What changed in this filing

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Item 1. Financial Statements

2024-04-30 compared with 2024-01-31 · 130 added, 104 removed, 408 unchanged (36% of the section changed)

1 unchanged sentence

BRINKER INTERNATIONAL, INC.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Consolidated Statements of Comprehensive Income (Unaudited)

(In millions, except per share amounts)

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2023 December 28,

2022 December 27,

2023 December 28,

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2024 March 29,

2023 March 27,

2024 March 29,

Company sales $ 1,108.9 $ 1,072.9 $ 3,174.6 $ 3,028.4

12 unchanged sentences

Other income, net ( 0.2 ) ( 0.6 ) ( 0.3 ) ( 1.3 )

Income (loss) before income taxes 45.8 27.1 53.0 ( 4.6 )

Income before income taxes 53.9 50.6 106.9 46.0

Provision (benefit) for income taxes 5.2 ( 0.1 ) 8.9 ( 2.4 )

Net income (loss) $ 42.1 $ 27.9 $ 49.3 $ ( 2.3 )

Basic net income (loss) per share $ 0.95 $ 0.63 $ 1.11 $ ( 0.05 )

Diluted net income (loss) per share $ 0.94 $ 0.62 $ 1.09 $ ( 0.05 )

Net income $ 48.7 $ 50.7 $ 98.0 $ 48.4

Basic net income per share $ 1.10 $ 1.15 $ 2.21 $ 1.10

Diluted net income per share $ 1.08 $ 1.12 $ 2.17 $ 1.08

Basic weighted average shares outstanding 44.3 44.1 44.4 44.0

2 unchanged sentences

Foreign currency translation adjustment $ ( 0.2 ) $ 0.1 $ ( 0.2 ) $ ( 0.8 )

Comprehensive income (loss) $ 42.3 $ 28.0 $ 49.3 $ ( 3.2 )

Comprehensive income $ 48.5 $ 50.8 $ 97.8 $ 47.6

See accompanying Notes to Consolidated Financial Statements (Unaudited)

43 unchanged sentences

60.3 million shares issued;

and 44.2 million shares outstanding at December 27, 2023 and 44.6 million shares outstanding at June 28, 2023)

and 44.5 million shares outstanding at March 27, 2024 and 44.6 million shares outstanding at June 28, 2023)

Additional paid-in capital 693.4 690.0

1 unchanged sentence

Accumulated deficit ( 253.9 ) ( 351.9 )

Treasury stock, at cost ( 16.1 million shares at December 27, 2023, and 15.7 million shares at June 28, 2023)

Treasury stock, at cost ( 15.8 million shares at March 27, 2024, and 15.7 million shares at June 28, 2023)

( 486.0 ) ( 482.4 )

5 unchanged sentences

(In millions)

Twenty-Six Week Periods Ended

2023 December 28,

Thirty-Nine Week Periods Ended

2024 March 29,

Cash flows from operating activities

Net income (loss) $ 49.3 $ ( 2.3 )

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

Net income $ 98.0 $ 48.4

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

Depreciation and amortization 125.8 126.2

32 unchanged sentences

Payments of dividends ( 0.2 ) ( 0.4 )

Net cash (used in) provided by financing activities ( 55.9 ) 26.4

Net cash used in financing activities ( 142.0 ) ( 67.2 )

Net change in cash and cash equivalents 0.4 0.3

9 unchanged sentences

(In millions)

Twenty-Six Week Period Ended December 27, 2023

Thirty-Nine Week Period Ended March 27, 2024

Common Stock Additional

15 unchanged sentences

Balances at December 27, 2023 $ 6.0 $ 687.0 $ ( 302.6 ) $ ( 493.9 ) $ ( 6.0 ) $ ( 109.5 )

Twenty-Six Week Period Ended December 28, 2022

Net income — — 48.7 — — 48.7

Other comprehensive loss — — — — ( 0.2 ) ( 0.2 )

Stock-based compensation — 6.4 — — — 6.4

Purchases of treasury stock — ( 0.2 ) — ( 0.3 ) — ( 0.5 )

Issuances of treasury stock — 0.2 — 8.2 — 8.4

Balances at March 27, 2024 $ 6.0 $ 693.4 $ ( 253.9 ) $ ( 486.0 ) $ ( 6.2 ) $ ( 46.7 )

