Please see our 4/16 earnings preview for commentary on PENN’s upcoming quarter.  Below we highlight the important forward looking commentary from PENN’s FQ1 earnings release and conference call.




  • “Looking forward, as you can see from our guidance, we don’t see a whole lot of reason for enthusiasm in 2010.” 
  • “What we’ve done is done a lot of internal trend analysis for lack of a better description of it, which is indicating to us that the rate of decline is slowing. But rate of decline is slowing is not good news.  What that just means is it’s getting bad, it’s just getting bad slower, and we’re not on the breakneck pace to zero that we were before.” 
  • “If you take out both Penn National and Joliet, which we’re doing for internal purposes…January’s numbers – revenue numbers were down 5.3%. Now the good – if there is good… we were behind our own internal forecast up until the last weekend of the month, and then we came roaring back”
  • “Joliet, as you know, we’re operating with just the casino right now, and we don’t have much to sell there. And the competitive environment has increased in the fourth quarter. Now, labor is being managed well. We still have opportunities to be more efficient with our marketing spend there. We did open in the beginning of this week our new parking garage there. So I fully expect we’re going to see margin improvement in Joliet from what you saw in the fourth quarter”
  • “We continue to see more softness than anywhere in Southern Mississippi and Southern Louisiana.  And specifically, in Bay St. Louis, the promotional spending in that market, driven by our chief competitor in Gulfport, is deteriorating all of our margins and we’re trying to continue to find ways to protect our share, but not overspend to protect that share.”
  • “Tunica, it was a little bit different. We’ve been improving margins there. We had some unusual adjustments that negatively affected the fourth quarter in excess of $1 million of adjustments for inventory, bonus and severance, some repairs we made to the building and some increased healthcare costs. I do think those were one-time occurrences in Tunica and I don’t expect that to be a recurring theme. The promotional environment in Tunica is not like it is in Southern Mississippi.”  
  • “Charles Town, that’s one where we’re seeing some softness. We did have some weather effect in December, but even through the entire quarter, we still saw softness there in the market. And it’s an opportunity we continue to look at to improve our efficiency of our marketing spend. Again, labor is being managed well. We did see in line performance in the month of January in Charles Town, but again, we’re trying to get the right mix given the introduction of tax free promotional credits in that market to make sure that it’s as efficient use of those marketing dollars as it possibly can be and that’s the theme for Charles Town as we get into 2010 as well”
  • Answer to the impact of table games on property margins in Charles Town:  “That table tax rate is going to be 35%. So I don’t think it’s going to be enhancing our margins in Charles Town given the labor component there. I think, net-net we’re probably in the 27, 28%  area”
  • “Typically what we see across our properties are roughly 15%, table games are roughly 15% a slot, in mature markets where they both been existing sort of similar period of time. Obviously at Charles Town, what we’re expecting is that it will take some time to ramp to that level.”
  • “With the good weather and not much on TV to occupy people’s time on weekends, we continue to see reasonably good growth from our capital investment at Lawrenceburg, 8 to 9% in the fourth quarter and we had record attendance levels on Saturday.”
  • “I think the reality is this, you’ve extracted the easy stuff. The low hanging fruit has been pulled out of our cost structure. And I think as we go forward, we’re going to struggle to keep or to  basically reduce cost commensurate with revenue declines that we’re starting to get to the point where this is not as effective as we’ve been – of being able to match the revenue declines with operating cost declines.”
  • “They’re just gambling at lower threshold and you see it too and how they are playing the slot products. You see a continued trend to play the low denomination slots.”
  •  “What we’ve got for a corporate overhead number next year is around 69 million. Obviously, we continue to expect it doesn’t really have any significant amounts for lobbying. I mean there are certain amounts that we recognize we’d be spending. But it’s certainly much reduced than the current levels. The other items I mean obviously – we don’t have table games in here, because quite candidly, we don’t really have a good date for when we think it will be up and running. And the state regulatory process in Pennsylvania historically has proven to be incredibly lengthy.”
    • “So and those 69 million could be ratably throughout, let’s say, 70 million split fairly evenly throughout the year? That’s our expectation”
    • From 4/15/2010 Telsey  Conference: “I would point out that in the corporate overhead number, there’s probably – there’s almost $24 million worth of Ohio referendum costs associated with our efforts last year in Ohio.”

