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Acct 201 Course Project Assignment #2-IND for [insert company name] page 12

Template for Course Project Assignment #2-INDIVIDUAL[footnoteRef:1] due 12/10/13 [1: Robert Bowen and Jane Jollineau of the University of San Diego prepared this template. Revised: 11/2/13. ]

Learning about your Company, its Financial Statements & tracking its Stock Price

Your

name

Other team member(s)

Section #

Again, use your Company’s most recent SEC Form 10-K to answer the questions below in the space provided. You will need to complete one template for each company. [Search hint: every item you want may not be where you expect it type in what you are looking for (e.g., “preferred stock”) into the upper right hand search window in the 10-K pdf file.]

Part 1: Basic data on your company

Company name	BRINKER INTERNATIONAL, INC
Industry name	Restaurant brands

Part 2: Understanding the financial statements (continued from Assignment #1-IND)

Part 2A: Inventories

Using your Company’s financial statements, answer the questions below:

Insert numbers and compute financial ratios	Most recent year available	1st Prior Year
Does the Company report Inventories on the balance sheet? (Yes or No)	Yes	Yes
Do they appear to be manufacturing, retail or some other inventory accounts?	Retail	Retail
What is the dollar amount of total inventories at yearend?	24,628	25,360
What is the major inventory method (cost-flow assumption), e.g., FIFO, LIFO, weighted-average?	FIFO	FIFO
If they use LIFO, what would have been the ending balance under FIFO?	n/a	n/a
Compute inventory turnover for the most recent year. (Inventory turnover = CGS ÷ Average Inventory) -- see textbook p. 300	30.34	n/a
Compute days in inventory for the most recent year. (Days in inventory = 365 ÷ Inventory turnover ratio) -- see textbook p. 300	12 days	n/a

Part 2B: Accounts Receivable

Using your Company’s financial statements, answer the questions below:

Insert numbers and compute financial ratios	Most recent year available	1st Prior Year
Does the Company report Accounts Receivable? (Yes or No)	Yes	Yes
What is the dollar amount of Accounts Receivable, net, at yearend? (i.e., net of Allowance for Doubtful Accounts)	37,842	43,387
What is the balance in Allowance for Doubtful Accounts at yearend? (this account may have a different name)	Details not given	Details not given
What is the balance in accounts receivable, gross, at yearend? (= Accounts Receivable, net, plus Allowance for Doubtful Accounts)	n/a	n/a
Compute the % of gross Accounts Receivable that management expects to be uncollectible at yearend (= Allowance for DA ÷ Accounts Receivable, gross)	n/a	n/a
Compute Accounts Receivable Turnover for the most recent year. (= Net Sales ÷ Ave net A/R) – see textbook p. 416	70.08	n/a
Compute A/R Collection Period in days for the most recent year. (= 365 ÷ Accounts Receivable Turnover ratio) – see textbook p. 416	5.21 (6) days	n/a

Part 2C: Long-lived assets

Insert numbers and compute financial ratios	Most recent year available	1st Prior Year
Does the Company report fixed assets (e.g., property, plant & equipment) on its balance sheet? (Yes or No)	Yes	Yes
What is the balance in Property, Plant & Equipment, net, at yearend?	1,035,815	1,043,564
What depreciation method is used (e.g., straight-line, accelerated)?	straight-line basis	straight-line basis
What is the balance in Accumulated Depreciation at yearend?	1,147,895	1,076,238
What is the original cost of the Property, Plant and Equipment at yearend?	2,183,710	2,119,802
Compute yearend Accumulated Depreciation ÷ the yearend original cost of PP&E	0.53	0.51
Does the Company report any intangible assets (e.g., Goodwill) on its balance sheet? (Yes or No)	yes	yes
Compute the ratio of intangible assets to total assets. (= yearend intangible assets ÷ yearend total assets)	0.1	0.09

