EAT Brinker International Inc

DALLAS, Aug. 11 /PRNewswire-FirstCall/ -- Brinker International, Inc. (NYSE:EAT), reported net income of $49.8 million, or $0.55 diluted earnings per share, including certain charges and gains, for the company's fourth quarter ended June 29, 2005. Exclusive of the charges and gains, diluted earnings per share grew 8 percent to $0.71. For the same quarter of fiscal 2004, which had an additional operating week, the company reported net income of $63.7 million, or $0.62 diluted earnings per share, including restructuring charges. Exclusive of the restructuring charges, fiscal 2004 fourth quarter diluted earnings per share were $0.66. As previously reported in the May sales release, the company recorded a $15.9 million charge related to the correction of accounting policies associated with the accrual of vacation and utilities and a $6.6 million tax benefit resulting from a correction of the company's deferred tax liabilities. Additionally, the company recorded a $6.6 million charge resulting from the decision to close 15 restaurants and a $1.9 million gain resulting from the sale of all three Corner Bakery Cafe commissaries. Excluding the aforementioned after-tax charges and gains, net income and diluted earnings per share for the fourth quarter would have been as follows: Fourth Quarter FY '05 (in millions, except per share amounts) Net Income Diluted EPS As reported $49.8 $0.55 Utility and vacation correction 15.9 0.18 Deferred tax liability correction (6.6) (0.07) Store closure charge 6.6 0.07 Gain on sale of commissaries (1.9) (0.02) As Adjusted $63.8 $0.71 Other results for the fourth quarter and fiscal year 2005 included: -- The company and its franchisees opened 44 restaurants in the fourth quarter, bringing the total to 151 new restaurants in fiscal 2005. -- Brinker reported revenues for the 13-week period of $1,042.1 million, an increase of 2.3 percent compared with $1,018.2 million reported for the 14-week period of fiscal 2004, or an increase of 10.4 percent excluding revenues of $73.9 million for the additional operating week in fourth quarter fiscal 2004. These revenue gains were primarily driven by new restaurant development and a 3.7 percent increase in comparable store sales for all Brinker concepts. -- For the four reported brands, quarterly comparable store sales increased 4.2 percent at Chili's, 0.9 percent at Macaroni Grill, 4.4 percent at On the Border and 2.8 percent at Maggiano's. -- Brinker reported revenues for the 52 weeks of fiscal 2005 of $3,912.9 million, an increase of 5.5 percent compared with $3,707.5 million for the 53 weeks of fiscal 2004, or an increase of 7.7 percent excluding revenues of $73.9 million for the additional operating week in fourth quarter fiscal 2004. These revenue gains were primarily driven by new restaurant development and a 2.5 percent increase in comparable store sales for all Brinker concepts. -- For the four reported brands, fiscal 2005 comparable store sales increased 2.9 percent at Chili's, decreased 1.2 percent at Macaroni Grill, increased 5.6 percent at On the Border and increased 3.2 percent at Maggiano's. -- Net income for fiscal 2005 was $160.2 million or $1.73 diluted earnings per share, including charges and gains. Exclusive of the charges and gains, earnings per diluted share were $2.12. -- The company repurchased approximately 214,000 shares during the fourth quarter, bringing the total for fiscal 2005 to 5.0 million shares. At the end of the quarter, approximately $125.1 million was available under the company's share repurchase authorizations. June and July 2005 Comparable Store Sales For the four-week period ending June 29, 2005, comparable store sales increased 1.6 percent. June comparable store sales for the company and the four reported brands were as follows: June FY '05 June FY '04 Brinker 1.6 % 1.7 % Chili's 0.9 % 2.4 % Macaroni Grill 1.2 % -1.6 % On The Border 2.1 % 4.9 % Maggiano's 2.6 % -0.8 % June price increases and product mix-shifts for Brinker and the four reported brands were as follows: Price Increase Product Mix-Shift Brinker 3.1 % 1.2 % Chili's 3.5 % 1.7 % Macaroni Grill 2.1 % 0.3 % On The Border 1.8 % -0.1 % Maggiano's 1.7 % 0.0 % For the five-week period ended August 3, 2005, comparable store sales increased 3.5 percent. July comparable store sales for the company and the four reported brands were as follows: July FY '06 July FY '05 Brinker 3.5 % 2.6 % Chili's 5.4 % 2.4 % Macaroni Grill -1.3 % 0.4 % On The Border 0.4 % 9.7 % Maggiano's 1.6 % 0.1 % July price increases and product mix-shifts for Brinker and the four reported brands were as follows: Price Increase Product Mix-Shift Brinker 2.6 % 1.7 % Chili's 2.9 % 2.7 % Macaroni Grill 2.2 % -0.1 % On The Border 1.8 % -1.0 % Maggiano's 1.5 % 0.7 % First Quarter and Full Fiscal Year 2006 Forecast The company's initial estimate for its first quarter fiscal 2006 earnings per diluted share is $0.45 to $0.47, excluding equity-based compensation expense. Equity-based compensation expense for the first quarter is estimated to be approximately $10.4 million ($8.1 million after-tax), resulting in earnings per diluted share of $0.36 to $0.38. This assumes comparable store sales of 3 to 4 percent and weighted average shares of 91 to 92 million. The company anticipates full-year fiscal 2006 earnings per diluted share to be $2.40 to $2.46, excluding equity-based compensation expense. Equity- based compensation expense for the year is estimated to be approximately $31.0 to $33.0 million ($24.0 to $26.0 million after-tax), resulting in earnings per diluted share of $2.08 to $2.16. This assumes comparable store sales of 3 to 4 percent and weighted average shares of 90 to 91 million. The first quarter and full year guidance excludes gains and charges. August sales results will be published on September 8, 2005, after the market closes. 