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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 23, 2020
Commission File Number 1-10275
https://cdn.kscope.io/99644ef6a3e600806595989183dcbd82-eat-20200923_g1.jpg
BRINKER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DE
75-1914582
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3000 Olympus Blvd
Dallas
TX
75019
(Address of principal executive offices)(Zip Code)
(972)
980-9917
(Registrant’s telephone number, including area code)
Title of each class
Trading Symbol(s)
Name of exchange on which registered
Common Stock, $0.10 par value
EAT
NYSE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of October 23, 2020: 45,289,445 shares



BRINKER INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page

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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRINKER INTERNATIONAL, INC.
Consolidated Statements of Comprehensive Income (Unaudited)
(In millions, except per share amounts)
Thirteen Week Periods Ended
September 23,
2020
September 25,
2019
Revenues
Company sales$728.2 $763.9 
Franchise and other revenues11.9 22.1 
Total revenues740.1 786.0 
Operating costs and expenses
Food and beverage costs193.5 203.8 
Restaurant labor248.0 268.5 
Restaurant expenses202.5 207.3 
Depreciation and amortization37.4 38.1 
General and administrative30.5 38.0 
Other (gains) and charges3.8 (0.9)
Total operating costs and expenses715.7 754.8 
Operating income24.4 31.2 
Interest expenses14.6 14.9 
Other income, net(0.4)(0.5)
Income before income taxes10.2 16.8 
Provision (benefit) for income taxes(0.5)1.9 
Net income$10.7 $14.9 
Basic net income per share$0.24 $0.40 
Diluted net income per share$0.23 $0.39 
Basic weighted average shares outstanding45.1 37.5 
Diluted weighted average shares outstanding45.7 38.1 
Other comprehensive income (loss)
Foreign currency translation adjustment$0.3 $(0.2)
Other comprehensive income (loss)0.3 (0.2)
Comprehensive income$11.0 $14.7 
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
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BRINKER INTERNATIONAL, INC.
Consolidated Balance Sheets
(In millions, except per share amounts)
Unaudited
September 23,
2020
June 24,
2020
ASSETS
Current assets
Cash and cash equivalents$58.8 $43.9 
Accounts receivable, net56.8 52.3 
Inventories25.9 27.3 
Restaurant supplies51.6 51.6 
Prepaid expenses13.4 13.9 
Income taxes receivable, net33.1 35.4 
Total current assets239.6 224.4 
Property and equipment, at cost
Land34.2 34.2 
Buildings and leasehold improvements1,544.7 1,534.4 
Furniture and equipment788.3 785.7 
Construction-in-progress18.3 24.4 
2,385.5 2,378.7 
Less accumulated depreciation and amortization(1,603.5)(1,573.4)
Net property and equipment782.0 805.3 
Other assets
Operating lease assets1,041.3 1,054.6 
Goodwill187.7 187.6 
Deferred income taxes, net39.1 38.2 
Intangibles, net22.5 23.0 
Other23.1 22.9 
Total other assets1,313.7 1,326.3 
Total assets$2,335.3 $2,356.0 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable$99.4 $104.9 
Gift card liability107.1 109.9 
Accrued payroll63.3 65.2 
Operating lease liabilities117.8 117.3 
Other accrued liabilities121.9 100.6 
Total current liabilities509.5 497.9 
Long-term debt and finance leases, less current installments1,158.3 1,208.5 
Long-term operating lease liabilities, less current portion1,045.2 1,061.6 
Other liabilities87.4 67.1 
Commitments and contingencies (Note 14)
Shareholders’ deficit
Common stock (250.0 million authorized shares; $0.10 par value; 70.3 million shares issued and 45.3 million shares outstanding at September 23, 2020, and 70.3 million shares issued and 45.0 million shares outstanding at June 24, 2020)
7.0 7.0 
Additional paid-in capital663.2 669.4 
Accumulated other comprehensive loss(5.9)(6.2)
Accumulated deficit(386.8)(397.5)
Treasury stock, at cost (25.0 million shares at September 23, 2020, and 25.3 million shares at June 24, 2020)
(742.6)(751.8)
Total shareholders’ deficit(465.1)(479.1)
Total liabilities and shareholders’ deficit$2,335.3 $2,356.0 
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
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BRINKER INTERNATIONAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Thirteen Week Periods Ended
September 23,
2020
September 25,
2019
Cash flows from operating activities
Net income$10.7 $14.9 
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization37.4 38.1 
Stock-based compensation3.9 7.1 
Restructure charges and other impairments0.5 (3.2)
Net loss on disposal of assets0.4 0.3 
Other0.8 0.6 
Changes in assets and liabilities:
Accounts receivable, net0.6 7.0 
Inventories1.4 0.1 
Prepaid expenses0.4 5.9 
Operating lease assets, net of liabilities(2.2)(1.7)
Deferred income taxes, net(0.9)1.3 
Other assets0.0 (0.5)
Accounts payable(4.9)2.8 
Gift card liability(2.7)(6.1)
Accrued payroll(1.9)(12.1)
Other accrued liabilities16.2 19.7 
Current income taxes2.4 12.3 
Other liabilities20.7 0.1 
Net cash provided by operating activities82.8 86.6 
Cash flows from investing activities
Payments for property and equipment(13.6)(20.5)
Proceeds from note receivable0.6 0.7 
Payments for franchise restaurant acquisitions (96.2)
Proceeds from sale of assets 0.2 
Net cash used in investing activities(13.0)(115.8)
Cash flows from financing activities
Payments on revolving credit facility(75.0)(227.0)
Borrowings on revolving credit facility28.4 299.0 
Payments on long-term debt(4.6)(2.4)
Purchases of treasury stock(3.9)(11.3)
Payments for debt issuance costs(1.5) 
Payments of dividends(1.3)(14.8)
Proceeds from issuance of treasury stock3.0 1.3 
Net cash (used in) provided by financing activities(54.9)44.8 
Net change in cash and cash equivalents14.9 15.6 
Cash and cash equivalents at beginning of period43.9 13.4 
Cash and cash equivalents at end of period$58.8 $29.0 
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
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Footnote Index
BRINKER INTERNATIONAL, INC.
Notes to the Consolidated Financial Statements (Unaudited)
Footnote Index
Note #DescriptionPage
Basis of Presentation
Effect of New Accounting Standards
Note 3
Revenue Recognition
Other Gains and Charges
Income Taxes
Net Income Per Share
Segment Information
Fair Value Measurements
Leases
Debt
Accrued and Other Liabilities
Shareholders’ Deficit
Supplemental Cash Flow Information
Contingencies
Fiscal 2020 Chili’s Restaurant Acquisition
Subsequent Events