See accompanying Notes to Consolidated Financial Statements (Unaudited)

Thirty-Nine Week Period Ended March 29, 2023

Common Stock Additional

5 unchanged sentences

Other comprehensive loss — — — — ( 1.0 ) ( 1.0 )

Dividends — — 0.0 — — 0.0

Stock-based compensation — 4.7 — — — 4.7

9 unchanged sentences

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

Net income — — 50.7 — — 50.7

Other comprehensive income — — — — 0.1 0.1

Stock-based compensation — 4.4 — — — 4.4

Purchases of treasury stock — 0.0 — ( 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)

18 unchanged sentences

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

Our Consolidated Financial Statements (Unaudited) as of December 27, 2023 and June 28, 2023, and for the thirteen and twenty-six week periods ended December 27, 2023 and December 28, 2022, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Our Consolidated Financial Statements (Unaudited) as of March 27, 2024 and June 28, 2023, and for the thirteen and thirty-nine week periods ended March 27, 2024 and March 29, 2023, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

The Company is 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 of December 27, 2023, we owned, operated or franchised 1,658 restaurants, consisting of 1,184 Company-owned restaurants and 474 franchised restaurants, located in the United States, 29 other countries and two United States territories.

As of March 27, 2024, we owned, operated or franchised 1,618 restaurants, consisting of 1,176 Company-owned restaurants and 442 franchised restaurants, located in the United States, 27 other countries and two United States territories.

Use of Estimates

8 unchanged sentences

Foreign Currency Translation

The foreign currency translation adjustment included in the Consolidated Statements of Comprehensive Income (Loss) (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 (loss) and would only be realized upon disposition of our Canadian restaurants.

The foreign currency translation adjustment included 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).

New Accounting Standards Implemented in Fiscal 2024

Effect of New Accounting Standards

We reviewed accounting pronouncements that became effective for our fiscal 2024 and determined that either they were not applicable, or they did not have a material impact on the Consolidated Financial Statements (Unaudited).

We also reviewed recently issued accounting pronouncements to be adopted in future periods and determined that they are not expected to have a material impact on the Consolidated Financial Statements (Unaudited).

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, which would require us to adopt the provisions in our fiscal 2025 10-K.

Early adoption is permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

Management is currently evaluating this ASU to determine its impact on our disclosures.

We also reviewed other recently issued accounting pronouncements to be adopted in future periods and determined that they are not expected to have a material impact on the Consolidated Financial Statements (Unaudited).

Footnote Index

REVENUE RECOGNITION

4 unchanged sentences

however, due to the variability and uncertainty of these future revenues based upon a sales-based measure, these future revenues are not yet estimable as the performance obligations remain unsatisfied.

Footnote Index

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 28, 2023 and December 27, 2023:

The following table reflects the changes in deferred franchise and development fees between June 28, 2023 and March 27, 2024:

Deferred Franchise and Development Fees

2 unchanged sentences

Amount recognized to Franchise revenues ( 1.7 )

Balance as of December 27, 2023 $ 10.5

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 27, 2023:

Balance as of March 27, 2024 $ 9.8

Fiscal Year Franchise and Development Fees Revenue Recognition

1 unchanged sentence

Thereafter 6.8

Footnote Index

Deferred Gift Card Revenues

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 28, 2023 and December 27, 2023:

The following table reflects the changes in the Gift card liability between June 28, 2023 and March 27, 2024:

Gift Card Liability

3 unchanged sentences

Gift card breakage recognized to Company sales ( 11.0 )

Other ( 1.2 )

Balance as of December 27, 2023

Balance as of March 27, 2024

FAIR VALUE MEASUREMENTS

4 unchanged sentences

Level 3 Unobservable inputs that cannot be corroborated by observable market data

Footnote Index

Financial Instruments

4 unchanged sentences

The 5.000 % notes and 8.250 % notes carrying amounts, which are net of unamortized debt issuance costs and discounts, and fair values are as follows:

December 27, 2023 June 28, 2023

March 27, 2024 June 28, 2023

Carrying Amount Fair Value Carrying Amount Fair Value

7 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 Income (Loss) (Unaudited).

During the thirteen and twenty-six week periods ended December 27, 2023 and December 28, 2022, no indicators of impairment were identified.

