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Item 8. Financial Statements and Supplementary Data

2024-08-21 compared with 2023-08-23 · 176 added, 246 removed, 782 unchanged (35% of the section changed)

7 unchanged sentences

Consolidated Statements of Cash Flows - Fiscal Years Ended June 26 , 202 4, June 28, 2023, and June 29, 2022

Consolidated Statements of Shareholders’ Deficit - Fiscal Years Ended June 28, 2023, June 29, 2022 and June 30, 2021

Consolidated Statements of Shareholders’ Equity (Deficit) - Fiscal Years Ended June 26, 2024, June 28, 2023, and June 29, 2022

Notes to Consolidated Financial Statements

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Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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Income before income taxes 164.9 90.8 115.2

(Benefit) Provision for income taxes ( 11.8 ) ( 2.4 ) 13.6

Provision (benefit) for income taxes 9.6 ( 11.8 ) ( 2.4 )

Net income $ 155.3 $ 102.6 $ 117.6

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Diluted weighted average shares outstanding 45.7 45.0 45.6

Other comprehensive income

Other comprehensive loss

Foreign currency translation adjustment $ ( 0.3 ) $ ( 0.7 ) $ ( 0.6 )

Other comprehensive income (loss) ( 0.7 ) ( 0.6 ) 1.5

Other comprehensive loss

( 0.3 ) ( 0.7 ) ( 0.6 )

Comprehensive income $ 155.0 $ 101.9 $ 117.0

(1) Fiscal 2021, which ended on June 30, 2021, contained 53 weeks.

The impact of the 53rd week in fiscal 2021 resulted in an increase in Total revenues.

While certain expenses increased in direct relationship to additional revenues from the 53rd week, other expenses, such as fixed costs, are incurred on a calendar month basis.

See accompanying Notes to Consolidated Financial Statements

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Prepaid expenses 20.6 17.2

Income taxes receivable, net — 4.5

Total current assets 234.1 183.3

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Total assets $ 2,593.1 $ 2,487.0

LIABILITIES AND SHAREHOLDERS’ DEFICIT

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current liabilities

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Other accrued liabilities 144.7 116.3

Income taxes payable, net 2.4 —

Income taxes payable 7.3 2.4

Total current liabilities 622.3 535.9

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Commitments and contingencies (Note 8)

Shareholders’ deficit

Shareholders’ equity (deficit)

Common stock ( 250.0 million authorized shares;

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( 471.5 ) ( 482.4 )

Total shareholders’ deficit ( 144.3 ) ( 268.1 )

Total liabilities and shareholders’ deficit $ 2,487.0 $ 2,484.4

Total shareholders’ equity (deficit) 39.4 ( 144.3 )

Total liabilities and shareholders’ equity (deficit) $ 2,593.1 $ 2,487.0

See accompanying Notes to Consolidated Financial Statements

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Deferred income taxes, net ( 20.6 ) ( 30.9 ) ( 11.7 )

Restructure and impairment charges 24.0 20.3 9.8

Non-cash other (gains) and charges 28.7 24.0 20.3

Stock-based compensation 25.9 14.4 18.6

1 unchanged sentence

Other 2.8 1.8 3.0

Changes in assets and liabilities, net of the impact of acquisitions:

Changes in assets and liabilities:

Accounts receivable, net ( 0.6 ) 0.7 3.4

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Prepaid expenses ( 12.3 ) ( 20.6 ) ( 12.2 )

Current income taxes 8.0 14.4 14.7

Income taxes 4.0 8.0 14.4

Operating lease assets, net of liabilities ( 4.0 ) ( 2.8 ) 3.4

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BRINKER INTERNATIONAL, INC.

Consolidated Statements of Shareholders’ Deficit

Consolidated Statements of Shareholders’ Equity (Deficit)

(In millions)

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Net income — — — 117.6 — — 117.6

Other comprehensive income — — — — — 1.5 1.5

Other comprehensive loss — — — — — ( 0.6 ) ( 0.6 )

Dividends — — — 0.1 — — 0.1

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Issuances of treasury stock 0.9 — ( 14.9 ) — 27.4 — 12.5

Retirement of stock — ( 1.0 ) — ( 306.1 ) 307.1 — —

Balances at June 28, 2023 44.6 6.0 690.0 ( 351.9 ) ( 482.4 ) ( 6.0 ) ( 144.3 )

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Issuances of treasury stock 1.2 — ( 7.6 ) — 36.2 — 28.6

Retirement of stock — ( 1.0 ) — ( 306.1 ) 307.1 — —

Balances at June 26, 2024 45.0 $ 6.0 $ 707.8 $ ( 196.6 ) $ ( 471.5 ) $ ( 6.3 ) $ 39.4

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Revenue Recognition 55

Acquisitions 57

Fair Value Measurements 56

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Income Taxes 63

Shareholders’ Deficit 68

Shareholders’ Equity (Deficit) 65

Stock-based Compensation 66

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We utilize a 13 week accounting period for quarterly reporting purposes, except in years containing 53 weeks when the fourth quarter contains 14 weeks.

Fiscal 2023 and Fiscal 2022, which ended on June 28, 2023 and June 29, 2022, respectively, each contained 52 weeks.

Fiscal 2021, which ended on June 30, 2021, contained 53 weeks.

Fiscal 2024, Fiscal 2023 and Fiscal 2022 which ended on June 26, 2024, June 28, 2023 and June 29, 2022 respectively, each contained 52 weeks.

Reclassifications - Beginning in 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.

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Actual results could differ from those estimates.

External Impacts to Our Operating Environment - During both 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.

During fiscal 2023, all our domestic Company-owned and franchise restaurants operated with no restrictions.

During fiscal 2022, the continuing spread of COVID-19 cases (particularly the Omicron variant), significantly impacted our guest traffic and sales.

Many of our restaurants had face mask requirements and some of our restaurants had proof of vaccination requirements for our customers, team members or both.

Significant Accounting Policies

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Fair value measurements are categorized in three levels based on the types of significant inputs used, as follows:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs available at measurement date other than quote prices included in Level 1

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Goodwill - Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is assigned to the reporting unit in which the acquired business will operate for purposes of impairment testing.

