What changed in this filing

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Item 1. Financial Statements

2023-05-03 compared with 2023-02-01 · 126 added, 101 removed, 479 unchanged (32% of the section changed)

1 unchanged sentence

BRINKER INTERNATIONAL, INC.

Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

Consolidated Statements of Comprehensive Income (Unaudited)

(In millions, except per share amounts)

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2022 December 29,

2021 December 28,

2022 December 29,

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2023 March 30,

2022 March 29,

2023 March 30,

Company sales $ 1,072.9 $ 970.9 $ 3,028.4 $ 2,752.3

12 unchanged sentences

Other income, net ( 0.6 ) ( 0.4 ) ( 1.3 ) ( 1.2 )

(Loss) Income before income taxes 27.1 29.1 ( 4.6 ) 42.5

Income before income taxes 50.6 38.7 46.0 81.2

(Benefit) Provision for income taxes ( 0.1 ) 2.1 ( 2.4 ) 3.8

Net (loss) income $ 27.9 $ 27.6 $ ( 2.3 ) $ 40.8

Basic net (loss) income per share $ 0.63 $ 0.61 $ ( 0.05 ) $ 0.90

Diluted net (loss) income per share $ 0.62 $ 0.60 $ ( 0.05 ) $ 0.88

Net income $ 50.7 $ 36.6 $ 48.4 $ 77.4

Basic net income per share $ 1.15 $ 0.82 $ 1.10 $ 1.71

Diluted net income per share $ 1.12 $ 0.81 $ 1.08 $ 1.68

Basic weighted average shares outstanding 44.1 44.4 44.0 45.2

3 unchanged sentences

Other comprehensive income (loss) 0.1 0.4 ( 0.8 ) ( 0.1 )

Comprehensive (loss) income $ 28.0 $ 27.5 $ ( 3.2 ) $ 40.3

Comprehensive income $ 50.8 $ 37.0 $ 47.6 $ 77.3

See accompanying Notes to Consolidated Financial Statements (Unaudited)

33 unchanged sentences

Other accrued liabilities 126.9 116.1

Income taxes payable, net 0.9 —

Total current liabilities 585.7 558.0

6 unchanged sentences

$ 0.10 par value;

60.3 million shares issued and 44.0 million shares outstanding at December 28, 2022, and 70.3 million shares issued and 43.8 million shares outstanding at June 29, 2022)

60.3 million shares issued and 44.1 million shares outstanding at March 29, 2023, and 70.3 million shares issued and 43.8 million shares outstanding at June 29, 2022)

Additional paid-in capital 692.3 690.9

1 unchanged sentence

Accumulated deficit ( 406.1 ) ( 148.4 )

Treasury stock, at cost ( 16.3 million shares at December 28, 2022, and 26.5 million shares at June 29, 2022)

Treasury stock, at cost ( 16.2 million shares at March 29, 2023, and 26.5 million shares at June 29, 2022)

( 496.4 ) ( 812.3 )

5 unchanged sentences

(In millions)

Twenty-Six Week Periods Ended

2022 December 29,

Thirty-Nine Week Periods Ended

2023 March 30,

Cash flows from operating activities

Net (loss) income $ ( 2.3 ) $ 40.8

Adjustments to reconcile Net (loss) income to Net cash provided by operating activities:

Net income $ 48.4 $ 77.4

Adjustments to reconcile Net income to Net cash provided by operating activities:

Depreciation and amortization 126.2 123.1

23 unchanged sentences

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

Proceeds from sale of assets — 0.1

Net cash used in investing activities ( 133.3 ) ( 193.4 )

7 unchanged sentences

Proceeds from issuance of treasury stock 2.1 0.4

Net cash provided by financing activities 26.4 42.4

Net cash used in financing activities ( 67.2 ) ( 29.2 )

Net change in cash and cash equivalents 0.3 ( 11.0 )

5 unchanged sentences

(In millions)

