DALLAS, Aug. 10, 2017 /PRNewswire/ -- Brinker
International, Inc. (NYSE: EAT) today announced results for the
fiscal fourth quarter and year ended June
28, 2017.
Highlights include the following:
- For fiscal 2017, the fourth quarter and fiscal-year periods
included 13 weeks and 52 weeks, respectively. For fiscal 2016, the
fourth quarter and fiscal-year periods included 14 weeks and 53
weeks, respectively
- On a GAAP basis, earnings per diluted share in the fourth
quarter of fiscal 2017 decreased 7.3 percent to $1.02 compared to $1.10 for the fourth quarter of fiscal
20161. On a GAAP basis, earnings per diluted share in
fiscal 2017 decreased 14.0 percent to $2.94 compared to $3.42 for fiscal 20161
- Earnings per diluted share, excluding special items, in the
fourth quarter of fiscal 2017 decreased 12.1 percent to
$1.09 compared to $1.24 for the fourth quarter of fiscal
20161. Earnings per diluted share, excluding special
items, in fiscal 2017 decreased 9.9 percent to $3.20 compared to $3.55 for fiscal 20161 (see non-GAAP
reconciliation below)
- Brinker International's total revenues in the fourth quarter of
fiscal 2017 decreased 8.1 percent to $810.7
million compared to the fourth quarter of fiscal 2016, and
company sales in the fourth quarter of fiscal 2017 decreased 8.1
percent to $785.8 million compared to
the fourth quarter of fiscal 2016, primarily attributable to one
less operating week in the fourth quarter of 2017
- Chili's company-owned comparable restaurant sales2
in the fourth quarter of fiscal 2017 decreased 2.2 percent compared
to the fourth quarter of fiscal 2016. Chili's U.S. franchise
comparable restaurant sales2 in the fourth quarter of
fiscal 2017 decreased 0.2 percent compared to the fourth quarter of
fiscal 2016
- Maggiano's comparable restaurant sales2 in the
fourth quarter of fiscal 2017 increased 0.5 percent compared to the
fourth quarter of fiscal 2016
- Chili's international franchise comparable restaurant
sales2 in the fourth quarter of fiscal 2017 decreased
4.2 percent compared to the fourth quarter of fiscal 2016
- Operating income, as a percent of total revenues, declined
approximately 140 basis points to 9.9 percent in the fourth quarter
of fiscal 2017 compared to 11.3 percent for the fourth quarter of
fiscal 2016
- Restaurant operating margin, as a percent of company
sales, declined approximately 130 basis points to 17.0 percent in
the fourth quarter of fiscal 2017 compared to 18.3 percent for the
fourth quarter of fiscal 2016 (see non-GAAP reconciliation
below)
- For fiscal 2017, cash flows provided by operating activities
were $312.9 million and capital
expenditures totaled $102.6 million.
Free cash flow was $210.3 million
(see non-GAAP reconciliation below)
- The company's Board of Directors authorized an additional
$250 million in share repurchases
which brings the total available authority to approximately
$365 million
- The company's Board of Directors approved a quarterly dividend
of $0.38 per share on the common
stock of the company, representing a 12 percent increase over the
prior year. The dividend will be payable Sept. 28, 2017 to shareholders of record as of
Sept. 8, 2017
"Our ability to again report adjusted earnings above
expectations is a testament to our team's ability to operate
restaurants and supporting functions in a manner that delivers
bottom line results," said Wyman
Roberts, chief executive officer and president. "That being
said, we are focusing our efforts on improving traffic at Chili's
through a quality food-driven experience."
1Prior year amounts are revised due to the correction
of an immaterial error. Refer to disclosures in tables 6 and 7 in
this press release for further information.
2 Amounts are calculated based on comparable 13 weeks in
each fiscal quarter.