Goodwill is tested for impairment annually, as of the first day of the second quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Goodwill is tested for impairment annually, during the second quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

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

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Revenues - Revenues are presented in the Company sales and Franchise revenues captions in the Consolidated Statements of Comprehensive Income.

Company Sales - Company sales 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.

Company Sales - Company sales 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 discount costs from third-party gift card sales.

We record revenues from the sale of food, beverages and alcohol, net of discounts, upon delivery to the customer.

Sales taxes assessed by a governmental authority that are both imposed on and concurrent with specific revenue transactions and collected from a customer have been excluded from revenues.

Gift Card Breakage Revenue - Breakage revenues represent the monetary value associated with outstanding gift card balances that will not be redeemed.

Gift card breakage represents the monetary value associated with outstanding gift card balances that will not be redeemed.

We estimate this amount based on our historical gift card redemption patterns and actuarial estimates, update the breakage rate estimate periodically and if necessary, adjust the deferred revenues balance within the Gift card liability in the Consolidated Balance Sheets.

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Additionally, proceeds from the sale of gift cards are recorded as deferred revenues in the Gift card liability in the Consolidated Balance Sheets and recognized as Company sales when the gift card is redeemed by the holder.

Gift Card Discount Costs - Our gift cards are sold through various outlets such as in-restaurant, Chili’s and Maggiano’s websites, directly to other businesses and through third-party distributors that sell our gift cards at retail locations.

Our gift cards are sold through various outlets such as in-restaurant, Chili’s and Maggiano’s websites, directly to other businesses and through third-party distributors that sell our gift cards at retail locations.

We incur incremental direct costs, such as commissions and activation fees, for gift cards sold by third-party businesses and distributors.

These initial direct costs are deferred and amortized against revenues proportionate to the pattern of related gift card redemptions.

Franchise Revenues - Franchise revenues include royalties, franchise advertising fees, gift card equalization, and franchise and development fees.

These gift card discount costs are deferred and amortized against revenues proportionate to the pattern of related gift card redemptions.

Franchise Revenues - Franchise revenues include royalties, franchise advertising fees, franchise and development fees and gift card equalization.

Franchise royalties are based on a percentage of the sales generated by our franchise-operated restaurants.

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Franchise and Development Fees are received from franchises for new restaurant openings and for territory development arrangements.

The performance obligation related to these arrangements are collectively deferred as a contract liability and recognized

The performance obligation related to these arrangements are collectively deferred as a contract liability and recognized on a straight-

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on a straight-line basis into Franchise revenues in the Consolidated Statements of Comprehensive Income over the term of the underlying agreements.

line basis into Franchise revenues in the Consolidated Statements of Comprehensive Income over the term of the underlying agreements.

Advertising Expenses - Advertising production costs are expensed in the period when the advertising first takes place.

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We record a liability for unrecognized tax benefits resulting from tax positions taken, or expected to be taken, in an income tax return that is not more-likely-than-not to be realized.

We recognize any interest and penalties related to unrecognized tax benefits in (Benefit) Provision for income taxes in the Consolidated Statements of Comprehensive Income.

We recognize any interest and penalties related to unrecognized tax benefits in Provision (benefit) for income taxes in the Consolidated Statements of Comprehensive Income.

Additionally, income taxes are computed on a consolidated legal jurisdiction basis with no regard to brand.

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Therefore, we apply estimated forfeiture rates that are derived from our historical forfeitures of similar awards.

Certain employees are eligible to receive stock options, performance stock options, performance shares, restricted stock and restricted stock units, while non-employee members of the Board of Directors are eligible to receive stock options, restricted stock and restricted stock units.

Certain employees are eligible to receive stock options, performance shares, restricted stock and restricted stock units, while non-employee members of the Board of Directors are eligible to receive stock options, restricted stock and restricted stock units.

Awards granted to the Board of Directors are non-forfeitable and are fully expensed upon grant.

Awards to eligible employees may vest over a specified period of time or service period and may also contain performance-based conditions.

The fair value of restricted stock and restricted stock units that do not contain a performance condition are based on our closing stock price on the date of grant, while the fair value of stock options, if granted, is estimated using the Black-Scholes option-pricing model on the date of grant.

The fair values of restricted stock and restricted stock units that do not contain a performance condition are based on our closing stock price on the date of grant, while the fair value of stock options, if granted, is estimated using the Black-Scholes option-pricing model on the date of grant.

Performance shares represent a right to receive shares of common stock upon satisfaction of Company performance goals usually at the end of a three-fiscal-year cycle.

Vesting of performance shares granted are generally contingent upon meeting Company performance goals based on a specified rate of earnings growth or a specified range of earnings at the end of the three-fiscal-year period and may also include a market-based metric, such as TSR.

Compensation expenses for the performance shares is recorded to General and administrative expenses based on management’s periodic estimates of the number of shares that will be earned under the Company performance metric, and the fair value of the shares as determined by our closing stock price on the date of grant, or by Monte Carlo simulation if a market-based metric is included.

Vesting of performance shares granted are generally contingent upon meeting Company performance goals based on a specified range of earnings at the end of the three-fiscal-year period and may also include a market-based metric, such as TSR.

Compensation expenses for the performance shares are recorded to General and administrative expenses based on management’s periodic estimates of the number of shares that will be earned under the Company performance metric, and the fair value of the shares as determined by our closing stock price on the date of grant, or by Monte Carlo simulation if a market-based metric is included.

A cumulative expenses adjustment is recognized when that estimate changes.

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dollars and are reported as a component of comprehensive income and recorded in Accumulated other comprehensive loss on our Consolidated Balance Sheets.

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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

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the dilutive effect of stock options and restricted share awards.

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.

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Awards excluded due to anti-dilutive effect 0.4 1.3 0.8

New Accounting Standards Implemented

We reviewed all accounting pronouncements that became effective for our fiscal 2023 and determined that either they were not applicable or they did not have a material impact on the Consolidated Financial Statements.

We also reviewed all 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.

Chili’s Restaurant Acquisitions

During fiscal 2022, we completed the acquisitions of 68 Chili’s restaurants from three former franchisees.

