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): January 24, 2006
BRINKER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
|
Delaware |
|
1-10275 |
|
74-1914582 |
|
(State of Incorporation) |
|
(Commission File |
|
(IRS Employment |
|
|
|
Number) |
|
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)).
Item 2.02. Results of Operations and Financial Condition.
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 January 24, 2006, Brinker International, Inc. issued a Press Release announcing its second quarter fiscal 2006 results. A copy of this Press Release is attached hereto as Exhibit 99.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
99 Press Release, dated January 24, 2006.
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: January 30, 2006 |
By: |
/s/ Douglas H. Brooks |
|
|
|
|
Douglas H. Brooks, Chairman of the Board |
|
|
|
|
President and Chief Executive Officer |
|
Exhibit 99
FOR IMMEDIATE RELEASE
|
Contacts: Suzanne Keen, Media Relations |
|
Lynn Schweinfurth, Laura Conn, Investor Relations |
|
(972) 770-8722 |
|
(972) 770-7228, (972) 770-5810 |
BRINKER INTERNATIONAL REPORTS
SECOND QUARTER FISCAL 2006 EARNINGS
DALLAS (Jan. 24, 2006) – Brinker International, Inc. (NYSE: EAT) announced fiscal 2006 second-quarter earnings per diluted share from continuing operations of $0.46 prior to restructuring charges of $0.01, or reported earnings per diluted share from continuing operations of $0.45. Excluding incremental equity-based compensation expense of $0.10 and restructuring charges of $0.01, earnings per diluted share from continuing operations were $0.56. Excluding restructuring charges, fiscal 2005 second-quarter earnings per diluted share from continuing operations were $0.46. A reconciliation of reported income from continuing operations to income from continuing operations before special items is included in Table 3 below.
Revenue Growth
Brinker reported revenues for the 13-week period of $1,009.1 million, an increase of 10.9 percent compared with $909.7 million reported for the same period of fiscal 2005(1). These revenue gains were primarily driven by a 2.2 percent increase in comparable store sales (see Table 1) and restaurant capacity growth of 7.1 percent. The company and its franchisees opened 39 restaurants in the second quarter.
Table 1: Q2 comparable store sales
Q2 06 and Q2 05, company and four reported brands; percentage
|
|
|
Q2 06 |
|
Q2 05 |
|
Q2 06 |
|
Q2 06 |
|
|
Brinker International |
|
2.2 |
|
2.6 |
|
2.6 |
|
1.5 |
|
|
Chili’s |
|
2.7 |
|
3.2 |
|
3.0 |
|
1.7 |
|
|
Macaroni Grill |
|
1.1 |
|
(2.2 |
) |
1.9 |
|
1.6 |
|
|
On The Border |
|
0.4 |
|
6.4 |
|
2.2 |
|
0.8 |
|
|
Maggiano’s |
|
2.6 |
|
5.8 |
|
2.2 |
|
0.2 |
|
(1) Revenues exclude Corner Bakery.
December 2005 Comparable Store Sales
For the four-week period ending Dec. 28, 2005, comparable store sales increased 2.7 percent(2) (see Table 2).
Table 2: Month of December comparable store sales
Dec 06 and Dec 05; Percentage
|
|
|
Dec 06 |
|
Dec 05 |
|
Dec 06 |
|
Dec 06 |
|
|
Brinker International |
|
2.7 |
|
6.9 |
|
3.2 |
|
1.7 |
|
|
Chili’s |
|
4.1 |
|
6.6 |
|
3.9 |
|
2.0 |
|
|
Macaroni Grill |
|
(1.5 |
) |
6.3 |
|
1.7 |
|
1.3 |
|
|
On The Border |
|
(0.6 |
) |
9.9 |
|
2.2 |
|
0.8 |
|
|
Maggiano’s |
|
4.5 |
|
6.8 |
|
2.7 |
|
1.2 |
|
Operating Performance, Before Tax
Cost of sales, as a percent of revenues, decreased from 28.6 percent to 28.5 percent or 10 basis points for the quarter compared to the prior year. The decrease was due to favorable commodity prices and menu price changes, partially offset by product mix shifts.