Table 1: Q4 and FY
comparable restaurant sales1
|
Company-owned,
reported brands and franchise; percentage
|
|
|
|
Q4
17
|
|
Q4
16
|
|
FY
17
|
|
FY
16
|
Brinker
International
|
|
(1.8)
|
|
|
(1.8)
|
|
|
(2.1)
|
|
|
(2.4)
|
|
Chili's
Company-Owned
|
|
|
|
|
|
|
|
|
Comparable Restaurant
Sales
|
|
(2.2)
|
|
|
(1.8)
|
|
|
(2.3)
|
|
|
(2.6)
|
|
Pricing Impact
|
|
2.9
|
|
|
1.0
|
|
|
1.8
|
|
|
1.0
|
|
Mix-Shift2
|
|
1.4
|
|
|
1.3
|
|
|
1.7
|
|
|
0.1
|
|
Traffic
|
|
(6.5)
|
|
|
(4.1)
|
|
|
(5.8)
|
|
|
(3.7)
|
|
Maggiano's
|
|
|
|
|
|
|
|
|
Comparable Restaurant
Sales
|
|
0.5
|
|
|
(1.7)
|
|
|
(0.6)
|
|
|
(1.3)
|
|
Pricing Impact
|
|
1.0
|
|
|
1.8
|
|
|
2.1
|
|
|
1.9
|
|
Mix-Shift2
|
|
1.6
|
|
|
(2.5)
|
|
|
0.3
|
|
|
(1.6)
|
|
Traffic
|
|
(2.1)
|
|
|
(1.0)
|
|
|
(3.0)
|
|
|
(1.6)
|
|
|
|
|
|
|
|
|
|
|
Chili's
Franchise3
|
|
(1.7)
|
|
|
(3.4)
|
|
|
(2.1)
|
|
|
(0.7)
|
|
U.S.
Comparable Restaurant Sales
|
|
(0.2)
|
|
|
(2.1)
|
|
|
(1.1)
|
|
|
(1.2)
|
|
International
Comparable Restaurant Sales
|
|
(4.2)
|
|
|
(5.5)
|
|
|
(3.7)
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
Chili's
Domestic4
|
|
(1.7)
|
|
|
(1.8)
|
|
|
(2.0)
|
|
|
(2.2)
|
|
System-wide5
|
|
(1.8)
|
|
|
(2.2)
|
|
|
(2.1)
|
|
|
(1.9)
|
|
|
|
1
|
Comparable restaurant
sales includes all restaurants that have been in operation for more
than 18 months. Amounts are calculated based on comparable 13 weeks
in each fiscal quarter and 52 weeks in each fiscal year.
|
|
|
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
|
Revenues generated by
franchisees are not included in revenues on the consolidated
statements of comprehensive income; however, we generate royalty
revenue and advertising fees based on franchisee revenues, where
applicable. We believe including franchise comparable restaurant
sales provides investors information regarding brand performance
that is relevant to current operations and may impact future
restaurant development.
|
|
|
4
|
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.
|
|
|
5
|
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.
|
Quarterly Operating Performance
CHILI'S fourth quarter company sales decreased 8.6 percent to
$682.9 million from $747.3 million in the prior year primarily due to
one less operating week in fiscal 2017 and a decline in comparable
restaurant sales. As compared to the prior year, Chili's restaurant
operating margin1 declined. Restaurant expenses, as a
percent of company sales, increased due to sales deleverage, higher
advertising and marketing related expenses and increased workers'
compensation insurance expenses. Restaurant labor, as a percent of
company sales, increased slightly compared to the prior year due to
sales deleverage and higher wage rates, partially offset by lower
manager bonuses. Cost of sales, as a percent of company sales,
decreased due to increased menu pricing and favorable commodity
pricing primarily related to beef and poultry, partially offset by
unfavorable commodity pricing primarily related to
avocados.
MAGGIANO'S fourth quarter company sales decreased 4.8 percent to
$102.9 million from $108.1 million in the prior year primarily due to
one less operating week in fiscal 2017, partially offset by an
increase in comparable restaurant sales and restaurant capacity. As
compared to the prior year, Maggiano's restaurant operating
margin1 declined. Restaurant expenses, as a percent of
company sales, increased primarily due to sales deleverage and
higher advertising and workers' compensation insurance expenses.
Restaurant labor, as a percent of company sales, was flat compared
to the prior year. Cost of sales, as a percent of company sales,
was negatively impacted by unfavorable menu item mix, partially
offset by increased menu pricing.
1Restaurant operating margin is defined as Company
sales less Cost of sales, Restaurant labor and Restaurant expenses
and excludes Depreciation and amortization expenses. (See non-GAAP
reconciliation below)
FRANCHISE AND OTHER revenues decreased 5.7 percent to
$24.8 million for the fourth quarter
of fiscal 2017 compared to $26.3
million in the prior year fourth quarter primarily due to
lower digital entertainment revenue from one less operating week
and a slight decrease in royalty income from franchisees.
Other
Depreciation and amortization expense decreased $0.2 million for the quarter compared to the
fourth quarter of fiscal 2016 primarily due to an increase in
fully-depreciated assets and restaurant closures, partially offset
by depreciation on asset replacements and new restaurant
openings.
General and administrative expense decreased $1.6 million for the quarter compared to the
fourth quarter of fiscal 2016 primarily due to one less operating
week and lower payroll and stock-based compensation expenses.