ROST: KM Shorting, Thesis Unchanged

Keith remains opportunistic with a Ross Stores’ position on the short-side, with shares nearing an immediate term overbought level at 56.87 and a bullish line of support down at 54.63. Our thesis remains unchanged and is outlined below as highlighted in our April 5th post below:


“…We remain convinced that the opportunities to meaningfully exceed both guidance and elevated Street expectations are gradually becoming harder and harder to achieve.  When you add in eight quarters in a row of inventory declines (while sales have accelerated) it remains hard to envision anything but a deceleration in momentum is on the horizon.  There is no question that this has been a great run, as it has been for other retailers benefitting from value pricing and the consumer trade-down effect.


Check out this historical perspective below, which takes a detailed but long look at the relationship between the industry’s inventory management (represented by the Sales/Inventory spread) vs. ROST historical same-store sales.  The Sales/Inventory spread for clothing and accessories retailers is currently at its widest margin since before 1996.  Tough to argue with that one…  We then line this up against Ross’ topline results and you will see that ROST’s same-store sales exceed the Sales/Inventory spread far more frequently than not, 139 months out of 169 or 82% of the time.  In fact, of the 30 times the sales/inventory spread outpaced comps over 13 years, 5 have been since September of last year alone.


The cleanliness of the inventory pipeline for retailers and manufacturers alike is about as good as we’ve ever seen and as a result, there are simply less “quality”  goods for ROST to procure.  Additionally, with fewer units floating around in the pipeline, we should begin to see ROST (and others) no longer being able to buy as close to need as we have seen over the past year.  This should have an adverse impact on inventory turns as well as the industry’s ability to flow fresh, unique good as frequently.  All this points to diminishing upside on margins and earnings. This is one of those names where we don’t need to see earnings collapse to be right, but rather simply stop going up.”


ROST: KM Shorting, Thesis Unchanged - ROST SalesInv Spread 4 10 1


ROST: KM Shorting, Thesis Unchanged - ROST SalesInv Spread 4 10 2




Please see our 4/16 earnings preview for commentary on IGT’s upcoming quarter.  Below we highlight the important forward looking commentary from IGT’s FQ1 earnings release and conference call.




  •  “While we continue to have limited visibility around replacement demand, we believe future demand will exceed trough levels experienced in the early part of 2009.”
    • Not exactly encouraging as Pat’s referring to the measly 1,800 replacement units that IGT shipped in the March 09 quarter and the 2,300 replacement units shipped in the June 2009 quarter. 
  • “Going forward, we expect product sales gross margins to remain in the low 50% range, also [benefitting] by our cost savings initiatives and impact of product sales mix.”
  • “We continue to move towards our goal of the previously announced $200 million of cost cuts when compared to the fourth quarter of 2008. We feel that we are on track to achieve our cost reduction goals as we move throughout fiscal 2010."
  • “We expect the quarterly SG&A run rate in the range of $95 million to $100 million.”
  • “We expect a quarterly R&D run rate in the low $50 million area”
  • “As it relates to R&D, Q1 is naturally lower just due to the fact that the team is largely preoccupied with G2E. And we do have some initiatives underway that we know will require us to uptick that a little bit going forward...R&D probably over time is going to run somewhere around the couple of hundred million. I don't think we can get it much lower than that, given that the sheer number of things we do”
  • “The decline in total depreciation and amortization was primarily due to lower depreciation in our domestic MegaJackpots and Mexico lease operations. Please note that some of this will come back as we refresh our installed base of assets over time.”
  • “Going forward, we expect our quarterly tax rate to trend at approximately 37% to 39% before discrete items.”
  • “CapEx is expected to trend in the range of $50 million to $75 million, although we do continue to come in nearer the lower end of the range as we more proactively manage our CapEx as part of our efficiency and cost reduction efforts.”
  • “Our guidance for 2010 remains a range of $0.77 to $0.87 per diluted share. As always, our guidance excludes the one-time items like the first quarter tax benefit of $0.01, which resulted primarily from our recent stock option exchange program. Our guidance also assumes no dilution impact from our convertible notes.”
  • “We see an improvement in Europe. Last year was a horrible year in Europe. Latin America will be a big contributor as it was in Q1 for the year. And then I think we see stability in places like South Africa and Australia where they've been consistent providers. And I think the same for the U.K., the consistent contribution. But again, we're not forecasting huge year-on-year improvement internationally, just given that many of the international markets are suffering the same economic and credit woes that the U.S. has felt.”
    • I guess ex- Japan there would be a decrease – since Japan contributed over 3,700 units to FY 2009 shipments 