We accounted for these acquisitions as a business combination.

Total purchase price, including post-closing adjustments was $ 106.7 million.

The results of operations, and assets and liabilities, of these restaurants are included in the Consolidated Financial Statements from the acquisition dates.

Recently Issued Accounting Standards or Disclosure Rules

In November 2023, the Financial Accounting Standards Board (“FASB”) 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 Form 10-K.

Early adoption is permitted.

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

Management does not expect this ASU to have a material impact on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires disaggregated information about a company’s effective tax rate reconciliation and requires disclosure of income taxes paid by jurisdiction.

The amendments are effective for fiscal years beginning after December 15, 2024, which would require us to adopt the provisions in our fiscal 2026 Form 10-K.

Early adoption is permitted.

The amendments should be applied prospectively;

however, retrospective application is permitted.

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

In March 2024, the SEC adopted the final rule under SEC Release No.

33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors.

This rule will require registrants to disclose certain climate-related information in registration statements and annual reports.

In April 2024, the SEC voluntarily stayed the final rule as a result of pending legal challenges.

The disclosure requirements will apply to our fiscal year beginning June 26, 2025 (fiscal 2026 Form 10-K), pending resolution of the stay.

Management is currently evaluating the final rule to determine its impact on our disclosures.

Footnote Index

REVENUE RECOGNITION

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Recognition of these fees in subsequent periods is based on satisfaction of the contractual performance obligations of the active contracts with franchisees.

The weighted average remaining term of the current franchise agreements, including certain renewal periods expected to be exercised, was approximately 20 years as of June 28, 2023.

We also expect to earn subsequent period royalties and advertising fees related to our franchise contracts;

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Additions 0.6 1.9

Amount recognized to Other gains and charges (1)

Amount recognized to Franchise revenues ( 2.0 ) ( 0.9 )

Ending balance $ 9.7 $ 11.1

(1) The remaining deferred franchise and development fee balances associated with the 68 Chili’s restaurants acquired during fiscal 2022 were recognized as of the acquisition dates in Other (gains) and charges in the Consolidated Statements of Comprehensive Income.

Refer to Note 3 - Acquisitions for further details.

Footnote Index

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 June 26, 2024:

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Ending balance $ 64.8 $ 73.0

(1) Gift card breakage recognized to Company sales decreased due to prior year change in estimate to increase gift card breakage rates primarily attributable to gift cards sold prior to fiscal 2022.

During fiscal 2022, we completed three acquisitions of substantially all of the assets and certain liabilities related to previously franchised Chili’s locations, as follows:

• Mid-Atlantic Region Acquisition - On September 2, 2021, we acquired 23 previously franchised Chili’s restaurants located in the Mid-Atlantic region of the United States for a total purchase price of $ 47.7 million, including post-closing adjustments.

The acquisition was funded with borrowings from our existing credit facility and proceeds from a sale leaseback transaction completed simultaneously with the acquisition (refer to Note 7 - Leases for further details on the sale leaseback transaction).

• Great Lakes Region Acquisition - On October 31, 2021, we acquired 37 previously franchised Chili’s restaurants located in the Great Lakes and Northeast region of the United States for a total purchase price of $ 57.1 million, including post-closing adjustments, funded with borrowings from our existing credit facility.

• Northwest Region Acquisition - On February 1, 2022, we acquired six previously franchised Chili’s restaurants and on May 5, 2022, we acquired two additional previously franchised Chili’s restaurants located in the Northwest region of the United States for a total purchase price of $ 2.0 million, including post-closing adjustments.

We accounted for each of these acquisitions as a business combination.

The results of operations, and assets and liabilities, of these restaurants are included in the Consolidated Financial Statements from the acquisition dates.

The assets and liabilities of the acquired restaurants were recorded at their fair values.

The fair values of tangible and

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intangible assets acquired were primarily based on significant inputs not observable in an active market, including estimates of replacement costs, future cash flows and discount rates.

These inputs represent Level 3 fair value measurements as defined under GAAP.

The amounts recorded for the fair value of acquired assets and liabilities for the more significant acquisitions are as follows:

Mid-Atlantic Region Great Lakes Region

Fair Value September 2, 2021 Fair Value October 31, 2021

Current assets $ 1.4 $ 2.1

Property and equipment 46.2 43.6

Operating lease assets 23.6 47.8

Reacquired franchise rights (1)

Current liabilities ( 1.4 ) ( 1.4 )

Finance lease liabilities, less current portion ( 3.7 ) —

Operating lease liabilities, less current portion ( 23.1 ) ( 46.8 )

Net assets acquired $ 47.7 $ 57.1

(1) Reacquired franchise rights related to the Mid-Atlantic Region acquisition and Great Lakes Region acquisition both have weighted average amortization periods of approximately 15 years.

(2) Goodwill is expected to be deductible for tax purposes.

The portion of the purchase price attributable to goodwill represents the benefits expected as a result of the acquisition, including sales and unit growth opportunities, and the benefit of the assembled workforce of the acquired restaurants.

FAIR VALUE MEASUREMENTS

Non-Financial Assets

The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying amounts because of the short maturity of these items.

The carrying amount of long-term debt outstanding related to our revolving credit facility approximates fair value as the interest rate on this instrument approximates current market rates (Level 2).

As of the end of fiscal 2024, there was no outstanding balance on the revolving credit facility.

Refer to Note 7 - Debt for more information regarding our long-term debt including our 5.000% and 8.250% notes.

The fair values of these notes are based on quoted market prices and are considered Level 2 fair value measurements, and the carrying amounts and the fair values are as follows:

June 26, 2024 June 28, 2023

Carrying Amount Fair Value Carrying Amount Fair Value

5.000 % notes $ 349.8 $ 349.6 $ 349.0 $ 343.5

345.2 367.8 344.3 348.3

We review the carrying amounts of non-financial assets, primarily long-lived property and equipment, finance lease assets, operating lease assets, reacquired franchise rights, goodwill and transferable liquor licenses annually or when events or circumstances indicate that the fair value may not substantially exceed the carrying amount.

We determined the fair values of property and equipment, including finance lease assets, operating lease assets and reacquired franchise rights are based on Level 3 fair value measurements.

