Chili's 2012 Annual Report Download - page 45

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As of June 27, 2012, our credit rating by Standard and Poor’s (“S&P”) was BBB- (investment grade) with a
stable outlook. Our corporate family rating by Moody’s was Ba1 (non-investment grade) and our senior
unsecured rating was Ba2 (non-investment grade) with a stable outlook. Our goal is to retain our investment
grade rating from S&P and ultimately regain our investment grade rating from Moody’s.
We paid dividends of $50.1 million to common stock shareholders in fiscal 2012 compared to $53.2 million
in dividends paid in fiscal 2011. Our Board of Directors approved a 14 percent increase in the quarterly dividend
from $0.14 to $0.16 per share effective with the September 2011 dividend; however, lower outstanding shares
resulting from repurchase activity reduced our total dividend payment in the current year. Additionally, we
declared a quarterly dividend late in fiscal 2012 which was paid early in fiscal 2013 on June 28, 2012.
Subsequent to the end of the fiscal year, our Board of Directors approved a 25% increase in the quarterly
dividend from $0.16 to $0.20 per share effective with the September 2012 dividend which was declared in
August 2012. We will continue to target a 40 percent dividend payout ratio to provide additional return to
shareholders.
Our Board of Directors has authorized a total of $2,885.0 million of share repurchases. As of June 27, 2012,
approximately $160 million was available under our share repurchase authorizations. Subsequent to the end of
the fiscal year, our Board of Directors authorized an additional $500 million in share repurchases, bringing the
total authorization to $3,385.0 million. Our stock repurchase plan 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. Repurchased
common stock is reflected as a reduction of shareholders’ equity. During fiscal 2012, approximately 2.0 million
stock options were exercised resulting in cash proceeds of $43.4 million.
We have evaluated ways to monetize the value of our owned real estate and determined that the alternatives
considered are more costly than other financing options currently available due to a combination of the income
tax impact and higher effective borrowing rates.
Cash Flow Outlook
We believe that our various sources of capital, including future cash flow from operating activities of
continuing operations and availability under our existing credit facility are adequate to finance operations as well
as the repayment of current debt obligations. 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 facility and from our internal cash generating capabilities to adequately manage our ongoing business.
F-9