What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-04 compared with 2022-02-02 · 181 added, 176 removed, 316 unchanged (53% of the section changed)

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand our Company, our operations and our current operating environment.

For an understanding of the significant factors that influenced our performance during the thirteen and twenty-six week periods ended December 29, 2021 and December 23, 2020, the MD&A should be read in conjunction with the Consolidated Financial Statements (Unaudited) and related Notes to Consolidated Financial Statements (Unaudited) included in this quarterly report.

For an understanding of the significant factors that influenced our performance during the thirteen and thirty-nine week periods ended March 30, 2022 and March 24, 2021, the MD&A should be read in conjunction with the Consolidated Financial Statements (Unaudited) and related Notes to Consolidated Financial Statements (Unaudited) included in this quarterly report.

All amounts within the MD&A are presented in millions unless otherwise specified.

We are principally engaged in the ownership, operation, development and franchising of the Chili’s ® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy ® (“Maggiano’s”) restaurant brands, as well as virtual brands including It’s Just Wings ® and Maggiano’s Italian Classics™.

At December 29, 2021, we owned, operated or franchised 1,653 restaurants, consisting of 1,182 Company-owned restaurants and 471 franchised restaurants, located in the United States, 28 countries and two United States territories.

At March 30, 2022, we owned, operated or franchised 1,650 restaurants, consisting of 1,187 Company-owned restaurants and 463 franchised restaurants, located in the United States, 28 countries and two United States territories.

Our restaurant brands, Chili’s and Maggiano’s, are both operating segments and reporting units.

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The spread of COVID-19 has prompted changes in consumer behavior and social distancing preferences as well as dining room closures and dining room capacity restrictions mandated or encouraged by federal, state and local governments.

The number of open dining rooms and the dining room capacity restrictions have fluctuated over the course of the pandemic based on state and local mandates, which has resulted in significant impacts to our guest traffic and sales primarily in fiscal 2021.

Chili’s and Maggiano’s ability to continue serving guests during the COVID-19 pandemic is the result of our strategic decision to invest in technology, virtual brands, and off-premise capabilities including online ordering, mobile app ordering, curbside service and third-party delivery.

We have experienced limited material shortages and service disruptions in our supply chain and in the availability of labor to operate our restaurants.

We also experienced an increase in employee turnover in the first two quarters of fiscal 2022.

We recognize there is significant demand for talent and are actively working to safeguard, engage, attract and retain our employees.

It is possible that shortages or disruptions could increase during fiscal 2022 as demand for goods, transportation and labor increases.

Impact on Financial Outlook

The ultimate impact of the COVID-19 pandemic cannot be reasonably estimated due to the uncertainty about the extent and duration of the spread of the virus, the availability, acceptance and efficacy of preventative vaccines, the emergence and impact of new COVID-19 variants and changing government restrictions.

The number of open dining rooms and the dining room capacity restrictions have fluctuated over the course of the pandemic based on state and local mandates, and has resulted in significant adverse impacts to our guest traffic and sales primarily in fiscal 2021.

In fiscal 2022, we have experienced limited product shortages and service disruptions in our supply chain, limited availability of labor to operate our restaurants due to a tight labor market, and an increase in employee turnover.

It is possible that supply chain and labor shortages or disruptions could continue or increase in future periods if demand for goods, transportation and labor remains high.

The future impact of the COVID-19 pandemic cannot be reasonably estimated due to the uncertainty about the extent and duration of the spread of the virus, the availability, acceptance and efficacy of preventative vaccines, the emergence and impact of new COVID-19 variants and changing government restrictions.

Additional impacts to the business may arise that we are not aware of currently.

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Guest Engagement Through Technology - We have invested in our technology and off-premise options as more guests are opting for To-Go and delivery.

Chili’s partnership with DoorDash has been instrumental in growing off-premise business and offering our guests continued service during the COVID-19 pandemic.

We leveraged technology so that DoorDash orders are sent directly into our point of sale system, creating efficiencies and a system that allows us to better serve our guests.

Chili’s partnerships with delivery service providers have been instrumental in growing our off-premise business and offering our guests continued service during the COVID-19 pandemic.

We leveraged technology so that delivery service provider orders are sent directly into our point of sale system, creating efficiencies and a system that allows us to better serve our guests.

We believe that guests will continue to prefer convenience and off-premise options.

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In dining rooms, we use tabletop devices to engage our guests at the table.

These devices allow guests to pay at the table, reordering, digital entertainment, guest feedback and interaction with our My Chili’s Rewards program.

These devices provide functionality for guests to pay at the table, to order or re-order, to engage in digital entertainment, to provide guest feedback and to interact with our My Chili’s Rewards program.

Our My Chili’s Rewards loyalty program offers free chips and salsa or a non-alcoholic beverage to members based on their visit frequency.

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We are committed to offering consistent, quality products at a price point that is compelling to our guests.

Our value platforms allow guests to mix and match select menu items at a discounted price as part of the every-day base menu.

Additionally, we have continued our Margarita of the Month promotion that features a premium-liquor margarita every month at an every-day value price of $5.00.

platforms allow guests to mix and match select menu items at a discounted price as part of the every-day base menu.

Additionally, we have continued our Margarita of the Month promotion that features a premium-liquor margarita every month at an every-day value price.

Most of our value propositions are available for guests to enjoy in our dining rooms or off-premise.

Chili’s off-premise dining options, including our virtual brands It’s Just Wings and Maggiano’s Italian Classics, are also a critical part of our strategy.

In the twenty-six week period ended December 29, 2021, Chili’s off-premise sales, including both to-go and delivery, were approximately 35% of Company sales, with approximately 53% coming from To-Go and 47% from delivery.

Chili’s off-premise dining options, including our virtual brands, are also a critical part of our strategy.

In the thirty-nine week period ended March 30, 2022, Chili’s off-premise sales, including both To-go and delivery, were approximately 35% of Company sales, with approximately 52% coming from To-Go and 48% from delivery.

In the thirty-nine week period ended March 24, 2021, Chili’s off-premise sales, including both To-go and delivery, were approximately 45% of Company sales, with approximately 59% coming from To-Go and 41% from delivery.

We regularly evaluate our processes and menu at Chili’s to identify opportunities where we can improve our service quality and food.

We continue to focus on our core equities and improving guest satisfaction with our food and service by improving execution of our operations standards.

We continually focus on guest satisfaction by improving our operational execution and standards.

Maggiano’s - At Maggiano’s, we believe our focus on operating fundamentals and technology provide the foundation for future efficiencies and growth.

For example, Maggiano’s delivery partnership with DoorDash makes third party delivery more sustainable and efficient for the brand to operate.

