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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, 1995 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 (214) 980-9917
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Common Stock, $0.10 par value
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 1, 1995 was $ 1,138,717,530.50.
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 1, 1995
Common Stock, $0.10 par value 76,562,063 Shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Shareholders for the
fiscal year ended June 28, 1995 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 26, 1995, for its annual meeting of
shareholders on November 2, 1995, are incorporated by reference into Part III
hereof, to the extent indicated herein.
PART I
Item 1. BUSINESS.
General
Brinker International, Inc. (the "Company") is principally engaged in
the operation and development of the Chili's Grill & Bar ("Chili's"),
Grady's American Grill ("Grady's"), Romano's Macaroni Grill ("Macaroni
Grill"), Spageddies Italian Kitchen ("Spageddies"), On The Border
Cafes ("On The Border") and Cozymel's - A Very Mexican Grill
("Cozymel's") restaurant 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 Grady's,
Macaroni Grill, Spageddies, On The Border and Cozymel's in
February 1989, November 1989, June 1993, May 1994 and July 1995,
respectively.
Restaurant Concepts and Menus
Chili's Grill & Bar
Chili's establishments are full-service Southwestern-themed
restaurants, featuring a casual atmosphere and a limited menu of
freshly prepared chicken, beef and seafood entrees, 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 or slacks, 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, quality
food at modest prices. Entree selections range in menu price from
$4.69 to $9.99, with the average revenue per meal, including alcoholic
beverages, approximating $9.00 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,
1995, food and non-alcoholic beverage sales constituted approximately
87% of the concept's total restaurant revenues, with alcoholic
beverage sales accounting for the remaining 13%.
Grady's American Grill
Grady's restaurants are casual, upscale dinner house restaurants which
features "made from scratch" recipes and a broad menu focusing on
fresh seafood, prime rib, steaks, chicken and pasta entrees, salads,
sandwiches, appetizers, desserts and a full-service bar. Grady's
restaurants feature booth and table seating, wood and brick walls, and
brass fixtures. Service personnel are dressed smartly, in casual
slacks, blue work shirts and ties, to reinforce the upscale
atmosphere.
The restaurant appeals to a slightly more sophisticated customer than
Chili's. Entree selections range in price from $5.45 to $14.45, with
the average revenue per meal, including alcoholic beverages,
approximating $11.50 per person. During the year ended June 28, 1995,
food and non-alcoholic beverage sales constituted approximately 88% of
the concept's total restaurant revenues, with alcoholic beverage sales
accounting for the remaining 12%.
Romano's Macaroni Grill
Macaroni Grill is an upscale Italian theme restaurant which
specializes in family-style recipes and features fresh seafood, meat,
chicken and pasta entrees, salads, pizza, appetizers and desserts with
a full-service bar in most restaurants. Exhibition cooking, wood-
burning 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 $5.75 to $18.95 with
certain specialty items priced on a daily basis. The average revenue
per meal, including alcoholic beverages, is approximately $13.00 per
person. During the year ended June 28, 1995, food and non-alcoholic
beverage sales constituted approximately 84% of the concept's total
restaurant revenues, with alcoholic beverage sales accounting for the
remaining 16%.
Spageddies Italian Kitchen
Spageddies restaurants are casual, full-service, moderately-priced,
family oriented Italian restaurants featuring rotisserie chicken,
steak and pasta entrees, salads, pizza, appetizers and desserts with a
full-service bar. Spageddies restaurants feature an exhibition
kitchen, a wood-burning pizza oven, booth and table seating, and
prominent displays of peppers, parmesan and tomatoes. Service
personnel are dressed casually in blue jeans and white shirts to
reinforce the casual and informal environment.
Entree selections range in menu price from $4.25 to $11.50, with the
average revenue per meal, including alcoholic beverages, approximating
$9.50 per person. During the year ended June 28, 1995, food and non-
alcoholic beverage sales constituted approximately 91% of the
concept's total restaurant revenues, with alcoholic beverage sales
accounting for the remaining 9%.
On The Border Cafes
On The Border restaurants are full-service, casual Tex-Mex theme
restaurants featuring Southwest 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 $5.29 to $12.99, with the
average revenue per meal, including alcoholic beverages, approximating
$11.50 per person. During the year ended June 28, 1995, food and non-
alcoholic beverage sales constituted approximately 75% of the
concept's total restaurant revenues, with alcoholic beverage sales
accounting for the remaining 25%.
Cozymel's
Cozymel's restaurants are casual, upscale authentic Yucatan
restaurants featuring fish, chicken, beef and pork entrees, salads,
appetizers, desserts and a full-service bar featuring a wide variety
of specialty frozen beverages. Cozymel's restaurants offer an
authentic "Yucatan vacation" atmosphere, which includes a souvenir
shop and an outdoor patio. Service personnel are festively dressed in
colorful T-shirts and black pants.
Entree selections range in menu price from $4.99 to $12.99 with the
average revenue per meal, including alcoholic beverages, approximately
$11.75 per person. During the year ended June 28, 1995, food and non-
alcoholic beverage sales constituted approximately 74% of the
concept's total revenues, with alcoholic beverages accounting for the
remaining 26%.
Restaurant Locations
At June 28, 1995, the Company's system of company-operated, joint
venture and franchised units included 560 restaurants located in 45
states, Canada, Mexico, Singapore, Malaysia, Australia, Egypt, Puerto
Rico, France and Indonesia. The Company's portfolio of restaurants is
illustrated below:
June 28, 1995
Chili's:
Company-Operated 316
Franchise 108
Grady's 44
Macaroni Grill:
Company-Operated 50
Franchise 1
Spageddies:
Company-Operated 12
Franchise 4
On The Border:
Company-Operated 16
Franchise 5
Cozymel's:
Joint Venture 3
R&D Concept:
Company-Operated 1
TOTAL 560
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 on major metropolitan areas in the United States and
smaller market areas 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 senior 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 only five
restaurants, including two each in fiscal 1994 and 1995, which were
performing below the Company's standards primarily due to declining
trading-area demographics. These and future closings will be key to a
successful reallocation of resources to the stronger performing
stores.
The following table illustrates the system-wide restaurants either
opened or acquired in fiscal 1995 and the planned openings in fiscal
1996:
Restaurant Openings
Fiscal 1995 Fiscal 1995 Fiscal 1996
Openings Net Acquisitions Projected Openings
Chili's:
Company-Operated 36 3 35-38
Franchise 30 (5) 30-35
Grady's 11 (1) 6
Macaroni Grill:
Company-Operated 16 0 20
Franchise 0 0 1
Spageddies:
Company-Operated 6 0 4
Franchise 4 0 4-6
On The Border:
Company-Operated 2 0 10
Franchise 0 (2) 1
Cozymel's 2 0 10
TOTAL 107 (5) 121-131
The restaurants acquired by the Company in fiscal 1995 relate to four
Chili's restaurants located in Florida and Georgia which were acquired
on August 3, 1994, from a franchisee in exchange for 505,930 shares of
Company common stock. The Cozymel's restaurants opened in fiscal 1995
were opened by a joint venture in which an affiliate of the Company
owned a fifty percent (50%) interest. Subsequent to the end of fiscal
1995, an affiliate of the Company acquired all of the outstanding
stock in the unaffiliated entity owning the remaining fifty percent
(50%) interest in the joint venture.
The Company anticipates that some of the fiscal 1996 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 either leases the land, and pays for the building,
furniture, fixtures and equipment from its own funds, or owns the
land, building, furniture, fixtures and equipment. The Company's
restaurant concept portfolio allows the Company to purchase multiple
site locations, which offers the Company a competitive advantage in
the real estate market.
As of June 28, 1995, the Company has lease or purchase commitments for
future construction of 39 Chili's, 11 Grady's, 22 Macaroni
Grill, 13 Spageddies, 8 On The Border and 10 Cozymel's restaurant
sites. The Company is currently in the process of completing the
acquisition of sites for fiscal 1996 projected openings and locating
sites for fiscal 1997 projected openings.
The following table illustrates the approximate average capital
investment for a typical unit in our primary restaurant concepts:
Chili's Grady's Macaroni Grill Spageddies On The Border Cozymel's
Land $650,000 $ 800,000 $ 900,000 $700,000 $ 720,000 $ 950,000
Building 975,000 1,075,000 1,100,000 925,000 1,025,000 1,100,000
Furniture &
Equipment 430,000 510,000 510,000 500,000 610,000 690,000
Other 75,000 75,000 75,000 75,000 75,000 80,000
TOTAL $2,130,000 $2,460,000 $2,585,000 $2,200,000 $2,430,000 $2,820,000
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.
Joint Venture and Franchise Operations
The Company intends to continue its expansion through joint venture
and franchise development, both domestically and internationally.
During the year ended June 28, 1995, 30 new Chili's and 4 Spageddies
franchised restaurants were opened and two joint venture-owned
Cozymel's restaurants were opened.
During the past two years, the Company entered into an international
franchise agreement, which will bring Chili's to Great Britain in the
next 12 months. In fiscal 1995, the first Chili's restaurants opened
in Egypt (July 1994), Australia (August 1994), Puerto Rico (September
1994), France (February 1995) and Indonesia (May 1995).
The Company intends to continue pursuing international expansion and
is currently contemplating development in other countries. The
Company has previously entered into joint venture agreements for
research and development activities related to the testing of new
restaurant concepts and typically has a 50% interest in such joint
ventures, which interests are accounted for under the equity method.
A typical joint venture or franchise development agreement provides
for payment of area development and initial franchise fees in addition
to subsequent royalty and advertising fees based on the annual gross
sales of each restaurant. Future joint venture or 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.
At June 28, 1995, 29 total joint venture or franchise development
agreements existed. The Company anticipates that an additional 30-35
franchised Chili's, 4-6 franchised Spageddies, one franchised Macaroni
Grill, and one franchised On The Border restaurants will be opened
during fiscal 1996.
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.
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 three 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. Each concept is directed by a President
or Senior Vice President.
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 & 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, which
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 newly created 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 18 to 54 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.
In addition, the Company has added a new dimension to in-store
marketing with our Frequent Diner Program. Currently offered at
Chili's retaurants, the program rewards customer loyalty by issuing
points with each purchase that are redeemable for meals, hotel stays
and travel.
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.
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.
Employees
At June 28, 1995, the Company employed approximately 37,500 persons,
of whom approximately 750 were corporate personnel, 2,250 were
restaurant managers or trainees and 34,500 were employed in
non-management restaurant positions. Of the 750 corporate employees,
300 were in management positions and approximately 450 were general
office employees. The executive officers of the Company have an
average of more than 20 years of experience in the restaurant
industry.
The Company considers its employee relations to be good and believes
that its employee turnover rate is lower than 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.
Service Marks
The Company has registered, among other marks, "Brinker
International", "Chili's", "Grady's", "Romano's Macaroni Grill",
"Spageddies", "Spageddies Italian Italian Food", and "On The Border"
as service marks with the United States Patent and Trademark Office.
In addition, the Company has service mark applications pending for
"Grady's American Grill", "Spageddies Italian Kitchen" and
"Cozymel's".
Seasonality
The Company's sales volumes fluctuate seasonally, and are generally
higher in the summer months and lower in the winter months.
Governmental Regulation
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.
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.
Item 2. PROPERTIES.
The following table illustrates the approximate average dining
capacity for each prototypical unit in primary restaurant concepts:
Chili's Grady's Macaroni Grill Spageddies On The Border Cozymel's
Square Feet 6,000 7,000 7,300 6,200 7,500 10,500
Dining Seats 215-230 235-245 235-245 220-230 275-300 320-360
Dining Tables 50-60 50-60 65-75 50-60 60-70 70-85
Certain of the Company's restaurants are leased for an initial term of
5 to 30 years, with renewal terms of 1 to 30 years. The leases
typically provide for a fixed rental plus percentage rentals based on
sales volume. At June 28, 1995, the Company owned the land and/or
building for 298 of the 439 Company-operated restaurants. The Company
has closed five restaurants since inception and considers that its
properties are suitable, adequate, well-maintained and sufficient for
the operations contemplated.
The Company leases warehouse space totalling approximately 39,100
square feet in Dallas, Texas, which it uses for menu development
activity and 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. In March 1992, the
Company leased additional office space for the expansion of its
corporate headquarters. This additional office lease was expanded in
July 1994 and currently includes approximately 46,400 square feet of
office space.
Item 3. LEGAL PROCEEDINGS.
None.
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, 1995:
First Quarter 25 7/8 20 1/2
Second Quarter 24 3/8 16 1/2
Third Quarter 20 5/8 16 1/8
Fourth Quarter 17 1/2 14 7/8
Fiscal year ended June 29, 1994:
First Quarter 26 1/2 22 1/6
Second Quarter 30 2/3 25 2/3
Third Quarter 33 1/3 26 5/6
Fourth Quarter 31 1/2 20 3/8
On March 9, 1994, the Company declared a stock split, effected in the
form of a 50% stock dividend ("Stock Dividend") to shareholders of
record on March 21, 1994, payable March 30, 1994. Stock prices in the
preceding table have been restated to reflect the Stock Dividend.
As of September 1, 1995, there were 2,372 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.
Item 6. SELECTED FINANCIAL DATA.
"Selected Financial Data" on page 53 of the Company's 1995 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 54 through 57 of the Company's 1995
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.
The information relating to the Company's directors (including those
officers who are directors) is incorporated herein by reference from
pages 4 through 8 of the Company's Proxy Statement dated September
26, 1995, for the annual meeting of shareholders on November 2, 1995.
Item 11. COMPENSATION INFORMATION.
"Executive Compensation" on pages 8 through 10 of the Company's Proxy
Statement dated September 26, 1995, for the annual meeting of
shareholders on November 2, 1995, is 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 26, 1995, for the annual
meeting of shareholders on November 2, 1995, are incorporated herein
by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
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 15 for a listing of all financial statements
incorporated herein from the Company's 1995 Annual Report to
Shareholders.
(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 three months ended June 28, 1995.
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: /Debra L. Smithart
Debra L. Smithart, Executive Vice
President - Chief Financial Officer
Dated: September 22, 1995
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, 1995
Name Title
/Ronald A. McDougall President, Chief Executive
Ronald A. McDougall Officer and Director
(Principal Executive Officer)
/Debra L. Smithart Executive Vice President - Chief
Debra L. Smithart Financial Officer and Director
(Principal Financial and Accounting
Officer)
/Norman E. Brinker Chairman of the Board
Norman E. Brinker
/Creed L. Ford, III Director
Creed L. Ford, III
/F. Lane Cardwell, Jr. Director
F. Lane Cardwell, Jr.
/Roger F. Thomson Director
Roger F. Thomson
/Jack W. Evans, Sr. Director
Jack W. Evans, Sr.
Director
Rae F. Evans
/J.M. Haggar, Jr. Director
J.M. Haggar, Jr.
Director
Ray L. Hunt
Director
J. Ira Harris
Director
Frederick S. Humphries
Director
James E. Oesterreicher
Director
William F. Regas
/Roger T. Staubach 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 1995 Annual Report to Shareholders are incorporated herein by
reference in Item 8.
1995 Annual
Report Page
Independent Auditors' Report 73
Consolidated Balance Sheets -
June 28, 1995 and June 29, 1994 58-59
Consolidated Statements of Income -
Years Ended June 28, 1995, June 29, 1994
and June 30, 1993 60
Consolidated Statements of Shareholders'
Equity - Years Ended June 28, 1995,
June 29, 1994 and June 30, 1993 61
Consolidated Statements of Cash Flows -
Years Ended June 28, 1995, June 29, 1994
and June 30, 1993 62-63
Notes to Consolidated Financial Statements 64-72
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. (3)
10(b) Registrant's 1991 Stock Option Plan for Non-Employee Directors and
Consultants. (1)
10(c) Registrant's 1992 Incentive Stock Option Plan. (1)
13 1995 Annual Report to Shareholders. (4)
21 Subsidiaries of the registrant. (1)
23 Independent Auditors' Consent. (1)
27 Financial Data Schedule. (5)
99 Proxy Statement of registrant dated September 26, 1995. (4)
(1) Filed herewith.
(2) Filed as an exhibit to Registration Statement No. 2-87736 on Form S-1
and incorporated herein by reference.
(3) Filed as an exhibit to report on Form 10-K for year ended June 30,
1990 and incorporated herein by reference.
(4) Portions filed herewith, to the extent indicated herein.
(5) Filed with EDGAR version.
EXHIBIT 3(a)
CERTIFICATE OF INCORPORATION OF THE REGISTRANT,
AS AMENDED
CERTIFICATE OF INCORPORATION
OF
CHILI'S, INC.
FIRST. The name of the Corporation is Chili's, Inc.
SECOND. The address of the Corporation's registered office in the State
of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH. The total number of shares of capital stock of that the
Corporation shall have the authority to issue is 21,000,000 shares, consisting
of 20,000,000 shares of Common Stock with a par value of $0.10 per share (the
"Common Stock") and 1,000,000 shares of Preferred Stock with a par value of
$1.00 per share (the "Preferred Stock").
Each holder of Common Stock shall at every meeting of stockholders be
entitled to one vote in person or by proxy for each share of Common Stock held
by the stockholder.
Shares of Preferred Stock may be issued from time to time in one or more
series, each such series to have such distinctive designation or title as may
be fixed by the Board of Directors prior to the issuance of any shares
thereof. Each such series shall have such voting powers and such preferences
and relative, participating, optional, or other special rights, with such
qualifications, limitations, or restrictions of such preferences or rights as
shall be stated in the resolution or resolutions providing for the issue of
such series of Preferred Stock adopted from time to time by the Board of
Directors prior to the issuance of any shares thereof, in accordance with the
laws of the State of Delaware. Each share of any series of Preferred Stock
shall be identical with all other shares of such series, except as to the date
from which accumulated preferred dividends, if any, shall be cumulative.
