<SUBMISSION>
<ACCESSION-NUMBER>0000703351-04-000027
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20040324
<FILING-DATE>20040507
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BRINKER INTERNATIONAL INC
<CIK>0000703351
<ASSIGNED-SIC>5812
<IRS-NUMBER>751914582
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0630
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-10275
<FILM-NUMBER>04787751
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>6820 LBJ FREEWAY
<CITY>DALLAS
<STATE>TX
<ZIP>75240
<PHONE>9729809917
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>6820 LBJ FREEWAY
<CITY>DALLAS
<STATE>TX
<ZIP>75240
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CHILIS INC
<DATE-CHANGED>19910528
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>form10q3q041.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<html>

<head>

<title>FORM 10-Q</title>

</head>

<body link=blue vlink=purple>

<p align=center>UNITED
STATES<br>
&nbsp;</p>

<p align=center>SECURITIES
AND EXCHANGE COMMISSION<br>
&nbsp;</p>

<p align=center>WASHINGTON
D.C. 20549</p>

<p align=center>FORM
10-Q</p>

<p align=center>QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE</p>

<p align=center>SECURITIES
EXCHANGE ACT OF 1934<br>
&nbsp;</p>

<p align=center>For
the Quarterly Period Ended March 24, 2004</p>

<p align=center>Commission
File Number 1-10275<br>
&nbsp;</p>

<p align=center>BRINKER
INTERNATIONAL, INC.</p>

<p align=center>(Exact
name of registrant as specified in its charter)</p>

<p align=center>&nbsp;</p>

<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td width=338 valign=top>
  <p align=center>DELAWARE</p>
  </td>
  <td width=338 valign=top>
  <p align=center>75-1914582</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>
  <p align=center>(State
  or other jurisdiction of</p>
  </td>
  <td width=338 valign=top>
  <p align=center>(I.R.S.
  Employer</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>
  <p align=center>incorporation
  or organization)</p>
  </td>
  <td width=338 valign=top>
  <p align=center>Identification
  No.)</p>
  </td>
 </tr>
</table>

<p align=center>6820
LBJ FREEWAY, DALLAS, TEXAS 75240<br>
(Address
of principal executive offices)<br>
(Zip
Code)</p>

<p align=center>(972)
980-9917<br>
(Registrant's
telephone number, including area code)<br>
&nbsp;</p>

<p>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.</p>

<p>Yes <u>&nbsp;&nbsp;X&nbsp; </u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No <i>_____</i></p>



<p>Indicate by check
mark whether the registrant is an accelerated filer (as defined in Rule 12b-2
of the Exchange Act).</p>

<p>Yes <u>&nbsp;&nbsp;X&nbsp; </u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No <i>_____</i></p>



<p>Number of shares of
common stock of registrant outstanding at March 24, 2004: <u>96,376,432</u></p>

<hr><P Style="page-break-after: always"></P><br clear=all>


<b>BRINKER INTERNATIONAL, INC.&nbsp;</b><h6 align=center><font size="3">INDEX</font></h6>









<table cellspacing=0 cellpadding=0>
 <tr>
  <td width=583 valign=top>
  <p>Part I -
  Financial Information</p>
  </td>
  <td width=94 valign=top>
  <p align="right">Page</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Item 1.&nbsp; Financial Statements</p>
  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consolidated Balance Sheets -</p>
  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; March 24, 2004 (Unaudited) and
  June 25, 2003</p>
  </td>
  <td width=94 valign=top>
  <p align=right>3</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consolidated Statements of Income</p>
  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Unaudited) - Thirteen week and
  thirty-nine week</p>
  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; periods ended March 24, 2004
  and March 26, 2003</p>
  </td>
  <td width=94 valign=top>
  <p align=right>4</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notes to Consolidated</p>
  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Statements (Unaudited)</p>
  </td>
  <td width=94 valign=top>
  <p align=right>6 - 9</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Item 2. Management's Discussion and
  Analysis of</p>
  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Condition and Results of
  Operations</p>
  </td>
  <td width=94 valign=top>
  <p align=right>10 - 15</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Item 3. Quantitative and Qualitative
  Disclosures</p>
  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; About Market Risk</p>
  </td>
  <td width=94 valign=top>
  <p align=right>15</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Item 4. Controls and Procedures</p>
  </td>
  <td width=94 valign=top>
  <p align=right>16</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>Part II - Other
  Information</p>
  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Item 1. Legal Proceedings</p>
  </td>
  <td width=94 valign=top>
  <p align=right>19</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Item 2. Changes in Securities, Use of
  Proceeds</p>
  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; and Issuer Purchases of Equity
  Securities</p>
  </td>
  <td width=94 valign=top>
  <p align=right>19</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Item 6. Exhibits and Reports on Form
  8-K</p>
  </td>
  <td width=94 valign=top>
  <p align=right>19 - 20</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Signatures</p>
  </td>
  <td width=94 valign=top>
  <p align=right>21</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top>

  </td>
  <td width=94 valign=top>

  </td>
 </tr>
</table>



<br clear=all>


<hr><P Style="page-break-after: always"></P>


<p><b>PART I.&nbsp; FINANCIAL INFORMATION<br>
Item 1.&nbsp; FINANCIAL STATEMENTS</b></p>



<table cellspacing=0 cellpadding=0 width=680>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p align=center><b>BRINKER
  INTERNATIONAL, INC.</b></p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p align=center><b>Consolidated
  Balance Sheets</b></p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p align=center><b>(In thousands, except share and per share amounts)</b></p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>

  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p align="left">&nbsp;</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=center><b>March
  24,  <u>2004</u> (Unaudited)</b></p>
  </td>
  <td width=122 valign=top>
  <p align="center"><b>June 25,<br>
  <u>2003</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  &nbsp;</td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>ASSETS</p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>Current
  Assets:</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Cash and cash equivalents</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right>$&nbsp;&nbsp; 94,731 </p>
  </td>
  <td width=122 valign=top>
  <p align=right>$&nbsp;&nbsp; 33,492 </p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Accounts receivable </p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right>31,708</p>
  </td>
  <td width=122 valign=top>
  <p align=right>34,619</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Inventories</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right>24,045</p>
  </td>
  <td width=122 valign=top>
  <p align=right>24,403</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Prepaid expenses and other</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right>&nbsp;&nbsp;&nbsp; 86,052</p>
  </td>
  <td width=122 valign=top>
  <p align=right>&nbsp;&nbsp;&nbsp; 73,686</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Deferred income taxes</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 13,915</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 267</u></p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp;&nbsp; Total current assets </p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right><u>&nbsp;&nbsp; 250,451</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;&nbsp; 166,467</u></p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>Property
  and Equipment, at cost:</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Land</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right>280,431</p>
  </td>
  <td width=122 valign=top>
  <p align=right>269,212</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Buildings and leasehold improvements </p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right>1,320,707</p>
  </td>
  <td width=122 valign=top>
  <p align=right>1,245,546</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Furniture and equipment</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right>644,981</p>
  </td>
  <td width=122 valign=top>
  <p align=right>588,815</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Construction-in-progress</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 54,796</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 71,913</u></p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; &nbsp;</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right>2,300,915</p>
  </td>
  <td width=122 valign=top>
  <p align=right>2,175,486</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Less accumulated depreciation and
  amortization </p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right><u>&nbsp; (772,099</u>)</p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp; (675,914</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp;&nbsp; Net property and equipment </p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right><u>&nbsp;1,528,816</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;1,499,572</u></p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>Other
  Assets:</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Goodwill</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right>158,068</p>
  </td>
  <td width=122 valign=top>
  <p align=right>185,068</p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp; Other</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 94,928</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 92,183</u></p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp;&nbsp; Total other assets</p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right><u>&nbsp;&nbsp; 252,996</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;&nbsp; 277,251</u></p>
  </td>
 </tr>
 <tr>
  <td width=456 valign=top>
  <p>&nbsp;&nbsp; Total assets </p>
  </td>
  <td width=102 colspan=2 valign=top>
  <p align=right><u>$2,032,263</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>$1,943,290</u></p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>

  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>LIABILITIES AND
  SHAREHOLDERS' EQUITY</p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>Current
  Liabilities:</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp; Current installments of long-term debt </p>
  </td>
  <td width=96 valign=top>
  <p align=right>$&nbsp;&nbsp; 17,595</p>
  </td>
  <td width=122 valign=top>
  <p align=right>$&nbsp;&nbsp; 17,629</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp; Accounts payable</p>
  </td>
  <td width=96 valign=top>
  <p align=right>94,283</p>
  </td>
  <td width=122 valign=top>
  <p align=right>108,068</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp; Accrued liabilities</p>
  </td>
  <td width=96 valign=top>
  <p align=right>&nbsp;&nbsp; 202,216</p>
  </td>
  <td width=122 valign=top>
  <p align=right>&nbsp;&nbsp; 176,583</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp; Income taxes payable</p>
  </td>
  <td width=96 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 57,343</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp; 7,931</u></p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp;&nbsp;&nbsp; Total current liabilities</p>
  </td>
  <td width=96 valign=top>
  <p align=right><u>&nbsp;&nbsp; 371,437</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;&nbsp; 310,211</u></p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>Long-term debt, less current
  installments</p>
  </td>
  <td width=96 valign=top>
  <p align=right>355,587</p>
  </td>
  <td width=122 valign=top>
  <p align=right>353,785</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>Deferred
  income taxes</p>
  </td>
  <td width=96 valign=top>
  <p align=right>48,606</p>
  </td>
  <td width=122 valign=top>
  <p align=right>55,096</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>Other
  liabilities</p>
  </td>
  <td width=96 valign=top>
  <p align=right>93,563</p>
  </td>
  <td width=122 valign=top>
  <p align=right>83,948</p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>

  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>Contingencies
  (Note 7) </p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>

  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>Shareholders'
  Equity:</p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>&nbsp; Common stock - 250,000,000 authorized
  shares; $0.10 </p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>&nbsp;&nbsp; par value; 117,499,541 shares issued and </p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>&nbsp;&nbsp; 96,376,432 shares outstanding at March 24,</p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>&nbsp;&nbsp; 2004, and 117,499,541 shares issued and</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp;&nbsp; 97,854,952 shares outstanding at June 25,
  2003</p>
  </td>
  <td width=96 valign=top>
  <p align=right>11,750</p>
  </td>
  <td width=122 valign=top>
  <p align=right>11,750</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp; Additional paid-in capital</p>
  </td>
  <td width=96 valign=top>
  <p align=right>348,635</p>
  </td>
  <td width=122 valign=top>
  <p align=right>344,486</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp; Accumulated other comprehensive income</p>
  </td>
  <td width=96 valign=top>
  <p align=right>675</p>
  </td>
  <td width=122 valign=top>
  <p align=right>609</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp; Retained earnings</p>
  </td>
  <td width=96 valign=top>
  <p align=right><u>&nbsp;1,212,781</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;1,123,337</u></p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp;</p>
  </td>
  <td width=96 valign=top>
  <p align=right>1,573,841</p>
  </td>
  <td width=122 valign=top>
  <p align=right>1,480,182</p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>&nbsp; Less:</p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>
  <p>&nbsp; Treasury stock, at cost (21,123,109 shares
  at March</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  &nbsp;&nbsp; 24, 2004 and 19,644,589 shares at June 25, 2003)</td>
  <td width=96 valign=top>
  <p align="right">(409,013)</td>
  <td width=122 valign=top>
  <p align="right">(337,946)</td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp; Unearned compensation</p>
  </td>
  <td width=96 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; (1,758</u>)</p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; (1,986</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp;&nbsp; Total shareholders' equity </p>
  </td>
  <td width=96 valign=top>
  <p align=right><u>&nbsp;1,163,070</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>&nbsp;1,140,250</u></p>
  </td>
 </tr>
 <tr>
  <td width=462 colspan=2 valign=top>
  <p>&nbsp;&nbsp; Total
  liabilities and shareholders' equity</p>
  </td>
  <td width=96 valign=top>
  <p align=right><u>$2,032,263</u></p>
  </td>
  <td width=122 valign=top>
  <p align=right><u>$1,943,290</u></p>
  </td>
 </tr>
 <tr>
  <td width=680 colspan=4 valign=top>

