UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 29, 1999
Commission File Number 1-10275
BRINKER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-1914582
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6820 LBJ FREEWAY, DALLAS, TEXAS 75240
(Address of principal executive offices)
(Zip Code)
(972) 980-9917
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Number of shares of common stock of registrant outstanding at
December 29, 1999: _65,149,868
BRINKER INTERNATIONAL, INC.
INDEX
Part I - Financial Information
Condensed Consolidated Balance Sheets -
December 29, 1999 (Unaudited) and June 30, 1999 3 - 4
Condensed Consolidated Statements of Income
(Unaudited) - Thirteen week and twenty-six week
periods ended December 29, 1999
and December 23, 1998 5
Condensed Consolidated Statements of Cash Flows
(Unaudited) - Twenty-six week periods ended
December 29, 1999 and December 23, 1998 6
Notes to Condensed Consolidated
Financial Statements (Unaudited) 7 - 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 14
Part II - Other Information 15 - 18
PART I. FINANCIAL INFORMATION
BRINKER INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 29, June 30,
1999 1999
ASSETS (Unaudited)
Current Assets:
Cash and Cash Equivalents $ 21,308 $ 12,597
Accounts Receivable 19,946 21,390
Inventories 16,687 15,050
Prepaid Expenses 46,985 46,431
Deferred Income Taxes 2,837 5,585
Other 4,095 2,097
Total Current Assets 111,858 103,150
Property and Equipment, at Cost:
Land 179,871 169,368
Buildings and Leasehold Improvements 694,703 650,000
Furniture and Equipment 367,188 351,729
Construction-in-Progress 69,918 46,186
1,311,680 1,217,283
Less Accumulated Depreciation
and Amortization 443,856 403,907
Net Property and Equipment 867,824 813,376
Other Assets:
Goodwill 73,068 74,190
Other 94,273 94,928
Total Other Assets 167,341 169,118
Total Assets $ 1,147,023 $ 1,085,644
(continued)
BRINKER INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
December 29, June 30,
1999 1999
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited)
Current Liabilities:
Current Installments of Long-term Debt $ 14,635 $ 14,635
Accounts Payable 66,273 74,100
Accrued Liabilities 109,958 101,384
Total Current Liabilities 190,866 190,119
Long-term Debt, Less Current Installments 212,990 183,158
Deferred Income Taxes 10,159 9,140
Other Liabilities 44,451 41,788
Commitments and Contingencies
Shareholders' Equity:
Preferred Stock - 1,000,000 Authorized
Shares; $1.00 Par Value; No Shares Issued - -
Common Stock - 250,000,000 Authorized
Shares; $.10 Par Value; 78,364,522
Shares Issued and 65,149,868 Shares
Outstanding at December 29, 1999, and
78,150,054 Shares Issued and 65,899,445
Shares Outstanding at June 30, 1999 7,836 7,815
Additional Paid-In Capital 290,532 285,448
Retained Earnings 595,446 542,918
893,814 836,181
Less:
Treasury Stock, at Cost (13,214,654
shares at December 29, 1999 and 12,250,609
shares at June 30, 1999) 201,015 174,742
Unearned Compensation 4,242 -
Total Shareholders' Equity 688,557 661,439
Total Liabilities and Shareholders'
Equity $ 1,147,023 $ 1,085,644
See accompanying notes to condensed consolidated financial
statements.
