What changed in this filing

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Item 1. Financial Statements

2025-01-29 compared with 2024-10-30 · 158 added, 95 removed, 372 unchanged (40% of the section changed)

3 unchanged sentences

(In millions, except per share amounts)

Thirteen Week Periods Ended

September 25,

2024 September 27,

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2024 December 27,

2023 December 25,

2024 December 27,

Company sales $ 1,346.1 $ 1,063.7 $ 2,473.4 $ 2,065.7

26 unchanged sentences

(In millions, except per share amounts)

September 25,

2024 June 26,

5 unchanged sentences

Prepaid expenses 21.6 20.6

Income taxes receivable 1.4 —

Total current assets 210.7 234.1

21 unchanged sentences

Other accrued liabilities 152.0 144.7

Income taxes payable 7.6 7.3

Income taxes payable, net 5.5 7.3

Total current liabilities 644.3 622.3

6 unchanged sentences

$ 0.10 par value;

60.3 million shares issued and 44.4 million shares outstanding at September 25, 2024, and 60.3 million shares issued and 45.0 million shares outstanding at June 26, 2024)

60.3 million shares issued and 44.4 million shares outstanding at December 25, 2024 and 60.3 million shares issued and 45.0 million shares outstanding at June 26, 2024)

Additional paid-in capital 704.5 707.8

1 unchanged sentence

Accumulated deficit ( 39.6 ) ( 196.6 )

Treasury stock, at cost ( 15.9 million shares at September 25, 2024, and 15.3 million shares at June 26, 2024)

Treasury stock, at cost ( 15.9 million shares at December 25, 2024, and 15.3 million shares at June 26, 2024)

( 532.7 ) ( 471.5 )

5 unchanged sentences

(In millions)

Thirteen Week Periods Ended

September 25,

2024 September 27,

Twenty-Six Week Periods Ended

2024 December 27,

Cash flows from operating activities

24 unchanged sentences

Proceeds from note receivable — 1.3

Proceeds from sale of assets — 0.7

Insurance recoveries — 0.7

Net cash used in investing activities ( 105.8 ) ( 86.8 )

2 unchanged sentences

Payments on revolving credit facility ( 300.0 ) ( 224.0 )

Purchases of treasury stock ( 74.8 ) ( 24.7 )

Payments on long-term debt ( 362.1 ) ( 5.6 )

Payments for debt issuance costs ( 0.1 ) ( 0.7 )

Purchases of treasury stock ( 85.2 ) ( 25.1 )

Proceeds from issuance of treasury stock 7.4 0.5

Payments for debt issuance costs ( 0.1 ) ( 0.7 )

Net cash used in financing activities ( 225.0 ) ( 55.9 )

10 unchanged sentences

(In millions)

Thirteen Week Period Ended September 25, 2024

Twenty-Six Week Period Ended December 25, 2024

Common Stock Additional

9 unchanged sentences

Balances at September 25, 2024 $ 6.0 $ 697.9 $ ( 158.1 ) $ ( 526.9 ) $ ( 6.2 ) $ 12.7

Thirteen Week Period Ended September 27, 2023

Net income — — 118.5 — — 118.5

Other comprehensive loss — — — — ( 0.5 ) ( 0.5 )

Stock-based compensation — 7.2 — — — 7.2

Purchases of treasury stock — ( 0.3 ) — ( 10.1 ) — ( 10.4 )

Issuances of treasury stock — ( 0.3 ) — 4.3 — 4.0

Balances at December 25, 2024 $ 6.0 $ 704.5 $ ( 39.6 ) $ ( 532.7 ) $ ( 6.7 ) $ 131.5

Twenty-Six Week Period Ended December 27, 2023

Common Stock Additional

9 unchanged sentences

Balances at September 27, 2023 $ 6.0 $ 683.8 $ ( 344.7 ) $ ( 495.2 ) $ ( 6.2 ) $ ( 156.3 )

Net income — — 42.1 — — 42.1

Other comprehensive income — — — — 0.2 0.2

Stock-based compensation — 4.4 — — — 4.4

Purchases of treasury stock — ( 0.1 ) — ( 0.3 ) — ( 0.4 )

Issuances of treasury stock — ( 1.1 ) — 1.6 — 0.5

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

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 September 25, 2024 and June 26, 2024, and for the thirteen week periods ended September 25, 2024 and September 27, 2023, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Our Consolidated Financial Statements (Unaudited) as of December 25, 2024 and June 26, 2024, and for the thirteen and twenty-six week periods ended December 25, 2024 and December 27, 2023, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

We own, develop, operate and franchise the Chili’s ® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy ® (“Maggiano’s”) restaurant brands.

