DELAWARE
|
|
75-1914582
|
(State or other jurisdiction of
incorporation or organization)
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|
(I.R.S. Employer
Identification No.)
|
|
|
|
6820 LBJ FREEWAY, DALLAS, TEXAS
|
|
75240
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(Address of principal executive offices)
|
|
(Zip Code)
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(972) 980-9917
|
||
(Registrant’s telephone number, including area code)
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Large accelerated filer
|
x
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|
Accelerated filer
|
o
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Non-accelerated filer
|
o
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(Do not check if a smaller reporting company)
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Smaller reporting company
|
o
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|
|
|
Emerging growth company
|
o
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Class
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Outstanding at April 30, 2018
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Common Stock, $0.10 par value
|
43,853,794 shares
|
|
Page
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|
|
|
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|
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March 28,
2018 |
|
June 28,
2017 |
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
13,400
|
|
|
$
|
9,064
|
|
Accounts receivable, net
|
44,336
|
|
|
44,658
|
|
||
Inventories
|
24,407
|
|
|
24,997
|
|
||
Restaurant supplies
|
46,685
|
|
|
46,380
|
|
||
Prepaid expenses
|
15,191
|
|
|
19,226
|
|
||
Total current assets
|
144,019
|
|
|
144,325
|
|
||
Property and Equipment, at Cost:
|
|
|
|
||||
Land
|
149,150
|
|
|
149,098
|
|
||
Buildings and leasehold improvements
|
1,673,950
|
|
|
1,655,227
|
|
||
Furniture and equipment
|
719,924
|
|
|
713,228
|
|
||
Construction-in-progress
|
10,563
|
|
|
21,767
|
|
||
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2,553,587
|
|
|
2,539,320
|
|
||
Less accumulated depreciation and amortization
|
(1,609,722
|
)
|
|
(1,538,706
|
)
|
||
Net property and equipment
|
943,865
|
|
|
1,000,614
|
|
||
Other Assets:
|
|
|
|
||||
Goodwill
|
164,011
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|
|
163,953
|
|
||
Deferred income taxes, net
|
29,239
|
|
|
37,029
|
|
||
Intangibles, net
|
24,744
|
|
|
27,512
|
|
||
Other
|
31,001
|
|
|
30,200
|
|
||
Total other assets
|
248,995
|
|
|
258,694
|
|
||
Total assets
|
$
|
1,336,879
|
|
|
$
|
1,403,633
|
|
LIABILITIES AND SHAREHOLDERS’ DEFICIT
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Current installments of long-term debt
|
$
|
7,301
|
|
|
$
|
9,649
|
|
Accounts payable
|
97,166
|
|
|
104,231
|
|
||
Gift card liability
|
126,627
|
|
|
126,482
|
|
||
Accrued payroll
|
75,995
|
|
|
70,281
|
|
||
Other accrued liabilities
|
139,051
|
|
|
111,515
|
|
||
Income taxes payable
|
2,857
|
|
|
14,203
|
|
||
Total current liabilities
|
448,997
|
|
|
436,361
|
|
||
Long-term debt, less current installments
|
1,361,705
|
|
|
1,319,829
|
|
||
Other liabilities
|
134,719
|
|
|
141,124
|
|
||
Commitments and Contingencies (Note 11)
|
|
|
|
||||
Shareholders’ Deficit:
|
|
|
|
||||
Common stock - 250,000,000 authorized shares; $0.10 par value; 176,246,649 shares issued and 43,843,747 shares outstanding at March 28, 2018 and 176,246,649 shares issued and 48,440,721 shares outstanding at June 28, 2017
|
17,625
|
|
|
17,625
|
|
||
Additional paid-in capital
|
509,479
|
|
|
502,074
|
|
||
Accumulated other comprehensive loss
|
(5,445
|
)
|
|
(11,921
|
)
|
||
Retained earnings
|
2,655,387
|
|
|
2,627,073
|
|
||
|
3,177,046
|
|
|
3,134,851
|
|
||
Less treasury stock, at cost (132,402,902 shares at March 28, 2018 and 127,805,928 shares at June 28, 2017)
|
(3,785,588
|
)
|
|
(3,628,532
|
)
|
||
Total shareholders’ deficit
|
(608,542
|
)
|
|
(493,681
|
)
|
||
Total liabilities and shareholders’ deficit
|
$
|
1,336,879
|
|
|
$
|
1,403,633
|
|
|
Thirteen Week Period Ended
|
|
Thirty-Nine Week Period Ended
|
||||||||||||
|
March 28,
2018 |
|
March 29,
2017 |
|
March 28,
2018 |
|
March 29,
2017 |
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Company sales
|
$
|
790,495
|
|
|
$
|
790,624
|
|
|
$
|
2,250,125
|
|
|
$
|
2,276,743
|
|
Franchise and other revenues
|
22,039
|
|
|
20,017
|
|
|
68,199
|
|
|
63,433
|
|
||||
Total revenues
|
812,534
|
|
|
810,641
|
|
|
2,318,324
|
|
|
2,340,176
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Company restaurants (excluding depreciation and amortization)
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
207,328
|
|
|
201,903
|
|
|
587,808
|
|
|
587,742
|
|
||||
Restaurant labor
|
265,367
|
|
|
261,632
|
|
|
766,858
|
|
|
760,894
|
|
||||
Restaurant expenses
|
190,205
|
|
|
192,372
|
|
|
566,983
|
|
|
582,146
|
|
||||
Company restaurant expenses
|
662,900
|
|
|
655,907
|
|
|
1,921,649
|
|
|
1,930,782
|
|
||||
Depreciation and amortization
|
37,553
|
|
|
39,335
|
|
|
113,728
|
|
|
117,526
|
|
||||
General and administrative
|
36,619
|
|
|
35,931
|
|
|
102,065
|
|
|
102,014
|
|
||||
Other gains and charges
|
2,752
|
|
|
6,600
|
|
|
25,167
|
|
|
13,984
|
|
||||
Total operating costs and expenses
|
739,824
|
|
|
737,773
|
|
|
2,162,609
|
|
|
2,164,306
|
|
||||
Operating income
|
72,710
|
|
|
72,868
|
|
|
155,715
|
|
|
175,870
|
|
||||
Interest expense
|
14,549
|
|
|
13,658
|
|
|
42,754
|
|
|
36,108
|
|
||||
Other, net
|
(755
|
)
|
|
(402
|
)
|
|
(2,246
|
)
|
|
(1,084
|
)
|
||||
Income before provision for income taxes
|
58,916
|
|
|
59,612
|
|
|
115,207
|
|
|
140,846
|
|
||||
Provision for income taxes
|
12,000
|
|
|
17,243
|
|
|
33,048
|
|
|
40,607
|
|
||||
Net income
|
$
|
46,916
|
|
|
$
|
42,369
|
|
|
$
|
82,159
|
|
|
$
|
100,239
