Chili's 2001 Annual Report Download

Download and view the complete annual report

Please find the complete 2001 Chili's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 64

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64

BRINKER INTERNATIONAL,INC.
2001 ANNUAL REPORT

Table of contents

  • Page 1
    B R I N K E R I N T E R N AT I O N A L , I N C . 2001 AN N U AL R E P O RT

  • Page 2
    Eye on the Future...Eye on the Ball.

  • Page 3
    ...the Brinker logo welcome visitors and employees to our worldwide headquarters. Those eight flames represent the heart and soul of Brinker International: Customers, Food, Team, Concepts, Culture, Partners, Community and Shareholders. Photograph by David Coltrane of Brinker International's Integrated...

  • Page 4
    ... Companies" by Fortune magazine. â-† 3 for 2 stock split. â-† To Go sales increased 40% over last year...exceeding $125 million. â-† Acquired Big Bowl, giving us a presence in the rapidly expanding Asian segment. â-† Chili's won "Best in Class - Outstanding Menu Award" from Restaurant Business...

  • Page 5
    ... from Forbes magazine as one of "America's Best Big Companies." â-† Stock price hit an all-time high. Our core concepts remain strong performers in each of their competitive segments. The strategic additions of the Big Bowl and Rockfish Seafood Grill concepts further strengthen our portfolio with...

  • Page 6
    ..., service, and people. We are very excited about our future together. Keeping an eye on our long-term game plan continues to deliver very solid results. We remain unwavering in our adherence to our key initiatives - developing the best team in the business, targeted and disciplined restaurant...

  • Page 7
    ... people and the right game plan. Our future is bright and we are well positioned to maintain a dominant leadership position in the industry. Our confidence has never been stronger. We thank you, the shareholders, employees, and guests, for sharing such an exciting time with us. DOUGLAS H. BROOKS...

  • Page 8
    SELECTED FINANCIAL HIGHLIGHTS F i s c a l Ye a r s (Amounts in thousands, except per share amounts) 2001 2000 1999 Systemwide Sales $ 3,107,159 $ 2,719,770 $ 2,332,814 Company Revenues $ 2,473,656 $ 2,159,837 $ 1,870,554 Operating Income 230,994 195,669 154,182 Income Before ...

  • Page 9
    ... Counsel and Secretary; Starlette B. Johnson, Executive Vice President and Chief Strategic Officer. N um b e r of R e s ta u r a n t s Revenues 1200 3500 1000 3000 2500 800 2000 600 1500 400 Company Operated 200 Systemwide 0 1997 1998 1999 2000 2001 0 1997 1998 1999 2000 2001 1000 500 7

  • Page 10
    ...the menu a true sizzle by adding customer favorites like Citrus Fire Chicken & Shrimp or tangy Boneless Buffalo Wings. Chili's also expanded its reach with an innovative, smaller building design that takes the brand to previously untapped markets. Even the traditional pepper icon is sporting a fresh...

  • Page 11
    Citrus Fire Chicken & Shrimp Like No Place Else. 9 TM

  • Page 12
    ... feels comfortable enjoying food in the company of family and friends. It's the timeless traditions, pride and passion created and delivered in every guest experience that has earned Macaroni Grill the "Platinum Choice in Chains" award in 1998, 1999 and 2000 by Restaurants & Institutions magazine...

  • Page 13
    Run by chefs. That explains our food. TM San Marino 11

  • Page 14
    .... Determined to claim the segment, On The Border is undertaking a new look and atmosphere, new logo, new rich colors, new menu flavors and energetic, exciting advertising. On The Border's charge is to feed everyone's craving for the bold flavors of mesquite-grilled fajitas and frosty margaritas...

  • Page 15
    Mesquite-Grilled Original Fajitas On The Border. Off The Map 13 TM

  • Page 16
    ..., yet comfortable setting. Experience the time-honored tradition of dining, whether it is a special dinner for two, a group of friends enjoying a festive meal served family-style, a private event in one of the lavish banquet rooms or a carry-out Italian meal to enjoy at home. Let us take you back to...