Part 2D: Liabilities

Using your Company’s financial statements, answer the questions below:

Insert numbers and compute financial ratios	Most recent year available	1st Prior Year
What is the Company’s largest current liability at yearend?	Accrued liabilities	Accrued liabilities
Does the Company report unearned (or deferred) revenue? (Yes or No)	No	No
What is the total dollar amount of long-term debt at yearend?	780,121	587,890
Compute the debt to total assets ratio (= yearend total liabilities ÷ yearend total assets) – see textbook p. 60	0.9	0.78
Compute times interest earned (= net operating income ÷ interest expense) – see textbook p. 525	8.8 times	8.65 times

Part 2E: Stockholders’ Equity

Insert numbers and compute financial ratios	Most recent year available	1st Prior Year
Does the Company report any nonzero amount of preferred stock? (Yes or No)	no	no
How many common shares are authorized at yearend?	250,000,000	250,000,000
How many common shares are issued at yearend?	176,246,649	176,246,649
What is the total amount of paid-in-capital at yearend?	495,045	484,406
What is the average cost of shares issued at yearend? [= (C/S at par + addt’l paid-in-capital) ÷ yearend shares issued]	$2.81	$2.75
Does the Company report any treasury stock? If so, how many shares are held as treasury stock?	108,802,550	101,904,534
How many common shares are outstanding at yearend?	67,444,099	74,342,115
What is the average cost of treasury shares at yearend?	$38.01	$30.77
How much did the Company pay in dividends during the year (if any)?	56,343	50,081
Compute the Dividend Payout ratio (= cash dividends declared on C/S ÷ net income) – see textbook p. 594	34.49%	33.12%
Compute Return on Assets [= (net income ÷ average total assets] – see textbook p. 464	11.30%	n/a
Compute Return on Common Equity [= (net income – preferred stock dividends) ÷ average common shareholders’ equity] – see textbook p. 595	71.14%	n/a

Part 2F: Insert your company’s financial statements here – this should fit on 4 or 5 pages

Include copies of the following financial statements from the Company’s 10-K – not abbreviated versions from Finance Yahoo or Google Finance. These should be the same statements you submitted with your first assignment.

· Balance sheet (may be on two pages)

BRINKER INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)



	2013		2012
ASSETS
Current Assets:
Cash and cash equivalents	$	59,367			$	59,103
Accounts receivable	37,842			43,387
Inventories	24,628			25,360
Prepaid expenses and other	71,824			66,359
Income taxes receivable	4,930			1,055
Deferred income taxes	0			2,918
Total current assets	198,591			198,182
Property and Equipment:
Land	147,581			152,382
Buildings and leasehold improvements	1,435,426			1,399,905
Furniture and equipment	580,115			556,304
Construction-in-progress	20,588			11,211
	2,183,710			2,119,802
Less accumulated depreciation and amortization	(1,147,895	)		(1,076,238	)
Net property and equipment	1,035,815			1,043,564
Other Assets:
Goodwill	142,103			125,604
Deferred income taxes	24,064			20,231
Other	52,030			51,827
Total other assets	218,197			197,662
Total assets	$	1,452,603			$	1,439,408
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current installments of long-term debt	$	27,596			$	27,334
Accounts payable	93,326			100,531
Accrued liabilities	268,444			273,884
Deferred income taxes	845			0
Total current liabilities	390,211			401,749
Long-term debt, less current installments	780,121			587,890
Other liabilities	132,914			139,896
Commitments and Contingencies (Notes 9 and 14)
Shareholders’ Equity:
Common stock—250,000,000 authorized shares; $.10 par value; 176,246,649 shares issued and 67,444,099 shares outstanding at June 26, 2013 and 176,246,649 shares issued and 74,342,115 shares outstanding at June 27, 2012	17,625			17,625
Additional paid-in capital	477,420			466,781
Retained earnings	2,217,623			2,112,858
	2,712,668			2,597,264
Less treasury stock, at cost (108,802,550 shares at June 26, 2013 and 101,904,534 shares at June 27, 2012)	(2,563,311	)		(2,287,391	)
Total shareholders’ equity	149,357			309,873
Total liabilities and shareholders’ equity	$	1,452,603			$	1,439,408

