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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 March 24, 2021
Commission File Number 1-10275
https://cdn.kscope.io/48014dc6bd27f15a8d410d3b1cd86102-eat-20210324_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 April 23, 2021: 45,750,918 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 EndedThirty-Nine Week Periods Ended
March 24,
2021
March 25,
2020
March 24,
2021
March 25,
2020
Revenues
Company sales$813.7 $840.4 $2,288.1 $2,451.8 
Franchise and other revenues14.7 19.6 41.1 63.5 
Total revenues828.4 860.0 2,329.2 2,515.3 
Operating costs and expenses
Food and beverage costs213.9 226.7 606.3 653.6 
Restaurant labor270.8 285.9 774.6 846.2 
Restaurant expenses216.1 220.2 629.9 652.2 
Depreciation and amortization37.4 43.5 112.0 120.9 
General and administrative33.7 23.3 94.2 95.9 
Other (gains) and charges4.3 19.3 13.5 30.7 
Total operating costs and expenses776.2 818.9 2,230.5 2,399.5 
Operating income52.2 41.1 98.7 115.8 
Interest expenses14.1 14.3 43.1 44.2 
Other income, net(0.3)(0.4)(1.2)(1.4)
Income before income taxes38.4 27.2 56.8 73.0 
Provision (benefit) for income taxes4.5 (3.6)0.2 (0.6)
Net income$33.9 $30.8 $56.6 $73.6 
Basic net income per share$0.74 $0.83 $1.25 $1.97 
Diluted net income per share$0.73 $0.81 $1.22 $1.94 
Basic weighted average shares outstanding45.5 37.2 45.3 37.3 
Diluted weighted average shares outstanding46.7 37.8 46.2 38.0 
Other comprehensive income (loss)
Foreign currency translation adjustment$0.3 $(1.0)$1.1 $(1.1)
Other comprehensive income (loss)0.3 (1.0)1.1 (1.1)
Comprehensive income$34.2 $29.8 $57.7 $72.5 
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
March 24,
2021
June 24,
2020
ASSETS
Current assets
Cash and cash equivalents$63.6 $43.9 
Accounts receivable, net66.6 52.3 
Inventories27.1 27.3 
Restaurant supplies52.0 51.6 
Prepaid expenses11.6 13.9 
Income taxes receivable, net31.5 35.4 
Total current assets252.4 224.4 
Property and equipment, at cost
Land33.1 34.2 
Buildings and leasehold improvements1,556.8 1,534.4 
Furniture and equipment804.7 785.7 
Construction-in-progress14.5 24.4 
2,409.1 2,378.7 
Less accumulated depreciation and amortization(1,657.5)(1,573.4)
Net property and equipment751.6 805.3 
Other assets
Operating lease assets1,025.8 1,054.6 
Goodwill188.1 187.6 
Deferred income taxes, net47.5 38.2 
Intangibles, net21.5 23.0 
Other22.1 22.9 
Total other assets1,305.0 1,326.3 
Total assets$2,309.0 $2,356.0 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable$121.4 $104.9 
Gift card liability110.9 109.9 
Accrued payroll112.0 65.2 
Operating lease liabilities117.2 117.3 
Other accrued liabilities116.3 100.6 
Total current liabilities577.8 497.9 
Long-term debt and finance leases, less current installments1,017.0 1,208.5 
Long-term operating lease liabilities, less current portion1,023.7 1,061.6 
Other liabilities81.1 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 45.7 million shares outstanding at March 24, 2021, and 70.3 million shares issued and 45.0 million shares outstanding at June 24, 2020)
7.0 7.0 
Additional paid-in capital677.4 669.4 
Accumulated other comprehensive loss(5.1)(6.2)
Accumulated deficit(340.9)(397.5)
Treasury stock, at cost (24.6 million shares at March 24, 2021, and 25.3 million shares at June 24, 2020)
(729.0)(751.8)
Total shareholders’ deficit(390.6)(479.1)
Total liabilities and shareholders’ deficit$2,309.0 $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)
Thirty-Nine Week Periods Ended
March 24,
2021
March 25,
2020
Cash flows from operating activities
Net income$56.6 $73.6 
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization112.0 120.9 
Stock-based compensation11.3 9.0 
Restructure and impairment charges6.5 24.8 
Net loss on disposal of assets1.1 1.1 
Other2.7 1.7 
Changes in assets and liabilities:
Accounts receivable, net(1.3)12.8 
Inventories(0.4)(1.2)
Restaurant supplies(0.4)(0.3)
Prepaid expenses2.3 10.8 
Operating lease assets, net of liabilities(9.1)(6.3)
Deferred income taxes, net(9.3)4.2 
Other assets(0.2)(0.4)
Accounts payable19.0 (1.7)
Gift card liability1.0 5.1 
Accrued payroll46.7 (26.6)
Other accrued liabilities10.5 11.1 
Current income taxes6.4 (0.2)
Other liabilities13.2 (0.6)
Net cash provided by operating activities268.6 237.8 
Cash flows from investing activities
Payments for property and equipment(62.4)(82.0)
Proceeds from sale of assets1.6 1.0 
Proceeds from note receivable1.5 2.2 
Payments for franchise restaurant acquisitions (94.6)
Net cash used in investing activities(59.3)(173.4)
Cash flows from financing activities
Payments on revolving credit facility(210.0)(630.0)
Borrowings on revolving credit facility28.4 806.8 
Payments on long-term debt(14.3)(12.4)
Purchases of treasury stock(4.1)(32.3)
Payments for debt issuance costs(2.2)(1.0)
Payments of dividends(1.5)(43.3)
Proceeds from issuance of treasury stock14.1 1.6 
Net cash (used in) provided by financing activities(189.6)89.4 
Net change in cash and cash equivalents19.7 153.8 
Cash and cash equivalents at beginning of period43.9 13.4 
Cash and cash equivalents at end of period$63.6 $167.2 
See accompanying Notes to Consolidated Financial Statements (Unaudited)
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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