  • Page 17
    You Just Can't Get More Italian. Rigatoni "D" TM 15

  • Page 18
    ... Bakery Cafe will make your TM day better. Start with fresh-brewed coffee and a warm Scrambled Egg Panini. For lunch or dinner choose our fresh Tomato Mozzarella Sandwich or one of our hot and hearty soups. When we deliver our breakfast baskets and sandwich platters, you'll know that we've got...

  • Page 19
    Tomato Mozzarella Sandwich Feed the Day 17 TM

  • Page 20
    ... atmosphere rich in color, tantalizing aromas spilling from open kitchens, swirling margarita machines and friendly, attentive service. Using flavorful peppers and distinctive savory sauces, Cozymel's brings new zest to fresh seafood, grilled beef and chicken and slow-roasted pork dishes reflecting...

  • Page 21
    Tropical. Not Typical. La Marina 19

  • Page 22
    ..., hand-rolled summer rolls, several varieties of noodles, made from scratch sauces and curries - accompanied by homemade ginger ale, hibiscus iced tea or a tropical cocktail. Relieve the stress of the day. Breathe deeply. Sip some tea. Visit the Stir Fry Bar. Experience Big Bowl - Fresh Asian...

  • Page 23
    Shanghai Classic with Vegetables Fresh Asian Cooking 21

  • Page 24
    .... Blackboard Specials, featuring signature entrees, that change daily keep this casual seafood eatery fresh. Rockfish Seafood Grill's warm and casual atmosphere makes it a neighborhood favorite for families everywhere - soon to have ten locations in Texas. Rockfish Seafood Grill...great seafood...

  • Page 25
    Array of Rockfish Seafood Fish Happens 23 TM

  • Page 26
    Eatzi's Market & Bakery® continues to enjoy success providing restaurantquality take-home meals to people who are hungry for time - as well as good food. Every day, our awardwinning chefs freshly prepare over 1,800 signature menu items for a steady stream of customers who depend on Eatzi's® for ...

  • Page 27
    Swordfish with Mango Salsa, Couscous, & Asparagus Time to eatZi's 25

  • Page 28
    ... Vice President of Food and Beverage Purchasing Ron Kirk Mayor, City of Dallas, Texas, and Partner, Gardere Wynne Sewell, LLP Todd E. Diener Chili's Grill & Bar President Randall R. Kies Vice President of Marketing - Chili's Grill & Bar Jeffrey A. Marcus Private Investor John C. Miller Romano...

  • Page 29
    ...e s ta u r a n t c o n c e p t s CHILI'S GRILL & BAR ROMANO'S MACARONI GRILL BIG BOWL Todd E. Diener President John C. Miller President Wilson L. Craft President Scott D. Nietschmann Senior Vice President and Chief Operating Officer Stuart K. Gee Vice President of Operations Bruce Cost Vice...

  • Page 30
    ...annual report filed with the Securities and Exchange Commission on Form 10-K for the 2001 fiscal year upon written request from the shareholder addressed to: Secretary/Investor Relations Brinker International, Inc. 6820 LBJ Freeway Dallas, TX 75240 (972) 980-9917 www.brinker.com Chili's Grill & Bar...

  • Page 31
    ... STATEMENTS Page Selected Financial Data ...Management's Discussion and Analysis of Financial Condition and Results of Operations ...Consolidated Statements of Income-Fiscal Years Ended June 27, 2001, June 28, 2000, and June 30, 1999 ...Consolidated Balance Sheets-June 27, 2001 and June 28, 2000...

  • Page 32
    ... outstanding ...Diluted weighted average shares outstanding ...Balance Sheet Data (End of Period): Working capital deficit ...Total assets ...Long-term obligations ...Shareholders' equity ...Number of Restaurants Open (End of Period): Company-operated ...Franchised/Joint Venture ... $ $ 1.46 - 1.46...

  • Page 33
    ...that influenced the performance of Brinker International, Inc. (the ''Company'') during the past three fiscal years, the following discussion should be read in conjunction with the consolidated financial statements and related notes found elsewhere in this annual report. The Company has a 52/53 week...

