Chili's 2002 Annual Report Download - page 51

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation between the reported provision for income taxes and the amount computed by applying the
statutory Federal income tax rate of 35% to income before provision for income taxes is as follows (in
thousands):
2002 2001 2000
Income tax expense at statutory rate .................. $81,147 $77,674 $63,540
FICA tax credit ................................. (9,002) (7,029) (5,993)
State income taxes, net of Federal benefit .............. 5,783 6,822 5,405
Other ........................................ 1,208 (688) 750
$79,136 $76,779 $63,702
The income tax effects of temporary differences that give rise to significant portions of deferred income tax
assets and liabilities as of June 26, 2002 and June 27, 2001 are as follows (in thousands):
2002 2001
Deferred income tax assets:
Insurance reserves ..................................... $ 7,099 $ 6,665
Employee benefit plans ................................. 12,243 10,443
Leasing transactions.................................... 8,564 8,479
Other, net........................................... 13,077 15,921
Total deferred income tax assets ......................... 40,983 41,508
Deferred income tax liabilities:
Depreciation and capitalized interest on property and equipment . . . 34,326 28,847
Prepaid expenses ...................................... 7,928 4,792
Goodwill and other amortization ........................... 5,371 2,926
Other, net........................................... 8,993 4,430
Total deferred income tax liabilities ....................... 56,618 40,995
Net deferred income tax liability (asset).................... $15,635 $ (513)
6. DEBT
Long-term debt consists of the following (in thousands):
2002 2001
Convertible debt ...................................... $254,948 $ —
Senior notes ......................................... 45,953 59,966
Credit facilities ....................................... 63,500 146,700
Capital lease obligations (see Note 8) ....................... 36,047 1,398
Mortgage loan obligations ............................... 43,523 45,631
443,971 253,695
Less current installments ................................ (17,292) (17,635)
$426,679 $236,060
In October 2001, the Company issued $431.7 million of zero coupon convertible senior debentures (the
‘‘Debentures’’), maturing on October 10, 2021, and received proceeds totaling approximately $250.0 million prior
to debt issuance costs. The Debentures require no interest payments and were issued at a discount representing a
yield to maturity of 2.75% per annum. The Debentures are redeemable at the Company’s option on October 10,
2004, and the holders of the Debentures may require the Company to redeem the Debentures on October 10,
2003, 2005, 2011 or 2016, and in certain other circumstances. 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 at specified dates, 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
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