EXHIBIT 13

BRINKER INTERNATIONAL, INC.

Consolidated Financial Statements

Table of Contents

The following are attached hereto as part of Exhibit 13:

	Page
Selected Financial Data	F-2
Management’s Discussion and Analysis of Financial Condition and Results of Operations	F-4
Consolidated Statements of Comprehensive Income - Fiscal Years Ended June 26, 2019, June 27, 2018 and June 28, 2017	F-19
Consolidated Balance Sheets - June 26, 2019 and June 27, 2018	F-20
Consolidated Statements of Cash Flows - Fiscal Years Ended June 26, 2019, June 27, 2018 and June 28, 2017	F-21
Consolidated Statements of Shareholders’ Deficit - Fiscal Years Ended June 26, 2019, June 27, 2018 and June 28, 2017	F-22
Notes to Consolidated Financial Statements	F-23
Report of Independent Registered Public Accounting Firm	F-59
Management’s Report on Internal Control over Financial Reporting	F-62

F-1

BRINKER INTERNATIONAL, INC.

Selected Financial Data

(In millions, except per share amounts and number of restaurants)

	Fiscal Years Ended
	6/26/2019(1)			6/27/2018			6/28/2017			6/29/2016(2)			6/24/2015
Income Statement Data:
Revenues
Company sales	$	3,106.2		$	3,041.5		$	3,062.5		$	3,166.7		$	2,904.7
Franchise and other revenues	111.7			93.9			88.3			90.8			97.6
Total revenues	3,217.9			3,135.4			3,150.8			3,257.5			3,002.3
Operating costs and expenses
Company restaurants (excluding depreciation and amortization)
Cost of sales	823.0			796.0			791.3			840.2			775.1
Restaurant labor	1,059.7			1,033.9			1,017.9			1,036.0			929.2
Restaurant expenses	812.3			757.5			773.5			762.7			703.3
Company restaurant expenses	2,695.0			2,587.4			2,582.7			2,638.9			2,407.6
Depreciation and amortization	147.6			151.4			156.4			156.4			145.2
General and administrative	149.1			136.0			132.8			127.6			133.5
Other (gains) and charges	(4.5		)	34.5			22.7			17.1			4.8
Total operating costs and expenses	2,987.2			2,909.3			2,894.6			2,940.0			2,691.1
Operating income	230.7			226.1			256.2			317.5			311.2
Interest expenses	61.6			59.0			49.6			32.6			29.0
Other (income), net	(2.7		)	(3.1		)	(1.9		)	(1.5		)	(2.1		)
Income before provision for income taxes	171.8			170.2			208.5			286.4			284.3
Provision for income taxes	16.9			44.3			57.7			85.8			89.6
Net income	$	154.9		$	125.9		$	150.8		$	200.6		$	194.7
Basic net income per share	$	4.04		$	2.75		$	2.98		$	3.47		$	3.09
Diluted net income per share	$	3.96		$	2.72		$	2.94		$	3.42		$	3.02
Basic weighted average shares outstanding	38.3			45.7			50.6			57.9			63.1
Diluted weighted average shares outstanding	39.1			46.3			51.2			58.7			64.4
Balance Sheet Data:
Working capital	$	(244.6	)	$	(278.0	)	$	(292.0	)	$	(257.2	)	$	(233.3	)
Total assets(3)	1,258.3			1,347.3			1,403.6			1,458.5			1,421.5
Long-term obligations(3)	1,206.6			1,631.3			1,461.0			1,248.4			1,091.7
Shareholders’ deficit	(778.2		)	(718.3		)	(493.6		)	(225.6		)	(90.8		)
Dividends per share	$	1.52		$	1.52		$	1.36		$	1.28		$	1.12
Number of Restaurants Open (End of Year):
Company-owned	1,001			997			1,003			1,001			888
Franchise	664			689			671			659			741
Total	1,665			1,686			1,674			1,660			1,629
Revenues of Franchisees(4)	$	1,311.3		$	1,309.4		$	1,331.9		$	1,348.6		$	1,644.0

F-2

⁽¹⁾  Fiscal 2019 reflects the impact of the adoption of the new revenue recognition accounting standard using the modified retrospective transition method. All other periods presented have not been restated. Refer to Note 1 - Nature of Operations and Summary of Significant Accounting Policies and Note 2 - Revenue Recognition in our Notes to the Consolidated Financial Statements for information regarding our adoption of the new revenue standard.

⁽²⁾  Fiscal 2016 consisted of 53 weeks while all other periods presented consisted of 52 weeks.

⁽³⁾  Debt issuance costs are presented in the Consolidated Balance Sheets as a direct deduction from the associated debt liability. Amounts presented for fiscal years prior to fiscal 2017 were reclassified from Other assets to Long-term debt to conform to the current presentation.

⁽⁴⁾  Revenues of Franchisees represent the gross sales reported by our franchisees. Royalty revenues recognized by us are based on these sales generated and reported to us by franchisees.

F-3

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand our company, our operations, and our current operating environment. For an understanding of the significant factors that influenced our performance, the MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes to the Consolidated Financial Statements included in this annual report. Our MD&A consists of the following sections:

• Overview - a general description of our business and the casual dining segment of the restaurant industry

• Results of Operations - an analysis of the Consolidated Statements of Comprehensive Income included in the Consolidated Financial Statements

• Liquidity and Capital Resources - an analysis of cash flows, including capital expenditures, aggregate contractual obligations, share repurchase activity, known trends that may impact liquidity, and the impact of inflation

• Impact of Inflation - a discussion of the effect of inflation on our business

• Off-Balance Sheet Arrangements - a discussion of the off-balance sheet arrangements entered into by us

• Critical Accounting Estimates - a discussion of accounting policies that require critical judgments and estimates including recent accounting pronouncements

• Quantitative and Qualitative Disclosures about Market Risk - a discussion of our exposure to market risks

The following MD&A includes a discussion comparing our results in fiscal 2019 to fiscal 2018, and should be read together with Part II, Item 6 - Selected Financial Data presented for the fiscal year ended June 26, 2019 and Part II, Item 8 - Financial Statements and Supplementary Data of our Annual Report. For a discussion comparing our results from fiscal 2018 to fiscal 2017, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Exhibit 13 of our Annual Report on Form 10-K for the fiscal year ended June 27, 2018, filed with the SEC on August 27, 2018.

The Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States, and include the accounts of Brinker International, Inc. and our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. We have a 52/53 week fiscal year ending on the last Wednesday in June. Fiscal years 2019, 2018 and 2017, which ended on June 26, 2019, June 27, 2018 and June 28, 2017, respectively, each contained 52 weeks. All amounts within the MD&A are presented in millions unless otherwise specified.

OVERVIEW

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 June 26, 2019, we owned, operated, or franchised 1,665 restaurants, consisting of 1,001 Company-owned restaurants and 664 franchised restaurants, located in the United States, 29 countries and two United States territories. Our two restaurant brands, Chili’s and Maggiano’s, are both operating segments and reporting units.