Twenty-Six Week Period Ended December 28, 2022

Thirty-Nine Week Period Ended March 29, 2023

Common Stock Additional

18 unchanged sentences

Balances at December 28, 2022 $ 6.0 $ 688.7 $ ( 456.8 ) $ ( 499.2 ) $ ( 6.2 ) $ ( 267.5 )

Twenty-Six Week Period Ended December 29, 2021

Net income — — 50.7 — — 50.7

Other comprehensive income — — — — 0.1 0.1

Dividends — — — — — —

Stock-based compensation — 4.4 — — — 4.4

Purchases of treasury stock — — — ( 0.1 ) — ( 0.1 )

Issuances of treasury stock — ( 0.8 ) — 2.9 — 2.1

Balances at March 29, 2023 $ 6.0 $ 692.3 $ ( 406.1 ) $ ( 496.4 ) $ ( 6.1 ) $ ( 210.3 )

See accompanying Notes to Consolidated Financial Statements (Unaudited)

Thirty-Nine Week Period Ended March 30, 2022

Common Stock Additional

17 unchanged sentences

Balances at December 29, 2021 $ 7.0 $ 683.7 $ ( 225.3 ) $ ( 787.6 ) $ ( 5.2 ) $ ( 327.4 )

Net income — — 36.6 — — 36.6

Other comprehensive income — — — — 0.4 0.4

Dividends — — 0.0 — — 0.0

Stock-based compensation — 5.3 — — — 5.3

Purchases of treasury stock — 0.0 — ( 26.1 ) — ( 26.1 )

Issuances of treasury stock — ( 1.2 ) — 1.2 — —

Balances at March 30, 2022 $ 7.0 $ 687.8 $ ( 188.7 ) $ ( 812.5 ) $ ( 4.8 ) $ ( 311.2 )

See accompanying Notes to Consolidated Financial Statements (Unaudited)

8 unchanged sentences

Income Taxes 12

Net (Loss) Income Per Share 11

Net Income Per Share 12

Segment Information 12

5 unchanged sentences

Fiscal 2022 Chili’s Restaurant Acquisitions 19

Subsequent Events 20

Footnote Index

2 unchanged sentences

and its subsidiaries and any predecessor companies of Brinker International, Inc.

Our Consolidated Financial Statements (Unaudited) as of December 28, 2022 and June 29, 2022, and for the thirteen and twenty-six week periods ended December 28, 2022 and December 29, 2021, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Our Consolidated Financial Statements (Unaudited) as of March 29, 2023 and June 29, 2022, and for the thirteen and thirty-nine week periods ended March 29, 2023 and March 30, 2022, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Effective for the first quarter of fiscal 2023, we are presenting certain revenue streams related to gift cards, digital entertainment, Maggiano’s banquet service charges and delivery fees within Company sales to better align with the presentation used within the casual dining industry.

2 unchanged sentences

These reclassifications have no effect on Total revenues or Net income previously reported.

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 ® .

As of December 28, 2022, we owned, operated or franchised 1,648 restaurants, consisting of 1,182 Company-owned restaurants and 466 franchised restaurants, located in the United States, 28 countries and two United States territories.

As of March 29, 2023, we owned, operated or franchised 1,654 restaurants, consisting of 1,184 Company-owned restaurants and 470 franchised restaurants, located in the United States, 28 countries and two United States territories.

Use of Estimates

8 unchanged sentences

Foreign Currency Translation

The foreign currency translation adjustment included in Comprehensive (loss) income in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited) represents the unrealized impact of translating the financial statements of our Canadian restaurants from Canadian dollars to United States dollars.

This amount is not included in Net (loss) income and would only be realized upon disposition of our Canadian restaurants.

The foreign currency translation adjustment included in Comprehensive income in the Consolidated Statements of Comprehensive Income (Unaudited) represents the unrealized impact of translating the financial statements of our Canadian restaurants from Canadian dollars to United States dollars.