The fair values of transferable liquor licenses are based on prices in the open market for licenses in the same or similar jurisdictions and are categorized as Level 2.

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

All impairment charges were included in Other (gains) and charges in the Consolidated Statements of Comprehensive Income for the periods presented.

Refer to Note 14 - Other Gains and Charges for more information.

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

Definite-Lived Assets Impairment

Definite-lived assets include property and equipment, including finance lease assets, operating lease assets and reacquired franchise rights.

During fiscal 2023, we impaired certain long-lived assets and operating lease assets primarily related to 38 underperforming Chili’s restaurants.

During fiscal 2022, we impaired certain long-lived assets and operating lease assets primarily related to 30 underperforming Chili’s and two underperforming Maggiano’s restaurants.

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We determined the fair value of these assets based on Level 3 fair value measurements.

The table below presents the carrying values and related impairment charges recorded on these impaired restaurants for the periods presented:

During fiscal 2024 and fiscal 2023 we impaired certain long-lived assets and operating lease assets primarily related to 35 and 38 underperforming Chili’s restaurants, respectively.

The table below presents the carrying values and related charges recorded on these impaired restaurants for the periods presented:

Impairment Charges

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June 26, 2024 June 28, 2023 June 26, 2024 June 28, 2023

Underperforming restaurants

Long-lived assets $ 10.2 $ 7.3 $ 10.2 $ 7.3

Reacquired franchise rights assets 0.3 — 0.3 —

Property and equipment $ 10.2 $ 10.2 $ 9.3 $ 10.2

Reacquired franchise rights 0.4 0.3 0.4 0.3

Operating lease assets 21.4 21.4 2.5 1.5

Total underperforming restaurants $ 31.9 $ 20.3 $ 12.0 $ 8.3

Indefinite-Lived Assets Impairment

The fair values of transferable liquor licenses are based on prices in the open market for licenses in the same or similar jurisdictions and are categorized as Level 2.

Based on our annual reviews, in fiscal 2023 we determined there was a $ 0.1 million impairment and in fiscal 2022 we determined there was $ 0.2 million impairment.

Chili’s Restaurant Acquisitions

In fiscal 2022, we completed the acquisition of 68 Chili’s restaurants from three former franchisees.

The preliminary fair value of assets acquired and liabilities assumed for these restaurants utilized Level 3 inputs.

The fair values of intangible assets acquired were primarily based on significant inputs not observable in an active market, including estimates of replacement costs, future cash flows, and discount rates.

Refer to Note 3 - Acquisitions for further details.

Other Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and long-term debt.

The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying amounts because of the short maturity of these items.

Long-Term Debt

The carrying amount of debt outstanding related to our revolving credit facility approximates fair value as the interest rate on this instrument approximates current market rates (Level 2).

The fair values of our notes are based on quoted market prices and are considered Level 2 fair value measurements.

The 5.000 %, 8.250 % and 3.875 % notes’ carrying amounts, which are net of unamortized debt issuance costs and discounts, and fair values are as follows, refer to Note 8 - Debt for further details:

June 28, 2023 June 29, 2022

Carrying Amount Fair Value Carrying Amount Fair Value

5.000 % notes $ 349.0 $ 343.5 $ 348.2 $ 329.0

8.250% notes (1)

344.3 348.3 — —

3.875% notes (2)

— — 299.7 295.4

(1) On June 27, 2023 we issued $ 350.0 million of 8.250% senior notes due July 2030 (the “2030 Notes”).

(2) On May 15, 2023 the 3.875% notes matured and were repaid in full using borrowings under our revolving credit facility.

Total $ 32.0 $ 31.9 $ 12.2 $ 12.0

During fiscal 2024 and fiscal 2023 we impaired certain transferable liquor licenses with related charges of $ 0.1 million in each of the respective fiscal years.

All impairment charges were included in Other (gains) and charges in the Consolidated Statements of Comprehensive Income for the periods presented.

Refer to Note 13 - Other Gains and Charges for more information.

Footnote Index

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Changes in goodwill:

Additions (1)

— — — 7.2 — 7.2

Foreign currency translation adjustment ( 0.2 ) — ( 0.2 ) ( 0.1 ) — ( 0.1 )

Balance at end of year $ 156.4 $ 38.4 $ 194.8 $ 156.6 $ 38.4 $ 195.0

(1) In the fiscal year ended June 29, 2022, we acquired 68 domestic Chili’s restaurants previously owned by three franchise partners.

Refer to Note 3 - Acquisitions for further information.

Intangible assets, net are as follows:

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Chili’s reacquired franchise rights (1)

$ 26.0 $ ( 16.2 ) $ 9.8 $ 28.4 $ ( 14.9 ) $ 13.5

Chili’s other 0.4 ( 0.4 ) — 0.4 ( 0.4 ) —

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$ 10.1 $ 10.4

(1) The carrying value of Definite-lived intangible assets was adjusted for closure write offs and impairment charges in fiscal 2024 and 2023.

Amortization expenses for all definite-lived intangible assets were recorded in Depreciation and amortization in the Consolidated Statements of Comprehensive Income as follows:

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Definite-lived intangibles amortization expense $ 3.0 $ 3.2 $ 3.0

Annual amortization expenses for definite-lived intangible assets are estimated to be $ 3.0 million for fiscal 2024, $ 2.7 million for each of fiscal 2025, fiscal 2026, and fiscal 2027 and $ 1.4 million for fiscal 2028.

Annual amortization expenses for definite-lived intangible assets are estimated to be $ 2.7 million for fiscal 2025 and fiscal 2026, $ 2.6 million for fiscal 2027, $ 0.9 million fiscal 2028 and $ 0.5 million for fiscal 2029.

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Sales tax 18.4 17.3

Utilities and services 10.4 9.6

Current installments of finance lease obligations 10.2 20.3

Interest 18.1 6.4

Current installments of finance lease obligations 14.1 10.2

Utilities and services 10.0 10.4

Other 28.1 18.2

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Finance leases 53.7 0.3 13.4

(1) Cash paid related to lease liabilities for Operating leases were higher in fiscal 2021 primarily due to the lease payments made during fiscal 2021 for rents that were deferred in fiscal 2020 due to the impacts of the COVID-19 pandemic.