We are committed to strategies and a company culture that we believe are centered on a guest experience which includes bringing back guests, growing long-term sales and profit and engaging team members. Our strategies and culture are intended to differentiate our brands from the competition, reduce the costs associated with managing our restaurants and establish a strong presence for our brands in key markets around the world.

We regularly evaluate our processes and menu at Chili’s to identify opportunities where we can improve our service quality and food. During fiscal 2018, we reduced our menu items by approximately one-third compared to fiscal 2017,

F-4

and focused on our core equities of burgers, ribs, fajitas and margaritas. This initiative improved kitchen efficiency and allowed our managers and cooks to deliver our food hotter and faster to our guests. We also invested in the quality of our food. During fiscal 2019, we continued to focus on our core equities and improving guest satisfaction with our food and service by improving execution of our operations standards.

We remain competitive with a flexible platform of our value offerings at both lunch and dinner and are committed to offering consistent, quality products at a price point that is compelling to our guests. Our “3 for $10” platform allows guests to combine a starter, a non-alcoholic drink and an entrée for just $10.00 and is part of the every-day base menu. Additionally, we have continued our margarita of the month promotion that started in fiscal 2018 that features a new premium-liquor margarita every month at an every-day value price of $5.00. We believe these and other value offers are increasing guest frequency and that few of our competitors can match these offers on a consistent basis. We continue to seek opportunities to reinforce value and create interest for the Chili’s brand with new and varied offerings to further enhance sales and drive incremental traffic.

The Chili’s brand continues to leverage technology to improve convenience for our guests and to create a digital guest experience that we believe will help us engage our guests more effectively. Our loyalty database included more than 6 million active members in fiscal 2019. We further improved our marketing returns with those guests by offering targeted relevant promotions tied to individual purchase behavior. We plan to continue to expand our database and digital marketing impact in fiscal 2020. We anticipate that guest loyalty programs will be a significant part of our marketing strategy going forward. We also have put greater emphasis on improving and advertising our To Go capabilities. During fiscal 2019, Chili’s grew our To Go sales to $336.1 million. Our To Go sales were 12.3% of total Chili’s sales in the United States for fiscal 2019, driven by online sales that increased approximately 40.0% in fiscal 2019. The majority of our To Go guests now order their food through a personal computer or cellphone, and we believe online ordering will continue to be a strong sales driver in fiscal 2020.

In June 2019, we announced a partnership between Chili’s and Maggiano’s with DoorDash, a growing delivery company in the United States. In partnership with DoorDash, we leveraged technology so that DoorDash orders are sent directly into our point of sale system, creating a seamless guest experience, while providing Chili’s with a local delivery service at an economic advantage over independent restaurants and other franchised casual dining chains. We believe that guests will continue to prefer more convenience and options that allow them to eat at home, and we plan to continue investments in our digital guest experience, To Go and delivery capabilities. We expect to leverage the DoorDash partnership in fiscal 2020, along with continuing to expand our To Go business, to offer guests convenient options other than quick service and fast casual restaurants that have historically been more relevant than casual dining options for occasions when guests want a quick dining solution, but just do not feel like cooking.

We believe that improvements at our domestic Chili’s will have a significant impact on the business; however, our results will also benefit through additional contributions from Maggiano’s and our global Chili’s franchise business. In fiscal 2019, Maggiano’s opened one franchise location (in the Dallas Fort Worth International Airport). Guests are responding favorably to the new Maggiano’s location, and we intend to explore other opportunities to franchise Maggiano’s in additional airport locations. During fiscal 2019, Maggiano’s leveraged technology in the front of the house to improve the accuracy of wait-time quotes to customers, and in the back of the house to improve labor efficiencies. Additionally, in fiscal 2019, Maggiano’s brought value to our carry-out menu by offering carry-out customers the opportunity to “Double the Portion, Not the Price” by taking home a second portion of certain menu items for a reduced price. Maggiano’s guests also continue to show an increased preference for our carry-out menu and delivery service. In fiscal 2019, Maggiano’s grew its carry-out business by 17.5% compared to fiscal 2018.

Our global Chili’s franchisees continue to open new locations, including our first Chili’s restaurant in China, which opened in the fourth quarter of fiscal 2019. Our international franchisees opened 18 new restaurants in fiscal 2019. We plan to strategically pursue expansion of Chili’s internationally through development agreements with new and existing franchise partners.

F-5

RESULTS OF OPERATIONS

The following table sets forth selected operating data as a percentage of Total revenues (unless otherwise noted) for the periods indicated. All information is derived from the accompanying Consolidated Statements of Comprehensive Income:

	Fiscal Years Ended
	June 26, 2019		June 27, 2018
Revenues
Company sales	96.5	%	97.0	%
Franchise and other revenues	3.5	%	3.0	%
Total revenues	100.0	%	100.0	%
Operating costs and expenses
Company restaurants (excluding depreciation and amortization)
Cost of sales(1)	26.5	%	26.2	%
Restaurant labor(1)	34.1	%	34.0	%
Restaurant expenses(1)	26.2	%	24.9	%
Company restaurant expenses(1)	86.8	%	85.1	%
Depreciation and amortization	4.6	%	4.8	%
General and administrative	4.6	%	4.3	%
Other (gains) and charges	(0.1	)%	1.1	%
Total operating costs and expenses	92.8	%	92.8	%
Operating income	7.2	%	7.2	%
Interest expense	1.9	%	1.9	%
Other (income), net	0.0	%	(0.1	)%
Income before provision for income taxes	5.3	%	5.4	%
Provision for income taxes	0.5	%	1.4	%
Net income	4.8	%	4.0	%

⁽¹⁾  As a percentage of Company sales

Revenues

Transition to New Revenue Recognition Accounting Standard

Effective fiscal 2019, we adopted FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), from the previous guidance ASC Topic 605, Revenue Recognition and ASC Subtopic 952-605, Franchisors - Revenue Recognition (together, “Legacy GAAP”). Our transition to ASC 606 represents a change in accounting principle. The Consolidated Financial Statements for fiscal 2019 reflect the application of ASC 606 guidance using the modified retrospective transition method, while the Consolidated Financial Statements for prior periods were prepared under Legacy GAAP. Please refer to Note 1 - Nature of Operations and Summary of Significant Accounting Policies and Note 2 - Revenue Recognition in the Consolidated Financial Statements for further details of our adoption of ASC 606 and our policies for recognition of revenues from contracts with customers.

F-6

Fiscal 2019 versus Fiscal 2018

The following is a summary of the change in Total revenues:

	Total Revenues
	Chili’s			Maggiano’s			Total Revenues
Fiscal year ended June 27, 2018 (Legacy GAAP)	$	2,700.2		$	435.2		$	3,135.4
Change from:
Restaurant closings	(8.0		)	(1.6		)	(9.6		)
Restaurant openings	11.1			(0.3		)	10.8
Restaurant relocations	2.4			—			2.4
Comparable restaurant sales	58.8			2.3			61.1
Company sales	64.3			0.4			64.7
Franchise and other revenues(1)	17.7			0.1			17.8
Fiscal year ended June 26, 2019 (ASC 606)	$	2,782.2		$	435.7		$	3,217.9

⁽¹⁾  With the adoption of ASC 606, beginning in fiscal 2019, Franchise and other revenues was further disaggregated prospectively into Royalties and Franchise fees and other revenues. The fiscal 2018 year was not restated.