This amount is not included in Net income and would only be realized upon disposition of our Canadian restaurants.

The related Accumulated other comprehensive loss is presented in the Consolidated Balance Sheets (Unaudited).

3 unchanged sentences

During fiscal 2022 and fiscal 2023, our operating results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflation on wages and food and beverage costs.

The ongoing effects of COVID-19 and its variants, along with other geopolitical and macroeconomic events could lead to further capacity restrictions, mask and

The ongoing effects of COVID-19 and its variants, along with other geopolitical and macroeconomic events could lead to further capacity restrictions, mask and vaccine mandates, wage inflation, staffing challenges, product cost inflation and disruptions in the supply chain that impact our restaurants’ ability to obtain the products needed to support their operation.

Such events could also

Footnote Index

vaccine mandates, wage inflation, staffing challenges, product cost inflation and disruptions in the supply chain that impact our restaurants’ ability to obtain the products needed to support their operation.

Such events could also negatively affect consumer spending potentially reducing guest traffic and/or reducing the average amount guests spend in our restaurants.

negatively affect consumer spending potentially reducing guest traffic and/or reducing the average amount guests spend in our restaurants.

New Accounting Standards Implemented in Fiscal 2023

8 unchanged sentences

Deferred franchise and development fees are classified within Other accrued liabilities for the current portion expected to be recognized within the next 12 months, and Other liabilities for the long-term portion in the Consolidated Balance Sheets (Unaudited).

The following table reflects the changes in deferred franchise and development fees between June 29, 2022 and December 28, 2022:

The following table reflects the changes in deferred franchise and development fees between June 29, 2022 and March 29, 2023:

Deferred Franchise and Development Fees

2 unchanged sentences

Amount recognized to Franchise revenues ( 0.7 )

Balance as of December 28, 2022 $ 11.3

The following table illustrates franchise and development fees expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of December 28, 2022:

Balance as of March 29, 2023 $ 11.2

Fiscal Year Franchise and Development Fees Revenue Recognition

4 unchanged sentences

Deferred revenues related to our gift cards include the full value of unredeemed gift card balances less recognized breakage and the unamortized portion of third party fees.

The following table reflects the changes in the Gift card liability between June 29, 2022 and December 28, 2022:

The following table reflects the changes in the Gift card liability between June 29, 2022 and March 29, 2023:

Gift Card Liability

4 unchanged sentences

Other ( 0.5 )

Balance as of December 28, 2022

Balance as of March 29, 2023

OTHER GAINS AND CHARGES

Other (gains) and charges in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited) consist of the following:

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2022 December 29,

2021 December 28,

2022 December 29,

Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited) consist of the following:

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2023 March 30,

2022 March 29,

2023 March 30,

Lease contingencies $ 2.0 $ — $ 2.0 $ 2.9

Restaurant closure charges 1.8 1.2 6.6 1.7

Severance and other benefit charges 2.4 — 2.9 —

Loss from natural disasters, net of (insurance recoveries) 1.1 0.2 0.9 0.8

Enterprise system implementation costs 1.3 0.5 3.3 1.4

Severance and other benefit charges 1.0 — 3.9 —

Remodel-related costs 0.1 0.9 1.1 4.0

Lease contingencies — 2.9 — 2.9

Acquisition-related costs, net — 0.6 0.2 1.5

Loss from natural disasters, net of (insurance recoveries) ( 0.1 ) — 0.8 0.8

Other 0.2 2.9 1.9 4.7

$ 6.3 $ 6.1 $ 19.8 $ 17.0

• Restaurant closure charges relates to closure costs and leases associated with certain closed Chili’s restaurants for all periods presented and one closed Maggiano’s in the first quarter of fiscal 2023.

• Lease contingencies includes expenses related to lease guarantees and certain sublease receivables for divested brands when we have determined it is probable that the current lessee will default on the lease obligation.