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

Footnote Index

thirteen and thirty-nine week periods ended March 27, 2024 and March 29, 2023, 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 27, 2023 and June 28, 2023, was $ 15.7 million and $ 15.3 million, respectively.

Accumulated amortization associated with definite-lived intangible assets at March 27, 2024 and June 28, 2023, was $ 16.2 million and $ 15.3 million, respectively.

ACCRUED LIABILITIES

3 unchanged sentences

Property tax 21.0 24.5

Interest 19.9 6.4

Sales tax 19.7 17.3

Current installments of finance lease obligations 15.5 10.2

Interest 15.5 6.4

Utilities and services 9.8 10.4

1 unchanged sentence

$ 131.3 $ 116.3

Footnote Index

We typically lease our restaurant facilities through ground leases (where we lease land only, but construct the building and improvements) or retail leases (where we lease the land/retail space and building).

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 Income (Loss) (Unaudited) were as follows:

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2023 December 28,

2022 December 27,

2023 December 28,

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

2024 March 29,

2023 March 27,

2024 March 29,

Operating lease cost $ 45.7 $ 45.3 $ 136.9 $ 135.5

6 unchanged sentences

Supplemental cash flow information related to leases:

Twenty-Six Week Periods Ended

2023 December 28,

Thirty-Nine Week Periods Ended

2024 March 29,

Operating lease assets obtained in exchange for operating lease liabilities

1 unchanged sentence

Finance leases assets obtained in exchange for finance lease liabilities

Finance lease assets are recorded in Property and equipment, at cost, and the net balance as of December 27, 2023 and June 28, 2023 was $ 45.9 million and $ 51.3 million, respectively.

Finance lease assets are recorded in Property and equipment, at cost, and the net balance as of March 27, 2024 and June 28, 2023 was $ 73.5 million and $ 51.3 million, respectively.

Footnote Index

Pre-Commencement Leases

In the third quarter of fiscal 2024, we executed one finance lease for Chili’s table-top devices with an initial term of 4 years after a rollout period, commencing as devices are installed.

The undiscounted fixed payments over the initial term of the lease for the remaining devices not installed as of March 27, 2024 is $ 22.1 million.

Additionally, we have executed six leases for new Chili’s locations with undiscounted fixed payments over the initial term of $ 16.1 million.

These leases are expected to commence during the next 12 months and are expected to have an economic lease term of 20 years.

These leases will commence when the landlords make the property available to us for new restaurant construction.

Long-term debt consists of the following:

13 unchanged sentences

Refer to Note 4 - Accrued Liabilities for further details.

Footnote Index

Revolving Credit Facility

In the twenty-six week period ended December 27, 2023, net repayments of $ 25.0 million were made on our revolving credit facility.

As of December 27, 2023, $ 763.7 million of credit was available under the revolving credit facility.

In the thirty-nine week period ended March 27, 2024, net repayments of $ 110.0 million were made on our revolving credit facility.

As of March 27, 2024, $ 848.7 million of credit was available under the revolving credit facility.

The $ 900.0 million revolving credit facility matures on August 18, 2026 and bears interest of SOFR plus an applicable margin of 1.50 % to 2.25 % and an undrawn commitment fee of 0.25 % to 0.35 %, both based on a function of our debt-to-cash-flow ratio.

As of December 27, 2023, our interest rate was 7.21 % consisting of SOFR of 5.36 % plus the applicable margin and spread adjustment of 1.85 %.

As of March 27, 2024, our interest rate was 7.20 % consisting of SOFR of 5.32 % plus the applicable margin and spread adjustment of 1.88 %.

Financial Covenants

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

As of December 27, 2023, we were in compliance with our covenants pursuant to the $900.0 million revolving credit facility and under the terms of the indentures governing our 5.000% and 8.250% notes .

As of March 27, 2024, we were in compliance with our covenants pursuant to the $900.0 million revolving credit facility and under the terms of the indentures governing our 5.000% and 8.250% notes .

CONTINGENCIES

1 unchanged sentence

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 27, 2023 and June 28, 2023, we have outstanding lease guarantees or are secondarily liable for an estimated $ 13.5 million and $ 16.9 million, respectively.

These amounts represent the maximum known potential liability of rent payments under the leases, but outstanding rent payments can exist outside of our knowledge as a result of the landlord and tenant relationship being between two third parties.

