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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 28, 2000 Commission File No. 1-10275
BRINKER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1914582
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
6820 LBJ Freeway, Dallas, Texas 75240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (972) 980-9917
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $0.10 par value
Stock Purchase Rights
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ___
The aggregate market value of the voting stock held by
persons other than directors and officers of registrant (who
might be deemed to be affiliates of registrant) at September 11,
2000 was $2,065,032,129.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
Outstanding at
Class September 11, 2000
Common Stock, $0.10 par value 66,056,817 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Shareholders
for the fiscal year ended June 28, 2000 are incorporated by
reference into Parts I, II and IV hereof, to the extent indicated
herein. Portions of the registrant's Proxy Statement dated
September 22, 2000, for its annual meeting of shareholders on
November 9, 2000, are incorporated by reference into Part III
hereof, to the extent indicated herein.
PART I
Item 1. BUSINESS.
General
Brinker International, Inc. ("Company") is principally
engaged in the ownership, operation, development and
franchising of the Chili's Grill & Bar ("Chili's"),
Romano's Macaroni Grill ("Macaroni Grill"), On The Border
Mexican Grill & Cantina ("On The Border"), Cozymel's
Coastal Mexican Grill ("Cozymel's"), Maggiano's Little
Italy ("Maggiano's"), and Corner Bakery Cafe ("Corner
Bakery") restaurant concepts. In addition, the Company is
involved in the ownership, and is or has been involved in
the development, of the Big Bowl ("Big Bowl"), Wildfire
("Wildfire"), and Eatzi's Market and Bakery ("Eatzi's")
concepts. The Company was organized under the laws of the
State of Delaware in September 1983 to succeed to the
business operated by Chili's, Inc., a Texas corporation,
organized in August 1977. The Company completed the
acquisitions of Macaroni Grill, On The Border, Cozymel's,
Maggiano's, and Corner Bakery in November 1989, May 1994,
July 1995, August 1995, and August 1995, respectively.
Core Restaurant Concepts
Chili's Grill & Bar
Chili's is a full-service Southwestern-themed
restaurant, featuring a casual atmosphere and a varied
menu of chicken, beef and seafood entrees, steaks,
hamburgers, ribs, fajitas, sandwiches, salads, appetizers
and desserts, all of which are prepared fresh daily
according to special Chili's recipes.
Chili's restaurants feature quick, efficient and
friendly table service designed to minimize customer
waiting time and facilitate table turnover, with an
average turnover time per table of approximately 45
minutes. Service personnel are dressed casually in jeans,
knit shirts and aprons to reinforce the casual, informal
environment. The decor of a Chili's restaurant consists of
booth seating, tile-top tables, hanging plants and wood
and brick walls covered with interesting memorabilia.
Emphasis is placed on serving substantial portions of
fresh, high quality food at modest prices. Entree
selections range in menu price from $5.29 to $13.99, with
the average revenue per meal, including alcoholic
beverages, approximating $10.38 per person. A full-
service bar is available at each Chili's restaurant, with
frozen margaritas offered as the concept's specialty
drink. During the year ended June 28, 2000, food and
non-alcoholic beverage sales constituted approximately
86.3% of the concept's total restaurant revenues, with
alcoholic beverage sales accounting for the remaining
13.7%.
Romano's Macaroni Grill
Macaroni Grill is a casual, country-style Italian
restaurant which specializes in family-style recipes and
features seafood, meat, chicken, pasta, salads, pizza,
appetizers and desserts with a full-service bar in most
restaurants. Exhibition cooking, pizza ovens and
rotisseries provide an enthusiastic and exciting
environment in the restaurants. Macaroni Grill
restaurants also feature white linen-clothed tables,
fireplaces, sous stations and prominent displays of wines.
Service personnel are dressed in white, starched shirts
and aprons, dark slacks, and bright ties.
Entree selections range in menu price from $5.29 to
$16.99 with certain specialty items priced on a daily
basis. The average revenue per meal, including alcoholic
beverages, is approximately $13.73 per person. During the
year ended June 28, 2000, food and non-alcoholic beverage
sales constituted approximately 86.1% of the concept's
total restaurant revenues, with alcoholic beverage sales
accounting for the remaining 13.9%.