  • Page 34
    ... to a scheduled repayment. Other, net decreased in both fiscal 2001 and 2000 as a result of reduced equity losses related to the Company's share in equity method investees. Additionally, in fiscal 2001, other, net decreased due to the acquisition of the remaining interest in the Big Bowl restaurant...

  • Page 35
    ... or $0.06 per diluted share in fiscal 1999. This new accounting standard accelerated the Company's recognition of preopening costs, but has benefited the post-opening results of new restaurants. NET INCOME AND NET INCOME PER SHARE Fiscal 2001 net income and diluted net income per share increased 23...

  • Page 36
    ... Wildfire restaurant concept. On April 12, 2001, the Company spent approximately $93.5 million, of which approximately $40.9 million represented assumption of debt, for the purchase of 40 Chili's, three Chili's sites under construction, and seven On The Border locations from NERCO. The acquisition...

  • Page 37
    ... rate change on the outstanding balance of the variable rate financial instruments as of June 27, 2001 would be approximately $2.0 million. The Company purchases certain commodities such as beef, chicken, flour, and cooking oil. These commodities are generally purchased based upon market prices...

  • Page 38
    ... 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...

  • Page 39
    ...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...

  • Page 40
    ... locations for new restaurants, obtain all required governmental permits (including zoning approvals and liquor licenses) on a timely basis, hire all necessary contractors and subcontractors, and meet construction schedules. The costs related to restaurant and concept development include purchases...

  • Page 41
    BRINKER INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) 2001 Fiscal Years 2000 1999 Revenues ...Operating Costs and Expenses: Cost of sales ...Restaurant expenses ...Depreciation and amortization ...General and administrative ...Total operating costs ...

  • Page 42
    BRINKER INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) 2001 2000 ASSETS Current Assets: Cash and cash equivalents ...Accounts receivable ...Inventories ...Prepaid expenses ...Deferred income taxes ...Other ...Total current assets ...Property and ...

  • Page 43
    ..., net of tax ...Comprehensive income ...Purchases of treasury stock ...Issuances of common stock ...Tax benefit from stock options exercised ...Amortization of unearned compensation ...Issuance of restricted stock, net of forfeitures ...Balances at June 27, 2001 ... - 117,840 - - (3,187) - 10,837...

  • Page 44
    ...by operating activities ...Cash Flows from Investing Activities: Payments for property and equipment ...Payment for purchases of restaurants ...Proceeds from sale of affiliate ...Proceeds from sales of marketable securities . Investments in equity method investees ...Net repayments from (advances to...

  • Page 45
    ...equivalents. The Company's financial instruments at June 27, 2001 and June 28, 2000 consist of cash equivalents, accounts receivable, notes receivable, and long-term debt. The fair value of these financial instruments approximates the carrying amounts reported in the consolidated balance sheets. The...

  • Page 46
    ... fiscal 1999. This new accounting standard accelerated the Company's recognition of preopening costs, but has benefited the post-opening results of new restaurants. Excluding the one-time cumulative effect, the adoption of the new accounting standard reduced the Company's reported results for fiscal...

  • Page 47
    ... method for measuring employee stock-based compensation cost which measures compensation cost as the excess, if any, of the quoted market price of the Company's common stock at the grant date over the amount the employee must pay for the stock. The Company's policy is to grant stock options at the...

  • Page 48
    ... financial statements and the reported amounts of revenues and costs and expenses during the reporting period. Actual results could differ from those estimates. 2. BUSINESS COMBINATIONS On February 1, 2001, the Company acquired the remaining 50% interest in the Big Bowl restaurant concept from its...

  • Page 49
    ...benefit): Federal ...State ...Total deferred income tax expense ... A reconciliation between the reported...2001 2000 1999 Income tax expense at statutory rate ...FICA tax credit ...State income taxes, net of Federal benefit... 2001 2000 Deferred income tax assets: Insurance reserves ...Employee benefit...