FIFTH. The number of directors of the Corporation shall be fixed in the
manner provided in the Bylaws of the Corporation, and until changed in the
manner provided in the Bylaws shall be seven, and the names and mailing
addresses of the persons who are to serve as directors until the first annual
meeting of stockholders or until their successors are elected and qualified
are as follows:
Name Address
Norman Brinker 8350 Meadow Road; Suite 286
Dallas, Texas 75231
Jack A. Lavine 8350 Meadow Road; Suite 286
Dallas, Texas 75231
Larry Lavine 8350 Meadow Road; Suite 286
Dallas, Texas 75231
Robert Hefner 8350 Meadow Road; Suite 286
Dallas, Texas 75231
Ron McDougall 8350 Meadow Road; Suite 286
Dallas, Texas 75231
Chuck Haines 8350 Meadow Road; Suite 286
Dallas, Texas 75231
Jack Evans 8350 Meadow Road; Suite 286
Dallas, Texas 75231
SIXTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation shall have the power to
adopt, amend, or repeal the Bylaws of the Corporation.
SEVENTH. The name and address of the incorporator is William R. Hays,
III, 1500 Diamond Shamrock Tower, Dallas, Texas 75201.
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
The undersigned, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, does make this certificate, hereby declaring and
certifying that this is his act and deed and the facts herein stated are true,
and accordingly has hereunto set his hand this 29th day of September, 1983.
/William R. Hays, III
William R. Hays, III
THE STATE OF TEXAS (
(
COUNTY OF DALLAS (
BE IT REMEMBERED that on this 29th day of September, 1983 personally
came before me, a Notary Public for the State of Texas, William R. Hays, III,
the person who signed the foregoing Certificate of Incorporation, known to me
personally to be such, and acknowledged the said Certificate to be his act and
deed and that the facts therein stated are true.
GIVEN UNDER MY HAND AND SEAL of office the day and year aforesaid.
[S E A L]
/Florence Owens
Notary Public in and for the State of
Texas
My Commission Expires:
3-11-84 Florence Owens
(Print name of Notary here)
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
CHILI'S, INC.
Chili's, Inc., a corporation duly organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
FIRST: That the Board of Directors of the Corporation, acting at a
special meeting duly called and held on August 12, 1986, duly adopted
resolutions (i) setting forth a proposed amendment to the Corporation's
Certificate of Incorporation consisting of a new Article Ninth of the
Certificate of Incorporation, (ii) declaring the advisability of such
amendment, and (iii) directing that such amendment be submitted for
consideration by the stockholders at the Annual Meeting of Stockholders of the
Corporation to be held on October 28, 1986.
SECOND: That thereafter, pursuant to resolutions of the Corporation's
Board of Directors, the Annual Meeting of Stockholders of the Corporation was
duly called and held on October 28, 1986, at which meeting holders of a
majority of the outstanding shares of capital stock of the Corporation
entitled to vote on the proposed amendment voted in favor of the following
amendment to the Certificate of Incorporation of the Corporation:
"NINTH. No director shall be liable to the Corporation or
its stockholders for monetary damages for a breach of fiduciary
duty, provided that this Section shall not eliminate or limit the
liability of a Director (i) for any breach of the Director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional
misconduct or knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction
from which such Director derived an improper personal benefit."
THIRD: That such amendment was duly adopted in accordance with
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of the Corporation will not be reduced by
reason of such amendment.
IN WITNESS WHEREOF, Chili's, Inc. has caused its corporate seal to be
affixed hereto and this Certificate to be signed by Norman E. Brinker, its
Chairman of the Board and attested by Richard Spellman, its Secretary, this
5th day of November, 1986.
CHILI'S, INC.
/Norman E. Brinker
Norman E. Brinker, Chairman of the Board
ATTEST:
/Richard Spellman
Richard Spellman, Secretary
THE STATE OF TEXAS (
(
COUNTY OF DALLAS (
BEFORE ME, the undersigned, a Notary Public, on this day personally
appeared Norman E. Brinker, known to me to be the person and officer whose
name is subscribed to the foregoing instrument and acknowledged to me that the
same was the act of Chili's, Inc., a corporation, and that he has executed the
same as the act of such corporation for the purposes therein expressed, and in
the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL of office this 5th day of November, 1986.
[S E A L]
/Barbara L. Mahoney
Notary Public in and for the State of
Texas
My Commission Expires:
12/27/87 Barbara L. Mahoney
(Print name of Notary here)
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
CHILI'S, INC., A DELAWARE CORPORATION
Pursuant to the provisions of Section 242 of the General Corporation Law
of the State of Delaware, Chili's, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), does hereby certify:
FIRST: That the Board of Directors of the Corporation, at a meeting of
the Board of Directors, adopted resolutions setting forth and declaring
advisable the following proposed amendments to the Certificate of
Incorporation of the Corporation. The pertinent part of the resolutions
setting forth the amendments is as follows:
Article First of the Certificate of Incoropration shall be
amended to read in its entirety as follows:
"FIRST. The name of the Corporation is Brinker
International, Inc."
The first paragraph of Article Fourth of the Certificate of
Incorporation shall be amended to read in its entirety as follows:
"FOURTH. The total number of shares of capital
stock that the Corporation shall have the authority to
issue is 51,000,000 shares, consisting of 50,000,000
shares of common stock with a par value of $.10 per
share (the "Common Stock") and 1,000,000 shares of
Preferred Stock with a par value of $1.00 per share
(the "Preferred Stock").
SECOND: That thereafter, pursuant to resolution of the Board of
Directors, the proposed amendments were submitted to the stockholders of the
Corporation, and the necessary number of shares as required by statute was
voted in favor of the amendments.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: In accordance with Section 103(d) of the General Corporation
Law of the State of Delaware, this amendment shall not become effective until
5:00 p.m. (Delaware time) on May 9, 1991, at which time this amendment shall
become effective.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to its Certificate of Incorporation to be executed this 9th day of
May, 1991.
CHILI'S, INC., a Delaware corporation
By:/Ronald A. McDougall
Ronald A. McDougall, President and
Chief Operating Officer
ATTEST:
/Robert L. Callaway
Robert L. Callaway, Secretary
STATE OF TEXAS (
(
COUNTY OF DALLAS (
BEFORE ME, the undersigned, on this day personally appeared RONALD A.
McDOUGALL and ROBERT L. CALLAWAY, known to me to be the persons whose names
are subscribed to the foregoing instrument and acknowledged to me that they
executed the same for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL of office this 9th day of May, 1991.
[S E A L]
/Rebecca E. Keck
Notary Public in and for the State of
Texas
My Commission Expires: Printed or Stamped Name:
June 27, 1993 Rebecca E. Keck
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
BRINKER INTERNATIONAL, INC.,
A DELAWARE CORPORATION
Pursuant to the provisions of Section 242 of the General Corporation Law
of the State of Delaware, Brinker International, Inc., a corporation organized
and existing under and by virtue of the General Corporation Law of the State
of Delaware (the "Corporation"), does hereby certify:
FIRST: That the Board of Directors of the Corporation, at a meeting of
the Board of Directors, adopted resolutions setting forth and declaring
advisable the following proposed amendment to the Certificate of Incorporation
of the Corporation. The pertinent part of the resolution setting forth the
amendment is as follows:
The first paragraph of Article Fourth of the Certificate of
Incorporation shall be amended to read in its entirety as follows:
"FOURTH. The total number of shares of capital
stock that the Corporation shall have the authority to
issue is 101,000,000 shares, consisting of 100,000,000
shares of common stock with a par value of $.10 per
share (the "Common Stock") and 1,000,000 shares of
Preferred Stock with a par value of $1.00 per share
(the "Preferred Stock").
SECOND: That thereafter, pursuant to resolution of the Board of
Directors, the proposed amendment was submitted to the stockholders of the
Corporation, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, and the necessary number of shares
as required by statute was voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to its Certificate of Incorporation to be executed this 5th day of
November, 1993.
BRINKER INTERNATIONAL, INC.,
a Delaware corporation
By:/Ronald A. McDougall
Ronald A. McDougall, President and
Chief Operating Officer
ATTEST:
/Roger F. Thomson
Roger F. Thomson, Secretary
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
BRINKER INTERNATIONAL, INC.,
A DELAWARE CORPORATION
Pursuant to the provisions of Section 242 of the General Corporation Law
of the State of Delaware, Brinker International, Inc., a corporation organized
and existing under and by virtue of the General Corporation Law of the State
of Delaware (the "Corporation"), does hereby certify:
FIRST: That the Board of Directors of the Corporation, at a meeting of
the Board of Directors, adopted resolutions setting forth and declaring
advisable the following proposed amendment to the Certificate of Incorporation
of the Corporation. The pertinent part of the resolution setting forth the
amendment is as follows:
The first paragraph of Article Fourth of the Certificate of
Incorporation shall be amended to read in its entirety as follows:
"FOURTH. The total number of shares of capital
stock that the Corporation shall have the authority to
issue is 251,000,000 shares, consisting of 250,000,000
shares of common stock with a par value of $.10 per
share (the "Common Stock") and 1,000,000 shares of
Preferred Stock with a par value of $1.00 per share
(the "Preferred Stock").
SECOND: That thereafter, pursuant to resolution of the Board of
Directors, the proposed amendment was submitted to the stockholders of the
Corporation, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, and the necessary number of shares
as required by statute was voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to its Certificate of Incorporation to be executed this 4th day of
November, 1994.
BRINKER INTERNATIONAL, INC.,
a Delaware corporation
By:/Ronald A. McDougall
Ronald A. McDougall, President and
Chief Operating Officer
ATTEST:
/Roger F. Thomson
Roger F. Thomson, Secretary
EXHIBIT 3(b)
BYLAWS OF REGISTRANT
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices at
such other place or places, both within and without the State of Delaware, as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETING OF SHAREHOLDERS
Section 1. Place of Meetings. All meetings of the shareholders for
the election of directors shall be held in the City of Dallas, State of Texas,
at such place within such city as may be fixed from time to time by the Board
of Directors, or at such other place either within or without the State of
Delaware as shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting. Meetings of shareholders for any
other purpose may be held at such time and place, within or without the State
of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Annual Meetings. Annual meetings of shareholders, shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, including the
first week of November of each fiscal year, at which meeting the shareholders
shall elect by a plurality vote the Board of Directors and transact such other
business as may be properly brought before the meeting.
Section 3. Notice of Annual Meetings. Written notice of the annual
meeting, stating the place, date and hour of the meeting, shall be given to
each shareholder of record entitled to vote at such meeting not less than ten
or more than 60 days before the date of the meeting.
Section 4. Special Meetings. Special meetings of the shareholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called at any time by order of the Board
of Directors and shall be called by the Chairman of the Board, the President
or the Secretary at the request in writing of a majority of the Board of
Directors. Such requests shall state the purpose or purposes of the proposed
special meeting. Business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.
Section 5. Notice of Special Meetings. Written notice of a special
meeting, stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given to each shareholder
of record entitled to vote at such meeting not less than ten nor more than 60
days before the date of the meeting.
Section 6. Quorum. Except as otherwise provided by statute or the
Certificate of Incorporation, the holders of stock having a majority of the
voting power of the stock entitled to be voted thereat, present in person or
represented by proxy, shall constitute a quorum for the transaction of
business at all meetings of the shareholders. If, however, such quorum shall
not be present or represented at any meeting of the shareholders, the
shareholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time without
notice (other than announcement at the meeting at which the adjournment is
taken of the time and place of the adjourned meeting) until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. If the adjournment is for
more than 30 days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to
each shareholder of record entitled to vote at the meeting.
Section 7. Organization. At each meeting of the shareholders, the
Chairman of the Board or the President, determined as provided in Article V of
these Bylaws, or if those officers shall be absent therefrom, another officer
of the Corporation chosen as chairman present in person or by proxy and
entitled to vote thereat, or if all the officers of the Corporation shall be
absent therefrom, a shareholder holding of record shares of stock of the
Corporation so chosen, shall act as chairman of the meeting and preside
thereat. The Secretary, or if he shall be absent from such meeting or shall
be required pursuant to the provisions of this Section 7 to act as chairman of
such meeting, the person (who shall be an Assistant Secretary, if an Assistant
Secretary shall be present thereat) whom the chairman of such meeting shall
appoint, shall act as secretary of such meeting and keep the minutes thereof.
Section 8. Voting. Except as otherwise provided in the Certificate
of Incorporation, each shareholder shall, at each meeting of the shareholders,
be entitled to one vote in person or by proxy for each share of stock of the
Corporation held by him and registered in his name on the books of the
Corporation on the date fixed pursuant to the provisions of Section 5 of
Article VII of these Bylaws as the record date for the determination of
shareholders who shall be entitled to notice of and to vote at such meeting.
Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held directly or indirectly by the
Corporation, shall not be entitled to vote. Any vote by stock of the
Corporation may be given at any meeting of the shareholders by the shareholder
entitled thereto, in person or by his proxy appointed by an instrument in
writing subscribed by such shareholder or by his attorney thereunto duly
authorized and delivered to the Secretary of the Corporation or to the
secretary of the meeting; provided, however, that no proxy shall be voted or
acted upon after three years from its date, unless said proxy shall provide
for a longer period. Each proxy shall be revocable unless expressly provided
therein to be irrevocable and unless otherwise made irrevocable by law. At
all meetings of the shareholders all matters, except where other provision is
made by law, the Certificate of Incorporation or these Bylaws, shall be
decided by the vote of a majority of the votes cast by the shareholders
present in person or by proxy and entitled to vote thereat, a quorum being
present. Unless demanded by a shareholder of the Corporation present in
person or by proxy at any meeting of the shareholders and entitled to vote
thereat, or so directed by the chairman of the meeting, the vote thereat on
any question other than the election or removal of directors need not be by
written ballot. Upon a demand of any such shareholder for a vote by written
ballot on any question or at the direction of such chairman that a vote by
written ballot be taken on any question, such vote shall be taken by written
ballot. On a vote by written ballot, each ballot shall be signed by the
shareholder voting, or by his proxy, if there be such a proxy, and shall state
the number of shares voted.
Section 9. List of Shareholders. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of its
stock ledger, either directly or through another officer of the Corporation
designated by him or through a transfer agent appointed by the Board of
Directors, to prepare and make, at least ten days before every meeting of the
shareholders, a complete list of the shareholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each shareholder
and the number of shares registered in the name of each shareholder. Such
list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at
least ten days prior to said meeting, either at a place within the city where
said meeting is to be held, which place shall be specified in the notice of
said meeting, or, if not so specified, at the place where said meeting is to
be held. The list shall also be produced and kept at the time and place of
said meeting during the whole time thereof, and may be inspected by any
shareholder of record who shall be present thereat. The stock ledger shall be
the only evidence as to who are the shareholders entitled to examine the stock
ledger, such list or the books of the Corporation, or to vote in person or by
proxy at any meeting of shareholders.
Section 10. Inspectors of Votes. At each meeting of the shareholders,
the chairman of such meeting may appoint up to two Inspectors of Votes to act
thereat, unless the Board of Directors shall have theretofore made such
appointments. Each Inspector of Votes so appointed shall first subscribe an
oath or affirmation faithfully to execute the duties of an Inspector of Votes
at such meeting with strict impartiality and according to the best of his
ability. Such Inspectors of Votes, if any, shall take charge of the ballots,
if any, at such meeting and after the balloting thereat on any question shall
count the ballots cast thereon and shall make a report in writing to the
secretary of such meeting of the results thereof. An Inspector of Votes need
not be a shareholder of the Corporation, and any officer of the Corporation
may be an Inspector of Votes on any question other than a vote for or against
his election to any position with the Corporation or on any other question in
which he may be directly interested.
Section 11. Action Without a Meeting. Any action required to be
taken at any annual or special meeting of shareholders of the Corporation, or
any action which may be taken at any annual or special meeting of
shareholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes (determined as of the record date of such consent) that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereat were present and voted. The record date of a written
consent shall be determined by the Board of Directors and shall be not later
than 10 days after the date on which a shareholder gives notice to the Board
of Directors of (i) the proposed action to be taken by consent and (ii) the
date on which the first written consent to take such action has been executed.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those shareholders owning
shares as of the record date who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors, which shall have and may exercise
all such powers of the Corporation and do all such lawful acts and things as
are not by statute, the Certificate of Incorporation or these Bylaws directed
or required to be exercised or done by the shareholders.
Section 2. Number, Qualification and Term of Office. The number of
directors which shall constitute the whole Board of Directors shall not be
less than one nor more than fifteen. The number of directors which shall
constitute the whole Board of Directors which shall constitute the whole Board
of Directors shall be determined by resolution of the Board of Directors or
by the shareholders at any annual or special meeting or otherwise pursuant to
action of the shareholders. Directors need not be shareholders. The
directors shall be elected at the annual meeting of the shareholders, except
as provided in Sections 4 and 5 of this Article III, and each director elected
shall hold office until the annual meeting next after his election and until
his successor is elected and qualified, or until his death or retirement or
until he shall resign or shall be removed in the manner hereinafter provided.
Section 3. Resignation. Any director may resign at any time by
giving written notice of his resignation to the Corporation. Any such
resignation shall take effect at the time specified therein, or, if the time
when it shall become effective shall not be specified therein, then it shall
take effect immediately upon its receipt by the Secretary. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective.
Section 4. Removal of Directors. Any director may be removed, either
with or without cause, at any time, by the affirmative vote of a majority in
voting interest of the shareholders of record of the Corporation entitled to
vote, given at any annual or special meeting of the shareholders called for
that purpose. The vacancy in the Board of Directors caused by any such
removal may be filled by the shareholders at such meeting or, if not so
filled, by the Board of Directors as provided in Section 5 of this Article
III.