In addition to the DoorDash platform, our guests have the ability to order delivery directly through the Maggiano’s website.

During the pandemic, Maggiano’s has leveraged off-premise dining options, including It’s Just Wings, to sustain revenues.

For example, Maggiano’s partnerships with delivery service providers make third party delivery more sustainable and efficient for the brand to operate.

In addition, our guests have the ability to order delivery directly through the Maggiano’s website.

During the pandemic, Maggiano’s has leveraged off-premise dining options to sustain revenues.

Maggiano’s historically hosts a significant portion of its banquets in the holiday season during the second and third quarters of the fiscal year.

Virtual Brands - We are investing in virtual brands, restaurant-like menu offerings that are only available for purchase digitally, to drive restaurant traffic and sales growth.

Virtual Brands - We are investing in virtual brands, restaurant-like menu offerings that are only available for purchase digitally, to drive restaurant traffic and sales growth at both Chili’s and Maggiano’s.

We expect that our virtual brands will enable us to capitalize on the growth in off-premise dining and to leverage excess kitchen capacity in our existing restaurant infrastructure, while adding minimal complexity in our restaurants’ kitchens.

It’s Just Wings, launched on June 23, 2020, is an offering consisting of chicken wings available in a variety of different sauces and rubs, curly fries, ranch dressing, fried Oreos and hand pies for a value price.

It’s Just Wings, launched on June 23, 2020, is an offering consisting of chicken wings available in a variety of different sauces and rubs, curly fries, ranch dressing and hand pies for a value price.

Maggiano’s Italian Classics offers a select group of items from the full menu of Maggiano’s Little Italy including several appetizers, salads, pastas, entrées, mac & cheese and hand pies.

They are available for purchase through DoorDash, Google Food Ordering and their respective websites - itsjustwings.com and maggianosclassics.com.

These brands are available for purchase through our third party service providers including DoorDash, UberEats, Google Food Ordering and the brand-specific websites itsjustwings.com and maggianosclassics.com.

The operating results for the virtual brands are included in the results of our Chili’s and Maggiano’s brands, based on the restaurants that prepared and processed the food orders.

We plan to continue to test and strategically launch additional virtual brands in the future to further drive our growth.

Franchise Partnerships - Our franchisees continue to grow our brands around the world, opening nine restaurants and entering into two new development agreement for the twenty-six week period ended December 29, 2021.

We plan to strategically pursue expansion of Chili’s internationally through development agreements with new and

existing franchise partners.

Franchise Partnerships - Our franchisees continue to grow our brands around the world, opening ten restaurants and entering into two new development agreement for the thirty-nine week period ended March 30, 2022.

We plan to strategically pursue expansion of Chili’s internationally through development agreements with new and existing franchise partners.

We are also supporting our franchise partners with opportunities to expand sales through our virtual brand offerings.

Company Development - The following table details the number of restaurant openings during the thirteen and twenty-six week periods ended December 29, 2021 and December 23, 2020, respectively, total full year projected openings in fiscal 2022, and the total restaurants open at each period end:

Company Development - The following table details the number of restaurant openings during the thirteen and thirty-nine week periods ended March 30, 2022 and March 24, 2021, respectively, total full year projected openings in fiscal 2022 and the total restaurants open at each period end:

Openings During the Openings During the Full Year Projected Openings

Thirteen Week Periods Ended Twenty-Six Week Periods Ended Total Open Restaurants at

December 29, 2021 December 23, 2020 December 29, 2021 December 23, 2020 Fiscal 2022 December 29, 2021 December 23, 2020

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended Total Open Restaurants at

March 30, 2022 March 24, 2021 March 30, 2022 March 24, 2021 Fiscal 2022 March 30, 2022 March 24, 2021

Company-owned restaurants

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Total 2 6 13 16 19-21 1,650 1,657

During the twenty-six week period ended December 29, 2021, we acquired 60 Chili’s restaurants previously owned by two former franchisees.

The acquisition of these restaurants is not reflected in Openings during the twenty-six week period ended December 29, 2021 or Full Year Projected Openings total as they are existing restaurant locations transitioning ownership.

These acquired restaurants are included in Total Open Restaurants at December 29, 2021 within the total for Company-owned restaurants Chili’s domestic.

At December 29, 2021, we own property for 53 of the 1,182 Company-owned restaurants.

During the thirty-nine week period ended March 30, 2022, we acquired 66 Chili’s restaurants previously owned by three former franchisees.

The acquisition of these restaurants is not reflected in Openings during the thirty-nine week period ended March 30, 2022 or Full Year Projected Openings total as they are existing restaurant locations transitioning ownership.

These acquired restaurants are included in Total Open Restaurants at March 30, 2022 within the total for Company-owned restaurants Chili’s domestic.

At March 30, 2022, we own property for 52 of the 1,187 Company-owned restaurants.

The net book values associated with these restaurants included land of $43.4 million and buildings of $15.7 million.

Thirteen and Twenty-Six Week Periods Ended December 29, 2021 compared to December 23, 2020

Thirteen and Thirty-Nine Week Periods Ended March 30, 2022 compared to March 24, 2021

Revenues are presented in two separate captions in the Consolidated Statements of Comprehensive Income (Unaudited) to provide more clarity around Company-owned restaurant revenues and operating expenses trends:

• Company sales include revenues generated by the operation of Company-owned restaurants including gift card redemptions and revenues from our It’s Just Wings and Maggiano’s Italian Classics virtual brands.

• Franchise and other revenues include royalties, gift card breakage, Maggiano’s banquet service charge income, delivery income, digital entertainment revenue, franchise advertising fees, franchise and development fees, gift card equalization and gift card discount costs from third-party gift card sales.

• Company sales include revenues generated by the operation of Company-owned restaurants including gift card redemptions and revenues from our virtual brands.

• Franchise and other revenues include royalties, gift card breakage, delivery income, Maggiano’s banquet service charge income, digital entertainment revenue, franchise advertising fees, franchise and development fees, gift card equalization and gift card discount costs from third-party gift card sales.

