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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 11-K
 
ý
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition year from              to             
Commission File No. 1-10275
 
A.
Full title of the plan and the address of the plan, if different from that of the issuer named below:
BRINKER INTERNATIONAL
401(K) SAVINGS PLAN
 
B.
Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
Brinker International
6820 LBJ Freeway
Dallas, Texas 75240


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Table of Contents
 
Page
 
 
Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*
All other schedules required by Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable.


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Report of Independent Registered Public Accounting Firm
To the Participants and Plan Administrator of the
Brinker International 401(k) Savings Plan

Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of the Brinker International 401(k) Savings Plan (the “Plan”) as of December 31, 2017 and 2016 and the related statements of changes in net assets available for benefits for the years then ended, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2017 and 2016, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits include performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Supplemental Information
The supplemental information in the accompanying schedule of Form 5500, Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2017 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
/s/ Whitley Penn LLP
We have served as the Plan’s auditor since 2007.
Dallas, Texas
June 1, 2018

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BRINKER INTERNATIONAL
401(K) SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 2017 and 2016
 
 
2017
 
2016
Investments – at fair value (Note 3)
$
269,704,693

 
$
236,532,521

Receivables:
 
 
 
Employer contributions
143,559

 
143,673

Participants’ contributions
272,928

 
277,643

Notes receivable from participants
12,038,074

 
10,948,688

 
12,454,561

 
11,370,004

Net assets available for benefits
$
282,159,254

 
$
247,902,525

See accompanying notes to financial statements.

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BRINKER INTERNATIONAL
401(K) SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2017 and 2016
 
 
2017
 
2016
Additions:
 
 
 
Contributions:
 
 
 
Participants
$
16,949,605

 
$
16,617,765

Rollovers
1,162,997

 
664,342

Employer
9,019,544

 
8,636,851

 
27,132,146

 
25,918,958

Investment income:
 
 
 
Net appreciation in fair value of investments
23,887,412

 
9,558,035

Interest and dividends
15,299,002

 
8,121,917

 
39,186,414

 
17,679,952

Interest on notes receivable from participants
498,545

 
450,651

Total additions
66,817,105

 
44,049,561

Deductions:
 
 
 
Benefits paid to participants
32,560,376

 
25,286,817

Net increase
34,256,729

 
18,762,744

Net assets available for benefits at beginning of year
247,902,525

 
229,139,781

Net assets available for benefits at end of year
$
282,159,254

 
$
247,902,525

See accompanying notes to financial statements.

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BRINKER INTERNATIONAL
401(K) SAVINGS PLAN
Notes to Financial Statements

December 31, 2017 and 2016
1. DESCRIPTION OF THE PLAN
The following description of the Brinker International (the “Company” or “Brinker”) 401(k) Savings Plan (the “Plan”) is provided for general information purposes only. Participants should refer to the Plan Document for a more complete description of the Plan’s provisions. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.
General
The Company originally adopted the Plan effective January 1, 1993. The Plan is a qualified defined contribution retirement plan covering eligible employees as defined below. The Plan was most recently amended and restated in its entirety effective December 1, 2014, primarily for the purpose of incorporating previous Plan amendments and implementing an updated Plan Document. Leased employees, non-US citizens, and union employees without specific contract provisions are not eligible to participate in the Plan.
The investments of the Plan are maintained in a trust (the “Trust”) by Fidelity Management Trust Company (the “Trustee”) and the recordkeeping functions are performed by Fidelity Investments Institutional Operations Company Incorporated (the “Recordkeeper”).
Contributions
An employee may become a participant on the first of the month following the date the employee completes one year of eligible service (at least 1,000 hours) and attains the age of twenty-one. Contributions are subject to Internal Revenue Service (“IRS”) limitations on total annual contributions, as well as plan limitations which stipulate that up to 50% of eligible base compensation including tips and 100% of eligible bonuses, as defined in the Plan, may be contributed to various investment funds on a tax-deferred basis.
The Company matches in cash at a rate of 100% of the first 3% of pay and 50% of the next 2% of pay for a participant’s compensation, as defined in the Plan, up to the maximum deferrable amount allowed by the Internal Revenue Code (“IRC”).
Eligible participants age 50 or older by the end of a calendar year are permitted to make catch-up contributions to the Plan up to the deferral amount allowed by the IRC.
Active hourly-tipped participants may elect to make voluntary after-tax contributions for each pay period under the Plan. The employee contributions may be made only from the participant’s compensation representing tip income that is not paid through the Company’s payroll and may contribute up to 100% of such tip income. An active participant may not make contributions for any period in which such person is not accruing hours of service with the Company.
 