· Income statement

BRINKER INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)



	Fiscal Years
	2013		2012		2011
Revenues:
Company sales	$	2,766,618			$	2,748,462			$	2,685,441
Franchise and other revenues	79,480			72,260			75,945
Total revenues	2,846,098			2,820,722			2,761,386
Operating Costs and Expenses:
Company restaurants
Cost of sales	758,377			769,729			742,283
Restaurant labor	892,413			891,910			886,559
Restaurant expenses	655,214			649,830			655,060
Company restaurant expenses	2,306,004			2,311,469			2,283,902
Depreciation and amortization	131,481			125,054			128,447
General and administrative	134,538			143,388			132,834
Other gains and charges	17,300			8,974			10,783
Total operating costs and expenses	2,589,323			2,588,885			2,555,966
Operating income	256,775			231,837			205,420
Interest expense	29,118			26,800			28,311
Other, net	(2,658	)		(3,772	)		(6,220	)
Income before provision for income taxes	230,315			208,809			183,329
Provision for income taxes	66,956			57,577			42,269
Net income	$	163,359			$	151,232			$	141,060

Basic net income per share	$	2.28			$	1.93			$	1.55

Diluted net income per share	$	2.20			$	1.87			$	1.53

Basic weighted average shares outstanding	71,788			78,559			90,807

Diluted weighted average shares outstanding	74,158			80,664			92,320

Dividends per share	$	0.80			$	0.64			$	0.56

· Statement of Cash Flows

BRINKER INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



	Fiscal Years
	2013		2012		2011
Cash Flows from Operating Activities:
Net income	$	163,359			$	151,232			$	141,060
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	131,481			125,054			128,447
Restructure charges and other impairments	11,425			10,396			8,427
Deferred income taxes	(4,793	)		11,808			15,277
Net (gain) loss on disposal of assets	(6,905	)		490			(401	)
Stock-based compensation	15,909			13,461			12,789
Loss (Earnings) on equity investments	851			1,350			(1,802	)
Other	363			799			405
Changes in assets and liabilities:
Accounts receivable	5,398			608			1,255
Inventories	908			(15	)		1,341
Prepaid expenses and other	82			(2,984	)		(2,150	)
Other assets	(4,115	)		489			406
Current income taxes	749			(3,874	)		(3,976	)
Accounts payable	(9,339	)		12,188			(21,515	)
Accrued liabilities	(9,995	)		(17,197	)		(15,178	)
Other liabilities	(4,690	)		(367	)		(4,397	)
Net cash provided by operating activities	290,688			303,438			259,988
Cash Flows from Investing Activities:
Payments for property and equipment	(131,531	)		(125,226	)		(70,361	)
Payments for purchase of restaurants	(24,622	)		(3,120	)		0
Proceeds from sale of assets	17,157			8,112			8,696
Insurance recoveries	1,152			0			0
Investment in equity method investees	0			(3,170	)		(2,896	)
Net cash used in investing activities	(137,844	)		(123,404	)		(64,561	)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt	549,528			70,000			0
Purchases of treasury stock	(333,384	)		(287,291	)		(422,099	)
Payments on long-term debt	(316,380	)		(18,749	)		(16,127	)
Payments on revolving credit facility	(150,000	)		0			0
Borrowings on revolving credit facility	110,000			40,000			0
Payments of dividends	(56,343	)		(50,081	)		(53,185	)
Proceeds from issuances of treasury stock	41,190			43,416			33,057
Excess tax benefits from stock-based compensation	8,778			1,406			291
Payments for deferred financing costs	(5,969	)		(1,620	)		0
Net cash used in financing activities	(152,580	)		(202,919	)		(458,063	)
Net change in cash and cash equivalents	264			(22,885	)		(262,636	)
Cash and cash equivalents at beginning of year	59,103			81,988			344,624
Cash and cash equivalents at end of year	$	59,367			$	59,103			$	81,988

