Moody's to review Brinker for possible downgrade

by Eric Schroeder
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NEW YORK — Moody’s Investors Service has placed the Baa3 senior unsecured ratings of Brinker International, Inc. under review for possible downgrade. Moody’s said the review follows Brinker’s announcement that fiscal year 2009 earnings per share, before special items and excluding the operating results of Macaroni Grill, are expected to decline by between 15% and 25% as compared with fiscal year 2008. Previous guidance from Brinker called for 8% to 10% growth.

"The review for possible downgrade reflects Brinker’s weaker-than-expected operating performance and the expectation that earnings will deteriorate further in fiscal year 2009," Moody’s said. "This could place additional downward pressure on debt protection metrics that are already weak for the current Baa3 rating."

The ratings service said its review will focus on Brinker’s ability "to improve operating performance and debt protection metrics over the intermediate term despite a consumer environment that continues to deteriorate, cost inflation that remains well above historic levels, and increasing competitive pressures."

Brinker International, Inc. owns, operates, and franchises several casual dining concepts, including Chili’s Grill & Bar, Romano’s Macaroni Grill, On The Border Mexican Grill & Cantina, and Maggiano’s Little Italy. Total revenues in the fiscal year ended June 28, 2008, were approximately $4.2 billion.

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