As of September 25, 2024 we owned, operated or franchised 1,625 restaurants, consisting of 1,170 Company-owned restaurants and 455 franchised restaurants, located in the United States, 28 other countries and two United States territories.

As of December 25, 2024, we owned, operated or franchised 1,624 restaurants, consisting of 1,164 Company-owned restaurants and 460 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 adjustments represent the unrealized impact of translating the financial statements of our Canadian restaurants from their respective functional currency (Canadian dollars) to United States dollars and are reported as a component of comprehensive income and recorded in Accumulated other comprehensive loss on our Consolidated Balance Sheets (Unaudited).

The Foreign currency translation adjustment represents the unrealized impact of translating the financial statements of our Canadian restaurants from their respective functional currency (Canadian dollars) to United States dollars and are reported as a component of Comprehensive income and recorded in Accumulated other comprehensive loss on our Consolidated Balance Sheets (Unaudited).

Recently Issued Accounting Standards or Disclosure Rules

6 unchanged sentences

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

The amendments should be applied prospectively;

however, retrospective application is permitted.

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

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

Footnote Index

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

Footnote Index

climate-related information in registration statements and annual reports.

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.

1 unchanged sentence

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

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires, for each relevant expense caption on the income statement, detailed disclosure amounts for purchases of inventory, employee compensation, depreciation, and intangible asset amortization.

In addition, this ASU requires companies to include amounts already required by GAAP in the same disclosure, provide a qualitative description of remaining amounts not separately disaggregated, and disclose the amount of total selling expenses along with the companies’ definition of selling expenses.

The amendment is effective for fiscal years beginning after December 15, 2026, which would require us to adopt the provisions in our fiscal 2028 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.

REVENUE RECOGNITION

5 unchanged sentences

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

The following table reflects the changes in deferred franchise and development fees between June 26, 2024 and September 25, 2024:

The following table reflects the changes in deferred franchise and development fees between June 26, 2024 and December 25, 2024:

Deferred Franchise and Development Fees

2 unchanged sentences

Amount recognized to Franchise revenues ( 0.7 )

Balance as of September 25, 2024 $ 9.7

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 September 25, 2024:

Balance as of December 25, 2024 $ 9.8

Footnote Index

Fiscal Year Franchise and Development Fees Revenue Recognition

1 unchanged sentence

Thereafter 6.5

Footnote Index

Deferred Gift Card Revenues

Total 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 26, 2024 and September 25, 2024:

The following table reflects the changes in the Gift card liability between June 26, 2024 and December 25, 2024:

Gift Card Liability

3 unchanged sentences

Gift card breakage recognized to Company sales ( 5.4 )

Balance as of September 25, 2024

Other ( 1.3 )

Balance as of December 25, 2024

FAIR VALUE MEASUREMENTS

8 unchanged sentences

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 the 5.000 % and 8.250 % notes are based on quoted market prices and are considered Level 2 fair value measurements.

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:

September 25, 2024 June 26, 2024

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

Footnote Index

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

December 25, 2024 June 26, 2024

Carrying Amount Fair Value Carrying Amount Fair Value

8.250 % notes $ 345.6 $ 369.3 $ 345.2 $ 367.8

$ 350.0 $ 350.2 $ 349.8 $ 349.6

5.000 % notes (1)

— — 349.8 349.6

(1) On October 1, 2024, the 5.000% notes matured and were repaid in full using borrowings under our revolving credit facility.

Non-Financial Assets

4 unchanged sentences

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

Footnote Index

During the thirteen week periods ended September 25, 2024 and September 27, 2023, no indicators of impairment were identified.

