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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 December 23, 2020
Commission File Number 1-10275
https://cdn.kscope.io/d8bf2fb7ba3924933d844775d8d0e29c-eat-20201223_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 January 22, 2021: 45,460,097 shares



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

2

Table of Contents

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 EndedTwenty-Six Week Periods Ended
December 23,
2020
December 25,
2019
December 23,
2020
December 25,
2019
Revenues
Company sales$746.2 $847.5 $1,474.4 $1,611.4 
Franchise and other revenues14.5 21.8 26.4 43.9 
Total revenues760.7 869.3 1,500.8 1,655.3 
Operating costs and expenses
Food and beverage costs198.9 223.1 392.4 426.9 
Restaurant labor255.8 291.8 503.8 560.3 
Restaurant expenses211.3 224.7 413.8 432.0 
Depreciation and amortization37.2 39.3 74.6 77.4 
General and administrative30.0 34.6 60.5 72.6 
Other (gains) and charges5.4 12.3 9.2 11.4 
Total operating costs and expenses738.6 825.8 1,454.3 1,580.6 
Operating income22.1 43.5 46.5 74.7 
Interest expenses14.4 15.0 29.0 29.9 
Other income, net(0.5)(0.5)(0.9)(1.0)
Income before income taxes8.2 29.0 18.4 45.8 
Provision (benefit) for income taxes(3.8)1.1 (4.3)3.0 
Net income$12.0 $27.9 $22.7 $42.8 
Basic net income per share$0.26 $0.75 $0.50 $1.14 
Diluted net income per share$0.26 $0.73 $0.49 $1.12 
Basic weighted average shares outstanding45.3 37.4 45.2 37.4 
Diluted weighted average shares outstanding46.1 38.1 45.9 38.1 
Other comprehensive income (loss)
Foreign currency translation adjustment$0.5 $0.1 $0.8 $(0.1)
Other comprehensive income (loss)0.5 0.1 0.8 (0.1)
Comprehensive income$12.5 $28.0 $23.5 $42.7 
See accompanying Notes to Consolidated Financial Statements (Unaudited)
3

Table of Contents

BRINKER INTERNATIONAL, INC.
Consolidated Balance Sheets
(In millions, except per share amounts)
Unaudited
December 23,
2020
June 24,
2020
ASSETS
Current assets
Cash and cash equivalents$64.1 $43.9 
Accounts receivable, net79.0 52.3 
Inventories26.8 27.3 
Restaurant supplies51.9 51.6 
Prepaid expenses11.8 13.9 
Income taxes receivable, net32.2 35.4 
Total current assets265.8 224.4 
Property and equipment, at cost
Land33.1 34.2 
Buildings and leasehold improvements1,550.9 1,534.4 
Furniture and equipment793.4 785.7 
Construction-in-progress16.5 24.4 
2,393.9 2,378.7 
Less accumulated depreciation and amortization(1,628.0)(1,573.4)
Net property and equipment765.9 805.3 
Other assets
Operating lease assets1,039.2 1,054.6 
Goodwill188.0 187.6 
Deferred income taxes, net53.5 38.2 
Intangibles, net22.0 23.0 
Other23.3 22.9 
Total other assets1,326.0 1,326.3 
Total assets$2,357.7 $2,356.0 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable$101.7 $104.9 
Gift card liability129.9 109.9 
Accrued payroll60.4 65.2 
Operating lease liabilities111.4 117.3 
Other accrued liabilities116.9 100.6 
Total current liabilities520.3 497.9 
Long-term debt and finance leases, less current installments1,134.6 1,208.5 
Long-term operating lease liabilities, less current portion1,040.2 1,061.6 
Other liabilities106.7 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 45.4 million shares outstanding at December 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 capital667.4 669.4 
Accumulated other comprehensive loss(5.4)(6.2)
Accumulated deficit(374.8)(397.5)
Treasury stock, at cost (24.9 million shares at December 23, 2020, and 25.3 million shares at June 24, 2020)
(738.3)(751.8)
Total shareholders’ deficit(444.1)(479.1)
Total liabilities and shareholders’ deficit$2,357.7 $2,356.0 
See accompanying Notes to Consolidated Financial Statements (Unaudited)
4

