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 income.

                                               Thirteen Week                              Twenty-Six Week
                                               Periods Ended                               Periods Ended
                                    December 26,          December 28,          December 26,          December 28,
                                        2012                  2011                  2012                  2011
Revenues:
Company sales                                97.0 %                97.0 %                97.1 %                97.0 %
Franchise and other revenues                  3.0 %                 3.0 %                 2.9 %                 3.0 %

Total revenues                              100.0 %               100.0 %               100.0 %               100.0 %

Operating Costs and Expenses:
Company restaurants
Cost of sales (1)                            27.6 %                28.0 %                27.7 %                28.0 %
Restaurant labor (1)                         32.5 %                32.4 %                32.7 %                32.8 %
Restaurant expense (1)                       24.2 %                24.2 %                24.4 %                24.9 %

Company restaurant expenses (1)              84.3 %                84.6 %                84.8 %                85.7 %
Depreciation and amortization                 4.8 %                 4.6 %                 4.8 %                 4.6 %
General and administrative                    4.5 %                 4.6 %                 5.0 %                 4.7 %
Other gains and charges                       0.0 %                 0.6 %                 0.0 %                 0.4 %

Total operating costs and
expenses                                     91.1 %                91.8 %                92.1 %                92.9 %

Operating income                              8.9 %                 8.2 %                 7.9 %                 7.1 %
Interest expense                              1.0 %                 0.9 %                 1.0 %                 1.0 %
Other, net                                   (0.1 )%               (0.1 )%               (0.1 )%               (0.1 )%

Income before provision for
income taxes                                  8.0 %                 7.4 %                 7.0 %                 6.2 %
Provision for income taxes                    2.6 %                 2.2 %                 2.3 %                 1.8 %

Net income                                    5.4 %                 5.2 %                 4.7 %                 4.4 %

(1) As a percentage of company sales.

The following table details the number of restaurant openings during the second quarter, year-to-date, total restaurants open at the end of the second quarter, and total projected openings in fiscal 2013.

                                             Second                                         Total Open at
                                             Quarter               Year-to-Date             End Of Second         Projected
                                            Openings                 Openings                  Quarter            Openings
                                       Fiscal      Fiscal      Fiscal        Fiscal      Fiscal      Fiscal        Fiscal
                                        2013        2012        2013          2012        2013        2012          2013
Chili's:
Company-owned                                2           0           2             0         823         821               0
Domestic Franchised                          1           1           2             1         452         467               2

Total                                        3           1           4             1       1,275       1,288               2
Maggiano's:                                  0           0           0             0          44          44               0

International: (a)
Company-owned                                0           0           0             0           0           0               0
Franchised                                  10           4          19            11         274         242           30-35

Total                                       10           4          19            11         274         242           30-35
Grand Total                                 13           5          23            12       1,593       1,574           32-37

(a) At the end of the second quarter of fiscal 2013, international franchised restaurants included 274 Chili's restaurants.

At December 26, 2012, we owned the land and buildings for 189 of the 867 company-owned restaurants. The net book values of the land and buildings associated with these restaurants totaled $141.1 million and $120.0 million, respectively.

GENERAL

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand Brinker International, our operations, and our current operating environment. For an understanding of the significant factors that influenced our performance during the quarters ended December 26, 2012 and December 28, 2011, the MD&A should be read in conjunction with the consolidated financial statements and related notes included in this quarterly report.

OVERVIEW

We are committed to strategies and initiatives that are centered on long-term sales and profit growth, enhancing the guest experience and team member engagement. These strategies 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.

Key economic indicators such as total employment, consumer confidence and spending levels were somewhat neutral this quarter; however, soft industry sales late in the quarter suggests that consumers remain cautious. This economic environment has continued to challenge the industry; however, we believe that our strategies and initiatives will provide a solid foundation for earnings growth going forward and are appropriate for all operating conditions.