On a GAAP basis, the effective income tax rate decreased to 25.2
percent in the current quarter from 31.8 percent in the fourth
quarter of fiscal 2016. Excluding the impact of special
items, the effective income tax rate decreased to 27.8 percent in
the current quarter compared to 32.3 percent in the fourth quarter
of fiscal 2016. The decline in profit in the current
quarter compared to the fourth quarter of fiscal 2016 coupled with
no significant change in realized tax credits resulted in a
decrease in both the GAAP basis effective tax rate and the
effective tax rate excluding special items. The decline in
the GAAP basis effective tax rate in the current quarter was
partially offset by the impact of lower restaurant impairment and
closure charges compared to the fourth quarter of fiscal 2016.
Immaterial Correction of Prior Period Financial
Statements
In connection with the preparation of the consolidated financial
statements for the year ended June 28, 2017, the Company
discovered immaterial errors in prior years relating to the
accuracy of the deferred income tax liability, primarily related to
property and equipment. While the Company has concluded that the
impact of these errors on the Company's previously-issued
consolidated financial statements was not material, the Company is
revising its previously-reported consolidated financial statements
for the fiscal years ended June 29, 2016 and June 24, 2015. The revisions include a net
increase in the provision for income taxes of $0.1 million and $2.0
million for fiscal 2016 and 2015, respectively. These
revisions resulted in no change to earnings per diluted share for
fiscal 2016 and a $0.03 decrease for
fiscal 2015. Please refer to tables 6 and 7 in this press release
for further information relating to these revisions to prior
periods. The cumulative effect of the changes to retained earnings
at the beginning of fiscal 2016, the earliest date presented in the
consolidated financial statements for the year ended June 28,
2017, was a reduction of $12.4 million.
Fiscal 2018 Outlook
The company estimates earnings per diluted share, excluding
special items, in the range of $3.25 to $3.35. We are unable to reliably forecast
special items such as restaurant impairments, restaurant closures,
reorganization charges and legal settlements without unreasonable
effort. As such, we do not present a reconciliation of
forecasted non-GAAP measures to the corresponding US GAAP
measures. When these items are reported in fiscal 2018,
reconciliations to the appropriate US GAAP measures will be
provided. The non-GAAP measures included as a supplement to
our estimated earnings per diluted share range are adjusted
earnings per diluted share, restaurant operating margin, effective
income tax rate excluding special items, free cash flow, and
EBITDA.
Estimated earnings per diluted share are based on the following
expectations:
- Revenues are expected to be up approximately one half percent
to 1.5 percent
- Comparable restaurant sales are expected to be flat to up 1.0
percent
- Restaurant operating margin is expected to be down
approximately 25 to 40 basis points year-over-year
- Depreciation expense is expected to be $2 to $3 million lower reflecting the impact of
fully-depreciated assets coupled with lower capital expenditures.
Capital expenditures are expected to be $105
to $115 million
- General and administrative expense is expected to be
$5 to $6 million higher on a dollar
basis due to planning incentive compensation at target
- Interest expense is expected to increase $8 to $9 million due to a higher debt balance and
a higher anticipated average interest rate in fiscal 2018
- Excluding the impact of special items, the effective income tax
rate is projected to be approximately 27 to 29 percent
- EBITDA is expected to be $420 to $430
million
- Free cash flow is expected to be $205 to
$215 million
- Diluted weighted average shares outstanding is expected to be
47 to 49 million
The company believes providing estimated fiscal 2018 earnings
per diluted share guidance provides investors the appropriate
insight into the company's ongoing operating performance.
Guidance Policy
Brinker provides annual guidance as it relates to comparable
restaurant sales, earnings per diluted share, excluding special
items, and other key line items in the statements of comprehensive
income and will only provide updates if there is a material change
versus the original guidance. We do not provide annual guidance as
it relates to US GAAP earnings per diluted share as we are unable
to reliably forecast special items such as restaurant impairments,
restaurant closures, reorganization charges and legal settlements
without unreasonable effort.
Non-GAAP Measures
Brinker management uses certain non-GAAP measures in analyzing
operating performance and believes that the presentation of these
measures in this release provides investors with information that
is beneficial to gaining an understanding of the company's
operating results. Non-GAAP disclosures should not be viewed as a
substitute for operating results determined in accordance with
GAAP, nor are they necessarily comparable to non-GAAP performance
measures that may be presented by other companies.
Reconciliations of these non-GAAP measures are included in the
tables below.