Section 5. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled by a majority of the directors then in office though less than a
quorum, or by a sole remaining director, and the directors so chosen shall
hold office until the annual meeting next after their election and until their
successors are elected and qualified, unless sooner displaced. If there are
no directors in office, then an election of directors may be held in the
manner provided by statute.
MEETINGS OF THE BOARD OF DIRECTORS
Section 6. Place of Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 7. Annual Meetings. The first meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
shareholders and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event such meeting is not held immediately
following the annual meeting of shareholders, the meeting may be held at such
time and place as shall be specified in a notice given as hereinafter provided
for special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 8. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall from time
to time be determined by the Board of Directors.
Section 9. Special Meetings; Notice. Special meetings of the Board
of Directors may be called by the Chairman of the Board, President or
Secretary on 24 hours' notice to each director, either personally or by
telephone or by mail, telegraph, telex, cable, wireless or other form of
recorded communication; special meetings shall be called by the Chairman of
the Board, President or Secretary in like manner and on like notice on the
written request of two directors. Notice of any such meeting need not be
given to any director, however, if waived by him in writing or by telegraph,
telex, cable, wireless or other form of recorded communication, or if he shall
be present at such meeting.
Section 10. Quorum and Manner of Acting. At all meetings of the Board
of Directors, a majority of the directors at the time in office shall
constitute a quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which a quorum is present shall be
the act of the Board of Directors, except as may be otherwise specifically
provided by statute or by the Certificate of Incorporation. If a quorum shall
not be present at any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 11. Remuneration. Unless otherwise expressly provided by
resolution adopted by the Board of Directors, none of the directors shall, as
such, receive any stated remuneration for his services; but the Board of
Directors may at any time and from time to time by resolution provide that a
specified sum shall be paid to any director of the Corporation, either as his
annual remuneration as such director or member of any committee of the Board
of Directors or as remuneration for his attendance at each meeting of the
Board of Directors or any such committee. The Board of Directors may also
likewise provide that the Corporation shall reimburse each director for any
expenses paid by him on account of his attendance at any meeting. Nothing in
this Section 11 shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving remuneration thereof.
COMMITTEES OF DIRECTORS
Section 12. Executive Committee; How Constituted and Powers. T h e
Board of Directors may, in its discretion, by resolution passed by a majority
of the whole Board of Directors, designate an Executive Committee consisting
of one or more of the directors of the Corporation. Subject to the provisions
of Section 141 of the General Corporation Law of the State of Delaware, the
Certificate of Incorporation, and these Bylaws, the Executive Committee shall
have and may exercise, when the Board of Directors is not in session, all the
powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and shall have the power to authorize
the seal of the Corporation to be affixed to all papers which may require it;
but the Executive Committee shall not have the power to amend the Certificate
of Incorporation (except that the Executive Committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the Board of Directors as provided in the Delaware
General Corporation Law, fix the designations and any of the preferences or
rights of such shares relating to dividends, redemptions, dissolution, any
distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the Corporation
or fix the number of shares of any series of stock or authorize the increase
or decrease of the shares or any series), to fill vacancies in the Board of
Directors or the Executive Committee, to adopt an agreement of merger or
consolidation under Section 251 or 252 of the Delaware General Corporation
Law, to recommend to the shareholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, to recommend to
the shareholders a dissolution of the Corporation or a revocation of a
dissolution, or to amend the Bylaws of the Corporation. Except as otherwise
provided herein or in the Corporation's Certificate of Incorporation, the
Executive Committee shall have the power and authority to authorize the
issuance of common stock and grant and authorize options and other rights with
respect to such issuance, to declare a dividend, to adopt a certificate of
ownership and merger pursuant to Section 253 of the Delaware General
Corporation Law, and to fill vacancies in any other committee of directors
elected or approved by officers of the Corporation. The Board of Directors
shall have the power at any time, by resolution passed by a majority of the
whole Board of Directors, to change the membership of the Executive Committee,
to fill all vacancies in it, or to dissolve it, with or without cause.
Section 13. Organization. The Chairman of the Executive Committee,
to be selected by the Board of Directors, shall act as chairman at all
meetings of the Executive Committee and the Secretary shall act as secretary
thereof. In case of the absence from any meeting of the Executive Committee
of the Chairman of the Executive Committee or the Secretary, the Executive
Committee may appoint a chairman or secretary, as the case may be, of the
meeting.
Section 14. Meetings. Regular meetings of the Executive Committee, of
which no notice shall be necessary, may be held on such days and at such
places, within or without the State of Delaware, as shall be fixed by
resolution adopted by a majority of the Executive Committee and communicated
in writing to all its members. Special meetings of the Executive Committee
shall be held whenever called by the Chairman of the Executive Committee or a
majority of the members of the Executive Committee then in office. Notice of
each special meeting of the Executive Committee shall be given by mail,
telegraph, telex, cable, wireless or other form of recorded communication or
be delivered personally or by telephone to each member of the Executive
Committee not later than the day before the day on which such meeting is to be
held. Notice of any such meeting need not be given to any member of the
Executive Committee, however, if waived by him in writing or by telegraph,
telex, cable, wireless or other form of recorded communication, or if he shall
be present at such meeting; and any meeting of the Executive Committee shall
be a legal meeting without any notice thereof having been given, if all the
members of the Executive Committee shall be present thereat. Subject to the
provisions of this Article III, the Executive Committee, by resolution
adopted by a majority of the whole Committee, shall fix its own rules of
procedure.
Section 15. Quorum and Manner of Acting. A majority of the Executive
Committee shall constitute a quorum for the transaction of business, and the
act of a majority of those present at a meeting thereof at which a quorum is
present shall be the act of the Committee.
Section 16. Other Committees. The Board of Directors may, by resolution
or resolutions passed by a majority of the whole Board of Directors, designate
one or more other committees consisting of one or more directors of the
Corporation, which, to the extent provided in said resolution or resolutions,
shall have and may exercise, subject to the provisions of Section 141 of the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation and these Bylaws, the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation,
and shall have the power to authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have
the power to fill vacancies in the Board of Directors, the Executive Committee
or any other committee or in their respective membership, appoint or remove
officers of the Corporation, or authorize the issuance of shares of the
capital stock of the corporation except that such a committee may, to the
extent provided in said resolutions, grant and authorize options and other
rights with respect to the common stock of the Corporation pursuant to and in
accordance with any plan approved by the Board of Directors. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors. A majority of all the
members of any such committee may determine its action and fix the time and
place of its meetings and specify what notice thereof, if any, shall be given,
unless the Board of Directors shall otherwise provide. The Board of Directors
shall have power to change the members of any such committee at any time to
fill vacancies, and to discharge any such committee, either with or without
cause, at any time.
Section 17. Alternate Members of Committees. The Board of Directors
may designate one or more directors as alternate members of the Executive
Committee or any other committee, who may replace any absent or disqualified
member at any meeting of the committee, or if none be so appointed, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any
such absent or disqualified member.
Section 18. Minutes of Committees. Each committee shall keep
regular minutes of its meetings and proceedings and report the same to the
Board of Directors at the next meeting thereof.
GENERAL
Section 19. Actions Without a Meeting. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or the committee.
Section 20. Presence at Meetings by Means or Communications Equipment.
Members of the Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors or such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each
other, and participation in a meeting pursuant to this Section 20 shall
constitute presence in person at such meeting.
ARTICLE IV
NOTICES
Section 1. Type of Notice. Whenever, under the provisions of the
statutes, the Certificate of Incorporation or these Bylaws, notice is required
to be given to any director or shareholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, in person or by
mail, addressed to such director or shareholder, at his address as it appears
on the records of the Corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given in
any manner permitted by Article III hereof and shall be deemed to be given at
the time when first transmitted by the method of communication so permitted.
Section 2. Waiver of Notice. Whenever any notice is required to be
given under the provisions of the statutes, the Certificate of Incorporation
or these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein,
shall be deemed equivalent thereto, and transmission of a waiver of notice by
a director or shareholder by mail, telegraph, telex, cable, wireless or other
form of recorded communication may constitute such a waiver.
ARTICLE V
OFFICERS
Section 1. Elected and Appointed Officers. The elected officers of
the Corporation shall be a Chief Executive Officer, a President, one or more
Executive Vice Presidents, Senior Vice Presidents and Vice Presidents, with or
without such descriptive titles as the Board of Directors shall deem
appropriate, a Secretary and a Treasurer and, if the Board of Directors so
elects, a Chairman of the Board (who shall be a director). The Board of
Directors or the Executive Committee of the Board of Directors by resolution
also may appoint one or more Assistant Vice Presidents, Assistant Treasurers,
Assistant Secretaries, and such other officers and agents as from time to time
may appear to be necessary or advisable in the conduct of the affairs of the
Corporation.
Section 2. Time of Election or Appointment. The Board of Directors
at its annual meeting shall elect or appoint, as the case may be, the officers
to fill the positions designated in or pursuant to Section 1 of this Article
V. Officers of the Corporation may also be elected or appointed, as the case
may be, at any other time.
Section 3. Salaries of Elected Officers. The salaries of all elected
officers of the Corporation shall be fixed by the Board of Directors.
Section 4. Term. Each officer of the Corporation shall hold his office
until his successor is elected or appointed and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon written
notice to the Corporation. Any officer elected or appointed by the Board of
Directors or the Executive Committee may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors. Any vacancy
occurring in any office of the Corporation by death, resignation, removal or
otherwise may be filled by the Board of Directors or the appropriate committee
thereof.
Section 5. Chairman of the Board. The Chairman of the Board shall
preside, if present, at all meetings of the Board of Directors and the
shareholders and shall perform such other reasonable duties as may be
prescribed from time to time by the Board of Directors or by the Bylaws.
Section 6. Chief Executive Officer. The Chief Executive Officer
shall have general supervision of the affairs of the Corporation and shall
have general and active control of all its business. He shall preside, in the
absence of the Chairman of the Board, at all meetings of shareholders. He
shall see that all orders and resolutions of the Board of Directors and the
shareholders are carried into effect. He shall have general authority to
execute bonds, deeds, and contracts in the name of the Corporation and affix
the corporation seal thereto; to sign stock certificates; to cause the
employment or appointment of such officers, employees, and agents of the
Corporation as the proper conduct of operations may require, and to fix their
compensation, subject to the provisions of these Bylaws; to remove or suspend
any employee or agent who was employed or appointed under his authority or
under authority of an officer subordinate to him; to suspend for cause,
pending final action by the authority that elected or appointed him, any
officer subordinate to him; in coordination with the other officers and
directors of the Corporation, to develop the Corporation's basic strategic and
long-range plans, including marketing programs, expansion plans and financial
structure; and, in general, to exercise all of the powers of authority usually
appertaining to the chief executive officer of a corporation, except as
otherwise provided in these Bylaws.
Section 7. President. The President shall be the Chief Operating
Officer of the Corporation and, as such, shall have, subject to review and
approval of the Chief Executive Officer, the responsibility for the day-to-day
operations of the Corporation.
Section 8. Executive Vice Presidents. In the absence of the
President or in the event of his inability or refusal to act, the Executive
Vice President (or, if there be more than one, the Executive Vice Presidents
in the order designated or, in the absence of any designation, in the order of
their election) shall perform the duties of the President and, when so acting,
shall have all of the powers of and be subject to all of the restrictions upon
the President. The Executive Vice Presidents shall perform such other duties
and have such other powers as the Board of Directors or the Chief Executive
Officer may from time to time prescribe. The officer in charge of finance, if
one is so elected, shall also perform the duties and assume the
responsibilities described in Section 14 of this Article for the Treasurer.
Section 9. Senior Vice Presidents. In the absence of the Executive Vice
President or in the event of his inability or refusal to act, the Senior Vice
President (or, if there be more than one, the Senior Vice Presidents in the
order designated or, in the absence of any designation, in the order of their
election) shall perform the duties of the Executive Vice President and, when
so acting, shall have all of the powers of and be subject to all of the
restrictions upon the Executive Vice President. The Senior Vice Presidents
shall perform such other duties and have such other powers as the Board of
Directors, the Chief Executive Officer, or the Chief Operating Officer may
from time to time prescribe. The officer in charge of finance, if one is so
elected, shall also perform the duties and assume the responsibilities
described in Section 14 of this Article for the Treasurer.
Section 10. Vice Presidents. In the absence of the Senior Vice
President or in the event of his inability or refusal to act, the Vice
President (or, if there be more than one, the Vice Presidents in the order
designated or, in the absence of any designation, in the order of their
election) shall perform the duties of the Senior Vice President and, when so
acting, shall have all of the powers of and be subject to all of the
restrictions upon the Senior Vice President. The Vice Presidents shall
perform such other duties and have such other powers as the Board of
Directors, the Chief Executive Officer, or the Chief Operating Officer may
from time to time prescribe. The officer in charge of finance, if one is so
elected, shall also perform the duties and assume the responsibilities
described in Section 14 of this Article for the Treasurer.
Section 11. Assistant Vice Presidents. In the absence of a Vice
President or in the event of his inability or refusal to act, the Assistant
Vice President (or, if there be more than one, the Assistant Vice Presidents
in the order designated or of their election or in such other manner as the
Board of Directors shall determine) shall perform the duties and exercise the
powers of that Vice President and shall perform such other duties and have
such other powers as the Board of Directors, the Chief Executive Officer, the
Chief Operating Officer, or the Vice President under whose supervision he is
appointed may from time to time prescribe.
Section 12. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the shareholders and record all
proceedings of such meetings in a book to be kept for that purpose and shall
perform like duties for the Executive Committee or other standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the Board of Directors and shall
perform such other duties as may be prescribed by the Board of Directors or
the Chief Executive Officer, under whose supervision he shall be. He shall
have custody of the corporate seal of the Corporation and he, or an Assistant
Secretary, shall have authority to affix the same to any instrument requiring
it, and when so affixed, it may be attested by his signature or by the
signature of such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation
and to attest the affixing by his signature. The Secretary shall keep and
account for all books, documents, papers, and records of the Corporation
except those for which some other officer or agent is properly accountable.
He shall have authority to sign stock certificates and shall generally perform
all of the duties usually appertaining to the office of the secretary of a
corporation.
Section 13. Assistant Secretaries. In the absence of the Secretary or
in the event of his inability or refusal to act, the Assistant Secretary (or,
if there be more than one, the Assistant Secretaries in the order determined
by the Board of Directors or, if there be no such determination, in the order
of their appointment) shall perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as
the Board of Directors, the Chief Executive Officer, or the Secretary may from
time to time prescribe.
Section 14. Treasurer. The Treasurer (or the Vice President in charge
of finance, if one is so elected) shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as ordered by the
Board of Directors, taking proper vouchers for such disbursements, and shall
render to the Chairman of the Board and the Board of Directors, at its regular
meetings or when the Board of Directors so requires, an account of all of his
transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, he shall give the Corporation a bond
(which shall be reviewed every six years) in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money, and other property or whatever
kind in his possession or under his control belonging to the Corporation. The
Treasurer shall perform such other duties as may be prescribed by the Board of
Directors, the Chief Executive Officer, or any such officer in charge of
finance.
Section 15. Assistant Treasurers. The Assistant Treasurer or Assistant
Treasurers shall assist the Treasurer and, in the absence of the Treasurer or
in the event of his inability or refusal to act, the Assistant Treasurer (or
if there be more than one, the Assistant Treasurers in the order determined by
the Board of Directors or, if there is no such determination, in the order of
their appointment), shall perform the duties and exercise the powers of the
Treasurer, and shall perform such other duties and have such other powers as
the Board of Directors, the Chief Executive Officer, or the Treasurer may from
time to time prescribe.
ARTICLE VI
INDEMNIFICATION
Section 1. Actions Other Than by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or contemplated
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust,
or other enterprise (all of such persons being hereafter referred to in this
Article as a "Corporate Functionary"), against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation or,
with respect to any criminal action or proceeding, that he had reasonable
cause to believe that his conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party
to be made a party to any threatened, pending, or contemplated action or suit
by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a Corporate Functionary against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation, except that no indemnification shall
be made in respect of any claim, issue, or matter as to which such person
shall have been adjudged to be liable to the Corporation, unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 3. Determination of Right to Indemnification. Any
indemnification under Sections 1 or 2 of this Article VI (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sections 1 or 2 of this Article
VI. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such a quorum is not obtainable, or,
even if obtainable if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the shareholders.
Section 4. Right to Indemnification. Notwithstanding the other
provisions of this Article VI, to the extent that a director, officer,
employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections
1 or 2 of this Article VI, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorney's fees)
actually and reasonably incurred by him in connection therewith.
Section 5. Prepaid Expenses. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as authorized by
the Board of Directors in the specific case, upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such amount
unless it shall ultimately be determined he is entitled to be indemnified by
the Corporation as authorized in this Article VI.
Section 6. Other Rights and Remedies. The indemnification provided
by this Article VI shall not be deemed exclusive of any other rights to which
any person seeking indemnification may be entitled under any by-law,
agreement, vote of shareholders or disinterested directors or otherwise, both
as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
Section 7. Insurance. Upon resolution passed by the Board of
Directors, the Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VI.
Section 8. Mergers. For purposes of this Article VI, references to
"the Corporation" shall include, in addition to the resulting or surviving
corporation, constituent corporations (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the
provisions of this Article VI with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if
its separate existence had continued.
ARTICLE VII
CERTIFICATES OF STOCK
Section 1. Right to Certificate. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board, the President or a Vice
President, and the Secretary or an Assistant Secretary of the Corporation
certifying the number of shares owned by him in the Corporation. If the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights shall be set forth in full or summarized on the
face or back of the certificate which the Corporation shall issue to represent
such class or series of stock, provided that, except as otherwise provided in
Section 202 of the General Corporation Law of the State of Delaware, in lieu
of the foregoing requirements, there may be set forth on the face or back of
the certificate which the Corporation shall issue to represent such class or
series of stock, a statement that the Corporation will furnish without charge
to each shareholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights.