  <p>See accompanying notes to
  consolidated financial statements.</p>
  </td>
 </tr>
 </table>

<hr><P Style="page-break-after: always"></P>

<br clear=all>




<table border=0 cellspacing=0 cellpadding=0 width=705>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=728 colspan=6 valign=top>
  <p align=center><b>BRINKER
  INTERNATIONAL, INC.</b></p>
  </td>
  <td
  width=1><p>&nbsp;</td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=728 colspan=6 valign=top>
  <p align=center><b>Consolidated
  Statements of Income</b></p>
  </td>
  <td
  width=1><p>&nbsp;</td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=728 colspan=6 valign=top>
  <p align=center><b>(In thousands, except per share amounts)</b></p>
  </td>
  <td
  width=1><p>&nbsp;</td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=728 colspan=6 valign=top>
  <p align=center><b>(Unaudited)</b></p>
  </td>
  <td
  width=1><p>&nbsp;</td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=728 colspan=6 valign=top>

  </td>
  <td
  width=1><p>&nbsp;</td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=700 colspan=7 valign=top>
  <p><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Thirteen
  Week Periods Ended</u>&nbsp;&nbsp; <u>Thirty-Nine
  Week Periods Ended</u></b></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>

  </td>
  <td width=117 valign=top>
  <p align=center><b>March 24,</b></p>
  </td>
  <td width=110 valign=top>
  <p align=center><b>March 26,</b></p>
  </td>
  <td width=109 valign=top>
  <p align=center><b>March 24,</b></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=center><b>March 26,</b></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>

  </td>
  <td width=117 valign=top>
  <p align=center><b>&nbsp; <u>2004</u></b></p>
  </td>
  <td width=110 valign=top>
  <p align=center><b>&nbsp;&nbsp;<u>2003</u></b></p>
  </td>
  <td width=109 valign=top>
  <p align=center><b>&nbsp;<u>2004</u></b></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=center><b>&nbsp;<u>2003</u></b></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>

  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Revenues</p>
  </td>
  <td width=117 valign=top>
  <p align=right><u>$
  931,922</u></p>
  </td>
  <td width=110 valign=top>
  <p align=right><u>$
  840,776</u></p>
  </td>
  <td width=109 valign=top>
  <p align=right><u>$
  2,689,310</u></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right><u>$
  2,409,178</u></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Operating
  Costs and Expenses:</p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; Cost of sales </p>
  </td>
  <td width=117 valign=top>
  <p align=right>255,759</p>
  </td>
  <td width=110 valign=top>
  <p align=right>231,054</p>
  </td>
  <td width=109 valign=top>
  <p align=right>740,878</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>659,151</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; Restaurant expenses </p>
  </td>
  <td width=117 valign=top>
  <p align=right>508,724</p>
  </td>
  <td width=110 valign=top>
  <p align=right>461,360</p>
  </td>
  <td width=109 valign=top>
  <p align=right>1,485,112</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;1,322,855</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; Depreciation and amortization </p>
  </td>
  <td width=117 valign=top>
  <p align=right>44,842</p>
  </td>
  <td width=110 valign=top>
  <p align=right>40,380</p>
  </td>
  <td width=109 valign=top>
  <p align=right>130,617</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>116,238</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; General and administrative</p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;&nbsp; 39,417</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;&nbsp; 34,810</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;&nbsp;&nbsp; 109,339</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;&nbsp;&nbsp;&nbsp; 99,131</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; Restructure charges and other impairments</p>
  </td>
  <td width=117 valign=top>
  <p align=right><u>&nbsp;&nbsp; 66,501</u></p>
  </td>
  <td width=110 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</u></p>
  </td>
  <td width=109 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp; 68,535</u></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,454</u></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp;&nbsp; Total operating costs and expenses </p>
  </td>
  <td width=117 valign=top>
  <p align=right><u>&nbsp; 915,243</u></p>
  </td>
  <td width=110 valign=top>
  <p align=right><u>&nbsp; 767,604</u></p>
  </td>
  <td width=109 valign=top>
  <p align=right><u>&nbsp; 2,534,481</u></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right><u>&nbsp; 2,206,829</u></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Operating
  income </p>
  </td>
  <td width=117 valign=top>
  <p align=right>16,679</p>
  </td>
  <td width=110 valign=top>
  <p align=right>73,172</p>
  </td>
  <td width=109 valign=top>
  <p align=right>154,829</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>202,349</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Interest
  expense</p>
  </td>
  <td width=117 valign=top>
  <p align=right>2,722</p>
  </td>
  <td width=110 valign=top>
  <p align=right>3,730</p>
  </td>
  <td width=109 valign=top>
  <p align=right>8,973</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>10,151</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Other,
  net</p>
  </td>
  <td width=117 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 1,103</u></p>
  </td>
  <td width=110 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 237</u></p>
  </td>
  <td width=109 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,973</u></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (593</u>)</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>

  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Income
  before provision for</p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp;income taxes</p>
  </td>
  <td width=117 valign=top>
  <p align=right>12,854</p>
  </td>
  <td width=110 valign=top>
  <p align=right>69,205</p>
  </td>
  <td width=109 valign=top>
  <p align=right>143,883</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>192,791</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>

  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Provision
  for income taxes </p>
  </td>
  <td width=117 valign=top>
  <p align=right><u>&nbsp;&nbsp; 12,116</u></p>
  </td>
  <td width=110 valign=top>
  <p align=right><u>&nbsp;&nbsp; 23,045</u></p>
  </td>
  <td width=109 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp; 54,439</u></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp; 64,402</u></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; &nbsp; Net
  income</p>
  </td>
  <td width=117 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp; 738</u></p>
  </td>
  <td width=110 valign=top>
  <p align=right><u>$&nbsp; 46,160</u></p>
  </td>
  <td width=109 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp; 89,444</u></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right><u>$&nbsp;&nbsp; 128,389</u></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Basic
  net income per share</p>
  </td>
  <td width=117 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp; 0.01</u></p>
  </td>
  <td width=110 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp; 0.48</u></p>
  </td>
  <td width=109 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.93</u></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.32</u></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Diluted
  net income per share</p>
  </td>
  <td width=117 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp; 0.01</u></p>
  </td>
  <td width=110 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp; 0.47</u></p>
  </td>
  <td width=109 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.91</u></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.30</u></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Basic
  weighted average</p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; shares outstanding</p>
  </td>
  <td width=117 valign=top>
  <p align=right><u>&nbsp;&nbsp; 95,973</u></p>
  </td>
  <td width=110 valign=top>
  <p align=right><u>&nbsp;&nbsp; 97,025</u></p>
  </td>
  <td width=109 valign=top>
  <p align=right><u>&nbsp; &nbsp;&nbsp;&nbsp;96,510</u></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp; 96,996</u></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>Diluted
  weighted average </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; shares outstanding</p>
  </td>
  <td width=117 valign=top>
  <p align=right><u>&nbsp;&nbsp; 98,007</u></p>
  </td>
  <td width=110 valign=top>
  <p align=right><u>&nbsp;&nbsp; 98,901</u></p>
  </td>
  <td width=109 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp; 98,351</u></p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp; 98,988</u></p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td
  width=5><p>&nbsp;</td>
  <td width=247 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=117 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=110 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=109 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=117 colspan=3 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=674 colspan=6 valign=top>
  <p>&nbsp;See accompanying notes to consolidated financial statements.</p>
  </td>
  <td
  width=31 colspan=2><p>&nbsp;</td>
 </tr>
 <tr height=0>
  <td width=1><hr></td>
 </tr>
</table><hr><P Style="page-break-after: always"></P>&nbsp;<table border=0 cellspacing=0 cellpadding=0 width=636>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p align="center"><b><br clear=all>
  BRINKER INTERNATIONAL, INC.</b></td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p align=center><b>Consolidated Statements of Cash Flows</b></p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p align=center><b>(In thousands)</b></p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p align=center><b>(Unaudited)</b></p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>

  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Thirty-Nine
  Week Periods Ended</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>

  </td>
  <td width=119 valign=top>
  <p align=center><b>March
  24,</b></p>
  </td>
  <td width=8 valign=top>

  </td>
  <td width=114 valign=top>
  <p align=center><b>March
  26,</b></p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;</p>
  </td>
  <td width=119 valign=top>
  <p align=center><b><u>2004</u></b></p>
  </td>
  <td width=8 valign=top>

  </td>
  <td width=114 valign=top>
  <p align=center><b><u>2003</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p>Cash Flows from Operating Activities:</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Net income</p>
  </td>
  <td width=119 valign=top>
  <p align=right>$&nbsp; 89,444</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>$
  128,389</p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p>Adjustments to reconcile net income to net cash</p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p>&nbsp; provided by
  operating activities:</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp; Depreciation and amortization</p>
  </td>
  <td width=119 valign=top>
  <p align=right>130,617</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>116,238</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp; Restructure charges and other
  impairments</p>
  </td>
  <td width=119 valign=top>
  <p align=right>68,535</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>9,454</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp; Deferred income taxes</p>
  </td>
  <td width=119 valign=top>
  <p align=right>(20,138)</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>18,955</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp; Amortization of deferred costs</p>
  </td>
  <td width=119 valign=top>
  <p align=right>7,032</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>8,961</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp; Gain on sale of assets</p>
  </td>
  <td width=119 valign=top>
  <p align=right>(2,452)</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>-</p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p>&nbsp;&nbsp; Changes in assets and liabilities:</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Receivables</p>
  </td>
  <td width=119 valign=top>
  <p align=right>2,215</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;(7,622)</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories</p>
  </td>
  <td width=119 valign=top>
  <p align=right>78</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>838</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other</p>
  </td>
  <td width=119 valign=top>
  <p align=right>6,041</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>2,699</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets</p>
  </td>
  <td width=119 valign=top>
  <p align=right>(3,804)</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>3,103</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current income taxes</p>
  </td>
  <td width=119 valign=top>
  <p align=right>49,412</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>42,325</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable</p>
  </td>
  <td width=119 valign=top>
  <p align=right>(13,785)</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>(25,016)</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued liabilities</p>
  </td>
  <td width=119 valign=top>
  <p align=right>24,852</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>5,555</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities</p>
  </td>
  <td width=119 valign=top>
  <p align=right><u>&nbsp;&nbsp; 13,362</u></p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 2,935</u></p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating
  activities</p>
  </td>
  <td width=119 valign=top>
  <p align=right><u>&nbsp; 351,409</u></p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>&nbsp; 306,814</u></p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>

  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p>Cash Flows
  from Investing Activities:</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Payments
  for property and equipment</p>
  </td>
  <td width=119 valign=top>
  <p align=right>(224,321)</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>(245,093)</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Proceeds
  from sale of assets</p>
  </td>
  <td width=119 valign=top>
  <p align=right>7,704</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>-</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Issuance of loan to affiliate</p>
  </td>
  <td width=119 valign=top>
  <p align=right>(2,800)</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>(3,800)</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Net
  repayments of advances to affiliates </p>
  </td>
  <td width=119 valign=top>
  <p align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 644</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 146&nbsp;&nbsp;
  </p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Investment in equity method investees</p>
  </td>
  <td width=119 valign=top>
  <p align=right>-</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>(1,750)</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Repayment
  of note receivable from affiliate</p>
  </td>
  <td width=119 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</u></p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>&nbsp;&nbsp; 11,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities</p>
  </td>
  <td width=119 valign=top>
  <p align=right><u>&nbsp;(218,773</u>)</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>&nbsp;(239,497</u>) </p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>

