Jill Cuthbertson - IR Wyman Roberts - President and CEO Marie Perry - SVP and CFO

Jeffrey Bernstein - Barclays John Ivankoe - JPMorgan John Glass - Morgan Stanley Nicole Miller - Piper Jaffray David Palmer - RBC Capital Markets Jeff Farmer - Wells Fargo Chris O’Cull - KeyBanc Capital Markets Sarah Bernstein - Sanford Bernstein Howard Penny - Hedgeye Management Joseph Buckley - Bank of America Andrew Strelzik - BMO Capital Markets

Good morning, ladies and gentlemen, and welcome to the Brinker International First Quarter 2015 Conference Call. At this time, all participants have been placed on a listen-only mode and the floor will be opened for your questions and comments following the presentation. Now I would like to turn the floor over to your host, Jill Cuthbertson. Ma'am, the floor is yours.

Thank you, Dave. Good morning, everyone, and welcome to Brinker International's first quarter fiscal 2015 earnings call, which is also being broadcast live over the Internet. Before turning the call over, let me quickly remind you of our Safe Harbor regarding forward-looking statements. During our management comments and in our responses to your questions, certain items may be discussed, which are not based entirely on historical facts. Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such risks and uncertainties include factors more completely described in this morning's press release and the company's filings with the SEC. On the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations. Reconciliations are provided in the tables in the press release and on Brinker's website under the Financial section of the Investor tab. Consistent with prior practice, we will be silent on intra-period sales or other key operating results yet to be reported as the data may not accurately reflect the final results of the quarter referenced. On our call today, you will hear from Wyman Roberts, Chief Executive Officer and President, Brinker International; and Marie Perry, Interim CFO, Controller and Treasurer. Following their remarks, we will take your questions. Now I will turn the call over to Wyman.

Thank you, Jill, and good morning, everyone. Thanks for joining us on the call today. For the next few minutes, I'm going to share with you our company results for the first quarter and talk about the performance of our brands and then I'll pass it over to Marie for an in-depth look into the numbers. As you saw in our press release this morning, Brinker reported first quarter earnings per share before special items of $0.50, representing a 16.3% increase over the same quarter last year. The casual dining industry showed signs of a sales rebound this summer with positive comps, which is encouraging. We maintained our significant gap to the industry and continue to take market share. Our results demonstrate that our strategy to grow sales and traffic through initiatives that drive relevance and differentiation is working. Both of our brands Chili's and Maggiano's and our franchises contributed to our performance and I want to briefly highlight the results of each business. So let's talk about Chili's. We had three consecutive years of comp sales growth for Chili's and we started 2015 strong with positive comp sales of 2.6% and positive traffic. We achieved these results against a very competitive backdrop in which many of our competitors focused on aggressive all-you-can-eat promotions and we chose to stay our course and not adopt a similar strategy and we still outperformed the industry, beating that by 210 basis points and Black Box by 100 basis points. The key to our success is our focus on creating relevance and differentiation through culinary, marketing and technology initiatives. So let me take a few minutes to talk about each of these areas. As you know, we've been innovating and renovating our menu. With innovation, we launched our Fresh Mex platform last year, with the introduction of Fresh Mex Bowls, new mix-and-match fajitas and table side guacamole. In the first quarter, we continued to innovate on the Fresh Mex platform by introducing top shelf enchiladas, which are proving very popular with our guests. In fact, we've grown the category to the point that almost one out of every four Chili's guests is eating a Fresh Mex entrees and that number would be higher if we included Guacamole, Margaritas and Chips and Salsa. Fresh Mex is an important platform for Chili's because it differentiates us from our casual dining and bar and grill competitors and helps improve our margins. With renovation we recently turned our attention to Burgers. This is a foundational category for Chili's and we modified our burgers from top to bottom. We took the same approach with our new line of Craft Burgers as we did with our Fresh Mex platform by bringing out freshness cues. Every burger now features a new potato bun, lettuce grown specifically for Chili's and garlic pickles made fresh each day in house. Often we'll incorporate new food items into our value platforms $20 dinner for two and lunch combos. We did this recently when we launched Craft Burger by adding a double burger to our lunch combos. This helps keep our value platform fresh and relevant. We want to maintain our strength in the burger category and our new Craft Burgers do just that. Looking ahead, our culinary team is working on a new platform we'll launch later in the year. This platform lines up with our unique brand positioning, is ownable for Chili's and will be difficult for our competitors to follow. So the food innovation pipeline continues to be full and strong at Chili's. So let's turn to marketing. Our approach to marketing is also somewhat unique. While many of our -- while many are focused on promoting limited time offers, we're focused on a branded message; one that gives consumers a compelling relevant story about Chili's. Earlier this month, we launched our new Fresh is Happening Now Campaign, highlighting the fresh things happening at Chili's. In the new TV spots, we focused on Craft Burger, house-made pickles, table side guacamole, reimaged restaurants and Ziosk technology. This is a fully integrated campaign that combines national TV with digital and social efforts to improve the perception of the brands, while reinforcing our strong value proposition. We're also featuring on a premium set TNT's new reality show, 'On the Menu' with home cooks competing to get a new burger on the Chili's menu. The winning burger, which featured slaw, fried pickles and barbeque sauce was in our restaurants less than 12 hours after the show aired. This is a testament to the ability of our operators to move quickly to deliver a fresh, quality food experience for our guests. Another way we're creating a relevant and differentiated dining experience for our guests is through technology. Next month we will complete the installation of Ziosk tablets in all of our domestic franchise Chili's restaurants, further extending our national footprint and leadership in this space. Currently guests can use Ziosk to order drinks and deserts, play games, redeem coupons and pay their check, all at the table. The next phase will be lining our new loyalty program to Ziosk, enabling us to connect with our guests at the table with their mobile phones. We're excited about the potential this has to create a stronger connection and smarter interactivity between us and our guests. We've also invested in additional guest-centric technology by upgrading the Chili's website and mobile platforms to improve our to-go experience. We are strategically leveraging technology to grow our business through better connectivity with our guests and to help us run our restaurants more efficiently. Going forward, we will continue to test new technologies to improve our business model. In the midst of all the exciting advances we're making, Chili's continues to get back to the communities where we live and work. In September, we completed the first part of our annual fund raising campaign for St. Jude Children's Research Hospital, raising more than $2 million for the children of St. Jude in just two weeks. That gets added to the over $50 million we've donated to in the past 10 years to St. Jude. This is just another example of what our operators and team members can do when they get focused behind a great cause. Okay. So now let's turn to Maggiano's. In the first quarter, Maggiano's delivered positive 0.6% comp sales and positive traffic marking our 19th consecutive quarter of comp stores sales growth. Maggiano's continues to lead the Italian dining category in terms of brand strength. In late September, we launched our new Lighter Take menu, which features new preparations of classic Italian dishes, delivering the same flavors and generous portions with a third less calories. Feedback from guests is strongly positive and the items are performing very well. In fact, around 18% of our guests are now eating a Lighter Take entrée and we're optimistic about the potential these dishes have to grow traffic as awareness of lighter take increases. We also continue to optimize our business model to deliver consistent profitable new restaurant growth. In the first quarter we opened two new restaurants, one is Sacramento and another in Vernon Hills, Illinois. We've also opened one more in Washington DC since the end of the quarter giving us five sites with our new smaller prototype. Turning to our franchise business, our U.S. comp sales were up 1.7%. Domestic Chili's franchises continue to align with our sales driving initiatives and deliver consistent Chili's experience for our guests. Our international franchise comp sales were down 0.5% driven by soft sales in Puerto Rico. The economy there is struggling right now. However, we're working with our partners to improve the business. We feel good about the results we'll be able to deliver. The rest of our global franchises continue to perform well and excluding Puerto Rico, achieved positive comps sales of 2.5%. During the quarter our international franchise partners opened six restaurants bringing our total to 297 in national restaurants. We appreciate the support, commitment and alignment from all of our franchises and look forward to continued strong results from our partnerships. Okay. Now let me turn the call over to Marie to walk you through the financials. Marie?

