Company Quick10K Filing
Brinker
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 39 $1,546
10-Q 2019-10-30 Quarter: 2019-09-25
10-K 2019-08-22 Annual: 2019-06-26
10-Q 2019-05-03 Quarter: 2019-03-27
10-Q 2019-02-01 Quarter: 2018-12-26
10-Q 2018-11-02 Quarter: 2018-09-26
10-K 2018-08-27 Annual: 2018-06-27
10-Q 2018-05-04 Quarter: 2018-03-28
10-Q 2018-02-02 Quarter: 2017-12-27
10-Q 2017-11-03 Quarter: 2017-09-27
10-K 2017-08-28 Annual: 2017-06-28
10-Q 2017-05-05 Quarter: 2017-03-29
10-Q 2017-02-03 Quarter: 2016-12-28
10-Q 2016-11-03 Quarter: 2016-09-28
10-K 2016-08-29 Annual: 2016-06-29
10-Q 2016-05-02 Quarter: 2016-03-23
10-Q 2016-02-01 Quarter: 2015-12-23
10-Q 2015-11-03 Quarter: 2015-09-23
10-K 2015-08-24 Annual: 2015-06-24
10-Q 2015-05-04 Quarter: 2015-03-25
10-Q 2015-02-02 Quarter: 2014-12-24
10-Q 2014-11-03 Quarter: 2014-09-24
10-K 2014-08-25 Annual: 2014-06-25
10-Q 2014-05-05 Quarter: 2014-03-26
10-Q 2014-02-03 Quarter: 2013-12-25
10-Q 2013-11-04 Quarter: 2013-09-25
10-K 2013-08-26 Annual: 2013-06-26
10-Q 2013-05-03 Quarter: 2013-03-27
10-Q 2013-02-04 Quarter: 2012-12-26
10-Q 2012-11-05 Quarter: 2012-09-26
10-K 2012-08-27 Annual: 2012-06-27
10-Q 2012-05-07 Quarter: 2012-03-28
10-Q 2012-02-06 Quarter: 2011-12-28
10-Q 2011-11-07 Quarter: 2011-09-28
10-K 2011-08-29 Annual: 2011-06-29
10-Q 2011-05-06 Quarter: 2011-03-30
10-Q 2011-02-07 Quarter: 2010-12-29
10-Q 2010-11-08 Quarter: 2010-09-29
10-K 2010-08-24 Annual: 2010-06-30
10-Q 2010-05-03 Quarter: 2010-03-24
10-Q 2010-02-01 Quarter: 2009-12-23
8-K 2020-01-27 Earnings, Regulation FD, Exhibits
8-K 2019-12-05 Enter Agreement, Exhibits
8-K 2019-11-20 Shareholder Vote
8-K 2019-11-07 Officers
8-K 2019-10-28 Earnings, Regulation FD, Exhibits
8-K 2019-09-05 Regulation FD, Exhibits
8-K 2019-09-03 Officers
8-K 2019-08-12 Earnings, Regulation FD, Exhibits
8-K 2019-07-10 Regulation FD, Exhibits
8-K 2019-06-11 Regulation FD, Exhibits
8-K 2019-04-29 Officers, Exhibits
8-K 2019-04-29 Earnings, Regulation FD, Exhibits
8-K 2019-03-26 Officers
8-K 2019-01-28 Earnings, Regulation FD, Exhibits
8-K 2019-01-28 Officers, Exhibits
8-K 2018-11-15 Shareholder Vote
8-K 2018-10-29 Earnings, Regulation FD, Exhibits
8-K 2018-10-01 Officers
8-K 2018-09-20 Officers
8-K 2018-09-06 Officers, Exhibits
8-K 2018-08-14 M&A, Earnings, Regulation FD, Exhibits
8-K 2018-08-07 Enter Agreement, M&A
8-K 2018-07-31 Enter Agreement
8-K 2018-07-23 Officers, Regulation FD, Exhibits
8-K 2018-05-14 Other Events, Exhibits
8-K 2018-05-01 Earnings, Regulation FD, Exhibits
8-K 2018-02-06 Regulation FD, Exhibits
8-K 2018-01-30 Earnings, Exhibits
8-K 2018-01-22 Officers, Exhibits
EAT 2019-09-25
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
EX-31.A eat2019092510qex-31a.htm
EX-31.B eat2019092510qex-31b.htm
EX-32.A eat2019092510qex-32a.htm
EX-32.B eat2019092510qex-32b.htm

Brinker Earnings 2019-09-25

EAT 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
SHAK 2,069 898 598 529 0 21 63 2,040 0% 32.1 2%
CNNE 1,974 1,872 620 1,269 300 73 150 2,103 24% 14.0 4%
CAKE 1,971 2,074 1,534 2,368 1,834 0 98 1,983 77% 20.2 0%
BLMN 1,807 3,512 3,353 4,128 2,843 112 374 2,862 69% 7.6 3%
DIN 1,695 2,041 2,256 874 388 104 232 2,804 44% 12.1 5%
ARCO 1,637 1,578 1,185 0 0 0 0 2,076 0%
EAT 1,546 1,258 2,036 3,218 2,395 155 465 2,739 74% 5.9 12%
PLAY 1,522 2,234 1,985 1,322 1,093 116 282 2,066 83% 7.3 5%
DENN 1,419 439 581 621 523 72 139 1,687 84% 12.1 16%
PZZA 1,378 727 787 1,536 0 -19 20 1,732 0% 86.9 -3%

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 25, 2019
Commission File Number 1-10275
brinkerdiamondhiresa11.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)

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 the latest practicable date.
Class
Trading Symbol(s)
Name of exchange on which registered
Outstanding at October 25, 2019
Common Stock, $0.10 par value
EAT
NYSE
37,371,338 shares



BRINKER INTERNATIONAL, INC.
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 Ended
 
September 25,
2019
 
September 26,
2018
Revenues
 
 
 
Company sales
$
763.9

 
$
728.3

Franchise and other revenues
22.1

 
25.5

Total revenues
786.0

 
753.8

Operating costs and expenses
 
 
 
Company restaurants (excluding depreciation and amortization)
 
 
 
Cost of sales
203.8

 
191.9

Restaurant labor
268.5

 
256.3

Restaurant expenses
207.3

 
199.0

Company restaurant expenses
679.6

 
647.2

Depreciation and amortization
38.1

 
37.0

General and administrative
38.0

 
33.8

Other (gains) and charges
(0.9
)
 