Table of Contents

BRINKER INTERNATIONAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Twenty-Six Week Periods Ended
December 23,
2020
December 25,
2019
Cash flows from operating activities
Net income$22.7 $42.8 
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization74.6 77.4 
Stock-based compensation6.9 9.7 
Restructure charges and other impairments3.8 6.1 
Net loss on disposal of assets0.8 0.5 
Other1.7 1.3 
Changes in assets and liabilities:
Accounts receivable, net(23.1)(48.7)
Inventories0.2 (0.5)
Restaurant supplies(0.2)(0.1)
Prepaid expenses2.1 1.6 
Operating lease assets, net of liabilities(11.8)(3.0)
Deferred income taxes, net(15.3)6.5 
Other assets(0.1)(0.2)
Accounts payable(4.0)(4.7)
Gift card liability20.1 44.8 
Accrued payroll(4.8)(10.8)
Other accrued liabilities7.3 14.9 
Current income taxes9.9 4.4 
Other liabilities39.2 0.3 
Net cash provided by operating activities130.0 142.3 
Cash flows from investing activities
Payments for property and equipment(37.1)(51.4)
Proceeds from note receivable1.3 1.4 
Proceeds from sale of assets1.3 0.3 
Payments for franchise restaurant acquisitions (96.2)
Net cash used in investing activities(34.5)(145.9)
Cash flows from financing activities
Payments on revolving credit facility(95.0)(416.0)
Borrowings on revolving credit facility28.4 463.0 
Payments on long-term debt(9.8)(5.0)
Purchases of treasury stock(3.9)(11.3)
Payments for debt issuance costs(2.2)(1.0)
Payments of dividends(1.3)(29.0)
Proceeds from issuance of treasury stock8.5 1.5 
Net cash (used in) provided by financing activities(75.3)2.2 
Net change in cash and cash equivalents20.2 (1.4)
Cash and cash equivalents at beginning of period43.9 13.4 
Cash and cash equivalents at end of period$64.1 $12.0 
See accompanying Notes to Consolidated Financial Statements (Unaudited)
5

Table of Contents
Footnote Index
BRINKER INTERNATIONAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
Footnote Index
Note #DescriptionPage
Basis of Presentation
Effect of New Accounting Standards
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

Table of Contents
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 December 23, 2020 and June 24, 2020, and for the thirteen and twenty-six week periods ended December 23, 2020 and December 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 December 23, 2020, we owned, operated or franchised 1,655 restaurants, consisting of 1,118 Company-owned restaurants and 537 franchised restaurants, located in the United States, 27 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 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 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. The rise in COVID-19 cases during the second quarter of fiscal 2021 resulted in some dining room closures and capacity restrictions which have negatively impacted our

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results. As of December 23, 2020, approximately 80% of our restaurant dining rooms and patios were opened with limited seating capacity. The capacity limitations and personal safety preferences in the reopened dining rooms have resulted in reduced traffic in the Company’s restaurants.
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 could lead to further 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.

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3. REVENUE RECOGNITION
Deferred Franchise and Development Fees
Our deferred franchise and development 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 as the performance obligations remain unsatisfied.
Deferred Franchise and Development Fees
Balance as of June 24, 2020$12.7 
Additions0.1 
Amount recognized to Franchise and other revenues(0.9)
Balance as of December 23, 2020$11.9 
Fiscal YearFranchise and Development Fees Revenue Recognition
Remainder of 2021$0.5 
20221.0 
20231.0 
20241.0 
20250.9 
Thereafter7.5 
$11.9 
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 sales67.6 
Gift card redemptions recognized to Company sales(41.7)
Gift card breakage recognized to Franchise and other revenues(4.9)
Other(1.0)
Balance as of December 23, 2020
$129.9 

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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 EndedTwenty-Six Week Periods Ended
December 23,
2020
December 25,
2019
December 23,
2020
December 25,
2019
Restaurant impairment charges$2.5 $4.6 $2.5 $4.6 
COVID-19 related charges1.0  2.2  
Restaurant closure charges0.4 2.9 1.9 3.1 
Remodel-related costs0.7 0.8 0.9 1.5 
Lease modification gain, net  (0.5)(3.1)
Acquisition of franchise restaurants costs, net 2.0  1.5 
Other0.8 2.0 2.2 3.8 
$5.4 $12.3 $9.2 $11.4 
Fiscal 2021
Restaurant impairment charges during the thirteen and twenty-six week periods ended December 23, 2020 primarily related to the long-lived and operating lease assets of 10 underperforming Chili’s restaurants and three underperforming Maggiano’s restaurants that we continue to operate.
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,
conversion of certain parking lots into dining areas, and
initial purchases of restaurant supplies such as face masks and hand sanitizers required to continue to reopen dining rooms.
Restaurant closure charges primarily relates to closure costs and leases associated with certain closed Chili’s restaurants.
Remodel-related costs relate to fixed asset disposals associated with the ongoing Chili’s remodel initiative.
Lease modification gain, net in the twenty-six week period ended December 23, 2020 relates to the lease terminations of certain Chili’s operating lease liabilities.
Fiscal 2020
Restaurant impairment charges during the thirteen and twenty-six week periods ended December 25, 2019 primarily related to the long-lived and operating lease assets of 10 underperforming Chili’s restaurants.
•    Restaurant closure charges during the thirteen and twenty-six week periods ended December 25, 2019 primarily related to leases on certain closed Chili’s restaurants.
•    Lease modification gain, net during the twenty-six week period ended December 25, 2019 included the first quarter of fiscal 2020 gain related to the lease termination of a previously impaired Chili’s operating lease.
•    Acquisition of franchise restaurants costs, net during the thirteen and twenty-six week periods ended December 25, 2019 related to the 116 restaurants acquired from a franchisee, refer to Note 15 - Fiscal 2020 Chili’s Restaurant Acquisition.