  • “Lower year-over-year blended yield saw the combined result of the decline in play levels and the continued shift in the installed base mix to include more lower yield machines in leased.”
  • “In product sales, the first quarter has historically been our lowest due to the holidays and the tendencies for customers to carefully consider their options after G2E and ahead of the release of their annual budget.”
  •  “We know that new or expansion units will be off year-on-year pretty heavily just because there isn't as many new properties opening or expanding during the fiscal year. And so everything else constant would say you have to make that up in replacement. And so you can already assume that we do assume in our guidance a decent uplift in replacements, but visibility to that is pretty limited I'd have to say at this point.”
  • “SG&A, we did have a couple of items during the quarter that's favorably impacted that won't be recurring… a couple of our accruals in the compensation area.. to the tune of about $3 million that obviously was kind of a one-time thing as we adjusted to our new comp plan.”
  • “We're just listening to what our customers are telling us about how they intend to spend capital and how much of it. And neither of those two comments would suggest that you should have a real hockey stick kind of uptick in replacement activity. And then just to stay flat with prior year, we've got to have a pretty significant uptick in replacement units just to offset the loss that would definitely be there from newer expansion.”



  • Question:  “I guess what I'm struggling with is this, revenues are seasonally at a low -- revenues are probably out of trough for the cycle; replacement sales seem to be going up; your expense have been reduced dramatically; you've committed to continue to reduce expenses on a go-forward basis; and if you print a $0.25 quarter in the first quarter, how can you not get to over almost $1 easily in the next year? I mean, I understand you guys want to be conservative and beat the number, but gosh, there must be something that we're missing because it sounds like things are going much better and this quarter was a good example of you controlling the things you can control and keeping things tight in front of what looks to be like a pretty good year on the revenue side as we move forward.” – Steve Kent, Goldman Sachs Analyst
    • IGT Response: I think we look at this more as a $0.22/$0.23 quarter with an adjustment for some of the one-time events…We feel very good that the replacement cycle will make its way back from the trough loads. It is timing that is less obvious to us… We have a bit of risk adjustment for the worst case scenario in Alabama. If you look at Game Ops, the Game Ops business, we're still experiencing a fair amount of mixed shift.”
  • “Our internal estimates should base on tracking of one order to the next, would suggest we're somewhere around 40% on the replacement side, which is consistent with where we were for Q4”
    • Actually it was closer to 30% in the December quarter and 35% in the September quarter
  • Market share for new/ expansions in NA:  “Some north of 50% and kind of varies widely”
    • Well that’s not really possible because between IGT, BYI and WMS there were over 4,600 units shipped this quarter… we think the number is closer to 1/3

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Government’s Marking to Model . . .

Despite the catastrophic collapse of the real estate bubble and housing prices, property tax revenue collected by states and localities is still on the rise - up 2.7% in 2009. This is a disconnect from the reality of the current state of the U.S. housing market, which is a direct result of most State and local governments marking their property tax collection schemes to model.


In the most recent economic downturn, receipts to State and local governments have largely gone south, declining (-10.9%), (-16.4%), and (-11.6%) in the last three quarters alone, according to the National Association of State Budget Officers.  As to be expected with a 9.7% unemployment rate, data from the Bureau of Economic Analysis shows that in 2009, income and sales tax receipts have posted the largest annual declines on record (-19% and -4.8%, respectively). In fact, of all the major State and local government tax categories, only receipts from corporate income and property taxes grew in 2009.


Government’s Marking to Model . . . - 1


Furthermore, BEA statistics show that property taxes have been a great source of income for struggling local governments, which collect over 96% of all property taxes. With property included, receipts to State and local governments declined  5.5% in 2009. Without property taxes, however, receipts declined 9.1% in 2009.


So with everything we know about depressed home prices, how can it be that property tax receipts are actually still on the rise?


The answer is easy - most State and local governments notoriously mark their property tax collection processes to model. That is, property taxes are often based on rather outdated appraisal values that consistently lag fair market values throughout most States. On average, as determined by Federal Reserve economist Byron Lutz, it takes three years for changes in the market value of homes to get reflected in an owner's property tax bill. So most State and local governments are raking in property tax receipts based on home values appraised in 2006 - the peak of the housing bubble.


So one would think that the consumer finally gets thrown a bone in the form a property taxes finally starting to roll over and catch up to the sunken home values across the country.


Not so fast, my friend.