The following is a summary of the change in Total revenues:

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Chili’s Maggiano’s Total Revenues

Thirteen Week Period Ended December 23, 2020 $ 696.4 $ 64.3 $ 760.7

Thirteen Week Period Ended March 24, 2021 $ 763.0 $ 65.4 $ 828.4

Comparable restaurant sales 73.0 32.6 105.6

Restaurant openings 3.2 — 3.2

Restaurant acquisitions (1)

Restaurant openings 2.8 — 2.8

Restaurant closures (2)

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Franchise and other revenues 2.3 2.8 5.1

Thirteen Week Period Ended December 29, 2021 $ 808.2 $ 117.6 $ 925.8

Thirteen Week Period Ended March 30, 2022 $ 879.6 $ 100.8 $ 980.4

Total Revenues

Chili’s Maggiano’s Total Revenues

Twenty-Six Week Period Ended December 23, 2020 $ 1,382.9 $ 117.9 $ 1,500.8

Thirty-Nine Week Period Ended March 24, 2021 $ 2,145.9 $ 183.3 $ 2,329.2

Comparable restaurant sales 239.2 115.1 354.3

Restaurant openings 8.6 — 8.6

Restaurant acquisitions (1)

Restaurant openings 11.4 — 11.4

Restaurant closures (2)

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Franchise and other revenues 8.0 8.8 16.8

Twenty-Six Week Period Ended December 29, 2021 $ 1,595.8 $ 206.4 $ 1,802.2

(1) We acquired 23 Chili’s restaurants on September 2, 2021 and 37 Chili’s restaurants on October 31, 2021 from two franchisees.

The revenues generated by these restaurants since the date of the acquisitions are included in Company sales for the thirteen and twenty-six week periods ended December 29, 2021.

(2) Restaurant closures include the change in Company sales resulting from temporary closures longer than 14 consecutive days that occurred in the previous 18 months, partially offset by permanently closed locations.

(3) Our franchisees generated sales of approximately $204.0 million and $419.3 million for the thirteen and twenty-six week periods ended December 29, 2021 compared to $187.7 million and $353.2 million in sales for the thirteen and twenty-six week periods ended December 23, 2020.

The table below presents the percentage change in comparable restaurant sales and restaurant capacity for the thirteen and twenty-six week periods ended December 29, 2021 compared to December 23, 2020:

Percentage Change in the Thirteen Week Period Ended December 29, 2021 versus December 23, 2020

Thirty-Nine Week Period Ended March 30, 2022 $ 2,475.4 $ 307.2 $ 2,782.6

(1) We acquired 23 Chili’s restaurants on September 2, 2021, 37 Chili’s restaurants on October 31, 2021 and six Chili’s restaurants on February 1, 2022 from three franchisees.

The revenues generated by these restaurants since the date of the acquisitions are included in Company sales for the thirteen and thirty-nine week periods ended March 30, 2022.

(2) Restaurant closures primarily represents the increase in Company sales in fiscal 2022 related to restaurants temporarily closed in fiscal 2021 due to the pandemic.

(3) Our franchisees generated sales of approximately $192.3 million and $609.7 million for the thirteen and thirty-nine week periods ended March 30, 2022 compared to $190.8 million and $543.7 million in sales for the thirteen and thirty-nine week periods ended March 24, 2021.

The table below presents the percentage change in comparable restaurant sales and restaurant capacity for the thirteen and thirty-nine week periods ended March 30, 2022 compared to March 24, 2021:

Percentage Change in the Thirteen Week Period Ended March 30, 2022 versus March 24, 2021

Comparable Restaurant Sales (1)

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Maggiano’s 50.5 % 4.8 % 16.8 % 28.9 % 0.0 %

Chili’s Franchise (4)

Franchise (4)

International 28.4 %

Chili’s domestic (5)

Maggiano’s domestic (5)

System-wide (6)

Percentage Change in the Twenty-Six Week Period Ended December 29, 2021 versus December 23, 2020

Percentage Change in the Thirty-Nine Week Period Ended March 30, 2022 versus March 24, 2021

Comparable Restaurant Sales (1)

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Maggiano’s 63.7 % 1.8 % 21.5 % 40.4 % 0.0 %

Chili’s Franchise (4)

Franchise (4)

International 29.5 %

Chili’s domestic (5)

Maggiano’s domestic (5)

System-wide (6)

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(2) Mix-Shift is calculated as the year-over-year percentage change in Company sales resulting from the change in menu items ordered by guests.

(3) Restaurant Capacity is measured by sales weeks and is calculated based on comparable periods year-over-year, including the effect of the acquisition of 23 Chili’s restaurants in the first quarter of fiscal 2022 and 37 Chili’s restaurants in the second quarter of fiscal 2022.

(4) Chili’s franchise sales generated by franchisees are not included in Total revenues in the Consolidated Statements of Comprehensive Income (Unaudited);

(3) Restaurant Capacity is measured by sales weeks and is calculated based on comparable periods year-over-year, including the effect of the acquisition of 23 Chili’s restaurants in the first quarter of fiscal 2022, 37 Chili’s restaurants in the second quarter of fiscal 2022 and six Chili’s restaurants in the third quarter of fiscal 2022.

(4) Chili’s and Maggiano’s franchise sales generated by franchisees are not included in Total revenues in the Consolidated Statements of Comprehensive Income (Unaudited);

however, we generate royalty revenues and advertising fees based on franchisee revenues, where applicable.

We believe presenting Chili’s franchise comparable restaurant sales provides investors relevant information regarding total brand performance.

(5) Chili’s domestic Comparable Restaurant Sales percentages are derived from sales generated by Company-owned and franchise-operated Chili’s restaurants in the United States.

(6) System-wide Comparable Restaurant Sales are derived from sales generated by Company-owned Chili’s and Maggiano’s restaurants and sales generated at franchise-operated Chili’s restaurants.

We believe presenting Franchise Comparable Restaurant Sales provides investors relevant information regarding total brand performance.

(5) Chili’s and Maggiano’s domestic Comparable Restaurant Sales percentages are derived from sales generated by Company-owned and franchise-operated Chili’s and Maggiano’s restaurants in the United States.

Beginning in the third quarter of fiscal 2022, the Maggiano’s franchise restaurant has been in operation for more than 18 months and is therefore included in the calculation of Comparable Restaurant Sales.

(6) System-wide Comparable Restaurant Sales are derived from sales generated by Chili’s and Maggiano’s Company-owned and franchise-operated restaurants.

Costs and Expenses

Thirteen Week Period Ended December 29, 2021 compared to December 23, 2020

Thirteen Week Period Ended March 30, 2022 compared to March 24, 2021

The following is a summary of the changes in Costs and Expenses:

Thirteen Week Periods Ended Favorable (Unfavorable) Variance

December 29, 2021 December 23, 2020

March 30, 2022 March 24, 2021

Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales

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As a percentage of Company sales:

• Food and beverage costs increased 1.2%, including 1.8% of higher meat, poultry and other commodity costs due to supply chain constraints and inflationary pressures, and 0.1% of unfavorable menu item mix, partially offset by 0.7% of increased menu pricing.