During the thirteen and twenty-six week periods ended December 25, 2024 and December 27, 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 September 25, 2024 and June 26, 2024, was $ 17.2 million and $ 16.6 million, respectively.

Accumulated amortization associated with definite-lived intangible assets at December 25, 2024 and June 26, 2024, was $ 17.7 million and $ 16.6 million, respectively.

ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

September 25,

2024 June 26,

2 unchanged sentences

Sales tax 25.5 18.4

Interest 15.4 18.1

Current installments of finance lease obligations 18.7 14.1

Interest 13.3 18.1

Utilities and services 10.5 10.0

3 unchanged sentences

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

Footnote Index

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

Thirteen Week Periods Ended

September 25,

2024 September 27,

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2024 December 27,

2023 December 25,

2024 December 27,

Operating lease cost $ 45.8 $ 45.6 $ 91.4 $ 91.2

6 unchanged sentences

Supplemental cash flow information related to leases:

Thirteen Week Periods Ended

September 25,

2024 September 27,

Twenty-Six Week Periods Ended

2024 December 27,

Operating lease assets obtained in exchange for operating lease liabilities

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 September 25, 2024 and June 26, 2024 was $ 91.7 million and $ 93.4 million, respectively.

Footnote Index

$ 43.4 $ 21.3

Finance lease 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 25, 2024 and June 26, 2024 was $ 97.7 million and $ 93.4 million, respectively.

Long-term debt consists of the following:

September 25,

2024 June 26,

9 unchanged sentences

Total long-term debt, less current portion $ 652.0 $ 786.3

(1) Obligations under our 5.000% notes have been classified as long-term, reflecting our intent and ability to refinance these notes through our existing revolving credit facility.

Subsequent to the end of the first quarter, on October 1, 2024, our $350.0 million 5.000% notes matured and the payoff was funded with borrowings from our revolving credit facility.

(1) On October 1, 2024, the 5.000% notes matured and were repaid in full using borrowings under our revolving credit facility.

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

1 unchanged sentence

Revolving Credit Facility

In the thirteen week period ended September 25, 2024, net borrowings of $ 25.0 million were drawn on our revolving credit facility.

As of September 25, 2024, $ 875.0 million of credit was available under the revolving credit facility.

In the twenty-six week period ended December 25, 2024, net borrowings of $ 215.0 million were drawn on our revolving credit facility.

As of December 25, 2024, $ 685.0 million of credit was available under the revolving credit facility.

Footnote Index

The $ 900.0 million revolving credit facility 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 September 25, 2024, our interest rate was 6.46 % consisting of SOFR of 4.86 % plus the applicable margin and spread adjustment of 1.60 %.

As of December 25, 2024, our interest rate was 5.94 % consisting of SOFR of 4.34 % plus the applicable margin and spread adjustment of 1.60 %.

Financial Covenants

The indentures for our 5.000% notes and the 8.250% 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 substantially all of their property.

The indenture for our 8.250% notes contains 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 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 September 25, 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 .

Footnote Index

As of December 25, 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 8.250% notes .

COMMITMENTS AND 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 September 25, 2024 and June 26, 2024, we have outstanding lease guarantees or are secondarily liable for an estimated $ 14.3 million and $ 15.7 million, respectively.

As of December 25, 2024 and June 26, 2024, we have outstanding lease guarantees or are secondarily liable for an estimated $ 14.2 million and $ 15.7 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.

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.

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.

During the first quarter of fiscal 2024, we recorded a $ 0.5 million charge in Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited).

We will continue to closely monitor our exposure.

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 and management is closely monitoring any exposure.

Letters of Credit

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

As of September 25, 2024, we had $ 5.8 million in undrawn standby letters of credit outstanding.

As of December 25, 2024, we had $ 5.8 million in undrawn standby letters of credit outstanding.

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

7 unchanged sentences

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

As such, as of September 25, 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.

As such, as of December 25, 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.

Footnote Index

Legal Proceedings

4 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.

Footnote Index

Thirteen Week Periods Ended

September 25,

2024 September 27,

Twenty-Six Week Periods Ended

2024 December 27,

Effective income tax rate 14.7 % 7.0 %

The federal statutory tax rate was 21.0 % for the thirteen week periods ended September 25, 2024 and September 27, 2023.

