Brinker: Reports Continued Margin Improvements in Q2/2011

Dallas / TX. (bi) Brinker International Inc. announced results for the fiscal second quarter ended December 29, 2010. «Our second quarter results demonstrate progress made on our commitment to double EPS in five years», said Doug Brooks, President and Chief Executive Officer. «We have gained this traction through continued margin expansion at Chili´s, top line growth at Maggiano´s and investments in our business designed to generate profitable and sustainable long term sales growth». Highlights for the second quarter of fiscal 2011 include the following:

• Earnings per diluted share, before special items, increased to 0,38 USD compared to 0,25 USD for the second quarter of fiscal 2010
• On a GAAP basis, earnings per diluted share increased to 0,41 USD from 0,18 USD in the second quarter of the prior year
• Restaurant operating margin improved 210 basis points to 17,4 percent
• Total revenues decreased 4,8 percent to 671,9 million USD
• Same restaurant sales at company-owned restaurants decreased 3,5 percent consisting of a 4,9 percent decrease at Chili´s and a 4,7 percent increase at Maggiano´s
• Cash flows provided by operating activities were 70,0 million USD and capital expenditures totaled 31,8 million USD for the first six months of fiscal 2011
• The Company repurchased approximately 8,3 million shares of its common stock for 157,2 million USD in the second quarter resulting in a fiscal year to date total of approximately 13,6 million shares for 249,9 million USD
• The Company paid a dividend of 0,14 USD per share, an increase of 27,3 percent over the prior year quarter

Quarterly Operating Performance

Chili´s second quarter revenues of 548,3 million USD represent a 7,4 percent decrease from the prior year period driven by a 4,9 percent decline in comparable restaurant sales. Revenues were also impacted by a net decline in capacity of 3,1 percent due to the sale of 21 restaurants to a franchisee in December 2009 and ten restaurant closures since the second quarter of fiscal 2010, Restaurant operating margin increased compared to the prior year due to favorable cost of sales driven by the positive impact of changes to value offerings and decreased commodity prices for chicken, ribs and cheese. Additionally, restaurant labor was positively impacted by the implementation of Team Service, partially offset by sales deleverage and higher restaurant management compensation.

Maggiano´s second quarter revenues were 107,8 million USD and comparable restaurant sales increased 4,7 percent primarily driven by improved traffic. Comparable restaurant sales have increased for four consecutive quarters and traffic has increased for five consecutive quarters. Restaurant operating margin increased compared to prior year primarily due to improved cost of sales resulting from menu changes and sales leverage.

Royalty and Franchise revenues totaled 15,8 million USD for the quarter, a decrease of 4,3 percent over the prior year driven in part by the recognition of franchise and development fees associated with the sale of 21 restaurants to a franchisee in the prior year quarter. International franchise comparable restaurant sales increased 2,9 percent while domestic franchise comparable restaurant sales decreased 6,5 percent for the same period. Since the second quarter of fiscal 2010, international and domestic franchisees have had net openings of 15 and five restaurants, respectively. Royalty revenues are recognized based on the sales generated and reported to the company by its franchisees. Brinker franchisees generated 372,5 million USD in sales for the second quarter of fiscal 2011, an increase of 1,3 percent over the prior year.