  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p>Cash
  Flows from Financing Activities:</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Net
  payments on credit facilities </p>
  </td>
  <td width=119 valign=top>
  <p align=right>-</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>(34,300)</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Purchases
  of treasury stock</p>
  </td>
  <td width=119 valign=top>
  <p align=right>(105,248)</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>(53,333)</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Proceeds
  from issuances of treasury stock</p>
  </td>
  <td width=119 valign=top>
  <p align=right>35,951</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>21,354</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Payments
  on long-term debt</p>
  </td>
  <td width=119 valign=top>
  <p align=right><u>&nbsp;&nbsp; (2,100</u>)</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>&nbsp; (1,934</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in financing activities</p>
  </td>
  <td width=119 valign=top>
  <p align=right><u>&nbsp; (71,397</u>)</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>&nbsp; (68,213</u>) </p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>

  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Net
  change in cash and cash equivalents</p>
  </td>
  <td width=119 valign=top>
  <p align=right>61,239</p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>(896)</p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Cash
  and cash equivalents at beginning of period</p>
  </td>
  <td width=119 valign=top>
  <p align=right><u>&nbsp;&nbsp; 33,492</u></p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>&nbsp;&nbsp; 10,091</u></p>
  </td>
 </tr>
 <tr>
  <td width=395 valign=top>
  <p>Cash
  and cash equivalents at end of period</p>
  </td>
  <td width=119 valign=top>
  <p align=right><u>$&nbsp; 94,731</u></p>
  </td>
  <td width=8 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>$&nbsp;&nbsp; 9,195</u></p>
  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>

  </td>
 </tr>
 <tr>
  <td width=636 colspan=4 valign=top>
  <p>See
  accompanying notes to consolidated financial statements.</p>
  </td>
 </tr>
</table>



<p><b>&nbsp;</b></p><hr><P Style="page-break-after: always"></P>


<p align=center><b>BRINKER INTERNATIONAL, INC.<br>
Notes to Consolidated Financial Statements<br>
(Unaudited)</b></p>





<p><b>1.&nbsp;&nbsp; BASIS OF PRESENTATION</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The consolidated financial statements of
Brinker International, Inc. and its wholly-owned subsidiaries (collectively,
the &quot;Company&quot;) as of March 24, 2004 and June 25, 2003 and for the thirteen week
and thirty-nine week periods ended March 24, 2004 and March 26, 2003, have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission (&quot;SEC&quot;).&nbsp; The
Company owns, operates, or franchises various restaurant concepts under the
names of Chili's Grill &amp; Bar (&quot;Chili's&quot;), Romano's Macaroni Grill
(&quot;Macaroni Grill&quot;), Maggiano's Little Italy (&quot;Maggiano's&quot;), On The Border
Mexican Grill &amp; Cantina (&quot;On The Border&quot;), Corner Bakery Cafe (&quot;Corner
Bakery&quot;), and Big Bowl Asian Kitchen (&quot;Big Bowl&quot;).&nbsp; In addition, the Company owns an approximate 43% interest in the
legal entities owning and developing Rockfish Seafood Grill (&quot;Rockfish&quot;).&nbsp; During the second quarter of fiscal 2004,
the Company sold the remaining fifteen Cozymel's Coastal Grill (&quot;Cozymel's&quot;)
restaurants.&nbsp; </p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The information furnished herein reflects all
adjustments (consisting only of normal recurring accruals and adjustments)
which are, in the opinion of management, necessary to fairly state the interim
operating results for the respective periods.&nbsp;
However, these operating results are not necessarily indicative of the
results expected for the full fiscal year.&nbsp;
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles in the United States 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 the June 25, 2003 Form 10-K. Management believes that
the disclosures are sufficient for interim financial reporting purposes.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certain prior year amounts in the
accompanying consolidated financial statements have been reclassified to
conform with fiscal 2004 classifications.&nbsp;
These reclassifications have no effect on the Company's net income or
financial position as previously reported.</p>

<p align="justify"><b>2.&nbsp;&nbsp;&nbsp;  STOCK OPTION PLANS</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company accounts for its stock based
compensation under the recognition and measurement principles of Accounting
Principles Board Opinion No. 25, <i>Accounting for Stock Issued to Employees</i>,
and related interpretations (&quot;APB 25&quot;), and has adopted the disclosure-only
provisions of Statement of Financial Accounting Standard (&quot;SFAS&quot;) No. 123.&nbsp; Under APB 25, no stock-based compensation
cost is reflected in net income for grants of stock options to employees
because the Company grants stock options with an exercise price equal to the
market value of the stock on the date of grant.&nbsp; Had the Company used the fair value based accounting method for
stock compensation expense prescribed by SFAS No. 123, the Company's net income
and earnings per share would have been reduced to the pro-forma amounts
illustrated as follows (in thousands, except per share amounts):</p><hr><P Style="page-break-after: always"></P>&nbsp;<table border=0 cellspacing=0 cellpadding=0 width=683>
 <tr>
  <td width=217 valign=top>

  </td>
  <td width=228 colspan=2 valign=top>
  <p align=center><b><u>Thirteen Week Periods Ended</u></b></p>
  </td>
  <td width=238 colspan=2 valign=top>
  <p align=center><b><u>Thirty-Nine Week Periods Ended</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>

  </td>
  <td width=114 valign=top>
  <p align=center><b>&nbsp;March 24,</b></p>
  </td>
  <td width=114 valign=top>
  <p align=center><b>March 26,</b></p>
  </td>
  <td width=111 valign=top>
  <p align=center><b>&nbsp;March 24,</b></p>
  </td>
  <td width=127 valign=top>
  <p align=center><b>March 26,</b></p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>

  </td>
  <td width=114 valign=top>
  <p align=center><b>&nbsp; <u>2004</u></b></p>
  </td>
  <td width=114 valign=top>
  <p align=center><b>&nbsp; <u>2003</u></b></p>
  </td>
  <td width=111 valign=top>
  <p align=center><b>&nbsp;<u>2004</u></b></p>
  </td>
  <td width=127 valign=top>
  <p align=center><b>&nbsp;<u>2003</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>

  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=111 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=127 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>
  <p>Net
  income - as reported</p>
  </td>
  <td width=114 valign=top>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 738</p>
  </td>
  <td width=114 valign=top>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 46,160</p>
  </td>
  <td width=111 valign=top>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 89,444</p>
  </td>
  <td width=127 valign=top>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  128,389</p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>

  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=111 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=127 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>
  <p>Add:
  Reported stock-based <br>
  &nbsp; compensation expense,<br>
  &nbsp; net of taxes </p>
  </td>
  <td width=114 valign=top>
  <p align=right><br>
  <br>
  417</p>
  </td>
  <td width=114 valign=top>
  <p align=right><br>
  <br>
  310</p>
  </td>
  <td width=111 valign=top>
  <p align=right><br>
  <br>
  1,348</p>
  </td>
  <td width=127 valign=top>
  <p align=right><br>
  <br>
  1,505</p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>
  <p>&nbsp; </p>
  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=111 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=127 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>
  <p>Deduct:
  Fair value based<br>
  &nbsp; compensation expense, <br>
  &nbsp; net of taxes  </p>
  </td>
  <td width=114 valign=top>
  <p align=right><u><br>
  <br>
  &nbsp;&nbsp; (4,730</u>)</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u><br>
  <br>
  &nbsp;&nbsp; (4,311</u>)</p>
  </td>
  <td width=111 valign=top>
  <p align=right><u><br>
  <br>
  &nbsp; (14,242</u>)</p>
  </td>
  <td width=127 valign=top>
  <p align=right><u><br>
  <br>
  &nbsp; (13,342</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>

  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=111 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=127 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>
  <p>Net
  income - pro-forma</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (3,575</u>)</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 42,159</u></p>
  </td>
  <td width=111 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 76,550</u></p>
  </td>
  <td width=127 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  116,552</u></p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>

  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=111 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=127 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top>
  <p>Earnings
  per share:</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>&nbsp; </u></p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>&nbsp; </u></p>
  </td>
  <td width=111 valign=top>
  <p align=right><u>&nbsp; </u></p>
  </td>
  <td width=127 valign=top>
  <p align=right><u>&nbsp; </u></p>
  </td>
 </tr>
 <tr>
  <td width=217>
  <p>Basic -
  as reported</p>
  </td>
  <td width=114>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; 0.01</u></p>
  </td>
  <td width=114>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.48</u></p>
  </td>
  <td width=111>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; 0.93</u></p>
  </td>
  <td width=127>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; 1.32</u></p>
  </td>
 </tr>
 <tr>
  <td width=217>
  <p>Basic -
  pro-forma</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (0.04</u>)</p>
  </td>
  <td width=114>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.43</u></p>
  </td>
  <td width=111>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; 0.79</u></p>
  </td>
  <td width=127>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; 1.20</u></p>
  </td>
 </tr>
 <tr>
  <td width=217>

  </td>
  <td width=114>
  <p align=right>&nbsp;</p>
  </td>
  <td width=114>
  <p align=right>&nbsp;</p>
  </td>
  <td width=111>
  <p align=right>&nbsp;</p>
  </td>
  <td width=127>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=217>
  <p>Diluted
  - as reported</p>
  </td>
  <td width=114>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.01</u></p>
  </td>
  <td width=114>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.47</u></p>
  </td>
  <td width=111>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; 0.91</u></p>
  </td>
  <td width=127>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.30</u></p>
  </td>
 </tr>
 <tr>
  <td width=217>
  <p>Diluted
  - pro-forma</p>
  </td>
  <td width=114 valign=top>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (0.04</u>)</p>
  </td>
  <td width=114>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.43</u></p>
  </td>
  <td width=111>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; 0.78</u></p>
  </td>
  <td width=127>
  <p align=right><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.18</u></p>
  </td>
 </tr>
</table>





<p align="justify"><b><br>
3.&nbsp;&nbsp; RESTRUCTURE CHARGES AND OTHER IMPAIRMENTS</b></p>





<p align="justify"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b>During
the third quarter of fiscal 2004, the Company recorded a $33.8 million charge
for long-lived asset impairments. The Company will close thirty restaurants
including six Chili's, five Macaroni Grill, six On The Border, six Corner
Bakery Cafe and seven Big Bowl restaurants.&nbsp;
The decision to close the restaurants was the result of a comprehensive
analysis performed during the third quarter that examined restaurants not
meeting minimum return on investment thresholds and certain other operating
performance criteria.&nbsp; During the fourth
quarter of fiscal 2004, the Company expects to record an additional charge of
approximately $7.0 to $9.0 million, primarily related to existing lease
obligations associated with several of the closing restaurants.&nbsp; These lease charges will be recorded
primarily during the fourth quarter in accordance with SFAS No. 146,
&quot;Accounting for Costs Associated with Exit or Disposal Activities&quot;, which
requires lease obligations to be recorded when a restaurant ceases
operations.&nbsp;  </p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As
a result of the seven Big Bowl closings and a review of the brand's positioning
and future development plans, the earnings forecast was revised and the Company
recorded a goodwill impairment charge of $27.0 million during the third quarter
of fiscal 2004.&nbsp; The fair value of Big
Bowl was estimated using the present value of expected future cash flows.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; During
fiscal 2003, the Company entered into negotiations to sell all sixteen of its
Cozymel's restaurants.&nbsp; The decision to
discontinue growth and sell the brand required the Company to record asset
impairment charges in fiscal 2003 totaling $20.3 million.&nbsp; After taking this charge, the carrying
values of the assets to be sold were approximately $23.8 million as of June 25,
2003.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; During
the second quarter of fiscal 2004, the Company closed one Cozymel's restaurant
and sold the remaining fifteen restaurants. In connection with the disposition,
the Company received approximately $1.5 million in cash, $20.2 million in notes
receivable, and recorded an impairment charge totaling $2.0 million during the
second quarter of fiscal 2004.&nbsp; </p>



<hr><P Style="page-break-after: always"></P>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; During
the fourth quarter of fiscal 2004, the Company settled all outstanding notes
receivable related to the sale of Cozymel's and received a final cash payment
of $14.5 million.&nbsp; As a result, the
Company recorded an additional impairment charge of $5.7 million during the
third quarter of fiscal 2004.&nbsp; </p>