The change in the effective income tax rate in the thirteen week period ended September 25, 2024 to the thirteen week period ended September 27, 2023 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit.

The federal statutory tax rate was 21.0 % for the twenty-six week periods ended December 25, 2024 and December 27, 2023.

The change in the effective income tax rate in the twenty-six week period ended December 25, 2024 to the twenty-six week period ended December 27, 2023 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit.

SHAREHOLDERS’ EQUITY

1 unchanged sentence

Our Board of Directors approved a $ 300.0 million share repurchase program during fiscal 2022.

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.

Our share repurchase program is used to return capital to shareholders and to minimize the dilution to our shares outstanding that results from equity compensation grants.

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’ equity in the Consolidated Balance Sheets (Unaudited).

In the thirteen week period ended September 25, 2024, we repurchased 1.1 million shares of our common stock for $ 74.8 million, including 0.9 million shares purchased for $ 66.0 million as part of our share repurchase program and 0.2 million shares 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 Shareholder’s equity in the Consolidated Balance Sheets (Unaudited).

In the twenty-six week period ended December 25, 2024, we repurchased 1.2 million shares of our common stock for $ 85.2 million, including 1.0 million shares purchased for $ 76.0 million as part of our share repurchase program and 0.2 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 September 25, 2024, approximately $ 117.0 million of share repurchase authorization remains under the current share repurchase program.

As of December 25, 2024, approximately $ 107.0 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.

Thirteen Week Periods Ended

September 25,

2024 September 27,

In November 2024, our stockholders approved the Brinker International, Inc.

2024 Stock Option and Incentive Plan (the “2024 Plan”) for employees and authorized approximately 3.5 million shares for issuance under the 2024 Plan.

The 2024 Plan replaced our stockholder-approved 1998 Stock Option and Incentive Plan (as amended, the “1998 Plan”) for employees, and no further awards will be granted under the 1998 Plan.

Our 1999 Stock Option and Incentive Plan for Non-Employee Directors and Consultants (the “1999 Plan”) remains in effect.

In November 2024, the Board of Directors approved the 2025 Executive Performance Share Retention Plan and the granting of performance-based restricted share awards to Kevin Hochman, our CEO and President of the Company and President of Chili’s Grill & Bar, and certain other executives of the Company at a total grant date fair value of

Footnote Index

$ 25.0 million.

Shares earned range from 0% to 200% of the target number of performance shares granted based on the Company’s total shareholder return (“TSR”) over a five -year period from September 26, 2024 through September 25, 2029, relative to the TSR of a peer group of companies as defined.

There is a cap on the dollar value of performance shares that may be earned based on a multiple of the target number of performance shares and the Company’s stock price on the grant date.

Additionally, vesting is generally contingent upon continuous service during the performance period.

Compensation expense for these performance shares is recorded to General and administrative expenses on a straight-line basis over the vesting period based on the fair value of the shares as determined by Monte Carlo simulation on the date of grant.

The following table presents restricted share awards granted under the Company’s various equity compensation plans and the related weighted average fair value per share amounts.

Twenty-Six Week Periods Ended

2024 December 27,

Restricted share awards

5 unchanged sentences

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.

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

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

Thirteen Week Periods Ended

September 25,

2024 September 27,

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2024 December 27,

2023 December 25,

2024 December 27,

Basic weighted average shares outstanding 44.4 44.2 44.7 44.4

1 unchanged sentence

Dilutive restricted shares

1.0 0.7 0.9 0.7

Total dilutive impact 1.1 0.7 1.0 0.7

1 unchanged sentence

Awards excluded due to anti-dilutive effect — 0.8 — 0.8

Footnote Index

OTHER GAINS AND CHARGES

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

Thirteen Week Periods Ended

September 25,

2024 September 27,

Enterprise system implementation costs $ 4.4 $ 2.0

Thirteen Week Periods Ended Twenty-Six Week Periods Ended

2024 December 27,

2023 December 25,

2024 December 27,

Litigation & claims, net $ 6.1 $ 1.0 $ 8.6 $ 3.2

Enterprise system implementation costs 5.2 2.1 9.6 4.1

Restaurant closure asset write-offs and charges 0.8 0.2 1.5 0.8

Lease contingencies — 0.5

Loss from natural disasters, net (of insurance recoveries) 0.7 ( 0.6 ) 0.7 ( 0.4 )

Lease modification gain, net ( 0.7 ) — ( 1.0 ) ( 0.1 )

Other — 0.6 1.6 2.0

• Enterprise system implementation costs primarily consist of consulting fees, software subscription fees, and contract labor associated with the enterprise system implementation.