Our current initiatives are designed to drive profitable sales growth and improve the guest experience in our restaurants. We are investing in new kitchen equipment, operations software and remodel initiatives as the core pieces of our current strategy. We completed the installation of new kitchen equipment in all of our company-owned Chili's restaurants this quarter. The upgraded equipment will consistently provide a high quality product at a faster pace, enhancing both profitability and guest satisfaction. Based on the installations completed earlier in the rollout and our robust testing process, we believe the usability and efficiency of the equipment will allow for significant labor savings over time. Also, the flexibility of our equipment will allow for the development of new menu categories that we believe will result in increased sales and guest traffic.

All company-owned Chili's restaurants are now operating with an integrated point of sale and back office software system that was designed to enhance the efficiency of our restaurant operations and reporting capabilities. Timely and more detailed reporting in our restaurants will result in improved inventory and labor management while reducing software maintenance costs. Additionally, our management team will have timely visibility into operating performance and trends which will enhance decision making and improve profitability. We expect to begin the system installation in Maggiano's restaurants by the end of the calendar year.

We have remodeled a significant number of our company-owned Chili's restaurants and plan to continue the initiative at a brisk pace. The remodel design is intended to revitalize Chili's in a way which enhances the relevance of the brand and raises guest expectations regarding the quality of the experience. The design is contemporary while staying true to the Chili's brand heritage. We believe that these updates will positively impact the guest perception of the restaurant in both the dining room and bar areas and provide a long-term positive impact to traffic and sales.

We continually evaluate our menu at Chili's to improve quality, freshness and value by introducing new items and improving existing favorites. Recently, we introduced some additional lighter choices to the menu with the Mango Chile Chicken and Mango Chile Tilapia entrees. We also expanded the dessert and appetizer selection with a new freshly baked skillet cookie and soft pretzel bread sticks. Our two for twenty and lunch combo offerings have been refreshed with new menu items including Southwestern Mac 'n' Cheese with Grilled Chicken that reflect our southwest positioning. Our new steak selection introduced last year also continues to have a high guest preference and has been enhanced with steak topper add-ons. An emphasis on new products, training and our reimaged bar also resulted in improved bar sales over last year. We believe these changes as well as our ability to develop new and innovative items will further enhance sales and drive incremental traffic. We are committed to offering a compelling everyday menu that provides items our guests prefer at a solid value.

Improvements at Chili's will have the most significant impact on the business; however, our results will also benefit through additional contributions from Maggiano's and our global business. Maggiano's continues to deliver sales growth and strong margin performance. Maggiano's offers a compelling menu and great value with Classic Pasta and Marco's Meal. Kitchen efficiency and inventory controls continue to enhance profitability and strengthen the business model.

Global expansion allows further diversification which will enable us to build strength in a variety of markets and economic conditions. This expansion will come through franchise relationships, joint venture arrangements and equity investments, taking advantage of demographic and eating trends which we believe will accelerate in the international market over the next decade. Our growing franchise operations both domestically and internationally enable us to improve margins as royalty payments impact the bottom line.

The casual dining industry is a competitive business which is sensitive to changes in economic conditions, trends in lifestyles and fluctuating costs. Our priority remains increasing profitable growth over time in all operating environments. We have designed both operational and financial strategies to achieve this goal and in our opinion, improve shareholder value. Success with our initiatives to improve sales trends and operational effectiveness will enhance the profitability of our restaurants and strengthen our competitive position. The effective execution of our financial strategies, including repurchasing shares of our common stock, payment of quarterly dividends, disciplined use of capital and efficient management of operating expenses, will further enhance our profitability and return value to our shareholders. We remain confident in the financial health of our company, the long-term prospects of the industry as well as our ability to perform effectively in a competitive marketplace and a variety of economic environments.