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5. INCOME TAXES
Thirteen Week Periods EndedTwenty-Six Week Periods Ended
December 23,
2020
December 25,
2019
December 23,
2020
December 25,
2019
Effective income tax rate(46.3)%3.8 %(23.4)%6.6 %
The federal statutory tax rate for the periods presented was 21.0%.
Fiscal 2021
Our effective income tax rate for the thirteen and twenty-six week periods ended December 23, 2020 was lower than the federal statutory rate primarily due to lower income before income taxes and the favorable impact from the FICA tip tax credit. The twenty-six week period ended December 23, 2020 also included the favorable impact of excess tax windfalls associated with stock-based compensation.
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:
Twenty-Six Week Period Ended
December 23,
2020
Income tax expense at statutory rate - 21.0%$3.9 
FICA tip tax credit(6.8)
Stock-based compensation tax windfall(1.2)
State income taxes, net of federal benefit1.3 
Other(1.5)
Provision (benefit) for income taxes - (23.4%)$(4.3)
Fiscal 2020
Our effective income tax rate for the thirteen and twenty-six week periods ended December 25, 2019 was lower than the federal statutory rate due to the favorable impact from the FICA tip 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 EndedTwenty-Six Week Periods Ended
December 23,
2020
December 25,
2019
December 23,
2020
December 25,
2019
Basic weighted average shares outstanding45.3 37.4 45.2 37.4 
Dilutive stock options0.2 0.1 0.1 0.1 
Dilutive restricted shares0.6 0.6 0.6 0.6 
Total dilutive impact0.8 0.7 0.7 0.7 
Diluted weighted average shares outstanding46.1 38.1 45.9 38.1 
Awards excluded due to anti-dilutive effect0.6 1.1 1.1 1.2 

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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, 27 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, Maggiano’s banquet service charge income, franchise and development fees, gift card discount costs from third-party gift card sales and merchandise income. 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 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, repairs and maintenance, delivery fees, utilities, 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 December 23, 2020
Chili’sMaggiano’sOtherConsolidated
Company sales$683.0 $63.2 $ $746.2 
Royalties7.6 0.1  7.7 
Franchise fees and other revenues5.8 1.0  6.8 
Franchise and other revenues13.4 1.1  14.5 
Total revenues696.4 64.3  760.7 
Food and beverage costs183.7 15.2  198.9 
Restaurant labor233.4 22.4  255.8 
Restaurant expenses188.7 22.1 0.5 211.3 
Depreciation and amortization30.8 3.4 3.0 37.2 
General and administrative5.4 1.3 23.3 30.0 
Other (gains) and charges4.4 0.8 0.2 5.4 
Total operating costs and expenses646.4 65.2 27.0 738.6 
Operating income (loss)50.0 (0.9)(27.0)22.1 
Interest expenses1.4 0.1 12.9 14.4 
Other income, net(0.2) (0.3)(0.5)
Income (loss) before income taxes$48.8 $(1.0)$(39.6)$8.2 