• Restaurant labor increased 0.6%, including 1.7% of higher hourly labor expenses due to increased wage rates, training and overtime, 0.8% of higher manager expenses due to merit increases and manager training due to greater than normal manager turnover, partially offset by 1.8% of sales leverage and 0.1% of lower other labor expenses.

• Restaurant expenses decreased 2.1%, including 2.9% of sales leverage and 0.6% of lower expenses related to delivery fees driven by the decline in off-premise sales, partially offset by 0.4% of higher utilities, 0.3% of higher workers’ compensation and general liability expenses resulting from unfavorable claims experience, 0.2% of higher supervision costs and 0.5% of higher other restaurant expenses.

• Food and beverage costs increased 1.8%, including 2.9% of higher meat, poultry and other commodity costs due to supply chain constraints and inflationary pressures, partially offset by 1.1% of increased menu pricing.

• Restaurant labor increased 1.0%, including 2.0% of higher hourly labor expenses due to increased wage rates, training and overtime, 0.8% of higher manager expenses for merit increases and manager training due to greater than normal manager turnover, partially offset by 1.3% of sales leverage and 0.5% of lower other labor expenses.

• Restaurant expenses decreased 1.1%, including 2.2% of sales leverage and 0.5% of lower delivery fee expenses due to changes in sales channel mix, partially offset by 0.4% of higher utilities, 0.3% of higher supervision costs, 0.3% of higher repairs and maintenance expenses, 0.2% of higher workers’ compensation and general liability expenses and 0.4% of higher other restaurant expenses.

Depreciation and amortization increased $4.8 million as follows:

Depreciation and Amortization

Thirteen Week Period Ended December 23, 2020 $ 37.2

Thirteen Week Period Ended March 24, 2021 $ 37.4

Additions for new and existing restaurant assets 5.7

Finance leases 1.8

Acquisition of Chili’s restaurants (1)

Finance leases 1.5

Corporate assets 0.6

Retirements and fully depreciated restaurant assets (5.0)

Thirteen Week Period Ended December 29, 2021 $ 41.6

(1) Represents the incremental depreciation and amortization of the assets and finance leases of the 60 Chili’s restaurants acquired in the first two quarters of fiscal 2022.

Thirteen Week Period Ended March 30, 2022 $ 42.2

(1) Represents the incremental depreciation and amortization of the assets and finance leases of the 66 Chili’s restaurants acquired in the first three quarters of fiscal 2022.

General and administrative expen ses increased $5.5 million as follows:

General and Administrative

Thirteen Week Period Ended December 23, 2020 $ 30.0

Performance-based compensation (1)

Thirteen Week Period Ended March 24, 2021 $ 33.7

Recruiting 1.1

Defined contribution plan employer expenses 1.0

Stock-based compensation 2.2

Payroll-related expenses 1.0

Professional fees 0.6

Stock-based compensation 0.5

Travel and entertainment expenses 0.5

Thirteen Week Period Ended December 29, 2021 $ 33.1

(1) Performance-based compensation decreased due to adjustment in the expected bonus payout for fiscal 2022 resulting from lower business performance metrics compared to the targets.

(2) Defined contribution plan employer expenses increased due to the temporary suspension of employer matching contributions related to the Company’s 401(k) plan from May 2020 through December 2020.

Employer matching contributions were reinstated beginning January 1, 2021.

Performance-based compensation 0.3

Thirteen Week Period Ended March 30, 2022 $ 39.2

Other (gains) and charges consisted of the following (for further details, refer to Note 4 - Other Gains and Charges):

Thirteen Week Periods Ended

2021 December 23,

Lease contingencies $ 2.9 $ —

Remodel-related costs 1.6 0.7

Acquisition-related costs, net 0.9 —

Enterprise system implementation costs 0.3 —

2022 March 24,

Restaurant closure charges $ 1.2 $ 0.3

Remodel-related costs 0.9 0.9

COVID-19 related charges 0.7 0.9

Restaurant impairment charges — 2.5

Enterprise system implementation costs 0.5 —

Acquisition-related costs, net 0.6 —

Loss from natural disasters, net of (insurance recoveries) — 1.8

Other 2.2 0.4

Interest expenses decreased $3.0 million due to lower interest rates and average borrowing balances on our revolving credit facility in fiscal 2022.

Twenty-Six Week Period Ended December 29, 2021 compared to December 23, 2020

Thirty-Nine Week Period Ended March 30, 2022 compared to March 24, 2021

The following is a summary of the changes in Costs and Expenses:

Twenty-Six Week Periods Ended Favorable (Unfavorable) Variance

December 29, 2021 December 23, 2020

Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance

March 30, 2022 March 24, 2021

Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales

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As a percentage of Company sales:

• Food and beverage costs increased 1.0%, including 1.4% of higher poultry, meat and other commodity costs due to supply chain constraints and inflationary pressures and 0.1% of unfavorable menu item mix, partially offset by 0.5% of favorable menu pricing.

• Restaurant labor increased 1.0%, including 2.0% of higher hourly restaurant labor costs primarily including wage rates, training and overtime and 0.9% of higher manager salaries and training resulting from merit increases and greater than normal manager turnover, partially offset by 1.9% of sales leverage.

• Restaurant expenses decreased 1.5%, driven by 3.1% of sales leverage and 0.7% of lower delivery fees, partially offset by 0.8% of higher repairs and maintenance expenses, 0.4% of higher utilities expenses, 0.4% of higher advertising expenses, 0.2% of higher supervision costs and 0.5% of higher other restaurant expenses.

• Food and beverage costs increased 1.3%, including 2.0% of higher poultry, meat and other commodity costs due to supply chain constraints and inflationary pressures, partially offset by 0.7% of favorable menu pricing.

• Restaurant labor increased 1.0%, including 1.9% of higher hourly restaurant labor costs primarily including wage rates, training and overtime and 0.8% of higher manager salaries and training resulting from merit increases and greater than normal manager turnover, partially offset by 1.6% of sales leverage and 0.1% of lower other restaurant labor expenses.

• Restaurant expenses decreased 1.4%, driven by 2.7% of sales leverage and 0.6% of lower delivery fee expenses due to changes in sales channel mix, partially offset by 0.7% of higher repairs and maintenance expenses, 0.4% of higher utilities expenses, 0.2% of higher supervision costs, 0.2% of higher workers’ compensation and general liability expenses, 0.2% of higher advertising expenses and 0.2% of higher other restaurant expenses.

Depreciation and amortization increased $11.1 million as follows:

Depreciation and Amortization

Twenty-Six Week Period Ended December 23, 2020 $ 74.6

Thirty-Nine Week Period Ended March 24, 2021 $ 112.0

Additions for existing and new restaurant assets 14.6

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Retirements and fully depreciated restaurant assets (13.6)

Twenty-Six Week Period Ended December 29, 2021 $ 80.9

(1) Represents the incremental depreciation and amortization of the assets and finance leases of the 60 Chili’s restaurants acquired in the first two quarters of fiscal 2022.