Total revenues for fiscal 2019 increased by $82.5 million, or 2.6%, compared to fiscal 2018 driven primarily by a $64.7 million, or 2.1%, increase in Company sales mostly due to a $61.1 million increase in comparable restaurant sales (refer to below table for percentage change in comparable restaurant sales for more information). Additionally Franchise and other revenues increased $17.8 million primarily related to $20.3 million of advertising fees presented gross with the adoption of ASC 606, partially offset by $2.2 million of lower retail royalty revenues. During fiscal 2018, advertising contributions of $22.6 million from franchisees were recorded net within Restaurant expenses. Royalties are also included in Franchise and other revenues, and are based on franchise sales. For fiscal 2019 our franchisees generated approximately $1,311.3 million in sales compared to $1,309.4 million in fiscal 2018.

The table below presents the percentage change in comparable restaurant sales and capacity for fiscal 2019 compared to fiscal 2018:

	Percentage Change in the Fiscal Year Ended June 26, 2019 versus June 27, 2018
	Comparable Sales(1)		Price Impact		Mix Shift(2)		Traffic		Restaurant Capacity(3)
Company-owned	2.1	%	1.7	%	(1.7	)%	2.1	%	(0.2	)%
Chili’s	2.3	%	1.7	%	(1.7	)%	2.3	%	(0.1	)%
Maggiano’s	0.6	%	1.5	%	(0.5	)%	(0.4	)%	(0.4	)%
Chili’s franchise(4)	0.1	%
United States	2.0	%
International	(3.0	)%
Chili’s domestic(5)	2.2	%
System-wide(6)	1.5	%

⁽¹⁾  Comparable restaurant sales include all restaurants that have been in operation for more than 18 months. Amounts are calculated based on comparable current period versus same period a year ago.

⁽²⁾  Mix-shift is calculated as the year-over-year percentage change in Company sales resulting from the change in menu items ordered by guests.

⁽³⁾  Restaurant capacity is measured by sales weeks. Amounts are calculated based on comparable 52 weeks in each fiscal year.

F-7

⁽⁴⁾  Chili’s franchise sales generated by franchisees are not included in revenues in the Consolidated Statements of Comprehensive Income; however, we generate royalty revenues and advertising fees based on franchisee revenues, where applicable. We believe including franchise comparable restaurant sales provides investors information regarding brand performance that is relevant to current operations.

⁽⁵⁾  Chili’s domestic comparable restaurant sales percentages are derived from sales generated by company-owned and franchise operated Chili’s restaurants in the United States.

⁽⁶⁾  System-wide comparable restaurant sales are derived from sales generated by company-owned Chili’s and Maggiano’s restaurants in addition to the sales generated at franchise-operated Chili’s restaurants.

Refer to Segment Results section for further discussion of our Chili’s and Maggiano’s segments below.

Costs and Expenses

Fiscal 2019 versus Fiscal 2018

	Fiscal Years Ended										(Favorable) Unfavorable Variance
	June 26, 2019					June 27, 2018
	Dollars			% of Company Sales		Dollars			% of Company Sales		Dollars			% of Company Sales
Cost of sales	$	823.0		26.5	%	$	796.0		26.2	%	$	27.0		0.3	%
Restaurant labor	1,059.7			34.1	%	1,033.9			34.0	%	25.8			0.1	%
Restaurant expenses	812.3			26.2	%	757.5			24.9	%	54.8			1.3	%
Depreciation and amortization	147.6					151.4					(3.8		)
General and administrative	149.1					136.0					13.1
Other (gains) and charges	(4.5		)			34.5					(39.0		)
Interest expense	61.6					59.0					2.6
Other (income), net	(2.7		)			(3.1		)			0.4

Cost of sales as a percentage of Company sales increased 0.3% in fiscal 2019 as compared to fiscal 2018 primarily due to 0.5% of unfavorable menu mix and 0.2% of unfavorable commodity pricing primarily related to produce, partially offset by 0.4% of increased menu pricing.

Restaurant labor as a percentage of Company sales increased 0.1% in fiscal 2019 as compared to fiscal 2018 primarily due to 0.5% of higher hourly wages, partially offset by 0.3% of incremental sales leverage and 0.1% of lower manager expenses.

Restaurant expenses as a percentage of Company sales increased 1.3% in fiscal 2019 as compared to fiscal 2018 primarily due to 1.0% of higher rent expenses primarily associated with the new operating leases entered into during fiscal 2019 as part of the sale leaseback transactions, 0.6% of higher advertising and marketing related expenses from the impact of adopting ASC 606, and 0.2% of higher To Go supply costs. These increases were partially offset by 0.5% of sales leverage.

Depreciation and amortization decreased $3.8 million, or 2.5%, in fiscal 2019 as compared to fiscal 2018 primarily due to a decrease of $22.1 million related to fully depreciated assets and restaurant closures, and $7.6 million from the reduction of restaurants assets sold as part of the sale leaseback transactions. These decreases were partially offset by $24.1 million of additions for existing restaurants primarily related to Chili’s remodels and $1.8 million of new restaurant additions.

F-8

General and administrative expenses increased $13.1 million, or 9.6%, in fiscal 2019 as compared to fiscal 2018 as follows:

	General and Administrative
Fiscal year ended June 27, 2018	$	136.0
Change from:
Performance-based compensation	7.6
Legal and professional fees	2.2
Stock-based compensation	1.9
Payroll-related expenses	0.9
Other	0.5
Fiscal year ended June 26, 2019	$	149.1

Other (gains) and charges during fiscal 2018 and 2019 primarily included the transactions below, refer to Note 5 - Other Gains and Charges in the Consolidated Financial Statements for further composition and details:

• Sale leaseback (gain), net of transaction charges during fiscal 2019 included gains of $35.2 million, less transaction costs of $7.9 million related to professional services, legal and accounting fees.

• (Gain) on sale of assets, net during fiscal 2019 primarily included $5.8 million for the net gain recognized on the sale of the owned-portion of our previous corporate headquarters building.

• Property damages, net of (insurance recoveries) during fiscal 2018 of $5.1 million primarily included expenses associated with Hurricanes Harvey and Irma primarily related to employee relief payments and inventory spoilage.

• Restaurant impairment charges during fiscal 2019 included $10.8 million primarily related to the long-lived assets and reacquired franchise rights of 11 underperforming Chili’s restaurants. During fiscal 2018, Restaurant impairment charges totaling $10.9 million primarily included charges of $7.2 million associated with the closure of nine Canadian Chili’s restaurants, and $3.7 million related to other restaurant impairment charges.

