Chili's 2014 Annual Report Download - page 44

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Interest expense decreased $1.0 million in fiscal 2014 resulting from lower interest rates partially offset by
higher borrowing balances. Interest expense increased $2.3 million in fiscal 2013 as a result of higher borrowing
balances.
Other, net in fiscal 2014, 2013, and 2012 includes $1.9 million, $2.3 million and $3.3 million, respectively,
of sublease income primarily from franchisees as part of the respective sale agreements, as well as other
subtenants.
INCOME TAXES
On a GAAP basis, the effective income tax rate for fiscal 2014 decreased to 28.8 percent compared to
29.1 percent in the prior year primarily due to the increased tax benefit resulting from litigation charges of
$39.5 million in the current year as well as reserve adjustments related to resolved tax positions.
On a GAAP basis, the effective income tax rate increased to 29.1 percent for fiscal 2013 from 27.6 percent
in fiscal 2012 primarily due to increased earnings, lower tax credits and lower favorable reserve adjustments
related to resolved tax positions, partially offset by the increased tax benefit resulting from higher special item
charges in the current year. Excluding other gains and charges, the effective income tax rate increased to
29.9 percent in fiscal 2013 compared to 29.1 percent in the prior year primarily due to higher earnings.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Cash Flow from Operating Activities
During fiscal 2014, net cash flow provided by operating activities was $359.8 million compared to
$290.7 million in the prior year. The increase was driven by an increase in current year earnings excluding non-
cash charges primarily related to litigation reserves and the timing of operational payments.
The working capital deficit increased to $255.3 million at June 25, 2014 from $192.6 million at June 26,
2013. The increase was driven primarily by an increase in reserves related to litigation matters, the gift card
liability and increased income taxes payable.
Cash Flow Used In Investing Activities
2014 2013
Net cash used in investing activities (in thousands):
Payments for property and equipment .................... $(161,066) $(131,531)
Proceeds from sale of assets ........................... 888 17,157
Payments for purchase of restaurants .................... 0 (24,622)
Insurance recoveries ................................. 0 1,152
$(160,178) $(137,844)
Net cash used in investing activities for fiscal 2014 increased to $160.2 million compared to $137.8 million
in the prior year. Capital expenditures increased to $161.1 million for fiscal 2014 compared to $131.5 million for
fiscal 2013 driven by increased new restaurant construction, purchases for the ongoing Chili’s reimage program
and fryer equipment. Capital expenditures in fiscal 2013 included purchases related to our kitchen retrofit
initiative, which was completed in the second quarter of fiscal 2013. We estimate that our capital expenditures
during fiscal 2015 will be approximately $130 million to $140 million and will be funded entirely by cash from
operations.
F-8