BRINKER INTERNATIONAL, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
13 Week Periods Ended 26 Week Periods Ended
Dec. 29, Dec. 23, Dec. 29, Dec. 23,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues $ 520,900 $ 443,975 $1,031,933 $ 876,076
Operating Costs and Expenses:
Cost of Sales 139,539 121,834 275,729 239,594
Restaurant Expenses 290,635 248,791 575,360 488,981
Depreciation and Amortization 22,784 19,530 44,901 38,523
General and Administrative 24,405 22,200 47,912 43,551
Total Operating Costs and Expenses 477,363 412,355 943,902 810,649
Operating Income 43,537 31,620 88,031 65,427
Interest Expense 3,120 2,327 5,518 4,389
Other, Net 1,486 2,330 2,072 3,417
Income Before Provision for
Income Taxes and Cumulative Effect
of Accounting Change 38,931 26,963 80,441 57,621
Provision for Income Taxes 13,509 9,356 27,913 19,994
Income Before Cumulative
Effect of Accounting Change 25,422 17,607 52,528 37,627
Cumulative Effect of Accounting Change - - - 6,407
Net Income $ 25,422 $ 17,607 $ 52,528 $ 31,220
Basic Earnings Per Share:
Income Before Cumulative Effect
of Accounting Change $ 0.39 $ 0.27 $ 0.80 $ 0.58
Cumulative Effect of
Accounting Change - - - 0.10
Basic Net Income Per Share $ 0.39 $ 0.27 $ 0.80 $ 0.48
Diluted Earnings Per Share:
Income Before Cumulative Effect
of Accounting Change $ 0.38 $ 0.26 $ 0.78 $ 0.56
Cumulative Effect of
Accounting Change - - - 0.10
Diluted Net Income Per Share $ 0.38 $ 0.26 $ 0.78 $ 0.46
Basic Weighted Average
Shares Outstanding 65,377 65,608 65,663 65,691
Diluted Weighted Average
Shares Outstanding 66,977 67,781 67,456 67,688
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
BRINKER INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
26 Week Periods Ended
December 29, December 23,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 52,528 $ 31,220
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Depreciation and Amortization 45,755 38,523
Deferred Income Taxes 3,767 2,700
Cumulative Effect of Accounting Change - 6,407
Changes in Assets and Liabilities:
Receivables (554) (301)
Inventories (1,637) (1,517)
Prepaid Expenses 1,603 (546)
Other Assets 891 1,233
Accounts Payable (7,827) 3,418
Accrued Liabilities 7,774 10,645
Other Liabilities 2,663 (384)
Net Cash Provided by Operating
Activities 104,963 91,398
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for Property and Equipment (98,933) (92,938)
Investment in Equity Method Investees (888) (3,509)
Net Advances to Affiliates - (15,878)
Net Cash Used in Investing Activities (99,821) (112,325)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings on Credit Facilities 29,832 40,345
Proceeds from Issuances of Treasury Stock 4,913 11,893
Purchases of Treasury Stock (31,176) (18,021)
Net Cash Provided by Financing Activities 3,569 34,217
Net Increase in Cash and Cash Equivalents 8,711 13,290
Cash and Cash Equivalents at Beginning
of Period 12,597 9,382
Cash and Cash Equivalents at End
of Period $ 21,308 $ 22,672
CASH PAID DURING THE PERIOD:
Interest, Net of Amounts Capitalized $ 4,914 $ 4,220
Income Taxes, Net of Refunds $ 28,680 $ 24,375
See accompanying notes to condensed consolidated financial
statements.
BRINKER INTERNATIONAL, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements of Brinker
International, Inc. and its wholly-owned subsidiaries
(collectively, the "Company") as of December 29, 1999 and June 30,
1999 and for the thirteen week and twenty-six week periods ended
December 29, 1999 and December 23, 1998, respectively, have been
prepared by the Company pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC"). The Company owns
and operates or franchises various restaurant concepts under the
names of Chili's Grill & Bar ("Chili's"), Romano's Macaroni Grill
("Macaroni Grill"), On The Border Mexican Grill & Cantina ("On The
Border"), Cozymel's Coastal Mexican Grill ("Cozymel's"),
Maggiano's Little Italy ("Maggiano's"), and Corner Bakery Cafe
("Corner Bakery"). In addition, the Company is involved in the
operation and development of the Eatzi's Market and Bakery
("Eatzi's"), Big Bowl, and Wildfire concepts.
The information furnished herein reflects all adjustments
(consisting only of normal recurring accruals and adjustments)
which are, in the opinion of management, necessary to fairly state
the operating results for the respective periods. However, these
operating results are not necessarily indicative of the results
expected for the full fiscal year. Certain information and
footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to SEC rules and
regulations. The notes to the condensed consolidated financial
statements should be read in conjunction with the notes to the
consolidated financial statements contained in the June 30, 1999
Form 10-K. Company management believes that the disclosures are
sufficient for interim financial reporting purposes.
Certain prior year amounts have been reclassified in the
accompanying condensed consolidated financial statements to
conform with current year presentation.