On The Border Mexican Grill & Cantina
On The Border restaurants are full-service, casual
Mexican restaurants featuring mesquite-grilled specialties
and traditional Tex-Mex entrees and appetizers served in
generous portions at modest prices. On The Border
restaurants feature an outdoor patio, a full-service bar,
booth and table seating and brick and wood walls with a
Southwest decor. On The Border restaurants also offer
enthusiastic table service intended to minimize customer
waiting time and facilitate table turnover while
simultaneously providing customers with a satisfying
casual dining experience.
Entree selections range in menu price from $4.99 to
$12.99, with the average revenue per meal, including
alcoholic beverages, approximating $12.40 per person.
During the year ended June 28, 2000, food and non-
alcoholic beverage sales constituted approximately 78.2%
of the concept's total restaurant revenues, with alcoholic
beverage sales accounting for the remaining 21.8%.
Cozymel's Coastal Mexican Grill
Cozymel's restaurants are casual, upscale coastal
Mexican restaurants featuring daily fresh fish features,
grilled chicken and beef, and slow-roasted pork entrees,
appetizers, desserts and a full-service bar featuring a
wide variety of signature margaritas and specialty frozen
beverages. Cozymel's restaurants offer a "tropical, not
typical" Mexican atmosphere, which includes an outdoor
patio, intended to evoke the atmosphere of a coastal
Mexican seaside resort.
Entree selections range in menu price from $5.99 to
$19.99 with the average revenue per meal, including
alcoholic beverages, approximating $14.59 per person.
During the year ended June 28, 2000, food and non-
alcoholic beverage sales constituted approximately 74.9%
of the concept's total restaurant revenues, with alcoholic
beverages accounting for the remaining 25.1%.
Maggiano's Little Italy
Maggiano's restaurants are classic re-creations of a
New York City pre-war "Little Italy" dinner house. Each
of the Maggiano's restaurants is a casual, full-service
Italian restaurant with a family-style menu as well as a
full lunch and dinner menu offering southern Italian
appetizers, homemade bread, bountiful portions of pasta,
chicken, seafood, veal and prime steaks, as well as a full
range of alcoholic beverages. Most Maggiano's restaurants
also feature extensive banquet facilities. Entree
selections range in menu price from $7.95 to $29.95, with
the average revenue per meal, including alcoholic
beverages, approximating $25.29 per person. During the
year ended June 28, 2000, food and non-alcoholic beverage
sales constituted approximately 78.3% of the concept's
total restaurant revenues, with alcoholic beverage sales
accounting for the remaining 21.7%.
Corner Bakery Cafe
Corner Bakery is a retail bakery cafe serving
breakfast, lunch and dinner in the emerging fast-casual
dining segment. Corner Bakery offers fresh muffins,
brownies, cookies and specialty items, as well as hearth-
baked breads, rolls and baguettes, all of which are
created daily by artisan bakers. The breads offered by
Corner Bakery include crusty country boules, and specialty
breads such as raisin-pecan, Kalamata olive ciabatta,
cranberry-orange, multi-grain harvest, and ryes.
While retaining a relaxed atmosphere, Corner Bakery
exemplifies casual elegance, with most bakeries having
both indoor and outdoor seating. In addition to breads,
breakfast and dessert sweets, featured in the cafes are
specialty sandwiches, fresh salads, warm soups, paninis,
pasta and pizzas. New savory foods, breads and sweets are
created seasonally to take advantage of the highest
quality ingredients available. Corner Bakery's catering
group offers a wide range of gift baskets, breakfast and
sandwich trays and lunch boxes for any size meeting or
social event. Prices for menu items range from $1.00 to
$7.99 with the average revenue per meal, including
alcoholic beverages, approximating $8.27 per person.
During the year ended June 28, 2000, food and non-
alcoholic beverage sales constituted over 99% of the
concept's total restaurant revenues. Catering sales
constituted approximately 14.5% of such food and non-
alcoholic beverage sales.
Jointly-Developed Restaurant Concepts
Big Bowl
Big Bowl features contemporary Asian cuisine prepared
with fresh ingredients in a casual, vibrant atmosphere.