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BRINKER INTERNATIONAL
401(K) SAVINGS PLAN
Notes to Financial Statements

Participants’ Accounts
Participant and Company matching contributions are invested in accordance with participants’ elections in the following funds:
 
Fund Options
 
Primarily invests in:
 
 
 
Fidelity Government Money Market Fund
 
Money market funds
 
 
 
PIMCO Total Return Fund
 
Intermediate-term mortgage, corporate, government and foreign bonds
 
 
 
Vanguard Inflation Protected Securities Fund
 
Intermediate-term government bonds
 
 
 
American Beacon Large Cap Value Fund
 
Equities of large-cap domestic companies
 
 
 
Fidelity Contrafund
 
Equities of domestic and foreign companies
 
 
 
American Funds EuroPacific Growth Fund
 
Equities of foreign companies
 
 
 
Neuberger Berman Genesis Fund
 
Equities of small-cap domestic companies
 
 
 
Dreyfus/The Boston Company Small Cap Value Fund
 
Equities of small-cap domestic companies
 
 
 
Fidelity Small Cap Growth Fund
 
Equities of small-cap domestic companies
 
 
 
Fidelity 500 Index Fund
 
Equities of companies included in the S&P 500 Index
 
 
 
Fidelity Extended Market Index Fund
 
Equities of companies included in the Dow Jones U.S. Completion Total Stock Market Index
 
 
 
Fidelity Freedom Funds
 
Fidelity equity, fixed-income and short-term mutual funds
 
 
 
Brinker Common Stock Fund
 
Brinker common stock and short-term investments
Participants’ accounts are adjusted with the proportionate share of gains or losses generated by their elected investment funds.
Vesting
Participants are immediately vested in both employee and employer matching contributions and the earnings thereon.
Forfeited Accounts
Forfeited account balances are used to reduce Company matching contributions. Forfeited accounts for the years ended December 31, 2017 and 2016 were not significant.
Payment of Benefits
Distributions under the Plan may be made upon a participant’s death, disability, retirement, or termination of employment. Actively employed participants may withdraw a portion of their vested account balance due to a financial hardship in accordance with IRS regulations and as defined in the Plan Document. Benefit payments may be made in the form of a single lump sum payment, a direct rollover into an Individual Retirement Account or another qualified plan, or periodic payments, as applicable.
 Notes Receivable from Participants
Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum amount equal to the lesser of $50,000 or 50% of their vested account balance. A participant may have up to two loans outstanding at a time; however, the total outstanding balance of all loans may not exceed the lesser of $50,000 or 50% of the participant’s vested account balance. Loan terms range from six months to 5 years or up to 15 years for the purchase of a primary residence. Maturities range from 2018 through 2032 as of December 31, 2017. The loans are secured by the participant’s account and bear interest at a rate of 1% above the prime lending rate which is determined at the end of the month prior to the month in which the loan request is

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BRINKER INTERNATIONAL
401(K) SAVINGS PLAN
Notes to Financial Statements

made. Interest rates on outstanding loans ranged from 4.25% to 9.25% as of December 31, 2017 and 2016. Principal and interest payments are made through bi-weekly payroll deductions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements are prepared under the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Administrative Expenses
The Company pays all administrative expenses related to the Plan for actively employed participants, except for transactional fees related to participant-directed actions on their account which are paid by the participant. Non-employee participants are responsible for the annual administration fees for their accounts.
Investment Valuation and Income Recognition
The Plan’s money market funds, mutual funds and Company common stock fund are stated at fair value using quoted market prices. (See Note 3 for additional disclosures).
Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Income from investments is recorded as earned on an accrual basis.
Notes Receivable from Participants
Notes receivable from participants are valued at the outstanding principal balance, which represents the exit value upon collection, either by repayment or by deemed distribution if not repaid.
Payment of Benefits
Benefits are recorded when paid. 
Contributions
Participant and employer contributions are accrued in the period that payroll deductions are made from plan participants in accordance with salary deferral agreements and as such, become obligations of the Company and assets of the Plan.
3. FAIR VALUE MEASUREMENTS
U.S. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-tier hierarchy that is used to identify assets and liabilities measured at fair value. The hierarchy focuses on the inputs used to measure fair value and requires that the lowest level input be used. The three levels defined are as follows:

Level 1 – observable inputs that are based upon quoted market prices for identical assets or liabilities within active markets.
Level 2 – observable inputs other than Level 1 that are based upon quoted market prices for similar assets or liabilities, based upon quoted prices within inactive markets, or inputs other than quoted market prices that are observable through market data for substantially the full term of the asset or liability.
Level 3 – inputs that are unobservable for the particular asset or liability due to little or no market activity and are significant to the fair value of the asset or liability. These inputs reflect assumptions that market participants would use when valuing the particular asset or liability.

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BRINKER INTERNATIONAL
401(K) SAVINGS PLAN
Notes to Financial Statements

The methodologies used to measure the fair value of each major category of investments are as follows:

Money Market funds are valued based on the short-term cash component as of the measurement date and classified within Level 1 of the valuation hierarchy.
Mutual funds are valued at the total market value of the underlying assets provided by the trustee of the Plan and are classified within Level 1 of the valuation hierarchy.
Brinker common stock fund is valued at the combined market value of the underlying stock based upon the closing price of the stock on its primary exchange times the number of shares held and the short-term cash component as of the measurement date and classified within Level 1 of the valuation hierarchy.
These methodologies were consistently applied as of December 31, 2017 and 2016.
 
The following table presents the fair value of financial instruments as of December 31, 2017 and 2016 by type of asset. The Plan has no investments that are classified as Level 2 or Level 3 as of December 31, 2017 and 2016.
 