<p align="justify"><b>&nbsp;4.&nbsp;&nbsp; CONVERTIBLE DEBT</b></p>

<p align="justify"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b>In October 2001, the Company issued $431.7 million of zero coupon
convertible senior debentures (the &quot;Debentures&quot;), maturing on October 10, 2021,
and received proceeds totaling approximately $250.0 million prior to debt
issuance costs.&nbsp; The Debentures require
no interest payments and were issued at a discount representing a yield to
maturity of 2.75% per annum.&nbsp; The
Debentures are redeemable at the Company's option beginning on October 10,
2004, and the holders of the Debentures may require the Company to redeem the
Debentures on October 10, 2005, 2011 or 2016, and in certain other
circumstances.&nbsp; In addition, each $1,000
Debenture is convertible into 18.08 shares of the Company's common stock if the
stock's market price exceeds 120% of the accreted conversion price for at least
20 trading days during the first 30 trading days of each quarter, the Company
exercises its option to redeem the Debentures, the credit rating of the
Debentures is reduced below both Baa3 and BBB-, or upon the occurrence of
certain specified corporate transactions.&nbsp;
The
market price of the Company's common stock has not exceeded 120% of the accreted
conversion price for any quarter, including the fourth quarter of
fiscal 2004, since the issuance of the Debentures.&nbsp; The conversion trigger price
for the Company's first quarter of fiscal 2005 is $41.54.</p>

<p align="justify"><b>5.&nbsp;&nbsp; SHAREHOLDERS' EQUITY</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to the Company's current stock
repurchase plan, the Company repurchased approximately 3.3 million shares of
its common stock for $105.2 million for year-to-date fiscal 2004.&nbsp; As of March 24, 2004, approximately 21.5
million shares of its common stock had been repurchased for $497.3 million
under the previously approved $510.0 million stock repurchase plan. In April
2004, the Board of Directors authorized an increase in the stock repurchase
plan of $500.0 million.&nbsp; The Company's
stock repurchase plan will be used to minimize the dilutive impact of a
potential conversion of the convertible debt and stock option exercises.&nbsp; The authorized increase brings the Company's
total stock repurchase program to $1,010.0 million.&nbsp; The repurchased common stock is reflected as a reduction of
shareholders' equity. </p>

<p align="justify"><b>6. SUPPLEMENTAL CASH FLOW
INFORMATION</b></p>



<p align="justify">&nbsp;&nbsp; Cash
paid for interest and income taxes for the first three quarters of fiscal 2004 and
2003 is as follows (in thousands):</p>



<table border=0 cellspacing=0 cellpadding=0 width=565>
 <tr>
  <td width=369 valign=top>

  </td>
  <td width=95 valign=top>
  <p align=center><b>March
  24, <br>
  <u>2004</u></b></p>
  </td>
  <td width=101 valign=top>
  <p align=center><b>March
  26, <br>
  <u>2003</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=369 valign=top>

  </td>
  <td width=95 valign=top>

  </td>
  <td width=101 valign=top>

  </td>
 </tr>
 <tr>
  <td width=369 valign=top>
  <p>Interest, net of
  amounts capitalized&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>
  </td>
  <td width=95 valign=top>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,805 </p>
  </td>
  <td width=101 valign=top>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;
  1,937 </p>
  </td>
 </tr>
 <tr>
  <td width=369 valign=top>
  <p>Income tax
  payments, net of refunds</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;&nbsp;
  25,530</p>
  </td>
  <td width=101 valign=top>
  <p align=right>&nbsp;
  3,122</p>
  </td>
 </tr>
</table>



<p>Non-cash investing and financing activities
for the first three quarters of fiscal 2004 and 2003 are as follows (in thousands):</p>



<table border=0 cellspacing=0 cellpadding=0 width=569>
 <tr>
  <td width=370 valign=top>

  </td>
  <td width=94 valign=top>
  <p align=center><b>March
  24, <br>
  <u>2004</u></b></p>
  </td>
  <td width=105 valign=top>
  <p align=center><b>March
  26, <br>
  <u>2003</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=370 valign=top>

  </td>
  <td width=94 valign=top>

  </td>
  <td width=105 valign=top>

  </td>
 </tr>
 <tr>
  <td width=370 valign=top>
  <p>Issuance of
  notes for sale of Cozymel's</p>
  </td>
  <td width=94 valign=top>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14,455&nbsp;
  </p>
  </td>
  <td width=105 valign=top>
  <p align=center>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;
  -</p>
  </td>
 </tr>
 <tr>
  <td width=370 valign=top>
  <p>Retirement of
  fully depreciated assets</p>
  </td>
  <td width=94 valign=top>
  <p align=right>&nbsp;7,785</p>
  </td>
  <td width=105 valign=top>
  <p align=right>&nbsp;
  153,865&nbsp; </p>
  </td>
 </tr>
 <tr>
  <td width=370 valign=top>
  <p>Net (decrease) increase in fair value of
  interest rate swaps </p>
  </td>
  <td width=94 valign=top>
  <p align=right>(4,906)</p>
  </td>
  <td width=105 valign=top>
  <p align=right>8,764</p>
  </td>
 </tr>
 <tr>
  <td width=370 valign=top>
  <p>Restricted
  common stock issued, net of&nbsp;&nbsp;forfeitures</p>
  </td>
  <td width=94 valign=top>
  <p align=right>2,379&nbsp;
  </p>
  </td>
  <td width=105 valign=top>
  <p align=right>4,644&nbsp;
  </p>
  </td>
 </tr>
</table>

<br clear=all>




<hr><P Style="page-break-after: always"></P>
<p><b>7.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>CONTINGENCIES</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In January 1996,
the Company entered into a Tip Reporting Alternative Commitment agreement (the
&quot;Contract&quot;) with the Internal Revenue Service (the &quot;IRS&quot;).&nbsp; The Contract
required the Company, among other things, to implement tip reporting educational
programs for its hourly restaurant employees and to establish tip reporting procedures.&nbsp; The IRS has alleged that the Company did not meet the
requirements of the Contract and has retroactively and unilaterally revoked it.&nbsp;
As a result of the revocation, the IRS commenced an examination during fiscal
2004 of the Company's 2000 through 2002 calendar years, which involved
interviews of current and former employees for the purpose of assessing
employer-only Federal Insurance Contributions Act (&quot;FICA&quot;) taxes on estimated
unreported cash tips.&nbsp; The Company believes it has complied and continues
to comply with all of the terms of the Contract and intends to vigorously
contest the accuracy of any assessment that may be proposed and to assert that
the Contract should be retroactively reinstated.&nbsp; It is not possible at
this time to reasonably estimate the possible loss or range of loss, if any.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company is engaged in various other legal
proceedings and has certain unresolved claims pending. The ultimate liability,
if any, for the aggregate amounts claimed cannot be determined at this time.
However, management of the Company, based upon consultation with legal counsel,
is of the opinion that there are no other matters pending or threatened which
are expected to have a material adverse effect, individually or in the
aggregate, on the Company's consolidated financial condition or results of
operations. </p>

<p align="justify">

<br
clear=all>




</p>

<hr><P Style="page-break-after: always"></P>

<p align="justify"><b>Item 2.&nbsp; MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS  OF
OPERATIONS</b></p>





<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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.
</p>





<table border=0 cellspacing=0 cellpadding=0 width=709>
 <tr>
  <td width=331 valign=top>
  &nbsp;</td>
  <td width=174 valign=top colspan="3">
  <p align="center"><b>13 Week Periods Ended</b></td>
  <td width=24 valign=top>
  &nbsp;</td>
  <td width=175 valign=top colspan="3">
  <p align="center"><b>39 Week Periods Ended</b></td>
  <td
  width=5>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p align=left>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=center><b>Mar. 24,</b></p>
  </td>
  <td width=18 valign=top>
  <p align=center>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=center><b>Mar. 26,</b></p>
  </td>
  <td width=24 valign=top>
  <p align=center>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=center><b>Mar. 24,</b></p>
  </td>
  <td width=18 valign=top>
  <p align=center>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=center><b>Mar. 26,</b></p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>

  </td>
  <td width=78 valign=top>
  <p align=center><b><u>2004</u></b></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=center><b><u>2003</u></b></p>
  </td>
  <td width=24 valign=top>
  <p align=center>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=center><b><u>2004</u></b></p>
  </td>
  <td width=18 valign=top>
  <p align=center>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=center><b><u>2003</u></b></p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>

  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>Revenues&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>100.0 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>100.0 %</u></p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right><u>100.0 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>100.0 %</u></p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>Operating Costs and Expenses:</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>&nbsp; Cost of sales</p>
  </td>
  <td width=78 valign=top>
  <p align=right>27.4 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>27.5 %</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>27.5 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>27.4 %</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>&nbsp; Restaurant expenses</p>
  </td>
  <td width=78 valign=top>
  <p align=right>54.6 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>54.9 %</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>55.2 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>54.9 %</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>&nbsp; Depreciation and amortization</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp; 4.8 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp; 4.8 %</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>&nbsp; 4.9 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp; 4.8 %</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>&nbsp; General and administrative</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp; 4.2 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp; 4.1 %</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>&nbsp; 4.1 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp; 4.1 %</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>&nbsp; Restructure charges and other impairments</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 7.1 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 0.0 %</u></p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right><u>&nbsp; 2.6 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 0.4 %</u></p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>&nbsp;&nbsp; Total operating costs and expenses</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp;98.1 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp;91.3 %</u></p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right><u>&nbsp;94.3 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp;91.6 %</u></p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>

  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>Operating income</p>
  </td>
  <td width=78 valign=top>
  <p align=right>1.9 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>8.7 %</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>5.7 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>8.4 %</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>

  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>Interest expense</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;&nbsp;0.3
  %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp; 0.5 %</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>&nbsp; 0.3 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp; 0.4 %</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>Other, net</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 0.2 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 0.0 %</u></p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right><u>&nbsp; 0.1 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 0.0 %</u></p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>

  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>Income before
  provision for income taxes</p>
  </td>
  <td width=78 valign=top>
  <p align=right>1.4 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>8.2 %</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>5.3 %</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>8.0 %</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>Provision for income taxes</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 1.3 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 2.7 %</u></p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right><u>&nbsp; 2.0 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 2.7 %</u></p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>

  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
 <tr>
  <td width=331 valign=top>
  <p>Net income</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 0.1 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 5.5 %</u></p>
  </td>
  <td width=24 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=79 valign=top>
  <p align=right><u>&nbsp; 3.3 %</u></p>
  </td>
  <td width=18 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 valign=top>
  <p align=right><u>&nbsp; 5.3 %</u></p>
  </td>
  <td
  width=5><p>&nbsp;</td>
 </tr>
</table>





<br clear=all>



<hr><P Style="page-break-after: always"></P>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The following table details the number of
restaurant openings during the third quarter and fiscal year-to-date, total
restaurants open at the end of the third quarter, and total projected openings in
fiscal 2004. </p>





<table cellspacing=0 cellpadding=0 width=719>
 <tr>
  <td width=176 valign=top>

  &nbsp;</td>
  <td width=143 colspan=2 valign=top>
  &nbsp;</td>
  <td width=146 colspan=3 valign=top>
  &nbsp;</td>
  <td width=159 colspan=2 valign=top>
  &nbsp;</td>
  <td width=95 valign=top>
  <p align="center">Total</td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=143 colspan=2 valign=top>
  <p align=center>Third Quarter</p>
  </td>
  <td width=146 colspan=3 valign=top>
  <p align="center">Year-to-Date</td>
  <td width=159 colspan=2 valign=top>
  <p align="center">Total Open at End</td>
  <td width=95 valign=top>
  <p align=center>Projected</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=143 colspan=2 valign=top>
  <p align=center>Openings</p>
  </td>
  <td width=146 colspan=3 valign=top>
  <p align="center">Openings</td>
  <td width=159 colspan=2 valign=top>
  <p align="center">Of Third Quarter</td>
  <td width=95 valign=top>
  <p align="center">Openings</td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p align=center>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=center>Fiscal</p>
  </td>
  <td width=71 valign=top>
  <p align=center>Fiscal</p>
  </td>
  <td width=71 valign=top>
  <p align=center>Fiscal</p>
  </td>
  <td width=71 valign=top>
  <p align=center>Fiscal</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=center>Fiscal</p>
  </td>
  <td width=85 valign=top>
  <p align=center>Fiscal</p>
  </td>
  <td width=95 valign=top>
  <p align=center>Fiscal</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p align=center>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=center><u>2004</u></p>
  </td>
  <td width=71 valign=top>
  <p align=center><u>2003</u></p>
  </td>
  <td width=71 valign=top>
  <p align=center><u>2004</u></p>
  </td>
  <td width=71 valign=top>
  <p align=center><u>2003</u></p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=center><u>2004</u></p>
  </td>
  <td width=85 valign=top>
  <p align=center><u>2003</u></p>
  </td>
  <td width=95 valign=top>
  <p align=center><u>2004</u></p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>Chili's: </p>
  </td>
  <td width=71 valign=top>