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net income per share
|
$
|
1.03
|
|
|
$
|
0.87
|
|
|
$
|
1.76
|
|
|
$
|
1.96
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per share
|
$
|
1.02
|
|
|
$
|
0.86
|
|
|
$
|
1.74
|
|
|
$
|
1.93
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares outstanding
|
45,433
|
|
|
48,954
|
|
|
46,719
|
|
|
51,211
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted weighted average shares outstanding
|
45,973
|
|
|
49,506
|
|
|
47,195
|
|
|
51,854
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
$
|
(243
|
)
|
|
$
|
734
|
|
|
$
|
577
|
|
|
$
|
(1,411
|
)
|
Other comprehensive income (loss)
|
(243
|
)
|
|
734
|
|
|
577
|
|
|
(1,411
|
)
|
||||
Comprehensive income
|
$
|
46,673
|
|
|
$
|
43,103
|
|
|
$
|
82,736
|
|
|
$
|
98,828
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends per share
|
$
|
0.38
|
|
|
$
|
0.34
|
|
|
$
|
1.14
|
|
|
$
|
1.02
|
|
|
Thirty-Nine Week Period Ended
|
||||||
|
March 28,
2018 |
|
March 29,
2017 |
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
82,159
|
|
|
$
|
100,239
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
113,728
|
|
|
117,526
|
|
||
Stock-based compensation
|
11,037
|
|
|
13,237
|
|
||
Deferred income taxes, net
|
7,788
|
|
|
(8,684
|
)
|
||
Restructure charges and other impairments
|
16,047
|
|
|
8,837
|
|
||
Net loss (gain) on disposal of assets
|
1,360
|
|
|
(628
|
)
|
||
Undistributed loss (earnings) on equity investments
|
330
|
|
|
(82
|
)
|
||
Other
|
2,431
|
|
|
2,082
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
2,710
|
|
|
11,078
|
|
||
Inventories
|
(128
|
)
|
|
(1,386
|
)
|
||
Restaurant supplies
|
(1,118
|
)
|
|
(1,338
|
)
|
||
Prepaid expenses
|
3,915
|
|
|
3,273
|
|
||
Other assets
|
(148
|
)
|
|
(340
|
)
|
||
Accounts payable
|
290
|
|
|
(7,487
|
)
|
||
Gift card liability
|
145
|
|
|
9,109
|
|
||
Accrued payroll
|
5,708
|
|
|
4,592
|
|
||
Other accrued liabilities
|
6,679
|
|
|
10,576
|
|
||
Current income taxes
|
(10,961
|
)
|
|
(14,603
|
)
|
||
Other liabilities
|
(4,270
|
)
|
|
(338
|
)
|
||
Net cash provided by operating activities
|
237,702
|
|
|
245,663
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Payments for property and equipment
|
(69,503
|
)
|
|
(79,730
|
)
|
||
Proceeds from sale of assets
|
14,825
|
|
|
3,077
|
|
||
Insurance recoveries
|
1,747
|
|
|
—
|
|
||
Proceeds from note receivable
|
1,185
|
|
|
—
|
|
||
Net cash used in investing activities
|
(51,746
|
)
|
|
(76,653
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Borrowings on revolving credit facility
|
524,000
|
|
|
200,000
|
|
||
Payments on revolving credit facility
|
(484,000
|
)
|
|
(328,000
|
)
|
||
Purchases of treasury stock
|
(162,004
|
)
|
|
(350,768
|
)
|
||
Payments of dividends
|
(53,098
|
)
|
|
(54,087
|
)
|
||
Payments on long-term debt
|
(7,834
|
)
|
|
(2,847
|
)
|
||
Proceeds from issuances of treasury stock
|
1,316
|
|
|
4,505
|
|
||
Proceeds from issuance of long-term debt
|
—
|
|
|
350,000
|
|
||
Payments for debt issuance costs
|
—
|
|
|
(10,216
|
)
|
||
Net cash used in financing activities
|
(181,620
|
)
|
|
(191,413
|
)
|
||
Net change in cash and cash equivalents
|
4,336
|
|
|
(22,403
|
)
|
||
Cash and cash equivalents at beginning of period
|
9,064
|
|
|
31,446
|
|
||
Cash and cash equivalents at end of period
|
$
|
13,400
|
|
|
$
|
9,043
|
|
|
Thirteen Week Period Ended
|
|
Thirty-Nine Week Period Ended
|
||||||||
|
March 28, 2018
|
|
March 29, 2017
|
|
March 28, 2018
|
|
March 29, 2017
|
||||
Basic weighted average shares outstanding
|
45,433
|
|
|
48,954
|
|
|
46,719
|
|
|
51,211
|
|
Dilutive stock options
|
115
|
|
|
168
|
|
|
98
|
|
|
212
|
|
Dilutive restricted shares
|
425
|
|
|
384
|
|
|
378
|
|
|
431
|
|
|
540
|
|
|
552
|
|
|
476
|
|
|
643
|
|
Diluted weighted average shares outstanding
|
45,973
|
|
|
49,506
|
|
|
47,195
|
|
|
51,854
|
|
|
|
|
|
|
|
|
|
||||
Awards excluded due to anti-dilutive effect on diluted net income per share
|
974
|
|
|
993
|
|
|
1,260
|
|
|
970
|
|
|
Thirteen Week Period Ended March 28, 2018
|
|
Thirty-Nine Week Period Ended March 28, 2018
|
||||
Income tax expense at statutory rate
|
$
|
16,555
|
|
|
$
|
32,373
|
|
FICA tax credit
|
(7,087
|
)
|
|
(13,857
|
)
|
||
State income taxes, net of federal benefit
|
2,284
|
|
|
4,467
|
|
||
Stock based compensation excess tax (windfall) shortfall
|
(43
|
)
|
|
1,127
|
|
||
Revaluation of deferred taxes
|
(321
|
)
|
|
8,417
|
|
||
Other
|
612
|
|
|
521
|
|
||
|
$
|
12,000
|
|
|
$
|
33,048
|
|
|
Thirteen Week Period Ended
|
|
Thirty-Nine Week Period Ended
|
||||||||||||
|
March 28,
2018 |
|
March 29,
2017 |
|
March 28,
2018 |
|
March 29,
2017 |
||||||||
Restaurant closure charges
|
$
|
2,777
|
|
|
$
|
794
|
|
|
$
|
7,321
|
|
|
$
|
3,621
|
|
Lease guarantee charges
|
510
|
|
|
—
|
|
|
1,943
|
|
|
—
|
|
||||
Accelerated depreciation
|
483
|
|
|
—
|
|
|
1,449
|
|
|
—
|
|
||||
Hurricane-related costs
|
240
|
|
|
—
|
|
|
5,460
|
|
|
—
|
|
||||
Foreign currency transaction gain
|
(948
|
)
|
|
—
|
|
|
(66
|
)
|
|
—
|
|
||||
Restaurant impairment charges
|
—
|
|
|
—
|
|
|
9,133
|
|
|
1,851
|
|
||||
Gain on the sale of assets, net
|
—
|
|
|
(55
|
)
|
|
(303
|
)
|
|
(2,624
|
)
|
||||
Severance
|
—
|
|
|
5,929
|
|
|
—
|
|
|
6,222
|
|
||||
Information technology restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
2,700
|
|
||||
Other
|
(310
|
)
|
|
(68
|
)
|
|
230
|
|
|
2,214
|
|
||||
|
$
|
2,752
|
|
|
$
|
6,600
|
|
|
$
|
25,167
|
|
|
$
|
13,984
|
|
|
Thirteen Week Period Ended March 28, 2018
|
||||||||||||||
|
Chili’s
|
|
Maggiano’s
|
|
Other
|
|
Consolidated
|
||||||||
Company sales
|
$
|
688,879
|
|
|
$
|
101,616
|
|
|
$
|
—
|
|
|
$
|
790,495
|
|
Franchise and other revenues
|
17,204
|
|
|
4,835
|
|
|
—
|
|
|
22,039
|
|
||||
Total revenues
|
706,083
|
|
|
106,451
|
|
|
—
|
|
|
812,534