Table 2:
Reconciliation of net income excluding special items
|
Q4 17 and Q4 16; $
millions and $ per diluted share
|
|
Brinker believes
excluding special items 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.
|
|
|
|
Q4
17
|
|
EPS Q4
17
|
|
Q4
161
|
|
EPS Q4
161
|
Net Income
|
|
50.6
|
|
|
1.02
|
|
|
62.2
|
|
|
1.10
|
|
Special
items2
|
|
7.2
|
|
|
0.14
|
|
|
11.7
|
|
|
0.21
|
|
Income tax effect
related to special items
|
|
(2.6)
|
|
|
(0.05)
|
|
|
(4.4)
|
|
|
(0.07)
|
|
Special items, net of
taxes
|
|
4.6
|
|
|
0.09
|
|
|
7.3
|
|
|
0.14
|
|
Adjustment for tax
items3
|
|
(1.1)
|
|
|
(0.02)
|
|
|
0.2
|
|
|
—
|
|
Net Income excluding
special items
|
|
54.1
|
|
|
1.09
|
|
|
69.7
|
|
|
1.24
|
|
Table 3:
Reconciliation of net income excluding special items
|
FY 17 and FY 16; $
millions and $ per diluted share
|
|
|
|
FY
17
|
|
EPS FY
17
|
|
FY
161
|
|
EPS FY
161
|
Net Income
|
|
$
|
150.8
|
|
|
$
|
2.94
|
|
|
$
|
200.6
|
|
|
$
|
3.42
|
|
Special
items2
|
|
22.7
|
|
|
0.44
|
|
|
17.2
|
|
|
0.29
|
|
Income tax effect
related to special items
|
|
(8.4)
|
|
|
(0.16)
|
|
|
(6.5)
|
|
|
(0.11)
|
|
Special items, net of
taxes
|
|
14.3
|
|
|
0.28
|
|
|
10.7
|
|
|
0.18
|
|
Adjustment for tax
items3
|
|
(1.1)
|
|
|
(0.02)
|
|
|
(3.2)
|
|
|
(0.05)
|
|
Net Income excluding
special items
|
|
$
|
164.0
|
|
|
$
|
3.20
|
|
|
$
|
208.1
|
|
|
$
|
3.55
|
|
|
|
1
|
Prior-year amounts
are revised due to the correction of an immaterial error. Refer to
disclosures in tables 6 and 7 in this press release for further
information.
|
|
|
2
|
See footnote "b" to
the consolidated statements of comprehensive income for additional
details on the composition of these amounts.
|
|
|
3
|
Amounts resulting
from the favorable resolution of liabilities established for
uncertain tax positions.
|
Table 4:
Reconciliation of restaurant operating margin
|
Q4 17 and Q4 16; $
millions
|
|
Restaurant operating
margin is not a measurement determined in accordance with GAAP and
should not be considered in isolation, or as an alternative to
operating income as an indicator of financial performance.
Restaurant operating margin is widely regarded in the industry as a
useful metric by which to evaluate restaurant-level operating
efficiency and performance of ongoing restaurant-level
operations. We define restaurant operating margin as Company
sales less Company restaurant expenses, including Cost of sales,
Restaurant labor and Restaurant expenses. Restaurant expenses
includes advertising expense. We believe this metric provides a
more useful comparison between periods and enables investors to
focus on the performance of restaurant-level operations by
excluding revenues not related to food and beverage sales at
company-owned restaurants, corporate general and administrative
expense, depreciation and amortization, and other gains and
charges.
|
|
Restaurant operating
margin excludes Franchise and other revenues which are earned
primarily from franchise royalties and other non-food and beverage
revenue streams such as banquet service charges, digital
entertainment revenues and gift card breakage.
Depreciation and amortization expense, substantially all of which
is related to restaurant-level assets, is excluded because such
expenses represent historical costs which do not reflect current
cash outlays for the restaurants. General and administrative
expense includes primarily non-restaurant-level costs associated
with support of the restaurants and other activities at our
corporate offices and is therefore excluded. We believe that
excluding special items, included within Other gains and charges,
from restaurant operating margin provides investors with a clearer
perspective of the Company's ongoing operating performance and a
more useful comparison to prior period results. Restaurant
operating margin as presented may not be comparable to other
similarly titled measures of other companies in our
industry.
|
|
|
|
Q4F17
|
|
Q4F16
|
Operating income -
GAAP
|
|
80.3
|
|
|
99.3
|
|
Operating income as a
percent of total revenues
|
|
9.9
|
%
|
|
11.3
|
%
|
|
|
|
|
|
Operating
income
|
|
80.3
|
|
|
99.3
|
|
Less: Franchise
and other revenues
|
|
(24.8)
|
|
|
(26.3)
|
|
Plus:
Depreciation and amortization
|
|
38.9
|
|
|
39.0
|
|
General and
administrative
|
|
30.8
|
|
|
32.5
|
|
Other gains and
charges
|
|
8.7
|
|
|
11.7
|
|
Restaurant operating
margin - non-GAAP
|
|
133.9
|
|
|
156.2
|
|
Restaurant operating
margin as a percent of company sales
|
|
17.0
|
%
|
|
18.3
|
%
|
Table 5:
Reconciliation of free cash flow
|
FY 17; $
millions
|
|
Brinker believes
presenting free cash flow provides a useful measure to evaluate the
cash flow available for reinvestment after considering the capital
requirements of our business operations.