Section 2. Facsimile Signatures. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with
the same effect as if he were such officer, transfer agent or registrar at the
date of issue.
Section 3. New Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation and alleged to have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed or the issuance of such new certificate.
Section 4. Transfers. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation, subject to any proper
restrictions on transfer, to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 5. Record Date. In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be less than ten nor more than 60
days before the date of such meeting, nor more than 60 days prior to any other
action. A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 6. Registered Shareholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not provided by the laws of the State of Delaware.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors (but not any committee thereof)
at any regular meeting, pursuant to law. Dividends may be paid in cash, in
property or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation.
Section 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in their absolute
discretion, thinks proper as a reserve or reserves to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall think
conducive to the interest of the Corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
Section 3. Annual Statement. The Board of Directors shall present at
each annual meeting, and at any special meeting of the shareholders when
called for by vote of the shareholders, a full and clear statement of the
business and condition of the Corporation.
Section 4. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time prescribe.
Section 5. Fiscal Year. The fiscal year of the Corporation shall
be determined by the Board of Directors.
Section 6. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the word
"Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed, affixed, reproduced or otherwise.
ARTICLE IX
AMENDMENTS
These Bylaws may be altered, amended or repealed or new Bylaws may be
adopted by the shareholders or by the Board of Directors at any regular
meeting of the shareholders or the Board of Directors or at any special
meeting of the shareholders or the Board of Directors if notice of such
alteration, amendment, repeal or adoption of new Bylaws be contained in the
notice of such special meeting.
EXHIBIT 10(b)
REGISTRANT'S 1991 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS AND CONSULTANTS
INTRODUCTION
On May 15, 1991, the Board of Directors of Brinker International, Inc.
(the "Company") adopted a program for granting non-qualified stock options to
non-employee directors and consultants which is formalized by the following
Stock Option Plan for Non-Employee Directors and Consultants (the "Plan"):
1. PURPOSE. The purpose of the Plan is to provide directors of the
Company who are not employees of the Company or its subsidiaries and certain
consultants and advisors with a proprietary interest in the Company through
the granting of options which will:
A. increase their interest in the Company's welfare;
B. furnish them an incentive to continue their services
for the Company; and
C. provide a means through which the Company may attract
able persons to serve on its Board of Directors and act as
consultants or advisors.
2. ADMINISTRATION. The Plan will be administered by the Committee.
3. PARTICIPANTS. The directors of the Company who are not employees
of the Company or its subsidiaries are to be granted options under the Plan.
In addition, certain Consultants may be granted options under the Plan. Upon
such grant, the optionees will become participants in the Plan.
4. SHARES SUBJECT TO PLAN. Options may not be granted under the Plan
for more than 337,500 shares of Common Stock of the Company, but this number
may be adjusted to reflect, if deemed appropriate by the Committee, any stock
dividend, stock split, share combination, recapitalization or the like, of or
by the Company. Shares to be optioned and sold may be made available from
either authorized but unissued Common Stock or Common Stock held by the
Company in its treasury. Shares that by reason of the expiration of an option
or otherwise are no longer subject to purchase pursuant to an option granted
under the Plan may be reoffered under the Plan.
5. ALLOTMENT OF SHARES. As part of the overall compensation for
directors of the Company, each eligible director, upon being elected to the
Board of Directors shall elect to receive as partial compensation for serving
on the Board of Directors either (a) an annual cash payment, (b) a grant of
12,000 stock options, or (c) a combination of stock options and cash, the
total value of which is equal to the annual cash payment described in
clause (a) above, provided that (i) such director receives at least Four
Thousand (4,000) stock options and (ii) the value of a stock option for
purposes of this clause (c) is equal to (A) the annual cash payment described
in clause (a) above divided by (B) 12,000. If the director elects to receive
stock options, they will be granted as of the 60th day (or if the 60th day is
not a business day, on the first business day thereafter) following the date
of the annual meeting of shareholders at which such director was elected to
the Board of Directors (or, if such director was elected or appointed to the
Board of directors other than at an annual meeting of shareholders, the
election whether to receive stock options or cash shall be made at the meeting
of the Board of Directors held contemporaneous with the next annual meeting of
shareholders and such Director shall receive a prorated portion of the annual
cash compensation for the period from the date of election or appointment to
the Board of Directors until the meeting of the Board of Directors held
contemporaneous with the next annual meeting of shareholders, and if any such
Director elects to receive stock options, such options will be granted as of
the 60th day following the date of the next annual meeting of shareholders).
Members of the Board of Directors who have served on the Board of Directors
for four years and are asked by the Nominating Committee to serve an
additional four years, also shall be entitled to make the election described
in the first sentence of this Section 5. Each of the non-employee directors
of the Board of Directors as of November 3, 1994, will be given the option at
such time to receive as additional compensation for serving on the Board of
Directors either (a) an annual cash payment, (b) a one-time grant of stock
options equal to the product of (i) 3,000 multiplied by (ii) the remaining
years of anticipated service on the Board of Directors for such director, or
(c) a combination of stock options and cash, the total value of which is equal
to the annual cash payment described in clause (a) above, provided that
(i) such director receives at least one-third ( ) of the options described in
clause (b) above, and (ii) the value of a stock option for purposes of this
clause (c) is equal to (A) the annual cash payment described in clause (a)
divided by (B) the number of options described in clause (b) above. The number
of stock options received and the vesting period for such options will be
prorated based upon the number of years remaining until such director has
completed his current four year term as director. The Committee shall
determine the number of shares of Common Stock to be offered from time to time
by grant of options to Consultants. The grant of an option to a Consultant
shall not be deemed either to entitle the Consultant to, or to disqualify the
Consultant from, participation in any other grant of options under the Plan.
6. GRANT OF OPTIONS. All director options under the Plan shall be
granted as provided in Section 5. All Consultant options under the Plan shall
be granted by the Committee. The grant of options shall be evidenced by stock
option agreements containing such terms and provisions as are approved by the
Committee, but not inconsistent with the Plan. The Company shall execute
stock option agreements upon instructions from the Committee.
7. OPTION PRICE. The option price shall be equal to the closing
price of Common Stock on the date the option is granted.
8. OPTION PERIOD. The Option Period will begin on the effective date
of the option grant and will terminate on the 10th anniversary of that date.
A director option will also terminate at 5:00 p.m. on the date the option
holder ceases to be a director of the Company for reasons of dishonesty,
whether in the course of directorship or otherwise, or for assisting a
competitor of the Company or its subsidiary without permission, or for
interfering with the Company's relationship with a customer, or for any
similar action or willful breach of duty to the Company (hereinafter
collectively referred to as "disloyalty"). The Committee may provide for the
exercise of director or Consultant options in installments and upon such
terms, conditions, and restrictions as it may determine. The Committee may
provide for termination of a Consultant's option in the case of termination of
Consultant status or any other reason.
9. RIGHTS IN THE EVENT OF DEATH OR DISABILITY. If a participant dies
or becomes disabled prior to termination of his right to exercise an option in
accordance with the provisions of his stock option agreements without totally
having exercised the option, the unvested portion of the option will become
immediately vested and the option may be exercised subject to the provisions
of Section 11 hereof, (a) in the case of death, by the participant's estate or
by the person who acquired the right to exercise the option by bequest or
inheritance or by reason of death of the participant or (b) in the case of
disability, by the participant or his personal representative.
10. PAYMENT. Full payment for the shares purchased upon exercising an
option shall be made in cash or by check at the time of exercise, or on such
other terms as are set forth in the applicable option agreement. No shares
may be issued until full payment of the purchase price therefor has been made,
and a participant will have none of the rights of a stockholder until shares
are issued to him.
11. EXERCISE OF OPTION.
A. Options granted under the Plan to directors may be
exercised during the Option Period, at such times, in such
amounts, in accordance with such terms and subject to such
restrictions as are determined by the Committee and set forth in
the applicable stock option agreements. Except as provided in the
fourth and fifth sentences of Section 5 and in Section 9, director
options shall be exercisable in the following cumulative
installments:
i. Up to one-third of the total optioned shares at any
time after the second anniversary of the effective date of grant
if the holder is still a director on such anniversary date;
ii. Up to an additional one-third of the total
optioned shares at any time after the third
anniversary of the effective date of grant if the
holder is still a director on such anniversary date;
and
iii. Up to an additional one-third of the total
optioned shares at any time after the fourth
anniversary of the effective date of grant if the
holder is still a director on such anniversary date.
Notwithstanding the foregoing, if a director retires from the Board of
Directors after serving a four year term, any stock options vesting within
ninety (90) days from the date of retirement may be exercised by the retiring
director effective as of the date of vesting.
B. Options granted to Consultants under the Plan may be
exercised during the Option Period, at such times, in such
amounts, in accordance with such terms and subject to such
restrictions and vesting requirements as are determined by the
Committee and set forth in the applicable stock option agreements.
C. The Committee shall provide in stock option agreements
that, notwithstanding the grant of an option requiring the
exercise thereof in periodic installments, the total number of
options granted may be exercisable, at the election of the holder,
upon a material change in control of the voting securities of the
Company. For purposes hereof, a material change in control of the
voting securities of the Company shall be deemed to include, but
not necessarily be limited to, the dissolution or liquidation of
the Company, a merger of the Company into, or acquisition of the
Company by, another entity, the sale or conveyance of all or
substantially all of the assets of the Company, the acquisition of
a majority of the voting securities of the Company by any person
or entity or group of affiliated persons or entities, or any other
event as determined by the Committee.
12. CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The number of shares of
Common Stock covered by each outstanding option granted under the Plan and the
option price may be adjusted to reflect, as deemed appropriate by the
Committee, any stock dividend, stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation, or the like, of or by the Company.
13. NON-ASSIGNABILITY. Options may not be transferred other than by
will or by the laws of descent and distribution. During a participant's
lifetime, options granted to a participant may be exercised only by the
participant.
14. INTERPRETATION. The Committee shall interpret the Plan and shall
prescribe such rules and regulations in connection with the operation of the
Plan as it determines to be advisable for the administration of the Plan. The
Committee may rescind and amend its rules and regulations.
15. AMENDMENT OR DISCONTINUANCE. The Plan may be amended or
discontinued by the Board of Directors of the Company without the approval of
the stockholders of the Company, except that any amendment that would
(a) materially increase the benefits accruing to participants under the Plan,
(b) materially increase the number of securities that may be issued under the
Plan, or (c) materially modify the requirements of eligibility for
participation in the Plan must be approved by the stockholders of the Company.
In addition, to the extent that an amendment would affect director options,
the Plan shall not be amended more than once every six (6) months, other than
to comport with changes in the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.
16. EFFECT OF PLAN. Neither the adoption of the Plan nor any action
of the Committee shall be deemed to give any director or Consultant any right
to be granted an option to purchase Common Stock of the Company or any other
rights except as may be evidenced by the stock option agreement, or any
amendment thereto, duly authorized by the Committee and executed on behalf of
the Company and then only to the extent and on the terms and conditions
expressly set forth therein.
17. TERM. Unless sooner terminated by action of the Committee, this
Plan will terminate on May 14, 2001. The Committee may not grant options
under the Plan after that date, but options granted before that date will
continue to be effective in accordance with their terms.
18. DEFINITIONS. For the purpose of this Plan, unless the context
requires otherwise, the following terms shall have the meanings indicated:
A. "Committee" means the Executive Committee of the Board
of Directors of the Company;
B. "Common Stock" means the Common Stock which the
Company is currently authorized to issue or may in the future be
authorized to issue (as long as the common stock varies from that
currently authorized, if at all, only in amount of par value);
C. "Company" means Brinker International, Inc., a
Delaware corporation;
D. "Consultant" means a consultant or advisor who is not
an officer, director, or ten percent (10%) stockholder of the
Company within the meaning of Section 16 of the Securities Exchange Act
of 1934 and who renders bona fide services to the Company or a
subsidiary of the Company otherwise than in connection with the
offer or sale of securities in a capital-raising transaction;
E. "Option Period" means the period during which an
option may be exercised;
F. "Plan" means this Stock Option Plan for Non-Employee
Directors and Consultants, as amended from time to time; and
G. "Subsidiary" means any corporation in an unbroken
chain of corporations beginning with the Company if, at the time
of the granting of this option, each of the corporations other
than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other
corporations in the chain, and "Subsidiaries" means more than one
of any such corporations.
EXHIBIT 10(c)
REGISTRANT'S 1992 INCENTIVE STOCK OPTION PLAN
Brinker International, Inc., a Delaware corporation (the "Company"),
hereby adopts the following plan, as approved by the Company's stockholders on
November 11, 1992:
1. PURPOSE. The purpose of the Plan is to provide employees with a
proprietary interest in the Company through the granting of options which will
(a) increase the interest of the employees in the Company's welfare;
(b) furnish an incentive to the employees to continue their services
for the Company; and
(c) provide a means through which the Company may attract able persons
to enter its employ.
2. ADMINISTRATION. The Plan will be administered by the Committee.
3. PARTICIPANTS. The Committee shall, from time to time, select the
particular employees of the Company and its Subsidiaries to whom options are
to be granted, and who will, upon such grant, become participants in the Plan.
4. STOCK OWNERSHIP LIMITATION. No Incentive Option may be granted to
an employee who owns more than 10% of the voting power of all classes of stock
of the Company or its Parent or Subsidiaries. This limitation will not apply
if the option price is at least 110% of the fair market value of the stock at
the time the Incentive Option is granted and the Incentive Option is not
exercisable more than five years from the date it is granted.
5. SHARES SUBJECT TO PLAN. The Committee may not grant options under
the Plan for more than 3,375,000 shares of Common Stock of the Company, but
this number may be adjusted to reflect, if deemed appropriate by the
Committee, any stock dividend, stock split, share combination, reca-
pitalization or the like, of or by the Company. Shares to be optioned and
sold may be made available from either authorized but unissued Common Stock or
Common Stock held by the Company in its treasury. Shares that by reason of
the expiration of an option or otherwise are no longer subject to purchase
pursuant to an option granted under the Plan may be re-offered under the Plan.
6. LIMITATION ON AMOUNT. The aggregate fair market value (determined
at the time of grant) of the shares of Common Stock which any employee is
first eligible to purchase in any calendar year by exercise of Incentive
Options granted under this Plan and all incentive stock option plans (within
the meaning of Section 422A of the Internal Revenue Code) of the Company or
its Parent or Subsidiaries shall not exceed $100,000. For this purpose, the
fair market value (determined at the respective date of grant of each option)
of the stock purchasable by exercise of an Incentive Option (or an installment
thereof) shall be counted against the $100,000 annual limitation for an
employee only for the calendar year such stock is first purchasable under the
terms of the option.
7. ALLOTMENT OF SHARES. The Committee shall determine the number of
shares of Common Stock to be offered from time to time by grant of options to
employees of the Company or its Subsidiaries. The grant of an option to an
employee shall not be deemed either to entitle the employee to, or to
disqualify the employee from, participation in any other grant of options
under the Plan. No participant may receive in any calendar year in excess of
twenty percent (20%) of the options granted in such calendar year.
8. GRANT OF OPTIONS. The Committee is authorized to grant Incentive
Options and Nonqualified Options under the Plan (additionally, the Board may
grant nonqualified options outside of the Plan as determined in its
discretion). The grant of options shall be evidenced by stock option
agreements containing such terms and provisions as are approved by the
Committee, but not inconsistent with the Plan, including provisions that may
be necessary to assure that any option that is intended to be an Incentive
Option will comply with Section 422A of the Internal Revenue Code. The
Company shall execute stock option agreements upon instructions from the
Committee.
9. OPTION PRICE. The option price for Incentive Options shall not be
less than 100% of the fair market value per share of the Common Stock on the
date the option is granted. The Committee shall determine the fair market
value of the Common Stock on the date of grant, and shall set forth the
determination in its minutes, using any reasonable valuation method. The
option price for Nonqualified Options shall be determined in the discretion of
the Committee.
10. OPTION PERIOD. The Option Period will begin on the date the
option is granted, which will be the date the Committee authorizes the option
unless the Committee specifies a later date. No option may terminate later
than ten years from the date the option is granted. The Committee may provide
for the exercise of options in installments and upon such terms, conditions
and restrictions as it may determine. The Committee may provide for
termination of the option in the case of termination of employment or any
other reason.
11. RIGHTS IN EVENT OF DEATH OR DISABILITY. If a participant dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Internal
Revenue Code) prior to termination of his right to exercise an option in
accordance with the provisions of his stock option agreement without totally
having exercised the option, the option may be exercised subject to the
provisions of Paragraph 13 hereof, by (i) the participant's estate or by the
person who acquired the right to exercise the option by bequest or inheritance
or by reason of death of the participant.
12. PAYMENT. Full payment for shares purchased upon exercising an
option shall be made in cash or by check at the time of exercise, or on such
other terms as are set forth in the applicable option agreement. No shares
may be issued until full payment of the purchase price therefor has been made,
and a participant will have none of the rights of a stockholder until shares
are issued to him.
13. EXERCISE OF OPTION. Options granted under the Plan may be
exercised during the Option Period, at such times, in such amounts, in
accordance with such terms and subject to such restrictions and vesting
requirements as are determined by the Committee and set forth in the
applicable stock option descriptions.
14. CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The number of shares of
Common Stock covered by each outstanding option granted under the Plan and the
option price may be adjusted to reflect, as deemed appropriate by the
Committee, any stock dividend, stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation or the like, of or by the Company. Notwithstanding anything in
this Plan to the contrary, all options granted pursuant to the Plan shall
become fully vested and exercisable at the election of the Participant at any
time prior to the expiration date of such option upon a material change in
control of the Company. For purposes hereof, a "material change in control of
the Company" shall be deemed to include, but not be limited to, the
dissolution or liquidation of the Company, a merger of the Company into
another corporation, partnership, trust or other business entity, (other than
a merger into a subsidiary or parent of the Company, or a merger the primary
purpose of which is reincorporation), the acquisition of the Company by
another corporation, partnership, trust, or other business entity, the sale or
conveyance of all or substantially all of the assets of the Company, the
acquisition of the majority of the voting securities of the Company by any
person or entity or group of affiliated persons or entities, or any other
event as determined by the Committee.
15. NON-ASSIGNABILITY. Options may not be transferred other than by
will or by the laws of descent and distribution. During a participant's
lifetime, options granted to a participant may be exercised only by the
participant.
16. INTERPRETATION. The Committee shall interpret the Plan and shall
prescribe such rules and regulations in connection with the operation of the
Plan as it determines to be advisable for the administration of the Plan. The
Committee may rescind and amend its rules and regulations.
17. AMENDMENT OR DISCONTINUANCE. The Plan may be amended or
discontinued by the Committee without the approval of the stockholders of the
Company, except that any amendment that would (a) materially increase the
benefits accruing to participants under the Plan, (b) materially increase the
number of securities that may be issued under the Plan, or (c) materially
modify the requirements of eligibility for participation in the Plan must be
approved by the stockholders of the Company.
18. EFFECT OF PLAN. Neither the adoption of the Plan by the Board nor
any action of the Committee shall be deemed to give any officer or employee
any right to be granted an option to purchase Common Stock of the Company or
any other rights except as may be evidenced by the stock option agreement, or
any amendment thereto, duly authorized by the Committee and executed on behalf
of the Company and then only to the extent and on the terms and conditions
expressly set forth therein.
19. TERM. Unless sooner terminated by action of the Board, this Plan
will terminate on September 7, 2002. The Committee may not grant options
under the Plan after that date, but options granted before that date will
continue to be effective in accordance with their terms.
20. DEFINITIONS. For the purpose of this Plan, unless the context
requires otherwise, the following terms shall have the meanings indicated:
(a) "Board" means the board of directors of the Company.
(b) "Committee" means the Compensation Committee of the Board, composed
of independent and disinterested members of the Board qualified to be members
of the Committee pursuant to Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended.
(c) "Common Stock" means the Common Stock which the Company is
currently authorized to issue or may in the future be authorized to issue.
(d) "Incentive Option" means an option granted under the Plan which
meets the requirements of Section 422A of the Internal Revenue Code.
(e) "Nonqualified Option" means an option granted under the Plan which
is not intended to be an Incentive Option.
(f) "Option Period" means the period during which an option may be
exercised.
(g) "Parent" means any corporation in an unbroken chain of
corporations ending with the Company if, at the time of granting of the
option, each of the corporations other than the Company owns stock possessing
50% or more of the total combined voting power of all classes of stock in one
of the other corporations in the chain.
(h) "Plan" means this 1992 Incentive Stock Option Plan, as amended
from time to time.
(i) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the
option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain,
and "Subsidiaries" means more than one of any such corporations.
EXHIBIT 13
1995 ANNUAL REPORT TO SHAREHOLDERS
SELECTED FINANCIAL DATA
(In thousands, except per share amounts and number of restaurants)
Fiscal Years
1995 1994 1993 1992 1991
Income Statement Data:
Revenues $1,042,199 $886,040 $704,984 $569,795 $476,637
Costs and Expenses:
Cost of Sales 283,417 241,950 195,967 158,401 137,744
Restaurant Expenses 540,986 451,029 358,949 297,941 249,494
Depreciation and
Amortization 58,570 51,570 38,292 29,203 23,459
General and Administrative 50,362 45,659 37,328 30,917 26,471
Interest Expense 595 441 406 636 1,071
Merger Expenses --- 1,949 --- --- ---
Injury Claim Settlement --- 2,248 --- --- ---
Other, Net (3,151) (5,348) (5,129) (3,148) (1,416)
Total Costs and Expenses 930,779 789,498 625,813 513,950 436,823
Income Before Provision for
Income Taxes 111,420 96,542 79,171 55,845 39,814
Provision for Income Taxes 38,676 34,223 27,083 18,836 13,565
Net Income $ 72,744 $ 62,319 $ 52,088 $ 37,009 $ 26,249
Primary Net Income
Per Share $ 0.98 $ 0.83 $ 0.71 $ 0.52 $ 0.40
Primary Weighted Average
Shares Outstanding 74,283 74,947 73,286 71,829 65,711
Balance Sheet Data
(end of period):
Working Capital
(Deficit) $ (2,377) $(54,879) $(40,579) $(25,009) $ 1,872
Total Assets 732,805 558,435 455,070 355,595 277,706
Long-term Obligations 139,645 39,316 31,082 26,725 24,594
Shareholders' Equity 496,797 417,377 344,086 261,593 207,214
Number of Restaurants Open
at End of Period:
Company Operated 439 369 308 258 223
Franchised/Joint Venture 121 89 75 57 48
Total 560 458 383 315 271
Prior year financial results have been restated to reflect the fiscal 1995
acquisition accounted for as a pooling of interest.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR FISCAL YEARS 1995, 1994, AND 1993
The following table sets forth expenses as a percentage of total revenues for
the periods indicated for revenue and expense items included in the
Consolidated Statements of Income.
PERCENTAGE OF TOTAL REVENUES
Fiscal Years
1995 1994 1993
Revenues 100.0% 100.0% 100.0%
Costs and Expenses:
Cost of Sales 27.2% 27.3% 27.8%
Restaurant Expenses 51.9% 50.9% 50.9%
Depreciation and Amortization 5.6% 5.8% 5.4%
General and Administrative 4.8% 5.2% 5.3%
Interest Expense 0.1% 0.0% 0.1%
Merger Expenses --- 0.2% ---
Injury Claim Settlement --- 0.3% ---
Other, Net (0.3%) (0.6%) (0.7%)
Total Costs and Expenses 89.3% 89.1% 88.8%
Income Before Provision
for Income Taxes 10.7% 10.9% 11.2%
Provision for Income Taxes 3.7% 3.9% 3.8%
Net Income 7.0% 7.0% 7.4%
REVENUES
Increases in revenues of 18% and 26% in fiscal 1995 and 1994, respectively,
primarily relate to the increases in Company-owned store weeks of 19% in
fiscal 1995 and 24% in fiscal 1994 driven by new unit expansion. Average
weekly sales at Company-owned stores declined 0.5% in fiscal 1995 and
increased 1.9% in fiscal 1994 while comparable store sales declined 0.3% and
increased 2.1% in fiscal 1995 and 1994, respectively.
NET INCOME
Sales levels were primarily impacted by increased competition within the
casual-dining sector coupled with a change in consumer spending as a result of
declining discretionary income. Brinker is committed to providing quality
food and service at an exceptional value. To this end, the Company continues
to monitor customer feedback and to make appropriate menu, service, and
ambiance changes to meet our customers' needs. Menu price increases had
little impact on the increase in revenues as weighted average price increases
over the past two years averaged less than 1% per year.
COSTS AND EXPENSES (as a percent of Revenues)
Cost of sales decreased in fiscal 1995 and 1994 due to favorable commodity
price variances and increased purchasing leverage, which offset product mix
changes to menu items with higher percentage food costs. In fiscal 1995,
favorable commodity price changes in poultry, meat, dairy, and bakery offset
unfavorable variances for produce, seafood, and non-alcoholic beverages. In
fiscal 1994, favorable commodity price changes in produce, dairy, poultry, and
pasta offset unfavorable commodity price changes in non-alcoholic beverages.
Restaurant expenses increased in fiscal 1995 and were flat in fiscal 1994. In
fiscal 1995, restaurant labor increased as a result of increased overtime,
training costs, and wage pressures due to heightened competition for hourly
employees; manager salaries increased as a result of increased staffing in
anticipation of new restaurant openings; credit card fees increased due to
proportionately higher credit card sales; and supplies increased due to new
menu rollouts. In fiscal 1994, occupancy costs decreased as Brinker moved
toward buying as opposed to leasing new restaurant sites. Liquor taxes also
decreased due to Brinker's expansion into states with lower liquor tax rates.
These decreases were offset by increases in manager salaries and training
expense to support expansion, and property taxes due to increased rates.
Depreciation and amortization decreased in fiscal 1995 as a result of the
increase in revenues and a decrease in per-unit depreciation and amortization
due to a declining depreciable asset base for older units. The fiscal 1994
increase primarily related to investments in computer hardware and software
and the ongoing restaurant remodeling program.
General and administrative expenses have decreased in the past two fiscal
years as a result of Brinker's focus on controlling corporate expenditures
relative to increasing revenues. Efficiencies resulting from investments in
computer hardware and software allowed Brinker to continue with the aggressive
expansion of its restaurant concepts without incurring proportional increases
in staff and support costs.
Merger expenses are one-time charges related to the acquisition of On The
Border in fiscal 1994, such as consulting fees, legal fees, and severance
costs.
Injury claim settlement represents a one-time charge in fiscal 1994 to settle
an injury claim arising from an airplane accident in March 1993 involving
several former officers of On The Border.
Other, net, decreased in fiscal 1995 primarily as a result of a decrease in
net realized gains on sales of marketable securities as well as a decrease in
dividend and interest income due to the declining balance in marketable
securities. The slight decrease in fiscal 1994 resulted from a decrease in
net realized gains on sales of marketable securities and recognition of a
permanent decline in market value for certain securities.
INCOME BEFORE PROVISION FOR INCOME TAXES
As a result of changes in the relationships between revenues and costs and
expenses, income before provision for income taxes has increased at rates of
15% and 22% in fiscal 1995 and 1994, respectively.
INCOME TAXES
The Company's effective income tax rate was 34.7%, 35.4%, and 34.2% in fiscal
1995, 1994, and 1993, respectively. The fiscal 1995 decrease is primarily the
result of an increase in Federal FICA tax credits paid on tips. The increase
in fiscal 1994 is the result of additional state income tax liabilities
resulting from expansion, particularly relating to growth in Florida and
California.
The Omnibus Budget Reconciliation Act, enacted in August 1993, mandated
certain changes in Federal income tax laws, which among other items, included
an increase in the statutory Federal corporate income tax rate from 34% to
35%, retroactive to January 1993, reinstatement of the targeted jobs tax
credit, through January 1995 at which time such credit was eliminated, and a
tax credit for FICA taxes paid on tips, effective January 1994. These changes
did not have a material impact on Brinker's fiscal 1995 and 1994 effective
income tax rate or the consolidated financial statements.
NET INCOME AND NET INCOME PER SHARE
Net income and primary net income per share were stable as a percent of
revenues in fiscal 1995 as a result of increased restaurant expenses in fiscal
1995, offset by one-time charges incurred in fiscal 1994, including the $2.2
million injury claim settlement and $1.9 million of merger costs incurred in
connection with the On The Border acquisition. Net income and primary net
income per share as a percent of revenues decreased slightly in fiscal 1994 as
a result of the aforementioned one-time charges. The change in the weighted
average number of common shares outstanding arose from common stock options
exercised each year offset by a decrease in dilutive common stock equivalents
due to a decline in Brinker's stock price.
IMPACT OF INFLATION
Brinker has not experienced a significant overall impact from inflation. As
operating expenses increase, Brinker, to the extent permitted by competition,
recovers increased costs by increasing menu prices.
LIQUIDITY AND CAPITAL RESOURCES
The working capital deficit decreased from $54.9 million at June 29, 1994 to
$2.4 million at June 28, 1995. Operating results from new and existing units,
proceeds from new loans, sales of marketable securities, and the exercise of
employee stock options generated cash proceeds that were offset by Brinker's
capital expenditures. Net cash provided by operating activities decreased to
$101.6 million in fiscal 1995 from $126.4 million in fiscal 1994 due to the
timing of operational receipts and payments, which offset cash generated from
the increased number of restaurants in operation, operating results from
existing units, and the effective containment of costs.
Brinker had available funds from credit facilities totalling $250 million at
June 28, 1995. Brinker estimates that its capital expenditures during fiscal
1996 will approximate $230 million. These capital expenditures, which will
primarily relate to the planned expansion of each restaurant concept and
Brinker's ongoing remodel program, will be funded from internal operations,
cash equivalents, income earned from investments, build-to-suit lease
agreements with landlords, and drawdowns on Brinker's available lines of
credit.
Brinker is not aware of any other event or trend which would potentially
affect its liquidity. In the event such a trend develops, Brinker believes
that there are sufficient funds available under the lines of credit and from
strong internal cash generating capabilities to adequately manage the
expansion of the business.
NEW ACCOUNTING PRONOUNCEMENT
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 ("SFAS No. 121"), Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of.
SFAS No. 121 sets forth standards for recognition and measurement of
impairment of long-lived assets. SFAS No. 121 is effective for Brinker in
fiscal 1997. Brinker does not believe the adoption of SFAS No. 121 will have
a material impact on its consolidated financial statements.
MANAGEMENT'S OUTLOOK
Brinker's strategy is to position itself for aggressive, strategic growth.
The Company's recent agreement with Lettuce Entertain You provides Brinker
with two new proven concepts - Maggiano's Little Italy and The Corner Bakery.
Brinker currently has several restaurant concepts occupying distinct niches
within the casual dining segment, each representing various price points and
types of cuisine. Management believes a strategic mix of concepts and
Brinker's alliance with Lettuce Entertain You will enhance the Company's
ability to take advantage of future shifts in the casual dining marketplace.
As Brinker continues to evolve and operate a portfolio of restaurant concepts,
the Company continually assesses each concept's potential for growth and
expansion in a rapidly changing marketplace. As part of this strategic
review, management has decided to temporarily discontinue future expansion
plans for the Grady's concept and Company owned Spageddies restaurants and is
currently evaluating the performance of Grady's and Spageddies and their role
in the pursuit of Brinker's long-term strategy for growth and development.
In fiscal 1995, Brinker experienced a difficult operating environment due to
intensified competition, weakened consumer confidence and continued pressure
on discretionary income. Management expects these conditions to continue into
fiscal 1996. Brinker has recently taken steps to enhance operating results by
emphasizing price value and service to exceed customer expectations. Focus on
these items as well as reallocating investment capital to accelerate the
growth of the Company's higher volume and more profitable concepts is intended
to strategically position Brinker to enhance long-term value for its
shareholders.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
1995 1994
ASSETS
Current Assets:
Cash and Cash Equivalents $ 38,780 $ 3,743
Accounts Receivable, Net 17,952 12,651
Assets Held for Sale and Leaseback 68 ---
Inventories 10,312 8,213
Prepaid Expenses 22,485 17,601
Deferred Income Taxes (Note 5) 4,389 4,655
Total Current Assets 93,986 46,863
Property and Equipment, at Cost (Note 7):
Land $ 148,123 $ 106,040
Buildings and Leasehold Improvements 358,717 286,437
Furniture and Equipment 214,275 172,403
Construction-in-Progress 49,500 31,300
770,615 596,180
Less Accumulated Depreciation
and Amortization 202,542 161,946
Net Property and Equipment 568,073 434,234
Other Assets:
Preopening Costs $ 7,258 $ 7,927
Marketable Securities (Note 3) 34,696 45,239
Notes Receivable 991 2,231
Other (Notes 2 and 9) 27,801 21,941
Total Other Assets 70,746 77,338
Total Assets $ 732,805 $ 558,435
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current Installments of Long-Term
Debt (Notes 6 and 7) $ 1,593 $ 501
Accounts Payable 34,252 45,340
Accrued Liabilities (Note 4) 60,518 55,901
Total Current Liabilities 96,363 101,742
Long-Term Debt, Less Current
Installments (Notes 6 and 7) 103,086 5,604
Deferred Income Taxes (Note 5) 13,497 12,143
Other Liabilities 23,062 21,569
Commitments and Contingencies
(Notes 6, 7, 9, and 10)
Shareholders' Equity (Notes 2 and 8):
Preferred Stock-1,000,000 Authorized Shares;
$1.00 Par Value; No Shares Issued --- ---
Common Stock-250,000,000 Authorized Shares;
$.10 Par Value; 72,073,597 and 71,405,017
Shares Issued and Outstanding in
1995 and 1994, Respectively 7,207 7,141
Additional Paid-In Capital 190,919 183,299
Unrealized Loss on Marketable Securities
(Note 3) (1,451) (441)
Retained Earnings 300,122 227,378
Total Shareholders' Equity 496,797 417,377
Total Liabilities and
Shareholders' Equity $ 732,805 $ 558,435
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
FISCAL YEARS
1995 1994 1993
Revenues $1,042,199 $886,040 $704,984
Costs and Expenses:
Cost of Sales 283,417 241,950 195,967
Restaurant Expenses (Note 7) 540,986 451,029 358,949
Depreciation and Amortization 58,570 51,570 38,292
General and Administrative 50,362 45,659 37,328
Interest Expense (Note 6) 595 441 406
Merger Expenses (Note 2) --- 1,949 ---
Injury Claim Settlement (Note 10) --- 2,248 ---
Other, Net (Note 3) (3,151) (5,348) (5,129)
Total Costs and Expenses 930,779 789,498 625,813
Income Before Provision
for Income Taxes 111,420 96,542 79,171
Provision for Income Taxes (Note 5) 38,676 34,223 27,083
Net Income $ 72,744 $ 62,319 $ 52,088
Primary Net Income Per Share $ 0.98 $ 0.83 $ 0.71
Primary Weighted Average
Shares Outstanding 74,283 74,947 73,286
Fully Diluted Net Income
Per Share $ 0.98 $ 0.83 $ 0.71
Fully Diluted Weighted Average
Shares Outstanding 74,345 75,043 73,415
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
Unrealized
Additional Loss On
Common Stock Paid-In Marketable Retained
Shares Amount Capital Securities Earnings Total
Balances at June 30, 1992 66,694 $ 6,670 $141,952 $ --- $112,971 $261,593
Net Income --- --- --- --- 52,088 52,088
Issuances of Common Stock 3,629 363 30,042 --- --- 30,405
Balances at June 30, 1993 70,323 $ 7,033 $171,994 $ --- $165,059 $344,086
Net Income --- --- --- --- 62,319 62,319
Unrealized Loss on Marketable
Securities (Note 3) --- --- --- (441) --- (441)
Issuances of Common Stock 1,082 108 11,305 --- --- 11,413
Balances at June 29, 1994 71,405 $ 7,141 $183,299 $ (441) $227,378 $417,377
Net Income --- --- --- --- 72,744 72,744
Unrealized Loss on Marketable
Securities (Note 3) --- --- --- (1,010) --- (1,010)
Issuances of Common Stock 668 66 7,620 --- --- 7,686
Balances at June 28, 1995 72,073 $ 7,207 $190,919 $ (1,451) $300,122 $496,797
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
FISCAL YEARS
1995 1994 1993
Cash Flows From Operating Activities:
Net Income $ 72,744 $ 62,319 $ 52,088
Adjustments to Reconcile Net Income to Net
Cash Provided By Operating Activities:
Depreciation of Property and Equipment 48,893 41,653 30,997
Amortization of Preopening Costs 9,677 9,917 7,295
Gain on Sale of Land (876) (1,000) ---
Net Loss (Gain) on Sale of Marketable
Securities 1,291 (1,543) (1,579)
Loss on Impairment of Marketable
Securities --- 1,072 ---
Changes in Assets and Liabilities:
Increase in Accounts Receivable (5,301) (6,601) (878)
Increase in Inventories (2,099) (1,244) (1,248)
Increase in Prepaid Expenses (4,884) (4,929) (2,648)
Increase in Other Assets (13,627) (11,070) (13,211)
(Decrease) Increase in Accounts
Payable (11,905) 21,612 25,041
Increase in Accrued Liabilities 4,617 9,919 9,803
Increase (Decrease) in Deferred
Income Taxes 1,620 (2,268) (6,053)
Increase in Other Liabilities 1,493 8,520 7,481
Net Cash Provided by Operating
Activities 101,643 126,357 107,088
Cash Flows From Investing Activities:
Payments for Property and Equipment (183,913) (114,794) (124,756)
Proceeds from Sale of Land 2,056 4,180 ---
Payment for Purchase of Restaurants
(Note 2) --- (8,165) ---
(Increase) Decrease in Assets Held
for Sale and Leaseback (68) 1,155 13
Purchases of Marketable Securities (15,216) (58,986) (62,796)
Proceeds from Sales of Marketable
Securities 23,458 42,470 61,630
Net Cash Used in Investing Activities (173,683) (134,140) (125,909)
Cash Flows From Financing Activities:
Payments of Long-Term Debt $ (1,426) $ (3,977) $ (308)
Proceeds from Issuances of Long-Term Debt 100,000 --- ---
Proceeds from Issuances of Common Stock 8,503 3,026 11,423
Net Cash Provided (Used) by
Financing Activities 107,077 (951) 11,115
Net Increase (Decrease) in Cash
and Cash Equivalents 35,037 (8,734) (7,706)
Cash and Cash Equivalents at Beginning
of Year 3,743 12,477 20,183
Cash and Cash Equivalents at End of Year $ 38,780 $ 3,743 $ 12,477
Cash Paid During the Year:
Interest, Net of Amounts Capitalized $ --- $ 430 $ 395
Income Taxes $ 47,838 $ 26,579 $ 11,687
Non-Cash Transactions During the Year:
Tax Benefit from Stock Options Exercised $ 817 $ 8,387 $ 18,982
See Accompanying Notes to Consolidated Financial Statements
Brinker International, Inc.