Thanks, Wyman. As you just heard, our first quarter earnings per share before special items was $0.50, representing 16.3% increase over the same quarter last year and continuing the year-over-year improvements we've seen since we started our plan to win back in fiscal 2011. First quarter revenues were $711 million, an increase of 3.8% over prior year. Total company-owned comparable restaurant sales increased 2.4%, due to a 1.7% increase in price, 0.4% improvement in mix and 0.3% increase in traffic and capacity was up 0.8% from new company-owned restaurant development. Franchise and other revenues were $24.2 million, an increase of $4 million over prior year, driven by the impact of Ziosk, royalties from our new Chili's retail food products and an increase in international franchise revenue, stemming from the net 23 international franchise openings in the past 12 months. U.S. franchise comparable restaurant sales increased 0.7% to 1.7% while international franchise comparable restaurant sales decreased 0.5%, driven primarily by economic conditions in Puerto Rico as Wyman mentioned. Cost of sales improved 30 basis points from prior year to 26.9%, driven by 50 basis points of menu price improvement, menu price impact, coupled with net 20 basis points of favorable mix primarily associated with lower oil usage related to new fryers and better waste control and 40 basis points of favorable commodity pricing relating to shortening and poultry. These improvements were slightly offset by unfavorable commodities of 80 basis points, stemming from greater than anticipated increase in price of burger meat cheese and avocados, which are market-based and not contracted as well as higher seafood cost. Currently, 85% of commodities are contracted through the end of calendar 2014 and 37% are contracted through the end of fiscal 2015. Restaurant labor increased 20 basis points to 33.1%, largely resulting from higher manager bonuses and wage and payroll tax increases, including the impact of minimum wage and discretionary investment and team member training on key initiatives. These unfavorable impacts were partially offset by leverage on higher sales, a lower employee health insurance expense as we lap a prior year adjustment related to unfavorable claims experience, coupled with productivity. Restaurant expense was $175.5 million or 30 basis points higher than prior year, mainly as a result of Ziosk device rental and credit card fees as guest credit card usage has been trending higher and increase in supplies associated with our menu initiatives, higher utility rates and higher preopening cost from our new restaurants, partially offset by leverage on higher sales. Depreciation expense increased $2.4 million to $35.5 million, consistent with our recent and ongoing investment in key capital initiatives, partially offset by an increase in fully depreciated assets. General and administrative expenses was $32.6 million, a decrease of $1.8 million versus prior year, primary driven by lower stock-based compensation expense and we lap a prior year special grant and a decrease in professional fees related to litigation. Interest expense was flat to prior year. The tax rate before special items was 31.7% versus 31.6% in the prior year, driven by the impact of higher earnings partially offset by a net increase in federal credits. Capital expenditures for the quarter was $40.2 million, with year-to-date cash flow from operations at $70.9 million. To date our Chili's reimage program is about 90% complete and we're still on track to reimage the rest of the company-owned Chili's system by the end of the fiscal year. During the quarter, we brought back 1.1 million shares for $53.3 million and we ended the quarter with $63.7 million of available cash on the balance sheet and since the end of the first quarter, we purchased another 712,000 shares for $37 million, leaving outstanding authorization of about $576 million. As we stated before, we are committed to a balanced approach of investing in our people and assets, managing debt, maintaining appropriate liquidity and returning cash to our shareholders. This includes the recent 17% increase in our quarterly dividend from $0.24 to $0.28 per share. With that, I'll turn the call back to Wyman to share final comments before we open the line for questions.