|
|
|
|
Fifty-Two Week
Period
Ended June 28, 2017
|
Cash flows provided
by operating activities - GAAP
|
|
312.9
|
|
Capital
expenditures
|
|
(102.6)
|
|
Free cash flow -
non-GAAP
|
|
210.3
|
|
Table 6:
Immaterial correction of prior period financial
statements
|
FY 16 and FY 15; $
thousands except per share amounts
|
|
In connection with
the preparation of the consolidated financial statements for the
year ended June 28, 2017, the Company discovered immaterial
errors in prior years relating to the accuracy of the deferred
income tax liability, primarily related to property and equipment.
While the Company has concluded that the impact of these errors on
the Company's previously-issued consolidated financial statements
is not material, the Company has determined to revise its
previously-reported consolidated financial statements for the years
ended June 29, 2016 and June 24, 2015.
|
|
The revisions to our
consolidated statements of comprehensive income for the years ended
June 29, 2016 and June 24, 2015 are as follows:
|
|
|
|
Fifty-Three Week
Period Ended
June 29, 2016
|
|
Fifty-Two Week
Period Ended
June 24, 2015
|
|
|
As
Reported
|
|
As
Revised
|
|
As
Reported
|
|
As
Revised
|
Income before
provision for income taxes
|
|
$
|
286,387
|
|
|
$
|
286,387
|
|
|
$
|
284,277
|
|
|
284,277
|
|
Provision for income
taxes
|
|
85,642
|
|
|
85,767
|
|
|
87,583
|
|
|
89,618
|
|
Net income
|
|
$
|
200,745
|
|
|
$
|
200,620
|
|
|
$
|
196,694
|
|
|
$
|
194,659
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share
|
|
$
|
3.47
|
|
|
$
|
3.47
|
|
|
$
|
3.12
|
|
|
$
|
3.09
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share
|
|
$
|
3.42
|
|
|
$
|
3.42
|
|
|
$
|
3.05
|
|
|
$
|
3.02
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
57,895
|
|
|
57,895
|
|
|
63,072
|
|
|
63,072
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
58,684
|
|
|
58,684
|
|
|
64,404
|
|
|
64,404
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss:
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
$
|
(2,964)
|
|
|
$
|
(2,964)
|
|
|
$
|
(7,690)
|
|
|
$
|
(7,690)
|
|
Other comprehensive
loss
|
|
(2,964)
|
|
|
(2,964)
|
|
|
(7,690)
|
|
|
(7,690)
|
|
Comprehensive
income
|
|
$
|
197,781
|
|
|
$
|
197,656
|
|
|
$
|
189,004
|
|
|
$
|
186,969
|
|
Table 7:
Immaterial correction of prior period financial
statements
|
FY 16; $
thousands
|
|
The revisions to our
consolidated balance sheet as of June 29, 2016 were as
follows:
|
|
|
|
June 29,
2016
|
|
|
As
Reported
|
|
As
Revised
|
|
|
|
|
|
Accounts receivable,
net
|
|
$
|
43,944
|
|
|
$
|
45,612
|
|
Current
assets
|
|
176,774
|
|
|
178,442
|
|
Deferred income
taxes, net
|
|
27,003
|
|
|
14,325
|
|
Total
other assets
|
|
249,534
|
|
|
236,856
|
|
Total
assets
|
|
1,469,460
|
|
|
1,458,450
|
|
|
|
|
|
|
Income taxes
payable
|
|
18,814
|
|
|
22,022
|
|
Other
current liabilities
|
|
428,880
|
|
|
432,088
|
|
Other
liabilities
|
|
139,423
|
|
|
137,682
|
|
Total
shareholders' deficit
|
|
(213,099)
|
|
|
(225,576)
|
|
Total liabilities and
shareholders' deficit
|
|
$
|
1,469,460
|
|
|
$
|
1,458,450
|
|
The revisions had no impact on cash flows from operating,
investing, or financing activities on the consolidated statements
of cash flows for fiscal years 2016 and 2015. The revisions to the
consolidated statements of shareholders' deficit include the change
to net income and the changes to comprehensive income, as noted
above, and a $12.4 million decrease
to retained earnings at the beginning of fiscal 2016.
