DALLAS, Aug. 5 /PRNewswire-FirstCall/ -- Brinker International, Inc.
(NYSE: EAT) announced fiscal 2008 fourth quarter earnings per diluted share
decreased to $0.41 from $0.71 in the prior year. Before special items,
earnings per diluted share decreased to $0.50 from $0.57 in the prior year
(reconciliation included in Table 3). For the full-year fiscal 2008, earnings
per diluted share decreased to $0.91 from $1.85 in the prior year. Before
special items, earnings per diluted share decreased to $1.75 from $1.76 in the
prior year (reconciliation included in Table 4).
In the first quarter of fiscal 2008, the company announced its intention
to sell Romano's Macaroni Grill and began presenting results from Macaroni
Grill operations as discontinued operations in its financial statements.
Brinker is in negotiations to sell a majority interest in the brand. As a
result, accounting principles require that the results of Macaroni Grill be
reclassified into continuing operations at this time; therefore, the company's
results for the fourth quarter and full-year of fiscal 2008 and 2007 reflect
the inclusion of the brand. The company expects to finalize the negotiations
prior to the filing of its Form 10-K and to record an additional pre-tax
impairment in its fiscal 2008 results ranging from $45 to $60 million. The
information presented below includes Macaroni Grill unless otherwise noted.
In certain instances, the company believes it is more useful to the reader to
provide information excluding the impact of Macaroni Grill in order to gain
insight into the company's ongoing operations. The company has also included
a reconciliation of fourth quarter and year-to-date results excluding Macaroni
Grill in the attached financial statements.
For the fourth quarter of fiscal 2008, earnings per diluted share before
special items and excluding Macaroni Grill decreased to $0.42 from $0.49 in
the prior year (reconciliation included in Table 3). For the full-year fiscal
2008, earnings per diluted share before special items and excluding Macaroni
Grill decreased to $1.41 from $1.49 in prior year (reconciliation included in
Table 4).
Highlights for the fiscal year 2008:
-- Brinker, excluding Macaroni Grill, experienced a 0.3 percent increase
in comparable restaurant sales, driven by positive sales at Chili's in
three of the four quarters;
-- Introduced successful menu items across our brands as a result of our
focus on food and beverage excellence, including Honey Chipotle Chicken
Crispers and updates on the classic Big Mouth Burger at Chili's, Border
Smart selections at On the Border, and award-winning Little Italy
favorites at Maggiano's;
-- Innovated ToGo at Chili's through developments in technology and
processes with positive results and plans to expand into fiscal year
2009;
-- Re-imaged 73 Chili's restaurants, resulting in mid-single digit
increases in sales, with plans to continue our reimage program in
fiscal year 2009 at a lower level of investment per restaurant;
-- Experienced significant growth in favorable guest feedback across the
brands as a result of the company's focus on both hospitality and food
and beverage excellence;
-- Sold 76 Chili's restaurants to our franchisee, ERJ Dining IV, LLC, with
a commitment to develop an additional 49 new Chili's restaurants;
-- Increased royalty revenues from franchisees by approximately 60%
percent;
-- Internationally, opened 32 restaurants, including eight under the
company's joint investment with CMR, SAB de CV to develop 50 Chili's
and Maggiano's restaurants in Mexico, and entered into 10 additional
development agreements with franchisees with commitments to build 56
restaurants;
-- Domestically, opened 70 company-owned restaurants (26 net of closures)
and 43 franchised restaurants and entered into three development
agreements with franchisees, with commitments to build 77 restaurants;
-- Increased quarterly dividend by 22 percent to $0.11 per share and paid
out $42.9 million in dividends; and
-- Repurchased 9.1 million shares of our common stock for $240.3 million.
'Our brands are responding to the difficult operating environment with a
disciplined focus on delivering an outstanding dining experience for our
guests' investment of money and time,' said Doug Brooks, Chairman and CEO. 'We
are driving this strategy with flavorful new menu offerings, updated
restaurant atmosphere and guest-focused training for all positions. Our
guests' response to these efforts has been very favorable, as evidenced by the
fact that Chili's has outperformed the casual dining industry benchmark in
terms of sales and traffic for four consecutive quarters.'
Quarterly Revenues
Brinker reported revenues for the 13-week period of $1,073.6 million, a
decrease of 6.1 percent compared with $1,143.0 million reported for the same
period of fiscal 2007. The company experienced a 1.0 percent increase in
comparable restaurant sales (see Table 1) in the fourth quarter of fiscal 2008
driven by an increase at Chili's of 3.4 percent. Revenues were negatively
impacted by a net decline in capacity of 9.3 percent due to sales of 171
restaurants to franchisees and 44 restaurant closures (27 of which are
Macaroni Grill). Royalty revenues from franchisees increased 67.3 percent to
$16.9 million from $10.1 million in the prior year.
Table 1: Q4 comparable restaurant sales
Q4 08 and Q4 07, company and four reported brands; percentage
Q4 08 Q4 07 Q4 08
Comparable Comparable Pricing Q4 08
Sales Sales Impact Mix-Shift
Brinker Excluding
Macaroni Grill 2.3 (1.9) 4.3 (0.2)
Brinker International 1.0 (2.0) 4.0 (0.1)
Chili's 3.4 (1.6) 4.6 (0.3)
On The Border (2.3) (4.7) 3.8 1.1
Maggiano's (0.5) (1.3) 3.1 (0.8)
Macaroni Grill (5.7) (2.1) 2.5 0.4
Table 2: FY comparable restaurant sales
FY 08 and FY 07, company and four reported brands; percentage
FY 08 FY 07 FY 08
Comparable Comparable Pricing FY 08
Sales Sales Impact Mix-Shift
Brinker Excluding
Macaroni Grill 0.3 (2.5) 3.0 0.4
Brinker International (0.5) (2.7) 2.9 0.5
Chili's 0.8 (2.4) 3.1 0.8
On The Border (3.3) (4.1) 2.5 (0.2)
Maggiano's 0.4 (1.7) 2.8 (1.9)
Macaroni Grill (4.4) (3.2) 2.2 1.1
Quarterly Operating Performance
Cost of sales, as a percent of revenues, increased from 27.9 percent in
the prior year to 28.6 percent in the fourth quarter of fiscal 2008. During
the quarter, cost of sales was negatively impacted by unfavorable commodity
prices, primarily beef, ribs, chicken and dairy products, and unfavorable
product mix shifts related to new menu items, partially offset by favorable
menu price changes.
Restaurant expenses, as a percent of revenues, increased to 55.8 percent
from 54.9 percent in the prior year primarily driven by increased labor
expenses due to increased wage rates and training at the restaurants,
restaurant supply costs and repair and maintenance expenses, partially offset
by lower pre-opening expenses.
Depreciation and amortization decreased $4.8 million primarily driven by
the classification of assets held for sale related to Macaroni Grill and
restaurant closures, partially offset by additional depreciation on remodels
and new restaurants.
Compared to the prior year, general and administrative expense decreased
$8.1 million for the quarter due to reduced salary and team member related
expenses resulting from the company's efforts to evolve its corporate
structure to align with the increased mix of franchise restaurants and the
expected decline in future company-owned restaurant development.