· Statement of Changes in Stockholders’ Equity

BRINKER INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

	Common Stock		Additional Paid-In Capital		Retained Earnings	Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total
	Shares		Amount
Balances at June 30, 2010	101,572			$	17,625		$	465,721			$	1,923,561		$	(1,678,159	)		$	0	$	728,748
Net income and comprehensive income	0			0		0			141,060			0		0			141,060
Dividends ($0.56 per share)	0			0		0			(51,432	)		0		0			(51,432	)
Stock-based compensation	0			0		13,381			0			0		0			13,381
Purchases of treasury stock	(20,585	)		0		(1,788	)		0			(420,311	)	0			(422,099	)
Issuances of common stock	1,951			0		(9,821	)		0			42,878		0			33,057
Excess tax shortfall from stock-based compensation	0			0		(3,805	)		0			0		0			(3,805	)
Balances at June 29, 2011	82,938			17,625		463,688			2,013,189			(2,055,592	)	0			438,910
Net income and comprehensive income	0			0		0			151,232			0		0			151,232
Dividends ($0.64 per share)	0			0		0			(51,563	)		0		0			(51,563	)
Stock-based compensation	0			0		13,461			0			0		0			13,461
Purchases of treasury stock	(10,966	)		0		(2,901	)		0			(284,390	)	0			(287,291	)
Issuances of common stock	2,370			0		(9,175	)		0			52,591		0			43,416
Excess tax benefit from stock-based compensation	0			0		1,708			0			0		0			1,708
Balances at June 27, 2012	74,342			17,625		466,781			2,112,858			(2,287,391	)	0			309,873
Net income and comprehensive income	0			0		0			163,359			0		0			163,359
Dividends ($0.80 per share)	0			0		0			(58,594	)		0		0			(58,594	)
Stock-based compensation	0			0		16,610			0			0		0			16,610
Purchases of treasury stock	(9,176	)		0		(5,565	)		0			(327,819	)	0			(333,384	)
Issuances of common stock	2,278			0		(10,709	)		0			51,899		0			41,190
Excess tax benefit from stock-based compensation	0			0		10,303			0			0		0			10,303
Balances at June 26, 2013	67,444			$	17,625		$	477,420			$	2,217,623		$	(2,563,311	)		$	0	$	149,357

Part 3: Discussion of a news article about the Company

Insert your second article discussion for this company here – this should fit on one page. (You turned in the first article with Assignment #1.) Again, please use a news article rather than an opinion piece from a blog such as Seeking Alpha.

Description of Article discussion (same as in Assignment #1-IND but with a different article)

Include one article summary for each company in the group (for a total of four-to-six article summaries depending upon how many members are in your group). The articles should be dated no earlier than June 1, 2013. Summarize the news article and its impact on your company or the industry (and perhaps the company’s stock price). Each article summary should include (at least) the following (at a minimum):

Citation: Title of article, author, source (e.g., WSJ, 7/29/13, p. B4), and link to article if possible

How: How does the article relate to the Company or to the industry?

Why: Your summary of the article should highlight key points that relate to the company or the industry and hopefully to accounting

Effect: For example, did the stock price change after the event(s) described in the article?

Do NOT copy and paste from the article. Use you own words.

Part 4: Tracking your Company’s stock price

You are tracking your company’s stock price from 9/24/13 through 12/3/13. This final submission should have a completed worksheet. [Complete your Stock Monitoring Worksheet by “selling” your stock at the adjusted closing price on December 3rd as shown below. See Blackboard for the actual Excel template. Paste a screenshot of your completed spreadsheet here.]