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Company restaurant expenses
|
572,812
|
|
|
89,991
|
|
|
97
|
|
|
662,900
|
|
||||
Depreciation and amortization
|
31,011
|
|
|
3,957
|
|
|
2,585
|
|
|
37,553
|
|
||||
General and administrative
|
10,601
|
|
|
1,420
|
|
|
24,598
|
|
|
36,619
|
|
||||
Other gains and charges
|
(75
|
)
|
|
6
|
|
|
2,821
|
|
|
2,752
|
|
||||
Total operating costs and expenses
|
614,349
|
|
|
95,374
|
|
|
30,101
|
|
|
739,824
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
91,734
|
|
|
11,077
|
|
|
(30,101
|
)
|
|
72,710
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
14,549
|
|
|
14,549
|
|
||||
Other, net
|
—
|
|
|
—
|
|
|
(755
|
)
|
|
(755
|
)
|
||||
Income (loss) before provision for income taxes
|
$
|
91,734
|
|
|
$
|
11,077
|
|
|
$
|
(43,895
|
)
|
|
$
|
58,916
|
|
|
Thirteen Week Period Ended March 29, 2017
|
||||||||||||||
|
Chili’s
|
|
Maggiano’s
|
|
Other
|
|
Consolidated
|
||||||||
Company sales
|
$
|
689,662
|
|
|
$
|
100,962
|
|
|
$
|
—
|
|
|
$
|
790,624
|
|
Franchise and other revenues
|
15,224
|
|
|
4,793
|
|
|
—
|
|
|
20,017
|
|
||||
Total revenues
|
704,886
|
|
|
105,755
|
|
|
—
|
|
|
810,641
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Company restaurant expenses
|
565,327
|
|
|
90,454
|
|
|
126
|
|
|
655,907
|
|
||||
Depreciation and amortization
|
32,386
|
|
|
4,078
|
|
|
2,871
|
|
|
39,335
|
|
||||
General and administrative
|
8,771
|
|
|
1,624
|
|
|
25,536
|
|
|
35,931
|
|
||||
Other gains and charges
|
4,233
|
|
|
—
|
|
|
2,367
|
|
|
6,600
|
|
||||
Total operating costs and expenses
|
610,717
|
|
|
96,156
|
|
|
30,900
|
|
|
737,773
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
94,169
|
|
|
9,599
|
|
|
(30,900
|
)
|
|
72,868
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
13,658
|
|
|
13,658
|
|
||||
Other, net
|
—
|
|
|
—
|
|
|
(402
|
)
|
|
(402
|
)
|
||||
Income (loss) before provision for income taxes
|
$
|
94,169
|
|
|
$
|
9,599
|
|
|
$
|
(44,156
|
)
|
|
$
|
59,612
|
|
|
Thirty-Nine Week Period Ended March 28, 2018
|
||||||||||||||
|
Chili’s
|
|
Maggiano’s
|
|
Other
|
|
Consolidated
|
||||||||
Company sales
|
$
|
1,940,076
|
|
|
$
|
310,049
|
|
|
$
|
—
|
|
|
$
|
2,250,125
|
|
Franchise and other revenues
|
51,992
|
|
|
16,207
|
|
|
—
|
|
|
68,199
|
|
||||
Total revenues
|
1,992,068
|
|
|
326,256
|
|
|
—
|
|
|
2,318,324
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Company restaurant expenses
|
1,648,094
|
|
|
273,187
|
|
|
368
|
|
|
1,921,649
|
|
||||
Depreciation and amortization
|
93,818
|
|
|
12,029
|
|
|
7,881
|
|
|
113,728
|
|
||||
General and administrative
|
29,443
|
|
|
4,202
|
|
|
68,420
|
|
|
102,065
|
|
||||
Other gains and charges
|
17,994
|
|
|
777
|
|
|
6,396
|
|
|
25,167
|
|
||||
Total operating costs and expenses
|
1,789,349
|
|
|
290,195
|
|
|
83,065
|
|
|
2,162,609
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
202,719
|
|
|
36,061
|
|
|
(83,065
|
)
|
|
155,715
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
42,754
|
|
|
42,754
|
|
||||
Other, net
|
—
|
|
|
—
|
|
|
(2,246
|
)
|
|
(2,246
|
)
|
||||
Income (loss) before provision for income taxes
|
$
|
202,719
|
|
|
$
|
36,061
|
|
|
$
|
(123,573
|
)
|
|
$
|
115,207
|
|
|
|
|
|
|
|
|
|
||||||||
Segment assets
|
$
|
1,126,650
|
|
|
$
|
151,649
|
|
|
$
|
58,580
|
|
|
$
|
1,336,879
|
|
Payments for property and equipment
|
58,613
|
|
|
5,590
|
|
|
5,300
|
|
|
69,503
|
|
|
Thirty-Nine Week Period Ended March 29, 2017
|
||||||||||||||
|
Chili’s
|
|
Maggiano’s
|
|
Other
|
|
Consolidated
|
||||||||
Company sales
|
$
|
1,970,390
|
|
|
$
|
306,353
|
|
|
$
|
—
|
|
|
$
|
2,276,743
|
|
Franchise and other revenues
|
47,417
|
|
|
16,016
|
|
|
—
|
|
|
63,433
|
|
||||
Total revenues
|
2,017,807
|
|
|
322,369
|
|
|
—
|
|
|
2,340,176
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Company restaurant expenses
|
1,658,067
|
|
|
272,137
|
|
|
578
|
|
|
1,930,782
|
|
||||
Depreciation and amortization
|
97,630
|
|
|
12,019
|
|
|
7,877
|
|
|
117,526
|
|
||||
General and administrative
|
28,115
|
|
|
4,836
|
|
|
69,063
|
|
|
102,014
|
|
||||
Other gains and charges
|
9,102
|
|
|
746
|
|
|
4,136
|
|
|
13,984
|
|
||||
Total operating costs and expenses
|
1,792,914
|
|
|
289,738
|
|
|
81,654
|
|
|
2,164,306
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
224,893
|
|
|
32,631
|
|
|
(81,654
|
)
|
|
175,870
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
36,108
|
|
|
36,108
|
|
||||
Other, net
|
—
|
|
|
—
|
|
|
(1,084
|
)
|
|
(1,084
|
)
|
||||
Income (loss) before provision for income taxes
|
$
|
224,893
|
|
|
$
|
32,631
|
|
|
$
|
(116,678
|
)
|
|
$
|
140,846
|
|
|
|
|
|
|
|
|
|
||||||||
Payments for property and equipment
|
$
|
60,770
|
|
|
$
|
10,673
|
|
|
$
|
8,287
|
|
|
$
|
79,730
|
|
|
March 28,
2018 |
|
June 28,
2017 |
||||
Revolving credit facility
|
$
|
432,250
|
|
|
$
|
392,250
|
|
5.00% notes
|
350,000
|
|
|
350,000
|
|
||
3.88% notes
|
300,000
|
|
|
300,000
|
|
||
2.60% notes
|
250,000
|
|
|
250,000
|
|
||
Capital lease obligations
|
43,667
|
|
|
45,417
|
|
||
Total long-term debt
|
1,375,917
|
|
|
1,337,667
|
|
||
Less unamortized debt issuance costs and discounts
|
(6,911
|
)
|
|
(8,189
|
)
|
||
Total long-term debt less unamortized debt issuance costs and discounts
|
1,369,006
|
|
|
1,329,478
|
|
||
Less current installments
|
(7,301
|
)
|
|
(9,649
|
)
|
||
|
$
|
1,361,705
|
|
|
$
|
1,319,829
|
|
|
March 28,
2018 |
|
June 28,
2017 |
||||
Insurance
|
$
|
18,143
|
|
|
$
|
17,484
|
|
Sales tax
|
17,174
|
|
|
12,494
|
|
||
Dividends
|
16,839
|
|
|
16,649
|
|
||
Interest
|
16,628
|
|
|
7,696
|
|
||
Property tax
|
13,952
|
|
|
16,566
|
|
||
Deferred sale proceeds
(1)
|
13,706
|
|
|
—
|
|
||
Other
(2)
|
42,609
|
|
|
40,626
|
|
||
|
$
|
139,051
|
|
|
$
|
111,515
|
|
(1)
|
Deferred sale proceeds relates to the corporate headquarters sale, please see
Note 4 - Other Gains and Charges
for further details.