(1) Non-cash operating lease assets obtained in exchange for operating lease liabilities were higher in fiscal 2022 primarily due to the new and assumed operating lease additions associated with the 68 restaurants purchased from three former franchisees, including sale leaseback transactions on six of the acquired restaurants.

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Additionally, the modifications of 25 leases in fiscal 2022 from finance leases to operating leases, resulted in increased operating lease assets of $ 47.9 million.

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Weighted Average Lease Term and Discount Rate

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Weighted average discount rate 5.9 % 6.0 % 5.5 % 5.8 %

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Lease Maturity Analysis

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Pre-Commencement Leases

In fiscal 2023, we executed five leases for new Chili’s locations with undiscounted fixed payments over the initial term of $ 17.7 million.

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

In fiscal 2024, we executed four leases for new Chili’s locations and one lease for a new Maggiano’s location with undiscounted fixed payments over the initial term of $ 15.5 million.

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

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5.000% notes (1)

8.250% notes (1)

3.875% notes (2)

Finance lease obligations 105.4 67.8

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Total long-term debt, less current portion $ 786.3 $ 912.2

(1) On June 27, 2023 we issued $ 350.0 million of 8.250% senior notes due July 2030.

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(2) On May 15, 2023 the 3.875% notes matured and were repaid in full using borrowings under our revolving credit facility.

(1) Obligations under our 5.000% notes, which mature on October 1, 2024 , 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 finance lease obligations, for the periods presented, are recorded within Other accrued liabilities in the Consolidated Balance Sheets.

Refer to Note 5 - Accrued Liabilities for further details.

Footnote Index

Excluding finance lease obligations and interest, our long-term debt maturities for the five fiscal years following June 26, 2024 and thereafter are as follows:

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Revolving Credit Facility

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 .

During fiscal 2023, we incurred and capitalized $ 0.5 million of debt issuance costs associated with the revolving credit facility, which are included in Other assets in the Consolidated Balance Sheets.

The $ 900.0 million revolving credit facility, as amended, matures on August 18, 2026 and bears interest of SOFR 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.

The $ 900.0 million revolving credit facility, as amended, matures on August 18, 2026 and bears interest at a rate of SOFR plus an applicable margin of 1.60 % to 2.35 % 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 June 26, 2024, our interest rate was 6.94 % consisting of SOFR of 5.34 % plus the applicable margin and spread adjustment of 1.60 %.

1 unchanged sentence

8.250 % Notes

On May 15, 2023, our $ 300.0 million 3.875 % notes matured and the payoff was funded with borrowings from our revolving credit facility.

8.250 % Notes

On June 27, 2023, we issued $ 350.0 million of 8.250 % senior notes due July 15, 2030 and used $ 340.0 million of the proceeds to reduce outstanding borrowings on the revolver.

The 2030 Notes require semi-annual interest payments in arrears, on each January 15 and July 15, beginning on January 15, 2024.

During fiscal 2023, we incurred and capitalized $ 5.7 million of debt issuance costs associated with the 2030 Notes, which are included in Long-term debt and finance leases, less current installments in the Consolidated Balance Sheets.

In fiscal 2023, we issued $ 350.0 million of 8.250 % se nior notes due July 15, 2030 (the “2030 Notes”).

The 2030 Notes require semi-annual interest payments in arrears, on each January 15 and July 15, which began on January 15, 2024.

5.000 % Notes

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Financial and Other Covenants

The indentures for the 2024 Notes and 2030 Notes contain certain covenants, including, but not limited to, limitations and restrictions on the ability of the Company and its Restricted Subsidiaries (as defined in the indentures) to (i) create liens on Principal Property (as defined in the Indenture) and (ii) merge, consolidate or amalgamate with or into any other person or sell, transfer, assign, lease, convey or otherwise dispose of all or

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substantially all of their property.

These covenants are subject to a number of important conditions, qualifications, exceptions and limitations.

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

As of June 28, 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 2024 Notes and 2030 Notes .

We expect to remain in compliance with our covenants throughout fiscal 2024.

As of June 26, 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 .

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COMMITMENTS AND CONTINGENCIES

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These leases have been assigned to the buyers and expire at the end of the respective lease terms, which range from fiscal 2025 through fiscal 2035.

In the event of default under a lease by a franchisee or 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 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 third parties.

We have received notices of default and have been named a party in lawsuits pertaining to some of these leases in circumstances where the current lessee did not pay its rent obligations.

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, including bankruptcy laws, govern our ability to pursue and recover amounts we may pay on behalf of such third parties.

We recorded a $ 2.0 million and $ 3.1 million charge in fiscal 2023 and fiscal 2022, respectively, which are included in Other (gains) and charges in the Consolidated Statements of Comprehensive Income.

These amounts are related to these leases and lawsuits and represent the low end of our estimated range of losses.

We recorded a $ 0.8 million and $ 2.0 million charge related to these leases and lawsuits in fiscal 2024 and fiscal 2023, respectively, which are included in Other (gains) and charges in the Consolidated Statements of Comprehensive Income.

We will continue to closely monitor our exposure.

3 unchanged sentences

All standby letters of credit are renewable within the next 10 months.

Cyber Security Litigation

Cybersecurity Litigation

In fiscal 2018, we discovered malware at certain Chili’s restaurants that may have resulted in unauthorized access or acquisition of customer payment card data.

2 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 July 11, 2023, the Eleventh Circuit Court of Appeals issued its order on our appeal of the district court’s class certification order.

The majority (1) found that only one plaintiff sufficiently alleged standing, but that Plaintiffs’ allegation that all cards involved in the data breach were posted to the “dark web” constitutes misuse sufficient to establish Article III standing;

(2) vacated and remanded the class certification decision for the district court to reconsider its predominance requirement;

and (3) upheld Plaintiff’s “averaging” damages methodology.

While the court’s decision to decertify the class is favorable, we believe the majority’s reasoning on the issues of standing and damages calculation is erroneous.

Accordingly, we intend to file a petition for rehearing with the Eleventh Circuit.