Notes To Consolidated Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The consolidated financial statements include the accounts of Brinker
International, Inc. and its wholly-owned subsidiaries ("Brinker"). All
significant intercompany accounts and transactions have been eliminated
in consolidation. In additional, Brinker's consolidated financial
statements and notes thereto have been restated to include the accounts
and operations of three restaurants acquired from a franchisee for all
periods presented (see Note 2).
Effective July 1, 1993, Brinker adopted a 52 week fiscal year ending on
the last Wednesday in June. This change enhances Brinker's ability to
measure comparative operating results. The impact of this change was
not significant. Fiscal years 1995, 1994, and 1993 ended June 28, 1995,
June 29, 1994, and June 30, 1993, respectively.
Certain amounts in the fiscal 1994 consolidated financial statements
have been reclassified to conform with the fiscal 1995 presentation.
(b) Financial Instruments
Brinker's policy is to invest cash in excess of operating requirements
in income-producing investments. Cash invested in instruments with
maturities of three months or less at the time of investment is
reflected as cash equivalents. Cash equivalents of $37,953,000 and
$110,000 at June 28, 1995 and June 29, 1994, respectively, consist
primarily of money market funds, short-term municipal funds, commercial
paper, and auction-rate preferred stock. The carrying value of these
instruments approximates market value due to their short-term
maturities.
The carrying values of Brinker's marketable securities and long-term
debt as presented in the consolidated financial statements approximate
their fair values (see Notes 3 and 6).
(c) Inventories
Inventories, which consist of food, beverages, and supplies, are stated
at the lower of cost (weighted average cost method) or market.
(d) Property and Equipment
Buildings and leasehold improvements are amortized using the
straight-line method over the lesser of the life of the lease, including
renewal options, or the estimated useful lives of the assets, which
range from 5 to 20 years.
Furniture and equipment are depreciated using the straight-line method
over the estimated useful lives of the assets, which range from 3 to 8
years.
(e) Capitalized Interest
Interest costs capitalized during the construction period of restaurants
were approximately $2,346,000, $690,000, and $800,000 during fiscal
1995, 1994, and 1993, respectively.
(f) Preopening Costs
Capitalized preopening costs include the direct and incremental costs
typically associated with the opening of a new restaurant which
primarily consist of costs incurred to develop new restaurant management
teams, travel and lodging for both the training and opening unit
management teams, and the food, beverage, and supplies costs incurred to
perform role play testing of all equipment, concept systems, and
recipes. Effective July 1, 1993, Brinker prospectively revised its
policy for capitalizing and amortizing preopening costs associated with
the opening of new restaurant sites. The amortization period was
reduced from 24 months to 12 months. The impact of the change in
accounting policy did not have a material impact on Brinker's
consolidated financial statements.
(g) Income Taxes
Brinker recognizes income taxes in accordance with the Financial
Accounting Standards Board Statement of Financial Accounting Standards
No. 109 ("Statement 109"), Accounting for Income Taxes, which Brinker
elected to adopt effective July 1, 1993. Under the asset and liability
method of Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
The impact of adoption on Brinker's consolidated financial statements
was not material.
(h) Stock Options
Proceeds from the exercise of common stock options issued to officers,
directors, key employees, and certain non-employees under Brinker's
stock option plans are credited to common stock to the extent of par
value and to additional paid-in capital for the excess.
(i) Net Income Per Share
Both primary and fully diluted net income per share are based on the
weighted average number of shares outstanding during the fiscal year
increased by common equivalent shares (stock options) determined using
the treasury stock method. Primary weighted average equivalent shares
are determined based on the average market price exceeding the exercise
price of the stock options. Fully diluted weighted average equivalent
shares are determined based on the higher of the average or ending
market price exceeding the exercise price of the stock options.
2. BUSINESS COMBINATIONS
On August 3, 1994, Brinker acquired four Chili's restaurants located in
Florida and Georgia from a franchisee in exchange for 505,930 shares of
Brinker common stock. The acquisition of one of the restaurants was
accounted for as a purchase. The acquisition of the remaining three
restaurants was accounted for as a pooling of interests. Accordingly,
Brinker's consolidated financial statements have been restated to
include the accounts and operations of these three restaurants for all
periods presented. The four acquired restaurants' results of operations
are not material.
On May 25, 1994, Brinker acquired 100% of Northwest Restaurants Joint
Venture ("NRJV"), a franchisee which operated nine Chili's restaurants
in California and Nevada, in exchange for 256,576 shares of Brinker
common stock. This acquisition was accounted for as a pooling of
interests and, accordingly, Brinker's consolidated financial statements
have been restated to include the accounts and operations of NRJV for
all periods presented.
On May 18, 1994, Brinker acquired the On The Border restaurant concept.
Under the terms of the merger agreement, 3,767,711 fully diluted shares
of On The Border common stock were converted to 1,239,130 shares of
Brinker common stock (approximately 0.3 for 1 exchange). The
acquisition was accounted for as a pooling of interests and,
accordingly, Brinker's consolidated financial statements have been
restated to include the accounts and operations of On The Border for all
periods presented. Merger expenses of $1,949,000 incurred in fiscal
1994 related to the acquisition of On The Border are reported separately
to reflect the impact of nonrecurring charges. These costs primarily
relate to consulting fees, legal fees, and severance costs.
On October 7, 1993, Brinker acquired the assets of a franchisee, which
operated four Chili's restaurants in Pennsylvania and Ohio, for
approximately $8,165,000 in cash. The acquisition was accounted for as
a purchase. Goodwill of approximately $6,941,000, representing the
excess of cost over the fair value of the assets acquired, was recorded
in connection with the acquisition and is included in other assets.
Goodwill is being amortized on a straight-line basis over 30 years. The
operations of the restaurants are not material and are included in
Brinker's consolidated results of operations from the date of
acquisition.
3. INVESTMENTS
Brinker adopted Statement of Financial Accounting Standards No. 115
("SFAS No. 115"), Accounting for Certain Investments in Debt and Equity
Securities, effective June 29, 1994. Under SFAS No. 115, debt and
equity securities are classified into three categories: trading,
available-for-sale, and held-to-maturity.
As of June 28, 1995 and June 29, 1994, Brinker's investment portfolio
consisted entirely of equity securities classified as available-for-
sale. SFAS No. 115 requires available-for-sale securities to be carried
at fair value with unrealized gains and unrealized losses reported as a
separate component of shareholders' equity. A decline in market value
of any available-for-sale security below cost that is deemed other than
temporary is charged to earnings resulting in the establishment of a new
cost basis for the security.
Brinker's investment position at June 28, 1995 and June 29, 1994 is as
follows (in thousands):
1995 1994
Cost $36,918 $45,680
Gross unrealized holding gains 260 66
Gross unrealized holding losses (2,482) (507)
Fair value $34,696 $45,239
Realized gains and realized losses are determined on a specific
identification basis. Realized gains and realized losses from
investment transactions were $187,000 and $1,478,000 during fiscal 1995,
$1,871,000 and $1,400,000 (including $1,072,000 of realized losses
resulting from recognition of a permanent decline in market value for
certain securities) during fiscal 1994, and $2,137,000 and $558,000
during fiscal 1993. Dividend and interest income during fiscal 1995,
1994, and 1993 was $3,368,000, $3,624,000, and $2,800,000, respectively.
Realized gains and realized losses as well as dividend and interest
income are included in other, net.
4. ACCRUED LIABILITIES
Accrued liabilities consist of the following (in thousands):
1995 1994
Payroll $16,256 $13,946
Insurance 14,884 14,849
Property tax 7,906 6,052
Sales tax 5,693 4,883
Profit sharing 2,803 6,270
Other 12,976 9,901
$60,518 $55,901
5. INCOME TAXES
The provision for income taxes consists of the following (in thousands):
1995 1994 1993
Current income tax expense:
Federal $31,133 $32,511 $29,335
State 5,151 3,980 3,501
Total current income tax expense 36,284 36,491 32,836
Deferred income tax expense (benefit):
Federal 2,113 (1,935) (5,551)
State 279 (333) (202)
Total deferred income tax expense
(benefit): 2,392 (2,268) (5,753)
$38,676 $34,223 $27,083
A reconciliation between the reported provision for income taxes and the
amount computed by applying the statutory Federal income tax rate of 35%
in fiscal 1995 and 1994 and 34% in fiscal 1993 and 1992 to income before
provision for income taxes follows (in thousands):
1995 1994 1993
Income tax expense at statutory rate $38,997 $33,790 $26,918
Targeted jobs tax credit (1,837) (709) (588)
FICA tax credit (2,600) (1,097) ---
Net investment activities (576) (870) (1,094)
State income taxes 3,451 2,228 2,177
Other 1,241 881 (330)
$38,676 $34,223 $27,083
The income tax effects of temporary differences that give rise to
significant portions of deferred income tax assets and liabilities as
determined as of June 28, 1995 and June 29, 1994 are as follows (in
thousands):
1995 1994
Deferred income tax assets:
Insurance reserves $ 9,420 $10,399
Leasing transactions 2,126 2,004
Net operating loss carryforwards 152 2,255
Unrealized loss on marketable securities 771 ---
Other, net 4,780 4,509
Total deferred income tax assets 17,249 19,167
Deferred income tax liabilities:
Depreciation and capitalized interest
on property and equipment 13,711 16,116
Preopening costs 7,518 5,670
Prepaid expenses 412 480
Other, net 4,716 4,389
Total deferred income tax liabilities 26,357 26,655
Net deferred income tax liability $ 9,108 $ 7,488
At June 28, 1995, Brinker has available net operating loss carryforwards
for Federal income tax purposes of $398,000 (arising from the On The
Border merger), which are available to offset future Federal taxable
income through fiscal 2008.
6. DEBT
Long-term debt consists of the following (in thousands):
1995 1994
7.8% senior notes $100,000 $ ---
Capital lease obligations (see Note 7) 3,479 4,905
Other 1,200 1,200
104,679 6,105
Less current installments 1,593 501
$103,086 $ 5,604
On April 12, 1995, Brinker issued $100 million of unsecured senior notes
bearing interest at an annual rate of 7.8%. Interest is payable semi-
annually and Brinker is required to pay 14.3% (or $14,300,000) of the
original principal balance annual on April 12th beginning in 1999
through 2004 with the remaining unpaid balance due on April 12, 2005.
At June 28, 1995, the estimated fair market value of these notes
approximated their carrying value based on the amount of future cash
flows discounted using Brinker's expected borrowing rates for loans of
comparable risk and maturity.
Brinker has available credit facilities aggregating $250 million at
June 28, 1995. A credit facility of $200 million bears interest at
LIBOR plus .25% and expires in fiscal 2000. The remaining credit
facilities bear interest based upon the lower of the banks' "Base" or
prime rate plus 1%, CD rates, or Eurodollar rates, and expire through
fiscal 1996. Commitment fees related to these credit facilities were
not material.
7. LEASES
(a) Capital Leases
Brinker leases certain buildings under capital leases. The asset values
of $6,900,000 and $7,900,000 at June 28, 1995 and June 29, 1994,
respectively, and the related accumulated amortization of $5,200,000 and
$5,100,000 at June 28, 1995 and June 29, 1995, respectively, are
included in property and equipment.
(b) Operating Leases
Brinker leases restaurant facilities and certain equipment under
operating leases having terms expiring at various dates through fiscal
2022. The restaurant leases have renewal clauses of 5 to 30 years at
the option of Brinker and have provisions for contingent rent based upon
a percentage of gross sales, as defined in the leases. Rent expense for
fiscal 1995, 1994 and 1993 was $36,200,000, $32,200,000, and
$27,800,000, respectively. Contingent rent included in rent expense for
fiscal 1995, 1994, and 1993 was $2,900,000, $2,900,000, and $2,500,000,
respectively.
In July 1993, Brinker entered into operating lease agreements with
unaffiliated groups to lease certain restaurant sites. During fiscal
1994 and 1994, the Company utilized the entire commitment of
approximately $30,000,000 for the development of restaurants leased by
Brinker for up to 5 years. The agreements with these groups expire in
fiscal 1988, and do not provide for renewal. Upon expiration, Brinker
may either purchase the properties or allow the lessor to sell the
restaurant facility to an unrelated party and guarantee the residual
value of approximately $25,500,000.
(c) Commitments
At June 28, 1995, future minimum lease payments on capital and operating
leases were as follows (in thousands):
Fiscal Year Capital Leases Operating Leases
1996 723 $ 31,368
1997 718 31,297
1998 657 30,815
1999 657 28,553
2000 613 27,505
Thereafter 2,269 188,687
Total minimum lease payments 5,637 $338,225
Imputed interest (average rate
of 11.5%) 2,158
Present value of minimum payments 3,479
Less current installments 393
Capital lease obligations $3,086
At June 28, 1995, Brinker had entered into other lease agreements for
restaurant facilities currently under construction or yet to be
constructed. In addition to a base rent, the leases also contain
provisions for additional contingent rent based upon gross sales, as
defined in the leases. Classification of these leases as capital or
operating has not been determined as construction of the leased
properties has not been completed.
8. STOCK OPTION PLANS
(a) 1983 and 1992 Employee Incentive Stock Option Plans
In accordance with the Incentive Stock Option Plans adopted in October
1983 and November 1992, options to purchase approximately 16.3 million
shares of Brinker's common stock may be granted to officers, directors,
and key employees. Options are granted at market value on the date of
grant, are exercisable beginning one to two years from the date of
grant, with various vesting periods, and expire ten years from the date
of grant. Option prices under these plans range from $1.27 to $26.83.
In October 1993, the 1983 Incentive Stock Option Plan expired.
Consequently, no options were granted subsequent to fiscal 1993.
Options granted prior to the expiration of this Plan remain exercisable
through February 2003.