Thanks Marie. So to wrap things up, we finished the first quarter with EPS growth of 16.3%. We're proud of the sales and traffic growth we accomplished. It's a testament to the effectiveness of our strategies and even though we experienced some unexpected headwinds, the good news is that most of these are starting to mitigate. I am confident that we'll achieve both our fiscal 2015 and long-term goals because of the plans we have in place. Through culinary innovation, differentiated marketing, new technologies, we'll further strengthen our brand relevance and drive topline growth, combined with our continued commitment to strengthen our business model and grow margins. This gives us confidence we'll be able to achieve our long-term goal of doubling fiscal 2012 EPS to $4 by fiscal 2017. And with that, we can now open the line for questions.

Thank you very much. (Operator Instructions) We'll take our first question from Jeffrey Bernstein with Barclays. Your line is live. Jeffrey Bernstein - Barclays: Great. Thank you very much. Two questions, just one on the margin side of things. It seems like from a restaurant margin perspective, you saw some pressure this quarter despite what seemed to be a fairly strong 2%-plus comp, which on your guidance for the full fiscal year is 1% to 2%. So you beat the comp side of things, but yet the margins were down on the restaurant margin level despite guidance for being up 25 to 50 for the year. So just wondering if you could talk broadly on the confidence in that restaurant margin expansion outlook for the full, especially as the compares are increasingly difficult any key drivers there? And then I have a follow-up.

Hey Jeff, this is Marie. So as we noted in the prepared remarks, so kind of maybe let's talk about Q1 and kind of our expectations going forward, but as we noted in the prepared remarks, we did see significant food inflation in our cost of sales for the quarter. And really when you look at kind of where that came from, it was from the non-contracted market-based items, the hamburger meat, the cheese and avocados. So when we kind of look forward, we do anticipate more favorability as we come off of some of those highs and then still look to identify opportunities in our food waste area and then the new fryers continuing to see that and then menu price. Some of the other items obviously like restaurant labor and restaurant expense, when we provided our guidance we noted kind of minimum wage in California and expecting some headwinds there. Also talked about the Ziosk device rental, and just some of the cost associated with Ziosk and then the preopening expenses. We do anticipate the ability to mitigate some of that as we look at wrapping some of those costs, also ability to take some price guidance in the future. So we are still sticking with our guidance on restaurant operating margins. Jeffrey Bernstein - Barclays: Got it. And then just the follow-up, in terms of the -- Wyman, you mentioned that over the summer that industry trends accelerated, which was encouraging. Just wondering to what you attribute that to? It seemed like the employment and the confidence numbers have been getting better for a long time now. So it doesn't seem like that's really the driver. Any thoughts on that, or whether you think this is sustainable over the next at least few months, or whether you have concerns on that front? Just as a tie-in, you said that the competitors were getting a little bit more promotional. Just wondering, I am assuming you are comfortable avoiding that promotional chase even if it means a little bit less of a gap versus the industry on the comp?

Yeah, absolutely Jeff. So it was encouraging to see positive comps for the industry and some strengthening there. I do think if you look at how the summer played it was driven by a lot of pre-aggressive promotion. As a matter of fact, if you look at NPD numbers 12 months rolling August, the category is at the highest deal rate that it's ever hit. And some players in there are reaching some pretty aggressive numbers. Interestingly enough, Chili's is at a four-year low and so we are bucking the trend not out there promoting as aggressively not actually promoting with limited time offer at all when we have. I think at one point I counted five major competitors, national competitors doing an all-you-can-eat offer on TV. That’s going to drive some shorter term traffic. I have no idea what's that doing to margins, but it's hard to believe it's helping with an all you can eat. So we are committed to this strategy. We've laid out four years ago, that we're going to fundamentally make Chili's better and stronger and we're going to get the business model aligned around that and that's what we're doing. So if that means the gap to the competition decreases a little bit, but it's off a higher base, that’s fine with us. It's all about delivering that two plus comp that we've talked about and committed to and that comes off a base of a one to two or 1% industry number and we're fine with that. We're really just focused on our strategy and playing our game. I’ll just add to Marie’s point, there were some unprecedented kind of situations in the commodity world, but when you look out, we feel pretty good. A record breaking grain harvest, the pricing of oil right now, there are some things that are not that far off in the future in terms their impact to the cost side of business, which are going to help mitigate some of the expenses that we saw with some records highs during the summer. So we're very confident that the margin story that we laid out for our long term plan is still very doable and we're tracking pretty close to where we thought we would be with the exception of some commodity issues that hit us a little bit harder than we thought in the quarter. Jeffrey Bernstein - Barclays: Understood. Thank you very much.