Thirty-Nine Week Period Ended March 30, 2022 $ 123.1

(1) Represents the incremental depreciation and amortization of the assets and finance leases of the 66 Chili’s restaurants acquired in the first three quarters of fiscal 2022.

General and administrative expe nses increased $14.6 million as follows:

General and Administrative

Twenty-Six Week Period Ended December 23, 2020 $ 60.5

Thirty-Nine Week Period Ended March 24, 2021 $ 94.2

Defined contribution plan employer expenses (1)

Payroll-related expenses 3.0

Stock-based compensation 2.9

Professional fees 2.9

Payroll-related expenses 2.0

Recruiting 2.1

Travel and entertainment expenses 1.3

Performance-based compensation (5.9)

Twenty-Six Week Period Ended December 29, 2021 $ 69.6

(1) Defined contribution plan employer expenses increased due to the temporary suspension of employer matching contributions related to the Company’s 401(k) plan from May 2020 through December 2020.

Thirty-Nine Week Period Ended March 30, 2022 $ 108.8

(1) Defined contribution plan employer expenses increased due to the reinstatement of employer matching contributions related to the Company’s 401(k) plan that were temporarily suspended from May 2020 through December 2020.

Employer matching contributions were reinstated beginning January 1, 2021.

(2) Performance-based compensation decreased due to adjustment in the expected bonus payout for fiscal 2022 resulting from lower business performance metrics compared to the targets.

Other (gains) and charges consisted of the following (for further details, refer to Note 4 - Other Gains and Charges):

Twenty-Six Week Periods Ended

2021 December 23,

Thirty-Nine Week Periods Ended

2022 March 24,

Remodel-related costs $ 4.0 $ 1.8

Lease contingencies 2.9 —

Restaurant closure charges 1.7 2.2

Acquisition-related costs, net 1.5 —

Enterprise system implementation costs 1.4 —

Restaurant closure charges 0.5 1.9

Loss from natural disasters, net of (insurance recoveries) 0.8 2.0

COVID-19 related charges 0.2 3.1

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Other 4.5 1.9

$ 17.0 $ 13.5

Interest expenses decreased $8.3 million due to lower interest rates and average borrowing balances on our revolving credit facility in fiscal 2022.

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2021 December 23,

2020 Favorable / (Unfavorable) December 29,

2021 December 23,

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2022 March 24,

2021 Favorable / (Unfavorable) March 30,

2022 March 24,

2021 Favorable / (Unfavorable) Variance

Effective income tax rate 5.4 % 11.7 % 6.3 % 4.7 % 0.4 % (4.3) %

The federal statutory tax rate was 21.0% for the thirteen and twenty-six week periods ended December 29, 2021 and December 23, 2020.

The effective income tax rate in the thirteen and twenty-six week periods ended December 29, 2021 increased compared to the thirteen and twenty-six week periods ended December 23, 2020 primarily due to a reduced

favorable impact from the FICA tip tax credit and the excess tax benefits associated with stock-based compensation in the first quarter of fiscal 2022.

The federal statutory tax rate was 21.0% for the thirteen and thirty-nine week periods ended March 30, 2022 and March 24, 2021.

The effective income tax rate in the thirteen week period ended March 30, 2022 decreased compared to the thirteen week period ended March 24, 2021 primarily due to the more favorable impact from the FICA tip tax credit,

partially offset by the reduced favorable impact from the excess tax benefits associated with stock-based compensation.

The effective income tax rate in the thirty-nine week period ended March 30, 2022 increased compared to the thirty-nine week period ended March 24, 2021 primarily due to the reduced favorable impact from the FICA tip tax credit and the excess tax benefits associated with stock-based compensation.

Segment Results

Chili’s Segment

Thirteen Week Period Ended December 29, 2021 compared to December 23, 2020

Thirteen Week Period Ended March 30, 2022 compared to March 24, 2021

Thirteen Week Periods Ended Favorable (Unfavorable) Variance Variance as percentage

2021 December 23,

2022 March 24,

Company sales $ 863.3 $ 749.0 $ 114.3 15.3 %

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Total revenues $ 879.6 $ 763.0 $ 116.6 15.3 %

Chili’s Total revenues increased by 16.1% primarily due to higher dining room guest sales and traffic, the acquisition of 60 Chili’s restaurants from two former franchisees and six new restaurant openings, partially offset by decreased off-premise sales.

Chili’s Total revenues increased by 15.3% primarily due to dining room sales growth from higher traffic, price increases, favorable mix, the acquisition of 66 Chili’s restaurants from three former franchisees and five new restaurant openings, partially offset by decreased To-Go sales.

Refer to “Revenues” section above for further details about Chili’s revenues changes.

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Thirteen Week Periods Ended Favorable (Unfavorable) Variance

December 29, 2021 December 23, 2020

March 30, 2022 March 24, 2021

Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales

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As a percentage of Company sales

• Chili’s Food and beverage costs increased 1.5%, including 1.9% of higher meat, poultry and other commodity costs due to supply chain constraints and inflationary pressures and 0.3% of unfavorable menu item mix, partially offset by 0.7% of increased menu pricing.

• Chili’s Restaurant labor increased 0.8%, including 1.5% of restaurant labor costs including wage rates, training and overtime, 1.2% of higher manager salaries and training due to merit increases and greater than normal manager turnover, partially offset by 1.3% of sales leverage, 0.4% of lower manager bonus expenses due to lower operational performance metrics and 0.2% of lower other labor expenses.

• Chili’s Restaurant expenses decreased 1.7%, including 2.7% of sales leverage and 0.6% of lower delivery fee expenses, partially offset by 0.6% of higher utilities expenses, 0.3% of higher workers’ compensation and general liability expenses resulting from unfavorable claims experience, 0.2% of higher rent expenses and 0.5% of higher other restaurant expenses.

• Chili’s Food and beverage costs increased 1.8%, including 3.0% of higher meat, poultry and other commodity costs due to supply chain constraints and inflationary pressures, partially offset by 1.2% of increased menu pricing.

• Chili’s Restaurant labor increased 1.0%, including 1.8% of restaurant labor costs including wage rates, training and overtime, 0.7% of higher manager salaries and training due to merit increases and greater than normal manager turnover and 0.1% of higher other labor expenses, partially offset by 1.1% of sales leverage and 0.5% of lower manager bonus expenses.