  • Page 50
    ... 2020, and bear interest at rates ranging from 8.44% to 10.75% per year. The obligations are collateralized by the acquired restaurant properties. Excluding capital lease obligations (see Note 7), the Company's long-term debt maturities for the five years following June 27, 2001 are as follows (in...

  • Page 51
    ....1 million at June 27, 2001. This fair value hedge changes the fixed-rate interest on the entire balance of the Company's senior notes to variable-rate interest. Under the terms of the hedges (which expire in fiscal 2005), the Company pays semi-annually a variable interest rate based on either LIBOR...

  • Page 52
    ...unamortized lease balance. The Company believes the future cash flows related to the real estate support the unamortized lease balance. (c) Commitments At June 27, 2001, future minimum lease payments on capital and operating leases were as follows (in thousands): Fiscal Year Capital Leases Operating...

  • Page 53
    ...granted to officers, directors, and eligible employees, as defined. Options are granted at the market value of the underlying common stock on the date of grant, are exercisable beginning one to two years from the date of grant, with various vesting periods, and expire 10 years from the date of grant...

  • Page 54
    ... market value of the underlying common stock on the date of grant, vest one-third each year beginning two years from the date of grant, and expire 10 years from the date of grant. Transactions during fiscal 2001, 2000, and 1999 were as follows (in thousands, except option prices): Number of Company...

  • Page 55
    ..., among other things, its holder to purchase, for an exercise price of $40, a number of shares of Company common stock having a market value of twice the exercise price. The rights may be redeemed by the Board of Directors for $0.01 per right prior to the date of the announcement that a person or...

  • Page 56
    ... employees to defer receipt of up to 20% of their base compensation and 100% of their eligible bonuses, as defined in the plan. The Company matches in Company common stock 25% of the first 5% a non-officer contributes while officers' contributions are matched at the same rate with cash. Employee...

  • Page 57
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During 2001, the Company purchased certain assets and assumed certain liabilities in connection with the acquisition of restaurants. The fair values of the acquired assets and liabilities recorded at the date of acquisition are as follows (in thousands): ...

  • Page 58
    ... owning and developing the restaurant concept. In July 2001, the Company entered into an asset purchase agreement with its franchise partner, Sydran Group, LLC, and Sydran Food Services III, L.P. to acquire 39 Chili's for approximately $55.5 million. The acquisition is expected to be completed...

  • Page 59
    INDEPENDENT AUDITORS' REPORT The Board of Directors Brinker International, Inc.: We have audited the accompanying consolidated balance sheets of Brinker International, Inc. and subsidiaries as of June 27, 2001 and June 28, 2000, and the related consolidated statements of income, shareholders' ...

  • Page 60
    ...records and related data, including minutes of the meetings of the Board of Directors and Committees of the Board. We believe that the representations made to the independent auditors were valid and appropriate. The Company maintains a system of internal controls over financial reporting designed to...

  • Page 61
    ... business trust CHILI'S OF WEST VIRGINIA, INC., a West Virginia corporation CHILI'S OF WISCONSIN, INC., a Wisconsin corporation BRINKER FREEHOLD, INC., a New Jersey corporation MAGGIANO'S OF TYSON'S, INC., a Virginia corporation ROMANO'S OF ANNAPOLIS, INC., a Maryland corporation CHILI'S OF BEL AIR...

  • Page 62
    ... limited partnership BIG BOWL HOLDING CORPORATION, a Delaware corporation BIG BOWL, INC., an Illinois corporation BIG BOWL TEXAS, L.P., a Texas limited partnership BRINKER VERMONT, INC., a Vermont corporation BRINKER NEW ENGLAND I, LLC, a Delaware limited liability company BRINKER NEW ENGLAND II...

  • Page 63
    ... and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended June 27, 2001, which report is incorporated by reference in the June 27, 2001 annual report on Form 10-K of Brinker International, Inc. KPMG LLP Dallas, Texas...

  • Page 64
    B R I N K E R I N T E R N AT I O N A L , I N C . 6 8 2 0 L B J F R E E WAY DALLAS, TEXAS 75240