Refer to Note 13 - Contingencies for additional information about our secondarily liable lease guarantees.

• Restaurant closure charges includes costs associated with the closure of certain Chili’s and Maggiano’s restaurants.

• Enterprise system implementation costs primarily consists of software subscription fees, certain consulting fees and contract labor associated with the ongoing enterprise system implementation that are not capitalized.

• Severance and other benefit charges relates to changes in our management team and organizational structure.

• Loss from natural disasters, net of (insurance recoveries) in the current year primarily consists of costs incurred related to Hurricane Ian and the Winter Storm in December 2022.

• Enterprise system implementation costs primarily consists of consulting fees and subscription fees related to the ongoing enterprise system implementation for all periods presented.

• Remodel-related costs relates to existing fixed asset write-offs associated with the ongoing Chili’s and Maggiano’s remodel projects for all periods presented.

• Lease contingencies in the prior year were recorded for potential lease defaults on certain lease guarantees and subleases.

• Remodel-related costs relates to assets that are removed or discarded in connection with Chili’s and Maggiano’s remodel projects.

• Acquisition-related costs, net in the prior year relates to the 68 restaurants acquired from former franchisees.

Refer to Note 14 - Fiscal 2022 Chili’s Restaurant Acquisitions for further details.

Footnote Index

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2022 December 29,

2021 December 28,

2022 December 29,

• Loss from natural disasters, net of (insurance recoveries) primarily relates to Hurricane Ian in September 2022 and the Winter Storm in December 2022.

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2023 March 30,

2022 March 29,

2023 March 30,

Effective income tax rate ( 0.2 ) % 5.4 % ( 5.2 ) % 4.7 %

The federal statutory tax rate was 21.0 % for the thirteen and twenty-six week periods ended December 28, 2022 and December 29, 2021.

The change in the effective income tax rate in the twenty-six week period ended December 28, 2022 to the twenty-six week period ended December 29, 2021, is primarily due to lower Income before income taxes and leverage of the FICA tip credit, partially offset by the excess tax shortfalls associated with stock-based compensation.

NET (LOSS) INCOME PER SHARE

Basic net (loss) income per share is computed by dividing Net (loss) income by the Basic weighted average shares outstanding for the reporting period.

Diluted net (loss) income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

For the calculation of Diluted net (loss) income per share, the Basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards.

Stock options and restricted share awards with an anti-dilutive effect are not included in the Diluted net (loss) income per share calculation.

The federal statutory tax rate was 21.0 % for the thirteen and thirty-nine week periods ended March 29, 2023 and March 30, 2022.

The change in the effective income tax rate in the thirty-nine week period ended March 29, 2023 to the thirty-nine week period ended March 30, 2022, is primarily due to lower Income before income taxes and leverage of the FICA tip credit, partially offset by the excess tax shortfalls associated with stock-based compensation.

NET INCOME PER SHARE

Basic net income per share is computed by dividing Net income by the Basic weighted average shares outstanding for the reporting period.

Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

For the calculation of Diluted net income per share, the Basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards.

Stock options and restricted share awards with an anti-dilutive effect are not included in the Diluted net income per share calculation.

Basic weighted average shares outstanding are reconciled to Diluted weighted average shares outstanding as follows:

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2022 December 29,

2021 December 28,

2022 December 29,

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2023 March 30,

2022 March 29,

2023 March 30,

Basic weighted average shares outstanding 44.1 44.4 44.0 45.2

Dilutive stock options 0.1 0.1 0.0 0.2

0.0 0.2 — 0.3

Dilutive restricted shares 0.9 0.6 0.8 0.6

0.8 0.6 — 0.6

Total dilutive impact 1.0 0.7 0.8 0.8

1 unchanged sentence

Awards excluded due to anti-dilutive effect 0.8 1.1 1.4 0.7

(1) Due to the net loss for the twenty-six week period ended December 28, 2022, zero incremental shares are included because the effect would be anti-dilutive.