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. CDT today (Aug. 11). 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 September 7, 2005. At the end of the fourth quarter of fiscal 2005, Brinker International either owned, operated, franchised, or was involved in the ownership of 1,588 restaurants under the names Chili's Grill & Bar (1,074 units), Romano's Macaroni Grill (235 units), Maggiano's Little Italy (33 units), On The Border Mexican Grill & Cantina (135 units), Corner Bakery Cafe (90 units), and Rockfish Seafood Grill (21 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) 13 Weeks 14 Weeks 52 Weeks 53 Weeks Ended Ended Ended Ended June 29, June 30, June 29, June 30, 2005 2004 2005 2004 (Unaudited) (Unaudited) (Unaudited) Revenues $1,042,050 $1,018,176 $3,912,850 $3,707,486 Operating Costs and Expenses: Cost of sales 292,039 283,846 1,100,842 1,024,724 Restaurant expenses (a) 581,422 543,793 2,180,239 2,030,044 Depreciation and amortization 48,745 45,846 190,889 178,879 General and administrative (b) 43,002 43,892 156,151 153,231 Restructure charges and other impairments 10,673 5,702 63,422 74,237 Total operating costs and expenses 975,881 923,079 3,691,543 3,461,115 Operating income 66,169 95,097 221,307 246,371 Interest expense 5,221 2,630 25,368 11,603 Other, net (86) (231) 1,526 1,742 Income before provision for income taxes 61,034 92,698 194,413 233,026 Provision for income taxes (c) 11,271 29,018 34,194 82,108 Net income $49,763 $63,680 $160,219 $150,918 Basic net income per share $0.56 $0.67 $1.81 $1.57 Diluted net income per share $0.55 $0.62 $1.73 $1.48 Basic weighted average shares outstanding 88,746 94,854 88,530 96,072 Diluted weighted average shares outstanding 90,062 104,606 94,229 105,739 a) Current year restaurant expenses include: -- A $3.0 million gain recorded in the fourth quarter as a result of the sale of three commissaries. -- A $24.3 million charge recorded in the fourth quarter as a result of a correction in accounting policies associated with accruals of vacation and utilities. -- A $2.0 million gain recorded in the third quarter as a result of the sale of five Chili's to a franchise partner. -- A $17.3 million charge recorded in the second quarter related to the IRS resolution announced in December 2004. -- A $3.8 million gain recorded in the first quarter as a result of the sale of nine Chili's to a franchise partner. Prior year restaurant expenses include: -- A $2.4 million gain recorded in the second quarter as a result of the sale of four Chili's to a franchise partner and the sale of one real estate property. b) Current year general and administrative expenses include a $1.1 million charge recorded in the fourth quarter as a result of a correction in accounting policies associated with accruals of vacation and utilities. c) Current year-to-date provision for income taxes includes a $16.9 million benefit related to the IRS settlement and a $6.6 million tax benefit recorded in the fourth quarter associated with the correction of deferred tax liabilities. BRINKER INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) June 29, June 30, 2005 2004 (Unaudited) ASSETS Total current assets $240,179 $400,920 Net property and equipment 1,708,165 1,613,884 Total other assets 207,780 239,620 Total assets $2,156,124 $2,254,424 LIABILITIES AND SHAREHOLDERS' EQUITY Total current liabilities $419,917 $379,162 Long-term debt, less current installments 406,505 639,291 Other liabilities 229,420 225,549 Total shareholders' equity 1,100,282 1,010,422 Total liabilities and shareholders' equity $2,156,124 $2,254,424 BRINKER INTERNATIONAL, INC. UNITS SUMMARY Total Fourth Fourth Units Quarter Quarter Total Projected Fiscal Fiscal Units Openings 2005 2005 Mar. 30, Openings Sales/ June 29, Fiscal 2005 Closings 2005 2006 Company-Owned Units: Chili's 793 25 (7) 811 97-100 Macaroni Grill 219 4 (3) 220 6-7 Maggiano's 33 - - 33 4-5 On The Border 115 4 (2) 117 6-8 Corner Bakery 84 4 (1) 87 7-9 1,244 37 (13) 1,268 120-129 JV/Franchise Units: Chili's 258 5 - 263 25-30 Macaroni Grill 13 2 - 15 4-5 On The Border 18 - - 18 3-4 Corner Bakery 3 - - 3 0-1 Rockfish 21 - - 21 - 313 7 - 320 32-40 Total Units: Chili's 1,051 30 (7) 1,074 122-130 Macaroni Grill 232 6 (3) 235 10-12 Maggiano's 33 - - 33 4-5 On The Border 133 4 (2) 135 9-12 Corner Bakery 87 4 (1) 90 7-10 Rockfish 21 - - 21 0 1,557 44 (13) 1,588 152-169 DATASOURCE: Brinker International, Inc. CONTACT: Louis Adams, +1-972-770-4967, Chris Barnes, +1-972-770-4959, Media Relations, or Lynn Schweinfurth, Investor Relations, +1-972-770-7228 Web site: http://www.brinker.com/

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