|
(2)
|
Other primarily consists of reserves for restaurant closure activities, certain lease reserves (see
Note 11 - Contingencies
for details), accruals for utilities and services, banquet deposits for Maggiano’s events, and the current portion of straight-line rent and landlord contributions.
|
|
March 28,
2018 |
|
June 28,
2017 |
||||
Straight-line rent
|
$
|
56,115
|
|
|
$
|
57,464
|
|
Insurance
|
42,138
|
|
|
42,532
|
|
||
Landlord contributions
|
23,527
|
|
|
26,402
|
|
||
Unfavorable leases
|
3,948
|
|
|
5,398
|
|
||
Unrecognized tax benefits
|
3,102
|
|
|
3,116
|
|
||
Other
|
5,889
|
|
|
6,212
|
|
||
|
$
|
134,719
|
|
|
$
|
141,124
|
|
•
|
Level 1 – inputs are quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 – inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities.
|
•
|
Level 3 – inputs are unobservable and reflect our own assumptions.
|
|
March 28, 2018
|
|
June 28, 2017
|
||||||||||||
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
2.60% Notes
|
$
|
249,928
|
|
|
$
|
249,800
|
|
|
$
|
249,495
|
|
|
$
|
250,480
|
|
3.88% Notes
|
298,178
|
|
|
285,480
|
|
|
297,912
|
|
|
286,077
|
|
||||
5.00% Notes
|
344,983
|
|
|
342,300
|
|
|
344,405
|
|
|
347,956
|
|
|
Accumulated Other Comprehensive Loss
|
||
Balance at June 28, 2017
|
$
|
(11,921
|
)
|
Cumulative losses as of June 28, 2017 reclassified from AOCL due to disposition
|
5,899
|
|
|
Current period other comprehensive income before reclassifications
|
1,096
|
|
|
Current period reclassifications from AOCL due to disposition
|
(519
|
)
|
|
Net current period other comprehensive income
|
577
|
|
|
Balance at March 28, 2018
|
$
|
(5,445
|
)
|
|
Thirty-Nine Week Period Ended
|
||||||
|
March 28,
2018 |
|
March 29,
2017 |
||||
Income taxes, net of refunds
|
$
|
36,227
|
|
|
$
|
63,381
|
|
Interest, net of amounts capitalized
|
29,463
|
|
|
18,595
|
|
|
Thirty-Nine Week Period Ended
|
||||||
|
March 28,
2018 |
|
March 29,
2017 |
||||
Retirement of fully depreciated assets
|
$
|
27,917
|
|
|
$
|
17,964
|
|
Dividends declared but not paid
|
17,804
|
|
|
17,276
|
|
||
Capital lease additions
|
6,079
|
|
|
1,147
|
|
||
Accrued capital expenditures
|
5,091
|
|
|
4,599
|
|
|
Thirteen Week Period Ended
|
|
Thirty-Nine Week Period Ended
|
||||||||
|
March 28,
2018 |
|
March 29,
2017 |
|
March 28,
2018 |
|
March 29,
2017 |
||||
Revenues:
|
|
|
|
|
|
|
|
||||
Company sales
|
97.3
|
%
|
|
97.5
|
%
|
|
97.1
|
%
|
|
97.3
|
%
|
Franchise and other revenues
|
2.7
|
%
|
|
2.5
|
%
|
|
2.9
|
%
|
|
2.7
|
%
|
Total revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||
Company restaurants (excluding depreciation and amortization)
|
|
|
|
|
|
|
|
||||
Cost of sales
(1)
|
26.2
|
%
|
|
25.5
|
%
|
|
26.1
|
%
|
|
25.8
|
%
|
Restaurant labor
(1)
|
33.6
|
%
|
|
33.1
|
%
|
|
34.1
|
%
|
|
33.4
|
%
|
Restaurant expenses
(1)
|
24.1
|
%
|
|
24.4
|
%
|
|
25.2
|
%
|
|
25.6
|
%
|
Company restaurant expenses
(1)
|
83.9
|
%
|
|
83.0
|
%
|
|
85.4
|
%
|
|
84.8
|
%
|
Depreciation and amortization
|
4.6
|
%
|
|
4.9
|
%
|
|
4.9
|
%
|
|
5.0
|
%
|
General and administrative
|
4.5
|
%
|
|
4.4
|
%
|
|
4.4
|
%
|
|
4.4
|
%
|
Other gains and charges
|
0.3
|
%
|
|
0.8
|
%
|
|
1.1
|
%
|
|
0.6
|
%
|
Total operating costs and expenses
|
91.1
|
%
|
|
91.0
|
%
|
|
93.3
|
%
|
|
92.5
|
%
|
Operating income
|
8.9
|
%
|
|
9.0
|
%
|
|
6.7
|
%
|
|
7.5
|
%
|
Interest expense
|
1.7
|
%
|
|
1.7
|
%
|
|
1.8
|
%
|
|
1.5
|
%
|
Other, net
|
(0.1
|
)%
|
|
(0.1
|
)%
|
|
(0.1
|
)%
|
|
0.0
|
%
|
Income before provision for income taxes
|
7.3
|
%
|
|
7.4
|
%
|
|
5.0
|
%
|
|
6.0
|
%
|
Provision for income taxes
|
1.5
|
%
|
|
2.2
|
%
|
|
1.5
|
%
|
|
1.7
|
%
|
Net income
|
5.8
|
%
|
|
5.2
|
%
|
|
3.5
|
%
|
|
4.3
|
%
|
(1)
|
As a percentage of
Company sales
.