SEGMENT INFORMATION

5 unchanged sentences

The Other segment also includes costs related to the common and shared infrastructure, including accounting, information technology, purchasing, guest relations, legal and restaurant development.

Company sales for each segment include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, Maggiano’s banquet service charge income, gift card breakage, delivery income, digital entertainment revenues, merchandise income and gift card discount costs from third-party gift card sales.

Company sales for each segment include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, gift card breakage, Maggiano’s banquet service charge income, delivery, digital entertainment revenues, merchandise income and gift card discount costs from third-party gift card sales.

Franchise revenues for each operating segment include royalties, franchise advertising fees, franchise and development fees and gift card equalization.

4 unchanged sentences

Operating income includes revenues and expenses directly attributable to segment-level results of operations.

Restaurant expenses during the periods presented primarily included restaurant rent, supplies, repair and maintenance expenses, delivery fees, utilities, credit card processing fees, property taxes, and workers’ compensation and general liability expenses.

Restaurant expenses during the periods presented primarily includes restaurant rent, supplies, repair and maintenance expenses, utilities, delivery fees, advertising, credit card processing fees, and property taxes.

The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:

Thirteen Week Period Ended December 28, 2022

Thirteen Week Period Ended March 29, 2023

Chili’s Maggiano's Corporate Consolidated

13 unchanged sentences

Income (loss) before income taxes $ 87.3 $ 12.2 $ ( 48.9 ) $ 50.6

Thirteen Week Period Ended December 29, 2021

Thirteen Week Period Ended March 30, 2022

Maggiano's Corporate Consolidated

16 unchanged sentences

Footnote Index

Twenty-Six Week Period Ended December 28, 2022

Thirty-Nine Week Period Ended March 29, 2023

Chili’s Maggiano's Corporate Consolidated

16 unchanged sentences

Payments for property and equipment 119.4 10.7 6.5 136.6

Twenty-Six Week Period Ended December 29, 2021

Thirty-Nine Week Period Ended March 30, 2022

Maggiano's Corporate Consolidated

34 unchanged sentences

The 3.875 % notes and 5.000 % notes carrying amounts, which are net of unamortized debt issuance costs and discounts, and fair values are as follows:

December 28, 2022 June 29, 2022

March 29, 2023 June 29, 2022

Carrying Amount Fair Value Carrying Amount Fair Value

8 unchanged sentences

We record an impairment charge for the excess of the carrying amount over the fair value.

Any impairment charges are included in Other (gains) and charges in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited).

During the thirteen and twenty-six week periods ended December 28, 2022 and December 29, 2021, no indicators of impairment were identified.

Any impairment charges are included in Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited).

During the thirteen and thirty-nine week periods ended March 29, 2023 and March 30, 2022, no indicators of impairment were identified.

Intangibles, net in the Consolidated Balance Sheets (Unaudited) includes both indefinite-lived intangible assets such as transferable liquor licenses and definite-lived intangible assets such as reacquired franchise rights.

Accumulated amortization associated with definite-lived intangible assets at December 28, 2022 and June 29, 2022, was $ 13.9 million and $ 12.6 million, respectively.

Accumulated amortization associated with definite-lived intangible assets at March 29, 2023 and June 29, 2022, was $ 14.8 million and $ 12.6 million, respectively.

Chili’s Restaurant Acquisitions

6 unchanged sentences

In addition to our restaurant facilities, we also lease our corporate headquarters location and certain equipment.

The components of lease expenses included in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited) were as follows:

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2022 December 29,

2021 December 28,

2022 December 29,

The components of lease expenses included in the Consolidated Statements of Comprehensive Income (Unaudited) were as follows:

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2023 March 30,

2022 March 29,

2023 March 30,

Operating lease cost $ 45.3 $ 44.1 $ 135.5 $ 128.7

17 unchanged sentences

Long-term debt and finance leases, less current installments $ 930.7 $ 989.1

(1) Obligations under our 3.875% notes, which will mature in May 2023, have been classified as long-term, reflecting our intent and ability to refinance these notes through our existing revolving credit facility.