• Remodel-related costs during fiscal 2019 totaled $7.7 million and were related to write-offs associated with the Chili’s remodel project. During fiscal 2018 Remodel-related costs of $1.5 million were written-off.

• Corporate headquarters relocation charges during fiscal 2019 of $5.3 million included lease reserve and other closure costs associated with the leased portion of our previous corporate headquarters location, in addition to moving and certain readiness costs of transition to the new corporate headquarters location during fiscal 2019.

• Restaurant closure charges during fiscal 2019 were $4.3 million which primarily related to Chili’s lease termination charges and certain Chili’s restaurant closure costs. During fiscal 2018, Restaurant closure charges of $7.5 million primarily included expenses of $4.6 million associated with the Canada closures and related lease termination charges, $1.8 million in lease termination expenses related to sublet Macaroni Grill locations. Additionally, during fiscal 2018 we recorded $1.1 million primarily related to lease termination charges and closure costs associated with certain Chili’s restaurants closed during fiscal 2018.

Interest expense increased $2.6 million, or 4.4%, in fiscal 2019 as compared to fiscal 2018 consisting of higher average borrowing balances and a higher interest rate on our revolving credit facility in fiscal 2019, partially offset by the matured $250.0 million 2.60% notes that were repaid using the revolving credit facility in the fourth quarter of fiscal 2018.

F-9

Other (income), net was unfavorable $0.4 million, or 12.9%, in fiscal 2019 as compared to fiscal 2018 due to a $0.4 million decrease in sub-lease income. Other (income), net during fiscal 2019 and fiscal 2018 includes $1.5 million and $1.9 million, respectively, of sublease income primarily from franchisees as part of their respective lease agreements, as well as other subtenants.

Segment Results

Fiscal 2019 versus Fiscal 2018

Chili’s Segment

	Fiscal Years Ended						Favorable (Unfavorable) Variance
	June 26, 2019			June 27, 2018
	ASC 606			Legacy GAAP
Company sales	$	2,692.6		$	2,628.3		$	64.3
Franchise and other revenues(1)	89.6			71.9			17.7
Total revenues	2,782.2			2,700.2			82.0
Company restaurant expenses(2)(3)	2,329.6			2,224.0			(105.6		)
Depreciation and amortization	120.1			125.0			4.9
General and administrative	38.7			39.6			0.9
Other gains and charges	(6.4		)	24.5			30.9
Total operating costs and expenses	2,482.0			2,413.1			(68.9		)
Operating income	$	300.2		$	287.1		$	13.1
Operating income as a percentage of Total revenues	10.8		%	10.6		%	0.2		%

⁽¹⁾  With the adoption of ASC 606, beginning in fiscal 2019, Franchise and other revenues was further disaggregated prospectively into Royalties and Franchise fees and other revenues. The fiscal 2018 year was not restated.

⁽²⁾  Advertising contributions received from franchisees are recorded within Franchise fees and other revenues within Total revenues, which differs from fiscal 2018 that includes advertising contributions recorded net within Company restaurant expenses.

⁽³⁾  Company restaurant expenses include Cost of sales, Restaurant labor, and Restaurant expenses, including advertising.

Chili’s Operating income, as a percentage of Total revenues, increased 0.2% in fiscal 2019 as compared to fiscal 2018 primarily related to the decrease in Other gains and charges, partially offset by the increase in Company restaurant expenses. Chili’s Total revenues for fiscal 2019 increased by $82.0 million, or 3.0%, compared to fiscal 2018, refer to “Revenues” section above for more details.

Company restaurant expenses for Chili’s, as a percentage of Company sales, increased 1.9% in fiscal 2019 as compared to fiscal 2018, primarily due to 1.4% of higher rent expenses associated primarily with the new operating leases entered into during fiscal 2019 as part of the sale leaseback transactions, 0.7% of unfavorable menu mix, 0.7% of higher advertising and marketing related expenses from the impact of adopting ASC 606, 0.6% of higher hourly wages, 0.3% of higher To Go supply costs, and 0.2% of unfavorable commodity pricing primarily related to produce. These increases were partially offset by 1.0% of incremental sales leverage, 0.5% of increased menu pricing impact on cost of sales, 0.3% of lower expenditures for advertising and marketing related expenses compared to prior year, and 1% of other favorable Company restaurant expenses.

Other gains and charges for Chili’s during fiscal 2019 primarily included gains of $26.8 million related to 151 sale leaseback transactions, $1.1 million on the gain on sale of land, $0.8 million foreign currency transaction gain and a

F-10

$0.7 million gain related to net insurance recoveries from property damage claims. These gains were partially offset by charges of $10.8 million related to restaurant impairments, $7.7 million of Chili’s remodel write-offs, $4.0 million in charges related to restaurant closure expenses, and $0.5 million in other net charges.

Other gains and charges for Chili’s during fiscal 2018 primarily included restaurant impairment charges and restaurant closure charges of $7.2 million and $4.6 million, respectively, related to nine underperforming Canadian Chili’s restaurants closed in fiscal 2018, $4.6 million of property damages, net of insurance recoveries primarily related to Hurricanes Harvey and Irma, restaurant impairment charges of $2.7 million related to certain underperforming restaurants, $1.9 million of sale leaseback transaction fees, $1.5 million of Chili’s remodel write-offs, $1.5 million of restaurant closure charges, and $0.4 million of other net charges.

Depreciation and amortization expenses for Chili’s decreased $4.9 million, or 3.9%, in fiscal 2019 as compared to fiscal 2018 primarily due to a decrease of $18.9 million related to fully depreciated assets and restaurant closures, and $5.1 million in reduced depreciation from the sale of assets in connection with the sale leaseback transactions. These decreases were partially offset by $17.6 million of additions for existing restaurants primarily related to the Chili’s remodels and $1.8 million of new restaurants additions.

General and administrative expenses for Chili’s decreased $0.9 million, or 2.3%, in fiscal 2019 as compared to fiscal 2018 primarily due to $1.4 million decrease in stock-based compensation expenses, $1.0 million in lower research and development expenses, and $0.3 million of lower payroll costs. These decreases were partially offset by an increase of $1.9 million in performance-based compensation expenses.

Maggiano’s Segment

	Fiscal Years Ended						Favorable (Unfavorable) Variance
	June 26, 2019			June 27, 2018
	ASC 606			Legacy GAAP
Company sales	$	413.6		$	413.2		$	0.4
Franchise and other revenues(1)	22.1			22.0			0.1
Total revenues	435.7			435.2			0.5
Company restaurant expenses(2)	364.8			362.8			(2.0		)
Depreciation and amortization	16.2			15.9			(0.3		)
General and administrative	6.1			5.5			(0.6		)
Other gains and charges	1.0			1.1			0.1
Total operating costs and expenses	388.1			385.3			(2.8		)
Operating income	$	47.6		$	49.9		$	(2.3	)
Operating income as a percentage of Total revenues	10.9		%	11.4		%	(0.5		)%

⁽¹⁾  With the adoption of ASC 606, beginning in fiscal 2019, Franchise and other revenues was further disaggregated prospectively into Royalties and Franchise fees and other revenues. The fiscal 2018 year was not restated.