Big Bowl is distinguished by its authentic, full-flavored
menu that features five kinds of fresh noodles, chicken
pot stickers and dumplings, hand-rolled summer rolls,
seasonal stir-fry dishes featuring local produce, wok-
seared fish, and signature beverages, such as "homemade"
fresh ginger ale and tropical cocktails. Big Bowl's focus
on quality means garlic, ginger and lemon grass are
chopped daily, lemon juice is hand squeezed, and peanut
sauce is prepared with home-roasted peanuts. Big Bowl's
flavorful broths, curry pastes, dip sauces and condiments
are made from scratch. Big Bowl's interactive stir-fry
bar allows the guests to help themselves to a "Farmers'
Market" array of vegetables to be wok-cooked with their
own choice of sauces and meats with noodles or rice.
While honoring its Asian culinary tradition, Big Bowl
strives to deliver fine quality at great value, assisted
by a service team carefully trained to guide guests
through this new culinary experience. Entree selections
range in menu price from $6.95 to $12.95, with the average
revenue per meal, including alcoholic beverages,
approximating $13.68 per person. During the year ended
June 28, 2000, food and non-alcoholic beverage sales
constituted approximately 87.2% of the concept's total
restaurant revenues, with alcoholic beverage sales
accounting for the remaining 12.8%.
Wildfire
Wildfire restaurants are authentic 1940's style steak
houses featuring an open kitchen consisting of a hardwood
burning oven and rotisserie. Each of the Wildfire
restaurants is a casual, full-service restaurant offering
broiled steaks, chops, fresh seafood, barbecued ribs,
pizza, spit-roasted chicken, salads to share, and a full
line of cocktails with a complete wine list to complement
the menu. Entree selections range from $12.95 to $26.95,
with the average revenue per meal, including alcoholic
beverages, approximating $22.18 per person. During the
year ended June 28, 2000, food and non-alcoholic beverage
sales constituted approximately 78.0% of the concept's
total restaurant revenues, with alcoholic beverages
accounting for the remaining 22.0%.
Eatzi's Market and Bakery
Eatzi's is a home meal replacement retail market, which
offers customers just about everything in the meal
spectrum, from fresh produce and raw meats and seafood to
restaurant-quality, chef-prepared meals-to-go. Eatzi's
also provides a tremendous variety of "made from scratch"
breads and pastries along with dry groceries, deli meats
and cheeses, made-to-order salads and sandwiches, a coffee
bar, and fresh cut flowers. Large selections of non-
alcoholic beverages, wine, and beer are available to
complete the meal. Specialty packaged items, specifically
selected to complement the fresh choices, are also
available.
Eatzi's features an abundance of fresh, high-quality
meals, openly presented in distinctive areas, replicating
an energetic European marketplace with an exhibition
kitchen and bakery. The circular chef's display case is
the focal point of the store designed to channel customer
traffic around to other departments. There is limited
indoor and outdoor seating since the emphasis is on take-
out purchases.
Emphasis is placed on restaurant-quality cuisine,
prepared fresh daily by highly skilled and culinary-
trained chefs using Eatzi's unique recipes. Certain
designated menu items are rotated weekly to provide
variety and to augment the core menu. Corporate chefs are
constantly developing and testing new recipes to ensure
high-quality and ample variety in addition to keeping
ahead of the customer's changing taste profiles.
Individual meal selections range in price from $4.99 to
$10.99 with the average revenue per purchase, including
alcoholic beverages, approximating $17.49. During the
year ended June 28, 2000, food and non-alcoholic beverage
sales constituted 95.0% of the concept's total revenues,
with alcoholic beverages accounting for the remaining
5.0%. Catering sales constituted approximately 18.6% of
such food and non-alcoholic beverage sales.
Business Development
The Company's long-term objective is to continue
expansion of its restaurant concepts by opening
Company-operated units in strategically desirable markets.
The Company intends to concentrate on development of
certain identified markets to achieve penetration levels
deemed desirable by the Company in order to improve the
Company's competitive position, marketing potential and
profitability. Expansion efforts will be focused not only
on major metropolitan areas in the United States but also
on smaller market areas and nontraditional locations (such
as airports, kiosks and food courts) which can adequately
support any of the Company's restaurant concepts.
The Company considers the restaurant site selection
process critical to its long-term success and devotes
significant effort to the investigation of new locations
utilizing a variety of sophisticated analytical
techniques. The site selection process focuses on a
variety of factors including: trading-area demographics,
such as target population density and household income
levels; an evaluation of site characteristics such as
visibility, accessibility and traffic volume; proximity to
activity centers such as shopping malls, hotel/motel
complexes and offices; and an analysis of the potential
competition. Members of management inspect and approve
each restaurant site prior to its acquisition.
