Brinker International Reports First Quarter Fiscal 2010 EPS

In the second quarter of fiscal 2009, the company completed the sale of Macaroni Grill while retaining a minority ownership interest. The information presented below includes Macaroni Grill unless otherwise noted.

Quarterly Revenues

Brinker reported revenues for the 13-week period of $778.1 million, a decrease of 21.0 percent compared with $984.4 million reported for the same period of fiscal 2009. The company experienced a 6.0 percent decrease in comparable restaurant sales (see Table 1) in the first quarter of fiscal 2010. Revenues were also negatively impacted by a net decline in capacity of 18.6 percent due to the sale of 198 restaurants since the first quarter of fiscal 2009 (189 of which were Macaroni Grills) and 49 restaurant closures (three of which were Macaroni Grills). Royalty and franchise revenues were $15.8 million for the quarter.

  Q1 10 and Q1 09, company and three reported brands; percentage



                                Q1 10        Q1 09       Q1 10

                              Comparable  Comparable    Pricing      Q1 10

                                Sales       Sales       Impact     Mix-Shift

                             -----------  ----------    -------    ---------

  Brinker International(1)       (6.0)       (3.0)        1.8        (2.5)

    Chili's                      (6.0)       (3.0)        1.9        (2.4)

    On The Border                (5.1)       (3.3)        2.2        (4.1)

    Maggiano's                   (6.6)       (3.3)        0.9        (2.0)



  (1) Brinker International comparable restaurant sales exclude the impact

      of Macaroni Grill.

Quarterly Operating Performance


Cost of sales, as a percent of revenues, decreased from 28.4 percent in the prior year to 28.2 percent in the first quarter of fiscal 2010. Menu changes at Chili's(R) Grill & Bar and On The Border Mexican Grill & Cantina(R) and favorable price changes resulted in improvements in cost of sales. These improvements more than offset the impact of recent promotions and unfavorable commodity prices primarily related to dairy, chicken and beef.

Restaurant expenses, as a percent of revenues, decreased to 58.5 percent from 58.8 percent in the prior year primarily due to lower utility and pre-opening expenses, partially offset by higher labor costs.

Depreciation and amortization decreased $2.3 million compared to the prior year due to fully depreciated assets and restaurant closures, partially offset by asset replacements and investments in existing restaurants.

General and administrative expense decreased $3.8 million for the quarter primarily due to reduced salary expense from lower headcount and income related to transitional services provided to Macaroni Grill, partially offset by increased insurance expense.

Interest expense decreased $2.5 million due to lower interest rates and lower average borrowings.

The effective income tax rate decreased to 26.1 percent in the current quarter as compared to 26.5 percent in the same quarter of last year due to leverage from FICA tip credits.

 Special Items

  -------------

  Table 2: Reconciliation of net income, before special items (1)

  Q1 10 and Q1 09; $ millions and $ per diluted share after-tax



                                                EPS                  EPS

  Item                                 Q1 10   Q1 10     Q1 09      Q1 09

  ----                                 -----   -----     -----      -----

  Net Income                            15.8    0.15      23.8       0.23

    Other (Gains) and Charges            1.7    0.02       3.1       0.03

                                         ---    ----       ---       ----

  Net Income before Special Items       17.5    0.17      26.9       0.26

    Macaroni Grill before Special Items    -       -      (6.3)     (0.06)

                                        ----    ----     -----      -----

  Adjusted Net Income before Special

   Items and Macaroni Grill             17.5    0.17      20.6       0.20

                                        ====    ====      ====       ====



  (1) The company believes excluding other gains and charges and Macaroni

      Grill from its financial results provides investors with a clearer

      perspective of the company's ongoing operating performance and a more

      relevant comparison to prior period results.

Cash Flow and Capital Allocation

Cash flow from operations for the first quarter fiscal 2010 increased to $66.4 million compared to $53.4 million in the prior year. Capital expenditures totaled $13.5 million, a reduction of $17.8 million compared to the prior year resulting from a decrease in new company-owned restaurant development. Due to strong cash flows, the Company has elected to pay $50.0 million on the outstanding term loan on October 21, 2009 which will reduce the balance to $340.0 million.

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