6

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Footnote Index

1. BASIS OF PRESENTATION
References to “Brinker,” the “Company,” “we,” “us,” and “our” in this Form 10-Q refer to Brinker International, Inc. and its subsidiaries and any predecessor companies of Brinker International, Inc.
Our Consolidated Financial Statements (Unaudited) as of September 23, 2020 and June 24, 2020, and for the thirteen week periods ended September 23, 2020 and September 25, 2019, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). We are principally engaged in the ownership, operation, development, and franchising of the Chili’s® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy® (“Maggiano’s”) restaurant brands. At September 23, 2020, we owned, operated or franchised 1,660 restaurants, consisting of 1,116 Company-owned restaurants and 544 franchised restaurants, located in the United States, 28 countries and two United States territories.
Fiscal Year
We have a 52/53 week fiscal year ending on the last Wednesday in June. 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 year 2021 contains 53 weeks and will end on June 30, 2021. Fiscal year 2020, which ended on June 24, 2020, contained 52 weeks.
Use of Estimates
The preparation of the consolidated financial statements is in conformity with generally accepted accounting principles in the United States (“GAAP”) and requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and costs and expenses in the reporting periods. Actual results could differ from those estimates.
The foreign currency translation adjustment included in Comprehensive income in the Consolidated Statements of Comprehensive Income (Unaudited) represents the unrealized impact of translating the financial statements of our Canadian restaurants from Canadian dollars to United States dollars. This amount is not included in Net income and would only be realized upon disposition of our Canadian restaurants. The related Accumulated other comprehensive loss is presented in the Consolidated Balance Sheets (Unaudited).
The information furnished herein reflects all adjustments (consisting only of normal recurring accruals and adjustments) which are, in our opinion, necessary to fairly state the interim operating results, financial position and cash flows for the respective periods. However, these operating results are not necessarily indicative of the results expected for the full fiscal year. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with GAAP, have been omitted pursuant to SEC rules and regulations. The Notes to the Consolidated Financial Statements (Unaudited) should be read in conjunction with the Notes to the Consolidated Financial Statements contained in our June 24, 2020 Form 10-K. We believe the disclosures are sufficient for interim financial reporting purposes. All amounts in the Notes to the Consolidated Financial Statements (Unaudited) are presented in millions unless otherwise specified.
Risks and Uncertainties
In January 2020, the Secretary of Health and Human Services declared the novel strain of coronavirus (“COVID-19”) a public health emergency. Subsequently in March 2020, the World Health Organization declared COVID-19 a global pandemic that resulted in a significant reduction in sales at our restaurants due to changes in consumer behavior as social distancing practices, dining room closures and other restrictions were mandated or encouraged by federal, state and local governments. In response to COVID-19, the Company temporarily closed all Company-owned restaurant dining and banquet rooms at the end of the third quarter of fiscal 2020 resulting in a transition to an off-premise business model. Beginning on April 27, 2020 we began to reopen certain dining room locations as permitted by state and local governments. As of September 23, 2020, substantially all of our restaurant dining rooms and patios were opened with limited seating capacity. The capacity limitations and personal safety