2. Commitments
In September 1999, the Company entered into a $25.0 million
equipment leasing facility. During fiscal 2000, the Company has
utilized $15.4 million of the facility. The facility, which is
accounted for as an operating lease, expires in fiscal 2006. The
Company guarantees a residual value related to the equipment of
approximately 87% of the total amount funded under the facility.
At the end of the lease term, the Company has the option to
purchase all of the leased equipment for an amount equal to the
unamortized lease balance, which amount will be no more than 75%
of the total amount funded under the facility.
In September 1999, the Company also entered into a $50.0 million
real estate leasing facility. During fiscal 2000, the Company has
utilized $3.9 million of the facility. The facility, which is
accounted for as an operating lease, expires in fiscal 2007. The
Company guarantees the residual value related to the properties,
which will be approximately 87% of the total amount funded under
the facility. At the end of the lease term, the Company has the
option to purchase all of the leased real estate for an amount
equal to the unamortized lease balance.
3. Preopening Costs
The Company elected early adoption of Statement of Position 98-5
("SOP 98-5"), "Reporting on the Costs of Start-Up Activities,"
retroactive to the first quarter of fiscal 1999. This new
accounting standard requires the Company to expense all start-up
and preopening costs as they are incurred. The Company previously
deferred such costs and amortized them over the twelve-month
period following the opening of each restaurant. The Condensed
Consolidated Statement of Income for the twenty-six week period
ended December 23, 1998 reflects the cumulative effect of this
accounting change, net of related income tax benefit.
4. Treasury Stock
The Company's Board of Directors previously approved a plan to
repurchase up to $110.0 million of the Company's common stock.
Pursuant to the plan and in accordance with applicable securities
regulations, the Company repurchased approximately 597,300 shares
of its common stock for approximately $13.7 million during the
second quarter of fiscal 2000, resulting in a cumulative
repurchase total of 4,275,000 shares of its common stock for
approximately $96.4 million. The Company's repurchase plan was
used by the Company to offset the dilutive effect of stock option
exercises and increase shareholder value. The repurchased common
stock is reflected as a reduction of shareholders' equity.
5. Long Term Incentive Plan
Pursuant to shareholder approval in November 1999, the Company
implemented the Long Term Incentive Plan (the "Plan") for certain
key employees, one component of which is the award of restricted
common stock in lieu of cash. During the second quarter of fiscal
2000, approximately 214,000 shares of restricted common stock were
awarded, the majority of which vests over a three-year period.
Unearned compensation was recorded at the date of award based on the
market value of the shares and is being recorded as compensation
expense over the vesting period. Unearned compensation related to
these shares, included as a separate component of shareholders'
equity, was approximately $4.2 million at December 29, 1999.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table sets forth selected operating data as a
percentage of total revenues for the periods indicated. All
information is derived from the accompanying condensed consolidated
statements of income.
<TABLE>
13 Week Periods Ended 26 Week Periods Ended
Dec. 29, Dec. 23, Dec. 29, Dec. 23,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Operating Costs and Expenses:
Cost of Sales 26.8% 27.4% 26.7% 27.3%
Restaurant Expenses 55.8% 56.0% 55.8% 55.8%
Depreciation and Amortization 4.4% 4.4% 4.4% 4.4%
General and Administrative 4.7% 5.0% 4.6% 5.0%
Total Operating Costs and Expenses 91.6% 92.9% 91.5% 92.5%
Operating Income 8.4% 7.1% 8.5% 7.5%
Interest Expense 0.6% 0.5% 0.5% 0.5%
Other, Net 0.3% 0.5% 0.2% 0.4%
Income Before Provision for Income
Taxes and Cumulative Effect of
Accounting Change 7.5% 6.1% 7.8% 6.6%
Provision for Income Taxes 2.6% 2.1% 2.7% 2.3%
Income Before Cumulative Effect
of Accounting Change 4.9% 4.0% 5.1% 4.3%
Cumulative Effect of Accounting Change - - - 0.7%
Net Income 4.9% 4.0% 5.1% 3.6%
</TABLE>
The following table details the number of restaurant openings
during the second quarter and year-to-date, as well as total
restaurants open at the end of the second quarter.