Restaurant expenses, as a percent of revenues, decreased from 55.8 percent to 55.0 percent, primarily driven by the $17.3 million IRS settlement recorded in the second quarter fiscal 2005, partially offset by incremental equity-based compensation of $2.8 million and higher utility rates.
Depreciation and amortization for the second quarter fiscal 2006 compared to 2005 increased $3.0 million. The change was driven by new restaurants, asset replacements and remodel additions, partially offset by store closures and a declining depreciable asset base for older stores.
General and administrative expense increased approximately $9.7 million for the quarter, which included $8.5 million related to incremental equity-based compensation in 2006 and an increase in performance-based incentives period over period.
Share Repurchases
The company repurchased 735,000 shares for approximately $28 million during the second quarter. The company continues to be active in its share repurchase program, purchasing $167 million year to date. At the end of the quarter, approximately $108 million remains available under the company’s share authorizations.
(2) Comparable store sales exclude Corner Bakery sales.
Special Items
Table 3: Reconciliation of income from continuing operations and description of special items
Q2 06 and Q2 05; $ millions and $ per diluted share after-tax
|
Item |
|
Income |
|
$ |
|
Per |
|
$ |
|
Per |
|
|
Income from Continuing Operations |
|
|
|
39.4 |
|
0.45 |
|
40.8 |
|
0.44 |
|
|
Equity-Based Compensation (3) |
|
Restaurant Expenses |
|
2.2 |
|
0.02 |
|
|
|
|
|
|
Equity-Based Compensation(3) |
|
General & Administrative |
|
6.6 |
|
0.08 |
|
|
|
|
|
|
Restructuring Charges(4) |
|
Restructure & Other |
|
0.8 |
|
0.01 |
|
2.8 |
|
0.02 |
|
|
Total Special Items |
|
|
|
9.6 |
|
0.11 |
|
2.8 |
|
0.02 |
|
|
Income from Continuing Operations, before Special Items |
|
|
|
49.0 |
|
0.56 |
|
43.6 |
|
0.46 |
|
Third Quarter and Full Fiscal Year 2006 Forecast
The company’s initial estimate for third quarter fiscal 2006 earnings per diluted share from continuing operations is $0.57 to $0.59, which includes incremental equity-based compensation expense of approximately $6.6 million ($5.1 million after tax), or earnings per diluted share of $0.06. Excluding incremental equity-based compensation, the estimate is $0.63 to $0.65 per diluted share. This guidance excludes certain gains and charges and assumes comparable store sales of 3 percent to 4 percent. Weighted average shares are estimated to be approximately 88 million.
The company anticipates full-year fiscal 2006 earnings per diluted share from continuing operations to be $2.09 to $2.14, which includes incremental equity-based compensation expense for the year of approximately $31 million to $33 million ($24 million to $26 million after tax), or earnings per diluted share of $0.27 to $0.29. Excluding incremental equity-based compensation, the estimate is $2.36 to $2.41 per diluted share. This guidance excludes certain gains and charges and assumes comparable store sales of 3 percent to 4 percent. Weighted average shares are estimated to be approximately 88 million.
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 and an outlook for future periods. The call will be broadcast live on the Brinker Web site (http://www.brinker.com) at 9 a.m. CST today (Jan. 24). 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 Feb. 21, 2006.
(3) This incremental expense relates to adopting FAS 123(R) at the beginning of fiscal year 2006.
(4) Restructuring charges consist of expenses associated with impairments and restaurant closures.
Forward Calendar
Period 7 (January) sales – Feb. 8, 2006, after the market closes.
At the end of the second quarter of fiscal 2006, Brinker International either owned, operated, or franchised 1,638 restaurants under the names Chili’s Grill & Bar (1,130 units), Romano’s Macaroni Grill (238 units), Maggiano’s Little Italy (37 units), On The Border Mexican Grill & Cantina (141 units), and Corner Bakery Cafe (92 units).
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, the impact of competition, the impact of acquisitions and divestitures, the seasonality of the company’s business, adverse weather conditions, future commodity prices, fuel and utility costs and availability, terrorists acts, consumer perception of food safety, changes in consumer taste, 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.
# # #
BRINKER INTERNATIONAL, INC.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
|
|
|
Thirteen Week Periods Ended |
|
Twenty-Six Week Periods Ended |
|
||||||||
|
|
|
December 28, |
|
December 29, |
|
December 28, |
|
December 29, |
|
||||
|
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Revenues |
|
$ |
1,009,083 |
|
$ |
909,721 |
|
$ |
1,984,979 |
|
$ |
1,780,686 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating Costs and Expenses: |
|
|
|
|
|
|
|
|
|
||||
|
Cost of sales |
|
287,305 |
|
259,791 |
|
562,463 |
|
502,970 |
|
||||
|
Restaurant expenses (a) |
|
555,371 |
|
507,759 |
|
1,098,143 |
|
990,518 |
|
||||
|
Depreciation and amortization |
|
47,602 |
|
44,617 |
|
94,313 |
|
88,571 |
|
||||
|
General and administrative (b) |
|
51,667 |
|
41,951 |
|
98,805 |
|
78,178 |
|
||||
|
Restructure charges and other impairments |
|
1,312 |
|
4,128 |
|
2,479 |
|
50,832 |
|
||||
|
Total operating costs and expenses |
|
943,257 |
|
858,246 |
|
1,856,203 |
|
1,711,069 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating income |
|
65,826 |
|
51,475 |
|
128,776 |
|
69,617 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest expense |
|
6,198 |
|
7,054 |
|
11,565 |
|
14,146 |
|
||||
|
Other, net |
|
(20 |
) |
1,093 |
|
(184 |
) |
1,535 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income before income tax (expense) benefit |
|
59,648 |
|
43,328 |
|
117,395 |
|
53,936 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income tax (expense) benefit (c) |
|
(20,278 |
) |
(2,508 |
) |
(39,583 |
) |
2,560 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income from continuing operations |
|
39,370 |
|
40,820 |
|
77,812 |
|
56,496 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income (loss) from discontinued operations, net of taxes |
|
3,507 |
|
583 |
|
(3,181 |
) |
(1,184 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income |
|
$ |
42,877 |
|
$ |
41,403 |
|
$ |
74,631 |
|
$ |
55,312 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic net income per share: |
|
|
|
|
|
|
|
|
|
||||
|
Income from continuing operations |
|
$ |
0.46 |
|
$ |
0.47 |
|
$ |
0.90 |
|
$ |
0.64 |
|
|
Income (loss) from discontinued operations |
|
$ |
0.04 |
|
$ |
0.00 |
|
$ |
(0.04 |
) |
$ |
(0.02 |
) |
|
Net income per share |
|
$ |
0.50 |
|
$ |
0.47 |
|
$ |
0.86 |
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Diluted net income per share: |
|
|
|
|
|
|
|
|
|
||||
|
Income from continuing operations |
|
$ |
0.45 |
|
$ |
0.44 |
|
$ |
0.88 |
|
$ |
0.60 |
|
|
Income (loss) from discontinued operations |
|
$ |
0.04 |
|
$ |
0.00 |
|
$ |
(0.04 |
) |
$ |
(0.01 |
) |
|
Net income per share |
|
$ |
0.49 |
|
$ |
0.44 |
|
$ |
0.84 |
|
$ |
0.59 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic weighted average shares outstanding |
|
85,980 |
|
87,505 |
|
86,909 |
|
88,633 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Diluted weighted average shares outstanding |
|
87,618 |
|
96,471 |
|
88,417 |
|
97,599 |
|
||||
a) Current year restaurant expenses include incremental equity-based compensation of $2.8 million and $5.2 million for the second quarter and year-to-date, respectively.
Prior year restaurant expenses include a $17.3 million charge recorded in the second quarter related to the IRS settlement and a $3.8 million gain recorded in the first quarter as a result of the sale of nine Chili’s to a franchise partner.
b) Current year general and administrative expenses include incremental equity-based compensation of $8.5 million and $13.1 million for the second quarter and year-to-date, respectively.
c) Prior year income tax (expense) benefit includes a $16.9 million benefit related to the IRS settlement.
BRINKER INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
|
December 28, |
|
June 29, |
|
||
|
|
|
2005 |
|
2005 |
|
||
|
|
|
(Unaudited) |
|
|
|
||
|
ASSETS |
|
|
|
|
|
||
|
Current assets of continuing operations |
|
$ |
269,414 |
|
$ |
233,123 |
|
|
Current assets of discontinued operations |
|
80,875 |
|
79,842 |
|
||
|
Net property and equipment |
|
1,721,665 |
|
1,646,466 |
|
||
|
Total other assets |
|
192,891 |
|
196,693 |
|
||
|
Total assets |
|
$ |
2,264,845 |
|
$ |
2,156,124 |
|
|
|
|
|
|
|
|
||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
||
|
Current liabilities of continuing operations |
|
$ |
540,761 |
|
$ |
419,564 |
|
|
Current liabilities of discontinued operations |
|
15,798 |
|
10,400 |
|
||
|
Long-term debt, less current installments |
|
489,686 |
|
406,505 |
|
||
|
Other liabilities |
|
180,744 |
|
219,373 |
|
||
|
Total shareholders’ equity |
|
1,037,856 |
|
1,100,282 |
|
||
|
Total liabilities and shareholders’ equity |
|
$ |
2,264,845 |
|
$ |
2,156,124 |
|
BRINKER INTERNATIONAL, INC.
UNITS SUMMARY
|
|
|
|
|
Second Quarter |
|
Second Quarter |
|
|
|
Projected |
|
|
|
|
Total Units |
|
Openings/Acquisitions |
|
Closings/Sales |
|
Total Units |
|
Openings |
|
|
|
|
Sept. 28, 2005 |
|
Fiscal 2006 (d) |
|
Fiscal 2006 (d) |
|
Dec. 28, 2005 |
|
Fiscal 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-Owned Units: |
|
|
|
|
|
|
|
|
|
|
|
|
Chili’s |
|
830 |
|
38 |
|
(1 |
) |
867 |
|
97-100 |
|
|
Macaroni Grill |
|
223 |
|
1 |
|
— |
|
224 |
|
6-7 |
|
|
Maggiano’s |
|
35 |
|
2 |
|
— |
|
37 |
|
4-5 |
|
|
On The Border |
|
119 |
|
4 |
|
(1 |
) |
122 |
|
6-8 |
|
|
Corner Bakery (e) |
|
90 |
|
1 |
|
(2 |
) |
89 |
|
7-9 |
|
|
|
|
1,297 |
|
46 |
|
(4 |
) |
1,339 |
|
120-129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JV/Franchise Units: |
|
|
|
|
|
|
|
|
|
|
|
|
Chili’s |
|
270 |
|
8 |
|
(15 |
) |
263 |
|
25-30 |
|
|
Macaroni Grill |
|
14 |
|
1 |
|
(1 |
) |
14 |
|
4-5 |
|
|
On The Border |
|
19 |
|
— |
|
— |
|
19 |
|
3-4 |
|
|
Corner Bakery (e) |
|
3 |
|
— |
|
— |
|
3 |
|
0-1 |
|
|
|
|
306 |
|
9 |
|
(16 |
) |
299 |
|
32-40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Units: |
|
|
|
|
|
|
|
|
|
|
|
|
Chili’s |
|
1,100 |
|
46 |
|
(16 |
) |
1,130 |
|
122-130 |
|
|
Macaroni Grill |
|
237 |
|
2 |
|
(1 |
) |
238 |
|
10-12 |
|
|
Maggiano’s |
|
35 |
|
2 |
|
— |
|
37 |
|
4-5 |
|
|
On The Border |
|
138 |
|
4 |
|
(1 |
) |
141 |
|
9-12 |
|
|
Corner Bakery (e) |
|
93 |
|
1 |
|
(2 |
) |
92 |
|
7-10 |
|
|
|
|
1,603 |
|
55 |
|
(20 |
) |
1,638 |
|
152-169 |
|
a) During the second quarter of fiscal 2006, the company acquired fifteen Chili’s restaurants and one Macaroni Grill restaurant from two of its franchisees. The company and its franchisees opened a total of thirty-nine new restaurants during the quarter ended December 28, 2005.
b) In September 2005, the company entered into an agreement to sell Corner Bakery. As a result, Corner Bakery is presented as discontinued operations.
FOR ADDITIONAL INFORMATION, CONTACT:
LYNN SCHWEINFURTH
INVESTOR RELATIONS
(972) 770-7228
6820 LBJ FREEWAY
DALLAS, TEXAS 75240