee separation action resulted in severance charges and accelerated stock-based compensation expenses of $ |
• | We recorded restaurant impairment charges of $ |
• | We incurred $ |
• | Other charges primarily include $ |
June 26, 2019 | June 27, 2018 | ||||||||||||||||||||||
Chili’s | Maggiano’s | Consolidated | Chili’s | Maggiano’s | Consolidated | ||||||||||||||||||
Balance at beginning of year | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Changes in goodwill: | |||||||||||||||||||||||
Additions(1) | |||||||||||||||||||||||
Foreign currency translation adjustment | ( | ) | ( | ) | |||||||||||||||||||
Balance at end of year | $ | $ | $ | $ | $ | $ |
(1) | During the fiscal year ended June 26, 2019, we acquired |
June 26, 2019 | June 27, 2018 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Definite-lived intangible assets | |||||||||||||||||||||||
Chili’s reacquired franchise rights(1) | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||
Chili’s other | ( | ) | ( | ) | |||||||||||||||||||
$ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
Indefinite-lived intangible assets | |||||||||||||||||||||||
Chili’s liquor licenses | $ | $ | |||||||||||||||||||||
Maggiano’s liquor licenses | |||||||||||||||||||||||
$ | $ |
(1) | We recorded an impairment charge of $ |
June 26, 2019 | June 27, 2018 | ||||||
Deferred liabilities and sale leaseback gains(1) | $ | $ | |||||
Insurance | |||||||
Property tax | |||||||
Dividends | |||||||
Sales tax | |||||||
Interest | |||||||
Straight-line rent(2) | |||||||
Landlord contributions | |||||||
Deferred franchise and development fees(3) | |||||||
Cyber security incident(4) | |||||||
Other(5) | |||||||
$ | $ |
(1) | Deferred liabilities and sale leaseback gains at June 26, 2019 relates to $ |
(2) | Straight-line rent includes the current portion of the straight-line rent of operating leases. During the fiscal years ended June 26, 2019, June 27, 2018 and June 28, 2017, $ |
(3) | Deferred franchise and development fees relates to the current portion of upfront initial franchise and development fees recorded as part of adopting ASC 606. Refer to Note 2 - Revenue Recognition for further details, and the Other liabilities table below for the long-term portion of the deferred revenues. |
(4) | Cyber security incident accrual relates to the fiscal 2018 event, refer to Note 15 - Commitments and Contingencies for further details. |
(5) | Other primarily consists of accruals for certain lease reserves, utilities, banquet deposits for Maggiano’s events, rent-related expenses and other various accruals. |
June 26, 2019 | June 27, 2018 | ||||||
Straight-line rent(1) | $ | $ | |||||
Insurance | |||||||
Landlord contributions(2) | |||||||
Deferred franchise and development fees(3) | |||||||
Unfavorable leases | |||||||
Unrecognized tax benefits | |||||||
Other | |||||||
$ | $ |
(1) | Straight-line rent is the long-term portion of the straight-line rent of operating leases. The June 26, 2019 balance includes $ |
(2) | Landlord contributions as of June 26, 2019 includes $ |
(3) | Deferred franchise and development fees relates to the long-term portion of upfront initial franchise and development fees recorded as part of adopting of ASC 606. Refer to Note 2 - Revenue Recognition for further details, and the Other accrued liabilities table above for the current portion of the deferred revenues. |
Fiscal Years Ended | |||||||||||
June 26, 2019 | June 27, 2018 | June 28, 2017 | |||||||||
Domestic | $ | $ | $ | ||||||||
Foreign | ( | ) | |||||||||
Income before provision for income taxes | $ | $ | $ |
Fiscal Years Ended | |||||||||||
June 26, 2019 | June 27, 2018 | June 28, 2017 | |||||||||
Current income tax expenses: | |||||||||||
Federal | $ | $ | $ | ||||||||
State | |||||||||||
Foreign | |||||||||||
Total current income tax expenses | |||||||||||