The Company periodically reevaluates restaurant sites
to ensure that site selection attributes have not
deteriorated below minimum standards. In the event site
deterioration were to occur, the Company makes a concerted
effort to improve the restaurant's performance by
providing physical, operating and marketing enhancements
unique to each restaurant's situation. If efforts to
restore the restaurant's performance to acceptable minimum
standards are unsuccessful, the Company considers
relocation to a proximate, more desirable site, or
evaluates closing the restaurant if the Company's
criteria, such as return on investment and area
demographic data, do not support a relocation. Since
inception, the Company has closed thirty-five restaurants,
including eleven in fiscal 2000, which were performing
below the Company's standards primarily due to declining
trading-area demographics. The Company operates pursuant
to a strategic plan targeted to support the Company's long-
term growth objectives, with a focus on continued
development of those restaurant concepts that have the
greatest return potential for the Company and its
shareholders.
The following table illustrates the system-wide
restaurants opened in fiscal 2000 and the planned openings
in fiscal 2001:
Fiscal 2000 Fiscal 2001
Openings Projected Openings
Chili's:
Company-Operated 35 37-40
Franchise 33 42-45
Macaroni Grill:
Company-Operated 17 17-20
Franchise 1 1-3
On The Border:
Company-Operated 15 8-11
Franchise 7 4-6
Cozymel's 0 1-2
Maggiano's 2 2-3
Corner Bakery:
Company-Operated 7 7-10
Franchise 1 0
Big Bowl 2 2-3
TOTAL 120 121-143
The Company anticipates that some of the fiscal 2001
projected restaurant openings will be constructed pursuant
to "build-to-suit" agreements, in which the lessor
contributes the land cost and all, or substantially all,
of the building construction costs. In other cases, the
Company may either lease or own the land (paying for any
owned land from its own funds) and either lease or own the
building, furniture, fixtures and equipment (paying for
any owned items from its own funds).
The following table illustrates the approximate average
capital investment for a typical unit in the Company's
primary restaurant concepts:
Chili's Macaroni Grill On The Border Cozymel's Maggiano's Corner Bakery
Land $ 600,000 $1,000,000 $ 750,000 $1,000,000 $3,000,000 $ 800,000
Building 1,080,000 1,400,000 1,300,000 1,500,000 3,300,000 570,000
Furniture &
Equipment 450,000 565,000 615,000 700,000 1,200,000 300,000
Other 60,000 100,000 65,000 100,000 130,000 25,000
TOTAL $2,190,000 $3,065,000 $2,730,000 $3,300,000 $7,630,000 $1,695,000
The specific rate at which the Company is able to open
new restaurants is determined by its success in locating
satisfactory sites, negotiating acceptable lease or
purchase terms, securing appropriate local governmental
permits and approvals, and by its capacity to supervise
construction and recruit and train management personnel.
Franchise Operations
The Company intends to continue its expansion through
joint venture and franchise development, both domestically
and internationally. At June 28, 2000, forty-one total
joint venture or franchise development agreements existed.
During the year ended June 28, 2000, thirty-three Chili's,
one Macaroni Grill, seven On The Border, and one Corner
Bakery franchised restaurants were opened.
The Company has entered into international franchise
agreements, which will bring Chili's to Qatar and Macaroni
Grill to Puerto Rico in the 2001 fiscal year. In fiscal
2000, the first Chili's restaurants opened in Guatemala
(November 1999) and Saudi Arabia (November 1999), and the
first Macaroni Grill restaurant opened in Mexico (January
2000).
The Company intends to selectively pursue international
expansion and is currently contemplating development in
other countries. A typical franchise development agreement
provides for payment of area development and initial
franchise fees in addition to subsequent royalty and
advertising fees based on the gross sales of each
restaurant. Future franchise development agreements are
expected to remain limited to enterprises having
significant experience as restaurant operators and proven
financial ability to develop multi-unit operations.
Jointly-Developed Operations
The Company has previously entered into agreements for
research and development activities related to the testing
of new restaurant concepts and has a significant equity
interest in such ventures. The Company holds a 50%
interest in the legal entities owning the six Big Bowl
restaurants located in Chicago (3), Lincolnshire, and
Schaumburg, Illinois and Edina, Minnesota and the three
Wildfire restaurants located in Chicago (2) and
Lincolnshire, Illinois.