Webcast 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 broadcast live on Brinker's website
at 9 a.m. CDT today (Aug. 10) -
http://investors.brinker.com/phoenix.zhtml?c=119205&p=irol-EventDetails&EventId=5260922
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 Brinker's website until the end of the day Sept. 7, 2017.
Additional financial information, including statements of income
which detail operations excluding special items, franchise and
other revenues, and comparable restaurant sales trends by brand, is
also available on Brinker's website under the Financial Information
section of the Investor tab.
Forward Calendar
- SEC Form 10-K for fiscal 2017 filing on or before
Aug. 28, 2017; and
- First quarter earnings release, before market opens,
Nov. 1, 2017.
About Brinker
Brinker International, Inc. is one of the world's leading casual
dining restaurant companies. Founded in 1975 and based in
Dallas, Texas, as of June 28, 2017, Brinker owned, operated, or
franchised 1,674 restaurants under the names Chili's®
Grill & Bar (1,622 restaurants) and Maggiano's Little
Italy® (52 restaurants).
Forward-Looking Statements
The statements contained in this release that are not historical
facts are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements are based on our
current plans and expectations and involve risks and uncertainties
which could cause actual results to differ materially from our
historical results or from those projected in forward-looking
statements. These risks and uncertainties are, in many instances,
beyond our control. Such risks and uncertainties include, among
other things, general business and economic conditions, financial
and credit market conditions, litigation, reduced disposable
income, the impact of competition, the impact of mergers,
acquisitions, divestitures and other strategic transactions,
franchisee success, the seasonality of the company's business,
increased minimum wages, increased health care costs, adverse
weather conditions, loss of key management personnel, product
availability, actions of activist shareholders, terrorist 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 business strategy plan, material weakness in
internal control over financial reporting, governmental
regulations, inflation, technology failures, and failure to protect
the security of data of our guests and teammates, as well as the
risks described under the caption "Risk Factors" in our Annual
Report on Form 10-K and future filings with the Securities and
Exchange Commission.
BRINKER
INTERNATIONAL, INC.
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
Thirteen Week
Period Ended
|
|
Fourteen Week
Period Ended
(revised)
|
|
Fifty-Two Week
Period Ended
|
|
Fifty-Three
Week
Period Ended
(revised)
|
|
|
June 28,
2017
|
|
June 29,
2016
|
|
June 28,
2017
|
|
June 29,
2016
|
Revenues:
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
785,836
|
|
|
$
|
855,361
|
|
|
$
|
3,062,579
|
|
|
$
|
3,166,659
|
|
Franchise and other
revenues (a)
|
|
24,825
|
|
|
26,320
|
|
|
88,258
|
|
|
90,830
|
|
Total
revenues
|
|
810,661
|
|
|
881,681
|
|
|
3,150,837
|
|
|
3,257,489
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
Company restaurants
(excluding depreciation and amortization)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
203,579
|
|
|
224,440
|
|
|
791,321
|
|
|
840,204
|
|
Restaurant
labor
|
|
257,051
|
|
|
279,131
|
|
|
1,017,945
|
|
|
1,036,005
|
|
Restaurant
expenses
|
|
191,364
|
|
|
195,614
|
|
|
773,510
|
|
|
762,663
|
|
Company restaurant
expenses
|
|
651,994
|
|
|
699,185
|
|
|
2,582,776
|
|
|
2,638,872
|
|
Depreciation and
amortization
|
|
38,883
|
|
|
39,033
|
|
|
156,409
|
|
|
156,368
|
|
General and
administrative
|
|
30,805
|
|
|
32,403
|
|
|
132,819
|
|
|
127,593
|
|
Other gains and
charges (b)
|
|
8,671
|
|
|
11,726
|
|
|
22,655
|
|
|
17,180
|
|
Total operating costs
and expenses
|
|
730,353
|
|
|
782,347
|
|
|
2,894,659
|
|
|
2,940,013
|
|
Operating
income
|
|
80,308
|
|
|
99,334
|
|
|
256,178
|
|
|
317,476
|
|
Interest
expense
|
|
13,439
|
|
|
8,497
|
|
|
49,547
|
|
|
32,574
|
|
Other, net
|
|
(793)
|
|
|
(375)
|
|
|
(1,877)
|
|
|
(1,485)
|
|
Income before
provision for income taxes
|
|
67,662
|
|
|
91,212
|
|
|
208,508
|
|
|
286,387
|
|
Provision for income
taxes
|
|
17,078
|
|
|
28,995
|
|
|
57,685
|
|
|
85,767
|
|
Net income
|
|
$
|
50,584
|
|
|
$
|
62,217
|
|
|
$
|
150,823
|
|
|
$
|
200,620
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share
|
|
$
|
1.03
|
|
|
$
|
1.12
|
|
|
$
|
2.98
|
|
|
$
|
3.47
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share
|
|
$
|
1.02
|
|
|
$
|
1.10
|
|
|
$
|
2.94
|
|
|
$
|
3.42
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
48,917
|
|
|
55,657
|
|
|
50,638
|
|
|
57,895
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
49,435
|
|
|
56,394
|
|
|
51,250
|
|
|
58,684
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment (c)
|
|
$
|
1,084
|
|
|
$
|
330
|
|
|
$
|
(327)
|
|
|
$
|
(2,964)
|
|
Other comprehensive
income (loss)
|
|
1,084
|
|
|
330
|
|
|
(327)
|
|
|
(2,964)
|
|
Comprehensive
income
|
|
$
|
51,668
|
|
|
$
|
62,547
|
|
|
$
|
150,496
|
|
|
$
|
197,656
|
|
|
|
(a)
|
Franchise and other
revenues primarily includes royalties, development fees, franchise
fees, Maggiano's banquet service charge income, gift card breakage
and discounts, digital entertainment revenue, Chili's retail food
product royalties and delivery fee income.