As of March 27, 2024 and June 28, 2023, we have outstanding lease guarantees or are secondarily liable for an estimated $ 13.2 million and $ 16.9 million, respectively.

These amounts

Footnote Index

represent the maximum known potential liability of rent payments under the leases, but outstanding rent payments can exist outside of our knowledge as a result of the landlord and tenant relationship being between two third parties.

These leases have been assigned to the buyers and expire at the end of the respective lease terms, which range from fiscal 2024 through fiscal 2030.

1 unchanged sentence

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.

In the twenty-six week period ended December 27, 2023 we recorded a $ 0.5 million charge in Other (gains) and charges in the Consolidated Statements of Comprehensive Income.

In the thirty-nine week period ended March 27, 2024 we recorded a $ 0.8 million charge in Other (gains) and charges in the Consolidated Statements of Comprehensive Income.

Letters of Credit

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

As of December 27, 2023, we had $ 5.8 million in undrawn standby letters of credit outstanding.

As of March 27, 2024, we had $ 5.8 million in undrawn standby letters of credit outstanding.

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

4 unchanged sentences

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.

On December 13, 2023, we filed a petition for writ of certiorari in the United States Supreme Court seeking review of the 11 th Circuit’s decision to uphold the plaintiff’s damages calculation methodology.

We also sought further stay of the district court proceedings pending final adjudication of our petition and await the court’s ruling on such request.

The parties have completed their briefing on our petition for writ of certiorari in the United States Supreme Court seeking review of the Eleventh Circuit’s decision to uphold the plaintiff’s damages calculation methodology.

We await the Court’s decision whether to take up the matter.

Concurrently in the trial court, the court declined to stay the matter and ordered the parties to submit supplemental briefs on the issue of predominance as it relates to class certification in light of the Eleventh Circuit’s ruling on the issue.

The parties completed their briefing on March 22, 2024, and now await the court’s ruling.

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

As such, as of December 27, 2023, we have concluded that a loss, or range of loss, from this matter is not determinable, therefore, we have not

Footnote Index

recorded a liability related to the Litigation.

As such, as of March 27, 2024, 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.

5 unchanged sentences

Based upon consultation with legal counsel, management is of the opinion that there are no matters pending or threatened which are expected to have a material adverse effect, individually or in the aggregate, on the consolidated financial condition or results of operations.

Twenty-Six Week Periods Ended

2023 December 28,

Footnote Index

Thirty-Nine Week Periods Ended

2024 March 29,

Effective income tax rate 8.3 % ( 5.2 ) %

The federal statutory tax rate was 21.0 % for the twenty-six week periods ended December 27, 2023 and December 28, 2022.

The change in the effective income tax rate in the twenty-six week period ended December 27, 2023 to the twenty-six week period ended December 28, 2022 is primarily due to a less favorable impact from the FICA tip tax credit against higher Income before income taxes.

The federal statutory tax rate was 21.0 % for the thirty-nine week periods ended March 27, 2024 and March 29, 2023.

The change in the effective income tax rate in the thirty-nine week period ended March 27, 2024 to the thirty-nine week period ended March 29, 2023 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit.

SHAREHOLDERS’ DEFICIT

1 unchanged sentence

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 27, 2023, 16.1 million shares remain in treasury.

As of March 27, 2024, 15.8 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 27, 2023, we repurchased 0.8 million shares of our common stock for $ 25.1 million, including 0.7 million shares purchased for $ 21.0 million 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.

In the thirty-nine week period ended March 27, 2024, we repurchased 0.8 million shares of our common stock for $ 25.6 million, including 0.7 million shares purchased for $ 21.0 million 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.

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

As of December 27, 2023, approximately $ 183.0 million of share repurchase authorization remains under the current share repurchase program.

Footnote Index

As of March 27, 2024, approximately $ 183.0 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

2023 December 28,

Thirty-Nine Week Periods Ended

2024 March 29,

Restricted share awards

2 unchanged sentences

NET INCOME PER SHARE

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

Diluted net income (loss) 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 (loss) 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 (loss) per share calculation.

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

Footnote Index

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

2023 December 28,

2022 December 27,

2023 December 28,

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2024 March 29,

2023 March 27,

2024 March 29,

Basic weighted average shares outstanding 44.3 44.1 44.4 44.0

6 unchanged sentences

Awards excluded due to anti-dilutive effect 0.1 0.8 0.6 1.4

(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.