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Footnote Index
preferences in the reopened dining rooms have resulted in reduced traffic in the Company’s restaurants in comparison to pre-pandemic levels. See Note 4 - Other Gains and Charges for details regarding the financial impact of the COVID-19 pandemic on our financial results.
At this time, the ultimate impact of COVID-19 cannot be reasonably estimated due to the uncertainty about the extent and the duration of the spread of the virus. A lack of containment or another wave could lead to capacity restrictions, restaurant closures, disruptions in our supply chain and restaurant staffing which could adversely impact our financial results.
2. EFFECT OF NEW ACCOUNTING STANDARDS
New Accounting Standards Implemented in Fiscal 2021
Measurement of Credit Losses on Financial Instruments, ASU No. 2016-13 - In June 2013, the FASB issued ASU 2016-13, creating ASC Topic 326 – Financial Instruments – Credit Losses. ASU 2016-13 is intended to improve financial reporting by requiring timelier recording of credit losses on financial assets measured at amortized cost basis (including, but not limited to loans), net investments in leases recognized as lessor and off-balance sheet credit exposures. ASU 2016-13 eliminates the probable initial recognition threshold under the current incurred loss methodology for recognizing credit losses. Instead, ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The new guidance is effective for public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, which required us to adopt these provisions in the first quarter of fiscal 2021. The update was applied on a prospective basis. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements.
Fair Value Measurement (Topic 820): Disclosure Framework, ASU No. 2018-13 - Changes to the Disclosure Requirements for Fair Value Measurement - In August 2018, the FASB issued ASU 2018-13, which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The amendments under ASU 2018-13 add an incremental requirement, among others, for entities to disclose (1) the range and weighted average used to develop significant unobservable inputs and (2) how the weighted average was calculated for fair value measurements categorized within Level 3 of the fair value hierarchy. Entities may disclose other quantitative information in lieu of the weighted average if they determine that such information embodies a more reasonable and rational method of reflecting the distribution of significant unobservable inputs used to develop Level 3 fair value measurements. The new guidance is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, which required us to adopt these provisions in the first quarter of fiscal 2021. The update was applied on a prospective basis. The adoption of this guidance did not have an impact on our Consolidated Financial Statements.
Simplifying the Accounting for Income Taxes, ASU No. 2019-12 - In December 2019, the FASB issued ASU 2019-12, which removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The new guidance is effective for public entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, which will require us to adopt these provisions in the first quarter of fiscal 2022, and early adoption is permitted. We elected to early adopt this update in the first quarter of fiscal 2021. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements.
New Accounting Standards That Will Be Implemented In Future Periods
Reference Rate Reform, ASU 2020-04 - In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting. These updates are intended to simplify the market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This guidance is effective upon issuance to modifications made as early as the beginning of the interim period through December 31, 2022. We are currently assessing the impact that this guidance will have on our Consolidated Financial Statements.