In classic marked-to-model form, some State and local governments have raised property tax rates to offset declining home prices. Others have adjusted tax rates to keep property tax revenue stable, regardless of what happens to prices on the real estate market. Even more appalling, some State and local governments have actually raised property taxes to deal with budget shortfalls.  All told, the budget shortfall facing State and local governments in the next three fiscal years is $136.1 billion, according to NASBO.


In a twisted way, with property tax appeals well above historic means in most municipalities, it sounds insignificant to suggest that many State and local governments across the country have each planned to spend well over a hundred million dollars on property tax appeals in the next fiscal year. That's right - millions of Americans across the country are appealing their property taxes, citing home values well below the last State-appraised values the taxes are being based upon. Twenty to forty percent of appeals are granted. If the average holds, the lifeline that property taxes have been to flailing State and local government budgets will be eroded on the margin.


Perhaps that is why 41 states are behind their fiscal 2010 revenue projections (NASBO). Six were on target as of February 20th; a paltry three were ahead of schedule (NASBO). Moreover, NASBO studies suggest States are projecting a further decline of over 1.4% in tax collections for fiscal 2010. Thinned-out receipts have left States’ Rainy Day funds at 4.8% of expenditures - the lowest ratio since 2004 (NASBO). Back out the ultra-conservative Texas and Alaska, and that ratio is only 2.7% - the lowest since 1992 (NASBO)!


It neither sustainable for State and local governments to raise taxes based on marked-to-model housing prices, nor is it sustainable for homeowners to continue to a growing percentage of the tax burned.  Yet another reason to be concerned about the Domestic PIIGS, and the outlook for municipal bonds.


Darius Dale



PENN reports Thursday and we think the quarter could be slightly better than guidance. Expectations remain low despite a good move in the stock over the last two months.



The main tenet of our post Q4 earnings bullishness was that guidance had been cut to realistic levels.  We always liked the management team, growth prospects, and balance sheet and were encouraged to see significant earnings risk taken out of the equation.  The stock is up 29% since its February lows so it doesn’t appear to be a near-term table pounder.  However, with a $1 guidance for 2010 looking beatable and a promising long-term outlook, any stock weakness should probably be taken advantage of.


We expect PENN to beat both consensus and guidance when they report this Thursday. We estimate that PENN will print $597MM of revenues, $143MM of EBITDA and $0.25 of Adjusted EPS.  Since everyone has the state reported numbers we won’t bore you with all the details… you know where to find us if you care about them.  Below are just a few assumptions we made

  • Property level EBITDA of $161.4MM
  • Corporate expense of $18MM and stock comp of $6.8MM – in-line with guidance
  • D&A of $54MM
  • Net interest expenses of $34MM
  • 45% tax rate in line with mgmt guidance


How many restaurant companies have the potential to grow earnings 50% in the next two years?


If I were one of the multiple PE firms shopping around to buy a restaurant company, EAT would be on top of the short list.


(1)    National brand in a large category

(2)    Underutilized assets

(3)    Discount valuation

(4)    Global unit growth potential

(5)    Strong balance sheet

(6)    Stable cash flow

(7)    Strong franchise partners


My analogy to a PE company buying EAT is not totally misplaced.  First, buying a stock today with a credible (and somewhat proven) plan to double earnings in 5 years with potentially 50% of that growth coming in the first two is not a bad risk reward.


Second, the risks are well known.  Brinker and the rest of the industry are lapping severe discounting from last year’s economic turmoil.  The good news is the severe discounting is not as needed and the industry is operating in a more “normal” environment.  Yes, that makes sales comparisons difficult, but it’s a benefit to margins and cash flow.


The market reaction to earnings today was to sell off the stock.  Great, we bought it. 


If it goes down tomorrow because someone is concerned about fiscal 4Q10 same-store sales, I’ll buy it again.  We are within a six month window where all the bad news is out, and we are now looking down the barrel of potentially the best earnings growth story in the large cap casual dining space.


Judging by the dialogue on today’s call, there seems to be a lot of confusion among investors about the timing of implementation for POS, KDS and kitchen retrofits and the subsequent margin benefit.  However, management seemed confident about its potential earnings growth in the next two years.  EAT’s 5-year target to double EPS by FY15, off of the $1.40-$1.44 base, with 10%-12% EPS growth in FY13-FY15 implies 40% to 50% EPS growth from FY10 to FY12. This two-year target assumes 1% to 2% same-store sales growth, which seems achievable; though it does it rely on sequentially better 2-year trends going forward.


I know things don’t happen in a straight line and there will be bumps in the road, but I want to be a little early on this one.  Once it gets going, it’s gone…


With the typical PE firm’s 3-7 year time horizon, the odds are good on this one.