<TABLE>
Total Open at End
Second Quarter Openings Year-to-Date Openings of Second Quarter
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
2000 1999 2000 1999 2000 1999
<S> <C> <C> <C> <C> <C> <C>
Chili's:
Company-owned 8 5 20 15 454 429
Franchised 9 11 16 15 202 174
Total 17 16 36 30 656 603
Macaroni Grill:
Company-owned 3 3 9 8 137 119
Franchised -- -- -- -- 3 2
Total 3 3 9 8 140 121
On The Border:
Company-owned 5 2 10 7 77 57
Franchised 1 2 3 5 26 20
Total 6 4 13 12 103 77
Cozymel's -- 1 -- 1 13 13
Maggiano's 1 2 1 3 11 10
Corner Bakery:
Company-owned 4 11 6 15 55 45
Franchised 1 -- 1 -- 1 --
Total 5 11 7 15 56 45
Eatzi's -- 1 -- 2 5 5
Wildfire -- -- -- 1 3 2
Big Bowl -- 2 -- 2 4 4
Grand total 32 40 66 74 991 880
</TABLE>
REVENUES
Revenues for the second quarter of fiscal 2000 increased to $520.9
million, 17.3% over the $444.0 million generated for the same
quarter of fiscal 1999. Revenues for the twenty-six week period
ended December 29, 1999 rose 17.8% to $1,031.9 million from the
$876.1 million generated for the same period of fiscal 1999. The
increases are primarily attributable to a net increase of 74
company-owned restaurants since December 23, 1998 and an increase
in comparable store sales for the both the second quarter and year-
to-date of fiscal 2000 compared to fiscal 1999. The Company
increased its capacity (as measured in sales weeks) for the second
quarter and year-to-date of fiscal 2000 by 12.1% and 12.6%,
respectively, compared to the respective prior year periods.
Comparable store sales increased 5.2% and 5.3% for the second
quarter and year-to-date, respectively, from the same periods of
fiscal 1999. On a concept basis, comparable store sales increased
for the quarter and year-to-date compared to the same periods of
fiscal 1999 by 5.4% and 6.0% at Chili's, 4.5% and 3.8% at Macaroni
Grill, and 4.4% and 3.1% at On The Border, respectively. Menu
prices in the aggregate increased 1.5% in fiscal 2000 as compared
to fiscal 1999.
COSTS AND EXPENSES (as a percent of Revenues)
Cost of sales decreased for the second quarter and year-to-date of
fiscal 2000 as compared to the respective periods of fiscal 1999.
Improved purchasing leverage, menu price increases, and favorable
commodity price variances for poultry and dairy attributed to the
decrease in cost of sales for both the quarter and year-to-date.
These favorable variances were partially offset by unfavorable
product mix changes.
Restaurant expenses decreased in the second quarter and remained
flat for the first six months of fiscal 2000 compared to the
respective periods of fiscal 1999. Restaurant labor wage rates
were higher than in the prior year, but were fully offset by
increased sales leverage, improvements in labor productivity, and
menu price increases.
Depreciation and amortization remained flat for both the second
quarter and year-to-date of fiscal 2000 compared to the respective
periods of fiscal 1999. Depreciation and amortization decreases
resulted from the continued utilization of the equipment leasing
facilities, increased sales leverage and a declining depreciable
asset base for older units. Offsetting these decreases were
increases in depreciation related to new unit construction and
ongoing remodel costs.
General and administrative expenses decreased for both the second
quarter and year-to-date of fiscal 2000 compared to the respective
periods of fiscal 1999 as a result of the Company's continued focus
on controlling corporate expenditures relative to increasing
revenues and number of restaurants and increased sales leverage.
Interest expense increased in the second quarter and remained flat
for the first six months of fiscal 2000 compared with the
respective periods of fiscal 1999 primarily as a result of
increased borrowings on the Company's credit facilities primarily
used to fund the Company's continuing stock repurchase plan and a
decrease in the construction-in-progress balances subject to
interest capitalization. These increases were partially offset for
the second quarter and fully offset for year-to-date by increased
sales leverage as well as a decrease in the interest on senior
notes due to the scheduled repayment made in April 1999.
