Chili's 2002 Annual Report Download - page 57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company sponsors a non-qualified defined contribution retirement plan (‘‘Plan II’’) covering highly
compensated employees, as defined in the plan. Plan II allows eligible employees to defer receipt of up to 50% of
their base compensation and 100% of their eligible bonuses, as defined in the plan. The Company matches in
Company common stock 25% of the first 5% of non-officer contributions while officers’ contributions are
matched at the same rate with cash. Employee contributions vest immediately while Company contributions vest
25% annually beginning on the participant’s second anniversary of employment. In fiscal 2002, 2001, and 2000,
the Company contributed approximately $657,000, $655,000, and $543,000, respectively. At the inception of Plan
II, the Company established a Rabbi Trust to fund Plan II obligations. The market value of the trust assets is
included in other assets and the liability to Plan II participants is included in other liabilities.
12. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and income taxes is as follows (in thousands):
2002 2001 2000
Interest, net of amounts capitalized................... $ 8,229 $ 8,904 $10,192
Income taxes, net of refunds ........................ 48,801 68,597 36,646
Non-cash investing and financing activities are as follows (in thousands):
2002 2001 2000
Restricted common stock issued, net of forfeitures ........ $ 2,435 $ 371 $ 5,181
Increase in fair value of interest rate swaps and debt ...... 286 2,867 —
Decrease in fair value of forward rate agreements included
in other comprehensive income .................... — 895 —
Increase in fair value of interest rate swaps on real estate
leasing facility................................. 5,667 — —
During 2002, the Company purchased certain assets and assumed certain liabilities in connection with the
acquisition of restaurants. The fair values of the acquired assets and liabilities recorded at the date of acquisition
are as follows (in thousands):
Property and equipment acquired .................................. $36,312
Goodwill .................................................... 55,473
Other assets acquired ........................................... 8,585
Capital lease obligations assumed .................................. (35,480)
Other liabilities assumed ......................................... (4,399)
Net cash paid................................................. $60,491
13. RELATED PARTY TRANSACTION
The Company has secured notes receivable from Eatzi’s Corporation (‘‘Eatzi’s’’) with a carrying value of
approximately $11.0 million and $20.6 million at June 26, 2002 and June 27, 2001, respectively. Approximately
$6.0 million of the notes receivable is convertible into nonvoting Series A Preferred Stock of Eatzi’s at the option
of the Company and matures on December 28, 2006. The remaining note receivable matures on September 28,
2005.
Interest on the convertible note receivable is 10.5% per year with payments due on a quarterly basis until the
principal balance and all accrued and unpaid interest have been paid in full. Interest on the remaining notes
receivable balance is prime rate plus 1.5% per year with payments due on a quarterly basis until the principal
balance and all accrued and unpaid interest have been paid in full. The notes receivable are included in other
assets in the accompanying consolidated balance sheets.
During fiscal 2002 and 2001, certain scheduled payments were not made as the Company continued
negotiations with Eatzi’s to restructure the notes receivable. A letter of intent was signed on August 6, 2002 to
divest the Company of its interest in the concept. Under the terms of the letter, Eatzi’s has agreed to pay the
Company $11.0 million in cash and to execute a $4.0 million promissory note in consideration for its interest in
the concept. The promissory note will be unsecured and payable only upon the closing of an initial public offering
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