|
|
Third Quarter Openings
|
|
Year-to-Date Openings
|
|
Total Open at End Of Third Quarter
|
|
Projected
Openings |
|||||||||||||
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2018
|
|||||||
Company-owned restaurants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Chili’s domestic
|
1
|
|
|
1
|
|
|
5
|
|
|
4
|
|
|
940
|
|
|
934
|
|
|
5-6
|
|
Chili’s international
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
5
|
|
|
14
|
|
|
—
|
|
Maggiano’s
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
52
|
|
|
52
|
|
|
1
|
|
Total company-owned
|
1
|
|
|
1
|
|
|
6
|
|
|
7
|
|
|
997
|
|
|
1,000
|
|
|
6-7
|
|
Franchise restaurants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Chili’s domestic
|
1
|
|
|
3
|
|
|
5
|
|
|
5
|
|
|
314
|
|
|
316
|
|
|
5
|
|
Chili’s international
|
8
|
|
|
4
|
|
|
27
|
|
|
16
|
|
|
375
|
|
|
344
|
|
|
36-39
|
|
Total franchise
|
9
|
|
|
7
|
|
|
32
|
|
|
21
|
|
|
689
|
|
|
660
|
|
|
41-44
|
|
Total restaurants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Chili’s domestic
|
2
|
|
|
4
|
|
|
10
|
|
|
9
|
|
|
1,254
|
|
|
1,250
|
|
|
10-11
|
|
Chili’s international
|
8
|
|
|
4
|
|
|
27
|
|
|
17
|
|
|
380
|
|
|
358
|
|
|
36-39
|
|
Maggiano’s
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
52
|
|
|
52
|
|
|
1
|
|
Grand total
|
10
|
|
|
8
|
|
|
38
|
|
|
28
|
|
|
1,686
|
|
|
1,660
|
|
|
47-51
|
|
|
Thirteen Week Period Ended March 28, 2018
|
|||||||||||||
|
Comparable
Sales (1) |
|
Price
Increase |
|
Mix-Shift
(2)
|
|
Traffic
|
|
Capacity
|
|||||
Company-owned
|
(0.3
|
)%
|
|
1.2
|
%
|
|
0.6
|
%
|
|
(2.1
|
)%
|
|
(0.3
|
)%
|
Chili’s
|
(0.4
|
)%
|
|
1.1
|
%
|
|
0.6
|
%
|
|
(2.1
|
)%
|
|
(0.3
|
)%
|
Maggiano’s
|
0.5
|
%
|
|
1.3
|
%
|
|
0.6
|
%
|
|
(1.4
|
)%
|
|
0.0
|
%
|
Chili’s Franchise
(3)
|
(2.1
|
)%
|
|
|
|
|
|
|
|
|
||||
U.S.
|
(3.2
|
)%
|
|
|
|
|
|
|
|
|
||||
International
|
(0.2
|
)%
|
|
|
|
|
|
|
|
|
||||
Chili’s Domestic
(4)
|
(1.1
|
)%
|
|
|
|
|
|
|
|
|
||||
System-wide
(5)
|
(0.8
|
)%
|
|
|
|
|
|
|
|
|
|
Thirteen Week Period Ended March 29, 2017
|
|||||||||||||
|
Comparable
Sales (1) |
|
Price
Increase |
|
Mix-Shift
(2)
|
|
Traffic
|
|
Capacity
|
|||||
Company-owned
|
(2.2
|
)%
|
|
2.8
|
%
|
|
1.1
|
%
|
|
(6.1
|
)%
|
|
0.3
|
%
|
Chili’s
|
(2.3
|
)%
|
|
2.9
|
%
|
|
1.0
|
%
|
|
(6.2
|
)%
|
|
0.2
|
%
|
Maggiano’s
|
(1.6
|
)%
|
|
2.4
|
%
|
|
1.4
|
%
|
|
(5.4
|
)%
|
|
2.0
|
%
|
Chili’s Franchise
(3)
|
(2.5
|
)%
|
|
|
|
|
|
|
|
|
||||
U.S.
|
0.3
|
%
|
|
|
|
|
|
|
|
|
||||
International
|
(7.1
|
)%
|
|
|
|
|
|
|
|
|
||||
Chili’s Domestic
(4)
|
(1.7
|
)%
|
|
|
|
|
|
|
|
|
||||
System-wide
(5)
|
(2.3
|
)%
|
|
|
|
|
|
|
|
|
|
Thirty-Nine Week Period Ended March 28, 2018
|
|||||||||||||
|
Comparable
Sales (1) |
|
Price
Increase |
|
Mix-Shift
(2)
|
|
Traffic
|
|
Capacity
|
|||||
Company-owned
|
(1.5
|
)%
|
|
2.0
|
%
|
|
1.3
|
%
|
|
(4.8
|
)%
|
|
(0.1
|
)%
|
Chili’s
|
(1.7
|
)%
|
|
2.0
|
%
|
|
1.4
|
%
|
|
(5.1
|
)%
|
|
(0.2
|
)%
|
Maggiano’s
|
0.1
|
%
|
|
0.9
|
%
|
|
0.8
|
%
|
|
(1.6
|
)%
|
|
1.6
|
%
|
Chili’s Franchise
(3)
|
(2.4
|
)%
|
|
|
|
|
|
|
|
|
||||
U.S.
|
(2.3
|
)%
|
|
|
|
|
|
|
|
|
||||
International
|
(2.6
|
)%
|
|
|
|
|
|
|
|
|
||||
Chili’s Domestic
(4)
|
(1.9
|
)%
|
|
|
|
|
|
|
|
|
||||
System-wide
(5)
|
(1.8
|
)%
|
|
|
|
|
|
|
|
|
|
Thirty-Nine Week Period Ended March 29, 2017
|
|||||||||||||
|
Comparable
Sales (1) |
|
Price
Increase |
|
Mix-Shift
(2)
|
|
Traffic
|
|
Capacity
|
|||||
Company-owned
|
(2.2
|
)%
|
|
2.1
|
%
|
|
1.0
|
%
|
|
(5.3
|
)%
|
|
0.5
|
%
|
Chili’s
|
(2.3
|
)%
|
|
2.0
|
%
|
|
1.3
|
%
|
|
(5.6
|
)%
|
|
0.3
|
%
|
Maggiano’s
|
(1.0
|
)%
|
|
2.4
|
%
|
|
(0.2
|
)%
|
|
(3.2
|
)%
|
|
3.0
|
%
|
Chili’s Franchise
(3)
|
(2.2
|
)%
|
|
|
|
|
|
|
|
|
||||
U.S.
|
(1.4
|
)%
|
|
|
|
|
|
|
|
|
||||
International
|
(3.5
|
)%
|
|
|
|
|
|
|
|
|
||||
Chili’s Domestic
(4)
|
(2.1
|
)%
|
|
|
|
|
|
|
|
|
||||
System-wide
(5)
|
(2.2
|
)%
|
|
|
|
|
|
|
|
|
(1)
|
Comparable restaurant sales include all restaurants that have been in operation for more than 18 months. Restaurants temporarily closed for 14 days or more are excluded from comparable restaurant sales.
|
(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 revenues and advertising fees based on franchisee sales, 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.
|
|
Thirty-Nine Week Period Ended
|
||||||
|
March 28,
2018 |
|
March 29,
2017 |
||||
Net cash used in investing activities (in thousands):
|
|
|
|
||||
Payments for property and equipment
|
$
|
(69,503
|
)
|
|
$
|
(79,730
|
)
|
Proceeds from sale of assets
|
14,825
|
|
|
3,077
|
|
||
Insurance recoveries
|
1,747
|
|
|
—
|
|
||
Proceeds from note receivable
|
1,185
|
|
|
—
|
|
||
|
$
|
(51,746
|
)
|
|
$
|
(76,653
|
)
|
|
Thirty-Nine Week Period Ended
|
||||||
|
March 28,
2018 |
|
March 29,
2017 |
||||
Net cash used in financing activities (in thousands):
|
|
|
|
||||
Borrowings on revolving credit facility
|
$
|
524,000
|
|
|
$
|
200,000
|
|
Payments on revolving credit facility
|
(484,000
|
)
|
|
(328,000
|
)
|
||
Purchases of treasury stock
|
(162,004
|
)
|
|
(350,768
|
)
|
||
Payments of dividends
|
(53,098
|
)
|
|
(54,087
|
)
|
||
Payments on long-term debt
|
(7,834
|
)
|
|
(2,847
|
)
|
||
Proceeds from issuances of treasury stock
|
1,316
|
|
|
4,505
|
|
||
Proceeds from issuance of long-term debt
|
—
|
|
|
350,000
|
|
||
Payments for debt issuance costs
|
—
|
|
|
(10,216
|
)
|
||
|
$
|
(181,620
|
)
|
|
$
|
(191,413
|
)
|
•
|
The Company has engaged external tax advisers to assist with the design and implementation of the remediation plan that will enhance internal control over financial reporting for income taxes;
|
•
|
The Company has implemented new reporting processes and system improvements in our tax department that simplify and improve manual reconciliation controls and will allow us to more effectively train tax department personnel; and
|
•
|
Ensuring that tax department personnel effectively collaborate with financial reporting and other key departments to gain a better understanding of the information, analysis, and documentation necessary for the accurate presentation of deferred income taxes.