Restaurant Management
The Company's philosophy to maintain and operate each
concept as a distinct and separate entity ensures that the
culture, recruitment and training programs and unique
operating environments are preserved. These factors are
critical to the viability of each concept. Each concept is
directed by a president and one or more concept vice
presidents and senior vice presidents.
The Company's restaurant management structure varies by
concept. The individual restaurants themselves are led by
a management team including a general manager and between
two to five additional managers. The level of restaurant
supervision depends upon the operating complexity and
sales volume of each concept. An area director/supervisor
is responsible for the supervision of, on average, three
to seven restaurants. For those concepts with a
significant number of units within a geographical region,
additional levels of management may be provided.
The Company believes that there is a high correlation
between the quality of restaurant management and the long-
term success of a concept. In that regard, the Company
encourages increased tenure at all management positions
through various short and long-term incentive programs,
including equity ownership. These programs, coupled with
a general management philosophy emphasizing quality of
life, have enabled the Company to attract and retain
management employees at levels above the industry norm.
The Company ensures consistent quality standards in all
concepts through the issuance of operations manuals
covering all elements of operations and food and beverage
manuals, which provide guidance for preparation of Company-
formulated recipes. Routine visitation to the restaurants
by all levels of supervision enforce strict adherence to
Company standards.
The director of training for each concept is
responsible for maintaining each concept's operational
training program. The training program includes a four to
five month training period for restaurant management
trainees, a continuing management training process for
managers and supervisors, and training teams consisting of
groups of employees experienced in all facets of
restaurant operations that train employees to open new
restaurants. The training teams typically begin on-site
training at a new restaurant seven to ten days prior to
opening and remain on location two to three weeks
following the opening to ensure the smooth transition to
operating personnel.
Purchasing
The Company's ability to maintain consistent quality of
products throughout each of its restaurant concepts
depends upon acquiring food products and related items
from reliable sources. Suppliers are pre-approved by the
Company and are required, along with the restaurants, to
adhere to strict product specifications established
through the Company's quality assurance program to ensure
that high quality, wholesome food and beverage products
are served in the restaurants. The Company negotiates
directly with the major suppliers to obtain competitive
prices and uses purchase commitment contracts to stabilize
the potentially volatile pricing associated with certain
commodity items. All essential food and beverage products
are available, or upon short notice can be made available,
from alternative qualified suppliers in all cities in
which the Company's restaurants are located. Because of
the relatively rapid turnover of perishable food products,
inventories in the restaurants, consisting primarily of
food, beverages and supplies, have a modest aggregate
dollar value in relation to revenues.
Advertising and Marketing
The Company's concepts generally focus on the eighteen
to fifty-four year old age group, which constitutes
approximately half of the United States population.
Members of this population segment grew up on fast food,
but the Company believes that, with increasing maturity,
they prefer a more adult, upscale dining experience. To
attract this target group, the Company relies primarily on
television, radio, direct mail advertising and
word-of-mouth information communicated by customers.
The Company's franchise agreements require advertising
contributions to the Company to be used exclusively for
the purpose of maintaining, directly administering and
preparing standardized advertising and promotional
activities. Franchisees spend additional amounts on local
advertising when approved by the Company.
Employees
At June 28, 2000, the Company employed approximately
68,000 persons, of whom approximately 900 were corporate
personnel, 4,100 were restaurant area directors, managers
or trainees and 63,000 were employed in non-management
restaurant positions. The executive officers of the
Company have an average of approximately twenty-two years
of experience in the restaurant industry.
The Company considers its employee relations to be good
and believes that its employee turnover rate is
commensurate with the industry average. Most employees,
other than restaurant management and corporate personnel,
are paid on an hourly basis. The Company believes that it
provides working conditions and wages that compare
favorably with those of its competition. The Company's
employees are not covered by any collective bargaining
agreements.
Trademarks
The Company has registered, among other marks, "Big
Bowl", "Brinker International", "Chili's", "Chili's Grill
& Bar", "Chili's Too", "Chili's Bar & Bites", "Chili's
Southwest Grill & Bar", "Corner Bakery", "Cozymel's",
"Cozymel's Coastal Mexican Grill", "Eatzi's", "Eatzi's
Market & Bakery", "Romano's Macaroni Grill", "Macaroni
Grill", "Maggiano's Little Italy", "On The Border", "On
The Border Mexican Cafe", "Pizzaahhh!", and "Wildfire" as
trademarks with the United States Patent and Trademark
Office.