(11.1
)
Total operating costs and expenses
754.8

 
706.9

Operating income
31.2

 
46.9

Interest expenses
14.9

 
15.6

Other (income), net
(0.5
)
 
(0.8
)
Income before provision for income taxes
16.8

 
32.1

Provision for income taxes
1.9

 
5.7

Net income
$
14.9

 
$
26.4

 
 
 
 
Basic net income per share
$
0.40

 
$
0.65

 
 
 
 
Diluted net income per share
$
0.39

 
$
0.64

 
 
 
 
Basic weighted average shares outstanding
37.5

 
40.4

 
 
 
 
Diluted weighted average shares outstanding
38.1

 
41.1

 
 
 
 
Other comprehensive income (loss)
 
 
 
Foreign currency translation adjustment
$
(0.2
)
 
$
0.3

Other comprehensive income (loss)
(0.2
)
 
0.3

Comprehensive income
$
14.7

 
$
26.7


See accompanying Notes to the Consolidated Financial Statements (Unaudited)
3

Table of Contents

BRINKER INTERNATIONAL, INC.
Consolidated Balance Sheets
(In millions, except per share amounts)
 
Unaudited
 
 
 
September 25,
2019
 
June 26,
2019
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
29.0

 
$
13.4

Accounts receivable, net
48.3

 
55.0

Inventories
25.6

 
23.2

Restaurant supplies
51.8

 
47.1

Prepaid expenses
17.6

 
23.7

Income taxes receivable, net
1.4

 
14.6

Total current assets
173.7

 
177.0

Property and equipment, at cost
 
 
 
Land
34.9

 
33.4

Buildings and leasehold improvements
1,539.5

 
1,454.6

Furniture and equipment
779.0

 
757.5

Construction-in-progress
22.5

 
19.2

 
2,375.9

 
2,264.7

Less accumulated depreciation and amortization
(1,535.9
)
 
(1,509.6
)
Net property and equipment
840.0

 
755.1

Other assets
 
 
 
Operating lease assets (Note 3)
1,192.3

 

Goodwill (Note 2)
189.7

 
165.5

Deferred income taxes, net (Note 3)
45.5

 
112.0

Intangibles, net
24.3

 
22.3

Other
25.5

 
26.4

Total other assets
1,477.3

 
326.2

Total assets
$
2,491.0

 
$
1,258.3

LIABILITIES AND SHAREHOLDERS’ DEFICIT
 
 
 
Current liabilities
 
 
 
Accounts payable
$
105.2

 
$
97.5

Gift card liability
97.5

 
100.9

Accrued payroll
69.9

 
82.1

Operating lease liabilities (Note 3)
119.2

 

Other accrued liabilities
124.6

 
141.1

Total current liabilities
516.4

 
421.6

Long-term debt and finance leases, less current installments
1,313.8

 
1,206.6

Long-term operating lease liabilities, less current portion (Note 3)
1,189.1

 

Deferred gain on sale leaseback transactions (Note 3)

 
255.3

Other liabilities (Note 3)
56.8

 
153.0

Commitments and contingencies (Note 14)

 

Shareholders’ deficit
 
 
 
Common stock (250.0 million authorized shares; $0.10 par value; 176.2 million shares issued and 37.4 million shares outstanding at September 25, 2019, and 176.2 million shares issued and 37.5 million shares outstanding at June 26, 2019)
17.6

 
17.6

Additional paid-in capital
525.1

 
522.0

Accumulated other comprehensive loss
(5.8
)
 
(5.6
)
Retained earnings
2,967.4

 
2,771.2

Treasury stock, at cost (138.8 million shares at September 25, 2019, and 138.7 million shares at June 26, 2019)
(4,089.4
)
 
(4,083.4
)
Total shareholders’ deficit
(585.1
)
 
(778.2
)
Total liabilities and shareholders’ deficit
$
2,491.0

 
$
1,258.3


See accompanying Notes to the Consolidated Financial Statements (Unaudited)
4

Table of Contents

BRINKER INTERNATIONAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
 
Thirteen Week Periods Ended
 
September 25,
2019
 
September 26,
2018
Cash flows from operating activities
 
 
 
Net income
$
14.9

 
$
26.4

Adjustments to reconcile Net income to Net cash provided by operating activities:
 
 
 
Depreciation and amortization
38.1

 
37.0

Stock-based compensation
7.1

 
3.6

Restructure charges and other impairments
(3.2
)
 
1.9

Net loss (gain) on disposal of assets
0.3

 
(13.6
)
Other
0.6

 
0.8

Changes in assets and liabilities:
 
 
 
Accounts receivable, net
7.0

 
7.9

Inventories
0.1

 
0.8

Prepaid expenses
5.9

 
(6.3
)
Operating lease assets, net of liabilities
(1.7
)
 

Deferred income taxes, net
1.3

 
(76.1
)
Other assets
(0.5
)
 
(0.5
)
Accounts payable
2.8

 
(5.1
)
Gift card liability
(6.1
)
 
(4.6
)
Accrued payroll
(12.1
)
 
(11.9
)
Other accrued liabilities
19.7

 
12.5

Current income taxes
12.3

 
77.5

Other liabilities
0.1

 
(0.7
)
Net cash provided by operating activities
86.6

 
49.6

Cash flows from investing activities
 
 
 
Payments for property and equipment
(20.5
)
 
(31.2
)
Payments for franchise restaurant acquisitions
(96.2
)
 

Proceeds from sale of assets
0.2

 

Proceeds from note receivable
0.7

 
0.7

Insurance recoveries

 
1.4

Proceeds from sale leaseback transactions, net of related expenses

 
447.6

Net cash (used in) provided by investing activities
(115.8
)
 
418.5

Cash flows from financing activities
 
 
 
Borrowings on revolving credit facility
299.0

 
204.0

Payments on revolving credit facility
(227.0
)
 
(549.0
)
Purchases of treasury stock
(11.3
)
 
(105.5
)
Payments of dividends
(14.8
)
 
(16.2
)
Payments on long-term debt
(2.4
)
 