⁽²⁾  Company restaurant expenses includes Cost of sales, Restaurant labor, and Restaurant expenses, including advertising expenses.

Maggiano’s Operating income, as a percentage of Total revenues, decreased 0.5% in fiscal 2019 as compared to fiscal 2018 primarily related to an increase in Company restaurant expenses, as a percentage of sales. Maggiano’s Total revenues for fiscal 2019 increased by $0.5 million, or 0.1%, compared to fiscal 2018, refer to “Revenues” section above for more details.

Company restaurant expenses for Maggiano’s, as a percentage of Company sales, increased 0.4% in fiscal 2019 as compared to fiscal 2018, primarily due to 0.7% of higher rent and property tax expenses (including the new operating

F-11

lease entered into during fiscal 2019 as part of the sale leaseback transaction), 0.2% of unfavorable commodity pricing primarily related to produce, 0.2% of higher hourly wage rates, and 0.1% of higher To Go supply costs. These increases were primarily offset by 0.3% of increased menu pricing impact on cost of sales, 0.1% of favorable menu mix, 0.2% of lower manager expenses, 0.1% of sales leverage and 0.1% of favorable net other Company restaurant expenses.

Income Taxes

Fiscal 2019 versus Fiscal 2018

	Fiscal Years Ended
	June 26, 2019		June 27, 2018		Change
Effective income tax rate	9.8	%	26.0	%	(16.2	)%

The effective income tax rate in fiscal 2019 decreased compared to fiscal 2018 which included the impact of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) that was enacted on December 22, 2017 in the second quarter of fiscal 2018. The Tax Act lowered the federal statutory tax rate from 35.0% to 21.0% effective January 1, 2018.

Our fiscal 2019 effective income tax rate includes a full year impact of the 21.0% lower federal statutory tax rate, and was further lowered due to an increase in the FICA tax credit benefit, partially offset by the impact of the taxable gain related to the sale leaseback transactions. During fiscal 2019, the sale leaseback transactions, as described in Note 3 - Sale Leaseback Transactions in the Consolidated Financial Statements, resulted in tax expenses of $78.6 million, which were paid in full during fiscal 2019.

Our federal statutory tax rate for fiscal 2018 was 28.1%, representing a blended tax rate for the fiscal year based on the number of days in the fiscal year before and after the effective date. Our fiscal 2018 effective income tax rate included the blended partial-year positive impact of lowering the federal statutory tax rate, partially offset by the negative impact of the $8.2 million revaluation of the Company’s deferred tax accounts pursuant to the Tax Act. In accordance with ASC 740, we re-measured our deferred tax accounts as of the enactment date using the new federal statutory tax rate and recognized the change as a discrete item in the Provision of income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Cash Flows from Operating Activities

	Fiscal Years Ended
	June 26, 2019		June 27, 2018
Net cash provided by operating activities	$	212.7	$	284.5

During fiscal 2019, net cash flow provided by operating activities decreased $71.8 million compared to fiscal 2018 primarily due to tax on the sale leaseback transactions gain paid of $78.6 million during fiscal 2019.

F-12

Cash Flows from Investing Activities

	Fiscal Years Ended
	June 26, 2019			June 27, 2018
Cash flows from investing activities
Payments for property and equipment	$	(167.6	)	$	(101.3	)
Payments for franchise restaurant acquisitions	(3.1		)	—
Proceeds from sale of assets	1.6			19.9
Insurance recoveries	1.7			1.7
Proceeds from note receivable	2.8			1.9
Proceeds from sale leaseback transactions, net of related expenses	485.9			—
Net cash provided by (used in) investing activities	$	321.3		$	(77.8	)

During fiscal 2019, net cash provided by investing activities increased $399.1 million compared to the net cash used in fiscal 2018 primarily due to $485.9 million of net cash proceeds received from the sale leaseback transactions during fiscal 2019, partially offset by a $66.3 million increase in capital expenditures primarily related to the Chili’s remodel program and new corporate headquarters.

Cash Flows from Financing Activities

	Fiscal Years Ended
	June 26, 2019			June 27, 2018
Cash flows from financing activities
Borrowings on revolving credit facility	$	853.0		$	1,016.0
Payments on revolving credit facility	(1,150.0		)	(588.0		)
Purchases of treasury stock	(167.7		)	(303.2		)
Payments on long-term debt	(9.5		)	(260.3		)
Payments of dividends	(60.3		)	(70.0		)
Proceeds from issuances of treasury stock	3.0			2.3
Payments for debt issuance costs	—			(1.6		)
Net cash used in financing activities	$	(531.5	)	$	(204.8	)

During fiscal 2019, net cash used in financing activities increased $326.7 million compared to fiscal 2018 primarily due to $725.0 million of net repayment activity on the revolving credit facility during fiscal 2019, partially offset by a $250.8 million decrease in payments on long-term debt, a $135.5 million decrease in share repurchases and a $9.7 million decrease in dividends paid.

Net repayments of $297.0 million were made during fiscal 2019 on the $1.0 billion revolving credit facility primarily from proceeds received from the sale leaseback transactions, partially offset by borrowings for share repurchases. As of June 26, 2019, $523.3 million was outstanding under the revolving credit facility. Subsequent to the end of the fiscal year, net borrowings of $8.0 million were drawn on the revolving credit facility.

Our $1.0 billion revolving credit facility generally bears interest of LIBOR plus an applicable margin, which is a function of our credit rating and debt to cash flow ratio, but is subject to a maximum of LIBOR plus 2.00%. In the fourth quarter of fiscal 2018, an amendment to the revolving credit facility was executed to provide the ability to complete certain sale-leaseback transactions. For a period of 180 days following the fiscal 2018 amendment to the revolving credit facility that occurred in May 2018, we paid interest at a rate of LIBOR plus 1.70%. Effective October 2018, we resumed paying interest at a rate of LIBOR plus 1.38% for a total of 3.78%. One month LIBOR at June 26, 2019 was approximately 2.40%. As of June 26, 2019, $476.7 million of credit was available under the revolving credit facility. As of June 26, 2019, we are in compliance with all financial covenants.

F-13

In August 2018, our Board of Directors authorized a $300.0 million increase to our existing share repurchase program resulting in total authorizations of $4.9 billion. During the fiscal year ended June 26, 2019, we repurchased 3.6 million shares of our common stock for $167.7 million. Subsequent to the end of the fiscal year, we repurchased approximately 0.3 million shares of our common stock for $10.0 million. Our stock repurchase plan has been and will be used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. Repurchased shares are reflected as an increase in Treasury stock within Shareholders’ deficit in the Consolidated Balance Sheets.