All right, Jeff.

Thank you very much. We will take our next question from John Ivankoe with JPMorgan. Your line is live. John Ivankoe - JPMorgan: Hi. Great, thank you so much. Two questions, if I may. First, I remember for Brinker's specifically several years ago, that July was by far the most important month in the quarter and at least looking at the industry it looks like July was actually pretty soft. So it might have been like your July results that would have constrained some of the flow through that one would have otherwise expected to see on the comps. So that's the first question. And then secondly, is regarding the loyalty program I think that you mentioned in your prepared remarks. And I just wanted to get a sense of your confidence that both in the short term and long term that a loyalty program, it can be successful from a profitability perspective versus just being another form of discounting. Thanks.

John in terms of your first question, July by definition kind of the five-week period and so I think where the focus of July is, it's just that its stronger versus than August and September. Where kids are going back to school and that kind of thing and so that’s why typically July has kind of a higher impact typically kind of across the industry. John Ivankoe - JPMorgan: And not to specifically ask your July comps, but the July comps were kind of the low point in the quarter for the industry overall. So I'm just trying to get a sense of whether if the comps were evenly distributed amongst the quarter whether you, whether they will might, that makes sense.

No I think from our perspective John it was a pretty solid quarter consistently. Actually feel really good about how we went in and how we came out, we are not going to give monthly numbers. And the margin impact if you are thinking that maybe we lost some leverage in the more high volume July month, it really goes back to that simple story about the commodities that we don’t contract. They got a little bit -- I can't imagine what some of the pizza guys are feeling with where cheese kind has played itself out through the summer. We just didn't anticipated staying at those levels for longer that it has and again the good news is that starting to abate and come back in line and so we are feeling much better. But that was really the driver of any softness to margins that we experienced relatively to I think what we expected. Not exactly sure how other people may have modeled. We knew that we were going to have -- we made some investments in labor with the role out of the new menus and so that’s put a little bit pressure on the labor line, but again those were all planned expenses from our prospective. So we were in line pretty much with everything we thought we would see with the exception of those commodities. John Ivankoe - JPMorgan: And on loyalty.

Yeah on loyalty. So again, we don’t want to give too much away until we roll out the program, but it will be a unique program. It's not going to be the typical program. It will be unique to Chili’s and to how we see our ability to connect with our guest on a more direct basis. And so yes, will there be offers and will there be some rewards for heavy loyalty, sure. But we don’t think it's going to be a significant drain. And obviously we are anticipating that the net impact of what it will drive in traffic will be much more incremental to the bottom line than what we will give up in any kind of a deal. John Ivankoe - JPMorgan: Thank you.

All right. Thanks John.

Thank you. We'll take our next question from John Glass with Morgan Stanley. Your line is left. John Glass - Morgan Stanley: Thanks, good morning. I hate to harp on the margins, but if I could just go back, I think you initially said 25 to 50 basis points at the restaurant level. So given the first quarter, do you still feel comfortable with that? And my understanding at least was that that all came from food costs, and that labor and the restaurant expenses should be flat. Is that the right way to think about it, so if there is risk it's really just in the food cost? We should not expect labor and other restaurant expense leverage this year.

Hey John. So yes, I think again what we were surprised by in the first quarter were these higher than anticipated commodities. So we thought we would see the labor kind of number we would see, but we anticipate obviously that it will get better as we move through the year relative to prior year, but we weren’t surprised by the margins that we got in the labor line and really the restaurant expense line. A little bit of movement in the restaurant expense line, but primarily we were in line with what we thought with the exception of the commodity expenses that we keep kind of referring back to. So we don’t see that commodity expense holding. We see those things coming back in line and so we are still confident in the direction that we have given as far as long-term plan. John Glass - Morgan Stanley: Okay. And then understanding that there is some discounting in the industry and that may have played a role in the shrinking of this gap to the industry, you also had everything in your favor from incremental advertising which you put in place last year, the menu additions you have made, Ziosk, I think most of the system is remodeled. Is there -- how do you view this quarter in the context of the full-year guidance? Is there a fear that this is as good as it gets because of all these initiatives working in your favor today and I think comparisons from here get harder? I'm just trying to understand how you think about the comp this quarter. What comes up and all the things you are already putting after sales initiatives.