Risk Factors/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, 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.
Competition. 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.
Seasonality. The Company's sales volumes fluctuate
seasonally, and are generally higher in the summer months
and lower in the winter months.
Governmental Regulations. 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 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 does not, at this
time, anticipate any occurring in the future.
The Company is subject to federal and state
environmental regulations, but these have not had a
material negative effect on the Company's operations.
More stringent and varied requirements of local and state
governmental bodies with respect to zoning, land use and
environmental factors could delay or prevent development
of new restaurants in particular locations. The Company
is subject to the Fair Labor Standards Act, which governs
such matters as minimum wages, overtime and other working
conditions, along with the American With Disabilities Act
and various family leave mandates. Although the Company
expects increases in payroll expenses as a result of
federal and state mandated increases in the minimum wage,
such increases are not expected to be material. However,
the Company is uncertain of the repercussion, if any, on
other expenses as vendors are impacted by higher minimum
wage standards.
Inflation. The Company has not experienced a
significant overall impact from inflation. As operating
expenses increase, the Company, to the extent permitted by
competition, recovers increased costs by increasing menu
prices or by reviewing, then implementing, alternative
products or processes.
Other Risk Factors. Other risk factors that could
cause the Company's actual results to differ materially
from those indicated in the forward-looking statements
include, without limitation, changes in economic
conditions, consumer perceptions of food safety, changes
in consumer tastes, governmental monetary policies,
changes in demographic trends, availability of employees,
and weather and other acts of God.
Item 2. PROPERTIES.
Restaurant Locations
At June 28, 2000, the Company's system of company-
operated, jointly-developed and franchised units included
1,038 restaurants located in forty-seven states,
Washington, D.C., Australia, Austria, Bahrain, Canada,
Egypt, Great Britain, Guatemala, Indonesia, Kuwait,
Lebanon, Malaysia, Mexico, Peru, Philippines, Puerto Rico,
Saudi Arabia, South Korea, United Arab Emirates, and
Venezuela. The Company's portfolio of restaurants is
illustrated below:
Chili's:
Company-Operated 466
Franchise 219
Macaroni Grill:
Company-Operated 145
Franchise 4
On The Border:
Company-Operated 82
Franchise 27
Cozymel's 13
Maggiano's 12
Corner Bakery:
Company-Operated 56
Franchise 1
Big Bowl 6
Wildfire 3
Eatzi's 4
TOTAL 1,038
The 685 Chili's restaurants include domestic locations
in forty-seven states and the District of Columbia and
foreign locations in nineteen countries. The 149 Macaroni
Grill restaurants include domestic locations in thirty-six
states and foreign locations in Canada, Great Britain and
Mexico. The On The Border, Cozymel's, Maggiano's, Corner
Bakery, Big Bowl and Wildfire restaurants, and Eatzi's
markets, are located exclusively within the United States
in thirty, eight, seven (and the District of Columbia),
seven (and the District of Columbia), two, one, and three
states, respectively.
Restaurant Property Information
The following table illustrates the approximate average
dining capacity for each current prototypical unit in
primary restaurant concepts:
Chili's Macaroni Grill On The Border Cozymel's Maggiano's
Square Feet 4,500 - 5,500 6,800 - 7,600 6,500 - 7,200 9,400 14,000 - 18,000
Dining Seats 145 - 215 250 - 275 220 - 240 380 500 - 725
Dining Tables 35 - 50 55 - 70 55 - 60 85 100 - 150
Corner Bakery's size and dining capacity varies based
upon whether it is an in-line or kiosk location. For a
Corner Bakery located in a kiosk, the square footage is 170
square feet, the number of dining seats is forty, and the
number of dining tables is fifteen. For in-line Corner
Bakery locations, the square footage ranges from 1,971 to
5,347, the number of dining seats ranges from 88 to 143,
and the number of dining tables ranges from thirty to
fifty.
Certain of the Company's restaurants are leased for an
initial term of five to thirty years, with renewal terms of
one to thirty years. The leases typically provide for a
fixed rental plus percentage rentals based on sales volume.
At June 28, 2000, the Company owned the land and/or
building for 529 of the 776 Company-operated restaurants.