|
•
|
The effect of competition on our operations and financial results.
|
•
|
Changes in consumer preferences may decrease demand for food at our restaurants.
|
•
|
Food safety incidents at our restaurants or in our industry or supply chain may adversely affect customer perception of our brands or industry and result in declines in sales and profits.
|
•
|
Global and domestic economic conditions may negatively impact consumer discretionary spending and could have a materially negative affect on our financial performance.
|
•
|
Unfavorable publicity relating to one or more of our company-owned or franchised restaurants in a particular brand that may taint public perception of the brand.
|
•
|
Employment and labor laws and regulations may increase the cost of labor for our restaurants.
|
•
|
The effect of governmental regulation on our ability to maintain our existing and future operations and to open new restaurants.
|
•
|
Increased costs and/or reduced revenues from shortages or interruptions in the availability and delivery of food and other supplies.
|
•
|
The effect of the implementation of the Tax Cuts and Jobs Act of 2017 on our consolidated financial statements.
|
•
|
Our ability to consummate successful strategic transactions that are important to our future growth and profitability.
|
•
|
Our inability to meet our business strategy plan and the impact on our profitability in the future.
|
•
|
Loss of key management personnel could hurt our business and limit our ability to operate and grow successfully.
|
•
|
Failure to recruit, train and retain high-quality restaurant management and team members may result in lower guest satisfaction and lower sales and profitability.
|
•
|
The impact of slow economic growth on our landlords or other tenants in retail centers in which we or our franchisees are located, which in turn could negatively affect our financial results.
|
•
|
The success of our franchisees to our future growth.
|
•
|
Downgrades in our credit ratings could impact our ability to access capital and materially adversely affect our business, financial condition and results of operations.
|
•
|
Inflation and fluctuation in energy costs may increase our operating expenses.
|
•
|
The general decrease in sales volumes during winter months.
|
•
|
Failure to recognize, respond to and effectively manage the accelerated impact of social media could adversely impact our business.
|
•
|
Litigation could have a material adverse impact on our business and our financial performance.
|
•
|
Dependence on information technology and any material failure in the operation or security of that technology or our ability to execute a comprehensive business continuity plan could impair our ability to efficiently operate our business.
|
•
|
Failure to protect the integrity and security of individually identifiable data of our guests and teammates and confidential and proprietary information of the Company could expose us to litigation and damage our reputation.
|
•
|
Failure to protect our service marks and intellectual property could harm our business.
|
•
|
Outsourcing of certain business processes to third-party vendors that subject us to risk, including disruptions in business and increased costs.
|
•
|
Disruptions in the global financial markets may affect our business plan by adversely impacting the availability and cost of credit.
|
•
|
The large number of company-owned restaurants concentrated in Texas, Florida and California makes us susceptible to changes in economic and other trends in those regions.
|
•
|
Declines in the market price of our common stock or changes in other circumstances that may indicate an impairment of goodwill possibly adversely affecting our financial position and results of operations.
|
•
|
Changes to estimates related to our property and equipment or operating results that are lower than our current estimates at certain restaurant locations, possibly causing us to incur impairment charges on certain long-lived assets.
|
•
|
Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and operating results.
|
•
|
Failure to achieve our target for growth in total return to shareholders may adversely affect our stock price.
|
•
|
Our business and operation could be negatively affected if we become subject to any securities litigation or shareholder activism, which could cause us to incur significant expense, hinder execution of investment strategy and impact our stock price.
|
•
|
Other risk factors that could cause our actual results to differ materially from those indicated in the forward-looking statements by affecting, among many things, pricing, consumer spending, consumer confidence, and operating costs, include, without limitation, changes in financial and credit markets (including rising interest rates); increases in costs of food commodities; increases in fuel costs and availability for our team members, customers and suppliers; increases in utility and energy costs on regional or national levels; increases in health care costs; health epidemics or pandemics or the prospects of these events; changes in consumer behaviors; changes in demographic trends; labor shortages and availability of employees; union organization; strikes; terrorist acts; energy shortages and rolling blackouts; and weather (including major hurricanes and regional winter storms) and other acts of God.
|
|
Total Number
of Shares Purchased (1) |
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Approximate Dollar Value that May Yet be Purchased Under the Program
|
||||||
December 28, 2017 through January 31, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
294,931
|
|
February 1, 2018 through February 28, 2018
|
1,481,557
|
|
|
$
|
35.23
|
|
|
1,480,920
|
|
|
$
|
242,730
|
|
March 1, 2018 through March 28, 2018
|
1,034,778
|
|
|
$
|
36.69
|
|
|
1,034,778
|
|
|
$
|
204,741
|
|
|
2,516,335
|
|
|
$
|
35.83
|
|
|
2,515,698
|
|
|
|
(1)
|
These amounts include shares purchased as part of our publicly announced programs and shares owned and tendered by team members to satisfy tax withholding obligations on the vesting of restricted share awards, which are not deducted from shares available to be purchased under publicly announced programs. Unless otherwise indicated, shares owned and tendered by team members to satisfy tax withholding obligations were purchased at the average of the high and low prices of the Company’s shares on the date of vesting. During the
third quarter
of fiscal
2018
,
637
shares were tendered by team members at an average price of
$36.35
.
|
|
BRINKER INTERNATIONAL, INC.
|
||
|
|||
Date: May 4, 2018
|
By:
|
|
/s/ Wyman T. Roberts
|
|
|
|
Wyman T. Roberts,
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|||
Date: May 4, 2018
|
By:
|
|
/s/ Joseph G. Taylor
|
|
|
|
Joseph G. Taylor
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
(a)
|
Definitions
. The following terms (whether or not underscored) when used in this Amendment, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):
|
(b)
|
Other Definitions
. Unless otherwise defined herein or the context otherwise requires, terms used in this Amendment, including its preamble and recitals, have the meanings provided in the Credit Agreement.
|
(c)
|
Other Interpretive Provisions
. The rules of construction in
Sections 1.02
through
1.05
of the Credit Agreement shall be equally applicable to this Amendment.
|
(a)
|
Section 1.01 of the Existing Credit Agreement
.
Section 1.01
of the Existing Credit Agreement is hereby amended by adding the following new definitions in proper alphabetical order:
|
(a)
|
all accounts (as defined in the UCC);
|
(b)
|
all inventory (as defined in the UCC) and all restaurant supplies;
|
(c)
|
all books and records relating to any of the foregoing (including, to the extent relating to the foregoing, customer data, credit files, ledgers, computer programs, printouts, and other computer materials and records (and all media on which such data, files, programs, materials and records are or may be stored)); and
|
(d)
|
all proceeds, products and replacements of, accessions to, and substitutions for, any of the foregoing, including without limitation proceeds of insurance policies, to the extent related to a loss related to the foregoing.
|
(b)
|
Section 1.01 of the Credit Agreement
. The Definition of “
Applicable Rate
” in
Section 1.01
of the Credit Agreement is hereby amended by adding at the end thereof the following:
|
(c)
|
Section 1.01 of the Credit Agreement
.