Transactions during fiscal 1995, 1994, and 1993 were as follows (in
thousands, except option prices):
1995 1994 1993
Options outstanding at beginning of year 6,897 6,284 6,498
Granted 1,290 1,474 1,539
Exercised (500) (771) (1,562)
Canceled (117) (90) (191)
Options outstanding at end of year 7,570 6,897 6,284
Option price range for options
granted during the year $16.50 $20.38 $18.95
to to to
$16.75 $26.83 $19.33
Options exercisable at end of year 4,044 3,282 2,702
Options available for grant
at end of year 618 1,791 3,705
(b) 1984 Non-Qualified Stock Option Plan
In accordance with the Non-Qualified Stock Option Plan adopted in
December 1984, options to purchase approximately 5 million shares of
Brinker's common stock were authorized for grant. Options were granted
at market value on the date of grant, are exercisable beginning one year
from the date of grant, with various vesting periods, and expire ten
years from the date of grant. Option prices under this plan range from
$.35 to $5.30.
On November 30, 1989, the Non-Qualified Stock Option Plan was
terminated. Consequently, no options were granted subsequent to fiscal
1990. Options granted prior to the termination of this plan remain
exercisable through June 1999.
Transactions during fiscal 1995, 1994, and 1993 were as follows (in
thousands):
1995 1994 1993
Options outstanding at beginning of year 549 858 2,741
Exercised (1) (309) (1,871)
Canceled --- --- (12)
Options outstanding at end of year 548 549 858
Options exercisable at end of year 548 549 858
(c) 1991 Non-Employee Stock Option Plan
In accordance with the Stock Option Plan for Non-Employee Directors and
Consultants adopted in May 1991, options to purchase 337,500 shares of
Brinker's common stock were authorized for grant. Options are granted
at market value on the date of grant, are exercisable beginning two
years from the date of grant, with a three year vesting period, and
expire ten years from the date of grant. Option prices under this plan
range from $11.22 to $23.92.
Transactions during fiscal 1995, 1994, and 1993 were as follows (in
thousands, except option prices):
1995 1994 1993
Options outstanding at beginning of year 122 107 80
Granted 82 18 27
Exercised --- (3) ---
Options outstanding at end of year 204 122 107
Option price for options granted
during the year $18.12 $23.92 $14.67
to
$23.37
Options exercisable at end of year 89 36 ---
Options available for grant
at end of year 131 213 231
(d) On The Border 1989 Stock Option Plan
In accordance with the Stock Option Plan for On The Border employees and
consultants, options to purchase 550,000 shares of On The Border's pre-
acquisition common stock were authorized for grant. Options were
granted at market value on the date of grant, were exercisable in
installments, and expired three to five years from date of grant.
Effective May 18, 1994, the 376,000 unexercised On The Border stock
options became exercisable immediately in accordance with the Stock
Option Plan and were converted to approximately 124,000 Brinker stock
options. Options outstanding at June 28, 1995 and June 29, 1994 were
109,000 and 124,000 stock options, respectively, and are exercisable at
prices ranging from $17.48 to $24.32.
9. SAVINGS PLANS
Effective January 1, 1993, Brinker established the Brinker Savings
Plan I ("Plan I"), a qualified defined contribution retirement plan
covering salaried employees who have completed one year or 1,000 hours
of service. Plan I allows eligible employees to defer receipt of up to
20% of their compensation and contribute such amounts to various
investment funds. Brinker matches 25% of the first 5% an employee
contributes with Brinker common stock. Employee contributions vest
immediately while Brinker contributions vest 25% annually beginning in
the participants' second year of eligibility since plan inception. In
fiscal 1995, 1994 and 1993, Brinker contributed approximately $355,000
(representing 18,745 shares of Brinker common stock), $345,000
(representing 11,666 shares of Brinker common stock), and $173,000
(representing 8,162 shares of Brinker common stock), respectively, and
incurred approximately $70,000, $116,000 and $48,000 in administrative
fees, respectively.
Effective January 1, 1993, Brinker established the Brinker Savings
Plan II ("Plan II"), a non-qualified defined contribution retirement
plan covering highly compensated employees, as defined in the plan.
Plan II allows eligible employees to defer receipt of up to 20% of their
base compensation and 100% of their eligible bonuses, as defined in the
plan, and contribute such amounts to various investment funds. Brinker
matches 25% of the first 5% a non-officer contributes with Brinker
common stock while officers' contributions are matched at the same rate
with cash. Employee contributions vest immediately while Brinker
contributions vest 25% annually beginning in the participants' second
year of employment since plan inception. In fiscal 1995, 1994 and 1993,
Brinker contributed approximately $259,000 (of which approximately
$154,000 was used to purchase 8,175 shares of Brinker common stock),
$231,000 (of which approximately $175,000 was used to purchase 7,096
shares of Brinker common stock), and $69,000 (of which approximately
$49,000 was used to purchase 2,373 shares of Brinker common stock),
respectively, and incurred approximately $70,000, $116,000, and $48,000
in administrative fees, respectively. Brinker has a rabbi trust to fund
Plan II obligations. As of June 28, 1995 and June 29, 1994, assets of
the trust aggregate approximately $5,448,000 and $2,599,000,
respectively, and are included in other assets. The aggregate market
value of these assets at June 28,1 995 and June 29, 1994 approximated
aggregate cost.
10. INJURY CLAIM SETTLEMENT AND CONTINGENCIES
On March 13, 1993, certain officers of On The Border and various family
members were involved in an airplane accident. In fiscal 1994, a
related injury claim was settled for approximately $2,248,000 and On The
Border was released from further liability.
Brinker 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 Brinker, 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 on Brinker's consolidated
financial condition or results of operations.
11. SUBSEQUENT EVENTS
On July 19, 1995, Brinker acquired the remaining 50% interest in its
three unit Cozymel's, A Very Mexican Grill, restaurant concept in
exchange for 430,769 shares of Brinker's common stock. The acquisition
will be accounted for as a purchase. The results of operations on a pro
forma basis are not presented separately as the results do not differ
significantly from historical amounts reported herein.
On August 29, 1995, Brinker acquired the three unit Maggiano's Little
Italy and five unit Corner Bakery concepts in exchange for 4,000,000
shares of Brinker's common stock. The acquisition will be accounted for
as a purchase. The results of operations on a pro forma basis are not
presented separately as the results do not differ significantly from
historical amounts reported herein.
12. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following summarizes the unaudited consolidated quarterly results of
operations for fiscal 1995 and 1994 (in thousands, except per share
amounts):
Year Ended June 28, 1995
Quarters Ended
Sept. 28 Dec. 28 March 29 June 28
Revenues $247,072 $246,607 $268,487 $280,033
Income Before Provision
for Income Taxes 28,756 24,728 27,722 30,214
Net Income 18,548 16,073 18,241 19,882
Primary Net Income Per Share 0.25 0.22 0.25 0.27
Primary Weighted Average
Shares Outstanding 74,799 74,391 74,110 73,928
Year Ended June 28, 1995
Quarters Ended
Sept. 29 Dec. 29 March 30 June 29
Revenues $207,253 $214,081 $226,440 $238,265
Income Before Provision
for Income Taxes 23,016 20,325 25,097 28,103
Net Income 14,917 13,189 16,146 18,066
Primary Net Income Per Share 0.20 0.18 0.21 0.24
Primary Weighted Average
Shares Outstanding 74,523 75,057 75,199 74,887
Amounts differ from those previously reported to reflect the fiscal 1995
acquisition accounted for as a pooling of interest as discussed in
Note 2.
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 28, 1995 and June 29, 1994,
and the related consolidated statements of income, shareholders' equity, and
cash flows for each of the years in the three-year period ended June 28, 1995.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by the Company's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Brinker
International, Inc. and subsidiaries as of June 28, 1995 and June 29, 1994,
and the results of their operations and their cash flows for each of the years
in the three-year period ended June 28, 1995, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Dallas, Texas
August 4, 1995, except as to the second paragraph
of Note 11, which is as of August 29, 1995
EXHIBIT 21
BRINKER INTERNATIONAL, INC., A DELAWARE CORPORATION
SUBSIDIARIES
REGISTRANT's subsidiaries operate full-service restaurants in various
locations throughout the United States under the names Chili's Grill & Bar,
Romano's Macaroni Grill, Grady's American Grill, Spageddies Italian Kitchen,
On The Border Cafes, and Cozymel's.
BRINKER RESTAURANT CORPORATION, a Delaware corporation
BRINKER COZYMEL'S CORPORATION, a Delaware corporation
BRINKER FLORIDA, INC., a Delaware corporation
BRINKER GEORGIA, INC., a Delaware corporation
BRINKER LOUISIANA, INC., a Delaware corporation
BRINKER NORTH CAROLINA, INC., a Delaware corporation
BRINKER OHIO, INC., a Delaware corporation
BRINKER OKLAHOMA, INC., a Delaware corporation
BRINKER TEXAS, L.P., a Texas limited partnership
CHILI'S BEVERAGE COMPANY, INC., a Texas corporation
CHILI'S, INC., a Tennessee corporation
GRADY'S, INC., a Tennessee corporation
MODERNAGE, INC., a Delaware corporation
ON THE BORDER CORPORATION, a Texas corporation
ROMANO'S MACARONI GRILL, INC., a Texas corporation
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Brinker International, Inc.:
We consent to incorporation by reference in the Registration Statement
Nos. 33-61594 and 33-56491 on Form S-8 and Nos. 33-67318, 33-27461, 33-42606,
33-53965 and 33-55181 on Form S-3 of Brinker International, Inc. and
subsidiaries of our report dated August 4, 1995, except as to the second
paragraph of Note 11, which is as of August 29, 1995, relating to the
consolidated balance sheets of Brinker International, Inc. and subsidiaries as
of June 28, 1995 and June 29, 1994, and the related consolidated statements of
income, shareholders' equity and cash flows for each of the years in the
three-year period ended June 28, 1995, which report is incorporated by
reference in the June 28, 1995 annual report on Form 10-K of Brinker
International, Inc. and subsidiaries.
KPMG Peat Marwick LLP
Dallas, Texas
September 22, 1995
EXHIBIT 99
PROXY STATEMENT OF REGISTRANT
DATED SEPTEMBER 26, 1995
DIRECTORS
A brief description of each person nominated to become a director of the
Company is provided below. All nominees, except Gerard V. Centioli, are
currently serving as directors of the Company, each having been elected at the
last annual meeting of the Company's shareholders held on November 3, 1994.
Norman E. Brinker, 64, served as Chairman of the Board of Directors and
Chief Executive Officer of the Company from September 1983 to June 1995, with
the exception of a brief period during which Mr. Brinker was incapacitated due
to an injury. On June 28, 1995, Mr. Brinker relinquished his position as
Chief Executive Officer of the Company, but continues to serve as Chairman of
the Board of Directors. Mr. Brinker is a member of the Executive and
Nominating Committees of the Company. He was the founder of S&A Restaurant
Corp., having served as its President from February 1966 through May 1977 and
as its Chairman of the Board of Directors and Chief Executive Officer from May
1977 through July 1983. From June 1982 through July 1983, Mr. Brinker served
as Chairman of the Board of Directors and Chief Executive Officer of Burger
King Corporation, while simultaneously occupying the position of President of
The Pillsbury Company Restaurant Group. Mr. Brinker currently serves as a
member of the Board of Directors of Haggar Apparel Company.
F. Lane Cardwell, Jr., 43, was elected Executive Vice President -
Strategic Development in June 1992, having formerly held the position of
Senior Vice President - Strategic Development since December 1990.
Mr. Cardwell joined the Company as Vice President - Strategic Development in
August 1988, having been previously employed by S&A Restaurant Corp. from
November 1978 to August 1988, during which time he served as Vice President -
Strategic Planning and Senior Vice President - Strategic Planning.
Mr. Cardwell has served as a member of the Board of Directors of the Company
since September 1991.
Gerard V. Centioli, 41, was elected Senior Vice President - Maggiano's/
Corner Bakery Concepts President in August 1995. Mr. Centioli previously
served as Senior Partner of Lettuce Entertain You Enterprises, Inc. and
President and Chief Executive Officer of the Maggiano's Little Italy and The
Corner Bakery Divisions. Prior to joining Lettuce Entertain You in 1984,
Mr. Centioli served as Vice President - Division President of Collins Foods
International, Inc.
Creed L. Ford, III, 42, joined the Company's predecessor in September
1976 as an Assistant Manager and was promoted to the position of Restaurant
General Manager in March 1977. In September 1978, Mr. Ford became Director of
Operations of the Company. He was elected Vice President - Operations of the
Company in October 1983, Senior Vice President - Operations in November 1984,
and Executive Vice President - Operations in April 1986. Mr. Ford has served
as a member of the Board of Directors of the Company since April 1985.
Ronald A. McDougall, 53, was elected President and Chief Executive
Officer of the Company in June 1995 having formerly held the office of
President and Chief Operating Officer since 1986. Mr. McDougall joined the
Company in 1983 and served as Executive Vice President - Marketing and
Strategic Development until his promotion to President. Prior to joining the
Company, Mr. McDougall held senior management positions at Proctor and Gamble,
Sara Lee, The Pillsbury Company and S&A Restaurant Corp. Mr. McDougall has
served as a member of the Board of Directors of the Company since September
1983 and is a member of the Executive and Nominating Committees of the
Company. He is active in numerous civic, charitable and professional
organizations.
Debra L. Smithart, 41, joined the Company as Assistant Controller in
June 1985. In February 1986 she was promoted to the position of Controller
and served in this capacity until December 1988 when she was elected Vice
President -Controller. In March 1991, Ms. Smithart was promoted to Vice
President - Finance and held this position until September 1991 when she was
promoted to Executive Vice President - Chief Financial Officer. Prior to
joining the Company, Ms. Smithart worked in various financial/accounting
capacities in the public accounting, oil & gas, real estate, and manufacturing
industries. Ms. Smithart has served as a member of the Board of Directors of
the Company since September 1991.
Jack W. Evans, 73, is currently President of Jack Evans Investments,
Inc. and Chairman of the Board of American Title Company. Mr. Evans is a
member of the Executive, Nominating and Compensation Committees of the Company
and has served as a member of the Company's Board of Directors since September
1983. He served as Chairman, Chief Executive Officer and President of Cullum
Companies, Inc., a retail food and drugstore chain from 1977 to 1990. He
served as Mayor of the City of Dallas from May 1981 to May 1983. He is also a
director of Texas Utilities Corporation, Randall's-Tom Thumb, and Morning Star
Group.
Rae F. Evans, 46, is currently President of Rae Evans & Associates, a
firm specializing in Washington corporate strategies. From 1982 until January
1995, Mrs. Evans was the Vice President, National Affairs of Hallmark Cards,
Inc. Mrs. Evans is a member of the Nominating Committee of the Company and
has served as a member of the Board of Directors since January 1990. She is a
member of the Business-Government Relations Council and is a past president of
the organization. She is President of the Capitol Forum and a member of the
Economic Club of Washington. Mrs. Evans is also a member of the Catalyst
Board of Advisors and the National Women's Economic Alliance. Mrs. Evans
serves on the Board of Directors of Haggar Apparel Company.
J. M. Haggar, Jr., 70, retired as Chairman of the Board of Directors of
Haggar Clothing, a clothing manufacturer, in February 1995, having previously
held the positions of President and Chief Executive Officer until 1991. He is
also a director of ENSERCH Corporation. Mr. Haggar is a member of the
Executive Committee and Audit Committee of the Company and has served as a
member of the Company's Board of Directors since April 1985.
J. Ira Harris, 57, is a Managing Director with Lazard Freres & Co., LLC,
an investment banking firm, having held such position since joining the firm
in January 1988. Mr. Harris has served as a member of the Board of Directors
of the Company since September 1993 and is a member of the Audit Committee and
Compensation Committee of the Company. He was previously a General Partner of
Salomon Brothers and served as a member of its Executive Committee from 1978
to 1983. Mr. Harris serves as a Director for various entities including
Manpower, Inc. and Caremark International, Inc. He is also Trustee of
Northwestern University.
Frederick S. Humphries, 59, is the President of Florida A&M University
in Tallahassee, Florida having held this position since 1985. Prior to
joining Florida A&M University, Dr. Humphries was President of Tennessee State
University in Nashville for over 11 years. Dr. Humphries serves as Chairman
of the State Board of Education Advisory Committee on the Education of Blacks
in Florida and is Chairman of the Board of Regents, Five-Year Working Group
for Agriculture, State of University System of Florida in addition to being
involved in various civic and community activities. Mr. Humphries has served
on the Board of Directors of the Company since May 1994 and is a member of the
Audit Committee of the Company. He is also a member of the Board of Directors
of Pride of Florida and Wal-Mart, Inc.
James E. Oesterreicher, 54, is the Vice Chairman and Chief Executive
Officer of J.C. Penney Company, Inc., having been elected to this position in
January 1995. Mr. Oesterreicher served as President of JCPenney Stores and
Catalog from 1992 to 1995 and as Executive Vice President and Director of
JCPenney Stores from 1988 to 1992. Mr. Oesterreicher has been with the J.C.
Penney Company since 1964 where he started as a management trainee. He serves
as a Director for various entities, including Presbyterian Hospital of Plano,
Circle Ten Council, Boy Scouts of America, National 4-H Council and National
Organization on Disabilities. He also serves as an advisory board member for
the Center for Retailing, Education and Research at the University of Florida.
Mr. Oesterreicher has served as a member of the Board of Directors of the
Company since May 1994 and is a member of the Audit and Nominating Committees
of the Company.
Roger T. Staubach, 53, has been Chairman of the Board and Chief
Executive Officer of The Staubach Company, a national real estate company
specializing in tenant representation, since 1982. He has served as a member
of the Board of Directors of the Company since May 1993 and is a member of the
Executive and Compensation Committees of the Company. Mr. Staubach is a 1965
graduate of the U.S. Naval Academy and served four years in the Navy as an
officer. In 1968, he joined the Dallas Cowboys professional football team as
quarterback and was elected to the National Football League Hall of Fame in
1985. He currently serves on the Board of Directors of Halliburton Company,
First USA, Inc., Life Partners Group, American AAdvantage Funds and Columbus
Realty Trust and is active in numerous civic, charity and professional
organizations.