• Chili’s Restaurant expenses decreased 1.0%, including 2.6% of sales leverage and 0.4% of lower delivery fee expenses due to changes in sales channel mix, partially offset by 0.7% of higher utilities expenses, 0.5% of higher rent expenses, 0.5% of higher repairs and maintenance expenses and 0.3% of higher other restaurant expenses.

Chili’s Depreciation and amortization increased $4.9 million as follows:

Depreciation and Amortization

Thirteen Week Period Ended December 23, 2020 $ 30.8

Thirteen Week Period Ended March 24, 2021 $ 31.0

Additions for new and existing restaurant assets 5.3

Finance leases 1.7

Acquisition of Chili’s restaurants (1)

Finance leases 1.4

Retirements and fully depreciated restaurant assets (3.8)

Thirteen Week Period Ended December 29, 2021 $ 35.4

(1) Represents the incremental depreciation and amortization of the assets and finance leases of the 60 Chili’s restaurants acquired in the first two quarters of fiscal 2022.

Thirteen Week Period Ended March 30, 2022 $ 35.9

(1) Represents the incremental depreciation and amortization of the assets and finance leases of the 66 Chili’s restaurants acquired in the first three quarters of fiscal 2022.

Chili’s General and administrative increased $2.5 million as follows:

General and Administrative

Thirteen Week Period Ended December 23, 2020 $ 5.4

Thirteen Week Period Ended March 24, 2021 $ 7.0

Recruiting 1.0

Defined contribution plan employer expenses 0.6

Stock-based compensation 0.2

Payroll-related expenses 0.4

Performance-based compensation 0.1

Thirteen Week Period Ended December 29, 2021 $ 7.2

Employer matching contributions were reinstated beginning January 1, 2021.

(2) Performance-based compensation decreased due to adjustment in the expected bonus payout for fiscal 2022 resulting from lower business performance metrics compared to the targets.

Thirteen Week Period Ended March 30, 2022 $ 9.5

Chili’s Other (gains) and charges consisted of the following (for further details, refer to Note 4 - Other Gains and Charges):

Thirteen Week Periods Ended

2021 December 23,

2022 March 24,

Restaurant closure charges $ 1.2 $ 0.3

Remodel-related costs 0.9 0.9

Acquisition of franchise restaurants-related costs 0.6 —

Restaurant closure charges 0.3 0.3

Loss from natural disasters, net of (insurance recoveries) 0.2 0.2

COVID-19 related charges 0.5 0.8

Restaurant impairment charges — 2.1

Twenty-Six Week Period Ended December 29, 2021 compared to December 23, 2020

Twenty-Six Week Periods Ended Favorable (Unfavorable) Variance Variance as percentage

2021 December 23,

Loss from natural disasters, net of (insurance recoveries) — 1.1

Thirty-Nine Week Period Ended March 30, 2022 compared to March 24, 2021

Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance Variance as percentage

2022 March 24,

Company sales $ 2,428.5 $ 2,107.0 $ 321.5 15.3 %

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Total revenues $ 2,475.4 $ 2,145.9 $ 329.5 15.4 %

Chili’s Total revenues increased 15.4% primarily due to higher dining room guest sales and traffic, the acquisition of 60 Chili’s restaurants from two former franchisees and six new restaurant openings, partially offset by decreased off-premise sales.

Chili’s Total revenues increased 15.4% primarily due to dining room sales growth from higher traffic, favorable mix, price increases, the acquisition of 66 Chili’s restaurants from three former franchisees and five new restaurant openings, partially offset by decreased To-Go sales.

Refer to “Revenues” section above for further details about Chili’s revenues changes.

The following is a summary of the changes in Chili’s operating costs and expenses:

Twenty-Six Week Periods Ended Favorable (Unfavorable) Variance

December 29, 2021 December 23, 2020

Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance

March 30, 2022 March 24, 2021

Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales

6 unchanged sentences

As a percentage of Company sales:

• Chili’s Food and beverage costs increased 1.2%, including 1.5% of higher poultry, meat and other commodity costs resulting from supply chain constraints and inflationary pressures and 0.2% of unfavorable menu item mix, partially offset by 0.5% of increased menu pricing.

• Chili’s Restaurant labor increased 1.2%, including 2.0% of higher restaurant hourly labor costs primarily including wage rates, training and overtime and 0.8% of higher manager salaries and training due to merit increases and greater than normal manager turnover, partially offset by 1.4% of sales leverage and 0.2% of lower manager bonus expenses due to lower operational performance metrics.

• Chili’s Restaurant expenses decreased 1.1%, including 2.4% of sales leverage and 0.6% of lower delivery fee expenses, partially offset by 0.8% of higher repairs and maintenance expenses, 0.4% of higher utilities expenses, 0.3% of higher workers’ compensation and general liability expenses resulting from unfavorable claims experience and 0.4% of higher other restaurant expenses.

• Chili’s Food and beverage costs increased 1.5%, including 2.1% of higher poultry, meat and other commodity costs resulting from supply chain constraints and inflationary pressures, partially offset by 0.6% of increased menu pricing.

• Chili’s Restaurant labor increased 1.1%, including 2.0% of higher restaurant hourly labor costs primarily including wage rates, training and overtime and 0.7% of higher manager salaries and training due to merit increases and greater than normal manager turnover, partially offset by 1.2% of sales leverage and 0.4% of lower manager bonus expenses.

• Chili’s Restaurant expenses decreased 1.1%, including 2.1% of sales leverage and 0.6% of lower delivery fee expenses due to changes in sales channel mix, partially offset by 0.5% of higher repairs and maintenance expenses, 0.4% of higher utilities expenses, 0.4% of higher rent expenses and 0.3% of higher other restaurant expenses.

Chili’s Depreciation and amortization increased $11.9 million as follows:

Depreciation and Amortization

Twenty-Six Week Period Ended December 23, 2020 $ 61.4

Thirty-Nine Week Period Ended March 24, 2021 $ 92.4

Additions for existing and new restaurant assets 13.9

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Retirements and fully depreciated restaurant assets (10.3)

Twenty-Six Week Period Ended December 29, 2021 $ 68.4

(1) Represents the incremental depreciation and amortization of the assets and finance leases of the 60 Chili’s restaurants acquired in the first two quarters of fiscal 2022.

Thirty-Nine Week Period Ended March 30, 2022 $ 104.3

(1) Represents the incremental depreciation and amortization of the assets and finance leases of the 66 Chili’s restaurants acquired in the first three quarters of fiscal 2022.

