Chili's 2002 Annual Report Download - page 39

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT OUTLOOK
During fiscal 2002, the Company delivered another year of strong financial performance in a difficult
economic environment. These results were achieved by disciplined capacity growth, opportunistic acquisitions,
and diligent fiscal responsibility. Our passionate culinary culture that keeps the Company’s menu offerings on the
leading edge and our unwavering focus on guest satisfaction are key contributors to our continued success.
During fiscal 2003, the Company will continue to leverage many of the initiatives that drove fiscal 2002
performance. Positive lifestyle, demographic, and demand trends for food away from home help balance an
uncertain economic environment. Revenue growth will be driven by higher capacity as a result of the Company’s
recent acquisitions, continued brand development and an effective real estate strategy. The Company believes
the ongoing efforts to enhance our guests’ experience provide the best avenue to deliver long-term shareholder
value.
FORWARD-LOOKING STATEMENTS
The Company wishes to caution readers that the following important factors, among others, could cause the
actual results of the Company to differ materially from those indicated by forward-looking statements made in
this report and from time to time in news releases, reports, proxy statements, registration statements and other
written communications, as well as oral forward-looking statements made from time to time by representatives of
the Company. Such forward-looking statements involve risks and uncertainties that may cause the Company’s or
the restaurant industry’s actual results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by these forward-looking statements. Factors that
might cause actual events or results to differ materially from those indicated by these forward-looking statements
may include matters such as future economic performance, restaurant openings, operating margins, the
availability of acceptable real estate locations for new restaurants, the sufficiency of the Company’s cash balances
and cash generated from operating and financing activities for the Company’s future liquidity and capital
resource needs, and other matters, and are generally accompanied by words such as ‘‘believes,’’ ‘‘anticipates,’’
‘‘estimates,’’ ‘‘predicts,’’ ‘‘expects’’ and similar expressions that convey the uncertainty of future events or
outcomes. An expanded discussion of various risk factors follows.
Competition may adversely affect the Company’s operations and financial results.
The restaurant business is highly competitive with respect to price, service, restaurant location and food
quality, and is often affected by changes in consumer tastes, economic conditions, population and traffic patterns.
The Company competes within each market with locally-owned restaurants as well as national and regional
restaurant chains, some of which operate more restaurants and have greater financial resources and longer
operating histories than the Company. There is active competition for management personnel and for attractive
commercial real estate sites suitable for restaurants. In addition, factors such as inflation, increased food, labor
and benefits costs, and difficulty in attracting hourly employees may adversely affect the restaurant industry in
general and the Company’s restaurants in particular.
The Company’s sales volumes generally decrease in winter months.
The Company’s sales volumes fluctuate seasonally, and are generally higher in the summer months and
lower in the winter months, which may cause seasonal fluctuations in the Company’s operating results.
Changes in governmental regulation may adversely affect the Company’s ability to open new restaurants and
the Company’s existing and future operations.
Each of the Company’s restaurants is subject to licensing and regulation by alcoholic beverage control,
health, sanitation, safety and fire agencies in the state, county and/or municipality in which the restaurant is
located. The Company has not encountered any difficulties or failures in obtaining the required licenses or
approvals that could delay or prevent the opening of a new restaurant and although the Company does not, at
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