REVENUES

Beginning in fiscal 2013, revenues are presented in two separate captions on the consolidated statements of income in an effort to provide more clarity around company-owned restaurant revenue and operating expense trends. Company sales includes revenues generated by the operation of company-owned restaurants and gift card redemptions. Franchise and other revenues includes royalties, development fees and franchise fees, Maggiano's banquet service charge income, and certain gift card activity (breakage and discounts). Prior year revenue amounts have been reclassified to conform to the fiscal 2013 presentation. These reclassifications have no effect on total revenue or net income previously reported.

Revenues for the second quarter of fiscal 2013 increased to $689.8 million, a 1.2% increase from the $681.9 million generated for the same quarter of fiscal 2012. Revenues for the twenty-six week period ended December 26, 2012 were $1,373.3 million, a 1.7% increase from the $1,350.3 million generated for the same period in fiscal 2012. The increase in revenue was primarily attributable to an increase in comparable restaurant sales as follows:

                                   Thirteen Week Period Ended December 26, 2012
                      Comparable         Price           Mix
                        Sales           Increase        Shift       Traffic         Capacity
   Company-owned              0.9 %           1.8 %        1.2 %        (2.1 )%           0.0 %
   Chili's                    1.0 %           1.6 %        1.3 %        (1.9 )%           0.0 %
   Maggiano's                 0.6 %           2.3 %        0.7 %        (2.4 )%           0.0 %
   Franchise (1)              2.4 %
   Domestic                   2.2 %
   International              2.7 %
   System-wide (2)            1.5 %

                                   Thirteen Week Period Ended December 28, 2011
                      Comparable         Price           Mix
                        Sales           Increase        Shift        Traffic        Capacity
   Company-owned              1.7 %           1.2 %       (0.5 )%         1.0 %          (0.5 )%
   Chili's                    1.4 %           1.1 %       (0.8 )%         1.1 %          (0.5 )%
   Maggiano's                 2.8 %           1.8 %        0.4 %          0.6 %           0.0 %
   Franchise (1)              2.6 %
   Domestic                   1.7 %
   International              4.8 %
   System-wide (2)            2.0 %

                                 Twenty-Six Week Period Ended December 26, 2012
                     Comparable          Price           Mix
                       Sales            Increase        Shift       Traffic         Capacity
  Company-owned              1.8 %            1.7 %        1.0 %        (0.9 )%          (0.1 )%
  Chili's                    1.9 %            1.5 %        1.0 %        (0.6 )%          (0.1 )%
  Maggiano's                 0.7 %            2.5 %        0.7 %        (2.5 )%           0.0 %
  Franchise (1)              2.6 %
  Domestic                   2.8 %
  International              2.1 %
  System-wide (2)            2.1 %

                                 Twenty-Six Week Period Ended December 28, 2011
                     Comparable          Price           Mix
                       Sales            Increase        Shift        Traffic        Capacity
  Company-owned              1.8 %            1.3 %       (0.9 )%         1.4 %          (0.4 )%
  Chili's                    1.6 %            1.2 %       (1.1 )%         1.5 %          (0.4 )%
  Maggiano's                 3.1 %            1.9 %        0.0 %          1.2 %           0.0 %
  Franchise (1)              2.3 %
  Domestic                   1.0 %
  International              6.1 %
  System-wide (2)            2.0 %

(1) Revenues generated by franchisees are not included in revenues on the consolidated statements of income; however, we generate royalty revenue and advertising fees based on franchise sales, where applicable. We believe including franchise comparable restaurant sales provides investors information regarding brand performance that is relevant to current operations and may impact future restaurant development.

(2) 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 franchisee operated restaurants.

Chili's revenues increased 1.2% to $563.3 million in the second quarter of fiscal 2013 from $556.5 million in the prior year. For the year-to-date period, Chili's revenues increased 2.0% to $1,144.6 million from $1,122.6 million in fiscal 2012. The increases were primarily driven by increased menu pricing and favorable mix shift.