Chili’s General and administrative increased $6.9 million as follows:

General and Administrative

Twenty-Six Week Period Ended December 23, 2020 $ 10.8

Thirty-Nine Week Period Ended March 24, 2021 $ 17.8

Defined contribution plan employer expenses (1)

Stock-based compensation 0.5

Recruiting 1.5

Travel and entertainment expenses 0.6

Professional fees 0.2

Payroll-related expenses 0.5

Stock-based compensation 0.5

Performance-based compensation (1.6)

Twenty-Six Week Period Ended December 29, 2021 $ 15.2

Thirty-Nine Week Period Ended March 30, 2022 $ 24.7

(1) Defined contribution plan employer expenses increased due to the reinstatement of employer matching contributions related to the Company’s 401(k) plan from May 2020 through December 2020.

Employer matching contributions were reinstated beginning January 1, 2021.

(2) Performance-based compensation decreased due to adjustment in the expected bonus payout for fiscal 2022 resulting from lower business performance metrics compared to the targets.

Chili’s Other (gains) and charges consisted of the following (for further details, refer to Note 4 - Other Gains and Charges):

Thirty-Nine Week Periods Ended

2022 March 24,

Remodel-related costs $ 3.9 $ 1.8

Restaurant closure charges 1.7 2.1

Acquisition of franchise restaurants-related costs 1.5 —

Loss from natural disasters, net of (insurance recoveries) 0.8 1.3

Restaurant impairment charges — 2.1

COVID-19 related charges — 2.9

Other 2.3 0.9

$ 10.2 $ 11.1

Maggiano’s Segment

Thirteen Week Period Ended December 29, 2021 compared to December 23, 2020

Thirteen Week Period Ended March 30, 2022 compared to March 24, 2021

Thirteen Week Periods Ended Favorable (Unfavorable) Variance Variance as a percentage

2021 December 23,

2022 March 24,

Company sales $ 97.3 $ 64.7 $ 32.6 50.4 %

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Thirteen Week Periods Ended Favorable (Unfavorable) Variance

December 29, 2021 December 23, 2020

March 30, 2022 March 24, 2021

Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales

6 unchanged sentences

As a percentage of Company sales:

• Maggiano’s Food and beverage costs increased 0.8%, including 1.1% of higher seafood, meat and produce commodity costs resulting from supply chain constraints and inflationary pressures, partially offset by 0.2% of favorable menu item mix and 0.1% of increased menu pricing.

• Maggiano’s Restaurant labor decreased 1.9%, including 6.9% of sales leverage and 0.7% of lower other labor expense, partially offset by 2.3% of higher restaurant hourly labor costs primarily including wage rates, training and overtime, 1.9% of higher manager bonus expenses and 1.5% of higher manager salaries and training.

• Maggiano’s Restaurant expenses decreased 7.0%, driven by 12.9% of sales leverage, partially offset by higher expenses including 1.6% of supervision expenses, 1.3% of repairs and maintenance expenses, 1.2% of advertising expenses, 0.8% of utilities, 0.5% of delivery fees and supplies and 0.5% of other restaurant expenses.

Twenty-Six Week Period Ended December 29, 2021 compared to December 23, 2020

Twenty-Six Week Periods Ended Favorable (Unfavorable) Variance Variance as a percentage

2021 December 23,

• Maggiano’s Food and beverage costs increased 1.9%, including 2.7% of higher seafood, dairy and other commodity costs resulting from supply chain constraints and inflationary pressures, partially offset by 0.7% of increased menu pricing and 0.1% of favorable menu item mix.

• Maggiano’s Restaurant labor increased 0.8%, including 4.2% of higher restaurant hourly labor costs primarily including wage rates, training and overtime, 1.5% of higher manager salaries and training and 0.5% of higher manager bonus expenses, partially offset by 5.0% of sales leverage and 0.4% of lower other labor expense.

• Maggiano’s Restaurant expenses decreased 4.0%, driven by 9.8% of sales leverage, partially offset by higher expenses including 1.8% of repairs and maintenance expenses, 1.7% of supervision expenses, 1.0% of advertising expenses, 0.7% of higher rent expenses, 0.4% of credit card fees and 0.2% of other restaurant expenses.

Thirty-Nine Week Period Ended March 30, 2022 compared to March 24, 2021

Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance Variance as a percentage

2022 March 24,

Company sales $ 296.2 $ 181.1 $ 115.1 63.6 %

6 unchanged sentences

The following is a summary of the changes in Maggiano’s operating costs and expenses:

Twenty-Six Week Periods Ended Favorable (Unfavorable) Variance

December 29, 2021 December 23, 2020

Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance

March 30, 2022 March 24, 2021

Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales

6 unchanged sentences

As a percentage of Company sales:

• Maggiano’s Food and beverage costs increased 0.6%, including 0.7% of higher seafood and other commodity costs resulting from supply chain constraints and inflationary pressures, partially offset by 0.1% of increased menu pricing.

• Maggiano’s Restaurant labor decreased 1.4%, including 6.7% of sales leverage and 0.3% of lower other labor expenses, partially offset by 2.8% of higher restaurant hourly labor costs primarily including wage rates, training and overtime, 1.5% of higher manager bonus expenses and 1.3% of higher manager salaries and training.

• Maggiano’s Restaurant expenses decreased 7.7%, driven by 12.8% of sales leverage, partially offset by higher expenses including 1.7% of repairs and maintenance expenses, 1.4% of supervision expenses, 1.2% of higher advertising expenses and 0.8% of other restaurant expenses.

• Maggiano’s Food and beverage costs increased 1.0%, including 1.5% of higher seafood and other commodity costs resulting from supply chain constraints and inflationary pressures, partially offset by 0.3% of increased menu pricing and 0.2% of favorable menu item mix.

• Maggiano’s Restaurant labor decreased 0.6%, including 6.1% of sales leverage and 0.3% of lower other labor expenses, partially offset by 3.3% of higher restaurant hourly labor costs primarily including wage rates, training and overtime, 1.3% of higher manager salaries and training and 1.2% of higher manager bonus expenses.

• Maggiano’s Restaurant expenses decreased 6.4%, driven by 11.7% of sales leverage, partially offset by higher expenses including 1.7% of repairs and maintenance expenses, 1.5% of supervision expenses, 1.2% of higher advertising expenses, 0.7% of higher utilities and 0.2% of other restaurant expenses.

Liquidity and Capital Resources

COVID-19 Impact on Liquidity

Cash flows generated from operating activities are our principal source of liquidity, which we use to finance capital expenditures, such as remodels, maintaining existing restaurants and constructing new restaurants, to pay dividends and to repurchase shares of our common stock when authorized.

Cash flows generated from operating activities are our principal source of liquidity, which we use to finance capital expenditures, such as remodels, maintaining existing restaurants and constructing new restaurants, to pay dividends or repurchase shares of our common stock when authorized.