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Thirteen Week Period Ended December 25, 2019
Chili’sMaggiano’sOtherConsolidated
Company sales$728.4 $119.1 $ $847.5 
Royalties9.9   9.9 
Franchise fees and other revenues4.8 7.1  11.9 
Franchise and other revenues14.7 7.1  21.8 
Total revenues743.1 126.2  869.3 
Food and beverage costs195.1 28.0  223.1 
Restaurant labor251.0 40.8  291.8 
Restaurant expenses194.2 30.4 0.1 224.7 
Depreciation and amortization32.1 4.0 3.2 39.3 
General and administrative8.5 1.5 24.6 34.6 
Other (gains) and charges10.6  1.7 12.3 
Total operating costs and expenses691.5 104.7 29.6 825.8 
Operating income (loss)51.6 21.5 (29.6)43.5 
Interest expenses1.1  13.9 15.0 
Other income, net(0.1) (0.4)(0.5)
Income (loss) before income taxes$50.6 $21.5 $(43.1)$29.0 
Twenty-Six Week Period Ended December 23, 2020
Chili’sMaggiano’sOtherConsolidated
Company sales$1,358.0 $116.4 $ $1,474.4 
Royalties14.2 0.1  14.3 
Franchise fees and other revenues10.7 1.4  12.1 
Franchise and other revenues24.9 1.5  26.4 
Total revenues1,382.9 117.9  1,500.8 
Food and beverage costs364.5 27.9  392.4 
Restaurant labor461.6 42.2  503.8 
Restaurant expenses370.1 42.9 0.8 413.8 
Depreciation and amortization61.4 7.0 6.2 74.6 
General and administrative10.8 2.6 47.1 60.5 
Other (gains) and charges8.0 0.9 0.3 9.2 
Total operating costs and expenses1,276.4 123.5 54.4 1,454.3 
Operating income (loss)106.5 (5.6)(54.4)46.5 
Interest expenses2.8 0.1 26.1 29.0 
Other income, net(0.3) (0.6)(0.9)
Income (loss) before income taxes$104.0 $(5.7)$(79.9)$18.4 
Segment assets$1,929.5 $226.3 $201.9 $2,357.7 
Segment goodwill149.6 38.4  188.0 
Payments for property and equipment32.8 1.0 3.3 37.1 

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Twenty-Six Week Period Ended December 25, 2019
Chili’s(1)
Maggiano’sOtherConsolidated
Company sales$1,405.9 $205.5 $ $1,611.4 
Royalties21.7 0.1  21.8 
Franchise fees and other revenues11.1 11.0  22.1 
Franchise and other revenues32.8 11.1  43.9 
Total revenues1,438.7 216.6  1,655.3 
Food and beverage costs377.5 49.4  426.9 
Restaurant labor484.1 76.2  560.3 
Restaurant expenses375.0 56.7 0.3 432.0 
Depreciation and amortization62.8 8.0 6.6 77.4 
General and administrative17.6 3.2 51.8 72.6 
Other (gains) and charges9.0 0.1 2.3 11.4 
Total operating costs and expenses1,326.0 193.6 61.0 1,580.6 
Operating income (loss)112.7 23.0 (61.0)74.7 
Interest expenses2.0  27.9 29.9 
Other income, net(0.3) (0.7)(1.0)
Income (loss) before income taxes$111.0 $23.0 $(88.2)$45.8 
Payments for property and equipment$42.4 $4.2 $4.8 $51.4 
(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. All impairment charges were included in Other (gains) and charges in the Consolidated Statements of Comprehensive Income for the periods presented.
Intangibles, net in the Consolidated Balance Sheets (Unaudited) includes both indefinite-lived intangible assets such as 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 December 23, 2020 and June 24, 2020, of $8.5 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 and twenty-six week periods ended December 23, 2020, we impaired certain long-lived assets and operating

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lease assets primarily related to 10 underperforming Chili’s and three underperforming Maggiano’s restaurants. During the thirteen and twenty-six week periods ended December 25, 2019, we impaired certain long-lived assets primarily related to 10 underperforming Chili’s restaurants. Additionally, we impaired certain finance and operating lease assets related to previously closed Chili’s restaurants. 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 expenses recorded on these impaired restaurants for the periods presented.
Impairment Charges
Pre-Impairment Carrying ValueThirteen and Twenty-Six Week Periods Ended
December 23,
2020
December 25,
2019
December 23,
2020
December 25,
2019
Underperforming restaurants
Long-lived assets$2.2 $4.5 $2.2 $4.5 
Reacquired franchise rights assets0.1  0.1  
Operating lease assets1.1  0.2  
Finance lease assets 0.1  0.1 
Total underperforming restaurants$3.4 $4.6 $2.5 $4.6 
Closed restaurants
Operating lease assets$ $6.4 $ $1.8 
Finance lease assets 5.8  1.4 
Total closed restaurants$ $12.2 $ $3.2 
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 and twenty-six week periods ended December 23, 2020 and December 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 fair value of the reporting unit 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 and second quarters 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. We performed our annual goodwill impairment analysis in the second quarter of fiscal 2021 using a

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qualitative approach based on these factors and no indicators of impairment were identified. 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 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:
December 23, 2020June 24, 2020
Carrying AmountFair ValueCarrying AmountFair Value
3.875% notes
$299.1 $299.3 $299.0 $282.8 
5.000% notes
347.0 364.0 346.7 330.8 
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 EndedTwenty-Six Week Periods Ended
December 23,
2020