No, we like the momentum John. I think if you look at the momentum from an absolute prospective, what we've been able to do in the last six months is just to start up really what we were all about which is changing the trajectory of the brand at Chili's. So from an absolute perspective positive traffic, we got a lot more to come in terms of imitative that were very excited about. So we feel very good about kind of where we're at and we don’t see this as kind of the top or anywhere near the end of the potential that we have to continue to grow the business and take market share. John Glass - Morgan Stanley: Okay, thank you.

All right, thank you, John.

Thank you. We'll take our next question from Nicole Miller with Piper Jaffray. Your line is live. Nicole Miller - Piper Jaffray: Thanks. Good morning. Could you talk a little bit about the Craft Burger margin profile and how it compares to some of the products and platforms that you have introduced over the last year or two?

Well, first of all Nicole hey, we obviously had a big business in burgers to begin with. So this was our renovation and what we've done is we've changed the burger and made it significantly better and maintained the margins, actually made the margins a little better. Some of that through some incremental pricing and some of that through some trade-offs in some items, but we have not, we actually strengthened the burger category margins with this introduction. So, and burgers are solid margins for us. Nicole Miller - Piper Jaffray: That's very…

I'm sorry, go ahead. Nicole Miller - Piper Jaffray: That's very helpful. Just kind of wanted to put that in some context in terms of the margin conversations. And then as it relates to Maggiano's, can you talk a little bit about the holiday plans? How you capitalize on regular dine-in business versus banquet? We are hearing some others that have that opportunity talking about bookings so far shaping up okay. Is there a price or mix shift opportunity? Can you just share a little bit of the big picture thought process for holiday?

Well, as you are well aware, Maggiano's relies heavily on the holiday business to drive their annual earnings results and the good news is that the Banquet business has really strengthened over the last year and we've seen some real positive results in the Banquet sales side of the business and the Banquet Sales Group has performed at all time high levels. I just think they've done a great job getting that group even better aligned with how to drive traffic and what they have to do to compete as you've said a lot more people are now into this business. Maggiano's has been doing it for years and years and now a lot of people are jumping in, but Maggiano's continues to offer that special occasion holiday experience that you can't really get it in most other places. So we're again optimistic about how the holiday season is going to play out and Maggiano's team is already out there aggressively booking holiday parties. Nicole Miller - Piper Jaffray: Thank you.

Thanks.

Thank you. We'll take our next question from David Palmer with RBC Capital Markets. Your line is live.

Hey, David. David Palmer - RBC Capital Markets: Hey Wyman good morning.

Good morning. David Palmer - RBC Capital Markets: I like the look of your latest advertisements for Chili's, which are certainly a little bit different than the competition, which has been price-point oriented but these seem to be great for branding with the food shots, something that's new at Chili's. Any sense that these types of ads are cutting through and driving traffic and I have one follow-up.

Well yeah, we're encouraged and excited about the approach David. We've been using a more branded approach really for the last six months and again I think the results indicate that you can't do this if you put -- you don’t have to be out there with just price points six weeks long promotional messages to be successful, that you can give the consumer a different story. It has to be compelling, but it doesn’t happen necessarily just be about price and limited time to drive traffic and compete in this environment. And I think we've been doing that pretty much now for the last six months or a little more in different formats and obviously this new campaign pushes it to another level. But with the success that we've had kind of speaks for itself. David Palmer - RBC Capital Markets: The other side of that, and this is my second question, is that the imperfect rule of thumb lately has been that high food cost companies seem to be gaining share, those companies with the 30%-plus food costs, more protein-centric, they are the ones that are seemingly attracting millennials and just seemingly having better food value to the consumer, which seems to be the predominant driver of occasions these days. Chili's has been a share gainer but with 26% food costs, which from the sound of it you think that might even have room to go lower, do you feel confident that you can be a long-term traffic grower without having to do more protein-oriented innovation promotions, essentially giving more food value back to the consumer?

Yes. I think again the strength of the brand, you've got to also look at the mix of the menu. We serve a lot more alcohol than a lot of other competitors. So when you, especially if you were to look at -- if you start to look at some of the fast casual guys if that's the benchmark for what's the consumer looking for in terms of cost of sales, I think when you look at the actual price points and the cost of sales associated with just kind of apples-to-apples items, you'll see that we're very competitive with them. And where we tend to stretch the margins a little bit more are probably on some of those other parts of the meal occasion that they don’t have like alcohol or may be more beverages in general. So that's -- and that's discretionary purchase and I think for our occasion guests are willing to do that. So we feel very confident. We monitor our value scores daily and we continue to see improvement in those and so that tells us that you don’t have to just throw huge portion of protein on a plate to give you -- to continue to enjoy the brand and come in and enjoy the experience. And it's so much more than just the food. It is about the administrators, it is about the service and those are all areas that our operators have dialed in on making improvements on those every day and they have an impact. The better experience also helps drive traffic and can help you not have to just put it on the plate as you say. So that's our strategy and we're going to continue to work it. David Palmer - RBC Capital Markets: Thank you.

Thank you.