Our strategic decision to enhance our off-premise business has enabled us to conveniently serve a significantly higher volume of off-premise guests during this pandemic compared to other industry competitors.

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Cash Flows from Operating Activities

Twenty-Six Week Periods Ended Favorable (Unfavorable) Variance

2021 December 23,

Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance

2022 March 24,

Net cash provided by operating activities $ 211.6 $ 268.6 $ (57.0)

Net cash provided by operating activities decreased primarily due to the repayment of the first installment of $27.2 million of payroll taxes that were previously deferred under the CARES Act, as well as an increase in payments of performance based compensation and bonuses in the current year, partially offset by improved operating performance in the first two quarters of fiscal 2022 compared to the prior year and the timing of operational receipts and payments.

Net cash provided by operating activities decreased primarily due to the repayment of the first installment of $27.2 million of payroll taxes that were previously deferred under the CARES Act, as well as an increase in payments of performance based compensation and bonuses in the current year, partially offset by improved operating performance in the first three quarters of fiscal 2022 compared to the prior year and the timing of operational receipts and payments.

Cash Flows from Investing Activities

Twenty-Six Week Periods Ended Favorable (Unfavorable) Variance

2021 December 23,

Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance

2022 March 24,

Cash flows from investing activities

2 unchanged sentences

Proceeds from sale leaseback transactions, net of related expenses 20.5 — 20.5

Proceeds from sale of assets 0.0 1.3 (1.3)

Proceeds from note receivable 1.0 1.5 (0.5)

Proceeds from sale of assets 0.1 1.6 (1.5)

Net cash used in investing activities $ (193.4) $ (59.3) $ (134.1)

Net cash used in investing activities increased primarily due to $104.5 million of cash consideration paid for the purchase of 60 Chili’s restaurants from two franchisees, partially offset by proceeds of $20.5 million received from the sale leaseback transactions on six of the acquired restaurants.

Net cash used in investing activities increased primarily due to $106.0 million of cash consideration paid for the purchase of 66 Chili’s restaurants from three franchisees, partially offset by proceeds of $20.5 million received from the sale leaseback transactions on six of the acquired restaurants.

Additionally, capital expenditures increased in fiscal 2022 primarily for equipment purchases and an increase in the pace of the Chili’s remodel initiative.

Cash Flows from Financing Activities

Twenty-Six Week Periods Ended Favorable (Unfavorable) Variance

2021 December 23,

Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance

2022 March 24,

Cash flows from financing activities

6 unchanged sentences

Proceeds from issuance of treasury stock 0.4 14.1 (13.7)

Net cash provided by (used in) financing activities $ 42.4 $ (75.3) $ 117.7

Net cash provided by financing activities increased primarily due to $132.5 million of net borrowing activity in fiscal 2022 compared to $66.6 million of net repayment activity in fiscal 2021 on the revolving credit facility, partially offset by an increase in share repurchases following the reinstatement of the share repurchase program in August 2021.

Net cash used in financing activities $ (29.2) $ (189.6) $ 160.4

Net cash used in financing activities decreased primarily due to $93.0 million of net borrowing activity in fiscal 2022 compared to $181.6 million of net repayment activity in fiscal 2021 on the revolving credit facility, partially offset by an increase in share repurchases following the reinstatement of the share repurchase program in August 2021.

Revolving Credit Facility

On August 18, 2021, we revised our existing $1.0 billion revolving credit facility to an $800.0 million revolving credit facility.

Net borrowings of $132.5 million were drawn during the twenty-six week period ended December 29, 2021 on the revolving credit facility.

As of December 29, 2021, $496.2 million of credit was available under the new revolving credit facility.

Net borrowings of $93.0 million were drawn during the thirty-nine week period ended March 30, 2022 on the revolving credit facility.

As of March 30, 2022, $535.7 million of credit was available under the new revolving credit facility.

The $800.0 million revolving credit facility matures on August 18, 2026 and bears interest of LIBOR plus an applicable margin of 1.500% to 2.250% and an undrawn commitment fee of 0.250% to 0.350%, both based on a function of our debt-to-cash-flow ratio.

As of December 29, 2021, our interest rate was 1.875% consisting of LIBOR of 0.125% plus the applicable margin of 1.750%.

In the twenty-six week period ended December 29, 2021, we incurred and capitalized $3.1 million of debt issuance costs associated with the new revolver, which are included in Other assets in the Consolidated Balance Sheets (Unaudited).

As of December 29, 2021, we were in compliance with our covenants pursuant to the $800.0 million revolving credit facility and under the terms of the indentures governing our 3.875% notes and 5.000% notes.

As of March 30, 2022, our interest rate was 2.250% consisting of LIBOR of 0.500% plus the applicable margin of 1.750%.

In the thirty-nine week period ended March 30, 2022, we incurred and capitalized $3.1 million of debt issuance costs associated with the new revolver, which are included in Other assets in the Consolidated Balance Sheets (Unaudited).

As of March 30, 2022, we were in compliance with our covenants pursuant to the $800.0 million revolving credit facility and under the terms of the indentures governing our 3.875% notes and 5.000% notes.

Refer to Note 10 - Debt for further information about our notes and revolving credit facility.

5 unchanged sentences

In August 2021, our Board of Directors reinstated the share repurchase program, allowing for a total available repurchase authority of $300.0 million.

In the twenty-six week period ended December 29, 2021, we repurchased 1.6 million shares of our common stock for $74.7 million, including 1.5 million shares purchased as part of our share repurchase program and 0.1 million shares purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares.

As of December 29, 2021, approximately $230.0 million was available under our share repurchase authorizations.

In the thirty-nine week period ended March 30, 2022, we repurchased 2.4 million shares of our common stock for $100.8 million, including 2.3 million shares purchased as part of our share repurchase program and 0.1 million shares purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares.

As of March 30, 2022, approximately $204.0 million was available under our share repurchase authorizations.

Dividend Program

In the fourth quarter of fiscal 2020, our Board of Directors voted to suspend the quarterly cash dividend in response to the liquidity needs created by the COVID-19 pandemic.

In the twenty-six week periods ended December 29, 2021 and December 23, 2020, dividends paid were solely related to the previously accrued dividends for restricted share awards that were granted prior to the suspension and vested in the period.

In the thirty-nine week periods ended March 30, 2022 and March 24, 2021, dividends paid were solely related to the previously accrued dividends for restricted share awards that were granted prior to the suspension and vested in the period.

Restricted share award dividends are accrued in Other accrued liabilities for the current portion to vest within 12 months, and Other liabilities for the portion that will vest after one year.

14 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis