SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

Current Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 21, 2009

 

BRINKER INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

1-10275

 

75-1914582

(State of Incorporation)

 

(Commission File
Number)

 

(IRS Employment
Identification No.)

 

6820 LBJ Freeway

Dallas, Texas 75240

(Address of principal executive offices)

 

Registrant’s telephone number, including area code    972-980-9917

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

 

 

 



 

Section 2 — Financial Information.

 

Item 2.02.  Results of Operations and Financial Conditions.

 

The information contained in this Current Report on Form 8-K, including the Exhibit attached hereto, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.  Furthermore, the information contained in this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.

 

On April 21, 2009, the Registrant issued a Press Release announcing its third quarter fiscal 2009 results.  A copy of this Press Release is attached hereto as Exhibit 99(a).

 

Section 9 — Financial Statements and Exhibits.

 

Item 9.01.  Financial Statements and Exhibits.

 

(d)   Exhibits.

 

99(a)       Press Release dated April 21, 2009.

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

BRINKER INTERNATIONAL, INC.

 

 

 

 

 

 

Date: April 22, 2009

By:

/s/ Douglas H. Brooks

 

 

Douglas H. Brooks, Chairman of the Board

 

 

President and Chief Executive Officer

 

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EXHIBIT 99(a)

 

 

FOR IMMEDIATE RELEASE

 

Contacts:

 

Stacey Sullivan Calbert, Media Relations

 

Marie Perry, Investor Relations

 

 

(800) 775-7290

 

(972) 770-1276

 

BRINKER INTERNATIONAL REPORTS INCREASE IN THIRD QUARTER

FISCAL 2009 EPS

 

DALLAS (April 21, 2009) — Brinker International, Inc. (NYSE: EAT) announced third quarter fiscal 2009 earnings per diluted share of $0.45 compared to $0.33 for the third quarter of fiscal 2008, before special items and excluding Romano’s Macaroni Grill (reconciliation included in Table 2). On a GAAP basis, earnings per diluted share increased to $0.34 from a loss per diluted share of $0.38 for the third quarter in the prior year.

 

“We are focused on delivering flavorful food at a great value with outstanding hospitality for our guests. The combination of a commitment to our guests and disciplined restaurant management resulted in margin improvement in the third quarter and will enable our continued success over the long-term,” stated Doug Brooks, Chairman and CEO.

 

In the second quarter of fiscal 2009, the company completed the sale of Macaroni Grill while retaining a minority ownership interest.  The information presented below includes Macaroni Grill unless otherwise noted.

 

Quarterly Revenues

 

Brinker reported revenues for the 13-week period of $857.4 million, a decrease of 20.4 percent compared with $1,077.2 million reported for the same period of fiscal 2008. The company experienced a 5.6 percent decrease in comparable restaurant sales (see Table 1) in the third quarter of fiscal 2009 due to decreases across all brands.  Revenues were also negatively impacted by a net decline in capacity of 17.7 percent due to 47 restaurant closures (3 of which were Macaroni Grills) and the sale of 198 restaurants since the third quarter of fiscal 2008 (189 of which were Macaroni Grills).

 

Table 1: Q3 comparable restaurant sales

Q3 09 and Q3 08, company and three reported brands; percentage

 

 

 

Q3 09
Comparable
Sales

 

Q3 08
Comparable
Sales

 

Q3 09
Pricing
Impact

 

Q3 09
Mix-Shift

 

Brinker International (1)

 

(5.6

)

1.1

 

3.5

 

0.6

 

Chili’s

 

(5.2

)

1.6

 

3.7

 

0.7

 

On The Border

 

(5.0

)

(1.8

)

3.3

 

2.2

 

Maggiano’s

 

(9.5

)

(0.4

)

1.7

 

(2.0

)

 


(1) Brinker International comparable restaurant sales exclude the impact of Macaroni Grill.

 

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Quarterly Operating Performance

 

Operating margins for the third quarter of fiscal 2009 were positively impacted by a disciplined focus on cost of sales, labor productivity and fixed costs, which helped offset the impact of the current sales environment.  Efforts to reduce waste and update menus to reflect the guests’ current focus on value resulted in improvements in cost of sales.  In addition, Brinker’s shift in emphasis from company-owned new restaurant development to the operations of existing restaurants led to lower pre-opening expenses as well as improved operational efficiency and lower labor costs through a reduction in turnover.  The company believes these changes along with the closure of underperforming restaurants will allow margin improvements to be sustainable in the future.

 

Cost of sales, as a percent of revenues, decreased from 28.9 percent in the prior year to 27.9 percent in the third quarter of fiscal 2009.  During the quarter, efficiency improvements, menu item changes at Chili’s and On The Border and favorable menu price changes more than offset the negative impact of unfavorable commodity prices primarily related to chicken, beef, cooking oil and sauces.

 

Restaurant expenses, as a percent of revenues, decreased to 54.6 percent from 56.8 percent in the prior year primarily due to lower labor costs and pre-opening expenses.

 

Depreciation and amortization remained essentially flat on a dollar basis compared to the prior year.

 

General and administrative expense decreased $5.0 million for the quarter due to reduced salary expense from lower headcount and income related to transitional services provided to Macaroni Grill that offsets the internal cost of providing the services.

 

Other gains and charges resulted in $17.9 million of charges in the third quarter of fiscal 2009 primarily due to $10.2 million of lease termination charges related to the closure of certain underperforming restaurants and $5.4 million of severance costs.

 

Interest expense decreased $3.3 million due to lower interest rates and lower average borrowings as compared to the same quarter last year.

 

The effective income tax rate changed from a benefit of 44.7 percent in the third quarter of fiscal 2008 to a provision of 28.9 percent in the current quarter primarily due to the tax effects of the impairment of Macaroni Grill assets in the prior year.

 

Special Items

 

Table 2: Reconciliation of net income (loss), before special items (1)

Q3 09 and Q3 08; $ millions and $ per diluted share after-tax

 

Item

 

Q3 09

 

EPS
Q3 09

 

Q3 08

 

EPS
Q3 08

 

Net Income (Loss)

 

35.0

 

0.34

 

(38.8

)

(0.38

)

Other (Gains) and Charges

 

11.2

 

0.11

 

83.6

 

0.82

 

Net Income before Special Items

 

46.2

 

0.45

 

44.8

 

0.44

 

Macaroni Grill before Special Items

 

 

 

(11.1

)

(0.11

)

Adjusted Net Income before Special Items and Macaroni Grill

 

46.2

 

0.45

 

33.7

 

0.33

 

 


(1)               The company believes excluding other gains and charges and Macaroni Grill from its financial results provides investors with a clearer perspective of the company’s ongoing operating performance and a more relevant comparison to prior period results.

 

Cash Flow and Capital Allocation

 

For the first nine months of fiscal 2009, cash flow from operations was $184.5 million and capital expenditures totaled $74.6 million.  In February 2009, the company entered into a $215 million unsecured, three-year revolving credit facility replacing its existing facility that was set to expire in October 2009.  Payments of $59.3 million were made on the

 

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revolving credit facility during the third quarter of fiscal 2009 resulting in fiscal year to date debt reductions of $123.3 million.  Subsequent to the end of the third quarter, the remaining $30.7 million balance on the revolving credit facility was paid down to zero.

 

Web-cast Information

 

Investors and interested parties are invited to listen to today’s conference call, as management will provide further details of the quarter. The call will be broadcast live on the Brinker Web site (http://www.brinker.com) at 9 a.m. CST today (April 21).  For those who are unable to listen to the live broadcast, a replay of the call will be available shortly thereafter and will remain on the Brinker Web site until the end of the day on May 19, 2009.

 

Additional financial information, including reconciliation details and debt covenant information, is also available on the Brinker website under the Financial Information section of the Investor tab.

 

Forward Calendar

 

·                  Third Quarter SEC Form 10-Q filing on or before May 4, 2009; and

·                  Fourth quarter earnings release, before market opens, on Aug. 6, 2009.

 

At the end of the third quarter of fiscal quarter 2009, Brinker International either owned, operated, or franchised 1,679 restaurants under the names Chili’s Grill & Bar (1,478 restaurants), On The Border Mexican Grill & Cantina (156 restaurants) and Maggiano’s Little Italy (45 restaurants).  Brinker also holds a minority investment in Romano’s Macaroni Grill.

 

The statements contained in this release that are not historical facts are forward-looking statements. These forward-looking statements involve risks and uncertainties and, consequently, could be affected by general business and economic conditions, financial and credit market conditions, credit availability, reduced disposable income, the impact of competition, the impact of mergers, acquisitions, divestitures and other strategic transactions, the seasonality of the company’s business, adverse weather conditions, future commodity prices, product availability, fuel and utility costs and availability, terrorists acts, consumer perception of food safety, changes in consumer taste, health epidemics or pandemics, changes in demographic trends, availability of employees, unfavorable publicity, the company’s ability to meet its growth plan, acts of God, governmental regulations, and inflation.

 

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BRINKER INTERNATIONAL, INC.

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Thirteen Week Periods Ended 

 

Thirty-Nine Week Periods Ended

 

 

 

March 25,

 

March 26,

 

March 25,

 

March 26,

 

 

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

857,378

 

$

1,077,183

 

$

2,791,210

 

$

3,161,654

 

Operating Costs and Expenses:

 

 

 

 

 

 

 

 

 

Cost of sales

 

238,946

 

311,152

 

785,914

 

894,229

 

Restaurant expenses

 

468,238

 

611,901

 

1,598,061

 

1,798,346

 

Depreciation and amortization

 

39,858

 

39,958

 

121,661

 

123,954

 

General and administrative

 

36,664

 

41,663

 

115,516

 

126,110

 

Other gains and charges (a)

 

17,862

 

133,235

 

107,964

 

125,483

 

 

 

 

 

 

 

 

 

 

 

Total operating costs and expenses

 

801,568

 

1,137,909

 

2,729,116

 

3,068,122

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

55,810

 

(60,726

)

62,094

 

93,532

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

7,452

 

10,800

 

27,444

 

36,191

 

Other, net

 

(852

)

(1,368

)

(2,417

)

(3,470

)

 

 

 

 

 

 

 

 

 

 

Income (loss) before tax expense (benefit)

 

49,210

 

(70,158

)

37,067

 

60,811

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

14,207

 

(31,340

)

47

 

7,549

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

35,003

 

$

(38,818

)

$

37,020

 

$

53,262

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

 

$

0.34

 

$

(0.38

)

$

0.36

 

$

0.51

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share (b)

 

$

0.34

 

$

(0.38

)

$

0.36

 

$

0.50

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

101,882

 

101,175

 

101,784

 

103,713

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

102,752

 

102,377

 

102,598

 

105,624

 

 


(a)          Current year other gains and charges in the third quarter primarily includes lease termination charges of $10.2 million and severance costs of $5.4 million.  In the first six months of fiscal 2009, other gains and charges consisted primarily of long-lived asset impairments of $44.2 million related to the decision to close 35 underperforming restaurants, a loss on the sale of Macaroni Grill of $43.3 million and lease termination costs of $2.0 million.

 

Prior year other gains and charges in the third quarter primarily includes charges of $73.1 million related to the write-down of Macaroni Grill assets to estimated fair value less costs to sell, $31.9 million related to restaurant closures and impairments of long-lived assets, $12.5 million related to asset write-offs resulting from the company’s reduced development schedule, $7.7 million of lease termination charges and $7.0 million of severance costs.  In the first six months of fiscal 2008, other gains and charges consisted primarily of $29.2 million gain on the sale of 76 restaurants to a franchisee, $9.7 million of charges related to restaurant closures and impairments of long-lived assets and $9.2 million of charges related to the expected sale of Macaroni Grill.

 

(b)          Due to the net loss in third quarter of fiscal 2008, basic weighted average shares outstanding were used in the diluted earnings per share calculation.  Using actual diluted shares would result in anti-dilution of earnings per share.

 

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BRINKER INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

March 25,

 

June 25,

 

 

 

2009

 

2008

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

$

318,313

 

$

320,173

 

Assets held for sale

 

 

135,850

 

Net property and equipment (a)

 

1,442,299

 

1,529,715

 

Total other assets

 

242,191

 

207,384

 

Total assets

 

$

2,002,803

 

$

2,193,122

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities

 

$

442,470

 

$

506,443

 

Liabilities associated with assets held for sale

 

 

18,408

 

Debt, including current installments

 

780,300

 

903,577

 

Other liabilities

 

172,540

 

169,605

 

Total shareholders’ equity

 

607,493

 

595,089

 

Total liabilities and shareholders’ equity

 

$

2,002,803

 

$

2,193,122

 

 


(a)           At March 25, 2009, the company owned the land and buildings for 224 of the 1,032 company-owned restaurants.  The net book values of the land and buildings associated with these restaurants totaled $179.9 million and $183.8 million, respectively.

 

BRINKER INTERNATIONAL, INC.

RESTAURANT SUMMARY

 

 

 

Total
Restaurants

 

Third Quarter
Openings/Acquisitions

 

Third Quarter
Closings/Sales

 

Total Restaurants

 

Projected
Openings
Fiscal

 

 

 

Dec. 24, 2008

 

Fiscal 2009

 

Fiscal 2009

 

Mar. 25, 2009

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

Company-Owned Restaurants:

 

 

 

 

 

 

 

 

 

 

 

Chili’s

 

885

 

1

 

(27

)

859

 

8-9

 

On The Border

 

129

 

 

(7

)

122

 

 

Maggiano’s

 

43

 

1

 

 

44

 

2

 

International(a)

 

7

 

 

 

7

 

2

 

 

 

1,064

 

2

 

(34

)

1,032

 

12-13

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise Restaurants:

 

 

 

 

 

 

 

 

 

 

 

Chili’s

 

427

 

3

 

 

430

 

25-28

 

On The Border

 

31

 

 

(3

)

28

 

5-7

 

International(a)

 

182

 

8

 

(1

)

189

 

46-49

 

 

 

640

 

11

 

(4

)

647

 

76-84

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Restaurants:

 

 

 

 

 

 

 

 

 

 

 

Chili’s

 

1,312

 

4

 

(27

)

1,289

 

33-37

 

On The Border

 

160

 

 

(10

)

150

 

5-7

 

Maggiano’s

 

43

 

1

 

 

44

 

2

 

International

 

189

 

8

 

(1

)

196

 

48-51

 

 

 

1,704

 

13

 

(38

)

1679

 

88-97

 

 


(a)          At the end of third quarter fiscal year 2009, international company-owned restaurants by brand were six Chili’s and one Maggiano’s.  International franchise restaurants by brand were 183 Chili’s and six On The Border’s.

 

FOR ADDITIONAL INFORMATION, CONTACT:

 

MARIE PERRY

INVESTOR RELATIONS

(972) 770-1276

6820 LBJ FREEWAY

DALLAS, TEXAS 75240

 

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