8

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Footnote Index
3. REVENUE RECOGNITION
Deferred Development and Franchise Fees
Our deferred development and franchise fees consist of the unrecognized fees received from franchisees. Recognition of these fees in subsequent periods is based on satisfaction of the contractual performance obligations of the active contracts with franchisees. We also expect to earn subsequent period royalties and advertising fees related to our franchise contracts; however, due to the variability and uncertainty of these future revenues based upon a sales-based measure, these future revenues are not yet estimable due to the unsatisfied performance obligations.
Deferred Franchise and Development Fees
Balance as of June 24, 2020$12.7 
Additions0.1 
Amount recognized to Franchise and other revenues(0.3)
Balance as of September 23, 2020$12.5 
Fiscal YearFranchise and Development Fees Revenue Recognition
Remainder of 2021$0.9 
20221.1 
20231.0 
20241.0 
20251.0 
Thereafter7.5 
$12.5 
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.
Gift Card Liability
Balance as of June 24, 2020$109.9 
Gift card sales19.0 
Gift card redemptions recognized to Company sales(19.9)
Gift card breakage recognized to Franchise and other revenues(2.2)
Other0.3 
Balance as of September 23, 2020$107.1 

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4. 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 23,
2020
September 25,
2019
Restaurant closure charges$1.5 $0.2 
COVID-19 related charges1.2  
Remodel-related costs0.2 0.7 
Lease modification gain, net(0.5)(3.1)
Other1.4 1.3 
$3.8 $(0.9)
Fiscal 2021
Restaurant closure charges primarily relates to closure costs associated with certain Chili’s restaurants closed in the first quarter of fiscal 2021.
COVID-19 related charges consists of costs related to both Chili’s and Maggiano’s employee assistance and related payroll taxes for certain team members, and restaurant supplies such as face masks and hand sanitizers required to continue to reopen dining rooms.
Remodel-related costs relates to fixed asset write-offs associated with the ongoing Chili’s remodel initiative.
Lease modification gain, net relates to the lease terminations of certain Chili’s operating lease liabilities.
Fiscal 2020
Lease modification gain, net related to the lease termination of a previously impaired Chili’s operating lease.
5. INCOME TAXES
Thirteen Week Periods Ended
September 23,
2020
September 25,
2019
Effective income tax rate(4.9)%11.3 %
The federal statutory tax rate for both periods presented was 21.0%.
Fiscal 2021
Our effective income tax rate for the thirteen week period ended September 23, 2020 was lower than the federal statutory rate primarily due to the favorable impact from the FICA tax credit and excess tax windfalls associated with stock-based compensation.

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A reconciliation between the reported provision for income taxes and the amount computed by applying the statutory Federal income tax rate to Provision (benefit) for income taxes is as follows:
Thirteen Week Period Ended
September 23,
2020
Income tax expense at statutory rate$2.1 
FICA tax credit(1.9)
Stock-based compensation tax windfall(1.1)
State income taxes, net of federal benefit0.6 
Other(0.2)
Provision (benefit) for income taxes$(0.5)
Fiscal 2020
Our effective income tax rate for the thirteen week period ended September 25, 2019 was lower than the federal statutory rate due to the favorable impact from the FICA tax credit.
6. NET INCOME PER SHARE
Basic net income per share is computed by dividing Net income by the Basic weighted average shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of Diluted net income per share, the Basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are not included in the Diluted net income per share calculation. Basic weighted average shares outstanding are reconciled to Diluted weighted average shares outstanding as follows:
Thirteen Week Periods Ended
September 23,
2020
September 25,
2019
Basic weighted average shares outstanding45.1 37.5 
Dilutive stock options0.1 0.1 
Dilutive restricted shares0.5 0.5 
Total dilutive impact0.6 0.6 
Diluted weighted average shares outstanding45.7 38.1 
Awards excluded due to anti-dilutive effect1.6 1.4 
7. SEGMENT INFORMATION
Our operating segments are Chili’s and Maggiano’s. The Chili’s segment includes the results of our Company-owned Chili’s restaurants, principally 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, 28 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.
Company sales include revenues generated by the operation of Company-owned restaurants including gift card redemptions and virtual brand revenues. Franchise and other revenues include Royalties and Franchise fees and other revenues. Franchise fees and other revenues include delivery service income, gift card breakage, franchise advertising fees, digital entertainment revenues, franchise and development fees, Maggiano’s banquet service charge income, gift card equalization, merchandise income, and gift card discount costs from third-party gift card sales. We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our

