Chili's 2008 Annual Report Download - page 42

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Board of Directors has authorized a total of $2,060.0 million in share repurchases, which has been
and will be used to return capital to shareholders and to minimize the dilutive impact of stock options and
other share-based awards. In June 2007, we entered into a written trading plan in compliance with
Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which provided for the purchase of
up to $140.0 million of shares of our common stock. Following the completion of this plan, we entered into
another 10b5-1 plan for the purchase of up to $100.0 million of shares of our common stock in November
2007. The latest trading plan was completed on November 23, 2007. Pursuant to our stock repurchase
plans, we repurchased approximately 9.1 million shares of our common stock for approximately
$240.3 million during fiscal 2008, which was funded using proceeds from the sales of restaurants to
franchisees. We have approximately $59.8 million in remaining authorization as of June 25, 2008. In the
future, we may consider additional share repurchases based on several factors, including our cash flow,
share price, operational liquidity, and planned investment and financing needs. The repurchased common
stock is reflected as a reduction of shareholders’ equity.
In fiscal 2008, we declared and paid four quarterly dividends to common stock shareholders. In the
first quarter, we declared a dividend in the amount of $0.09 per share. In the second, third and fourth
quarters, we declared and paid dividends in the amount of $0.11 per share. Total dividends paid during
fiscal 2008 were $42.9 million.
In August 2007, we extended our $50.0 million uncommitted credit facility through August 2008. In
September 2007, we also increased the $50.0 million uncommitted credit facility to $100.0 million and
extended the expiration date to September 2008.
In October 2007, we entered into a three-year term loan agreement for $400 million and terminated
the one-year unsecured committed credit facility of $400 million. The term loan proceeds were used to pay
off all outstanding amounts under the one-year unsecured committed credit facility. The term loan bears
interest at LIBOR plus an applicable margin, which is a function of our credit rating at such time, but is
subject to a maximum of LIBOR plus 1.5%. Based on our current credit rating, we are paying interest at a
rate of LIBOR plus 0.65%.
Excluding the impact of assets held for sale, the working capital deficit decreased to $187.9 million at
June 25, 2008 from $270.7 million at June 27, 2007 primarily due to increases in deferred tax assets
resulting from the impairment of Macaroni Grill long-lived assets held for sale to estimated fair value less
costs to sell as well as a decrease in income taxes payable due to declining earnings.
We believe that our various sources of capital, including cash flow from operating activities of
continuing operations, availability under existing credit facilities, and the ability to acquire additional
financing, are adequate to finance operations as well as the repayment of current debt obligations. We also
expect to receive net cash proceeds of $125.5 million from the sale of Macaroni Grill in the second quarter
of fiscal 2009. At that time, we will make a determination as to the appropriate use of the funds. We are
not aware of any other event or trend that would potentially affect our liquidity. In the event such a trend
develops, we believe that there are sufficient funds available under our credit facilities and from our
internal cash generating capabilities to adequately manage our ongoing business.
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