Chili's 2012 Annual Report Download - page 46

Payments due under our contractual obligations for outstanding indebtedness, purchase obligations as
defined by the Securities and Exchange Commission (“SEC”), and the expiration of the credit facility as of
June 27, 2012 are as follows:
Payments Due by Period
(in thousands)
Total
Less than
1 Year
1-3
Years
3-5
Years
More than
5 Years
Long-term debt(a) ........................... $600,559 $ 41,675 $356,384 $202,500 $ 0
Capital leases ............................... 75,951 5,473 11,273 11,515 47,690
Operating leases ............................ 489,636 100,287 174,162 112,968 102,219
Purchase obligations(b) ....................... 109,344 20,092 24,904 20,639 43,709
Amount of Revolving Credit Facility Expiration by Period
(in thousands)
Total
Commitment
Less than
1 year
1-3
Years
3-5
Years
More than
5 Years
Revolving credit facility ...................... $250,000 $ — $ — $250,000 $ —
(a) Long-term debt consists of amounts owed on the revolving credit facility, five-year term loan and 5.75%
notes, as well as remaining interest payments on the 5.75% notes totaling $33.4 million.
(b) A “purchase obligation” is defined as an agreement to purchase goods or services that is enforceable and
legally binding on us and that specifies all significant terms, including: fixed or minimum quantities to be
purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our
purchase obligations primarily consist of long-term obligations for the purchase of fountain beverages,
procurement outsourcing, and energy and exclude agreements that are cancelable without significant
penalty.
In addition to the amounts shown in the table above, $7.3 million of unrecognized tax benefits have been
recorded as liabilities. The timing and amounts of future cash payments related to these liabilities are uncertain.
IMPACT OF INFLATION
We have experienced impact from inflation. Inflation has caused increased food, labor and benefits costs
and has increased our operating expenses. To the extent permitted by competition, increased costs are recovered
through a combination of menu price increases and reviewing, then implementing, alternative products or
processes, or by implementing other cost reduction procedures.
CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are disclosed in Note 1 to our consolidated financial statements. The
following discussion addresses our most critical accounting estimates, which are those that are most important to
the portrayal of our financial condition and results, and that require significant judgment.
Stock Based Compensation
We measure and recognize compensation cost at fair value for all share-based payments, including stock
options. We determine the fair value of our stock option awards using the Black-Scholes option valuation model.
The Black-Scholes model requires judgmental assumptions including expected life and stock price volatility. We
base our expected life assumptions on historical experience regarding option life. Stock price volatility is
calculated based on historical prices and the expected life of the options. We determine the fair value of our
performance shares using a Monte Carlo simulation model. The Monte Carlo method is a statistical modeling
technique that requires highly judgmental assumptions regarding our future operating performance compared to
our plan designated peer group in the future. The simulation is based on a probability model and market-based
inputs that are used to predict future stock returns. We use the historical operating performance and correlation of
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