Other, net decreased for both the second quarter and year-to-date
of fiscal 2000 compared to the respective periods of fiscal 1999
primarily due to a decrease in the Company's share of net losses in
unconsolidated equity method investees.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
The cumulative effect of accounting change is the result of the
Company's early adoption of SOP 98-5 retroactive to the first
quarter of fiscal 1999 as discussed previously in the "Notes to
Condensed Consolidated Financial Statements" section. The
cumulative effect of this accounting change, net of income tax
benefit, was $6.4 million or $0.10 per diluted share. This new
accounting standard accelerates the Company's recognition of
preopening costs, but will benefit the post-opening results of new
restaurants.
NET INCOME AND NET INCOME PER SHARE
Net income for the second quarter and year-to-date of fiscal 2000
increased 44.4% and 68.3%, respectively, compared to the respective
periods of fiscal 1999. Diluted net income per share for the second
quarter and year-to-date of fiscal 2000 increased 46.2% and 69.6%,
respectively, compared to the respective periods of fiscal 1999.
Excluding the effects of the adoption of SOP 98-5 in the first
quarter of fiscal 1999, net income for the year-to-date period of
fiscal 2000 increased 39.6% from $37.6 million to $52.5 million and
diluted net income per share increased 39.3% from $.56 to $.78. The
increase in both net income and diluted net income per share before
consideration of the adoption of SOP 98-5 was mainly due to an
increase in revenues resulting from increases in capacity (as
measured in sales weeks), comparable store sales, and menu prices
and decreases in commodity prices and general and administrative
expenses. Diluted weighted average shares outstanding for the
second quarter decreased 1.2% compared to the prior year period due
to the effect of treasury stock repurchases, partially offset by
stock option exercises.
IMPACT OF INFLATION
The Company has not experienced a significant overall impact from
inflation. As operating expenses increase, the Company, to the
extent permitted by competition, recovers increased costs by
either increasing menu prices or reviewing, then implementing,
alternative products or processes.
LIQUIDITY AND CAPITAL RESOURCES
The working capital deficit decreased from $87.0 million at June
30, 1999 to $79.0 million at December 29, 1999. Net cash provided
by operating activities increased to $105.0 million for the second
quarter of fiscal 2000 from $91.4 million during the same period in
fiscal 1999 due to increased profitability, partially offset by the
timing of operational receipts and payments.
Long-term debt outstanding at December 29, 1999 consisted of $71.4
million of unsecured senior notes, $140.0 million of borrowings on
credit facilities, and obligations under capital leases. The
Company has credit facilities totaling $370.0 million and at
December 29, 1999, the Company had $228.3 million in available
funds from these facilities.
During the first quarter of fiscal 2000, the Company entered into a
$25.0 million equipment leasing facility. As of December 29, 1999,
$15.4 million of the facility had been utilized. In addition, the
Company entered into a $50.0 million real estate leasing facility.
As of December 29, 1999, $3.9 million of the facility had been
utilized. The remaining leasing facilities will be used to lease
equipment and real estate during the remainder of fiscal year 2000
and all of fiscal year 2001.
Capital expenditures consist of purchases of land for future
restaurant sites, new restaurants under construction, purchases of
new and replacement restaurant furniture and equipment, and ongoing
remodeling programs. Capital expenditures, net of amounts funded
under the respective equipment and real estate leasing facilities,
were $98.9 million for the first two quarters of fiscal 2000 as
compared to $92.9 million for the same period of fiscal 1999. The
amount of capital expenditures in the first half of fiscal 2000 was
essentially flat compared to the same period in fiscal 1999 due to
an almost equal number of restaurants being constructed or opened
during the respective periods. The Company estimates that its
capital expenditures during the third quarter will approximate $54
million. These capital expenditures will be funded from internal
operations, cash equivalents, and drawdowns on the Company's
available lines of credit.
The Company is not aware of any other event or trend which would
potentially affect its liquidity. In the event such a trend
develops, the Company believes that there are sufficient funds
available under its lines of credit and that it has strong internal
cash generating capabilities to adequately manage the expansion of
business.
YEAR 2000
The Company has addressed the potential business risks associated
with the Year 2000. Issues relating to the Year 2000 could have
arisen with the Company's vendors, franchise and joint venture
business partners, mission-critical systems, or mission-critical
equipment. As of the filing date of this report, the Year 2000
issue has not had a material adverse impact on the Company.