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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 March 24, 2021 and June 24, 2020, and for the thirteen and thirty-nine week periods ended March 24, 2021 and March 25, 2020, 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 March 24, 2021, we owned, operated or franchised 1,657 restaurants, consisting of 1,120 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 or 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 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.
Foreign Currency Translation
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).
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

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transition to an off-premise business model. In May 2020, we began to reopen certain dining room locations as permitted by state and local governments.
In March 2021, certain state and local governments started easing, and in some cases lifting, the dining room capacity restrictions. We are currently operating substantially all of our dining rooms in some capacity in accordance with state and local mandates in order to ensure the safety of our guests and team members. As of March 24, 2021, substantially all of our restaurant dining rooms and patios were opened with limited seating capacity. The capacity limitations and personal safety preferences 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
In the first quarter of fiscal 2021, we implemented the following new accounting standards:
Measurement of Credit Losses on Financial Instruments, ASU No. 2016-13
Fair Value Measurement (Topic 820): Disclosure Framework, ASU No. 2018-13
Simplifying the Accounting for Income Taxes, ASU No. 2019-12
The adoption of these new accounting standards did not have a material impact on our Consolidated Financial Statements. There were no new accounting standards implemented in the third quarter of fiscal 2021.
New Accounting Standards That Will Be Implemented In Future Periods
We reviewed all recently issued accounting pronouncements and determined that they were either not applicable or are not expected to have a material impact on the Consolidated Financial Statements.
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 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).