Section 1.01
of the Credit Agreement is hereby amended by deleting the definition of “Credit Documents” in its entirety and substituting in lieu thereof the following:
|
(d)
|
Section 1.01 of the Credit Agreement
. The Definition of “
Permitted Liens
” in
Section 1.01
of the Credit Agreement is hereby amended by (i) deleting the word “or” at the end of clause (h), (ii) deleting the period at the end of clause (i) and substituting a semicolon in lieu thereof, and (iii) adding at the end thereof the following:
|
“(j)
|
Liens granted pursuant to the terms of the Credit Documents;
|
(k)
|
Liens granted in cash collateral (including any associated deposit or securities accounts) to secure obligations incurred in connection with the issuance of letters of credit, bank guaranties, bankers acceptances and similar instruments; or
|
(l)
|
Liens granted in Principal Properties to secure obligations incurred in connection with Sale-Leaseback Transactions otherwise permitted to be consummated in accordance with the terms of this Agreement.
|
(e)
|
Section 1.01 of the Credit Agreement
. The Definition of “
Fee Letters
” in
Section 1.01
of the Credit Agreement is hereby amended by deleting such definition in its entirety and substituting in lieu thereof the following:
|
(f)
|
Section 1.03 of the Credit Agreement
.
Section 1.03
of the Credit Agreement is hereby amended by adding the following sentence at the end of such Section:
|
(g)
|
Article IV of the Credit Agreement
.
Article IV
of the Credit Agreement is hereby amended by adding the following new Section 4.11 at the end thereof:
|
(h)
|
Article V of the Credit Agreement
.
Article V
of the Credit Agreement is hereby amended by adding the following new Section 5.16 at the end thereof:
|
(i)
|
Section 6.09
of the Credit Agreement.
Section 6.09
of the Credit Agreement is hereby amended by adding the following sentence at the end of such Section:
|
(j)
|
Article VI of the Credit Agreement
.
Article VI
of the Credit Agreement is hereby amended by adding the following new Section 6.10 at the end thereof:
|
(a)
|
proper financing statements in form appropriate for filing under the UCC of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Security Agreement and the other Collateral Documents, covering the Collateral described in the Security Agreement and the other Collateral Documents; and
|
(b)
|
favorable opinions of counsel to the Loan Parties covering items customary for transactions contemplated by this Section 6.10.
|
(k)
|
Section 7.02 of the Credit Agreement
.
Section 7.02
of the Credit Agreement is hereby amended by adding the following at the end thereof:
|
(l)
|
Section 7.03 of the Credit Agreement
.
Section 7.03
of the Credit Agreement is hereby amended by deleting clause (b) in its entirety and substituting the following in lieu thereof:
|
(m)
|
Section 7.03 of the Credit Agreement
.
Section 7.03
of the Credit Agreement is hereby amended by deleting
clause (c)
in its entirety and substituting in lieu thereof the following:
|
(n)
|
Section 7.04 of the Credit Agreement
.
Section 7.04
of the Credit Agreement is hereby amended by deleting such Section in its entirety and substituting in lieu thereof the following:
|
(o)
|
Section 7.09
of the Credit Agreement.
Section 7.09
of the Credit Agreement is hereby amended by deleting the word “and” appearing at the end of clause (iv) thereof, substituting a comma in lieu thereof, deleting the period appearing at the end of clause (v) thereof, and substituting the following in lieu thereof:
|
(p)
|
Section 7.10 of the Credit Agreement
.
Section 7.10
of the Credit Agreement is hereby amended by deleting
clause (c)
in its entirety and substituting in lieu thereof the following:
|
(q)
|
Article VIII of the Credit Agreement
.
Article VIII
of the Credit Agreement is hereby amended by adding the following new Section 8.02 at the end thereof:
|
(r)
|
Section 9.01 of the Credit Agreement
.
Section 9.01
of the Credit Agreement is hereby amended by adding the following new clause (c) at the end thereof:
|
(s)
|
Article IX of the Credit Agreement
.
Article IX
of the Credit Agreement is hereby amended by adding the following new Section 9.09, Section 9.10 and Section 9.11 at the end thereof:
|
(a)
|
to release any Lien on any property granted to or held by the Administrative Agent under any Credit Document (i) upon termination of the Total Commitments and payment in full of all Obligations (other than contingent indemnification obligations), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Credit Document, or (iii) subject to
Section 10.01
, if approved, authorized or ratified in writing by the Majority Banks;
|
(b)
|
to subordinate any Lien on any property granted to or held by the Administrative Agent under any Credit Document to the holder of any Lien on such property that is permitted by clause (g) or (i) in the definition of Permitted Liens; and
|
(c)
|
upon request by the Administrative Agent at any time, the Majority Banks will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property pursuant to this
Section 9.09
.”
|
“9.10
|
No Bank is an Employee Benefit Plan
.
|
(a)
|
Each Bank, (x) represents and warrants, as of the date such Person became a Bank hereunder, to, and (y) covenants, from the date such Person becomes a Bank hereunder, from the date such Person becomes a Bank hereunder to the date such Person ceases being a Bank party to this Agreement, for the benefit of, the Administrative Agent and the Joint Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
|
(i)
|
such Bank is not using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Advances or Commitments;
|
(ii)
|
the transaction exemption set forth in one or more prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time (a “PTE”), such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Bank’s entrance into, participation in, administration of and performance of the Advances, the Commitments and this Agreement;
|
(iii)
|
(A) such Bank is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Bank to enter into, participate in, administer and perform the Advances, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Advances, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Bank, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Bank’s entrance into, participation in, administration of and performance of the Advances, the Commitments and this Agreement; or
|
(iv)
|
such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Bank.
|
(b)
|
In addition, unless clause (a)(i) above is true with respect to a Bank or such Bank has not provided another representation, warranty and covenant as provided in clause (a)(iv) above, such Bank further (x) represents and warrants, as of the date such Person becomes a Bank hereunder, to, and (y) covenants, from the date such Person becomes a Bank hereunder, to the date such Person ceases being a Bank party to this Agreement, for the benefit of, the Administrative Agent and the Joint Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that:
|
(i)
|
none of the Administrative Agent or Joint Lead Arrangers or any of their respective Affiliates is a fiduciary with respect to the assets of such Bank (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Credit Document or any documents related to hereto or thereto);
|
(ii)
|
the Person making the investment decision on behalf of such Bank with respect to the entrance into, participation in, administration of and performance of the Advances, the Commitments and this Agreement is independent (within the meaning of 29 CFR § 2510.3-21) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or other person that holds, or has under management or control, total assets of at least $50,000,000, in each case as described in 29 CFR § 2510.3-21(c)(1)(i)(A)-(E);
|
(iii)
|
the Person making the investment decision on behalf of such Bank with respect to the entrance into, participation in, administration of and performance of the Advances, the Commitments and this Agreement is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies (including in respect of the Obligations);
|
(iv)
|
the Person making the investment decision on behalf of such Bank with respect to the entrance into, participation in, administration of and performance of the Advances, the Commitments and this Agreement is a fiduciary under ERISA or the Code, or both, with respect to the Advances, the Commitments and this Agreement and is responsible for exercising independent judgment in evaluating the transactions hereunder; and
|
(v)
|
no fee or other compensation is being paid directly to the Administrative Agent or the Joints Lead Arrangers or any their respective Affiliates for investment advice (as opposed to other services) in connection with the Advances, the Commitments or this Agreement.
|
(a)
|
Section 9.12 of the Credit Agreement
.