Deferred income tax (benefits) expenses: | |||||||||||
Federal | ( | ) | ( | ) | |||||||
State | ( | ) | ( | ) | |||||||
Foreign | ( | ) | |||||||||
Total deferred income tax (benefits) expenses | ( | ) | ( | ) | |||||||
Provision for income taxes | $ | $ | $ | ||||||||
Effective tax rate | % | % | % |
Fiscal Years Ended | |||||||||||
June 26, 2019 | June 27, 2018 | June 28, 2017 | |||||||||
Income tax expense at statutory rate | $ | $ | $ | ||||||||
FICA tax credit | ( | ) | ( | ) | ( | ) | |||||
State income taxes, net of Federal benefit | |||||||||||
Tax reform impact | |||||||||||
Stock based compensation tax shortfall | |||||||||||
Other | ( | ) | |||||||||
Provision for income taxes | $ | $ | $ |
June 26, 2019 | June 27, 2018 | ||||||
Deferred income tax assets: | |||||||
Leasing transactions | $ | $ | |||||
Stock-based compensation | |||||||
Restructure charges and impairments | |||||||
Insurance reserves | |||||||
Employee benefit plans | |||||||
Gift cards | |||||||
Net operating losses | |||||||
Federal credit carryover | |||||||
State credit carryover | |||||||
Deferred gain on sale leaseback transactions | |||||||
Other, net | |||||||
Less: Valuation allowance | ( | ) | ( | ) | |||
Total deferred income tax assets | |||||||
Deferred income tax liabilities: | |||||||
Prepaid expenses | |||||||
Goodwill and other amortization | |||||||
Depreciation and capitalized interest on property and equipment | |||||||
Other, net | |||||||
Total deferred income tax liabilities | |||||||
Deferred income taxes, net | $ | $ |
June 26, 2019 | June 27, 2018 | ||||||
Balance at beginning of year | $ | $ | |||||
Additions based on tax positions related to the current year | |||||||
Additions based on tax positions related to prior years | |||||||
Settlements with tax authorities | ( | ) | |||||
Expiration of statute of limitations | ( | ) | ( | ) | |||
Balance at end of year | $ | $ |
June 26, 2019 | June 27, 2018 | ||||||
Revolving credit facility | $ | $ | |||||
5.00% notes | |||||||
3.875% notes | |||||||
Capital lease obligations (refer to Note 10 - Leases) | |||||||
Total long-term debt | |||||||
Less unamortized debt issuance costs and discounts | ( | ) | ( | ) | |||
Total long-term debt less unamortized debt issuance costs and discounts | |||||||
Less current installment portion of long-term debt | ( | ) | ( | ) | |||
Long-term debt, less current installments | $ | $ |
Long-Term Debt | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
$ |
June 26, 2019 | June 27, 2018 | June 28, 2017 | |||||||||
Straight-lined minimum rent | $ | $ | $ | ||||||||
Contingent rent | |||||||||||
Other | |||||||||||
Total rent expenses | $ | $ | $ |
Fiscal Year | Capital Leases | Operating Leases | |||||
2020 | $ | $ | |||||
2021 | |||||||
2022 | |||||||
2023 | |||||||
2024 | |||||||
Thereafter | |||||||
Total minimum lease payments(1) | $ | ||||||
Imputed interest (average rate of 6.18%) | ( | ) | |||||
Present value of minimum lease payments | |||||||
Less current installments | ( | ) | |||||
$ |
(1) | Future minimum lease payments have not been reduced by minimum sublease rentals to be received in the future under non-cancelable subleases. The total of undiscounted future sublease rentals are approximately $ |
June 26, 2019 | June 27, 2018 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
3.875% notes | $ | $ | $ | $ | |||||||||||
5.00% notes | $ | $ | $ | $ |
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||
Options outstanding at June 27, 2018 | $ | |||||||||||
Granted(1) | ||||||||||||
Exercised | ( | ) | ||||||||||
Forfeited or canceled | ( | ) | ||||||||||
Options outstanding at June 26, 2019 | $ | $ | ||||||||||
Options exercisable at June 26, 2019 | $ | $ |
(1) | There were |
Number of Restricted Share Awards | Weighted Average Grant Date Fair Value Per Award | |||||