  </td>
  <td width=71 valign=top>

  </td>
  <td width=71 valign=top>

  </td>
  <td width=71 valign=top>

  </td>
  <td width=78 colspan=2 valign=top>

  </td>
  <td width=85 valign=top>

  </td>
  <td width=95 valign=top>

  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp; Company-owned</p>
  </td>
  <td width=71 valign=top>
  <p align=right>18</p>
  </td>
  <td width=71 valign=top>
  <p align=right>16</p>
  </td>
  <td width=71 valign=top>
  <p align=right>56</p>
  </td>
  <td width=71 valign=top>
  <p align=right>52</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>742</p>
  </td>
  <td width=85 valign=top>
  <p align=right>677</p>
  </td>
  <td width=95 valign=top>
  <p align=right>70</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp; Franchised</p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 3</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 5</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp;16</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp;15</u></p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right><u>&nbsp; 220</u></p>
  </td>
  <td width=85 valign=top>
  <p align=right><u>&nbsp; 203</u></p>
  </td>
  <td width=95 valign=top>
  <p align=right><u>&nbsp;
  17</u></p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Total</p>
  </td>
  <td width=71 valign=top>
  <p align=right>21</p>
  </td>
  <td width=71 valign=top>
  <p align=right>21</p>
  </td>
  <td width=71 valign=top>
  <p align=right>72</p>
  </td>
  <td width=71 valign=top>
  <p align=right>67</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>962</p>
  </td>
  <td width=85 valign=top>
  <p align=right>880</p>
  </td>
  <td width=95 valign=top>
  <p align=right>87</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>Macaroni Grill:</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp; Company-owned</p>
  </td>
  <td width=71 valign=top>
  <p align=right>5</p>
  </td>
  <td width=71 valign=top>
  <p align=right>3</p>
  </td>
  <td width=71 valign=top>
  <p align=right>16</p>
  </td>
  <td width=71 valign=top>
  <p align=right>15</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>209</p>
  </td>
  <td width=85 valign=top>
  <p align=right>189</p>
  </td>
  <td width=95 valign=top>
  <p align=right>18</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp; Franchised</p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; -</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 1</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 1</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 1</u></p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 8</u></p>
  </td>
  <td width=85 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 7</u></p>
  </td>
  <td width=95 valign=top>
  <p align=right><u>&nbsp;&nbsp;
  2</u></p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Total</p>
  </td>
  <td width=71 valign=top>
  <p align=right>5</p>
  </td>
  <td width=71 valign=top>
  <p align=right>4</p>
  </td>
  <td width=71 valign=top>
  <p align=right>17</p>
  </td>
  <td width=71 valign=top>
  <p align=right>16</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>217</p>
  </td>
  <td width=85 valign=top>
  <p align=right>196</p>
  </td>
  <td width=95 valign=top>
  <p align=right>20</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>Maggiano's</p>
  </td>
  <td width=71 valign=top>
  <p align=right>-</p>
  </td>
  <td width=71 valign=top>
  <p align=right>1</p>
  </td>
  <td width=71 valign=top>
  <p align=right>3</p>
  </td>
  <td width=71 valign=top>
  <p align=right>4</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>28</p>
  </td>
  <td width=85 valign=top>
  <p align=right>24</p>
  </td>
  <td width=95 valign=top>
  <p align=right>3</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>On The Border:</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp; Company-owned</p>
  </td>
  <td width=71 valign=top>
  <p align=right>2</p>
  </td>
  <td width=71 valign=top>
  <p align=right>-</p>
  </td>
  <td width=71 valign=top>
  <p align=right>2</p>
  </td>
  <td width=71 valign=top>
  <p align=right>4</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>116</p>
  </td>
  <td width=85 valign=top>
  <p align=right>115</p>
  </td>
  <td width=95 valign=top>
  <p align=right>3</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp; Franchised</p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; -</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; -</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; -</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 1</u></p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right><u>&nbsp;&nbsp; 18</u></p>
  </td>
  <td width=85 valign=top>
  <p align=right><u>&nbsp;&nbsp; 19</u></p>
  </td>
  <td width=95 valign=top>
  <p align=right><u>&nbsp;&nbsp;
  -</u></p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Total</p>
  </td>
  <td width=71 valign=top>
  <p align=right>2</p>
  </td>
  <td width=71 valign=top>
  <p align=right>-</p>
  </td>
  <td width=71 valign=top>
  <p align=right>2</p>
  </td>
  <td width=71 valign=top>
  <p align=right>5</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>134</p>
  </td>
  <td width=85 valign=top>
  <p align=right>134</p>
  </td>
  <td width=95 valign=top>
  <p align=right>3</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>Corner Bakery:</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp; Company-owned</p>
  </td>
  <td width=71 valign=top>
  <p align=right>-</p>
  </td>
  <td width=71 valign=top>
  <p align=right>3</p>
  </td>
  <td width=71 valign=top>
  <p align=right>2</p>
  </td>
  <td width=71 valign=top>
  <p align=right>8</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>86</p>
  </td>
  <td width=85 valign=top>
  <p align=right>81</p>
  </td>
  <td width=95 valign=top>
  <p align=right>5</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp; Franchised</p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; -</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; -</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; -</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 1</u></p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 3</u></p>
  </td>
  <td width=85 valign=top>
  <p align=right><u>&nbsp;&nbsp;&nbsp; 3</u></p>
  </td>
  <td width=95 valign=top>
  <p align=right><u>&nbsp;&nbsp;
  -</u></p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Total</p>
  </td>
  <td width=71 valign=top>
  <p align=right>-</p>
  </td>
  <td width=71 valign=top>
  <p align=right>3</p>
  </td>
  <td width=71 valign=top>
  <p align=right>2</p>
  </td>
  <td width=71 valign=top>
  <p align=right>9</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>89</p>
  </td>
  <td width=85 valign=top>
  <p align=right>84</p>
  </td>
  <td width=95 valign=top>
  <p align=right>5</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>Big Bowl</p>
  </td>
  <td width=71 valign=top>
  <p align=right>1</p>
  </td>
  <td width=71 valign=top>
  <p align=right>2</p>
  </td>
  <td width=71 valign=top>
  <p align=right>3</p>
  </td>
  <td width=71 valign=top>
  <p align=right>6</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>21</p>
  </td>
  <td width=85 valign=top>
  <p align=right>17</p>
  </td>
  <td width=95 valign=top>
  <p align=right>3</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>Rockfish
  Partnership</p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 1</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 4</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 4</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp; 8</u></p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right><u>&nbsp;&nbsp; 24</u></p>
  </td>
  <td width=85 valign=top>
  <p align=right><u>&nbsp;&nbsp;
  20</u></p>
  </td>
  <td width=95 valign=top>
  <p align=right><u>&nbsp;&nbsp;
  5</u></p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>

  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=71 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=85 valign=top>
  <p align=right>&nbsp;</p>
  </td>
  <td width=95 valign=top>
  <p align=right>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=176 valign=top>
  <p>&nbsp;&nbsp;&nbsp;&nbsp; Grand Total</p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp;30</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>&nbsp;35</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>103</u></p>
  </td>
  <td width=71 valign=top>
  <p align=right><u>115</u></p>
  </td>
  <td width=78 colspan=2 valign=top>
  <p align=right><u>1,475</u></p>
  </td>
  <td width=85 valign=top>
  <p align=right><u>1,355</u></p>
  </td>
  <td width=95 valign=top>
  <p align=right><u>&nbsp;126</u></p>
  </td>
 </tr>
 <tr height=0>
  <td width=176></td>
  <td width=71></td>
  <td width=71></td>
  <td width=71></td>
  <td width=71></td>
  <td width=3></td>
  <td width=75></td>
  <td width=85></td>
  <td width=95></td>
 </tr>
</table>

<u><br clear=all>
</u>

<hr><P Style="page-break-after: always"></P>

<p align="justify"><b>OVERVIEW OF
OPERATIONS</b></p>

<p align="justify"><b>&nbsp;</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revenues for
the third quarter and year-to-date of fiscal 2004 increased by 10.8% and 11.6%,
respectively.&nbsp; These increases were
primarily driven by the addition of company-owned restaurants, as capacity
(measured by average-weighted sales weeks) increased for the third quarter and year-to-date by 7.6% and 9.0%,
respectively.&nbsp; During the third quarter,
the Company recorded a $33.8 million charge for long-lived asset impairments.&nbsp;
The Company will close 30 restaurants including six Chili's, five Macaroni
Grill, six On The Border, six Corner Bakery and seven Big Bowl restaurants.&nbsp;
The decision to close the restaurants was the result of a comprehensive analysis
performed during the third quarter that examined restaurants not meeting minimum
return on investment thresholds and certain other operating performance
criteria.&nbsp; As a result of the seven Big Bowl closings and a review of the
brand's positioning and future development plans, the Company recorded a
goodwill impairment charge of $27.0 million. During the fourth quarter of fiscal
2004, the Company settled all outstanding notes receivable related to the sale
of Cozymel's and received a final cash payment of $14.5 million.&nbsp; As a
result, the Company recorded an additional impairment charge of $5.7 million
during the third quarter of fiscal 2004.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The fourth quarter of fiscal 2004 is a 14-week quarter.&nbsp; The Company
estimates the extra week to
contribute $0.05 to $0.07 to earnings per share.&nbsp; The following outlook is based on a 13-week versus 13-week
basis.&nbsp; Revenues for the fourth quarter
of fiscal 2004 are estimated to increase by 8% to 11%, driven primarily by
capacity gains of 6% to 7%.&nbsp; Cost of
sales is estimated to be 0.1% to 0.2% higher than last year due to the impact of
higher beef and dairy costs.&nbsp; Restaurant
expenses, excluding the prior year Cozymel's charge, are estimated to be 0.2% to 0.4%
lower than last year as a result of increased sales leverage.&nbsp; General and administrative expenses are
estimated to be 0.3% to 0.4% higher due primarily to increased headcount and wage
rates.&nbsp; Additionally, during the fourth quarter of fiscal 2004, the
Company expects to record an additional charge of $7.0 to $9.0 million,
primarily related to existing lease obligations associated with the closing
restaurants.&nbsp; The effective tax
rate during the fourth quarter is estimated to be approximately 31.0%.</p>



<p align="justify"><b>REVENUES</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revenues for
the third quarter of fiscal 2004 increased to $931.9 million, 10.8% over the
$840.8 million generated for the same quarter of fiscal 2003. Revenues for the
thirty-nine week period ended March 24, 2004 rose 11.6% to $2,689.3 million
from the $2,409.2 million generated for the same period of fiscal 2003.&nbsp; The increases were primarily attributable to
a net increase of 84 company-owned restaurants since March 26, 2003 and an
increase in comparable store sales for the third quarter and year-to-date of
fiscal 2004 compared to the same periods of fiscal 2003. The Company increased
its capacity  for the third
quarter and year-to-date of fiscal 2004 by 7.6% and 9.0%, respectively,
compared to the respective prior year periods. Comparable store sales increased
3.2% and 2.6% for the third quarter and year-to-date, respectively, from the
same periods of fiscal 2003.&nbsp; Menu
prices in the aggregate increased 1.7% in fiscal 2004 as compared to fiscal
2003.</p>



<p align="justify"><b>COSTS AND EXPENSES </b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of sales, as a percent of revenues,
decreased 0.1% for the third quarter of fiscal 2004 as compared to the same
period of fiscal 2003.&nbsp; The decrease was
due to a 1.8% increase in menu prices, a 0.2% decrease in commodity prices for
poultry, and a 0.2% favorable product mix shift for meat and seafood, partially
offset by a 1.0% increase in commodity prices for meat, seafood, produce,
beverages, dairy and cheese and a 1.1% unfavorable product mix shift for
poultry and beverages.&nbsp; Cost of sales,
as a percent of revenues, increased 0.1% for year-to-date fiscal 2004 as
compared to the same period of fiscal 2003.&nbsp;
The increase was due to a 1.6% unfavorable product mix shift for
poultry, produce, beverages, dairy and cheese, and a 0.8% increase in commodity
prices for produce, beverages, dairy and cheese, partially offset by a 1.7%
increase in menu prices, a 0.4% decrease in commodity prices for poultry, and a
0.2% favorable product mix shift for meat and seafood.</p>



<hr><P Style="page-break-after: always"></P>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restaurant expenses, as a percent of
revenues, decreased 0.3% for the third quarter of fiscal 2004 as compared to
the same period of fiscal 2003.&nbsp; The
decrease was primarily due to a decrease in management labor, partially offset
by increases in utility costs, property taxes and health, workers compensation
and general liability insurance.&nbsp;
Restaurant expenses, as a percent of revenues, increased 0.3% for
year-to-date fiscal 2004 as compared to the same period of fiscal 2003.&nbsp; The increase was primarily due to increases
in payroll taxes resulting from increased tip reporting, utility costs, and
health, workers compensation and general liability insurance.&nbsp; These increases were partially offset by a
$2.4 million gain recorded during the second quarter of fiscal 2004 as a result
of the sale of four Chili's restaurants to a franchise partner and the sale of one real
estate property.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; Depreciation and amortization increased
$4.5 million and $14.4 million for the third quarter and year-to-date fiscal
2004, respectively, as compared to the same periods of fiscal 2003.&nbsp; The increases in depreciation expense were
due to new unit construction and ongoing remodel costs, partially offset by a
declining depreciable asset base for older units.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General and administrative expenses
increased $4.6 million and $10.2 million for the third quarter and year-to-date
fiscal 2004, respectively, as compared to the same periods of fiscal 2003. The
increases were primarily due to an increase in incentive based compensation and
increased payroll costs resulting from an increase in headcount and wage rates,
partially offset by decreases in costs resulting from the Company's continued
focus on controlling corporate expenditures. </p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restructure charges and other impairments recorded during the third
quarter of fiscal 2004 include a $33.8 million charge for long-lived asset
impairments, a goodwill impairment charge of $27.0 million related to Big Bowl,
and a $5.7 million charge related to the settlement of all outstanding
Cozymel's notes receivable.&nbsp; Restructure
charges and other impairments recorded year-to-date fiscal 2004 include the
charges previously mentioned, as well as a $2.0 million loss on the sale of
Cozymel's recorded during the second quarter of fiscal 2004.&nbsp; Restructure charges and other impairments
recorded year-to-date fiscal 2003 include $5.4 million resulting from the
decision to close nine restaurants and to write down the assets of one
under-performing restaurant and a $4.1 million impairment of intellectual
property rights.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense decreased $1.0 million
and $1.2 million for the third quarter and year-to-date fiscal 2004,
respectively, as compared to the same periods of fiscal 2003.&nbsp; Decreases in interest expense primarily resulted
from debt issuance costs related to the convertible debt being fully amortized
in the second quarter of fiscal 2004 and lower average outstanding balances on
the senior notes and revolving lines-of-credit.&nbsp; These decreases were partially offset by a decrease in
capitalized interest due to lower interest rates.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other, net increased approximately $1.0
million and $2.6 million for the third quarter and year-to-date fiscal 2004,
respectively, as compared to the same periods of fiscal 2003.&nbsp; Increases in the Company's net savings plan
obligations were partially offset by decreases in losses related to the
Company's share in equity method investees and by gains from life insurance
proceeds recorded in the first and second quarters of fiscal 2003 totaling $3.5
million.</p>



<p align="justify"><b>INCOME TAXES</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company's effective income tax rate
increased to 94.3% from 33.3% for the third quarter of fiscal 2004 and to 37.8%
from 33.4% year-to-date for fiscal 2004 as compared to the same periods of
fiscal 2003. The increases are primarily due to the Big Bowl goodwill impairment
charge, which is not deductible for tax purposes.&nbsp; </p>

<hr><P Style="page-break-after: always"></P>

<p align="justify"><b>LIQUIDITY AND
CAPITAL RESOURCES</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The working capital deficit decreased from
$143.7 million at June 25, 2003 to $121.0 million at March 24, 2004.&nbsp; Net cash provided by operating activities increased
to $351.4 million for the first nine months of fiscal 2004 from $306.8 million
during the same period in fiscal 2003 due to increased profitability before
restructuring charges and other impairments, and the timing of operational
receipts and payments.&nbsp; The Company
believes that its various sources of capital, including availability under
existing credit facilities, ability to raise additional financing, and cash
flow from operating activities, are adequate to finance operations as well as
the repayment of current debt obligations.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments of the Company's contractual obligations
under outstanding indebtedness and
the expiration of credit facilities as of March 24, 2004 are as follows:</p>



<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td width=175 valign=top>

  </td>
  <td width=480 colspan=5 valign=top>
  <p align=center><b>Payments Due by Period<br>
  <font size="2">(in thousands)</font></b></p>
  </td>
 </tr>
 <tr>
  <td width=175 valign=top>

  </td>
  <td width=96 valign=top>
  <p align=center><b><u><br>
  Total</u></b></p>
  </td>
  <td width=96 valign=top>
  <p align=center><b>Less than<br>
&nbsp;<u>1 Year </u></b></p>
  </td>
  <td width=96 valign=top>
  <p align=center><b>2-3<br>
  <u>Years</u></b></p>
  </td>
  <td width=96 valign=top>
  <p align=center><b>4-5<br>
  <u>Years</u></b></p>
  </td>
  <td width=96 valign=top>
  <p align=center><b>After 5 <u><br>
  Years</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=175>
  <p>Convertible debt (a)</p>
  </td>
  <td width=96>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 267,279</p>
  </td>
  <td width=96>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</p>
  </td>
  <td width=96>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</p>
  </td>
  <td width=96>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp; -</p>
  </td>
  <td width=96>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 267,279</p>
  </td>
 </tr>
 <tr>
  <td width=175>
  <p>Senior notes</p>
  </td>
  <td width=96>
  <p align=right>30,172</p>
  </td>
  <td width=96>
  <p align=right>14,300</p>
  </td>
  <td width=96>
  <p align=right>15,872</p>
  </td>
  <td width=96>
  <p align=right>-</p>
  </td>
  <td width=96>
  <p align=right>-</p>
  </td>
 </tr>
 <tr>
  <td width=175>
  <p>Capital
  leases</p>
  </td>
  <td width=96>
  <p align=right>61,870</p>
  </td>
  <td width=96>
  <p align=right>3,455</p>
  </td>
  <td width=96>
  <p align=right>6,778</p>
  </td>
  <td width=96>
  <p align=right>7,126</p>
  </td>
  <td width=96>
  <p align=right>44,511</p>
  </td>
 </tr>
 <tr>
  <td width=175 valign=top>
  <p>Mortgage loan obligations</p>
  </td>
  <td width=96 valign=top>
  <p align=right>39,536</p>
  </td>
  <td width=96 valign=top>
  <p align=right>2,351</p>
  </td>
  <td width=96 valign=top>
  <p align=right>4,767</p>
  </td>
  <td width=96 valign=top>
  <p align=right>4,387</p>
  </td>
  <td width=96 valign=top>
  <p align=right>28,031</p>
  </td>
 </tr>
 <tr>
  <td width=175>
  <p>Operating
  leases </p>
  </td>
  <td width=96>
  <p align=right>878,910</p>
  </td>
  <td width=96>
  <p align=right>102,491</p>
  </td>
  <td width=96>
  <p align=right>195,181</p>
  </td>
  <td width=96>
  <p align=right>172,317</p>
  </td>
  <td width=96>
  <p align=right>408,921</p>
  </td>
 </tr>
</table>





<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td width=175 valign=top>

  </td>
  <td width=480 colspan=5 valign=top>
  <p align=center><b><br>
  Amount of Credit Facility
  Expiration by Period<br>
  <font size="2">(in thousands)</font></b></p>
  </td>
 </tr>
 <tr>
  <td width=175 valign=top>

  </td>
  <td width=96 valign=top>
  <h6 align=center><font size="3">Total<br>
  Commitment</font></h6>
  </td>
  <td width=96 valign=top>
  <p align=center><b>Less than<br>
  <u>1 year (c)</u></b></p>
  </td>
  <td width=96 valign=top>
  <p align=center><b>2-3<br>
  <u>Years</u></b></p>
  </td>
  <td width=96 valign=top>
  <p align=center><b>4-5<br>
  <u>Years</u></b></p>
  </td>
  <td width=96 valign=top>
  <p align=center><b>Over 5<br>
  <u>Years</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=175>
  <p>Credit
  facilities (b)</p>
  </td>
  <td width=96>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 325,000</p>
  </td>
  <td width=96>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 50,000</p>
  </td>
  <td width=96>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; 275,000</p>
  </td>
  <td width=96>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</p>
  </td>
  <td width=96>
  <p align=right>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; -</p>
  </td>
 </tr>
</table>



<blockquote>



<p align="justify"><font size="2">(a)&nbsp; The
convertible debt was issued at a discount representing a yield to maturity of
2.75% per annum.&nbsp; The $267.3 million
balance is the accreted carrying value of the debt at March 24, 2004.&nbsp; The convertible debt will continue to
accrete at 2.75% per annum and, if  outstanding to maturity in October 2021, the
obligation will total $431.7 million.</font></p>



<p align="justify"><font size="2">(b)&nbsp; There were no amounts outstanding
under the credit facilities as of March 24, 2004.</font></p>



<p align="justify"><font size="2">(c)&nbsp; The portion of the credit
facilities that expires in less than one year is an uncommitted obligation
giving the lenders the option not to extend the Company funding.&nbsp; Should any or all of these obligations not be
extended, the Company has adequate capacity under the committed facility, which
does not expire until fiscal 2006.</font></p>



</blockquote>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capital
expenditures consist of purchases of land for future restaurant sites, new
restaurants under construction, purchases of new and replacement restaurant
furniture and equipment, and ongoing remodeling programs. Capital expenditures
were approximately $224.3 million for the first nine months of fiscal 2004
compared to $245.1 million for the same period of fiscal 2003. The decrease is
due primarily to fewer restaurants under construction and fewer restaurants opened in the
current period as compared to the same period in fiscal 2003. The Company
estimates that its capital expenditures during the fourth quarter of fiscal
2004 will approximate $81.0 million. These capital expenditures will be funded
entirely from operations and existing credit facilities.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; During the fourth quarter of fiscal 2004, the
Company settled all outstanding notes receivable related to the sale of
Cozymel's and received a final cash payment totaling $14.5 million. </p>