Maggiano's revenues increased 0.6% to $105.8 million in the second quarter of fiscal 2013 from $105.2 million in the same quarter of fiscal 2012. For the year-to-date period, Maggiano's revenues increased 0.7% to $188.2 million from $186.9 million in fiscal 2012. The increases were primarily driven by increased menu pricing and favorable mix shift.

Franchise and other revenues increased 2.0% to $20.6 million in the second quarter of fiscal 2013 compared to $20.2 million in the prior year driven primarily by an increase in royalty revenue. For the year-to-date period, franchise and other revenues decreased 0.7% to $40.5 million compared to $40.8 million in fiscal 2012 primarily due to lower gift card breakage income due to increased gift card usage trends, partially offset by an increase in royalty revenues related to the net addition of 17 franchised restaurants since the second quarter of fiscal 2012. Our franchisees generated approximately $401 million and $800 million in sales for the second quarter and year-to-date period of fiscal 2013.

COSTS AND EXPENSES

Cost of sales, as a percent of company sales, decreased to 27.6% for the second quarter and 27.7% for the year-to-date period of fiscal 2013 from 28.0% for the respective prior year periods. Cost of sales was favorably impacted in the current year by increased menu pricing, favorable commodity pricing on produce, poultry and dairy and decreased commodity usage at Maggiano's from efforts to reduce waste. These changes were partially offset by unfavorable commodity pricing and product mix related to beef and pork.

Restaurant labor, as a percent of company sales, increased to 32.5% for the second quarter from 32.4% in the prior year due to increased employee health

insurance claims and increased overtime incurred to support the installation of new kitchen equipment, partially offset by sales leverage related to higher revenue and improved labor productivity from the installation of the equipment. Restaurant labor, as a percent of company sales, decreased to 32.7% for the year-to-date period of fiscal 2013 from 32.8% in the prior year. The year-to-date period was positively impacted by sales leverage and improved labor productivity, partially offset by increased overtime incurred to support the installation of new kitchen equipment.

Restaurant expenses, as a percent of company sales, remained flat at 24.2% for the second quarter of fiscal 2013 as compared to the prior year. For the year-to-date period, restaurant expenses, as a percent of company sales, decreased to 24.4% in the current year from 24.9% in the prior year. The decrease was primarily driven by lower repair and maintenance expenses, utilities expenses and credit card fees, as well as sales leverage on fixed costs related to higher revenue, partially offset by higher workers' compensation insurance expenses.

Depreciation and amortization increased $1.8 million for the second quarter of fiscal 2013 and $3.3 million for the year-to-date period of fiscal 2013 compared to the same periods of the prior year primarily due to investments in existing restaurants and asset replacements, partially offset by an increase in fully depreciated assets.

General and administrative expenses remained flat for the second quarter of fiscal 2013 as compared to the prior year. General and administrative expenses increased $4.3 million for the year-to-date period of fiscal 2013 as compared to the prior year primarily due to an increase in stock-based and other compensation.

Other gains and charges in fiscal 2013 include charges of $0.7 million related to the impairment of long-lived assets held for use associated primarily with one underperforming restaurant. Additionally, we incurred $1.4 million in lease termination charges and $1.0 million related to long-lived asset impairments. The charges were primarily related to restaurants closed in prior years. We also recorded net year-to-date gains of $2.4 million primarily related to land sales.

Other gains and charges in fiscal 2012 include charges of $1.1 million related to the impairment of long-lived assets held for use associated with underperforming restaurants. Additionally, we incurred $2.4 million in lease termination charges associated with restaurants closed in prior periods and $0.4 million related to long-lived asset impairments resulting from closures. We also recorded $2.5 million in charges related to the pending settlement of a class action lawsuit, partially offset by gains of $1.3 million primarily related to land sales.

Interest expense increased to $7.1 million and $14.0 million for the second quarter and year-to-date period of fiscal 2013, respectively, compared to $6.5 million and $13.6 million for the same prior year periods resulting from higher borrowing balances.