Some business risks associated with the Year 2000 issue may
remain. However, it is not anticipated that any future Year 2000
issues will have a material adverse effect on the Company's
business, consolidated financial position, results of operations,
or cash flows.
The enterprise-wide program has cost approximately $2.7 million
from inception in calendar year 1997 through December 29, 1999.
The Company estimates that the total cost of the program will be
approximately $3.0 million and that any remaining costs will be
incurred prior to the end of fiscal 2000. All estimated costs have
been budgeted and are expected to be funded by the Company's
available cash.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest
rates on debt and changes in commodity prices.
The Company's net exposure to interest rate risk consists of
floating rate instruments that are benchmarked to U.S. and
European short-term interest rates. The Company may from time to
time utilize interest rate swaps and forwards to manage overall
borrowing costs and reduce exposure to adverse fluctuations in
interest rates. The Company does not use derivative instruments
for trading purposes and the Company has procedures in place to
monitor and control derivative use. The impact on the Company's
results of operations of a one-point interest rate change on the
outstanding balance of the variable rate debt as of December 29,
1999 would be immaterial.
The Company purchases certain commodities such as beef, chicken,
flour and cooking oil. These commodities are generally purchased
based upon market prices established with vendors. The purchase
arrangements may contain contractual features that limit the price
paid by establishing certain price floors or caps. The Company
does not use financial instruments to hedge commodity prices
because these purchase arrangements help control the ultimate cost
paid and any commodity price aberrations that are not covered by
contracts are generally short term in nature.
This market risk discussion contains forward-looking statements.
Actual results may differ materially from this discussion based
upon general market conditions and changes in domestic and global
financial markets.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 133 ("SFAS
No. 133"), "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 establishes accounting and reporting
standards for derivative instruments and hedging activities. In
June 1999, the FASB issued Statement of Financial Accounting
Standards No. 137 ("SFAS No. 137"), "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133," which defers the effective date
of SFAS No. 133 until the Company's first quarter financial
statements in fiscal 2001. The Company is not currently involved
in derivative instruments or hedging activities, and therefore,
will measure the impact of SFAS No. 133 as it becomes necessary.
FORWARD-LOOKING STATEMENTS
Certain statements contained herein are forward-looking regarding
future economic performance, restaurant openings, operating
margins, the availability of acceptable real estate locations for
new restaurants, the sufficiency of cash balances and cash
generated from operating and financing activities for future
liquidity and capital resource needs, and other matters. These
forward-looking statements involve risks and uncertainties and,
consequently, could be affected by general business conditions,
the impact of competition, the seasonality of the Company's
business, governmental regulations, inflation, changes in economic
conditions, consumer perceptions of food safety, changes in
consumer tastes, governmental monetary policies, changes in
demographic trends, identification and availability of suitable
and economically viable locations for new restaurants, food and
labor costs, availability of materials and employees, or weather
and other acts of God.
PART II. OTHER INFORMATION
Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Proxy Statement dated September 24, 1999 for the
Annual Meeting of Shareholders held on November 4, 1999, as filed
with the Securities and Exchange Commission on September 24, 1999,
is incorporated herein by reference.
(a) The Annual Meeting of Shareholders of the Company was held on
November 4, 1999.
(b) Each of the management's nominees, as described in the Proxy
Statement referenced above, was elected a director to hold office
until the next Annual Meeting of Shareholders or until his or her
successor is elected and qualified.