The near-term sales outlook may be choppy but, as I said earlier, negative sentiment will only offer more opportunity for those willing to look past the immediate term.








  • EPS of $0.42 before special items incl OTB
    • $0.37 on a continuing basis


Financial takeaways from Analyst Day

  • Long-term goal is to double FY2010 EPS pre special items by 2015
  • 10%-12% EPS growth for FY2013 through FY15
    • In order to double EPS, growth in the next two years must exceed 10%-12%
  • Assuming 1%-2% comps


Current FY10 Sales Guidance:

  • -1% to -2% incl 53rd week
    • 53rd week helped comps by 2%


  • For 500bps improvement:
    • 300 bps from kitchen retrofits /POS/KDS
    • 200 bps from others
    • 100 bps depreciation impact for a net 400 bps impact to margins
  • LED lighting and reimage programs also included in 100 bps impact



  • EAT will only continue to invest in incremental capital spending related to kitchen retrofits if it sees resulting margin improvement
  • FCF will be invested in business to reduce debt, pay dividends
    • Leftover cash will go to share repurchase


  • G&A cost included in discontinued operation
    • $3-6m of fees will be received for support services to acquirer to offset support costs associated with OTB (such as centralized accounting and other shared back office costs)
  • OTB sales will be $0.03 to $0.05 dilutive to EPS



  • Lower than normal expenses in 4Q09
    • Insurance, property tax, utilities, vacation
    • 110 bps favorable impact on margin


Analyst day

  • Outlined company’s “Plan to Win”
  • During quarter finished rollout of menu transformation
    • New items, improved kitchen processes, removed items, changed recipes



  • Promotional offers are attracting more guests
  • EAT’s participation in deals is among the lowest of its peers
  • Guest satisfaction has improved since the Analyst Day when it seemed to be softening as changes to the menu  were being implemented



  • During 2Q, revenues decreased by 7.8%
  • -4.2% decline in SSS, 40 fewer restaurants
    • Traffic better than comp, mix worse due to promotional activities
  • 5.3% decrease in capacity
  • COGs increased 30 bps to 28.5% vs prior year
    • 90 bps sequential improvement
  • 70bps benefit from commodities
    • Offset by margin loss from mix shifts due to promotions and changes at Maggiano’s and Chili’s
  • Restaurant operating expense was 54.7% vs 54.1% a year ago
  • Labor up due to training for new menu etc.
  • Depreciation has decreased due to fewer restaurants and more fully depreciated assets
  • G&A decreased by ~$2million per year, 10 bps as % of sales to 4.5%
    • G&A for discontinued ops are directly attributable to support costs that are identifiable to the OTB brand. Not included are accounting services and other back office costs.  EAT will collect fees that will offset these
  • Interest Expense was $1M lower YOY
  • Tax rate of 19.7% was lower than 3QFY09 due to resolution of tax positions
  • Capex was $32m
  • CFFO was $223m
  • $182m cash balance


  • Capex of $84m for fiscal year (unchg)




EAT's three businesses are Chili’s, Maggiano’s and Global business development (GBD)

  • GBD
    • Great growth potential outside the U.S.
    • Extending to 425 Chili’s outside the U.S. by 2014
  • Maggiano’s
    • Gained traction throughout the quarter
    • Comps sales +5.2% in March
      • Jan and Feb were 3.8% and 3.7% respectively
    • Margin improved 200 bps
    • KDS/POS testing in Mexico is returning great results
    • Chili’s
      • Testing initiatives aimed at driving margin
      • Rolling out LED lighting

Free Cash Flow

  • Short-term debt repayment goals are almost accomplished
  • Investment grade rating from S&P






What will the costs be for rolling out new kitchen initiatives?


The initiatives will be rolled out over time, not expecting a big hit to any one quarter, we’ll have more of an idea over the summer.



For the $0.05 dilution from OTB sale, were you referring to G&A picking up and that being the amount you have to offset with revenue?


No. Some G&A will not be recorded as OTB. There are some proceeds that will be used to buy back shares. After repurchase, net dilution will be 5cents



How do you see Chili’s navigating the competitive environment? Promotions in July last year, how do we think about promotions versus competitors that did promotions earlier in ’09?


The level of discounting and consumers that are eating on deals is staying strong. There is still a lot of discounting going on.



In some ways, will it be difficult to figure out how this summer will play out for casual dining?


Yes, it is difficult – the margin play is opportunistic for EAT and we’re balancing all that into plans as we proceed into summer and figure out strategy.