EXECUTIVE OFFICERS
The following persons are executive officers of the Company who are not
nominated to serve on the Company's Board of Directors:
Douglas H. Brooks, 43, joined the Company as an Assistant Manager in
February 1978 and was promoted to General Manager in April 1978. In March
1979, Mr. Brooks was promoted to Area Supervisor and in May 1982 to Regional
Director. He was again promoted in March 1987 to Senior Vice President-
Central Region Operations and to the position of Concept Head and Senior Vice
President-Chili's Operations in June 1992. Mr. Brooks was promoted to his
current position of Senior Vice President - Chili's Grill & Bar Concept
President in June 1994. Prior to joining the Company, Mr. Brooks helped
manage the first two Luther's Barbecue units.
Arthur J. DeAngelis, 41, has worked with the Company through one of its
franchise groups as a manager and later as a Company area director since 1984.
In 1991, Mr. DeAngelis joined the Company under the Grady's American Grill
concept and in June 1991 was promoted to Vice President-Operations.
Mr. DeAngelis was promoted to his current position of Senior Vice President-
Grady's American Grill Concept Head in June 1994. Mr. DeAngelis began his
restaurant career with S & A Restaurant Corp. in 1976 prior to joining the
Company.
Richard L. Federico, 41, joined the Company as Director of Operations
for Grady's in February 1989. Upon the Company's acquisition of Romano's
Macaroni Grill in November 1989, Mr. Federico became the Concept Head of this
new restaurant group. He was promoted to Vice President-Romano's Macaroni
Grill Operations in December 1990 and in June 1992 was promoted to Concept
Head and Senior Vice President-Macaroni Grill Operations. In February 1994,
Mr. Federico assumed responsibility for the operations of Spageddies Italian
Kitchen and was promoted to his current position as Senior Vice President and
Italian Concepts President in June 1994. Prior to joining the Company,
Mr. Federico worked in various management capacities with S & A Restaurant
Corp. and Houston's Restaurants and was a co-founder of Grady's Goodtimes,
predecessor to Grady's American Grill.
John C. Miller, 40, joined the Company as Vice President-Special
Concepts in September 1987. In October 1988, he was elected as Vice
President-Joint Venture/Franchise and served in this capacity until August
1993 when he was promoted to Senior Vice President-New Concept Development.
Mr. Miller was named Senior Vice President - Mexican Concepts in September
1994. Mr. Miller worked in various capacities with the Taco Bueno Division of
Unigate Restaurants prior to joining the Company.
Roger F. Thomson, 46, joined the Company as Senior Vice President,
General Counsel and Secretary in April 1993 and was promoted to Executive Vice
President, General Counsel and Secretary in March 1994 and was a Director of
the Company from 1993 until 1995. From 1988 until April 1993, Mr. Thomson
served as Senior Vice President, General Counsel and Secretary for Burger King
Corporation. Prior to 1988, Mr. Thomson spent ten years at S & A Restaurant
Corp. where he was Executive Vice President, General Counsel and Secretary.
Classes of Directors
For purposes of determining whether non-employee directors will be
nominated for reelection to the Board of Directors, the non-employee directors
have been divided into four classes. Each non-employee director will continue
to be subject to reelection by the shareholders of the Company each year.
However, after a non-employee director has served on the Board of Directors
for four years, such director shall be deemed to have been advised by the
Nominating Committee that he or she will not stand for reelection at the
subsequent annual meeting of shareholders and shall be considered a "Retiring
Director". Notwithstanding this policy, the Nominating Committee may
determine that it is appropriate to renominate any or all of the Retiring
Directors after first considering the appropriateness of nominating new
candidates for election to the Board of Directors. The four classes of non-
employee directors are as follows: Mr. Haggar comprises Class 3 and will be
considered a Retiring Director as of the annual meeting of shareholders
following the end of the 1996 fiscal year. Messrs. Harris and Staubach
comprise Class 4 and will be considered Retiring Directors as of the annual
meeting of shareholders following the end of the 1997 fiscal year. Messrs.
Evans, Humphries, and Oesterreicher and Ms. Evans comprise Class 1 and will be
considered Retiring Directors as of the annual meeting of shareholders
following the end of the 1998 fiscal year. Messrs. Ray L. Hunt and William F.
Regas comprise Class 2 and are considered Retiring Directors as of the annual
meeting of shareholders on November 2, 1995.
Committees of the Board of Directors
The Board of Directors of the Company has established an Executive
Committee, Audit Committee, Compensation Committee and Nominating Committee.
The Executive Committee (currently comprised of Messrs. Brinker, McDougall,
Evans, Haggar and Staubach) met three (3) times during the fiscal year and has
authority to act for the Board on most matters during the intervals between
Board meetings.
All of the members of the Audit and Compensation Committees are
directors independent of management who are not and never have been officers
or employees of the Company. The Audit Committee is currently comprised of
Messrs. Haggar, Harris, Humphries and Oesterreicher and the Committee met one
(1) time during the fiscal year. Included among the functions performed by
the Audit Committee are: the review with independent auditors of the scope of
the audit and the results of the annual audit by the independent auditors;
consideration and recommendation to the Board of the selection of the
independent auditors for the next year; the review with management and the
independent auditors of the annual financial statements of the Company; and
the review of the scope and adequacy of internal audit activities.
The Compensation Committee is currently comprised of Messrs. Evans,
Harris, Hunt and Staubach and it met five (5) times during the fiscal year.
Functions performed by the Compensation Committee include: ensuring the
effectiveness of senior management and management continuity, ensuring the
reasonableness and appropriateness of senior management compensation
arrangements and levels, the adoption, amendment and administration of stock-
based incentive plans (subject to shareholder approval where required),
management of the various stock option plans of the Company, approval of the
total number of available shares to be used each year in stock-based plans,
approval of the adoption and amendment of significant compensation plans and
approval of all compensation actions for officers, particularly at and above
the level of executive vice president. The specific nature of the Committee's
responsibilities as it relates to executive officers are set forth below under
"Report of the Compensation Committee."
The purpose of the Nominating Committee is to recommend to the Board of
Directors potential non-employee members to be added as new or replacement
members to the Board of Directors. The Nominating Committee met one (1) time
during the fiscal year and is composed of Messrs. Brinker, Evans, McDougall,
and Oesterreicher and Mrs. Evans.
Directors Compensation
Directors who are not employees of the Company receive $1,000 for each
meeting of the Board of Directors attended and $1,000 for each meeting of any
committee of the Board of Directors attended (unless such committee meeting is
held in conjunction with a meeting of the Board of Directors, in which event
compensation for attending the committee meeting will be $750). The Company
also reimburses directors for costs incurred by them in attending meetings of
the Board.
Directors who are not employees of the Company receive grants of stock
options under the Company's 1991 Stock Option Plan for Non-Employee Directors
and Consultants. New directors who are not employees of the Company will have
the option at the beginning of each Director term to receive as additional
compensation for serving on the Board of Directors either an annual cash
payment of $30,000 during the term such non-employee serves as a director, a
one-time grant of 12,000 stock options under the Company's 1991 Stock Option
Plan for Non-Employee Directors and Consultants, or a combination of cash and
stock options. If the director is appointed to the Board of Directors at any
time other than at an annual meeting of shareholders, the director will
receive a prorated portion of the annual cash compensation for the period from
the date of election or appointment to the Board of Directors until the
meeting of the Board of Directors held contemporaneous with the next annual
meeting of shareholders. If the director elects to receive cash, the first
payment will be made at such Board of Directors meeting and the following
payments will be made on the date of each annual meeting of shareholders
thereafter. If the director elects to receive stock options, they will be
granted as of the 60th day following such meeting (or if the 60th day is not a
business day, on the first business day thereafter). The stock options will
be granted at the fair market value on the date of grant. One-third of the
options will vest on each of the second, third and fourth anniversaries of the
date of grant.
If a Retiring Director is renominated to serve on the Board of Directors
for an additional four-year period, such Retiring Director will be treated as
a new director for purposes of determining compensation during such additional
four-year period.
During the year ended June 28, 1995, the Board of Directors held six (6)
meetings; each incumbent director attended at least 75% of the aggregate total
of meetings of the Board of Directors and Committees on which he or she
served.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the annual
compensation for the Company's five highest compensated executive officers,
including the Chief Executive Officer, whose salary and bonus exceeded
$100,000 in fiscal 1995.
Summary Compensation Table
Long-Term Compensation
Awards Payouts
Securities Long-Term
Name and Annual Compensation Underlying Incentive All Other
Principal Position Year Salary Bonus Options (2) Payouts Compensation (3)
Norman E. Brinker(1) 1995 $ 699,038 $ 339,558 125,000 $ 86,565 $ 37,489
Chairman of the 1994 $ 659,135 $ 706,592 202,500 $ 93,940 $ 26,439
Board and Chief 1993 $ 573,708 $ 753,887 225,000 $ 93,940 $ 6,904
Executive Officer
Ronald A. McDougall 1995 $ 574,038 $ 278,839 125,000 $ 86,565 $ 50,555
President and Chief 1994 $ 529,327 $ 567,439 202,500 $ 93,940 $ 22,547
Operating Officer 1993 $ 444,538 $ 585,842 225,000 $ 93,940 $ 2,729
Creed L. Ford, III 1995 $ 359,615 $ 130,361 30,000 $ 63,481 $ 8,795
Executive Vice 1994 $ 343,942 $ 275,154 56,250 $ 68,889 $ 7,305
President-Operations 1993 $ 306,692 $ 309,847 67,500 $ 68,889 $ 1,814
Debra L. Smithart 1995 $ 264,038 $ 95,714 30,000 $ 63,481 $ 11,805
Executive Vice 1994 $ 232,500 $ 186,000 56,250 $ 50,101 $ 5,471
President and Chief 1993 $ 183,309 $ 186,640 67,500 $ 31,313 $ -0-
Financial Officer
Douglas H. Brooks 1995 $ 266,249 $ 77,212 30,000 $ 40,397 $ 15,636
Senior Vice 1994 $ 232,884 $ 135,772 45,000 $ 43,839 $ 12,582
President-Chili's 1993 $ 206,231 $ 174,199 38,250 $ 43,839 $ 2,475
Grill & Bar Operations
(1) Effective June 29, 1995, the beginning of the Company's 1996
fiscal year, Mr. Brinker relinquished his position as Chief
Executive Officer and Mr. McDougall was elected President and
Chief Executive Officer.
(2) Stock options awarded have been restated to reflect the March 1994
and May 1993 stock splits effected in the form of 50% stock
dividends.
(3) All other compensation represents Company match on deferred
compensation.
Option Grants During 1995 Fiscal Year
The following table contains certain information concerning the grant of
stock options to the executive officers named in the above compensation table
during the Company's last fiscal year:
Realizable Value
of Assumed Annual Rates
of Stock Price Appreciation
for Option Term (1)
Name Granted Fiscal Year Base Price Date 5% 10%
Norman E. Brinker 125,000 9.69% $16.50 12/05/2004 $ 1,297,095 $ 3,287,094
Ronald A. McDougall 125,000 9.69% $16.50 12/05/2004 $ 1,297,095 $ 3,287,094
Creed L. Ford, III 30,000 2.33% $16.50 12/05/2004 $ 311,303 $ 788,903
Debra L. Smithart 30,000 2.33% $16.50 12/05/2004 $ 311,303 $ 788,903
Douglas H. Brooks 30,000 2.33% $16.50 12/05/2004 $ 311,303 $ 788,903
(1) The dollar amounts under these columns are the result of
calculations at the 5% and 10% rates set by the Securities and
Exchange Commission and, therefore, are not intended to forecast
possible future appreciation, if any, of the Company's stock
price. The Company did not use an alternative formula for a grant
date valuation, as the Company is not aware of any formula which
will determine with reasonable accuracy a present value based on
future unknown or volatile factors.
Stock Option Exercises and Fiscal Year-End Value Table
The following table shows stock option exercises by the named officers
during the last fiscal year, including the aggregate value of gains on the
date of exercise. In addition, this table includes the number of shares
covered by both exercisable and non-exercisable stock options at fiscal year-
end. Also reported are the values for "in-the-money" options which represent
the position spread between the exercise price of any such existing options
and the $17.38 fiscal year-end price of the Company's Common Stock.
Shares Value of Unexercised
Acquired Number of Unexercised In-the-Money Options at
On Value Options at Fiscal Year End Fiscal Year End
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Norman E. Brinker -0- -0- 618,750 440,000 $ 3,073,275 $ 109,375
Ronald A. McDougall -0- -0- 375,000 440,000 1,207,665 109,375
Creed L. Ford, III -0- -0- 790,644 120,000 8,615,849 26,250
Debra L. Smithart -0- -0- 95,350 120,000 3,973,669 26,250
Douglas H. Brooks -0- -0- 370,603 94,125 234,568 26,250
Long-Term Executive Profit Sharing Plan and Awards
Executives of the Company participate in the Long-Term Executive Profit
Sharing Plan. See "Report of the Compensation Committee -- Long-Term
Incentives" for more information regarding this plan. The following table
represents awards granted in the last fiscal year under the Long-Term
Executive Profit Sharing Plan.
Number of Estimated Future Payouts
Name Units Awarded Under Non-Stock Based Plans
(Dollars)
Threshold Target Maximum
>
Norman E. Brinker 1,000 $66,667 $100,000 *
Ronald A. McDougall 1,000 $66,667 $100,000 *
Creed L. Ford, III 600 $40,000 $ 60,000 *
Debra L. Smithart 600 $40,000 $ 60,000 *
Douglas H. Brooks 500 $33,333 $ 50,000 *
* There is no maximum future payout under the Long-Term Executive Profit
Sharing Plan.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as to the number of
shares of Common Stock of the Company beneficially owned by the principal
shareholders of the Company.
Beneficial Ownership
Number of
Name and Address Shares Percent
The Capital Group Companies 7,672,450 (1) 10.7%
333 South Hope Street
Los Angeles, California 90071
Fidelity Management Research 7,089,600 (2) 9.8%
82 Devonshire Street
Boston, Massachusetts 02109
Massachusetts Financial Services 5,326,460 (3) 7.4%
500 Boylston Street
Boston, Massachusetts 02116
(1) As of June 28, 1995. Based on information contained in
Schedule 13G dated as of July 10, 1995, as supplemented by subsequent
communication.
(2) As of August 28, 1995. Based on information supplied via direct
communication.
(3) As of August 11, 1995. Based on information supplied via direct
communication.
SECURITY OWNERSHIP OF MANAGEMENT
AND ELECTION OF DIRECTORS
Thirteen (13) directors are to be elected at the meeting. Each nominee
will be elected to hold office until the next annual meeting of the
shareholders or until his or her successor is elected and qualified. Proxy
holders will not be able to vote the proxies held by them for more than 13
persons. To be elected a director, each nominee must receive a plurality of
all of the votes cast at the meeting for the election of directors. Should
any nominee become unable or unwilling to accept nomination or election, the
proxy holders may vote the proxies for the election, in his or her stead, of
any other person the Board of Directors may recommend. All nominees have
expressed their intention to serve the entire term for which election is
sought. The following table sets forth certain information concerning
security ownership of management and nominees for election as directors of the
Company:
Number of Shares
of Common Stock
Beneficially Owned as Percent of
Name as of September 1, 1995 (1) Class
Norman E. Brinker 1,759,009 (2) 2.30%
Douglas H. Brooks 376,225 *
F. Lane Cardwell, Jr. 146,022 *
Gerard V. Centioli 296,462 *
Creed L. Ford, III 822,854 1.08%
Ronald A. McDougall 395,022 *
Debra L. Smithart 117,910 *
Jack W. Evans, Sr. 81,092 *
Rae F. Evans 12,835 (3) *
J.M. Haggar, Jr. 140,020 *
J. Ira Harris 17,000 (4) *
Frederick S. Humphries -0- -0-
James E. Oesterreicher 500 *
Roger T. Staubach 7,000 *
All executive officers
and directors as a
group (18 persons) 4,450,960 5.82%
* Less than one percent (1%)
(1) Includes shares of Common Stock which may be acquired by exercise
of exercisable options granted under the Company's 1983 Incentive
Stock Option Plan, the 1984 Non-Qualified Stock Option Plan, the
1992 Incentive Stock Option Plan and the 1991 Stock Option Plan
for Non-Employee Directors and Consultants, as applicable.
(2) Includes 20,250 shares of Common Stock held of record by a family
trust of which Mr. Brinker is trustee.
(3) Includes 1,875 shares of Common Stock held of record by a family
trust of which Ms. Evans is trustee.
(4) Total shares of Common Stock held of record by a trust of which
Mr. Harris is trustee.
The Company has established a guideline that all senior officers of the
Company own stock in the Company, believing that it is important to further
encourage and support an ownership mentality among the senior officers that
will continue to align their personal financial interests with the long-term
interests of the Company's shareholders. Pursuant to the guideline, the
minimum amount of Company Common Stock that a senior officer will be required
to own will be determined by such officer's position within the Company as
well as annual compensation. The guideline would require that each Senior
Vice President own an amount of Common Stock equal in value to such officer's
base salary, each Executive Vice President own an amount of Common Stock equal
in value to twice such officer's base salary, the President own an amount of
Common Stock equal in value to three times his base salary, and the Chief
Executive Officer own an amount of Common Stock equal in value to four times
his base salary. The guideline also encourages all other officers of the
Company to similarly acquire Common Stock in the Company. Phase-in of the
guideline began in October 1994 for those senior officers who did not meet the
minimum stock ownership levels as established by the guideline; senior
officers will have until December 31, 1999 to achieve the requisite level of
Common Stock ownership.