INCOME TAXES

The effective income tax rate increased to 32.7% and 32.0% for the second quarter and year-to-date periods of fiscal 2013 compared to 29.0% and 29.3% in the prior year primarily due to increased earnings and the temporary expiration of employment tax credits in the current year.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Cash Flow from Operating Activities

During the first six months of fiscal 2013, net cash flow provided by operating activities was $131.3 million compared to $114.2 million in the prior year. The increase was driven by an increase in earnings in the current year, partially offset by changes in working capital during the first six months of fiscal 2013.

The working capital deficit decreased to $168.8 million at December 26, 2012 from $206.9 million at June 27, 2012 primarily due to an increase in accounts receivable due to third party gift card sales during the holiday season and timing of operational payments, partially offset by the seasonal increase in the gift card liability and increased income taxes payable in the first six months of fiscal 2013.

Cash Flow from Investing Activities



                                                              Twenty-Six Week Periods Ended
                                                           December 26,            December 28,
                                                               2012                    2011
Net cash used in investing activities (in thousands):

Payments for property and equipment                       $      (69,752 )        $      (53,475 )
Proceeds from sale of assets                                       5,335                   4,279
Investment in equity method investee                                   0                    (912 )

                                                          $      (64,417 )        $      (50,108 )

Net cash used in investing activities for the first six months of fiscal 2013 increased to approximately $64.4 million compared to $50.1 million in the prior year. Capital expenditures increased to $69.8 million for the first six months of fiscal 2013 compared to $53.5 million for the prior year driven primarily by investments in the ongoing Chili's reimage program, new equipment related to our kitchen retrofit initiative and purchases of replacement restaurant furniture and equipment. We estimate that our capital expenditures during fiscal 2013 will be approximately $130 million to $140 million and will be funded entirely by cash from operations.

Cash Flow from Financing Activities



                                                             Twenty-Six Week Periods Ended
                                                          December 26,           December 28,
                                                              2012                   2011
Net cash used in financing activities (in thousands):

Purchases of treasury stock                              $      (131,445 )      $     (125,638 )
Borrowings on revolving credit facility                          110,000                     0
Payments of dividends                                            (27,677 )             (25,073 )
Proceeds from issuances of treasury stock                         22,515                16,649
Payments on long-term debt                                       (13,190 )              (5,625 )
Excess tax benefits from stock based compensation                  6,939                   792
Proceeds from issuance of long-term debt                               0                70,000
Other                                                                  0                (1,620 )

                                                         $       (32,858 )      $      (70,515 )

Net cash used in financing activities for the first six months of fiscal 2013 decreased to approximately $32.9 million compared to $70.5 million in the prior year primarily due to borrowing on the credit facility and increased proceeds from issuances of treasury stock related to stock option exercises, partially offset by increased repayments on long-term debt and spending on share repurchases.

In the first six months of fiscal 2013, $110 million was drawn from the revolver primarily to fund share repurchases, none of which was repaid by the end of the quarter. As of December 26, 2012, we had $100 million of credit available under the revolver.

The term loan and revolving credit facility bear 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 2.50%. Based on our current credit rating, we are paying interest at a rate of LIBOR plus 1.63%. One month LIBOR at December 26, 2012 was approximately 0.21%. As of December 26, 2012, we were in compliance with all financial debt covenants.

As of December 26, 2012, our credit rating by Standard and Poor's ("S&P") was BBB- (investment grade) with a stable outlook. Our corporate family rating by Moody's was Ba1 (non-investment grade) and our senior unsecured rating was Ba2 (non-investment grade) with a stable outlook. Our goal is to retain our investment grade rating from S&P and ultimately regain our investment grade rating from Moody's.

We repurchased approximately 1.5 million shares of our common stock for $45.1 million during the second quarter of fiscal 2013 and a total of 4.0 million . . .