OTHER GAINS AND CHARGES

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

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2023 December 28,

2022 December 27,

2023 December 28,

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

2024 March 29,

2023 March 27,

2024 March 29,

Restaurant closure asset write-offs and charges $ 4.0 $ 1.8 $ 4.8 $ 6.6

Enterprise system implementation costs 3.3 1.3 7.4 3.3

Litigation & claims, net 2.0 0.4 5.2 1.2

Restaurant closure asset write-offs and charges 0.2 3.3 0.8 4.8

Severance 0.4 1.0 0.5 3.9

Lease contingencies 0.3 2.0 0.8 2.0

Remodel-related asset write-offs 0.1 0.1 0.4 1.1

Loss from natural disasters, net of (insurance recoveries) ( 0.6 ) 1.1 ( 0.4 ) 0.9

Gain on the disposition of restaurants ( 0.4 ) — ( 0.4 ) —

Other ( 0.2 ) ( 0.3 ) 0.4 1.7

$ 9.9 $ 6.3 $ 19.5 $ 19.8

Footnote Index

• 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.

• Litigation & claims, net primarily relates to legal contingencies and claims on alcohol service cases.

• Restaurant closure asset write-offs and charges includes costs associated with the closure of certain Chili’s restaurants in the current year and both Chili’s and Maggiano’s restaurants in the prior year.

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

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

• Litigation & claims, net primarily relates to claims on alcohol service cases and legal contingencies.

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

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

Refer to Note 7 - Contingencies for additional information about our secondarily liable lease guarantees.

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

• Loss from natural disasters, net of (insurance recoveries) primarily relates to the receipt of insurance proceeds for the Hurricane Ida claim in the current year and to costs incurred related to Hurricane Ian & Winter Storm in the prior year.

• Gain on the disposition of restaurants relates to the net proceeds from the sale of a Canada Company-owned restaurant.

Footnote Index

SEGMENT INFORMATION

3 unchanged sentences

The Maggiano’s segment includes the results of our Company-owned Maggiano’s restaurants in the United States as well as the results from our domestic franchise business.

The Corporate segment includes costs related to our restaurant support teams for the Chili’s and Maggiano’s brands, including operations, finance, franchise, marketing, human resources and culinary innovation.

The Corporate 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, digital entertainment revenues, merchandise income and are net of gift card discounts from third-party gift card sales.

Costs related to our restaurant support teams for the Chili’s and Maggiano’s brands, including operations, finance, franchise, marketing, human resources and culinary innovation are included in the results of our operating segments.

The Corporate segment includes costs related to the common and shared infrastructure, including accounting, information technology, purchasing, guest relations, and 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, gift card breakage, Maggiano’s banquet service charge income, delivery, digital entertainment revenues, merchandise income and are net of gift card discounts 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.

3 unchanged sentences

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

Restaurant expenses during the periods presented primarily include restaurant rent, repairs and maintenance, delivery fees and to-go supplies, utilities, advertising, supplies, payment processing fees, franchise and property taxes, workers’ compensation and general liability insurance and supervision expenses.

Restaurant expenses during the periods presented primarily include restaurant rent, repairs and maintenance, advertising, utilities, supplies, delivery fees, payment processing fees, franchise and property taxes, supervision expenses, to-go supplies, and workers’ compensation and general liability insurance.

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

Footnote Index

Thirteen Week Period Ended December 27, 2023

Thirteen Week Period Ended March 27, 2024

Chili's Maggiano's Corporate Consolidated

13 unchanged sentences

Income (loss) before income taxes $ 96.4 $ 12.2 $ ( 54.7 ) $ 53.9

Thirteen Week Period Ended December 28, 2022

Footnote Index

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

Footnote Index

Twenty-Six Week Period Ended December 27, 2023

Thirty-Nine Week Period Ended March 27, 2024

Chili's Maggiano's Corporate Consolidated

15 unchanged sentences

Payments for property and equipment 121.3 12.3 7.3 140.9

Twenty-Six Week Period Ended December 28, 2022

Footnote Index

Thirty-Nine Week Period Ended March 29, 2023

Chili's Maggiano's Corporate Consolidated

17 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 1. Financial Statements