During fiscal 2019 we paid dividends of $60.3 million to common stock shareholders, compared to $70.0 million in fiscal 2018. We also declared a quarterly dividend on April 29, 2019, that was paid subsequent to fiscal 2019, on June 27, 2019, in the amount of $0.38 per share. A dividend accrual of $14.2 million was included in Other accrued liabilities in the Consolidated Balance Sheets as of June 26, 2019 related to this dividend. Subsequent to the end of fiscal 2019, on August 12, 2019, our Board of Directors declared a quarterly dividend of $0.38 per share to be paid on September 26, 2019 to shareholders of record as of September 6, 2019.

Cash Flow Outlook

We believe that our various sources of capital, including future cash flow from operating activities and availability under our existing credit facility are adequate to finance operations as well as the repayment of current debt obligations. We are not aware of any other event or trend that would potentially affect our liquidity. In the event such a trend develops, we believe that there are sufficient funds available under our credit facility and from our internal cash generating capabilities to adequately manage our ongoing business. We will continue to periodically evaluate ways to monetize the value of our remaining owned real estate and should alternatives become available that are more cost effective than our financing options currently available, we will consider execution of those alternatives.

Chili’s Restaurant Acquisitions

From time to time we have purchased restaurants from our franchisees in order to support our growth objectives in certain markets. During the fiscal year ended June 26, 2019, we purchased three restaurants previously owned and operated by our franchisees. In the fourth quarter of fiscal 2019, we executed a letter of intent to acquire 116 Chili’s restaurants owned by ERJ Dining, a franchisee, located in the Midwest United States. The closing of this transaction is expected to occur in the first quarter of fiscal 2020. We plan to integrate the acquired restaurants into our Chili’s operations structure. The purchase price will be funded with availability under our existing revolving credit facility. The results of operations of these restaurants are expected to be included in the consolidated financial statements from the date of acquisition beginning in fiscal 2020. The acquired restaurants are expected to generate approximately $300.0 million of annualized revenues which will be partially offset by the loss of average annualized royalty and advertising revenues of approximately $22.0 million. We are in the process of evaluating the fair value of the assets and liabilities to be acquired through internal studies and third-party valuations and expect to complete a preliminary purchase price allocation in the first quarter of fiscal 2020. This acquisition represents an opportunity to create value for our shareholders and generate additional earnings and cash flow growth. We remain committed to supporting the growth of our existing franchisees.

F-14

Future Commitments and Contractual Obligations

Payments due under our contractual obligations for outstanding indebtedness, leases, and purchase obligations as defined by the Securities and Exchange Commission (“SEC”) as of June 26, 2019 are as follows:

	Payments Due by Period
	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Long-term debt(1)	$	—	$	523.3	$	300.0	$	350.0	$	1,173.3
Interest(2)	51.4		62.4		46.6		8.8		169.2
Capital leases	12.3		18.3		12.7		17.4		60.7
Operating leases	156.8		303.1		265.3		771.7		1,496.9
Purchase obligations(3)	31.6		55.0		29.2		26.7		142.5

⁽¹⁾  Long-term debt consists of principal amounts owed on the revolving credit facility, 3.875% and 5.00% notes. As of June 26, 2019, $476.7 million of credit is available under the revolving credit facility.

⁽²⁾  Interest consists of remaining interest payments on the 3.875% and 5.00% notes totaling $142.8 million and remaining interest payments on the revolver totaling $26.4 million. The interest rates on the notes are fixed whereas the interest rate on the revolver is variable based on LIBOR and our applicable margin. We have assumed that the revolver balance carried will be $589.0 million in fiscal 2020 and $524.3 million in fiscal 2021 until the maturity date of September 12, 2021 using the interest rate as of June 26, 2019, which was approximately 3.78%. LIBOR is set to terminate in December 2021, however our revolver will expire before this date and we anticipate any new financings will be at the applicable interest rates.

⁽³⁾  Purchase obligations are defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our purchase obligations primarily consist of long-term obligations for the purchase of fountain beverages and professional services contracts and exclude agreements that are cancelable without significant penalty.

In addition to the amounts shown in the table above, $2.1 million of unrecognized tax benefits have been recorded as liabilities. The timing and amounts of future cash payments related to these liabilities are uncertain.

Expiration of the revolving credit facility amounts available as of June 26, 2019 are as follows:

	Amount of Revolving Credit Facility Expiration by Period
	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total Commitment
Revolving credit facility	$	110.0	$	890.0	$	—	$	—	$	1,000.0

The $110.0 million portion of the revolving credit facility is due in March 2020. As of June 26, 2019, there are no borrowings against this current portion of the revolver.

Although not a contractual obligation, we expect to incur additional costs, and are a defendant in a lawsuit related to the fiscal 2018 cyber security incident. We maintain insurance for this type of incident, and anticipate future costs to be reimbursable under our coverage, refer to Note 15 - Commitments and Contingencies for more details.

IMPACT OF INFLATION

We have experienced impact from inflation. Inflation has caused increased food, labor and benefits costs and has increased our operating expenses. To the extent permitted by competition, increased costs are recovered through a combination of menu price increases and reviewing, then implementing, alternative products or processes, or by implementing other cost reduction procedures.

F-15

OFF-BALANCE SHEET ARRANGEMENTS

We have obligations for guarantees on certain lease agreements and letters of credit as disclosed in Note 15 - Commitments and Contingencies in the Consolidated Financial Statements included in this report. Other than these items, we do not have any off-balance sheet arrangements.

CRITICAL ACCOUNTING ESTIMATES

Our significant accounting policies are disclosed in Note 1 - Nature of Operations and Summary of Significant Accounting Policies in the Consolidated Financial Statements. The following discussion addresses our most critical accounting estimates, which are those that are most important to the portrayal of our financial condition and results, and that require significant judgment.

Stock-Based Compensation

We measure and recognize compensation expenses for our performance awards granted that contain a company-specific performance condition at the grant date fair value of the awards that are expected to vest based on management’s periodic estimates. Management’s estimates require highly judgmental assumptions regarding our future operating performance and could result in estimates of compensation expenses that vary significantly over the vesting period. Changes in estimates of compensation expenses are recognized as an adjustment in the period of the change, as appropriate.

We determine the fair value of our stock option awards using the Black-Scholes option valuation model. The Black-Scholes model requires judgmental assumptions including expected life and stock price volatility. We base our expected life assumptions on historical experience regarding option life. Stock price volatility is calculated based on historical prices and the expected life of the options.

We recognize compensation expenses for only the portion of share-based awards that are expected to vest. Therefore, we apply estimated forfeiture rates that are derived from our historical forfeitures of similar awards.

Income Taxes

We make certain estimates and judgments in the calculation of tax expenses and the resulting tax liabilities and in the recoverability of deferred tax assets that arise from temporary differences between the tax and financial statement recognition of revenues and expenses. When considered necessary, we record a valuation allowance to reduce deferred tax assets to a balance that is more likely than not to be recognized. We use an estimate of our annual effective tax rate at each interim period based on the facts and circumstances available at that time while the actual effective tax rate is calculated at year-end.