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The following table reflects the changes in deferred franchise and development fees between June 24, 2020 and March 24, 2021:
Deferred Franchise and Development Fees
Balance as of June 24, 2020$12.7 
Additions0.3 
Amount recognized to Franchise and other revenues(1.3)
Other0.1 
Balance as of March 24, 2021$11.8 
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 March 24, 2021:
Fiscal YearFranchise and Development Fees Revenue Recognition
Remainder of 2021$0.3 
20221.0 
20231.0 
20241.0 
20250.9 
Thereafter7.6 
$11.8 
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 24, 2020 and March 24, 2021:
Gift Card Liability
Balance as of June 24, 2020$109.9 
Gift card sales88.6 
Gift card redemptions recognized to Company sales(79.8)
Gift card breakage recognized to Franchise and other revenues(8.0)
Other0.2 
Balance as of March 24, 2021
$110.9 

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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 EndedThirty-Nine Week Periods Ended
March 24,
2021
March 25,
2020
March 24,
2021
March 25,
2020
Loss from natural disasters, net of (insurance recoveries)$1.8 $(0.9)$2.0 $(0.6)
Remodel-related costs0.9 0.6 1.8 2.1 
COVID-19 related charges0.9 16.1 3.1 16.1 
Restaurant closure charges0.3 0.3 2.2 3.4 
Foreign currency transaction (gain) loss0.1 2.3 (0.3)2.2 
Restaurant impairment charges  2.5 4.6 
Lease modification gain, net  (0.5)(3.1)
Acquisition of franchise restaurants costs, net 1.1  2.6 
Other0.3 (0.2)2.7 3.4 
$4.3 $19.3 $13.5 $30.7 
Fiscal 2021
Loss from natural disasters, net of (insurance recoveries) primarily consists of costs incurred related to Winter Storm Uri in February 2021.
Remodel-related costs relate to fixed asset disposals associated with the ongoing Chili’s remodel initiative.
COVID-19 related charges in the thirty-nine week period ended March 24, 2021 consists of following 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 and personal protective supplies such as face masks and hand sanitizers required to maintain open dining rooms.
Restaurant closure charges in the thirty-nine week period ended March 24, 2021 primarily relates to closure costs and leases associated with certain closed Chili’s restaurants.
Foreign currency transaction (gain) loss resulted from the change in the value of our Mexican peso denominated note receivable received as consideration from the sale of our equity interest in our Mexico joint venture in the second quarter of fiscal 2018.
Restaurant impairment charges during the thirty-nine week period ended March 24, 2021 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.
Lease modification gain, net during the thirty-nine week period ended March 24, 2021 relates to lease terminations of certain Chili’s operating lease liabilities.
Fiscal 2020
Loss from natural disasters, net of (insurance recoveries) during the thirteen and thirty-nine week periods ended March 25, 2020 primarily consists of insurance proceeds received related to a previously filed claim.

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COVID-19 related charges consists of costs related to both Chili’s and Maggiano’s:
employee assistance - $15.5 million of employee assistance payments for the team members that experienced reduced shifts during this pandemic, who would have otherwise not received such payment under our normal compensation practices; and
inventory spoilage - $0.6 million due to the unexpected decline in traffic and dining room closures.
•    Restaurant closure charges during the thirteen and thirty-nine week periods ended March 25, 2020 primarily related to leases on certain closed Chili’s restaurants.
Restaurant impairment charges during the thirty-nine week period ended March 25, 2020 primarily related to the long-lived and operating lease assets of 10 underperforming Chili’s restaurants.
Lease modification gain, net during the thirty-nine week period ended March 25, 2020 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 thirty-nine week periods ended March 25, 2020 related to the 116 restaurants acquired from a franchisee. Refer to Note 15 - Fiscal 2020 Chili’s Restaurant Acquisition for details.
5. INCOME TAXES
Thirteen Week Periods EndedThirty-Nine Week Periods Ended
March 24,
2021
March 25,
2020
March 24,
2021
March 25,
2020
Effective income tax rate11.7 %(13.2)%0.4 %(0.8)%
The federal statutory tax rate for the periods presented was 21.0%. Our effective income tax rate for the thirteen and thirty-nine week periods ended March 24, 2021 was lower than the federal statutory rate primarily due to the favorable impact from the FICA tip tax credit. The thirty-nine week period ended March 24, 2021 also included the favorable impact of excess tax benefits 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:
Thirty-Nine Week Period Ended
March 24,
2021
Income tax expense at statutory rate - 21.0%$11.9 
FICA tip tax credit(12.2)
Stock-based compensation excess tax benefits(2.0)
State income taxes, net of federal benefit3.3 
Other(0.8)
Provision (benefit) for income taxes - 0.4%$0.2 
Our effective income tax rate for the thirteen and thirty-nine week periods ended March 25, 2020 was lower than the federal statutory rate due to reduced profitability related to the COVID-19 pandemic that resulted in the closure of all dining and banquet rooms by the end of the third quarter of fiscal 2020, and the favorable impact of the FICA tip tax credit. The Provision (benefit) for income taxes included a significant reduction for the thirteen week period ended March 25, 2020 necessary to align the year-to-date Provision (benefit) for income taxes to the year-to-date Income before income taxes.
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