 
 
2017
 
2016
Money market
 
$
9,252,687

 
$
11,241,094

Mutual funds
 
243,648,950

 
202,811,817

Brinker common stock fund
 
16,803,056

 
22,479,610

Total investments at fair value
 
$
269,704,693

 
$
236,532,521

4. RELATED-PARTY AND PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments consist of common stock of the Company and money market and mutual funds managed by the Trustee. Transactions involving these investments, as well as loans made to participants, qualify as party-in-interest transactions. All of these party-in-interest transactions are exempt from the prohibited transaction rules.
5. CONCENTRATION
At December 31, 2017 and 2016, the Brinker common stock fund approximated $16.8 million and $22.5 million, respectively, and represented approximately 6.2% and 9.5%, respectively, of the Plan’s total investments at fair value.
6. PLAN TERMINATION
Although it has no present intention to do so, the Company may terminate the Plan at any time subject to the provisions of ERISA.
7. INCOME TAX STATUS
In December 2011, the Plan adopted a volume submitter plan document. The sponsor of the volume submitter plan document has received an advisory letter from the IRS dated March 31, 2014, stating that the form of the underlying volume submitter document is qualified under Section 401 of the IRC and that any employer adopting this form of the plan will be considered to have a plan qualified under Section 401(a) of the IRC. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualified status. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes the Plan is qualified and the related Trust is tax-exempt as of the financial statement date.
8. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits. It is not possible

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BRINKER INTERNATIONAL
401(K) SAVINGS PLAN
Notes to Financial Statements

at this time to reasonably estimate the possible loss or range of loss, if any. We further caution that it is not possible to see all such factors, and you should not consider the identified factors as a complete list of all risks and uncertainties.
9. SUBSEQUENT EVENTS
In preparing the accompanying financial statements, management of the Plan has evaluated all subsequent events and transactions for potential recognition or disclosure through June 1, 2018, the date the financial statements were available for issuance.

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EIN: 75-2354902
PLAN # 001

BRINKER INTERNATIONAL
401(K) SAVINGS PLAN
Form 5500 Schedule H, line 4i – Schedule of Assets (Held at End of Year)
December 31, 2017
 
(a)
(b)
(c)
 
(e)
Identity of issue,
borrower, lessor or similar party
Description of investment including maturity date, rate of interest, collateral, par, or maturity value
 
Current
Value
 
 
 
 
Money market:
 
 
 
*   Fidelity Government Money Market Fund
9,252,687 shares
 
$
9,252,687

Mutual funds:
 
 
 
*   Fidelity Contrafund
324,349 shares
 
39,697,130

*   Fidelity 500 Index Fund
217,268 shares
 
20,303,730

*   Fidelity Freedom 2040 Fund
1,822,659 shares
 
19,484,228

*   Fidelity Freedom 2035 Fund
1,269,459 shares
 
19,308,466

American Funds EuroPacific Growth Fund
311,138 shares
 
17,467,262

Neuberger Berman Genesis Fund
280,984 shares
 
16,145,353

*   Fidelity Freedom 2030 Fund
824,232 shares
 
14,860,903

*   Fidelity Freedom 2045 Fund
1,136,867 shares
 
13,767,454

American Beacon Large Cap Value Fund
429,932 shares
 
12,532,508

PIMCO Total Return Fund
1,177,919 shares
 
12,097,232

*   Fidelity Freedom 2050 Fund
872,975 shares
 
10,624,106

*   Fidelity Freedom 2025 Fund
728,358 shares
 
10,473,793

*   Fidelity Small Cap Growth Fund
378,012 shares
 
9,348,230

Dreyfus/The Boston Company Small Cap Value Fund
364,238 shares
 
8,151,642

*   Fidelity Freedom 2020 Fund
313,804 shares
 
5,193,457

*   Fidelity Freedom 2055 Fund
378,234 shares
 
5,189,367

*   Fidelity Extended Market Index Fund
48,816 shares
 
3,029,025

Vanguard Inflation Protected Securities Fund
67,031 shares
 
1,715,998

*   Fidelity Freedom 2015 Fund
96,848 shares
 
1,293,883

*   Fidelity Freedom 2010 Fund
57,805 shares
 
927,192

*   Fidelity Freedom Income Fund
76,325 shares
 
897,586

*   Fidelity Freedom 2060 Fund
60,879 shares
 
743,946

*   Fidelity Freedom 2005 Fund
31,616 shares
 
396,459

 
 
 
243,648,950

* Brinker Common Stock Fund
432,874 shares
 
16,803,056

* Participant Loans
Interest rates from 4.25% to 9.25% and maturity dates from 2018 through 2032
 
12,038,074

Total
 
 
$
281,742,767

 *    Party-in-interest
Cost column not required – participant directed
See accompanying report of independent registered public accounting firm.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
BRINKER INTERNATIONAL, INC.
401(K) SAVINGS PLAN
 
 
 
Date:
June 1, 2018
By:
/s/ Jason Landry
 
 
 
Jason Landry
 
 
 
Plan Administrator



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