All matters at the district court remain stayed.

On April 29, 2024, the US Supreme Court denied our petition for certiorari concerning review of the Eleventh Circuit’s decision to uphold plaintiff’s damages calculation.

Accordingly, the parties continue to await the trial court’s ruling on the issue of predominance as it relates to class certification in light of the Eleventh Circuit’s ruling on this issue.

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

As such, as of June 28, 2023, we have concluded that a loss, or range of loss, from this matter is not

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determinable, therefore, we have not recorded a liability related to the Litigation.

As such, as of June 26, 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.

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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.

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Income before income taxes consists of the following:

4 unchanged sentences

Income before income taxes $ 164.9 $ 90.8 $ 115.2

The (Benefit) Provision for income taxes and effective tax rate consists of the following:

The Provision (benefit) for income taxes and effective tax rate consists of the following:

Fiscal Years Ended

June 26, 2024 June 28, 2023 June 29, 2022

Current income tax (benefit) expenses:

Current income tax expenses:

Federal $ 17.5 $ 12.2 $ 5.8

7 unchanged sentences

Total deferred income tax (benefit) expenses ( 20.6 ) ( 31.0 ) ( 11.6 )

(Benefit) Provision for income taxes $ ( 11.8 ) $ ( 2.4 ) $ 13.6

Provision (benefit) for income taxes $ 9.6 $ ( 11.8 ) $ ( 2.4 )

Effective tax rate 5.8 % ( 13.0 ) % ( 2.1 ) %

Footnote Index

A reconciliation between the reported (Benefit) Provision for income taxes and the amount computed by applying the statutory Federal income tax rate to Income before income taxes is as follows:

A reconciliation between the reported Provision (benefit) for income taxes and the amount computed by applying the statutory Federal income tax rate to Income before income taxes is as follows:

Fiscal Years Ended

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State income taxes, net of Federal benefit 7.7 4.7 6.2

Officers' compensation 3.7 0.0 0.9

Stock based compensation tax shortfall (windfall) ( 1.2 ) 0.8 ( 0.7 )

Other ( 1.0 ) ( 1.7 ) ( 0.1 )

(Benefit) Provision for income taxes $ ( 11.8 ) $ ( 2.4 ) $ 13.6

Provision (benefit) for income taxes $ 9.6 $ ( 11.8 ) $ ( 2.4 )

Our federal statutory tax rate for fiscal 2024, fiscal 2023 and fiscal 2022 was 21.0 %.

Footnote Index

Deferred Tax and Allowances

7 unchanged sentences

Federal credit carryover 61.2 59.5

Depreciation and capitalized interest on property and equipment 15.8 —

Net operating losses 4.4 4.2

1 unchanged sentence

Restructure charges and impairments 3.0 2.1

Payroll tax deferral — 6.8

Other, net 11.9 9.7

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We have deferred tax assets of $ 61.2 million of federal and $ 2.3 million of state tax credits, before federal benefit and valuation allowance, which expire at various dates between 2025 and 2044.

The recognized deferred tax asset for the state loss carryforwards, net of valuation allowance, is $ 2.3 million and the federal tax credits is $ 59.5 million.

$ 5.7 million of the federal credit carryover is limited by Section 382 of the Internal Revenue Code.

The recognized deferred tax asset, net of valuation allowance and federal benefit, for the state loss carryforwards is $ 2.5 million and the state tax credit carryforwards is $ 0.5 million.

There is no valuation allowance on the federal credit carryover and $ 5.1 million is limited by Section 382 of the Internal Revenue Code.

The valuation allowance is $ 5.8 million at the end of fiscal 2024 to recognize certain deductions and tax credits management believes are more-likely-than-not to not be realized.

In assessing whether a deferred tax asset will be

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realized, we consider the likelihood of the realization, and the reversal of existing taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment.

In assessing whether a deferred tax asset will be realized, we consider the likelihood of the realization, and the reversal of existing taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment.

Based upon the level of historical taxable income and projections for future taxable income, as of June 26, 2024, we believe it is more-likely-than-not that we will realize the benefits of the deferred tax assets, net of the existing valuation allowances.

Footnote Index

Unrecognized Tax Benefits

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Additions (Decreases) based on tax positions related to prior years — 0.1

Settlements with tax authorities — ( 0.8 )

Expiration of statute of limitations ( 0.3 ) ( 1.4 )

2 unchanged sentences

We do not expect any material changes to our liability for uncertain tax positions in the next 12 months.

We recognize accrued interest and penalties related to unrecognized tax benefits in (Benefit) Provision for income taxes in the Consolidated Statements of Comprehensive Income.

We recognize accrued interest and penalties related to unrecognized tax benefits in Provision (benefit) for income taxes in the Consolidated Statements of Comprehensive Income.

As of June 26, 2024, we had $ 0.2 million ($ 0.2 million net of a $ 0.0 million Federal deferred tax benefit) of interest and penalties accrued, compared to $ 0.2 million ($ 0.2 million net of a $ 0.0 million Federal deferred tax benefit) as of June 28, 2023.

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Compliance Assurance Process (CAP) program.

Our federal return for fiscal 2025 is under examination through the Internal Revenue Service:

Bridge Plus program.

There are no unrecorded liabilities associated with these examinations.

SHAREHOLDERS’ DEFICIT

SHAREHOLDERS’ EQUITY (DEFICIT)

Retirement of Common Stock

1 unchanged sentence

As of June 26, 2024, 15.3 million shares remain in treasury.

Footnote Index

Share Repurchases

In fiscal 2022, our Board of Directors approved a $ 300.0 million share repurchase program and the Company repurchased 2.3 million shares of our common stock for $ 96.0 million.

The Company did not repurchase any shares under the repurchase program in fiscal 2023.

Our Board of Directors approved a $ 300.0 million share repurchase program in August 2021.

Our share repurchase program is used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards.

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.

Repurchased shares are reflected as an increase in Treasury stock within Shareholders’ deficit in the Consolidated Balance Sheets.

In fiscal 2023, we repurchased 0.1 million shares of our common stock for $ 5.0 million, all of which were purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares.