The Company considers that its properties are suitable,
adequate, well-maintained and sufficient for the operations
contemplated.
Other Properties
The Company leases warehouse space totalling
approximately 39,150 square feet in Carrollton, Texas,
which it uses for storage of equipment and supplies. The
Company purchased an office building containing
approximately 105,000 square feet for its corporate
headquarters in July 1989. This office building was
expanded in May 1997 by the addition of a 2,470 square foot
facility used for menu development activities. In January
1996, the Company purchased an additional office complex
containing three buildings and approximately 198,000 square
feet for the expansion of its corporate headquarters.
Approximately 119,000 square feet of this complex is
currently utilized by the Company, with the remaining
79,000 square feet under lease, listed for lease to third
party tenants, or reserved for future expansion of the
Company headquarters. In November 1997, the Company sold
the office complex and is leasing it back under a twenty
year operating lease. The Company also leases office space
in California, Florida, Georgia, Illinois, New Jersey and
Texas for use as regional operation or real
estate/construction offices. The size of these office
leases range from 1,000 square feet to 3,600 square feet.
The Company owns or leases warehouse space in California,
Georgia, Illinois, Texas and Virginia for use as
commissaries for the preparation of bread and other food
products for its Corner Bakery stores. The size of these
commissaries range from 11,383 square feet to 20,000 square
feet.
Item 3. LEGAL PROCEEDINGS.
The Company is engaged in various legal proceedings and
has certain unresolved claims pending. The ultimate
liability, if any, for the aggregate amounts claimed cannot
be determined at this time. However, management of the
Company, based upon consultation with legal counsel, is of
the opinion that there are no matters pending or threatened
which are expected to have a material adverse effect,
individually or in the aggregate, on the Company's
consolidated financial condition or results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS.
The Company's Common Stock is traded on the New York
Stock Exchange ("NYSE") under the symbol "EAT". Bid prices
quoted represent interdealer prices without adjustment for
retail markup, markdown and/or commissions, and may not
necessarily represent actual transactions. The following
table sets forth the quarterly high and low closing sales
prices of the Common Stock, as reported by the NYSE.
Fiscal year ended June 28, 2000:
First Quarter 28.75 23.00
Second Quarter 27.06 20.19
Third Quarter 27.81 20.81
Fourth Quarter 35.06 26.25
Fiscal year ended June 30, 1999:
First Quarter 20.44 17.50
Second Quarter 26.63 16.00
Third Quarter 30.31 24.38
Fourth Quarter 29.63 23.56
As of September 11, 2000, there were 1,254 holders of
record of the Company's Common Stock.
The Company has never paid cash dividends on its Common
Stock and does not currently intend to do so as profits are
reinvested into the Company to fund expansion of its
restaurant business. Payment of dividends in the future
will depend upon the Company's growth, profitability,
financial condition and other factors, which the Board of
Directors may deem relevant.
During the three-year period ended on September 11,
2000, the Company issued no securities which were not
registered under the Securities Act of 1933, as amended.
Item 6. SELECTED FINANCIAL DATA.
"Selected Financial Data" on page F-2 of the Company's
2000 Annual Report to Shareholders is incorporated herein
by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages F-3 through F-
7 of the Company's 2000 Annual Report to Shareholders is
incorporated herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
"Quantitative and Qualitative Disclosures About Market
Risk" contained within "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
on pages F-6 through F-7 of the Company's 2000 Annual
Report to Shareholders is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Item 14(a)(1).
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
"Directors and Executive Officers" on pages 4 through 8
and "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 14 of the Company's Proxy Statement
dated September 22, 2000 for the annual meeting of
shareholders on November 9, 2000, are incorporated herein
by reference.
Item 11. EXECUTIVE COMPENSATION INFORMATION.
"Executive Compensation" on pages 9 through 10 and
"Report of the Compensation Committee" on pages 10 through
13 of the Company's Proxy Statement dated September 22,
2000, for the annual meeting of shareholders on November
9, 2000, are incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
"Principal Shareholders" on page 2 and "Security
Ownership of Management and Election of Directors" on
pages 3 through 4 of the Company's Proxy Statement dated
September 22, 2000, for the annual meeting of shareholders
on November 9, 2000, are incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
"Compensation Committee Interlocks and Insider
Participation" on pages 14 through 15 of the Company's
Proxy Statement dated September 22, 2000, for the annual
meeting of shareholders on November 9, 2000, is
incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.