(1.8
)
Proceeds from issuances of treasury stock
1.3

 
0.5

Net cash provided by (used in) financing activities
44.8

 
(468.0
)
Net change in cash and cash equivalents
15.6

 
0.1

Cash and cash equivalents at beginning of period
13.4

 
10.9

Cash and cash equivalents at end of period
$
29.0

 
$
11.0


See accompanying Notes to the Consolidated Financial Statements (Unaudited)
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BRINKER INTERNATIONAL, INC.
Notes to the Consolidated Financial Statements (Unaudited)
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.
Nature of Operations
Our Consolidated Financial Statements (Unaudited) as of September 25, 2019 and June 26, 2019, and for the thirteen week periods ended September 25, 2019 and September 26, 2018, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). We are principally engaged in the ownership, operation, development, and franchising of the Chili’s® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy® (“Maggiano’s”) restaurant brands. At September 25, 2019, we owned, operated or franchised 1,672 restaurants, consisting of 1,118 company-owned restaurants and 554 franchised restaurants, located in the United States, 28 countries and two United States territories.
Basis of Presentation
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 (Unaudited), and the reported amounts of revenues and costs and expenses during the reporting period. Actual results could differ from those estimates.
The foreign currency translation adjustment included in Comprehensive income in the Consolidated Statements of Comprehensive Income (Unaudited) represents the unrealized impact of translating the financial statements of our Canadian restaurants from Canadian dollars to United States dollars. This amount is not included in Net income and would only be realized upon disposition of our Canadian restaurants. The related Accumulated other comprehensive loss (“AOCL”) is presented in the Consolidated Balance Sheets (Unaudited).
The information furnished herein reflects all adjustments (consisting only of normal recurring accruals and adjustments) which are, in our opinion, necessary to fairly state the interim operating results, financial position and cash flows for the respective periods. However, these operating results are not necessarily indicative of the results expected for the full fiscal year. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with GAAP, have been omitted pursuant to SEC rules and regulations. The Notes to the Consolidated Financial Statements (Unaudited) should be read in conjunction with the Notes to the Consolidated Financial Statements contained in our June 26, 2019 Form 10-K. We believe the disclosures are sufficient for interim financial reporting purposes. All amounts within the Notes to the Consolidated Financial Statements (Unaudited) are presented in millions unless otherwise specified.
New Accounting Standards Implemented
ASU 2016-02, Leases (Topic 842) - In February 2016, the FASB issued ASU 2016-02, and subsequently amended this update by issuing additional ASU’s that provide clarification and further guidance around areas identified as potential implementation issues. These updates require a lessee to recognize in the balance sheet a liability to make lease payments and a corresponding right-of-use asset for virtually all leases, other than leases with a term of 12 months or less if the short-term lease exclusion expedient is elected. The updates also require additional disclosures about the amount, timing, and uncertainty of cash flows arising from leases. These updates are now effective for annual and interim periods for fiscal years beginning after December 15, 2018, which required us to adopt these provisions in the first quarter of fiscal 2020. Refer to Note 3 - Leases for disclosures about our adoption.
The impact of additional accounting standard updates that have not yet been adopted can be found at Note 15 - Effect of New Accounting Standards.

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2. CHILI’S RESTAURANT ACQUISITION
On September 5, 2019, we completed the acquisition of certain assets and liabilities relating to 116 franchised Chili’s restaurants, owned by a franchisee, located in the Midwest United States. Pro-forma financial information of the acquisition is not presented due to the immaterial impact of the financial results of the acquired restaurants in the Consolidated Financial Statements (Unaudited).
The total purchase price of $99.0 million, excluding post-closing adjustments, was funded with borrowings from our existing credit facility. We accounted for this acquisition as a business combination. The results of operations, and assets and liabilities, of these restaurants are included in the Consolidated Financial Statements (Unaudited) from the date of purchase. The assets and liabilities of these restaurants were recorded at their preliminary fair values and are subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. The final purchase price allocation is expected to be completed during the second quarter of 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. During the three week period ended September 25, 2019, these restaurants generated $15.3 million of revenue.
A net acquisition-related gain of $0.5 million was recorded during the thirteen week period ended September 25, 2019 to Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited). The net gain consisted of $2.6 million of franchise deferred revenue balances that were fully recognized at date of sale, partially offset by $1.5 million of professional services and transaction costs associated with the purchase, and $0.6 million of related franchise straight-line rent balances, net of market leasehold improvement adjustments, also fully recognized at the date of purchase.
The fair value of tangible and intangible assets acquired was primarily based on significant inputs not observable in an active market, including estimates of replacement costs, future cash flows, and discount rates. These inputs represent Level 3 fair value measurements as defined under GAAP. The preliminary amounts recorded for the fair value of acquired assets and liabilities at the acquisition date are as follows:
 
Fair Value September 5, 2019
Current assets(1)
$
7.3

Property and equipment
60.6

Operating lease assets
163.7

Reacquired franchise rights(2)
6.5

Goodwill(3)
24.3

Other assets
1.1

Total assets acquired
263.5

Current liabilities(4)
10.2

Operating lease liabilities, less current portion
158.3

Total liabilities assumed
168.5

Net assets acquired(5)
$
95.0

(1) 
Current assets included petty cash, inventory, and restaurant supplies.
(2) 
Reacquired franchise rights have a weighted average amortization period of approximately 8 years.
(3) 
Goodwill of $24.3 million is expected to be deductible for tax purposes. The portion of the purchase price attributable to goodwill represents the benefits expected as a result of the acquisition, including sales and unit growth opportunities, and the benefit of the assembled workforce of the acquired restaurants.