(1) Obligations under our 3.875% notes, which will mature on May 15, 2023 , have been classified as long-term, reflecting our intent and ability to refinance these notes through our existing revolving credit facility.

(2) Current installments of long-term debt consist of finance leases and are recorded within Other accrued liabilities in the Consolidated Balance Sheets (Unaudited).

1 unchanged sentence

Revolving Credit Facility

In the twenty-six week period ended December 28, 2022, net borrowings of $ 40.0 million were drawn on our revolving credit facility.

As of December 28, 2022, $ 488.7 million of credit was available under the revolving credit facility.

In the thirty-nine week period ended March 29, 2023, net repayments of $ 50.0 million were made on our revolving credit facility.

As of March 29, 2023, $ 578.7 million of credit was available under the 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 28, 2022, our interest rate was 6.438 % consisting of LIBOR of 4.438 % plus the applicable margin of 2.000 %.

As of March 29, 2023, our interest rate was 6.875 % consisting of LIBOR of 4.875 % plus the applicable margin of 2.000 %.

Footnote Index

1 unchanged sentence

Our debt agreements contain various financial covenants that, among other things, require the maintenance of certain leverage ratios.

As of December 28, 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 .

As of March 29, 2023, 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 .

We expect to remain in compliance with our covenants during the remainder of fiscal 2023.

2 unchanged sentences

2023 June 29,

Property tax $ 25.3 $ 23.3

Insurance $ 24.6 $ 23.5

Property tax 20.4 23.3

Sales tax 20.2 14.4

Interest 13.9 6.5

Current installments of long-term debt and finance leases 12.9 20.3

Utilities and services 10.3 9.6

Interest 7.2 6.5

Other 24.6 18.5

3 unchanged sentences

During the first quarter of fiscal 2023, the Board of Directors approved the retirement of 10.0 million shares of Treasury stock for a weighted average price per share of $ 30.71 .

As of December 28, 2022, 16.3 million shares remain in treasury.

As of March 29, 2023, 16.2 million shares remain in treasury.

Share Repurchases

2 unchanged sentences

We evaluate potential share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, proceeds from divestitures, borrowings and planned investment and financing needs.

In the twenty-six week period ended December 28, 2022, we repurchased 0.1 million shares of our common stock for $ 2.1 million, all of which were purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares.

In the thirty-nine week period ended March 29, 2023, we repurchased 0.1 million shares of our common stock for $ 2.2 million, all of which were purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares.

These withheld shares of common stock are not considered common stock repurchases under our authorized common stock repurchase plan.

As of December 28, 2022, approximately $ 204.0 million of share repurchase authorization remains under the current share repurchase program.

As of March 29, 2023, approximately $ 204.0 million of share repurchase authorization remains under the current share repurchase program.

Stock-based Compensation

The following table presents the restricted share awards granted and related weighted average fair value per share amounts.

Twenty-Six Week Periods Ended

2022 December 29,

Thirty-Nine Week Periods Ended

2023 March 30,

Restricted share awards

4 unchanged sentences

Cash paid for income taxes and interest is as follows:

Twenty-Six Week Periods Ended

2022 December 29,

Thirty-Nine Week Periods Ended

2023 March 30,

Income taxes, net

2 unchanged sentences

Non-cash operating, investing and financing activities are as follows:

Twenty-Six Week Periods Ended

2022 December 29,

Thirty-Nine Week Periods Ended

2023 March 30,

Operating lease additions (1)

3 unchanged sentences

Retirement of fully depreciated assets 94.2 120.9

(1) The twenty-six week period ended December 29, 2021 primarily included operating lease additions associated with the 60 restaurants purchased from two former franchisees.