Restricted share awards outstanding at June 27, 2018 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited | ( | ) | ||||
Restricted share awards outstanding at June 26, 2019 | $ |
Fiscal Years Ended | |||||||||||
June 26, 2019 | June 27, 2018 | June 28, 2017 | |||||||||
Income taxes, net of refunds(1) | $ | $ | $ | ||||||||
Interest, net of amounts capitalized |
(1) | Income taxes, net of refunds for the fiscal year ended June 26, 2019 included payments made for income tax liabilities resulting from the sale leaseback transactions completed in fiscal 2019. Refer to Note 3 - Sale Leaseback Transactions and Note 8 - Income Taxes for further details. |
Fiscal Years Ended | |||||||||||
June 26, 2019 | June 27, 2018 | June 28, 2017 | |||||||||
Retirement of fully depreciated assets | $ | $ | $ | ||||||||
Dividends declared but not paid | |||||||||||
Accrued capital expenditures | |||||||||||
Capital lease additions |
• | Royalties from franchises |
• | Franchise fees and other revenues include royalties, advertising fees (effective fiscal 2019), Maggiano’s banquet service charge income, gift card breakage, digital entertainment revenues, gift card equalization, |
Fiscal Year Ended June 26, 2019 | |||||||||||||||
ASC 606 | |||||||||||||||
Chili’s | Maggiano’s | Other | Consolidated | ||||||||||||
Company sales | $ | $ | $ | $ | |||||||||||
Royalties | |||||||||||||||
Franchise fees and other revenues(1) | |||||||||||||||
Franchise and other revenues | |||||||||||||||
Total revenues | |||||||||||||||
Company restaurant expenses(1) | |||||||||||||||
Depreciation and amortization | |||||||||||||||
General and administrative | |||||||||||||||
Other gains and charges(2) | ( | ) | ( | ) | |||||||||||
Total operating costs and expenses | |||||||||||||||
Operating income (loss) | ( | ) | |||||||||||||
Interest expense | |||||||||||||||
Other, net | ( | ) | ( | ) | |||||||||||
Income (loss) before provision for income taxes | $ | $ | $ | ( | ) | $ | |||||||||
Segment assets(2) | $ | $ | $ | $ | |||||||||||
Payments for property and equipment |
Fiscal Year Ended June 27, 2018 | |||||||||||||||
Legacy GAAP | |||||||||||||||
Chili’s | Maggiano’s | Other | Consolidated | ||||||||||||
Company sales | $ | $ | $ | $ | |||||||||||
Franchise and other revenues | |||||||||||||||
Total revenues | |||||||||||||||
Company restaurant expenses(1) | |||||||||||||||
Depreciation and amortization | |||||||||||||||
General and administrative | |||||||||||||||
Other gains and charges | |||||||||||||||
Total operating costs and expenses | |||||||||||||||
Operating income (loss) | ( | ) | |||||||||||||
Interest expense | |||||||||||||||
Other, net | ( | ) | ( | ) | |||||||||||
Income (loss) before provision for income taxes | $ | $ | $ | ( | ) | $ | |||||||||
Segment assets | $ | $ | $ | $ | |||||||||||
Payments for property and equipment |
Fiscal Year Ended June 28, 2017 | |||||||||||||||
Legacy GAAP | |||||||||||||||
Chili’s | Maggiano’s | Other | Consolidated | ||||||||||||
Company sales | $ | $ | $ | $ | |||||||||||
Franchise and other revenues | |||||||||||||||
Total revenues | |||||||||||||||
Company restaurant expenses(1) | |||||||||||||||
Depreciation and amortization | |||||||||||||||
General and administrative | |||||||||||||||
Other gains and charges | |||||||||||||||
Total operating costs and expenses | |||||||||||||||
Operating income (loss) | ( | ) | |||||||||||||
Interest expense | |||||||||||||||
Other, net | ( | ) | ( | ) | |||||||||||
Income (loss) before provision for income taxes | $ | $ | $ | ( | ) | $ | |||||||||
Payments for property and equipment | $ | $ | $ | $ |
(1) | Company restaurant expenses includes Cost of sales, Restaurant labor and Restaurant expenses, including advertising. With the adoption of ASC 606, for the fiscal year ended June 26, 2019, advertising contributions received from Chili’s franchisees are recorded as Franchise fees and other revenues within Total revenues, which differs from the fiscal years ended June 27, 2018 and June 28, 2017 that includes Chili’s franchise advertising contributions recorded on a net basis within Company restaurant expenses. |
(2) | During the fiscal year ended June 26, 2019 we completed sale leaseback transactions of |
Fiscal Year Ended June 26, 2019 | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Income before provision for income taxes | $ | $ | $ | $ | |||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Basic net income per share | $ | $ | $ | $ | |||||||||||
Diluted net income per share | $ | $ | $ | $ | |||||||||||
Basic weighted average shares outstanding | |||||||||||||||
Diluted weighted average shares outstanding |
Fiscal Year Ended June 27, 2018 | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Income before provision for income taxes | $ | $ | $ | $ | |||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Basic net income per share | $ | $ | $ | $ | |||||||||||
Diluted net income per share | $ | $ | $ | $ | |||||||||||
Basic weighted average shares outstanding | |||||||||||||||
Diluted weighted average shares outstanding |
• | Sale leaseback transactions gains of $ |
• | Gains on the sale of property of $ |
• | Foreign currency transaction gains of $ |
• | Insurance recoveries, net of property damages of $ |
• | Lease guarantee credits of $ |
• | Restaurant impairment charges of $ |
• | Remodel-related costs of $ |
• | Corporate headquarter relocation charges of $ |
• | Restaurant closure charges related to additional lease and other costs were recorded of $ |
• | Accelerated depreciation related to long-lived assets to be disposed of $ |
• | Severance charges of $ |
• | Cyber security incident charges of $ |
• | Restaurant impairment charges of $ |
• | Closed restaurant lease and other costs associated with closed restaurants of $ |
• | Hurricane related costs, net of recoveries of $ |
• | Cyber security incident charges related to professional services of $ |
• | Sale leaseback transaction charges of $ |
• | Lease guarantee charges of $ |
• | Accelerated depreciation related to long-lived assets to be disposed of $ |
• | Remodel-related costs of $ |
• | Foreign currency transaction losses of $ |
• | Gains on the sale of property of $ |
• | Severance charges of $ |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. |
Date: August 22, 2019 | By: | /s/ WYMAN T. ROBERTS | |
Wyman T. Roberts, | |||
President and Chief Executive Officer | |||
and President of Chili’s Grill & Bar | |||
(Principal Executive Officer) | |||
Date: August 22, 2019 | By: | /s/ JOSEPH G. TAYLOR | |
Joseph G. Taylor, | |||
Executive Vice President and Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
1. | I have reviewed this Annual Report on Form 10-K of Brinker International, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | /s/ WYMAN T. ROBERTS |
August 22, 2019 | Wyman T. Roberts, |
President and Chief Executive Officer | |
and President of Chili’s Grill & Bar | |
(Principal Executive Officer) |
1. | I have reviewed this Annual Report on Form 10-K of Brinker International, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | /s/ JOSEPH G. TAYLOR |
August 22, 2019 | Joseph G. Taylor, |
Executive Vice President and Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
Dated: | By: | /s/ WYMAN T. ROBERTS |
August 22, 2019 | Name: | Wyman T. Roberts, |
Title: | President and Chief Executive Officer | |
and President of Chili’s Grill & Bar | ||
(Principal Executive Officer) |
Dated: | By: | /s/ JOSEPH G. TAYLOR |
August 22, 2019 | Name: | Joseph G. Taylor, |
Title: | Executive Vice President and Chief Financial Officer | |
(Principal Financial and Accounting Officer) |