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(4) 
Current liabilities included current portion of operating lease liabilities, gift card liability and accrued property tax.
(5) 
Net assets acquired at fair value is equal to total purchase price of $99.0 million, less $1.6 million of closing adjustments and $2.8 million allocated to prepayment of leases entered into between us and the franchisee (refer to Note 3 - Leases for more information), partially offset by $0.4 million related to favorable market valuation adjustment recognized on pre-existing subleases that were terminated on the transaction date.
3. LEASES
As of September 25, 2019, 1,075 of our 1,118 company-owned restaurant facilities were leased. We typically lease our restaurant facilities through ground leases (where we lease land only, but own the building) or retail leases (where we lease the land/retail space and building). Our leased restaurants are leased for an initial lease term which is typically 10 to 20 years, with one or more renewal terms typically ranging from 1 to 10 years. The leases typically provide for a fixed rental or a fixed rental plus percentage rentals based on sales volume. In addition to our restaurant facilities, we also lease our corporate headquarters location and certain technology and other restaurant equipment. Our lease agreements do not contain any material residual value guarantees or material covenant restrictions.
Adoption of ASC 842
Transition and Practical Expedient Elections
We adopted FASB Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), from the previous guidance ASC Topic ASC 840, Leases (“Legacy GAAP”) effective June 27, 2019, the first day of fiscal 2020. We adopted ASC 842 using the alternative transition method, such that our fiscal 2020 Consolidated Financial Statements (Unaudited) reflect ASC 842, while our prior period Consolidated Financial Statements (Unaudited) were prepared under Legacy GAAP and have not been restated. In connection with the adoption of ASC 842, we also elected the following practical expedients and policies:
Package of practical expedients - the election of this package allowed us to carry forward our historical lease classification, our assessment of whether a contract is or contains a lease, for any leases that existed prior to adoption of ASC 842.
Combine lease and non-lease components policy - we elected for all classes of underlying leased assets to account for lease and non-lease components (such as common area maintenance) and include executory costs (such as property taxes and insurance) to combine as a single lease component.
Short-term lease policy - we elected the short-term lease exemption from balance sheet recognition for all classes of underlying assets with an initial term of 12 months or less and that do not include an option to purchase the underlying asset that we are reasonably certain to exercise. Short-term leases are expensed as incurred in Restaurant expenses in the Consolidated Statements of Comprehensive Income (Unaudited)
We did not elect the hindsight practical expedient that permitted a reassessment of lease terms for existing leases.
Lease Accounting Policy under ASC 842
ASC 842 requires lessees to recognize on the balance sheet at lease commencement the lease assets and related lease liabilities for the rights and obligations created by operating and finance leases with lease terms of more than 12 months. The lease term commences on the date the lessor makes the underlying property available, irrespective of when lease payments begin under the contract. When determining the lease term at commencement, we consider both termination and renewal option periods available, and only include the period for which failure to renew the lease imposes a penalty on us in such an amount that renewal, or termination options, appear to be reasonably certain.
Upon adoption, our lease liability will generally be based on the present value of the lease payments, consisting of fixed costs and certain rent escalations, using our incremental borrowing rate applicable to the lease term. The right-of-use lease asset will generally be based on the lease liability, adjusted for amounts related to other lease-related assets and liabilities. Our adjustments include prepaid rent, straight-line rent for timing differences between payment streams

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and lease term, landlord contributions that are recorded when received as a reduction to the asset, and favorable / unfavorable lease purchase price adjustments. Additionally, upon adoption, we also recorded partial impairments of right-of-use assets with an adjustment to Retained earnings for certain properties.
The interest rates used in our lease contracts are not implicit. We have derived our incremental borrowing rate using the interest rate we would pay on our existing borrowings, adjusted for the effect of designating collateral and the lease terms. The reasonably certain lease term and incremental borrowing rate for each lease requires judgment by management and can impact the classification and accounting for a lease as operating or finance, as well as the value of the lease asset and liability.
The lease asset carrying amounts will be assessed for impairment semi-annually or when events or circumstances indicate that the carrying amount may not be recoverable, in accordance with our long-lived asset impairment policy. We monitor for events or changes in circumstances that require reassessment of lease classification. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the lease asset.
Variable lease costs are expensed as incurred in Restaurant expenses in the Consolidated Statements of Comprehensive Income (Unaudited), and are not included in lease liabilities in the Consolidated Balance Sheets (Unaudited). Contingent rent represents payment of variable lease obligations based on a percentage of sales, as defined by the terms of the applicable lease, for certain restaurant facilities and is recorded at the point in time we determine that it is probable that such sales levels will be achieved. Additionally, we have certain leases which periodically reset to a specified index, such leases are initially recorded using the index that existed at lease commencement. Subsequent index changes are recorded as variable rental payments. Maintenance and property tax expenses are accounted for on an accrual basis as variable lease costs.
We sublease certain leased properties, typically related to closed or refranchised restaurants. The income from the sublease is recorded in Other (income), net in the Consolidated Statements of Comprehensive Income (Unaudited).
Operating lease expenses are recognized on a straight-line basis over the lease term in Restaurant expenses for restaurant facilities, or General and administrative for our corporate headquarters, in the Consolidated Statements of Comprehensive Income (Unaudited), respectively. Operating lease expenses associated with subleased leased properties are recognized on a straight-line basis over the lease term in Other (income), net in the Consolidated Statements of Comprehensive Income (Unaudited).
Finance lease expenses are recognized on a straight-line basis over the lesser of the useful life of the leased asset or the lease term and the expenses are recognized in Depreciation and amortization in the Consolidated Statements of Comprehensive Income (Unaudited). Interest on each finance lease liability is recorded to Interest expenses in the Consolidated Statements of Comprehensive Income (Unaudited).

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Financial Statement Impact of ASC 842 Adoption
The adoption of ASC 842 represents a change in accounting principle. The adoption did not have a significant impact on the Consolidated Statements of Comprehensive Income or Consolidated Statements of Cash Flows. Upon adoption, there was a material increase in Total assets and Total liabilities in the Consolidated Balance Sheet primarily due to the recognition of operating lease assets and related lease liabilities where we are the lessee. The table below reflects the balance sheet adoption impact related to ASC 842 as an adjustment at June 27, 2019, the first day of fiscal 2020 (condensed, unaudited):
 
Legacy GAAP
 
ASC 842 Cumulative Adjustments
 
ASC 842
 
June 26, 2019
 
 
June 27, 2019
ASSETS
 
 
 
 
 
Current assets(1)
$
177.0

 
$
0.3

 
$
177.3

Other assets
 
 
 
 
 
Operating lease assets(2)

 
1,034.3

 
1,034.3

Deferred income taxes, net(3)
112.0

 
(65.1
)
 
46.9

Intangibles, net(1)
22.3

 
(4.1
)
 
18.2

LIABILITIES AND SHAREHOLDERS’ DEFICIT
 
 
 
 
 
Current liabilities
 
 
 
 
 
Operating lease liabilities(4)

 
110.8

 
110.8

Other accrued liabilities(1)(5)
141.1

 
(38.3
)
 
102.8

Long-term operating lease liabilities, less current portion(4)

 
1,044.9

 
1,044.9

Deferred gain on sale leaseback transactions(5)
255.3

 
(255.3
)
 

Other liabilities(1)
153.0

 
(92.6
)
 
60.4

Retained earnings
2,771.2

 
195.9

 
2,967.1

(1) 
The following prior lease balances were reclassified into Operating lease assets upon adoption of ASC 842:
Current assets included the prepaid rent adjustment.
Intangibles, net included the favorable lease asset position adjustment.
Other accrued liabilities and Other liabilities balances related to the current and long-term portions of straight-line rent balances, unfavorable lease liability positions, exit-related lease accruals, and landlord contributions adjustments.
Additionally, Other accrued liabilities included $19.3 million of deferred gain on sale leaseback transactions that was eliminated as a cumulative effect adjustment to Retained earnings upon adoption, refer to (5) below for more details. Refer to Note 10 - Accrued and Other Liabilities for June 26, 2019 balance details.
(2) 
Operating lease assets represents the capitalization of operating lease right-of-use assets equal to the amount of recognized operating lease liability as described in (4) below, adjusted by the net carrying amounts described in (1) above, and $15.5 million related to certain operating lease assets for restaurant facilities previously fully impaired under our long-lived asset impairment policy that were recorded to Retained earnings.
(3) 
Deferred income taxes, net was reduced by $3.5 million related to the impact of adopting ASC 842 and recording the operating lease assets and liabilities, and $68.6 million related to the elimination of the deferred gain on sale leaseback transactions as described in (5) below.
(4) 
Operating lease liabilities, both current and long-term, represents the liabilities based on the present value of the lease payments, consisting of fixed costs and certain rent escalations, using our incremental borrowing rate applicable to the lease term.

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(5) 
Deferred gain on sale leaseback transactions balance of $255.3 million and the related short-term deferred gain balance recorded within Other accrued liabilities of $19.3 million, and the associated Deferred income taxes, net of $68.6 million as described in (3) above, were eliminated upon adoption into Retained earnings as required by the new lease accounting standard using the alternative transition method. No further gain will be amortized to Other gains and charges in the Consolidated Statements of Comprehensive Income effective fiscal 2020.
Lease Amounts Included in the Thirteen Week Period Ended September 25, 2019
Consolidated Balance Sheet Disclosure of Lease Amounts
The following table includes a detail of lease asset and liabilities included in the Consolidated Balance Sheets (Unaudited):
 
September 25, 2019
 
Finance
Leases(1)
 
Operating
Leases(2)
 
Total Leases
Lease assets
$
67.0

 
$
1,192.3

 
$
1,259.3

 
 
 
 
 
 
Current lease liabilities
10.2

 
119.2

 
129.4

Long-term lease liabilities
73.6

 
1,189.1

 
1,262.7

Total lease liabilities
$
83.8

 
$
1,308.3

 
$
1,392.1

(1) 
Finance lease assets are recorded in Property and equipment, at cost, and the related current and long-term lease liabilities are recorded within Other accrued liabilities and Long-term debt and finance leases, less current installments, respectively.
(2) 
Operating lease assets are recorded in Operating lease assets, and the related current and long-term lease liabilities are recorded within Operating lease liabilities and Long-term operating lease liabilities, less current portion, respectively.
Consolidated Statement of Comprehensive Income Disclosure of Lease Amounts
The components of lease expense, including variable lease costs primarily consisting of rent based on a percentage of sales, common area maintenance charges and real estate taxes, and short-term lease expenses for leases with lease terms less than twelve months are included in Consolidated Statements of Comprehensive Income (Unaudited) as follows:
 
Thirteen Week Period Ended
September 25, 2019
Operating lease cost
$
37.3

Finance lease amortization
2.7

Finance lease interest
0.9

Short-term lease cost
0.2

Variable lease cost
13.3

Sublease (income)
(1.2
)
Total lease costs, net
$
53.2



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Consolidated Statement of Cash Flows Disclosure of Lease Amounts
Supplemental cash flow information related to leases recorded in the Consolidated Statements of Cash Flows (Unaudited) is as follows:
 
Thirteen Week Period Ended
September 25, 2019
Cash flows from operating activities
 
Cash paid for amounts included in the measurement of lease liabilities
 
Operating leases
$
40.3

Finance leases
0.9

Cash flows from financing activities
 
Cash paid for amounts included in the measurement of lease liabilities
 
Finance leases
2.4

Non-cash lease assets obtained in exchange for new lease liabilities
 
Operating leases
187.1

Finance leases
37.7


Weighted Average Lease Term and Discount Rate
Other information related to leases is as follows:
 
September 25, 2019
 
Finance Leases
 
Operating Leases
Weighted average remaining lease term
11.3 years

 
12.1 years

Weighted average discount rate
5.4
%
 
4.3
%

Lease Maturity Analysis
As of September 25, 2019, accounted for and presented under ASC 842 guidance, the future minimum lease payments on finance and operating leases, as well as sublease income were as follows:
 
September 25, 2019
Fiscal Year
Finance Leases
 
Operating Leases
 
Sublease Income
Remainder of 2020
$
10.9

 
$
127.7

 
$
(3.5
)
2021
13.1

 
170.0

 
(4.6
)
2022
11.5

 
161.4

 
(4.5
)
2023
10.1

 
150.6

 
(3.5
)
2024
9.5

 
140.8

 
(2.5
)
Thereafter
58.4

 
969.6

 
(8.5
)
Total minimum lease payments
113.5

 
1,720.1

 
$
(27.1
)
Less: Imputed interest
29.7

 
411.8

 
 
Present value of lease liability
$
83.8

 
$
1,308.3

 
 


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As of June 26, 2019, as previously disclosed in our fiscal 2019 Form 10-K under Legacy GAAP, undiscounted future minimum lease payments on both capital and operating leases were as follows:
 
June 26, 2019
Fiscal Year
Capital
Leases
 
Operating
Leases(2)
2020
$
12.3

 
$
156.8

2021
10.1

 
154.5

2022
8.2

 
148.6

2023
6.7

 
137.7

2024
6.0

 
127.6

Thereafter
17.4

 
771.7

Total minimum lease payments(1)
60.7

 
$
1,496.9

Imputed interest (average rate of 6.18%)
(12.3
)
 
 
Present value of minimum lease payments
48.4

 
 
Less current capital lease obligations
(9.7
)
 
 
Long-term capital lease obligations
$
38.7

 
 
(1) 
Total minimum lease payments were not reduced by minimum sublease rentals to be received in the future under non-cancelable subleases. The total of undiscounted future sublease rentals was approximately $22.0 million and $14.6 million for capital and operating subleases, respectively, as of June 26, 2019.
(2) 
Operating lease expenses for the fifty-two weeks ended June 26, 2019, recorded under Legacy GAAP, totaled $158.6 million, which included $141.7 million for straight-lined minimum rent, $3.3 million for contingent rent, and $13.6 million of other rent-related expenses.
Significant Changes in Leases during the Period
As part of the Chili’s restaurant acquisition, we assumed and entered into 91 new operating leases included in the balances for the thirteen week period ended September 25, 2019. The leases were recorded net of preliminary purchase price accounting adjustments and prepaid rent. At September 25, 2019, the balances associated with these new leases in the Consolidated Balance Sheets (Unaudited) include Operating lease assets of $172.6 million, Operating lease liabilities of $5.0 million, and Long-term operating lease liabilities, less current portion of $164.5 million.
Additionally related to this transaction, we entered into 11 new finance leases with the initial terms of approximately 11 years, plus renewal options. At September 25, 2019, the balances associated with these finance leases in the Consolidated Balance Sheets (Unaudited) include Buildings and leasehold improvements of $23.7 million, Other accrued liabilities of $0.6 million, and Long-term debt and finance leases, less current installments of $23.0 million. Refer to Note 2 - Chili’s Restaurant Acquisition for information about the acquisition.
Pre-Commencement Leases
In the thirteen week period ended September 25, 2019, we executed one finance lease for Chili’s table-top devices with an initial term of 3 years plus one 3-year renewal option. This lease will commence over the course of fiscal 2020 as we receive the related devices. The undiscounted fixed payments over the initial term, net of lease incentives is $20.4 million. Additionally, we have executed 5 leases for new Chili’s locations with undiscounted fixed payments over the initial term of $15.5 million. These leases are expected to commence during fiscal 2020 and are expected to have an economic lease term of 20 years. These leases will commence when the landlords make the property available to us for new restaurant construction. We will assess the reasonably certain lease term at the lease commencement date.

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Table of Contents

Fiscal 2019 Sale Leaseback Transactions
Restaurant Properties Sale Leaseback Transactions
In the thirteen week period ended September 26, 2018, we completed sale leaseback transactions of 141 restaurant properties sold for aggregate consideration of $455.7 million. The balances attributable to the restaurant assets sold included Land of $103.6 million, Buildings and leasehold improvements of $217.6 million, certain fixtures included in Furniture and equipment of $9.3 million, and Accumulated depreciation of $163.9 million. The total gain was $289.1 million and the net proceeds from these sale leaseback transactions were used to repay borrowings on our revolving credit facility.
Lease Details
The initial terms of all leases are for 15 years, plus renewal options at our discretion. All of the leases were determined to be operating leases. Rent expenses associated with these operating leases were recognized on a straight-line basis over the lease terms under Legacy GAAP during fiscal 2019. As of June 26, 2019, the straight-line rent accrual balance of $62.3 million was included in Other accrued liabilities (current portion) and Other liabilities (long-term portion) in the Consolidated Balance Sheets (Unaudited) which included $2.8 million of straight-line rent accrual associated with these operating leases. The straight-line rent accrual balance was eliminated upon adoption of ASC 842 effective June 27, 2019, the first day of fiscal 2020, as previously discussed in this footnote.
Gain and Deferred Gain Recognition
We recognized the portion of the gross gain in excess of the present value of the future minimum lease payments, and deferred the remainder of the gain to be recognized straight-line in proportion to the operating lease terms. During the thirteen week period ended September 26, 2018, $20.1 million of the gain was recognized to Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited). As of June 26, 2019, the remaining balance of the deferred gain of $274.6 million was recorded in Other accrued liabilities (current portion) and Deferred gain on sale leaseback transactions (long-term portion) in the Consolidated Balance Sheets (Unaudited). The deferred gain balance was eliminated through the cumulative effect adjustment to Retained earnings effective June 27, 2019, the first day of fiscal 2020, upon adoption of ASC 842. Refer above for ASC 842 adoption details. For any future sale leaseback transactions under the ASC 842 guidance, the gain, adjusted for any off-market terms, will be recognized immediately in most cases.

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4. REVENUE RECOGNITION
Deferred Development and Franchise Fees
Our deferred development and franchise fees consist of the unrecognized fees received from franchisees. Recognition of these fees in subsequent periods is based on satisfaction of the contractual performance obligations of the active contracts with franchisees. We also expect to earn subsequent period royalties and advertising fees related to our franchise contracts, however under ASC 606, these future revenues are not yet determinable due to unsatisfied performance obligations based upon a sales-based measure.
The unrecognized fees received from franchisees are classified within Other accrued liabilities and Other liabilities in the Consolidated Balance Sheets (Unaudited). A summary of significant changes to the related deferred balance during the thirteen week period ended September 25, 2019 is presented below, followed by the revenues expected to be recognized in the subsequent periods based on current information.
 
Deferred Development and Franchise Fees
Balance at June 26, 2019
$
16.2

Additions
0.2

Amount recognized for Chili’s restaurant acquisition(1)
(2.6
)
Amount recognized to Franchise and other revenues
(0.5
)
Balance at September 25, 2019
$
13.3


(1) 
Deferred development and franchise fees remaining balance associated with 116 Chili’s restaurants acquired from a previous franchisee at the September 5, 2019 acquisition date were recognized in Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited), refer to Note 2 - Chili’s Restaurant Acquisition for further details.
Fiscal Year
Development and Franchise Fees Revenue Recognition
Remainder of 2020
$
0.8

2021
1.1

2022
1.0

2023
1.0

2024
1.0

Thereafter
8.4

 
$
13.3



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5. OTHER GAINS AND CHARGES
Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited) consist of the following:
 
Thirteen Week Periods Ended
 
September 25,
2019
 
September 26,
2018
Lease modification (gain)
$
(3.1
)
 
$

Acquisition of franchise restaurants costs, net of (gains)
(0.5
)
 

Remodel-related costs
0.7

 
0.5

Property damages, net of (insurance recoveries)
0.3

 
(0.8
)
Corporate headquarters relocation charges
0.3

 

Restaurant closure charges
0.2

 
1.7

Foreign currency transaction (gain) loss
0.2

 
(0.8
)
Severance and other benefit charges
0.2

 

Sale leaseback (gain), net of transaction charges

 
(13.3
)
Accelerated depreciation of previous headquarters

 
0.5

Cyber security incident charges

 
0.4

Other
0.8

 
0.7

 
$
(0.9
)
 
$
(11.1
)

Fiscal 2020
Lease modification (gain) of $3.1 million during the thirteen week period ended September 25, 2019 relates to the lease termination of a previously impaired Chili’s operating lease.
Acquisition of franchise restaurants costs, net of (gains) during the thirteen week period ended September 25, 2019 related to the 116 restaurants acquired from a franchisee, refer to Note 2 - Chili’s Restaurant Acquisition for details.
Remodel-related costs during the thirteen week period ended September 25, 2019 of $0.7 million were recorded related to existing fixed asset write-offs associated with the Chili’s remodel project.
Property damages, net of (insurance recoveries) during the thirteen week period ended September 25, 2019 consisted primarily of costs incurred for damages from Tropical Storm Imelda.
Corporate headquarters relocation charges of $0.3 million during the thirteen week period ended September 25, 2019 related to costs associated with the previous corporate headquarters location.
Restaurant closure charges of $0.2 million during the thirteen week period ended September 25, 2019 related to leases on certain closed restaurant locations.
Foreign currency transaction (gain) loss related to the CMR note denominated in pesos received from the sale of our equity interest in our Chili’s joint venture in Mexico during the second quarter of fiscal 2018. During the thirteen week period ended September 25, 2019, the value of the peso decreased as compared to the United States dollar resulting in a foreign currency transaction loss of $0.2 million.
Severance and other benefit charges during the thirteen week period ended September 25, 2019 related to the elimination of certain corporate headquarters positions.
Fiscal 2019
Sale leaseback (gain), net of transaction charges during the thirteen week period ended September 26, 2018 included gains of $20.1 million, associated with the transactions, less transaction costs incurred of $6.8 million

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related to professional services, legal and accounting fees. Refer to Note 3 - Leases for further details on this transaction.
Property damages, net of (insurance recoveries) during the thirteen week period ended September 26, 2018 included $0.9 million of insurance proceeds received related to a previously filed fire claim, partially offset by expenses incurred associated with storm damages at certain restaurant locations.
Foreign currency transaction (gain) loss during the thirteen week period ended September 26, 2018 included gains of $0.8 million resulting from the change in value of the Mexican peso as compared to that of the United States dollar on our Mexican peso denominated note receivable.
Restaurant closure charges during the thirteen week period ended September 26, 2018 included $1.7 million which were primarily related to Chili’s lease termination charges and certain Chili’s restaurant closure costs.
Accelerated depreciation of previous headquarters during the thirteen week period ended September 26, 2018 included $0.5 million of depreciation on certain leasehold improvements associated with the leased portion of our previous corporate headquarters property which closed during the third quarter of fiscal 2019.
Remodel-related costs during the thirteen week period ended September 26, 2018 totaling $0.5 million were recorded related to existing fixed asset write-offs associated with the Chili’s remodel project.
Cyber security incident charges during the thirteen week period ended September 26, 2018 of $0.4 million were recorded related to professional services associated with our response to the fourth quarter fiscal 2018 incident that are not believed to be covered by our insurance coverage. Refer to Note 15 - Commitments and Contingencies for more information.
6. INCOME TAXES
 
Thirteen Week Periods Ended
 
September 25,
2019
 
September 26,
2018
Effective income tax rate
11.3
%
 
17.9
%

The federal statutory tax rate for both periods was 21.0%. Our fiscal 2020 effective income tax rate for the thirteen week period ended September 25, 2019 was 11.3% due to the favorable impact of the FICA tax credit. Our fiscal 2019 effective income tax rate for the thirteen week period ended September 26, 2018 was 17.9% due to the favorable impact from the FICA tax credit, partially offset by the impact of the sale leaseback transactions. The sale leaseback transactions gains, as described in Note 3 - Leases, were recognized for tax purposes when the transaction was completed.
The effective income tax rate in the thirteen week period ended September 25, 2019 compared to the thirteen week period ended September 26, 2018 decreased 6.6%, primarily due to the impact of the sale leaseback transactions that occurred in the thirteen week period ended September 26, 2018.

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7. NET INCOME PER SHARE
Basic net income per share is computed by dividing Net income by the Basic weighted average shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of Diluted net income per share, the Basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are not included in the Diluted net income per share calculation. Basic weighted average shares outstanding is reconciled to Diluted weighted average shares outstanding as follows:
 
Thirteen Week Periods Ended
 
September 25,
2019
 
September 26,
2018
Basic weighted average shares outstanding
37.5

 
40.4

Dilutive stock options
0.1

 
0.2

Dilutive restricted shares
0.5

 
0.5

 
0.6

 
0.7

Diluted weighted average shares outstanding
38.1

 
41.1

 
 
 
 
Awards excluded due to anti-dilutive effect on diluted net income per share
1.4

 
1.0


8. 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 in the United States and Canada as well as the results from our domestic and international franchise businesses. The Maggiano’s segment includes the results of our company-owned Maggiano’s restaurants as well as the results from our domestic franchise business.
Company sales include revenues generated by the operation of company-owned restaurants including gift card redemptions. Franchise and other revenues include Royalties and Franchise fees and other revenues. Franchise fees and other revenues include advertising fees, Maggiano’s banquet service charge income, gift card breakage, digital entertainment revenues, gift card equalization, delivery fee income, franchise and development fees, retail royalty revenues, merchandise income, and gift card discount costs from third-party gift card sales. We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our operating segments are predominantly in the United States. There were no material transactions amongst our operating segments.

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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. Company restaurant expenses include food and beverage costs, restaurant labor costs and restaurant expenses, including advertising expenses. The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
 
Thirteen Week Period Ended September 25, 2019
 
Chili’s(1)
 
Maggiano’s
 
Other
 
Consolidated
Company sales
$
677.5

 
$
86.4

 
$

 
$
763.9

Royalties
11.8

 
0.1

 

 
11.9

Franchise fees and other revenues
6.3

 
3.9

 

 
10.2

Franchise and other revenues
18.1

 
4.0

 

 
22.1

Total revenues
695.6

 
90.4

 

 
786.0

 
 
 
 
 
 
 
 
Company restaurant expenses(2)
596.3

 
83.1

 
0.2

 
679.6

Depreciation and amortization
30.7

 
4.0

 
3.4

 
38.1

General and administrative
9.1

 
1.7

 
27.2

 
38.0

Other (gains) and charges
(1.6
)
 
0.1

 
0.6

 
(0.9
)
Total operating costs and expenses
634.5

 
88.9

 
31.4

 
754.8

Operating income (loss)
61.1

 
1.5

 
(31.4
)
 
31.2

Interest expenses
0.9

 

 
14.0

 
14.9

Other, net
(0.2
)
 

 
(0.3
)
 
(0.5
)
Income (loss) before provision for income taxes
$
60.4

 
$
1.5

 
$
(45.1
)
 
$
16.8

 
 
 
 
 
 
 
 
Segment assets(3)
$
2,142.3

 
$
251.8

 
$
96.9

 
$
2,491.0

Segment goodwill
151.3

 
38.4

 

 
189.7

Payments for property and equipment
16.1

 
2.3

 
2.1

 
20.5

 
Thirteen Week Period Ended September 26, 2018
 
Chili’s
 
Maggiano’s
 
Other
 
Consolidated
Company sales
$
640.3

 
$
88.0

 
$

 
$
728.3

Royalties
12.9

 

 

 
12.9

Franchise fees and other revenues
8.6

 
4.0

 

 
12.6

Franchise and other revenues
21.5

 
4.0

 

 
25.5

Total revenues
661.8

 
92.0

 

 
753.8

 
 
 
 
 
 
 
 
Company restaurant expenses(2)
563.1

 
83.9

 
0.2

 
647.2

Depreciation and amortization
30.5

 
4.0

 
2.5

 
37.0

General and administrative
8.8

 
1.7

 
23.3

 
33.8

Other (gains) and charges(4)
(12.3
)
 

 
1.2

 
(11.1
)
Total operating costs and expenses
590.1

 
89.6

 
27.2

 
706.9

Operating income (loss)
71.7

 
2.4

 
(27.2
)
 
46.9

Interest expenses
1.0

 
0.1

 
14.5

 
15.6

Other, net

 

 
(0.8
)
 
(0.8
)
Income (loss) before provision for income taxes
$
70.7

 
$
2.3

 
$
(40.9
)
 
$
32.1

 
 
 
 
 
 
 
 
Payments for property and equipment
$
22.7

 
$
3.2

 
$
5.3

 
$
31.2



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(1) 
Chili’s segment information for fiscal 2020 includes the results of operations and preliminary fair value of assets related to the 116 restaurants acquired effective September 5, 2019. Refer to Note 2 - Chili’s Restaurant Acquisition for further details.
(2) 
Company restaurant expenses include Cost of sales, Restaurant labor, and Restaurant expenses including advertising expenses.
(3) 
Segment assets for fiscal 2020 are presented in accordance with the newly adopted ASC 842 that now include Operating lease assets, refer to Note 3 - Leases for further details.
(4) 
During the thirteen week period ended September 26, 2018, we completed sale leaseback transactions of 141 company-owned Chili’s restaurant properties. Chili’s recognized a $13.3 million gain on the sale, including a certain portion of the deferred gain, net of related transaction costs incurred in Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited). Refer to Note 3 - Leases for further details.
9. DEBT
Long-term debt consists of the following:
 
September 25,
2019
 
June 26,
2019
Revolving credit facility
$
595.3

 
$
523.3

5.000% notes
350.0

 
350.0

3.875% notes
300.0

 
300.0

Finance lease obligations (refer to Note 3 - Leases)
83.8

 
48.4

Total long-term debt
1,329.1

 
1,221.7

Less unamortized debt issuance costs and discounts
(5.1
)
 
(5.4
)
Total long-term debt and finance leases, less unamortized debt issuance costs and discounts
1,324.0

 
1,216.3

Less current installments of long-term debt and finance leases(1)
(10.2
)
 
(9.7
)
Long-term debt and finance leases, less current installments
$
1,313.8

 
$
1,206.6


(1) 
Current installments of long-term debt and finance leases consist only of finance leases for the periods presented and are recorded within Other accrued liabilities in the Consolidated Balance Sheets (Unaudited). Refer to Note 10 - Accrued and Other Liabilities for further details.
Revolving Credit Facility
During the thirteen week period ended September 25, 2019, net borrowings of $72.0 million were drawn on the $1.0 billion revolving credit facility primarily to fund the acquisition of Chili’s restaurants (refer to Note 2 - Chili’s Restaurant Acquisition). As of September 25, 2019, $404.7 million of credit was available under the revolving credit facility.
Under the amended $1.0 billion revolving credit facility, the maturity date for $890.0 million of the facility was extended from March 12, 2020 to September 12, 2021 and the remaining $110.0 million remains due on March 12, 2020. The amended 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 2.000%. 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 1.700%. Effective October 2018, we resumed paying interest at a rate of LIBOR plus 1.375% for a total of 3.429%. One month LIBOR at September 25, 2019 was approximately 2.054%. 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.

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5.000% Notes
In fiscal 2017, we completed the private offering of $350.0 million of our 5.000% senior notes due October 2024 (the “2024 Notes”). We received proceeds of $350.0 million and utilized the proceeds to fund a $300.0 million accelerated share repurchase agreement and to repay $50.0 million on the amended $1.0 billion revolving credit facility. The notes require semi-annual interest payments which began on April 1, 2017.
3.875% Notes
In fiscal 2013, we issued $300.0 million of 3.875% notes due in May 2023. The notes require semi-annual interest payments which began in the second quarter of fiscal 2014.
Financial Covenants
Our debt agreements contain various financial covenants that, among other things, require the maintenance of certain leverage and fixed charge coverage ratios. As of September 25, 2019, we are in compliance with all financial covenants.
10. ACCRUED AND OTHER LIABILITIES
Other accrued liabilities consist of the following:
 
September 25,
2019
 
June 26,
2019
Property tax
$
25.1

 
$
17.3

Insurance
19.5

 
17.9

Dividends(1)
15.5

 
14.9

Sales tax
15.1

 
14.6

Interest
14.9

 
7.5

Current installments of finance leases
10.2