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operating segments are predominantly in the United States. There were no material transactions amongst 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 periods presented primarily included restaurant rent, supplies, utilities, delivery fees, repairs and maintenance, property taxes, credit card processing fees and advertising. The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
Thirteen Week Period Ended September 23, 2020
Chili’sMaggiano’sOtherConsolidated
Company sales$675.0 $53.2 $ $728.2 
Royalties6.6 0.0  6.6 
Franchise fees and other revenues4.9 0.4  5.3 
Franchise and other revenues11.5 0.4  11.9 
Total revenues686.5 53.6  740.1 
Food and beverage costs180.8 12.7  193.5 
Restaurant labor228.2 19.8  248.0 
Restaurant expenses181.4 20.8 0.3 202.5 
Depreciation and amortization30.6 3.6 3.2 37.4 
General and administrative5.4 1.3 23.8 30.5 
Other (gains) and charges3.6 0.1 0.1 3.8 
Total operating costs and expenses630.0 58.3 27.4 715.7 
Operating income (loss)56.5 (4.7)(27.4)24.4 
Interest expenses1.4  13.2 14.6 
Other income, net(0.1) (0.3)(0.4)
Income (loss) before income taxes$55.2 $(4.7)$(40.3)$10.2 
Segment assets$1,937.1 $221.8 $176.4 $2,335.3 
Segment goodwill149.3 38.4  187.7 
Payments for property and equipment11.6 0.5 1.5 13.6 

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Thirteen Week Period Ended September 25, 2019
Chili’s(1)
Maggiano’sOtherConsolidated
Company sales$677.5 $86.4 $ $763.9 
Royalties11.8 0.1  11.9 
Franchise fees and other revenues6.3 3.9  10.2 
Franchise and other revenues18.1 4.0  22.1 
Total revenues695.6 90.4  786.0 
Food and beverage costs182.4 21.4  203.8 
Restaurant labor233.1 35.4  268.5 
Restaurant expenses180.8 26.3 0.2 207.3 
Depreciation and amortization30.7 4.0 3.4 38.1 
General and administrative9.1 1.7 27.2 38.0 
Other (gains) and charges(1.6)0.1 0.6 (0.9)
Total operating costs and expenses634.5 88.9 31.4 754.8 
Operating income (loss)61.1 1.5 (31.4)31.2 
Interest expenses0.9  14.0 14.9 
Other income, net(0.2) (0.3)(0.5)
Income (loss) before income taxes$60.4 $1.5 $(45.1)$16.8 
Payments for property and equipment$16.1 $2.3 $2.1 $20.5 
(1)Chili’s segment information for fiscal 2020 includes the results of operations related to the 116 restaurants purchased from a former franchisee subsequent to the September 5, 2019 acquisition date. Refer to Note 15 - Fiscal 2020 Chili’s Restaurant Acquisition for details.
8. FAIR VALUE MEASUREMENTS
Fair value is the price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants on the measurement date. Fair value is grouped in three levels based on the level of significant inputs used in measuring fair value, as follows:
Level 1
Unadjusted 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
Level 3Unobservable inputs that cannot be corroborated by observable market data
Non-Financial Assets Measured on a Non-Recurring Basis
We review the carrying amounts of long-lived property and equipment, operating lease assets, reacquired franchise rights and transferable liquor licenses semi-annually or when events or circumstances indicate that the fair value may not substantially exceed the carrying amount. We record an impairment charge for the excess of the carrying amount over the fair value.
Intangibles, net in the Consolidated Balance Sheets (Unaudited) includes both indefinite-lived intangible assets such as the transferable liquor licenses and definite-lived intangible assets that include reacquired franchise rights and other items such as trademarks. Intangibles, net included accumulated amortization associated with definite-lived intangible assets at September 23, 2020 and June 24, 2020, of $8.0 million and $7.5 million, respectively.
Definite Lived Assets Impairment
Definite lived assets include property, equipment, operating lease assets, and reacquired franchise rights. During the thirteen week periods ended September 23, 2020 and September 25, 2019, no indicators of impairment existed.

