Cover Page About Brinker International Inc. Financial Highlights To Our Shareholders, Employees and Guests Chili's Romano's Macaroni Grill On The Border Mexican Grill & Cantina Maggiano's Little Italy Corner Bakery Cafe Cozymel's Coastal Grill Big Bowl Asian Kitchen Rockfish Seafood Grill Board of Directors Principal Officers Principal Officers in Restaurant Concepts Shareholder Information FINANCIAL INFORMATION    Selected Financial Data    Management's Discussion and Analysis    Consolidated Statements of Income    Consolidated Balance Sheets    Consolidated Statements of Shareholders' Equity    Consolidated Statements of Cash Flows    Notes to Consolidated Financial Statements    Independent Auditors' Report    Management's Responsibility Back Cover

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. SHAREHOLDERS' EQUITY

(a) Stockholder Protection Rights Plan     The Company maintains a Stockholder Protection Rights Plan (the "Plan"). Upon implementation of the Plan, the Company declared a dividend of one right on each outstanding share of common stock. The rights are evidenced by the common stock certificates, automatically trade with the common stock, and are not exercisable until it is announced that a person or group has become an Acquiring Person, as defined in the Plan. Thereafter, separate rights certificates will be distributed and each right (other than rights beneficially owned by any Acquiring Person) will entitle, among other things, its holder to purchase, for an exercise price of $40, a number of shares of Company common stock having a market value of twice the exercise price. The rights may be redeemed by the Board of Directors for $0.01 per right prior to the date of the announcement that a person or group has become an Acquiring Person. (b) Preferred Stock     The Company's Board of Directors is authorized to provide for the issuance of 1,000,000 preferred shares with a par value of $1.00 per share, in one or more series, and to fix the voting rights, liquidation preferences, dividend rates, conversion rights, redemption rights, and terms, including sinking fund provisions, and certain other rights and preferences. As of June 26, 2002, no preferred shares were issued. (c) Treasury Stock     In August 2001 and April 2002, the Board of Directors authorized increases in the stock repurchase plan of an additional $100.0 million each, bringing the Company's total share repurchase program to $410.0 million. Pursuant to the Company's stock repurchase plan, the Company repurchased approximately 5.1 million shares of its common stock for $136.1 million during fiscal 2002, resulting in a cumulative repurchase total of approximately 16.0 million shares of its common stock for $327.6 million. The Company's stock repurchase plan is used by the Company to offset the dilutive effect of stock option exercises, satisfy obligations under its savings plans, and for other corporate purposes. The repurchased common stock is reflected as a reduction of shareholders' equity. (d) Restricted Stock     Pursuant to shareholder approval in November 1999, the Company implemented the Executive Long-Term Incentive Plan for certain key employees, one component of which is the award of restricted common stock. During fiscal 2002 and 2001, respectively, approximately 100,000 and 57,000 shares of restricted common stock were awarded, the majority of which vests over a three-year period. Unearned compensation was recorded as a separate component of shareholders' equity at the date of the award based on the market value of the shares and is being amortized to compensation expense over the vesting period. (e) Stock Split     On December 8, 2000, the Board of Directors declared a three-for-two stock split, effected in the form of a 50% stock dividend, to shareholders of record on January 3, 2001, payable on January 16, 2001. As a result of the split, 39.2 million shares of common stock were issued on January 16, 2001. All references to number of shares and per share amounts of common stock have been restated to reflect the stock split. Shareholders' equity accounts have been restated to reflect the reclassification of an amount equal to the par value of the increase in issued common shares from the retained earnings account to the common stock account.