$ 12.1 $ 3.3 $ 21.0 $ 9.6

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

• Enterprise system implementation costs primarily consists of software subscription fees and certain other costs prior to implementation and support of our new cloud-based Enterprise Resource Planning (“ERP”) system after implementation.

• Restaurant closure asset write-offs and charges includes costs associated with the closure of certain Chili’s restaurants.

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

• Loss from natural disasters, net (of insurance recoveries) in the current quarter consists of costs incurred related to Hurricane Helene and Hurricane Milton.

• Lease modification gain, net relates to the reduction of lease liabilities of certain closed Chili’s restaurants.

SEGMENT INFORMATION

5 unchanged sentences

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

Footnote Index

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.

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, delivery service fee income, gift card breakage, 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.

1 unchanged sentence

There were no material transactions amongst our operating segments.

Footnote Index

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

Restaurant expenses during the periods presented primarily include restaurant rent, repairs and maintenance, supplies, advertising, utilities, delivery fees, payment processing fees, 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:

Thirteen Week Period Ended September 25, 2024

Thirteen Week Period Ended December 25, 2024

Chili's Maggiano's Corporate Consolidated

13 unchanged sentences

Income (loss) before income taxes $ 173.5 $ 28.2 $ ( 60.0 ) $ 141.7

Thirteen Week Period Ended December 27, 2023

Chili's Maggiano's Corporate Consolidated

Company sales $ 916.9 $ 146.8 $ — $ 1,063.7

Franchise revenues 10.3 0.1 — 10.4

Total revenues 927.2 146.9 — 1,074.1

Food and beverage costs 239.2 33.9 — 273.1

Restaurant labor 313.0 43.1 — 356.1

Restaurant expenses 258.3 36.2 0.2 294.7

Depreciation and amortization 35.5 3.2 2.6 41.3

General and administrative 10.2 2.1 30.9 43.2

Other (gains) and charges 0.9 0.2 2.2 3.3

Total operating costs and expenses 857.1 118.7 35.9 1,011.7

Operating income (loss) 70.1 28.2 ( 35.9 ) 62.4

Interest expenses 0.9 — 15.8 16.7

Other income, net ( 0.1 ) — — ( 0.1 )

Income (loss) before income taxes $ 69.3 $ 28.2 $ ( 51.7 ) $ 45.8

Footnote Index

Thirteen Week Period Ended September 27, 2023

Twenty-Six Week Period Ended December 25, 2024

Chili’s Maggiano's Corporate Consolidated

Company sales $ 2,215.8 $ 257.6 $ — $ 2,473.4

Franchise revenues 23.4 0.4 — 23.8

Total revenues 2,239.2 258.0 — 2,497.2

Food and beverage costs 569.2 59.0 — 628.2

Restaurant labor 720.0 78.4 — 798.4

Restaurant expenses 565.6 72.0 0.7 638.3

Depreciation and amortization 82.3 6.8 4.9 94.0

General and administrative 24.0 5.4 75.5 104.9

Other (gains) and charges 9.1 0.4 11.5 21.0

Total operating costs and expenses 1,970.2 222.0 92.6 2,284.8

Operating income (loss) 269.0 36.0 ( 92.6 ) 212.4

Interest expenses 2.9 0.1 26.0 29.0

Other income, net ( 0.1 ) — ( 0.5 ) ( 0.6 )

Income (loss) before income taxes $ 266.2 $ 35.9 $ ( 118.1 ) $ 184.0

Twenty-Six Week Period Ended December 27, 2023

Maggiano's Corporate Consolidated

Company sales

$ 1,814.7 $ 251.0 $ — $ 2,065.7

14 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements