The following table sets forth selected operating data as a percentage of total revenues for the periods indicated. All information is derived from the accompanying consolidated statements of income.

                                            Thirteen Week Periods Ended
                                           September 23,   September 24,
                                               2009            2008

Revenues                                          100.0%          100.0%
Operating Costs and Expenses:
Cost of sales                                      28.2%           28.4%
Restaurant expenses                                58.5%           58.8%
Depreciation and amortization                       5.0%            4.2%
General and administrative                          4.6%            4.0%
Other gains and charges                             0.4%            0.5%
Total operating costs and expenses                 96.7%           95.9%

Operating income                                    3.3%            4.1%

Interest expense                                    0.9%            0.9%
Other, net                                        (0.3)%          (0.1)%

Income before provision for income taxes            2.7%            3.3%
Provision for income taxes                          0.7%            0.9%

Net income                                          2.0%            2.4%

The following table details the number of restaurant openings during the first quarter, total restaurants open at the end of the first quarter, and total projected openings in fiscal 2010 (excluding Macaroni Grill).

                       First Quarter     Total Open at End     Projected
                         Openings         Of First Quarter     Openings
                      Fiscal   Fiscal    Fiscal      Fiscal     Fiscal
                       2010     2009      2010        2009       2010
Chili's:
Company-owned              -        7        857         894           -
Domestic Franchised        6       10        439         410       13-16
Total                      6       17      1,296       1,304       13-16

On The Border:
Company-owned              -        -        122         131           1
Domestic Franchised        1        3         31          33         1-3
Total                      1        3        153         164         2-4

Maggiano's                 -        -         44          42           1

International: (a)
Company-owned              -        1          -           6           -
Franchised                 5       10        206         169       30-35
Total                      5       11        206         175       30-35

Grand Total               12       31      1,699       1,685       46-56

At September 23, 2009, we owned the land and buildings for 224 of the 1,023 company-owned restaurants. The net book values of the land and buildings associated with these restaurants totaled $178.2 million and $178.3 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 September 23, 2009 and September 24, 2008, the MD&A should be read in conjunction with the consolidated financial statements and related notes included in this quarterly report.

OVERVIEW

We are principally engaged in the ownership, operation, development, and franchising of the Chili's Grill & Bar ("Chili's"), On The Border Mexican Grill & Cantina ("On The Border") and Maggiano's Little Italy ("Maggiano's") restaurant brands. At September 23, 2009, we owned, operated, or franchised 1,699 restaurants. We sold Romano's Macaroni Grill ("Macaroni Grill") to Mac Acquisition LLC, an affiliate of San Francisco-based Golden Gate Capital, in December 2008 and we currently hold an 18.2% ownership interest in the new entity.

Our results for the first quarter of fiscal 2010 reflect positive progress toward our goal of driving profitable growth over the long term. The economic environment continues to challenge the casual dining industry and its customers; however, we continue to take actions that will strengthen our business model and enhance our ability to provide strong results in all operating environments. We are focused on initiatives that will improve our products and increase efficiency while maintaining our position as an industry leader. We believe that economic factors will continue to negatively impact consumer confidence and put pressure on spending. Negative traffic trends in the industry indicate that casual dining customers are limiting discretionary spending by reducing the frequency of their visits to our restaurants or scaling back on check totals. Despite these challenges we have experienced positive results from our short-term initiatives. We will continually evaluate how we manage the business and make necessary changes in response to competition and the economic factors affecting the business.

Our goal is to take actions that will enable us to strengthen the balance sheet and improve operating profit. We are exhibiting discipline in our capital allocation and are taking steps to create sustainable margin improvements through cost controls and operational efficiencies. These steps will help maintain the health of our balance sheet and will provide the stable financial base needed to maintain our business through a depressed operating environment. Additionally, we are stimulating sales growth through promotional activities that provide an excellent value to our guests. These promotions provide a positive impact to sales; however, we will continue to focus our efforts on improvements that provide an opportunity for a long-term sustainable impact to the business. We are improving existing menu items and creating new offerings that we believe will drive sales and profit growth. We are achieving profit improvements through a disciplined approach to operations, including effective management of food costs, labor productivity and fixed costs. Our emphasis on the operations of our existing restaurants has resulted in lower turnover which has positively impacted labor cost and efficiency. We have taken steps to solidify our cash flows to provide the necessary flexibility to address current challenges and provide necessary short-term liquidity. Company-owned new restaurant development in fiscal 2010 is minimal; however, we will continue development under our international joint venture arrangement. Enhanced free cash flows resulting from our financial discipline will allow us to reduce our debt levels and will provide flexibility for further debt reductions.

We are committed to strategies and initiatives that are centered on sales and profit growth, enhanced employee engagement and improving the guest experience. Our priority is to strengthen our brands and build on the long-term health of the company by differentiating our brands from the competition, reducing the costs

associated with managing our restaurants and establishing a strong presence in key markets around the world. However, we will monitor the results closely as well as the current business environment in order to pace the implementation of our initiatives appropriately.

We strongly believe the investments we are making in our current initiatives will strengthen our brands and allow us to improve our competitive position and deliver profitable growth over the long term for our shareholders. For example, we believe that the unique and delicious food and signature drinks; the new flavors and offerings we continue to create at each of our brands; and the warm, welcoming and revitalized atmospheres will give our guests new reasons to dine with us more often. Another top area of focus remains creating a culture of hospitality that will differentiate our brands from all others in the industry.
We are investing in team member training at all levels that will empower our team to enhance the guest experience. We believe that superior performance in this area will provide guests a reason to make our brands their preferred choice when dining out. We have completed the combination of the Chili's and On the Border leadership teams. This change has streamlined decision making, enhanced sharing of best practices and has leveraged our talent across the portfolio. We believe this structure will further enhance our focus on actions that will improve the guest experience. And, with growing economic pressures in the United States and globally, international expansion allows further diversification of our portfolio, enabling us to build strength in a variety of markets and economic conditions. Our growth will be driven by cultivating relationships with franchisees and joint venture partners. Our growing percentage of 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 top priority remains increasing profitable traffic over time. We believe that this focus, combined with discipline around the use of capital and efficient management of operating expenses, will enable us to maintain our position as an industry leader. We remain confident in the financial health of our company, the long-term prospects of the industry as well as in our ability to perform effectively in a competitive marketplace and a variety of economic environments.

REVENUES

Revenues for the first quarter of fiscal 2010 decreased to $778.1 million, a 21.0% decrease from the $984.4 million generated for the same quarter of fiscal 2009. The decrease in revenue was primarily attributable to a decrease in comparable restaurant sales across all brands as well as net declines in capacity as follows:

                           Thirteen Week Period Ended September 23, 2009
                         Comparable       Price
                           Sales         Increase      Mix Shift    Capacity

Brinker International         (6.0)%          1.8%         (2.5)%    (18.6)%

Chili's                       (6.0)%          1.9%         (2.4)%     (3.7)%

On The Border                 (5.1)%          2.2%         (4.1)%     (7.4)%

Maggiano's                    (6.6)%          0.9%         (2.0)%      4.8%

                           Thirteen Week Period Ended September 24, 2008
                         Comparable       Price
                           Sales         Increase      Mix Shift    Capacity

Brinker International         (4.0)%          3.2%         (1.0)%     (4.1)%

Chili's                       (3.0)%          3.3%         (0.8)%     (3.4)%

On The Border                 (3.3)%          4.0%         (0.7)%      0.6%

Maggiano's                    (3.3)%          2.4%         (2.3)%      2.4%

Macaroni Grill                (9.0)%          2.9%         (1.2)%    (11.2)%

Comparable restaurant sales for the first quarter of fiscal 2010 decreased 6.0% compared to the same quarter of the prior year. The decrease in comparable restaurant sales resulted from a decline in customer traffic and unfavorable product mix shifts across all brands, partially offset by an increase in menu prices at all brands.

Our capacity decreased 18.6% for the first quarter of fiscal 2010 (as measured by average-weighted sales weeks) compared to the same quarter of the prior year. The reduction in capacity is primarily due to the sale of 198 restaurants (189 of which were Macaroni Grills) and 49 restaurant closures (three of which were Macaroni Grills) since the first quarter of fiscal 2009, partially offset by the development of new company-owned restaurants. Including the impact of Macaroni Grill and restaurant sales to franchisees, we experienced a net decrease of 243 company-owned restaurants since September 24, 2008.

Royalty revenues from franchisees decreased approximately 7.2% to $15.4 million in the first quarter of fiscal 2010 compared to $16.6 million in the prior year. The decrease is primarily due to the sale of Macaroni Grill.

COSTS AND EXPENSES

Cost of sales, as a percent of revenues, decreased to 28.2% for the first quarter of fiscal 2010 from 28.4% in the prior year. Cost of sales was positively impacted in the current quarter by menu item changes and menu price increases, partially offset by the impact of promotions and unfavorable commodity price changes primarily in dairy, chicken and beef.

Restaurant expenses, as a percent of revenues, decreased to 58.5% for the first quarter of fiscal 2010 as compared to 58.8% in the same period of the prior year. The decrease was primarily driven by lower utility and pre-opening expenses, partially offset by increased restaurant labor costs.

Depreciation and amortization decreased $2.3 million for the first quarter of fiscal 2010 as compared to the same period of fiscal 2009 primarily driven by fully depreciated assets and restaurant closures. These decreases were partially offset by an increase in depreciation due to asset replacements and investments in existing restaurants.

General and administrative expenses decreased $3.8 million, or 9.7%, for the first quarter of fiscal 2010 as compared to the same period of fiscal 2009. The decrease is primarily due to reduced salary expense from lower headcount driven by organizational changes, the sale of Macaroni Grill and income related to transitional services provided to Macaroni Grill that offset the internal cost of providing the services, partially offset by increased insurance expense.

In the first quarter of fiscal 2010, we recorded $2.0 million in lease termination charges related to restaurants closed in prior years and a $0.5 million charge for severance and other benefits resulting from organizational changes initiated in fiscal 2009. In the first quarter of fiscal 2009, we recorded $2.0 million in lease termination charges, a $1.7 million charge related to uninsured hurricane damage and a $1.3 million charge for expenses associated with the sale of Macaroni Grill.

Interest expense was $6.9 million for the first quarter of fiscal 2010 compared to $9.5 million for the first quarter of the prior year. The decrease in interest expense is primarily due to lower average borrowing balances on our credit facilities and lower interest rates on our debt carrying variable interest rates.

INCOME TAXES

The effective income tax rate decreased to 26.1% for the first quarter of fiscal 2010 compared to 26.5% for the same quarter of last year due to leverage from FICA tip credits.

LIQUIDITY AND CAPITAL RESOURCES

Our primary source of liquidity is cash flows generated from our restaurant operations. We expect our ability to generate solid cash flows from operations to continue into the future. Net cash provided by operating activities for the first quarter of fiscal 2010 increased to approximately $66.4 million compared to $53.4 million in the prior year primarily due to the timing of operational receipts and payments partially offset by a decline in operating profitability driven by the sale of Macaroni Grill, depressed market conditions and restaurant closures.

Capital expenditures consist of ongoing remodel investments, purchases of new and replacement restaurant furniture and equipment, investments in information technology infrastructure, new restaurants under construction, and purchases of land for future restaurant sites. Capital expenditures were $13.5 million for the first quarter of fiscal 2010 compared to $31.3 million for the same quarter of fiscal 2009. The reduction in capital expenditures is primarily due to a decrease in company-owned restaurant development and remodel investments in the first quarter of fiscal 2010 compared to prior year. We estimate that our capital expenditures during fiscal 2010 will be approximately $85 million and will be funded entirely by cash from operations.

The working capital deficit decreased to $6.1 million at September 23, 2009 from $39.7 million at June 24, 2009 primarily due to seasonal variation in sales and related operational expenditures as well as the retention of cash to maximize our liquidity position.

We paid dividends of $11.9 million, or $0.11 per share, to common stock shareholders in September 2009.

The Board of Directors has authorized a total of $2,060.0 million in share repurchases, which 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. As of September 23, 2009, approximately $60 million was available under our share repurchase authorizations. We did not repurchase any common shares under our share repurchase plan during the first quarter of fiscal 2010. We have currently placed a moratorium on share repurchases but, in the future, we may consider additional share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, and planned investment and financing needs.

As of September 23, 2009, we have $250 million available to us under our revolving credit facility and we are in compliance with all financial debt covenants.

In fiscal 2009, Standard and Poor's ("S&P") reaffirmed our debt rating of BBB- (investment grade) with a stable outlook. However, Moody's downgraded our corporate family rating to Ba1 (non-investment grade) and our senior unsecured note rating to Ba2 (non-investment grade) with a stable outlook. Our balance sheet is a primary focus as we have committed to reducing our leverage allowing us to retain the investment grade rating from S&P and ultimately regain our investment grade rating from Moody's. We currently plan to utilize available free cash flow to reduce our debt balance while maintaining sufficient capital to implement our current initiatives. We have curtailed virtually all domestic company-owned new restaurant development in fiscal 2010, placed a moratorium on all share repurchase activity, and kept dividends stable to ensure we maintain adequate cash flow to meet our current obligations and continue to pay down debt.

Our three-year term loan agreement expires in October 2010. Subsequent to the end of the first quarter, we repaid $50.0 million bringing the outstanding balance to $340.0 million. Based on our current credit rating, we are paying interest at a rate of LIBOR plus 0.95% (1.20%). In the event we refinance all or part of the remaining term loan balance at the maturity date, interest rates will be subject to current market conditions and will likely increase.

We believe that our various sources of capital, including 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.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2006, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") Subtopic 820-10, an amendment to ASC 820, "Fair Value Measurements and Disclosures," which clarifies the definition of fair value, describes methods used to appropriately measure fair value, and expands fair value disclosure requirements, but does not change existing guidance as to whether or not an instrument is carried at fair value. For financial assets and liabilities, ASC Subtopic 820-10 is effective for fiscal years beginning after November 15, 2007, which required that we adopt these provisions in fiscal 2009. For nonfinancial assets and liabilities, ASC Subtopic 820-10 is effective for fiscal years beginning after November 15, 2008, which required that we adopt these provisions in the first quarter of fiscal 2010. The adoption of ASC Subtopic 820-10 did not have a material impact on our financial statements.

In December 2007, the FASB issued ASC Topic 805, "Business Combinations." All business combinations will be accounted for by applying the acquisition method. ASC Topic 805 requires most identifiable assets, liabilities, noncontrolling interests, and goodwill acquired in a business combination to be recorded at full fair value. ASC Topic 805 is effective for annual reporting periods beginning on or after December 15, 2008, which required that we adopt these provisions beginning in the first quarter of fiscal 2010 for business combinations occurring on or after the effective date.

In June 2008, the FASB issued ASC Subtopic 260-10, an amendment to ASC 260, "Earnings Per Share," which provides that unvested share-based payment awards that contain nonforfeitable rights to dividends that are paid or unpaid are participating securities and shall be included in the computation of earnings per share based on

the two-class method. The two-class method is an earnings allocation method for computing earnings per share when an entity's capital structure includes either two or more classes of common stock or common stock and participating securities. ASC Subtopic 260-10 is effective for fiscal years beginning after December 15, 2008, which required us to adopt these provisions in the first quarter of fiscal 2010. The adoption of ASC Subtopic 260-10 did not have a material impact on our financial statements.

In June 2009, the FASB issued ASC Topic 105, "Generally Accepted Accounting Principles ("GAAP")," which establishes the FASB ASC as the single official source of authoritative, nongovernmental U.S. GAAP. The ASC did not change GAAP but reorganizes the literature. ASC Topic 105 is effective for interim and annual periods ending after September 15, 2009, which required us to adopt these provisions in the first quarter of fiscal 2010.