|
|
|
(b)
|
Other gains and
charges include:
|
|
Thirteen Week
Period Ended
|
|
Fourteen Week
Period Ended
|
|
Fifty-Two Week
Period Ended
|
|
Fifty-Three
Week
Period Ended
|
|
June 28,
2017
|
|
June 29,
2016
|
|
June 28,
2017
|
|
June 29,
2016
|
Restaurant impairment
charges
|
$
|
3,338
|
|
|
$
|
6,714
|
|
|
$
|
5,190
|
|
|
$
|
10,651
|
|
Lease guarantee
charges
|
1,089
|
|
|
—
|
|
|
1,089
|
|
|
—
|
|
Accelerated
depreciation
|
644
|
|
|
—
|
|
|
1,988
|
|
|
—
|
|
Restaurant closure
charges
|
463
|
|
|
3,691
|
|
|
4,084
|
|
|
3,780
|
|
Severance and other
benefits
|
369
|
|
|
936
|
|
|
6,591
|
|
|
3,304
|
|
Information
technology restructuring
|
39
|
|
|
—
|
|
|
2,739
|
|
|
—
|
|
Gain on the sale of
assets, net
|
(35)
|
|
|
—
|
|
|
(2,659)
|
|
|
(2,858)
|
|
Impairment of
investment
|
—
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
Impairment of
intangible assets
|
—
|
|
|
392
|
|
|
—
|
|
|
392
|
|
Litigation
|
—
|
|
|
(1,159)
|
|
|
—
|
|
|
(3,191)
|
|
Acquisition
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
700
|
|
Other
|
2,764
|
|
|
1,152
|
|
|
3,633
|
|
|
3,402
|
|
|
$
|
8,671
|
|
|
$
|
11,726
|
|
|
$
|
22,655
|
|
|
$
|
17,180
|
|
|
|
(c)
|
The foreign currency
translation adjustment included in comprehensive income on the
consolidated statements of comprehensive income represents the
unrealized impact of translating the financial statements of the
Canadian restaurants and the Mexican joint venture from their
respective functional currencies to U.S. dollars. This amount is
not included in net income and would only be realized upon
disposition of the businesses.
|
BRINKER
INTERNATIONAL, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
June 28,
2017
|
|
June 29, 2016
(revised)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets
|
|
$
|
154,392
|
|
|
$
|
178,442
|
|
Net property and
equipment (a)
|
|
1,000,614
|
|
|
1,043,152
|
|
Total other
assets
|
|
258,694
|
|
|
236,856
|
|
Total
assets
|
|
$
|
1,413,700
|
|
|
$
|
1,458,450
|
|
LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
|
|
|
|
Current installments
of long-term debt
|
|
$
|
9,649
|
|
|
$
|
3,563
|
|
Other current
liabilities
|
|
436,779
|
|
|
432,088
|
|
Long-term debt, less
current installments
|
|
1,319,829
|
|
|
1,110,693
|
|
Other
liabilities
|
|
141,124
|
|
|
137,682
|
|
Total shareholders'
deficit
|
|
(493,681)
|
|
|
(225,576)
|
|
Total liabilities and
shareholders' deficit
|
|
$
|
1,413,700
|
|
|
$
|
1,458,450
|
|
|
|
(a)
|
At June 28, 2017, the
company owned the land and buildings for 190 of the 1,003
company-owned restaurants. The net book values of the land totaled
$143.2 million and the buildings totaled $97.3 million associated
with these restaurants.