<hr><P Style="page-break-after: always"></P>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In
connection with the restaurant closings in the fourth quarter of fiscal 2004,
the Company expects to generate cash of approximately $13.0 million primarily
related to the sale of real estate and tax benefits resulting from impairment
charges.&nbsp; </p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to the Company's current stock
repurchase plan, the Company repurchased approximately 3.3 million shares of
its common stock for $105.2 million for year-to-date fiscal 2004.&nbsp; As of March 24, 2004, approximately 21.5
million shares of its common stock had been repurchased for $497.3 million
under the previously approved $510.0 million stock repurchase plan. In April
2004, the Board of Directors authorized an increase in the stock repurchase
plan of $500.0 million.&nbsp; The Company's
stock repurchase plan will be used to minimize the dilutive impact of a
potential conversion of the convertible debt and stock option exercises.&nbsp; The authorized increase brings the Company's
total stock repurchase program to $1,010.0 million.&nbsp; The repurchased common stock is reflected as a reduction of
shareholders' equity. </p>

<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company is not aware of any other
event or trend that would potentially affect its liquidity. In the event such
a trend develops, the Company believes that there are sufficient funds
available under its credit facilities and from its internal cash generating capabilities
to adequately manage the expansion of business.</p>



<p align="justify"><b>Item 3.&nbsp; QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There have been no material changes in the
quantitative and qualitative market risks of the Company since the prior
reporting period.</p>



<p align="justify"><b>CRITICAL ACCOUNTING POLICIES</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The following discussion addresses our
most critical accounting policies, which are those that are most important to
the portrayal of our financial condition and results, and that require
significant judgment.</p>



<blockquote>



<p align="justify"><b>Property
and Equipment</b>&nbsp; </p>



</blockquote>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment are depreciated on a
straight-line basis over the estimated useful lives of the assets.&nbsp; The useful lives of the assets are based
upon the Company's expectations for the period of time that the asset will be used
to generate revenue.&nbsp; The Company
periodically reviews the assets for changes in circumstances, which may impact
their useful lives.</p>



<blockquote>



<p align="justify"><b>Impairment of Long-Lived Assets</b>&nbsp; </p>



</blockquote>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company
reviews property and equipment for impairment when events or circumstances
indicate that the carrying amount of a restaurant's assets may not be
recoverable.&nbsp; The Company tests for
impairment using historical cash flows and other relevant facts and
circumstances as the primary basis for its estimates of future cash flows. &nbsp;This process requires the use of estimates
and assumptions, which are subject to a high degree of judgment.&nbsp; In addition, at least annually the Company
assesses the recoverability of goodwill and other intangible assets related to
its restaurant concepts.&nbsp; These
impairment tests require the Company to estimate fair values of its restaurant
concepts by making assumptions regarding future cash flows, expected growth
rates, terminal values, and other factors.&nbsp;
These assumptions could be materially different than those used by a
third party.&nbsp; In the event that these
assumptions change in the future, the Company may be required to record
impairment charges for these assets.</p>
<blockquote>
  <hr><P Style="page-break-after: always"></P>
  <p align="justify"><b>Financial Instruments</b>&nbsp; </p>
</blockquote>



<p align="justify">&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Company enters into interest rate swaps to maintain the value of certain
fixed-rate debt and lease obligations.&nbsp;
The fair value of these swaps is estimated using widely accepted
valuation methods.&nbsp; The valuation of
derivatives involves considerable judgment, including estimates of future
interest rate curves.&nbsp; Changes in those
estimates may materially affect the amounts recognized in the balance sheet for
the Company's derivatives and interest costs in future periods.</p>



<blockquote>



<p align="justify"> <b>Self-Insurance</b>&nbsp; </p>



</blockquote>



<p align="justify">&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;The Company is self-insured for certain
losses related to health, general liability and workers' compensation.&nbsp; The Company maintains stop loss coverage
with third party insurers to limit its total exposure.&nbsp; The self-insurance liability represents an
estimate of the ultimate cost of claims incurred as of the balance sheet date.&nbsp; The estimated liability is not discounted
and is established based upon analysis of historical data and actuarial
estimates, and is reviewed by the Company on a quarterly basis to ensure that
the liability is appropriate. If actual trends, including the severity or
frequency of claims, differ from our estimates, our financial results could be
impacted. </p>



<p align="justify"><b>Item 4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CONTROLS AND
PROCEDURES </b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Within the 90-day period prior to the
filing of this report, an evaluation was carried out under the supervision and with
the participation of the Company's management, including its Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of its disclosure controls and procedures (as defined in Rule
13a-14(c) under the Securities Exchange Act of 1934). Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the design and operation of these disclosure controls and procedures were
effective.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There were no significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.</p>



<p align="justify"><b>&nbsp;FORWARD-LOOKING
STATEMENTS</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company wishes to caution readers that the following
important factors, among others, could cause the actual results of the Company
to differ materially from those indicated by forward-looking statements made in
this report and from time to time in news releases, reports, proxy statements,
registration statements and other written communications, as well as verbal
forward-looking statements made from time to time by representatives of the
Company.&nbsp; Such forward-looking
statements involve risks and uncertainties that may cause the Company's or the
restaurant industry's actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by these forward-looking statements.&nbsp; Factors that might cause actual events or
results to differ materially from those indicated by these forward-looking
statements may include matters such as future economic performance, restaurant
openings, operating margins, the availability of acceptable real estate
locations for new restaurants, the sufficiency of the Company's cash balances
and cash generated from operating and financing activities for the Company's
future liquidity and capital resource needs, and other matters, and are
generally accompanied by words such as &quot;believes,&quot; &quot;anticipates,&quot; &quot;estimates,&quot;
&quot;predicts,&quot; &quot;expects&quot; and similar expressions that convey the uncertainty of
future events or outcomes.&nbsp; An expanded
discussion of some of these risk factors follows.</p>



<hr><P Style="page-break-after: always"></P>



<p align="justify"><i>Competition may adversely affect the Company's
operations and financial results.</i></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The restaurant business is highly competitive with respect to
price, service, restaurant location, nutritional and dietary trends and food quality, and is often affected by
changes in consumer tastes,  economic
conditions, population and traffic patterns.&nbsp;
The Company competes within each market with locally-owned restaurants
as well as national and regional restaurant chains, some of which operate more
restaurants and have greater financial resources and longer operating histories
than the Company.&nbsp; There is active
competition for management personnel and for attractive commercial real estate
sites suitable for restaurants.&nbsp; In
addition, factors such as inflation, increased food, labor and benefits costs,
and difficulty in attracting hourly employees may adversely affect the
restaurant industry in general and the Company's restaurants in particular.</p>



<p align="justify"><i>The Company's sales
volumes generally decrease in winter months.</i></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company's sales volumes fluctuate seasonally, and are
generally higher in the summer months and lower in the winter months, which may
cause seasonal fluctuations in the Company's operating results.</p>



<p align="justify"><i>Changes in governmental
regulation may adversely affect the Company's ability to open new restaurants
and the Company's existing and future operations.</i></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Each of the Company's restaurants is subject to licensing and
regulation by alcoholic beverage control, health, sanitation, safety and fire
agencies in the state, county and/or municipality in which the restaurant is
located.&nbsp; The Company generally has not
encountered any difficulties or failures in obtaining the required licenses or
approvals that could delay or prevent the opening of a new restaurant and
although the Company does not, at this time, anticipate any occurring in the
future, there can be no assurance that the Company will not experience material
difficulties or failures that could delay the opening of restaurants in the
future.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; The Company is subject to federal and state environmental
regulations, and although these have not had a material negative effect on the
Company's operations, there can be no assurance that there will not be a
material negative effect in the future.&nbsp;
More stringent and varied requirements of local and state governmental
bodies with respect to zoning, land use and environmental factors could delay
or prevent development of new restaurants in particular locations.</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; The Company is subject to the Fair Labor Standards Act, which
governs such matters as minimum wages, overtime and other working conditions,
along with the Americans With Disabilities Act, various family leave mandates
and a variety of other laws enacted, or rules and regulations promulgated, by
federal, state and local governmental authorities that govern these and other
employment matters. Although the Company expects increases in payroll expenses
as a result of federal, state and local mandated increases in the minimum wage,
and although such increases are not expected to be material, there can be no
assurance that there will not be material increases in the future.&nbsp; However, the Company's vendors may be
affected by higher minimum wage standards, which may result in increases in the
price of goods and services supplied to the Company.</p>

<hr><P Style="page-break-after: always"></P>

<p align="justify"><i>Inflation may increase
the Company's operating expenses.</i></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company has not experienced a significant overall impact
from inflation.&nbsp; As operating expenses
increase, the Company, to the extent permitted by competition, recovers
increased costs by increasing menu prices, by reviewing, then implementing,
alternative products or processes, or by implementing other cost-reduction
procedures.&nbsp; There can be no assurance,
however, that the Company will be able to continue to recover increases in
operating expenses due to inflation in this manner.</p>



<p align="justify"><i>Increased energy costs may
adversely affect the Company's profitability.</i></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; The Company's success depends in part on its ability to absorb
increases in utility costs.&nbsp; Various
regions of the United States in which the Company operates multiple
restaurants, particularly California, have experienced significant and
temporary increases in utility prices.&nbsp;
If these increases should recur, they will have an adverse effect on the
Company's profitability.</p>



<p align="justify"><i>If the Company is unable to
meet its growth plan, the Company's profitability in the future may be
adversely affected.</i></p>



<p align="justify">&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; The Company's ability to meet its growth plan is dependent
upon, among other things, its ability to identify available, suitable and
economically viable locations for new restaurants, obtain all required
governmental permits (including zoning approvals and liquor licenses) on a
timely basis, hire all necessary contractors and subcontractors, and meet
construction schedules.&nbsp; The costs
related to restaurant and concept development include purchases and leases of
land, buildings and equipment and facility and equipment maintenance, repair
and replacement.&nbsp; The labor and
materials costs involved vary geographically and are subject to general price
increases.&nbsp; As a result, future capital
expenditure costs of restaurant development may increase, reducing
profitability.&nbsp; There can be no
assurance that the Company will be able to expand its capacity in accordance
with its growth objectives or that the new restaurants and concepts opened or
acquired will be profitable.</p>



<p align="justify"><i>Unfavorable publicity
relating to one or more of the Company's restaurants in a particular brand may
taint public perception of the brand.</i></p>



<p align="justify">&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; Multi-unit restaurant businesses can be adversely affected by
publicity resulting from poor food quality, illness or other health concerns or
operating issues stemming from one or a limited number of restaurants.&nbsp; In particular, since the Company depends
heavily on the &quot;Chili's&quot; brand for a majority of its revenues, unfavorable
publicity relating to one or more Chili's restaurants could have a material
adverse effect on the Company's business,  financial
condition, and results of operations.</p>



<p align="justify"><i>Other risk factors may
adversely affect the Company's financial performance.</i></p>



<p align="justify">&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; Other risk factors that could cause the Company's actual
results to differ materially from those indicated in the forward-looking
statements include, without limitation, changes in economic conditions,
consumer perceptions of food safety, changes in consumer tastes, governmental
monetary policies, changes in demographic trends, availability of employees,
terrorist acts, and weather and other acts of God.</p>



<hr><P Style="page-break-after: always"></P>



<p align="justify">



<br clear=all>




<b>PART II.&nbsp; OTHER INFORMATION</b></p>

<p align="justify"><b>&nbsp;Item 1. &nbsp;&nbsp;LEGAL
PROCEEDINGS</b></p>

<p align="justify"><b>&nbsp;</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Information regarding legal proceedings is incorporated by
reference from Note 7 to the Company's consolidated financial statements set
forth in Part I of this report.</p>



<p align="justify"><b>Item 2. &nbsp; CHANGES IN SECURITIES, USE OF PROCEEDS AND
ISSUER PURCHASES OF EQUITY SECURITIES</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares repurchased during the third quarter
of fiscal 2004 are as follows (in thousands, except share and per share
amounts):</p>