On share repurchases, will that be an open market repurchase?


Looking into all options, will discuss with the board and decide on a way forward. 



What is ticket time now?


It varies between lunch and dinner…5 minutes is a goal.  That will make us far more competitive at lunchtime in particular.



Talk about the timing of the roll-out, 5 restaurants at the start of 2011FY, by the start, how much of the systems will be POS/KDS operative?


End of this year for POS, early next year for KDS.  To finish the retro fits, however, it will take longer, possibly into 2012, 2013. 



Margin improvement timeline?


Margin equipment will come through 2011, 2012, but the full 400 bps will not be realized until 2013.



Share repurchase?


Not all OTB related, we will have excess cash that we will use for share repurchase. Didn’t receive authorization from board until late in 4Q so haven’t done that yet. 



Commodities will be down for C’10? What do you think for commodities in CY11? Also, how will health insurance legislation affect EAT?


We have gone through a lot of commodity negotiations. We have clarity on those costs out to December (still favorable in all items ex produce through December).  50-60% contracted through December. 



With current levels and outlook, do you have a sense of how they will go in C’11?


Flat from 2010 into 2011 but it’s very difficult to tell.   On health insurance, there are still more questions than answers. Most of the requirements won’t take effect until 2014, the couple of things that do (students and pre-existing conditions) are already covered by EAT health insurance.



Cash balance?





On service strategy, can you explain that?


Focused more on team service.  It’s a strategy that worked well at Maggiano’s.



Kitchen retrofit should take 2/3 years. Accelerated depreciation?


As we roll out the equipment, yes, but will be written off over five years.



What is the lead time for the marketing (fresh pairings)? Is it a couple of weeks or months?  Also, sales trends at Maggiano’s being addressed mid week? How are they looking?


We have a national marketing strategy that has media in place.  Cost structure benefit comes with that. It’s really about messaging.  We’re able to move quickly, it can be done as quick as three or four weeks.



Promotions…as you switch to fresh pairings, we saw that food costs were down but GM also declined, does this new fresh pairings have enough of an impact that it would have swung to a benefit or is there not that level of margin impact from this promotion?


Biggest issue is the introduction of the menu revolution. The promotion doesn’t have a significant impact on COGs. The difference that we see going forward is from the costs we see going forward rolling out the new menu.



First question relates to G&A, interest exp guidance. Implied 4Q guidance seems to suggest, ex OTB, that costs are increasing? Are you being conservative or what is going on?


What we might do with our credit facility at the end of the year is still in flux so the interest expense line is difficult to call conservatism.  The other two lines, perhaps can be called conservative, but profit sharing initiatives and other variables can move those lines up or down.



Do these retrofits and margin improvements happen in step or are there different investments or possible hurdles in the way? Do staff adjust quickly in your experience or will it take time for staff to ramp?


POS and KDS are already familiar to most staff.  Aloha system already in place in some restaurants.  The retro fit is where the big capital dollars come in place. $100k per restaurant. Relatively small investments with pretty quick returns in terms of guest satisfaction and margin performance – 30 to 45 days.



Advertising…you benefitted from rebalancing, media rates seem to be going up…demand may be a little softer for a while longer, do you expect to have to spend a little more on advertising going forward?


Our media costs are mostly accounted for over the next five months.



5 minute ticket time is a huge improvement…can you translate that into a comp?


When you put all of the initiatives together, no questions we see an increase in getting guests through, wait times shortened. 



EPS commentary…are we talking about $1.20, $1.24…double FY15 off that number?


Double eps is on $1.40 to $1.44



What is the comp assumption? 3%-4% longterm?


1%-2% for ’11 and ’12



How does margin expansion come then?


The initiatives will give us the margin improvements in 2011 and then in 2012 the kitchen benefit will kick in.



Given that comps came in at low end of the range, did the quarter end softly? There is an industry wide view that things are improving…did Chili’s lag?


We saw acceleration from February to March even on a weather/adjusted basis.



Maggiano’s numbers by month? March strength continuing into April?


3.8% in January, 3.7% in February, 5.4% in March.



What does this mean for the corporate spending rebound? Anything that would derail that? Is that something you see as playing out for the remainder of year?


We’re trying to grow the consumer experience? Working on a guest that doesn’t come that often.  If we can expand above the banquet/occasion business, we see a lot of growth.  Short term we see nothing that would change that.

I would say that business spending is starting to come back. Banquet bookings looking better.



Howard Penney

Managing Director

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