We have recorded deferred tax assets reflecting the benefit of income tax credits and state loss carryforwards, which expire in varying amounts. Realization is dependent on generating sufficient taxable income in the relevant jurisdiction prior to expiration of the income tax credits and state loss carryforwards. Although realization is not assured, management believes it is more likely than not that the recognized deferred tax assets will be realized. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

We record a liability for unrecognized tax benefits resulting from tax positions taken, or expected to be taken, in an income tax return. We recognize any interest and penalties related to unrecognized tax benefits in income tax expenses. Significant judgment is required in assessing, among other things, the timing and amounts of deductible and taxable items. Tax reserves are evaluated and adjusted as appropriate, while taking into account the progress of audits of various taxing jurisdictions.

In addition to the risks related to the effective tax rate described above, the effective tax rate reflected in forward-looking statements is based on current tax law. Any significant changes in the tax laws could affect these estimates.

F-16

Impairment of Long-Lived Assets

We review the carrying amount of property and equipment semi-annually or when events or circumstances indicate that the carrying amount may not be recoverable. The impairment test is a two-step process. Step one includes comparing the operating cash flows of the restaurants over their remaining service life to the carrying value of the asset group. If the cash flows exceed the carrying value, then the asset group is not impaired and no further evaluation is required. If the carrying value of the asset group exceeds its cash flows, impairment may exist and performing step two is necessary to determine the impairment loss. If the carrying amount is not recoverable, we record an impairment charge for the excess of the carrying amount over the fair value of the asset group. We determine fair value based on discounted projected future operating cash flows of the restaurants over their remaining service life using a risk adjusted discount rate that is commensurate with the inherent risk. This process requires the use of estimates and assumptions, which are subject to a high degree of judgment.

Impairment of Goodwill

We assess the recoverability of goodwill related to our restaurant brands on an annual basis or more often if circumstances or events indicate impairment may exist. We consider our restaurants brands, Chili’s and Maggiano’s, to be both our operating segments and reporting units. We compare the fair value of our reporting units to their carrying value. If the fair value exceeds the carrying value then the goodwill balance is not impaired and no further analysis is required. If the carrying value of the reporting unit exceeds its fair value then the impairment will be measured as the difference between the carrying value and fair value of the reporting unit in accordance with ASU 2017-04 which we adopted effective fiscal 2019. This ASU simplified the calculation of the amount of impairment loss by eliminating the requirement in previous guidance to perform a second fair value allocation as if the unit were being acquired in a business combination in order to calculate an implied goodwill value which would then be used to determine the amount of impairment loss, if any.

We determine fair value based on a combination of market-based values and discounted projected future operating cash flows of the reporting units using a risk adjusted discount rate that is commensurate with the risk inherent in our current business model. We make assumptions regarding future profits and cash flows, expected growth rates, terminal values and other factors which could significantly impact the fair value calculations. In the event that these assumptions change in the future, we may be required to record impairment charges related to goodwill. The fair values of our reporting units were substantially in excess of the carrying values as of our fiscal 2019 goodwill impairment tests that were performed at the end of the second quarter. No indicators of impairment were identified from the date of our impairment test through the end of fiscal 2019.

Self-Insurance

We are self-insured for certain losses related to health, general liability and workers’ compensation. We maintain stop loss coverage with third party insurers to limit our total exposure. The self-insurance liability represents an estimate of the ultimate cost of claims incurred and unpaid as of the balance sheet date. The estimated liability is not discounted and is established based upon analysis of historical data and actuarial estimates and is reviewed on a quarterly basis to ensure that the liability is appropriate. If actual trends, including the severity or frequency of claims, differ from our estimates, our financial results could be impacted.

Gift Card Revenues

Proceeds from the sale of gift cards are recorded as deferred revenues and recognized as revenues when the gift card is redeemed by the holder. Breakage income represents the value associated with the portion of gift cards sold that will most likely never be redeemed. Effective fiscal 2019, with the adoption of ASC 606, breakage revenues are recognized proportionate to the pattern of related gift card redemptions. Before fiscal 2019, based on our historical gift card redemption patterns and considering our gift cards did not have expiration dates or dormancy fees, we reasonably estimated the amount of gift card balances for which redemption was remote and recorded breakage income based on this estimate. We recognize breakage income within the franchise and other revenues caption in the Consolidated Statements of Comprehensive Income.

F-17

We update our breakage rate estimate periodically and, if necessary, adjust the deferred revenues balance accordingly. If actual redemption patterns vary from our estimate, actual gift card breakage income may differ from the amounts recorded. Changing our breakage-rate assumption used to record fiscal 2019 breakage by 25 basis points would result in an impact to the consolidated statement of comprehensive income of approximately $0.5 million.

Effect of New Accounting Standards

The impact of new accounting pronouncements can be found at Note 18 - Effect of New Accounting Standards in the Consolidated Financial Statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This market risk discussion contains forward-looking statements. Actual results may differ materially from this discussion based upon general market conditions and changes in domestic and global financial markets.

Interest Rate Risk

We are exposed to interest rate risk on short-term and long-term financial instruments carrying variable interest rates. The variable rate financial instruments consist of the outstanding borrowings on our revolving credit facility. At June 26, 2019, $523.3 million was outstanding under the revolving credit facility. The impact on our annual results of operations of a one-point interest rate change on the outstanding balance of these variable rate financial instruments as of June 26, 2019 would be approximately $5.2 million.

Commodity Price Risk

We purchase certain commodities such as beef, pork, poultry, seafood, produce, dairy and natural gas. These commodities are generally purchased based upon market prices established with vendors. These purchase arrangements may contain contractual features that fix the price paid for certain commodities. We do not use financial instruments to hedge commodity prices because these purchase arrangements help control the ultimate cost paid.

Impact of Inflation

We believe that our results of operations are not materially impacted by moderate changes in the inflation rate. Inflation did not have a material impact on our operations in fiscal 2019, 2018 or 2017. However, severe increases in inflation could affect the United States or global economies and have an adverse impact on our business, financial condition and results of operations. If several of the various costs in our business experience inflation at the same time, such as commodity price increases beyond our ability to control and increased labor costs, we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting consumer demand.

F-18

BRINKER INTERNATIONAL, INC.