Section 9.12
of the Credit Agreement is hereby amended by deleting clause (f) in its entirety and substituting in lieu thereof the following:
|
(b)
|
Other Credit Documents
. From and after the Third Amendment Effective Date, each reference to the Existing Credit Agreement in any Credit Document shall be a reference to the Existing Credit Agreement, as amended by this Amendment, as the same may hereafter be further amended, amended and restated, supplemented or otherwise modified.
|
(a)
|
Documentation
. The Administrative Agent shall have received this Amendment duly executed by the Borrower, the Guarantors, the Administrative Agent and the Consenting Banks, and in sufficient copies for each Bank.
|
(b)
|
Certification
. The Administrative Agent shall have received a certificate, dated as of the Third Amendment Effective Date and signed by a Financial Officer, certifying that:
|
(i)
|
no event or events which have or would reasonably be expected to have a Material Adverse Effect shall have occurred since June 28, 2017;
|
(ii)
|
no Default or event which, with the giving of notice, the lapse of time or both, would constitute a Default shall have occurred and be continuing on and as of the Third Amendment Effective Date;
|
(iii)
|
the representations and warranties contained in
Section 6
hereof shall be true and correct on and as of the Third Amendment Effective Date; and
|
(iv)
|
no legal or regulatory action or proceeding shall have commenced and be continuing against the Borrower or any of its Subsidiaries since June 28, 2017, which has, or would reasonably be expected to have, a Material Adverse Effect.
|
(c)
|
Consent Fee
. The Administrative Agent shall have received, for the ratable account of each Consenting Bank that has executed and delivered a counterpart hereof to the Administrative Agent on or prior to 5:00 p.m. Eastern Time on April 27, 2018 (the “
Deadline
”), a fee equal to 0.125% of such Bank’s undrawn Commitment and amount of outstanding Advances on the Third Amendment Effective Date (such fees, the “
Consent Fees
”). The Consent Fees shall be payable in U.S. dollars in immediately available funds as directed by the Administrative Agent. Once paid, no Consent Fees shall be refundable under any circumstances. For the avoidance of doubt, no Consent Fee shall be payable to any Bank that does not consent to this Amendment prior to the Deadline.
|
(d)
|
Fees and Expenses
. The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Third Amendment Effective Date pursuant to the Third Amendment Fee Letter, including all fees, charges and disbursements required to be paid or reimbursed by the Borrower pursuant to
Section 8
hereof (which fees, charges and disbursements of counsel and such other out of pocket fees and expenses shall be limited to those for which invoices have been submitted on or prior to the Third Amendment Effective Date (
provided
,
however
, nothing herein shall preclude any post-closing settlement of such fees, charges, disbursements, costs and expenses to the extent not so invoiced)).
|
(a)
|
The execution, delivery and performance by the Borrower and each Guarantor of its obligations in connection with this Amendment are within its corporate powers, have been duly authorized by all necessary corporate action and do not and will not (i) violate any provision of its articles or certificate of incorporation or bylaws or similar organizing or governing documents of the Borrower or the Guarantor, (ii) contravene any applicable law which is applicable to the Borrower or such Guarantor, or (iii) conflict with, result in a breach of or constitute (with notice, lapse of time or both) a default under any material indenture or instrument or other material agreement to which the Borrower or such Guarantor is a party, by which it or any of its properties is bound or to which it is subject, except, in the case of clauses (ii) and (iii) above, to the extent such contraventions, conflicts, breaches or defaults could not reasonably be expected to have a Material Adverse Effect.
|
(b)
|
The Borrower and each Guarantor has taken all necessary corporate action to execute, deliver and perform this Amendment and has validly executed and delivered this Amendment. This Amendment constitutes a legal, valid and binding obligation of the Borrower and each Guarantor, enforceable against the Borrower and each Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
|
(c)
|
No material consent, approval, authorization or other action by, notice to, or registration or filing with, any governmental authority or other Person is or will be required as a condition to or otherwise in connection with the due execution, delivery and performance by the Borrower or each Guarantor of this Amendment, except (i) such as have been obtained or made and are in full force and effect, (ii) such filings as may be required in connection with the Borrower’s obligations under the Exchange Act, and (iii) that the Borrower shall be required to cause Brinker Payroll to guaranty the Borrower’s 5.0% senior notes due 2024.
|
(d)
|
As of the Third Amendment Effective Date, the representations and warranties contained in each of the Credit Documents are true and correct in all material respects (except for those representations and warranties that have a material qualifier, in which case those representations and warranties shall be true and correct in all respects) as of the date hereof as though made on and as of such date (other than any such representations or warranties that, by their terms, refer to a specific date, in which case as of such specific date).
|
(e)
|
No Default or event which, with the giving of notice, the lapse of time or both, would constitute a Default shall exist after giving effect to this Amendment.
|
(a)
|
The Existing Credit Agreement and each of the other Credit Documents, as specifically amended by this Amendment, are and shall continue to be in full force and effect according to their respective terms and are hereby in all respects ratified and confirmed. The parties hereto acknowledge and agree that the amendments contained herein do not constitute a novation of the Existing Credit Agreement, the other Credit Documents or the indebtedness or any other obligation of the Borrower and the Guarantors described therein and shall not, in any case, affect, diminish or abrogate the Borrower’s or any Guarantor’s liability under the Credit Agreement or any other Credit Document.
|
(b)
|
The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Bank or the Administrative Agent under any of the Credit Documents, nor constitute a waiver of, consent to a departure from, or modification of any other term, covenant, provision or condition set forth in any of the Credit Documents.
|
Title:
|
Senior Vice President and Chief Financial Officer
|
Title:
|
Vice President, Treasurer and Assistant Secretary
|
Title:
|
Vice President, Treasurer and Assistant Secretary
|
Title:
|
Vice President, Treasurer and Assistant Secretary
|
|
JPMORGAN CHASE BANK, N.A.
By:__________________________
Name:
Title:
|
|
WELLS FARGO BANK, N.A.
By:__________________________
Name:
Title:
|
|
MUFG BANK, LTD.
By:__________________________
Name:
Title:
|
|
SUNTRUST BANK
By:__________________________
Name:
Title:
|
|
U.S. BANK NATIONAL ASSOCIATION
By:__________________________
Name:
Title:
|
|
BARCLAYS BANK PLC
By:__________________________
Name:
Title:
|
|
REGIONS BANK
By:__________________________
Name:
Title:
|
|
COMPASS BANK
By:__________________________
Name:
Title:
|
|
ASSOCIATED BANK NATIONAL ASSOCIATION
By:__________________________
Name:
Title:
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Brinker International, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
A.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
B.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptable accounting principles;
|
C.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
D.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
A.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
B.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 4, 2018
|
By:
|
|
/s/ Wyman T. Roberts
|
|
|
|
|
Wyman T. Roberts,
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Brinker International, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
A.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
B.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptable accounting principles;
|
C.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
D.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
A.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
B.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 4, 2018
|
By:
|
|
/s/ Joseph G. Taylor
|
|
|
|
|
Joseph G. Taylor
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
Date:
|
May 4, 2018
|
By:
|
|
/s/ Wyman T. Roberts
|
|
|
|
|
Wyman T. Roberts,
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
Date:
|
May 4, 2018
|
By:
|
|
/s/ Joseph G. Taylor
|
|
|
|
|
Joseph G. Taylor
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|