|
BRINKER
INTERNATIONAL, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Fifty-Two Week
Period Ended
|
|
Fifty-Three
Week
Period Ended
(revised)
|
|
|
June 28,
2017
|
|
June 29,
2016
|
Cash Flows From
Operating Activities:
|
|
|
|
|
Net income
|
|
$
|
150,823
|
|
|
$
|
200,620
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
156,409
|
|
|
156,368
|
|
Stock-based
compensation
|
|
14,568
|
|
|
15,159
|
|
Restructure charges
and other impairments
|
|
14,412
|
|
|
17,445
|
|
Net (gain) loss on
disposal of assets
|
|
(377)
|
|
|
87
|
|
Changes in assets and
liabilities
|
|
(22,949)
|
|
|
5,021
|
|
Net cash provided by
operating activities
|
|
312,886
|
|
|
394,700
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
Payments for property
and equipment
|
|
(102,573)
|
|
|
(112,788)
|
|
Proceeds from sale of
assets
|
|
3,157
|
|
|
4,256
|
|
Payment for business
acquisition, net of cash acquired
|
|
—
|
|
|
(105,577)
|
|
Net cash used in
investing activities
|
|
(99,416)
|
|
|
(214,109)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
Proceeds from
issuance of long-term debt
|
|
350,000
|
|
|
—
|
|
Purchases of treasury
stock
|
|
(370,877)
|
|
|
(284,905)
|
|
Payments on revolving
credit facility
|
|
(388,000)
|
|
|
(110,000)
|
|
Borrowings on
revolving credit facility
|
|
250,000
|
|
|
256,500
|
|
Payments of
dividends
|
|
(70,771)
|
|
|
(74,066)
|
|
Payments for debt
issuance costs
|
|
(10,216)
|
|
|
—
|
|
Proceeds from
issuances of treasury stock
|
|
5,621
|
|
|
6,147
|
|
Payments on long-term
debt
|
|
(3,832)
|
|
|
(3,402)
|
|
Excess tax benefits
from stock-based compensation
|
|
2,223
|
|
|
5,460
|
|
Net cash used in
financing activities
|
|
(235,852)
|
|
|
(204,266)
|
|
Net change in cash
and cash equivalents
|
|
(22,382)
|
|
|
(23,675)
|
|
Cash and cash
equivalents at beginning of year
|
|
31,446
|
|
|
55,121
|
|
Cash and cash
equivalents at end of year
|
|
$
|
9,064
|
|
|
$
|
31,446
|
|
BRINKER
INTERNATIONAL, INC.
|
RESTAURANT
SUMMARY
|
|
|
|
Fourth Quarter
Openings
Fiscal 2017
|
|
Total Restaurants
June 28, 2017
|
|
Openings
Fiscal
2017
|
|
Projected
Openings
Fiscal 2018
|
Company-owned
restaurants:
|
|
|
|
|
|
|
|
|
Chili's
domestic
|
|
3
|
|
|
937
|
|
|
7
|
|
|
5-6
|
|
Chili's
international
|
|
—
|
|
|
14
|
|
|
1
|
|
|
—
|
|
Maggiano's
|
|
—
|
|
|
52
|
|
|
2
|
|
|
1
|
|
Total
company-owned
|
|
3
|
|
|
1,003
|
|
|
10
|
|
|
6-7
|
|
Franchise
restaurants:
|
|
|
|
|
|
|
|
|
Chili's
domestic
|
|
1
|
|
|
315
|
|
|
6
|
|
|
6-8
|
|
Chili's
international
|
|
14
|
|
|
356
|
|
|
30
|
|
|
38-43
|
|
Total
franchise
|
|
15
|
|
|
671
|
|
|
36
|
|
|
44-51
|
|
Total
restaurants:
|
|
|
|
|
|
|
|
|
Chili's
domestic
|
|
4
|
|
|
1,252
|
|
|
13
|
|
|
11-14
|
|
Chili's
international
|
|
14
|
|
|
370
|
|
|
31
|
|
|
38-43
|
|
Maggiano's
|
|
—
|
|
|
52
|
|
|
2
|
|
|
1
|
|
Grand
total
|
|
18
|
|
|
1,674
|
|
|
46
|
|
|
50-58
|
|
View original
content:http://www.prnewswire.com/news-releases/brinker-international-reports-fourth-quarter-and-fiscal-year-results-300502387.html
SOURCE Brinker International, Inc.