Thank you. We'll take our next question from Jeff Farmer with Wells Fargo. Your line is live. Jeff Farmer - Wells Fargo: Thank you. Just following up on an earlier question, you had mentioned that the MPD data pointed to I think record deal levels in August. Just curious if you could put that into some level of context for us, meaning was it materially higher than last summer? And I guess more importantly, as you look forward do you expect to have any of that intense deal level sort of trend off here as we get later into the winter and into 2015.

Hey Jeff, yeah what I quoted was the rolling 12-month August number. So I really -- sometimes those numbers are on a month-to-month basis can get a little bit bouncy especially if you're looking at individual brands. So I tend to look at a longer period of time. So we're just looking at the annual numbers kind of rolling 12 August and the numbers there are at all time high for casual dining, bar and grill. And then you look at some of the competitors with that sample size and you feel pretty comfortable that it's reasonable and you can see some people really jumping up and so that to me just indicates the last 12 months probably driven by more of the last six, become very competitive. And obviously there were things happening in the industry where people were aggressively trying to grow sales for various different reasons. And I think that had an impact on deal rates. Again, our number at that point in time, at the end of August is a four year low. Jeff Farmer - Wells Fargo: All right. That is helpful. And just one unrelated question drilling down on the guidance, specifically as it relates to the D&A and G&A growth numbers that you put out there for FY15, should we think that over each quarter should that be a relatively stable cadence? Or how should we think about that incremental dollar cost in both the D&A and G&A lines rolling into FY15?

Depreciation and amortization, Jeff hi this is Marie. It is pretty consistent across the quarters for fiscal '15 and for G&A, just looking real quick, those are trending upward toward the back -- it's pretty consistent. Jeff Farmer - Wells Fargo: Okay, consistent but trending up toward the back half of the fiscal year?

Yeah this one.

Yeah.

Pretty consistent with slight increase.

Yeah. Jeff Farmer - Wells Fargo: Okay.

Pretty consistent with the slight increase in the back half of the year. Jeff Farmer - Wells Fargo: All right, thank you very much.

Thank you. We’ll take our next question from Chris O’Cull with KeyBanc. Your line is live. Chris O'Cull - KeyBanc Capital Markets: Thanks good morning. Wyman, you mentioned the new platform is ownable for Chili's, that you are expecting to come out later this year, but will it also have a friendly -- will it also be margin friendly?

It will be margin neutral at least and again depending on one of the things we don’t know until we get into more robust testing environment, Chris, is kind of where they are trading from and so it's always a little bit difficult to give you what you really want, which is hey, what’s the total impact on margins. I know the items themselves are good margin items. All are strong margin items, but depending when you start to grow a category, where is it going to pull from, is still yet to be seen. So we’re optimistic and we’re comfortable that we will not be doing anything that will probably hurt our margins, but I couldn’t give you an exact number right now. So that’s how we’ve been building things out. If you just look at the last four years, everything we’ve added has been neutral to positive as we’ve worked our margin story pretty favorably. Chris O’Cull - KeyBanc Capital Markets: That's fair. And then I had a follow-up. And Marie, I apologize if I missed this but was the G&A spend for the quarter in line with your internal expectations? Otherwise it looks like the $10 million increase you're targeting for the year is going to be pretty back-end loaded.

Yeah, the G&A for the quarter was a little bit lower and obviously we kind of called out the one time item. Chris O’Cull - KeyBanc Capital Markets: Okay. Okay, thanks. Thanks guys.

All right, thanks.

Thank you. We’ll take our next question from Sarah Senatore with Sanford Bernstein. Your line is live. Sarah Bernstein - Sanford Bernstein: Thank you very much. I have a few follow-ups if I might. The first is, just back to the margin question. I apologize for belaboring it. But I do wonder if you could just share on an ongoing basis what is the comp you need to lever restaurant labor and expenses? And in particular I guess it sounds like part of the issue is we roll off Ziosk and maybe some of the training that things should look a little bit better in the second half of the year. But it just feels like if I look at the model over the last couple of quarters, it's been a long time since restaurant expenses levered and the labor line has sort of diminished in terms of its contribution. So I'm just trying to figure out once all is said and done, first of all what is the right comp to think about getting leverage and then when might we revert back to that more normalized algorithm? And then I will have another follow-up question, please.

Hi Sarah, it's Wyman. I think we just go back to guidance. At 1% to 2%, we’re still seeing we can deliver the margins that we committed to, so in terms of leverage, what’s necessary is deliver that 25 to 50 basis points in margin improvement that we’ve talked about beginning the year, we still think we can do that with 1% to 2% comps. Obviously in the first quarter it was a little bit more challenging, which again -- I know that when you’re looking at this year versus last year, you tend to want to focus in on that labor line and the Restaurant expense line. But where we’re really missed it versus our expectations was in cost of sales. So we have margin opportunities that we’ve already baked in, better than we’ve showed in the first quarter in cost of sales. The labor and the restaurant expense numbers will get better relative to prior year as we kind of roll through the year for a couple of reasons. One, as we mentioned on the labor line, we did make some investments in labor to roll out the new menus. Two, the California minimum wage impact, we didn’t price for all of that. Initially, it was a pretty big hit and we’ve opted to kind of just play that a little softer and see but there are could be opportunities for us to price for more of that later in the year. And we’ve got upside to labor in the back half of the year because the efficiencies that our operators are running now, as they wrap into the back half, we’ll see better numbers because they’re running the restaurants as efficiently as they’ve ever run them and we’re continuing to deliver great guest satisfaction scores. The restaurant expense number, again I think that you just got to remember that there is that whole Ziosk revenue/expense is popping Restaurant expenses by about 20 basis points and we’ll wrap on that in the back half as well. So, the back half gets a lot easier year-over-year for several of those reasons.