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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 EndedThirty-Nine Week Periods Ended
March 24,
2021
March 25,
2020
March 24,
2021
March 25,
2020
Basic weighted average shares outstanding45.5 37.2 45.3 37.3 
Dilutive stock options0.5 0.1 0.3 0.1 
Dilutive restricted shares0.7 0.5 0.6 0.6 
Total dilutive impact1.2 0.6 0.9 0.7 
Diluted weighted average shares outstanding46.7 37.8 46.2 38.0 
Awards excluded due to anti-dilutive effect0.0 1.4 0.7 1.3 
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, which are principally located in the United States, within the full-service casual dining segment of the industry. The Chili’s segment also has Company-owned restaurants in Canada, and franchised locations in the United States, 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. The Other segment includes costs related to our restaurant support teams for the Chili’s and Maggiano’s brands, including operations, finance, franchise, marketing, human resources and culinary innovation. The Other segment also includes costs related to the common and shared infrastructure, including accounting, information technology, purchasing, guest relations, legal and restaurant development.
Company sales for each segment include revenues generated by the operation of Company-owned restaurants including gift card redemptions and virtual brand revenues. Franchise and other revenues include royalties, 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 located 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, delivery fees, repairs and maintenance, utilities, property taxes, credit card processing fees and advertising.

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The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
Thirteen Week Period Ended March 24, 2021
Chili’sMaggiano’sOtherConsolidated
Company sales$749.0 $64.7 $ $813.7 
Royalties7.7   7.7 
Franchise fees and other revenues6.3 0.7  7.0 
Franchise and other revenues14.0 0.7  14.7 
Total revenues763.0 65.4  828.4 
Food and beverage costs198.7 15.2  213.9 
Restaurant labor248.7 22.1  270.8 
Restaurant expenses194.2 21.7 0.2 216.1 
Depreciation and amortization31.0 3.4 3.0 37.4 
General and administrative7.0 1.3 25.4 33.7 
Other (gains) and charges3.1 0.3 0.9 4.3 
Total operating costs and expenses682.7 64.0 29.5 776.2 
Operating income (loss)80.3 1.4 (29.5)52.2 
Interest expenses1.4  12.7 14.1 
Other income, net(0.1) (0.2)(0.3)
Income (loss) before income taxes$79.0 $1.4 $(42.0)$38.4 

Thirteen Week Period Ended March 25, 2020
Chili’sMaggiano’sOtherConsolidated
Company sales$748.7 $91.7 $ $840.4 
Royalties9.0   9.0 
Franchise fees and other revenues6.7 3.9  10.6 
Franchise and other revenues15.7 3.9  19.6 
Total revenues764.4 95.6  860.0 
Food and beverage costs204.1 22.6  226.7 
Restaurant labor251.1 34.8  285.9 
Restaurant expenses193.2 26.9 0.1 220.2 
Depreciation and amortization36.5 3.8 3.2 43.5 
General and administrative5.9 1.1 16.3 23.3 
Other (gains) and charges14.9 2.4 2.0 19.3 
Total operating costs and expenses705.7 91.6 21.6 818.9 
Operating income (loss)58.7 4.0 (21.6)41.1 
Interest expenses1.1  13.2 14.3 
Other income, net(0.1) (0.3)(0.4)
Income (loss) before income taxes$57.7 $4.0 $(34.5)$27.2 