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Indefinite Lived Assets Impairment
We determine the fair value of transferable liquor licenses based on prices in the open market for licenses in the same or similar jurisdictions that is considered Level 2. During the thirteen week periods ended September 23, 2020 and September 25, 2019, no indicators of impairment were identified.
Goodwill
We review the carrying amounts of goodwill annually or when events or circumstances indicate that the carrying amount may not be recoverable. We may elect to perform a qualitative assessment for our reporting units to determine whether it is more likely than not that the fair value of the reporting unit is greater than its carrying value. If a qualitative assessment is not performed, or if the result of the qualitative assessment indicates a potential impairment, then the reporting unit’s fair value is compared to its carrying value. If the carrying amount is not recoverable, we record an impairment charge for the excess of the carrying amount over the implied fair value of the goodwill.
Related to the qualitative assessment, changes in circumstances existing at the measurement date or at other times in the future, such as declines in our market capitalization, as well as in the market capitalization of other companies in the restaurant industry, declines in sales at our restaurants, and significant adverse changes in the operating environment for the restaurant industry could result in an impairment loss of all or a portion of our goodwill.
We performed a detailed quantitative assessment in the third quarter of fiscal 2020 of our goodwill balances associated with both reporting units. This assessment was performed in response to observed indicators of impairment that were primarily driven by the impact of the COVID-19 pandemic on our business. These indicators were significant declines in operating cash flows and market capitalization. Based on this assessment, we concluded that our goodwill and indefinite-lived intangible assets were not impaired at that time. We updated this assessment in the fourth quarter of fiscal 2020 and again concluded no impairment triggering event existed based on improved market capitalization and improved operating results compared to projections in the detailed quantitative assessment prepared in the third quarter of fiscal 2020. Our operating results and operating cash flows have continued to outperform our initial quantitative assessment in the first quarter of fiscal 2021. Our stock price and market capitalization have also increased to levels greater than before the COVID-19 pandemic began in the United States. As a result, we have not performed a quantitative analysis in the first quarter of fiscal 2021; however, based on these qualitative factors, Management has concluded no triggering event exists. Our ability to operate dining and banquet rooms and generate off-premise sales at our restaurants is critical to avoiding a future triggering event as the impact of the COVID-19 pandemic continues. Management’s judgments about the impact of the pandemic could change as additional developments occur. We will continue to monitor and evaluate our results to determine if more a more detailed assessment is necessary.
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 the amended revolving credit facility approximates fair value as the interest rate on this instrument approximates current market rates (Level 2). The fair values of the 3.875% and 5.000% notes are based on quoted market prices and are considered Level 2 fair value measurements. The 3.875% notes and 5.000% notes carrying amounts, which are net of unamortized debt issuance costs and discounts, and fair values are as follows, refer to Note 10 - Debt for further details:
September 23, 2020June 24, 2020
Carrying AmountFair ValueCarrying AmountFair Value
3.875% notes
$299.1 $293.3 $299.0 $282.8 
5.000% notes
346.9 357.4 346.7 330.8 

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Note Receivable
During fiscal 2018, we received an $18.0 million long-term note receivable as consideration related to the sale of our equity interest in the Chili’s joint venture in Mexico. We determined the fair value of this note based on an internally developed analysis relying on Level 3 inputs at inception. This analysis was based on a credit rating we assigned to the counterparty and comparable interest rates associated with similar debt instruments observed in the market. As a result of this analysis, we determined the fair value of this note was approximately $16.0 million and recorded this fair value as its initial carrying value. We believe the fair value continues to approximate the note receivable carrying value, which as of September 23, 2020 was $7.0 million. The current portion of the note represents cash payments to be received over the next 12 months and is included within Accounts receivable, net while the long-term portion of the note is included within Other assets in the Consolidated Balance Sheets (Unaudited).
9. LEASES
We typically lease our restaurant facilities through ground leases (where we lease land only, but construct the building and improvements) or retail leases (where we lease the land/retail space and building). In addition to our restaurant facilities, we also lease our corporate headquarters location and certain equipment.
Lease Amounts Included in the Consolidated Statements of Comprehensive Income (Unaudited)
The components of lease expenses included in the Consolidated Statements of Comprehensive Income (Unaudited) were as follows:
Thirteen Week Periods Ended
September 23,
2020
September 25,
2019
Operating lease cost$41.7 $37.3 
Variable lease cost14.0 13.3 
Finance lease amortization4.0 2.7 
Finance lease interest1.5 0.9 
Short-term lease cost0.1 0.2 
Sublease income(1.0)(1.2)
Total lease costs, net$60.3 $53.2 
Lease Maturity Analysis
As of September 23, 2020, the discounted future minimum lease payments on finance and operating leases, as well as sublease income, were as follows:
September 23, 2020
Fiscal YearFinance LeasesOperating LeasesSublease Income
Remainder of 2021$17.5 $135.8 $2.5 
202222.4 169.2 3.2 
202320.9 157.6 2.6 
202411.4 146.6 1.9 
20259.0 136.6 1.8 
Thereafter53.6 864.5 4.8 
Total future lease payments(1)
134.8 1,610.3 $16.8 
Less: Imputed interest31.0 447.3 
Present value of lease liability$103.8 $1,163.0 
(1)Finance and Operating leases total future lease payments represent the contractual obligations due under the contract, including certain cancellable option periods where we are reasonably assured to exercise the