And Sarah, this is Marie. Just to kind of reiterate what has already been said is when we gave the guidance initially, we talked about kind of a slight commodity inflation and so again when you look at Q1, we did have that 80 basis points. When we say costs of sales, year-over-year were favorable but in essence, that commodity inflation hit us pretty hard on those non-contracted market based items and so again you’re probably seeing as many other things that we’re seeing as is kind of with the grain and with dairy. We’re just starting to see trends where you’re seeing improvements and so we expect to see some of that improvement. In our guidance, we were looking at about a 1% inflationary cost for food cost and so that’s just going to have higher on the first part of the fiscal year and then more favorable to the backend. Sarah Bernstein - Sanford Bernstein: Thank you, and I understand that for you the variance of as you said a couple of times is with cost of goods. I'm just thinking for those of us trying to model forward, typically you want to see some leverage on the other line items. Because commodities will do what they are going to do but you want to make sure that you have sort of a model where you get leverage. You don't have to reinvest so much in labor or expenses. But that is very helpful, so I appreciate it. And I guess the one other question I had, you talked about deals and the value relative value for Chili's, I guess just when I look at the industry sometimes what we see is that when there is actually a lot of commodity inflation, restaurants look a little bit better value versus food at home. Is that ever something that you think about kind of relative pricing versus a highly inflationary food at home index and whether or not your relative value kind of goes up and down in that context? I'm just trying to think through if commodities do in fact roll over what that might mean about the industry's pricing and that kind of thing. Thanks

Hey Sarah. I’m not sure exactly I’m going to answer the question you were asking but let me take a shot. So we also -- I think that whole graph that everyone is familiar that shows that as at home or grocery prices go up then the relative value for restaurants tends to look better and you actually see some movement towards restaurants. We’re aware of that and we kind of like to see that although it comes usually with that double edge, which is now you’ve got commodity prices usually that are driving the grocery that are going to flow into the restaurants eventually. How we address that from a pricing perspective is we’re kind of committed to a relatively consistent pricing strategy. We believe that our guests aren’t expecting significant price increases outside of this 1% to 2% range and we like to stay in that 1% to 2% range. And so we try to do everything we can to give them a consistent experience with a reasonable pricing and don’t try and adjust aggressively for commodity shifts because many times as we think it is going to be the case this time. The commodities react and move back and again the beauty of our menu is unlike some that are heavy and at let’s say stake where the outlook for the stake for the next two three years could be bad and you have to really address that on a much more strategic basis from pricing standpoint with our varied menu and so much usage in chicken with the ability for chicken to rewrite itself from a pricing perspective. It is so easy and such a short timeframe. We think that’s a smarter strategy because we believe that the commodity market will move itself back to an equilibrium. So that’s kind of how we look at it. Sarah Bernstein - Sanford Bernstein: Great, yeah. That was exactly my question, so thank you.

Thank you.

Thank you. We’ll take our next question from Howard Penny with Hedgeye Management. Your line is live.

Hey Howard. Howard Penny - Hedgeye Management: Hi, how are you.

We’re good. Howard Penny - Hedgeye Management: As I think back to the progress that you've made on fixing the Kitchen of the Future in the stores and everything that you have done to improve the margins, you have -- and this gives us, it's just my opinion obviously, but the one thing that doesn't seem to be as commensurate with the improvements to the look of the stores and the kitchen is the improvement in the booth because if you look at the things that you have done in the last couple fiscal years, you haven't really moved the needle on traffic. And I don't know -- I understand the industry is under the kind of pressure it is and I do appreciate the momentum in traffic. So sequentially these past couple of quarters, but on a two-year basis your traffic did actually tick down not up this past quarter. So it feels like there is still an opportunity and this may be get to the previous question about food costs, but it still feels like there's an opportunity for you to take the food to the next level and that you really haven't gone to that level where you may have thought you were back going when you went into this progress back, or into the improvement back in 2010. So I don't know if that makes sense, or if that is even a valid comment. But that's is kind of my view.

I agree with you to some degree. However, I think we have opportunity. When we talk about the future and where we see the potential and why were optimistic that we can continue to -- we've grown this thing -- the 20% EPS growth over the last few years and we think we can continue to do that for the next few because we do see opportunities to put better products out there. We got a vision for the menu to that I think will impress you and a lot of other consumers by the time we are done with it and we map this thing out 18 months ago and we are on a journey to bring it to fruition and we are excited about the potential we have to continue to show consumers and our guest that the food at Chili’s can be better and more relevant. And it's not that it's not great now, but it can be better. So I would agree with you. I think there is opportunity. That’s how we looked at it. And I would say that if you look I don’t if you’ve had a chance to eat the new burger. I don’t know if you’ve had a chance of eat some of the Fresh Mex, but I think the progress over the last two menu changes six months, which start to indicate that we are on the right path and I again over the next year or so we will continue to push it. Howard Penny - Hedgeye Management: Is it possible for you to introduce a grass-fed burger, for instance, or a product that would be totally different from what your competitors are offering and consistent with some of the other chains that seem to be growing traffic?