Consolidated Statements of Comprehensive Income

(In millions, except per share amounts)

	Fiscal Years Ended
	June 26, 2019			June 27, 2018			June 28, 2017
Revenues
Company sales	$	3,106.2		$	3,041.5		$	3,062.5
Franchise and other revenues (Note1)	111.7			93.9			88.3
Total revenues	3,217.9			3,135.4			3,150.8
Operating costs and expenses
Company restaurants (excluding depreciation and amortization)
Cost of sales	823.0			796.0			791.3
Restaurant labor	1,059.7			1,033.9			1,017.9
Restaurant expenses (Note1)	812.3			757.5			773.5
Company restaurant expenses	2,695.0			2,587.4			2,582.7
Depreciation and amortization	147.6			151.4			156.4
General and administrative	149.1			136.0			132.8
Other (gains) and charges	(4.5		)	34.5			22.7
Total operating costs and expenses	2,987.2			2,909.3			2,894.6
Operating income	230.7			226.1			256.2
Interest expense	61.6			59.0			49.6
Other (income), net	(2.7		)	(3.1		)	(1.9		)
Income before provision for income taxes	171.8			170.2			208.5
Provision for income taxes	16.9			44.3			57.7
Net income	$	154.9		$	125.9		$	150.8
Basic net income per share	$	4.04		$	2.75		$	2.98
Diluted net income per share	$	3.96		$	2.72		$	2.94
Basic weighted average shares outstanding	38.3			45.7			50.6
Diluted weighted average shares outstanding	39.1			46.3			51.2
Other comprehensive income (loss)
Foreign currency translation adjustment	$	0.2		$	0.2		$	(0.3	)
Other comprehensive income (loss)	0.2			0.2			(0.3		)
Comprehensive income	$	155.1		$	126.1		$	150.5

See accompanying Notes to the Consolidated Financial Statements.

F-19

BRINKER INTERNATIONAL, INC.

Consolidated Balance Sheets

(In millions, except per share amounts)

	June 26, 2019			June 27, 2018
ASSETS
Current assets
Cash and cash equivalents	$	13.4		$	10.9
Accounts receivable, net	55.0			53.7
Inventories	23.2			24.2
Restaurant supplies	47.1			46.7
Prepaid expenses	23.7			20.8
Income taxes receivable, net	14.6			—
Total current assets	177.0			156.3
Property and equipment, at cost
Land	33.4			154.0
Buildings and leasehold improvements	1,454.6			1,673.3
Furniture and equipment	757.5			722.0
Construction-in-progress	19.2			22.1
	2,264.7			2,571.4
Less accumulated depreciation and amortization	(1,509.6		)	(1,632.5		)
Net property and equipment	755.1			938.9
Other assets
Goodwill	165.5			163.8
Deferred income taxes, net	112.0			33.6
Intangibles, net	22.3			24.0
Other	26.4			30.7
Total other assets	326.2			252.1
Total assets	$	1,258.3		$	1,347.3
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Current installments of long-term debt	$	9.7		$	7.1
Accounts payable	97.5			104.7
Gift card liability	100.9			119.1
Accrued payroll	82.1			74.5
Other accrued liabilities	131.4			127.2
Income taxes payable, net	—			1.7
Total current liabilities	421.6			434.3
Long-term debt, less current installments	1,206.6			1,499.6
Deferred gain on sale leaseback transactions	255.3			—
Other liabilities	153.0			131.7
Commitments and contingencies (Note 10 and Note 15)
Shareholders’ deficit
Common stock (250.0 million authorized shares; $0.10 par value; 176.2 million shares issued and 37.5 million shares outstanding at June 26, 2019, and 176.2 million shares issued and 40.8 million shares outstanding at June 27, 2018)	17.6			17.6
Additional paid-in capital	522.0			511.6
Accumulated other comprehensive loss	(5.6		)	(5.8		)
Retained earnings	2,771.2			2,683.0
	3,305.2			3,206.4
Less treasury stock, at cost (138.7 million shares at June 26, 2019, and 135.4 million shares at June 27, 2018)	(4,083.4		)	(3,924.7		)
Total shareholders’ deficit	(778.2		)	(718.3		)
Total liabilities and shareholders’ deficit	$	1,258.3		$	1,347.3

See accompanying Notes to the Consolidated Financial Statements.

F-20

BRINKER INTERNATIONAL, INC.

Consolidated Statements of Cash Flows

(In millions)

	Fiscal Years Ended
	June 26, 2019			June 27, 2018			June 28, 2017
Cash flows from operating activities
Net income	$	154.9		$	125.9		$	150.8
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization	147.6			151.4			156.4
Stock-based compensation	16.4			14.2			14.5
Restructure charges and other impairments	26.5			21.7			14.4
Net (gain) loss on disposal of assets	(33.1		)	1.6			(0.4		)
Undistributed loss on equity investments	—			0.3			—
Other	3.0			3.1			3.0
Changes in assets and liabilities:
Accounts receivable, net	(3.0		)	(3.3		)	3.5
Inventories	1.0			—			—
Restaurant supplies	(0.6		)	(1.2		)	(1.5		)
Prepaid expenses	(3.0		)	(1.7		)	(0.7		)
Deferred income taxes, net	(75.8		)	3.4			(22.7		)
Other assets	0.9			0.3			0.3
Accounts payable	(4.1		)	1.6			3.0
Gift card liability	(10.1		)	(7.3		)	4.2
Accrued payroll	6.8			4.2			(0.7		)
Other accrued liabilities	(7.7		)	(6.8		)	(5.8		)
Current income taxes	(12.7		)	(14.9		)	(7.7		)
Other liabilities	5.7			(8.0		)	4.5
Net cash provided by operating activities	212.7			284.5			315.1
Cash flows from investing activities
Payments for property and equipment	(167.6		)	(101.3		)	(102.6		)
Payments for franchise restaurant acquisitions	(3.1		)	—			—
Proceeds from sale of assets	1.6			19.9			3.2
Proceeds from note receivable	2.8			1.9			—
Insurance recoveries	1.7			1.7			—
Proceeds from sale leaseback transactions, net of related expenses	485.9			—			—
Net cash provided by (used in) investing activities	321.3			(77.8		)	(99.4		)
Cash flows from financing activities
Borrowings on revolving credit facility	853.0			1,016.0			250.0
Payments on revolving credit facility	(1,150.0		)	(588.0		)	(388.0		)
Purchases of treasury stock	(167.7		)	(303.2		)	(370.9		)
Payments of dividends	(60.3		)	(70.0		)	(70.8		)
Payments on long-term debt	(9.5		)	(260.3		)	(3.8		)
Proceeds from issuances of treasury stock	3.0			2.3			5.6
Payments for debt issuance costs	—			(1.6		)	(10.2		)
Proceeds from issuance of long-term debt	—			—			350.0
Net cash used in financing activities	(531.5		)	(204.8		)	(238.1		)
Net change in cash and cash equivalents	2.5			1.9			(22.4		)
Cash and cash equivalents at beginning of period	10.9			9.0			31.4
Cash and cash equivalents at end of period	$	13.4		$	10.9		$	9.0

See accompanying Notes to the Consolidated Financial Statements.

F-21

BRINKER INTERNATIONAL, INC.

Consolidated Statements of Shareholders’ Deficit

(In millions)

	Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive (Loss) Income			Total
	Shares	Amount
Balances at June 29, 2016	55.4	$	17.6	$	495.1	$	2,545.8	$	(3,272.4	)	$	(11.6	)	$	(225.5	)
Net income	—	—		—		150.8		—			—			150.8
Other comprehensive loss	—