(a) (1) Financial Statements.
Reference is made to the Index to Financial Statements
attached hereto on page 18 for a listing of all financial
statements incorporated herein from the Company's 2000
Annual Report to Shareholders.
(a) (2) Financial Statement Schedules.
None.
(a) (3) Exhibits.
Reference is made to the Exhibit Index preceding the
exhibits attached hereto on page E-1 for a list of all
exhibits filed as a part of this Report.
(b) Reports on Form 8-K
The Company was not required to file a current report
on Form 8-K during the fiscal quarter ended June 28, 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BRINKER INTERNATIONAL, INC.,
a Delaware corporation
By:___/s/_____________________________
Russell G. Owens, Executive Vice
President and Chief Financial
and Strategic Officer
Dated: September 22, 2000
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
of the registrant and in the capacities indicated on
September 22, 2000.
Name Title
____/s/________________ Vice Chairman of the Board and Chief
Ronald A. McDougall Executive Officer
(Principal Executive Officer)
___/s/________________ Executive Vice President and Chief
Russell G. Owens Financial and Strategic Officer
(Principal Financial and Accounting
Officer)
___/s/________________ Chairman of the Board
Norman E. Brinker
____/s/_______________ President, Chief Operating Officer
Douglas H. Brooks and Director
___/s/_______________ Director
Donald J. Carty
____________________ Director
Dan W. Cook, III
____/s/______________ Director
Marvin J. Girouard
___/s/________________ Director
J.M. Haggar, Jr.
___/s/________________ Director
Frederick S. Humphries
___/s/________________ Director
Ronald Kirk
___/s/________________ Director
Jeffrey A. Marcus
___/s/________________ Director
James E. Oesterreicher
___/s/________________ Director
Roger T. Staubach
INDEX TO FINANCIAL STATEMENTS
The following is a listing of the financial statements which are
incorporated herein by reference. The financial statements of
the Company included in the Company's 2000 Annual Report to
Shareholders are incorporated herein by reference in Item 8.
2000 Annual
Report Pages
Consolidated Balance Sheets - F-8
June 28, 2000 and June 30, 1999
Consolidated Statements of Income - F-10
Fiscal Years Ended June 28, 2000, June 30, 1999
and June 24, 1998
Consolidated Statements of Shareholders' F-11
Equity - Fiscal Years Ended June 28, 2000,
June 30, 1999 and June 24, 1998
Consolidated Statements of Cash Flows - F-12
Fiscal Years Ended June 28, 2000, June 30, 1999
and June 24, 1998
Notes to Consolidated Financial Statements F-13
Independent Auditors' Report F-25
Management's Responsibility for Consolidated F-26
Financial Statements
All schedules are omitted as the required information is
inapplicable or the information is presented in the
financial statements or related notes.
INDEX TO EXHIBITS
Exhibit
3(a) Certificate of Incorporation of the registrant, as amended. (1)
3(b) Bylaws of the registrant. (1)
10(a) Registrant's 1983 Incentive Stock Option Plan. (2)
10(b) Registrant's 1991 Stock Option Plan for Non-Employee Directors and
Consultants. (3)
10(c) Registrant's 1992 Incentive Stock Option Plan. (3)
10(d) Registrant's Stock Option and Incentive Plan. (4)
10(e) Registrant's 1999 Stock Option and Incentive Plan for Non-Employee
Directors and Consultants. (5)
13 2000 Annual Report to Shareholders. (6)
21 Subsidiaries of the registrant. (5)
23 Independent Auditors' Consent. (5)
27 Financial Data Schedule. (7)
99 Proxy Statement of registrant dated September 22, 2000. (6)
(1) Filed as an exhibit to annual report on Form 10-K for
year ended June 28, 1995 and incorporated herein by
reference.
(2) Filed as an exhibit to annual report on Form 10-K for
year ended June 26, 1996 and incorporated herein by
reference.
(3) Filed as an exhibit to annual report on Form 10-K for
year ended June 25, 1997 and incorporated herein by
reference.
(4) Filed as an exhibit to annual report on Form 10-K for year
ended June 30, 1999 and incorporated herein by reference.
(5) Filed herewith.
(6) Portions filed herewith, to the extent indicated herein.
(7) Filed with EDGAR version.
E-1