We are evaluating those kind of things as well. Howard, I think -- we are looking at alternative ways to bring product to the guest and alternative products and it's not lost on us what consumers are resonating -- what's resonating with consumers in terms of not just flavor profiles, which fortunately for Chili’s especially we are riding the center of the bulls eye for where flavor profiles are going, which is really nice for us, but also with regard to other aspects of dinning that they are looking for and that’s one of them and so we are exploring all of those things. Could it happen? Yes, I think it can. Will it happen? I am not committing to it, but I think it can. Howard Penny - Hedgeye Management: Okay. Thank you so much, Wyman.

Thank you, Howard.

Thank you. We will take our next question from Joseph Buckley with Bank of America. Your line is live.

Hey Joe. Joseph Buckley - Bank of America: Hi, Wyman. Thank you. Had a couple of questions. Marie, the full-year G&A guidance for $10 million increase, is that off the $132 million level, or is there any adjustments there like for the stock option grants in the first quarter a year ago? I just want to make sure I understand what you're thinking on the G&A.

It's up at $132 million. Joseph Buckley - Bank of America: Okay. And then just a couple of questions on the Ziosk. Wonder if you can just update us on what you are experiencing. The expense of the Ziosk is mentioned in this release and curious if the game revenue has subsided a little bit. But I guess more importantly is how you are thinking about the Ziosk as you move into mobile phone ordering and payments and are there any plans to kind of expand what the customer can order on the Ziosk to include entrees?

Yes. So Joe, its Wyman. We just are very excited about Ziosk is working into the organization and what it brings and so with regard to the revenue and the cost side of its, its revenue positive for us and so we more than offsetting the expanse. Again it's playing a little bit of havoc with our margins just because we don’t count the revenue and sales. We count it in other revenue and we put the expense in restaurant expense and so I guess it gets divided by the current sales dollars and we don't get credit for that, but the other revenue line is more than offsetting the expense. So we got our game sales and the economics of the model are working well for us. The upside potential and the reason that we put Ziosk in in the first place was because of what we think it can do to help change the guest experience in the long run and so that’s primarily through better interactivity. We've been working literally for years now on developing a database that will allow us to do loyalty in a different way and with this table top technology it will also allow us a way to interact with consumers that's unique and different from how others will do it. We're actually going to do that with some current cardholders and some partners in the near future and so even how you are going to transact and what you can do at our tabletop relative to what you could do with other competitors with current payment systems will be different. So all that is just now being explored and we're just finishing up our franchise roll out. So we haven’t have every restaurant in the system with it and we won't until here in next month or so. So once we get that all done, which we are close -- it just coming up very quickly. We'll then start to work on the next day, which is this higher level interactivity and then whether or not we can find additional ways to interact with the guest in terms of future ordering or ordering in advance, there's all sorts of things that we are working on. There's other technologies we're also in test with today that could interact with this that provide even other opportunities for us. So we are really touching -- we are using that as kind of a center piece for a lot of different initiatives that drive the guest experience and help us run a more efficient restaurant. Joseph Buckley - Bank of America: Thank you.

Thank you, very much ladies and gentlemen. The last question we will take for today will be coming from Andrew Strelzik with BMO Capital Markets. Your line is live. Andrew Strelzik - BMO Capital Markets: Hi. Good morning everyone.

Good morning. Andrew Strelzik - BMO Capital Markets: Just had kind of a two-part question on innovation. First, could you talk about how much more runway you think there is to innovate around the Fresh Mex platform? And then second, if you could kind of compare the consumer reaction or any anecdotes that you can provide around burgers relative to the Fresh Mex introduction that would also be great. Thank you.

Hi Andrew. We got several additional ideas that we're working on Fresh Mex. So we definitely think that category has got further room for expansion and developments. So we're aggressively pushing those. And in the burger category and the role that has been received very well, the increase in the preference on burgers and the acceptance and the feedback and the guest satisfaction scores although early in and looking very positive. So we're very excited about burgers. It's what the concept was founded on and so it’s a fundamental aspect of Chili’s and we think this iteration puts us really right in this sweet spot, if you will, of what the consumers is looking for with regard to burgers and the fresh pickles that we're making in house and the lettuce that we've now got being grown especially for us, I think just make that burger and the bun that we've now got, just make that burger so much better than what we had and competitive that we're excited about it. Andrew Strelzik - BMO Capital Markets: Great I appreciate it. Thank you.

All right, Andrew.

Thank you very much ladies and gentlemen. I would turn the floor back to your host for any closing comments they would like to make.

Well. We appreciate you joining us. We look forward to the next call and we will see you there. Thank you.

Thank you.

Thank you very much ladies and gentlemen. This concludes today's presentation. You may disconnect your lines and have a wonderful day. Thank you for your participation.