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options. Included in the Total future lease payments as of September 23, 2020 was non-cancelable lease commitments of $114.0 million for finance leases, and $1,065.8 million for operating leases.
10. DEBT
Long-term debt consists of the following:
September 23,
2020
June 24,
2020
Revolving credit facility$426.3 $472.9 
5.000% notes350.0 350.0 
3.875% notes300.0 300.0 
Finance lease obligations103.8 102.1 
Total long-term debt1,180.1 1,225.0 
Less: unamortized debt issuance costs and discounts(4.1)(4.3)
Total long-term debt, less unamortized debt issuance costs and discounts1,176.0 1,220.7 
Less: current installments of long-term debt(1)
(17.7)(12.2)
Long-term debt less current installments$1,158.3 $1,208.5 
(1)Current installments of long-term debt consist only of finance leases for the periods presented and are recorded within Other accrued liabilities in the Consolidated Balance Sheets (Unaudited). Refer to Note 11 - Accrued and Other Liabilities for further details.
Revolving Credit Facility
In the thirteen week period ended September 23, 2020, net repayments of $46.6 million were made on the $1.0 billion revolving credit facility. As of September 23, 2020, $573.7 million of credit was available under the revolving credit facility.
Amended Revolving Credit Agreement
In the first quarter of fiscal 2021, we executed the seventh amendment to our revolving credit facility. This amendment extended the maturity date to December 12, 2022, and required a capacity reduction to $900.0 million from $1.0 billion on September 12, 2021. The issuance of certain debt or preferred equity interests will result in an immediate capacity reduction, an interest rate reduction of 0.250% on the spread, and 0.100% reduction on the undrawn fee if the issuance exceeds $250.0 million pursuant to the terms of the agreement.
The revolving credit facility bears interest of LIBOR, through December 2021, plus an applicable margin of 2.250% to 3.000% and an undrawn commitment fee of 0.350% to 0.500%, both based on a function of our debt-to-cash-flow ratio. Upon LIBOR’s expiration in December 2021, our interest rate will be a function of a similar, publicly available, Eurodollar rate. As of September 23, 2020, our interest rate was 3.750% consisting of the LIBOR floor of 0.750% plus the applicable margin of 3.000%.
During the first quarter of fiscal 2021, we incurred $1.5 million of debt issuance costs, associated with the revolver amendment, which are included in Other assets in the Consolidated Balance Sheets (Unaudited).
5.000% Notes
In fiscal 2017, we completed the private offering of $350.0 million of our 5.000% senior notes due October 2024, our fiscal 2025 (the “2024 Notes”). We received proceeds of $350.0 million and utilized the proceeds to fund a $300.0 million accelerated share repurchase agreement and to repay $50.0 million on the amended $1.0 billion revolving credit facility. The notes require semi-annual interest payments which began on April 1, 2017.
The indenture for the 2024 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 indenture) to (i) create liens on Principal Property (as defined in the Indenture) and (ii) merge, consolidate or amalgamate with or into any

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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.
3.875% Notes
In fiscal 2013, we issued $300.0 million of 3.875% notes due in May 2023, our fiscal 2023. These “2023 Notes” require semi-annual interest payments which began in the second quarter of fiscal 2014.
Financial Covenants
Our debt agreements contain various financial covenants that, among other things, require the maintenance of certain leverage and fixed charge coverage ratios. As of September 23, 2020, pursuant to the amended revolving credit facility and under the terms of the indentures governing our 2023 Notes and 2024 Notes, we are in compliance with our covenants. We expect to remain in compliance with our covenants during the remainder of fiscal 2021.
11. ACCRUED AND OTHER LIABILITIES
Other accrued liabilities consist of the following:
September 23,
2020
June 24,
2020
Property tax$27.0 $22.9 
Insurance21.3 20.7 
Sales tax18.0 13.3 
Current installments of finance leases17.7 12.2 
Interest14.9 7.5 
Utilities and services8.4 8.3 
Cyber security incident3.4 3.4 
Other(1)
11.2 12.3 
$121.9 $100.6 
(1)Other primarily consists of accruals for banquet deposits for Maggiano’s events, charitable donations, rent-related expenses, deferred franchise and development fees, and other various accruals.
Other liabilities consist of the following:
September 23,
2020
June 24,
2020
Deferred payroll taxes(1)
$34.2 $12.9 
Insurance33.5 33.7 
Deferred franchise fees11.4 11.6 
Unrecognized tax benefits2.1 2.1 
Other6.2 6.8 
$87.4 $67.1 
(1)    Deferred payroll taxes primarily consists of the deferral of the employer portion of certain payroll related taxes as allowed under the CARES Act which will be repaid in two equal installments on December 31, 2021, and December 31, 2022.