Repurchased shares are reflected as an increase in Treasury stock within Shareholders’ equity (deficit) in the Consolidated Balance Sheets.

In fiscal 2024, we repurchased 0.7 million shares of our common stock for $ 21.0 million as part of our share repurchase program and 0.1 million shares of our common stock for $ 4.8 million 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.

In fiscal 2022, the Company repurchased 2.3 million shares of our common stock for $ 96.0 million as part of our share repurchase program.

The Company did not repurchase any shares under the repurchase program in fiscal 2023.

As of June 26, 2024, approximately $ 183.0 million was available in the share repurchase program.

Footnote Index

STOCK-BASED COMPENSATION

10 unchanged sentences

Tax benefit related to stock-based compensation expenses 4.3 2.6 3.9

Stock Options

In fiscal 2019 and fiscal 2018, certain eligible employees under the Plans were granted performance stock options whose vesting was contingent upon meeting Company performance goals based on our annual earnings at the end of fiscal 2021 and fiscal 2022.

Expenses for performance stock options were recognized using a graded-vesting schedule over the vesting period based upon management’s periodic estimates of the number of stock options that ultimately vested.

At the end of fiscal 2021, the first performance goal was met, resulting in the vesting of 0.4 million, or one-half, of the outstanding performance stock options.

At the end of fiscal 2022, the second performance goal was not met, which resulted in the forfeiture of the remaining 0.4 million performance stock options.

The options have a contractual term to exercise of no later than August 31, 2025.

Stock options that do not contain a performance condition were also granted to eligible employees in the fiscal years prior to fiscal 2021.

Expenses related to these stock options are recognized using a graded-vesting schedule over the vesting period or to the date on which retirement eligibility is achieved, if shorter.

Stock options generally vest over a period of 1 to 4 years and have contractual terms to exercise of 8 years.

Full or partial vesting of awards may occur upon a change in control (as defined in the Plans), or upon an employee’s death, disability or involuntary termination.

No stock options have been granted in fiscal 2023, fiscal 2022, or fiscal 2021.

Footnote Index

Stock option transactions during fiscal 2023 were as follows (option prices in dollars):

Options Weighted

Price Weighted

Life (Years) Aggregate

Stock options outstanding at June 29, 2022 1.9 $ 38.73

Exercised ( 0.4 ) 31.52

Forfeited or canceled ( 0.5 ) 40.36

Stock options outstanding at June 28, 2023 1.0 $ 40.74 2.5 $ 1.3

Stock options exercisable at June 28, 2023 1.0 $ 40.98 2.4 $ 1.1

The intrinsic value and related tax benefit of options exercised is as follows:

Fiscal Years Ended

June 28, 2023 June 29, 2022 June 30, 2021

Intrinsic value of options exercised $ 3.3 $ 0.2 $ 9.8

Tax benefit realized on options exercised 0.8 — 2.4

Restricted Share Awards

Restricted share awards consist of performance shares and restricted stock units.

In fiscal 2023 and fiscal 2022, eligible employees under the Plans were granted performance shares whose vesting is contingent upon meeting Company performance goals based on our earnings at the end of a three-fiscal-year period.

In fiscal 2024, fiscal 2023 and fiscal 2022, eligible employees under the Plans were granted performance shares whose vesting is contingent upon meeting Company performance goals based on our earnings at the end of a three-fiscal-year period.

The number of shares that will vest varies depending on the amount of earnings achieved as compared to the target amount.

The fiscal 2023 grant also includes a provision that will increase or decrease the number of shares to be vested if Brinker’s relative TSR ranking compared to the peer group falls in the top 25% or bottom 25%, respectively.

In fiscal 2021, certain eligible employees under the Plans were granted performance shares whose vesting is contingent upon the Company exceeding a specified level of annual earnings in any of fiscal 2022, fiscal 2023 or fiscal 2024.

The number of shares that will vest varies depending on the fiscal year that the performance criteria is first met.

The fiscal 2024 and fiscal 2023 grants also include a provision that will increase or decrease the number of shares to be vested if Brinker’s relative TSR ranking compared to the peer group falls in the top 25% or bottom 25%, respectively.

The number of shares that can vest ranges from 0% of target to 200% of target.

Expenses are recognized ratably over the vesting period, or to the date on which retirement eligibility is achieved, if shorter, based upon management’s periodic estimates of the number of shares that will be earned under the Company performance metric.

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Non-employee directors’ awards have variable distribution dates ranging from one year after grant to two years following departure from the Board.

Footnote Index

Restricted share award transactions, including performance shares reflected at target, during fiscal 2024 were as follows (fair value per award in dollars):

5 unchanged sentences

Restricted share awards outstanding at June 26, 2024 1.6 $ 35.12

Footnote Index

As of June 26, 2024, unrecognized compensation expenses related to unvested restricted share awards that are expected to vest totaled approximately $ 18.1 million and will be recognized over a weighted average period of 1.6 years.

3 unchanged sentences

Fair value of restricted share awards vested $ 16.8 $ 16.1 $ 18.1

Stock Options

At the end of fiscal 2021, the first performance goal was met, resulting in the vesting of 0.4 million, or one-half, of the outstanding performance stock options.

At the end of fiscal 2022, the second performance goal was not met, which resulted in the forfeiture of the remaining 0.4 million performance stock options.

The options have a contractual term to exercise of no later than August 31, 2025.

Stock options that do not contain a performance condition were also granted to eligible employees in the fiscal years prior to fiscal 2021.

Expenses related to these stock options were recognized using a graded-vesting schedule over the vesting period or to the date on which retirement eligibility was achieved, if shorter.

Stock options generally vested over a period of 1 to 4 years and have contractual terms to exercise of 8 years.

Full or partial vesting of awards may have occurred upon a change in control (as defined in the Plans), or upon an employee’s death, disability or involuntary termination.

No stock options have been granted in fiscal 2024, fiscal 2023, or fiscal 2022.

Stock option transactions during fiscal 2024 were as follows (option prices in dollars):

Options Weighted

Price Weighted

Life (Years) Aggregate

Stock options outstanding at June 28, 2023 1.0 $ 40.74

Exercised ( 0.7 ) 40.94

Forfeited or canceled ( 0.1 ) 49.09

Stock options outstanding and exercisable at June 26, 2024 0.2 $ 38.03 1.9 $ 8.5

The intrinsic value and related tax benefit of options exercised is as follows:

Fiscal Years Ended

June 26, 2024 June 28, 2023 June 29, 2022

Intrinsic value of options exercised $ 11.5 $ 3.3 $ 0.2

Tax benefit realized on options exercised 1.1 0.8 —

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DEFINED CONTRIBUTION PLAN

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We match, in cash, what an employee contributes at a rate of 100 % of the first 3 % and 50 % of the next 2 % with immediate vesting.

Effective January 1, 2021, the plan was amended and restated in its entirety primarily for the purpose of reinstating the safe harbor matching employer contributions which were suspended in May 2020 to reduce corporate expenses in response to the business downturn caused by the COVID-19 impact.

Additionally, in June 2021, the plan was amended and restated to adopt a new pre-approved plan document as required by the IRS.

We contributed employer matching contributions in each fiscal year which is recorded to General and administrative in the Consolidated Statements of Comprehensive Income:

2 unchanged sentences

Employer contributions match expenses $ 13.6 $ 11.9 $ 11.0

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OTHER GAINS AND CHARGES

2 unchanged sentences

June 26, 2024 June 28, 2023 June 29, 2022

Enterprise system implementation costs $ 14.0 $ 4.7 $ 2.4

Restaurant level impairment charges 12.3 12.1 8.5

Restaurant closure asset write-offs and charges 10.1 8.3 3.7

Enterprise system implementation costs 4.7 2.4 —

Severance and other benefit charges 3.7 — 0.5

Litigation & claims, net 6.6 2.5 3.4

Lease contingencies 0.8 2.0 3.1

Remodel-related asset write-off 1.1 4.9 2.3

Loss from natural disasters, net of (insurance recoveries) 0.8 1.1 2.9

Severance 0.5 3.7 —

Remodel-related asset write-offs 0.5 1.1 4.9

Gain on sale of assets, net ( 2.7 ) ( 3.7 ) —

1 unchanged sentence

$ 43.2 $ 32.7 $ 31.2

Enterprise system implementation costs primarily consists of software subscription fees, certain consulting fees, and contract labor associated with the ongoing enterprise system implementation.

Restaurant level impairment charges primarily associated with the following long-lived assets:

1 unchanged sentence

Refer to Note 3 - Fair Value Measurements for further details.

• Fiscal 2023 - 38 underperforming Chili’s restaurants.

• Fiscal 2022 - 30 underperforming Chili’s and two underperforming Maggiano’s restaurants.

• Fiscal 2021 - 11 underperforming Chili’s and three underperforming Maggiano’s restaurants.

Restaurant closure asset write-offs and 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 in fiscal 2023 and the elimination of certain Maggiano’s banquet manager positions in fiscal 2021.

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.

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

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 8 - Commitments and Contingencies for additional information about our secondarily liable lease guarantees.

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

Loss from natural disasters, net of (insurance recoveries) primarily relates to the following natural disasters:

• Fiscal 2023 - Hurricane Ian in September 2022 and the Winter Storm in December 2022.

• Fiscal 2022 - Hurricane Ida in August 2021.

• Fiscal 2021 - Winter Storm Uri in February 2021.

Gain on sale of assets, net in fiscal 2023 relates to sale of three land parcels for previously closed Chili’s restaurants.

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

Footnote Index

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

Gain on sale of assets, net relates to sale of land parcel for a closed Chili’s restaurant in fiscal 2024 and sale of land parcels on three previously closed Chili’s restaurants in fiscal 2023.

SEGMENT INFORMATION

1 unchanged sentence

The Chili’s segment includes the results of our Company-owned Chili’s restaurants, which are principally located in the United States, within the full-service casual dining segment of the industry.

The Chili’s segment also has Company-owned restaurants in Canada, and franchised locations in the United States, 29 other countries and two United States territories.

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 Other 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 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 operating 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, gift card equalization, and franchise and development fees.

The Chili’s segment also includes results of our Canadian Company-owned restaurants and royalties and other fees from our franchised locations in the United States, 27 other countries and two United States territories.

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

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, legal and restaurant development.

Company sales for each operating 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 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.

We do not rely on any major customers as a source of sales , and the customers and long-lived assets of our operating segments are predominantly located in the United States.

There were no material transactions amongst our operating segments.

There were no material transactions between our operating segments.

Our chief operating decision maker uses Operating income as the measure for assessing performance of our segments.

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

Restaurant expenses during the years presented primarily included restaurant rent, supplies, repairs and maintenance, utilities, delivery fees, advertising, property taxes and workers’ compensation and general liability insurance.

Restaurant expenses during the years presented primarily included restaurant rent, repairs and maintenance, supplies, utilities, delivery fees, advertising, payment processing fees, franchise and property taxes, workers’ compensation and general liability insurance.

supervision expenses, and to-go supplies.

Footnote Index

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

17 unchanged sentences

Payments for property and equipment 172.0 16.5 10.4 198.9

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Fiscal Year Ended June 28, 2023

Maggiano's Corporate Consolidated

Chili's Maggiano's Corporate Consolidated

Company sales $ 3,606.7 $ 486.5 $ — $ 4,093.2

14 unchanged sentences

Payments for property and equipment 158.1 16.6 10.2 184.9

Footnote Index

Fiscal Year Ended June 29, 2022

15 unchanged sentences

Payments for property and equipment $ 133.7 $ 9.1 $ 7.5 $ 150.3

(1) Chili’s segment information for fiscal 2022 includes the results of operations and the fair values of assets related to the 68 restaurants purchased from three former franchisees subsequent to the acquisition dates.

Refer to Note 3 - Acquisitions for further details.

(2) Fiscal 2021, which ended on June 30, 2021, contained 53 weeks.

The impact of the 53rd week in fiscal 2021 resulted in an increase in Total revenues.

While certain expenses increased in direct relationship to additional revenues from the 53rd week, other expenses, such as fixed costs, are incurred on a calendar month basis.

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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data