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Thirty-Nine Week Period Ended March 24, 2021
Chili’sMaggiano’sOtherConsolidated
Company sales$2,107.0 $181.1 $ $2,288.1 
Royalties21.9 0.1  22.0 
Franchise fees and other revenues17.0 2.1  19.1 
Franchise and other revenues38.9 2.2  41.1 
Total revenues2,145.9 183.3  2,329.2 
Food and beverage costs563.2 43.1  606.3 
Restaurant labor710.3 64.3  774.6 
Restaurant expenses564.6 64.6 0.7 629.9 
Depreciation and amortization92.4 10.4 9.2 112.0 
General and administrative17.8 3.9 72.5 94.2 
Other (gains) and charges11.1 1.2 1.2 13.5 
Total operating costs and expenses1,959.4 187.5 83.6 2,230.5 
Operating income (loss)186.5 (4.2)(83.6)98.7 
Interest expenses4.2 0.1 38.8 43.1 
Other income, net(0.4) (0.8)(1.2)
Income (loss) before income taxes$182.7 $(4.3)$(121.6)$56.8 
Segment assets$1,905.2 $219.7 $184.1 $2,309.0 
Segment goodwill149.7 38.4  188.1 
Payments for property and equipment56.3 1.4 4.7 62.4 
Thirty-Nine Week Period Ended March 25, 2020
Chili’s(1)
Maggiano’sOtherConsolidated
Company sales$2,154.6 $297.2 $ $2,451.8 
Royalties30.7 0.1  30.8 
Franchise fees and other revenues17.8 14.9  32.7 
Franchise and other revenues48.5 15.0  63.5 
Total revenues2,203.1 312.2  2,515.3 
Food and beverage costs581.6 72.0  653.6 
Restaurant labor735.2 111.0  846.2 
Restaurant expenses568.2 83.6 0.4 652.2 
Depreciation and amortization99.3 11.8 9.8 120.9 
General and administrative23.5 4.3 68.1 95.9 
Other (gains) and charges23.9 2.5 4.3 30.7 
Total operating costs and expenses2,031.7 285.2 82.6 2,399.5 
Operating income (loss)171.4 27.0 (82.6)115.8 
Interest expenses3.1  41.1 44.2 
Other income, net(0.4) (1.0)(1.4)
Income (loss) before income taxes$168.7 $27.0 $(122.7)$73.0 
Payments for property and equipment$68.9 $6.2 $6.9 $82.0 
(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.

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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 measurements are categorized in three levels based on the types of significant inputs used, as follows:
Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities
Level 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 (Unaudited) 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 such as reacquired franchise rights and trademarks. Intangibles, net included accumulated amortization associated with definite-lived intangible assets at March 24, 2021 and June 24, 2020, of $9.2 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 thirty-nine week period ended March 24, 2021, we impaired certain long-lived assets and operating lease assets primarily related to 10 underperforming Chili’s and three underperforming Maggiano’s restaurants. During the thirty-nine week period ended March 25, 2020, 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 ValueThirty-Nine Week Periods Ended
March 24,
2021
March 25,
2020
March 24,
2021
March 25,
2020
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
The fair values of transferable liquor licenses are based on prices in the open market for licenses in the same or similar jurisdictions, and are categorized as Level 2. During the thirteen and thirty-nine week periods ended March 24, 2021 and March 25, 2020, no indicators of impairment were identified.

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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 declines in operating cash flows and market capitalization that were primarily driven by the impact of the COVID-19 pandemic on our business. 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 operating results compared to projections in the quantitative assessment prepared in the third quarter of fiscal 2020.
Our operating results and operating cash flows for the thirteen and thirty-nine week periods ended March 24, 2021 have continued to outperform our initial quantitative assessment. 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 qualitative approach based on these factors and no indicators of impairment were identified. During the thirteen and thirty-nine week periods ended March 25, 2020, no indicators of impairment were identified based on our assessments.
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 in future periods to determine if a more detailed assessment is necessary.
Other Financial Instruments