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12. SHAREHOLDERS’ DEFICIT
The changes in Total shareholders’ deficit during the thirteen week periods ended September 23, 2020 and September 25, 2019, respectively, were as follows:
Thirteen Week Period Ended September 23, 2020
Common StockAdditional
Paid-In
Capital
Accumulated DeficitTreasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Balance at June 24, 2020$7.0 $669.4 $(397.5)$(751.8)$(6.2)$(479.1)
Net income  10.7   10.7 
Other comprehensive income    0.3 0.3 
Dividends  0.0   0.0 
Stock-based compensation 3.9    3.9 
Purchases of treasury stock (1.1) (2.8) (3.9)
Issuances of common stock (9.0) 12.0  3.0 
Balance at September 23, 2020$7.0 $663.2 $(386.8)$(742.6)$(5.9)$(465.1)
Thirteen Week Period Ended September 25, 2019
Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Balance at June 26, 2019$17.6 $522.0 $2,771.2 $(4,083.4)$(5.6)$(778.2)
Effect of ASC 842 adoption— — 195.9 — — 195.9 
Net income  14.9   14.9 
Other comprehensive loss    (0.2)(0.2)
Dividends ($0.38 per share)  (14.6)  (14.6)
Stock-based compensation 7.1    7.1 
Purchases of treasury stock (0.3) (11.0) (11.3)
Issuances of common stock (3.7) 5.0  1.3 
Balance at September 25, 2019$17.6 $525.1 $2,967.4 $(4,089.4)$(5.8)$(585.1)
Dividends
In the fourth quarter of fiscal 2020, our quarterly cash dividend was suspended in response to the COVID-19 pandemic. Before this suspension, our Board of Directors approved quarterly dividends of $0.38 per share paid quarterly. In the thirteen week period ended September 23, 2020, dividends paid solely related to the previously accrued dividends for restricted share awards that vested in the period. Restricted share award dividends are accrued in Other accrued liabilities for the current portion to vest within 12 months, and Other liabilities for the portion that will vest after one year. Before the suspension, in the thirteen week period ended September 25, 2019, we paid dividends of $14.8 million to common stock shareholders.

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Stock-based Compensation
The following table presents the stock options and restricted share awards granted, and related weighted average exercise price and fair value per share amounts.
Thirteen Week Periods Ended
September 23,
2020
September 25,
2019
Stock options
Stock options granted 0.3 
Weighted average exercise price per share$ $38.51 
Weighted average fair value per share$ $6.83 
Restricted share awards
Restricted share awards granted0.5 0.3 
Weighted average fair value per share$39.76 $38.51 
Share Repurchases
In the fourth quarter of fiscal 2020, our share repurchase program was suspended in response to the COVID-19 pandemic. Prior to the suspension, our share repurchase program was used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. We evaluated 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 (Unaudited).
In the thirteen week period ended September 23, 2020, we repurchased 0.1 million shares from team members to satisfy tax withholding obligations on the vesting of restricted shares. Before the suspension, in the thirteen week period ended September 25, 2019, we repurchased 0.3 million shares of our common stock for $11.3 million.
Effect of Adoption of ASC 842
In the first quarter of fiscal 2020, we adopted the lease accounting standard, ASC 842, and recorded a $195.9 million cumulative effect adjustment increase to Retained earnings for the change in accounting principle.
13. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes and interest is as follows:
Thirteen Week Periods Ended
September 23,
2020
September 25,
2019
Income taxes, net of (refunds)$(2.1)$(11.8)
Interest, net of amounts capitalized5.5 6.1 
Non-cash investing and financing activities are as follows:
Thirteen Week Periods Ended
September 23,
2020
September 25,
2019
Retirement of fully depreciated assets$2.5 $4.3 
Dividends declared but not paid 14.6 
Accrued capital expenditures6.4 14.2 

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14. CONTINGENCIES
Lease Commitments
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 23, 2020 and June 24, 2020, we have outstanding lease guarantees or are secondarily liable for $37.7 million and $39.7 million, respectively. These amounts represent the expected maximum potential liability of future rent payments under the leases. These leases have been assigned to the buyers and expire at the end of the respective lease terms, which range from fiscal 2021 through fiscal 2027. In the event of default under a lease by a franchisee or owner of a d