Votes Against or
Votes For Withheld
Norman E. Brinker 59,152,070 606,040
Ronald A. McDougall 59,152,286 605,824
Douglas H. Brooks 59,188,970 569,140
Donald J. Carty 59,185,224 572,886
Dan W. Cook III 58,593,026 1,165,084
Marvin J. Girouard 58,627,353 1,130,757
J.M. Haggar, Jr. 59,142,291 615,819
Frederick S. Humphries 59,152,008 606,102
Ron Kirk 59,182,176 575,934
Jeffrey A. Marcus 59,186,369 571,741
James E. Oesterreicher 59,150,773 607,337
Roger T. Staubach 59,149,346 608,764
(c) The following matters were also voted upon at the meeting
and approved by the shareholders:
(i) re-approval of the Company's Profit Sharing Plan
Number of Affirmative Votes Cast Number of Negative Votes Cast
58,927,343 781,084
Number of Abstain Votes Cast
49,683
(ii) approval of the Company's Executive Long-Term Incentive
Plan
Number of Affirmative Votes Cast Number of Negative Votes Cast
58,834,455 867,489
Number of Abstain Votes Cast
56,166
(iii) approval of the Company's 1999 Stock Option and Incentive
Plan for Non-Employee Directors and Consultants
Number of Affirmative Votes Cast Number of Negative Votes Cast
46,559,086 13,137,164
Number of Abstain Votes Cast
61,860
Item 6: EXHIBITS
Exhibit 27 Financial Data Schedules. Filed with EDGAR version.
(a) Financial Data Schedule as of and for the 26-week period ended
December 29, 1999.
(b) Restated Financial Data Schedule as of and for the 26-week
period ended December 23, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
BRINKER INTERNATIONAL, INC.
Date: February 10, 2000 By:____________________________________
Ronald A. McDougall, Vice Chairman
and Chief Executive Officer
(Duly Authorized Signatory)
Date: February 10, 2000 By:_____________________________________
Russell G. Owens, Executive Vice
President and Chief Financial
and Strategic Officer
(Principal Financial and Accounting
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND RELATED CONDENSED CONSOLIDATED
STATEMENT OF INCOME OF BRINKER INTERNATIONAL, INC. AS OF AND FOR THE 26-WEEK
PERIOD ENDED DECEMBER 29, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-29-1999
<CASH> 21,308
<SECURITIES> 0
<RECEIVABLES> 24,404
<ALLOWANCES> (363)
<INVENTORY> 16,687
<CURRENT-ASSETS> 111,858
<PP&E> 1,311,680
<DEPRECIATION> (443,856)
<TOTAL-ASSETS> 1,147,023
<CURRENT-LIABILITIES> 190,866
<BONDS> 212,990
0
0
<COMMON> 7,836
<OTHER-SE> 680,721
<TOTAL-LIABILITY-AND-EQUITY> 1,147,023
<SALES> 1,021,199
<TOTAL-REVENUES> 1,031,933
<CGS> 275,729
<TOTAL-COSTS> 895,990
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 469
<INTEREST-EXPENSE> 5,518
<INCOME-PRETAX> 80,441
<INCOME-TAX> 27,913
<INCOME-CONTINUING> 52,528
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,528
<EPS-BASIC> 0.80
<EPS-DILUTED> 0.78
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND RELATED CONDENSED CONSOLIDATED
STATEMENT OF INCOME OF BRINKER INTERNATIONAL, INC. AS OF AND FOR THE 26-WEEK
PERIOD ENDED DECEMBER 23, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-23-1998
<CASH> 22,672<F1>
<SECURITIES> 0
<RECEIVABLES> 22,123<F1>
<ALLOWANCES> (221)
<INVENTORY> 15,291
<CURRENT-ASSETS> 102,595<F1>
<PP&E> 1,132,472<F2>
<DEPRECIATION> (371,305)
<TOTAL-ASSETS> 1,046,459<F1><F2>
<CURRENT-LIABILITIES> 188,207<F1>
<BONDS> 187,616
0
0
<COMMON> 7,815
<OTHER-SE> 611,016<F2>
<TOTAL-LIABILITY-AND-EQUITY> 1,046,459<F1><F2>
<SALES> 867,055
<TOTAL-REVENUES> 876,076
<CGS> 239,594
<TOTAL-COSTS> 767,098<F2>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 313
<INTEREST-EXPENSE> 4,389
<INCOME-PRETAX> 57,621<F2>
<INCOME-TAX> 16,590<F2>
<INCOME-CONTINUING> 37,627<F2>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 6,407<F2>
<NET-INCOME> 31,220<F2>
<EPS-BASIC> 0.48<F2>
<EPS-DILUTED> 0.46<F2>
<FN>
<F1>Restated to reflect reclassifications in the condensed consolidated
financial statements to conform with current year presentation.
<F2>Restated to reflect the adoption of Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities."
</FN>
</TABLE>