(1) The thirty-nine week period ended March 30, 2022 primarily included operating lease additions associated with the 66 restaurants purchased from three former franchisees and the modifications of 25 real estate leases.

Refer to Note 14 - Fiscal 2022 Chili’s Restaurant Acquisitions for further details.

2 unchanged sentences

We have, in certain cases, divested brands or sold restaurants to franchisees and have not been released from lease guarantees for the related restaurants.

As of December 28, 2022 and June 29, 2022, we have outstanding lease guarantees or are secondarily liable for an estimated $ 22.8 million and $ 26.3 million, respectively.

As of March 29, 2023 and June 29, 2022, we have outstanding lease guarantees or are secondarily liable for an estimated $ 19.7 million and $ 26.3 million, respectively.

These amounts represent the maximum known potential liability of rent payments under the leases.

2 unchanged sentences

In the event of default under a lease by an owner of a divested brand, the indemnity and default clauses in our agreements with such third parties and applicable laws govern our ability to pursue and recover amounts we may pay on behalf of such parties.

As of December 28, 2022, we have contingent liabilities of $ 1.1 million for our estimated exposure of the lease defaults related to these lease guarantees.

In fiscal 2023, we recorded a $ 2.0 million charge, including a $ 1.4 million contingent loss related to the lease guarantees, in Other (gains) and charges in the Consolidated Statements of Comprehensive Income.

As of March 29, 2023, we have contingent liabilities of $ 2.5 million for our estimated exposure of the lease defaults related to these lease guarantees.

These contingent liabilities are classified within Other accrued liabilities in the Consolidated Balance Sheets (Unaudited).

1 unchanged sentence

We provide letters of credit to various insurers to collateralize obligations for outstanding claims.

As of December 28, 2022, we had $ 5.8 million in undrawn standby letters of credit outstanding.

As of March 29, 2023, we had $ 5.8 million in undrawn standby letters of credit outstanding.

All standby letters of credit are renewable within the next 7 months.

3 unchanged sentences

In connection with this event, the Company was also named as a defendant in a putative class action lawsuit in the United States District Court for the Middle District of Florida (the “Litigation”) relating to this incident.

In the Litigation, plaintiffs assert various claims at the Company’s Chili’s restaurants involving customer payment card information and seek monetary damages in excess of $ 5.0 million, injunctive and declaratory relief, and attorney’s fees and costs.

In the Litigation, plaintiffs assert

Footnote Index

various claims at the Company’s Chili’s restaurants involving customer payment card information and seek monetary damages in excess of $ 5.0 million, injunctive and declaratory relief, and attorney’s fees and costs.

Oral argument of our appeal of the district court’s class certification order was held before the Eleventh Circuit Court of Appeals on June 8, 2022 in Jacksonville, Florida.

2 unchanged sentences

We believe we have defenses and intend to continue defending the Litigation.

As such, as of December 28, 2022, we have concluded that a loss, or range of loss, from this matter is not determinable, therefore, we have not recorded a liability related to the Litigation.

As such, as of March 29, 2023, we have concluded that a loss, or range of loss, from this matter is not determinable, therefore, we have not recorded a liability related to the Litigation.

We will continue to evaluate this matter based on new information as it becomes available.

35 unchanged sentences

Net assets acquired at fair value related to the Great Lakes Region acquisition are equal to the total purchase price of $ 56.0 million, plus $ 1.1 million of closing adjustments.

SUBSEQUENT EVENTS

On May 2, 2023, we amended our $ 800.0 million revolving credit facility to increase the capacity to $ 900.0 million and to adopt SOFR as the new benchmark rate, replacing LIBOR .

We do not expect the adoption of SOFR to have a material impact on our Consolidated Financial Statements (Unaudited).

Additionally, there were no other material changes to the terms and conditions of the revolving credit facility.

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 1. Financial Statements