<table border=0 cellspacing=0 cellpadding=0 width=649>
 <tr>
  <td width=241 valign=bottom>
  <p align=center>&nbsp;</p>
  </td>
  <td width=126 valign=bottom>
  <p align=center><b>Total Number<br>
&nbsp;of
  Shares <u>Purchased (a)</u></b></p>
  </td>
  <td width=114 valign=bottom>
  <p align=center><b>Average <br>
  Price
  <br>
  Paid per<br>
&nbsp;<u>Share</u></b></p>
  </td>
  <td width=168 valign=bottom>
  <p align=center><b>Maximum Dollar
  <br>
  Value that May <br>
  Yet be Purchased <u><br>
  Under the Program</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=241 valign=bottom>
  <p>December 25, 2003
  through<br>
&nbsp;&nbsp;
&nbsp;January 28, 2004</p>
  </td>
  <td width=126 nowrap valign=bottom>
  <p>&nbsp;&nbsp;
  282,800</p>
  </td>
  <td width=114 nowrap valign=bottom>
  <p align=center>$33.45</p>
  </td>
  <td width=168 nowrap valign=bottom>
  <p align=center>&nbsp;$18,054 </p>
  </td>
 </tr>
 <tr>
  <td width=241 valign=bottom>
  <p>January 29, 2004
  through <br>
  &nbsp;&nbsp;&nbsp;
  February 25, 2004</p>
  </td>
  <td width=126 nowrap valign=bottom>
  <p>&nbsp;&nbsp;
  148,200</p>
  </td>
  <td width=114 nowrap valign=bottom>
  <p align=center>$35.83</p>
  </td>
  <td width=168 nowrap valign=bottom>
  <p align=center>&nbsp;$12,739 </p>
  </td>
 </tr>
 <tr>
  <td width=241 valign=bottom>
  <p>February 26, 2004
  through <br>
  &nbsp;&nbsp;&nbsp;
  March 24, 2004</p>
  </td>
  <td width=126 nowrap valign=bottom>
  <p>&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp; 1,300 </u></p>
  </td>
  <td width=114 nowrap valign=bottom>
  <p align=center>$38.24</p>
  </td>
  <td width=168 nowrap valign=bottom>
  <p align=center>&nbsp;$12,689 </p>
  </td>
 </tr>
 <tr>
  <td width=241 valign=bottom>

  <br>
&nbsp;</td>
  <td width=126 nowrap valign=bottom>
  <p>&nbsp; <u>&nbsp;432,300 </u></p>
  </td>
  <td width=114 nowrap valign=bottom>
  <p align=center>$34.28</p>
  </td>
  <td width=168 nowrap valign=bottom>
  <p align=center>&nbsp;</p>
  </td>
 </tr>
</table>



<blockquote>



<p><font size="2">(a)&nbsp;
All of the shares purchased during the third quarter of fiscal 2004 were
purchased as part of the publicly announced program described in Part I of this
report.</font></p>



</blockquote>



<p><b>Item 6.&nbsp; EXHIBITS AND REPORTS ON FORM 8-K</b></p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibits
</p>

<blockquote>
  <blockquote>



<p align="justify">31(a)&nbsp;&nbsp; Certification
by Douglas H. Brooks, President and Chief Executive Officer of the Registrant,
pursuant to 17 CFR 240.13a - 14(a) or 17 CFR 240.15d - 14(a).</p>



<p align="justify">31(b)&nbsp;&nbsp; Certification
by Charles M. Sonsteby, Executive Vice President and Chief Financial Officer of
the Registrant, pursuant to 17 CFR 240.13a - 14(a) or 17 CFR 240.15d - 14(a).</p>



    <p align="justify">32(a)&nbsp;&nbsp; Certification by Douglas H. Brooks,
    President and Chief Executive Officer of the Registrant, pursuant to 18
    U.S.C. Section 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.</p>
    <p align="justify">32(b)&nbsp;&nbsp; Certification by Charles M. Sonsteby,
    Executive Vice President and Chief Financial Officer of the Registrant,
    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.</p>
  </blockquote>

  <hr><P Style="page-break-after: always"></P>

<p align="justify">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reports on
Form 8-K</p>



  <blockquote>



<p align="justify">A current report on Form 8-K, dated January 20, 2004, was filed
with the Securities and Exchange Commission on January 23, 2004.&nbsp; This Form 8-K furnished a copy of the
Company's press release announcing its second quarter fiscal 2004 results.</p>

  </blockquote>
</blockquote>
<hr><P Style="page-break-after: always"></P>&nbsp;<p align=center><b>SIGNATURES</b></p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to
the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.</p>





<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>BRINKER
  INTERNATIONAL, INC.</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>

  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>

  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>

  </td>
 </tr>
 <tr>
  <td width=338 valign=top>
  <p>&nbsp;</p>
  <p>&nbsp;</p>
  <p>Date:
  May 7, 2004</p>
  </td>
  <td width=338 valign=top>
  <p>&nbsp;</p>
  <p>&nbsp;</p>
  <p>By:
  <u>/s/ Douglas H.
  Brooks&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp; Douglas H. Brooks,
  President</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp; and Chief Executive Officer</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp; (Principal Executive Officer)</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>

  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>

  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>

  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>

  </td>
 </tr>
 <tr>
  <td width=338 valign=top>
  <p>&nbsp;</p>
  <p>&nbsp;</p>
  <p>Date:
  May 7, 2004</p>
  </td>
  <td width=338 valign=top>
  <p>&nbsp;</p>
  <p>&nbsp;</p>
  <p>By:
  <u>/s/ Charles M. Sonsteby&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp; Charles M.
  Sonsteby,</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp; Executive Vice President and</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp; Chief Financial Officer</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp; (Principal Financial Officer)</p>
  </td>
 </tr>
</table>







</body>

</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>ex31a3q041.htm
<DESCRIPTION>EXHIBIT 31(A)
<TEXT>
<html>

<head>

<title>EXHIBIT 31(a)</title>

</head>

<body>

<p align=center>EXHIBIT 31(a)</p>



<p align=center><b>CERTIFICATIONS</b></p>

<p align="justify">I,
Douglas H. Brooks, certify that: </p>



<p align="justify">1. I have reviewed this quarterly report on Form 10-Q
of Brinker International, Inc.;</p>

<p align="justify">2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report;</p>

<p align="justify">3. Based on my knowledge, the financial statements, and
other financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
report;</p>

<p align="justify">4. The registrant's other certifying officer(s) and I
are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:</p>

<blockquote>

<p align="justify">a.&nbsp;&nbsp;&nbsp;
Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;</p>

<p align="justify">b.&nbsp;&nbsp;&nbsp;
Evaluated
the effectiveness of the registrant's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and</p>

<p align="justify">c.&nbsp;&nbsp;&nbsp;
Disclosed
in this report any change in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and</p>

</blockquote>

<p align="justify">5. The registrant's other certifying officer(s) and I
have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):</p>

<blockquote>

<p align="justify">a.&nbsp;&nbsp;&nbsp;
All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and
report financial information; and</p>

<hr><P Style="page-break-after: always"></P>

<p align="justify">b.&nbsp;&nbsp;&nbsp;
Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal control over financial
reporting.</p>







</blockquote>







<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>

  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>

  </td>
 </tr>
 <tr>
  <td width=319 valign=top>
  <p>&nbsp;</p>
  <p>Date: May 7, 2004</p>
  </td>
  <td width=319 valign=top>
  <p>&nbsp;</p>
  <p><u>/s/ Douglas H. Brooks
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>Douglas H. Brooks</p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>President and</p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>Chief Executive Officer</p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>(Principal Executive Officer)</p>
  </td>
 </tr>
</table>



</body>

</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>ex31b3q041.htm
<DESCRIPTION>EXHIBIT 31(B)
<TEXT>
<html>

<head>

<title>EXHIBIT 31(b)</title>

</head>

<body>

<p align=center>EXHIBIT 31(b)</p>



<p align=center><b>CERTIFICATIONS</b></p>



<p align="justify">I,
Charles M. Sonsteby, certify that: </p>



<p align="justify">1.&nbsp;&nbsp;&nbsp;
I
have reviewed this quarterly report on Form 10-Q of Brinker International,
Inc.;</p>

<p align="justify">2.&nbsp;&nbsp;&nbsp;
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;</p>

<p align="justify">3.&nbsp;&nbsp;&nbsp;
Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;</p>

<p align="justify">4.&nbsp;&nbsp;&nbsp;
The
registrant's other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) for the registrant and have:</p>

<blockquote>

<p align="justify">a.&nbsp;&nbsp;&nbsp;
Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;</p>

<p align="justify">b.&nbsp;&nbsp;&nbsp;
Evaluated
the effectiveness of the registrant's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and</p>

<p align="justify">c.&nbsp;&nbsp;&nbsp;
Disclosed
in this report any change in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and</p>

</blockquote>

<p align="justify">5.&nbsp;&nbsp;&nbsp;
The
registrant's other certifying officer(s) and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):</p>

<blockquote>

<p align="justify">a.&nbsp;&nbsp;&nbsp;
All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and
report financial information; and</p>

<hr><P Style="page-break-after: always"></P>

<p align="justify">b.&nbsp;&nbsp;&nbsp;
Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal control over financial
reporting.</p>





</blockquote>





<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>

  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>

  </td>
 </tr>
 <tr>
  <td width=319 valign=top>
  <p>&nbsp;</p>
  <p>Date: May 7, 2004</p>
  </td>
  <td width=319 valign=top>
  <p>&nbsp;</p>
  <p><u>/s/ Charles M.
  Sonsteby&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>Charles M. Sonsteby</p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>Executive Vice President and</p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>Chief Financial Officer</p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>(Principal Financial Officer)</p>
  </td>
 </tr>
</table>



</body>

</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>ex32a3q041.htm
<DESCRIPTION>EXHIBIT 32(A)
<TEXT>
<html>

<head>

<title>EXHIBIT 32(a)</title>

</head>

<body>

<p align=center>EXHIBIT 32(a)</p>





<p align=center>CERTIFICATION</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to 18 U.S.C.
Section 1350, the undersigned officer of Brinker International, Inc. (the
&quot;Company&quot;), hereby certifies that the Company's Quarterly Report on
Form 10-Q for the quarter ended March 24, 2004 (the &quot;Report&quot;) fully
complies with the requirements of Section 13(a) or 15(d), as applicable, of the
Securities Exchange Act of 1934 and that the information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.</p>







<p align="justify">&nbsp;</p>







<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td width=319 valign=top>
  <p>Date: May 7, 2004</p>
  </td>
  <td width=319 valign=top>
  <p>By: <u>/s/ Douglas H.
  Brooks&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>&nbsp;&nbsp;&nbsp; Douglas
  H. Brooks</p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>&nbsp;&nbsp;&nbsp;
  President and</p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>&nbsp;&nbsp;&nbsp; Chief
  Executive Officer</p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top>

  </td>
  <td width=319 valign=top>
  <p>&nbsp;&nbsp;&nbsp;
  (Principal Executive Officer)</p>
  </td>
 </tr>
</table>



</body>

</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>5
<FILENAME>ex32b3q041.htm
<DESCRIPTION>EXHIBIT 32(B)
<TEXT>
<html>

<head>

<title>EXHIBIT 32(b)</title>

</head>

<body>

<p align=center>EXHIBIT 32(b)</p>





<p align=center>CERTIFICATION</p>



<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to 18 U.S.C.
Section 1350, the undersigned officer of Brinker International, Inc. (the
&quot;Company&quot;), hereby certifies that the Company's Quarterly Report on
Form 10-Q for the quarter ended March 24, 2004 (the &quot;Report&quot;) fully
complies with the requirements of Section 13(a) or 15(d), as applicable, of the
Securities Exchange Act of 1934 and that the information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.</p>







<p>&nbsp;</p>







<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td width=338 valign=top>
  <p>Date: May 7, 2004</p>
  </td>
  <td width=338 valign=top>
  <p>By: <u>/s/ Charles M.
  Sonsteby&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp; Charles
  M. Sonsteby,</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp;
  Executive Vice President and</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp; Chief
  Financial Officer</p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top>

  </td>
  <td width=338 valign=top>
  <p>&nbsp;&nbsp;&nbsp;
  (Principal Financial Officer)</p>
  </td>
 </tr>
</table>





</body>

</html>

</TEXT>
</DOCUMENT>
</SUBMISSION>
