Chili's 2012 Annual Report Download - page 60

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In fiscal 2009, we sold Romano’s Macaroni Grill (“Macaroni Grill”) to Mac Acquisition LLC (“Mac
Acquisition”), an affiliate of Golden Gate Capital. As of June 27, 2012 and June 29, 2011, we held a 15.6%
ownership interest in the new entity.
We account for the Mexico joint venture and Mac Grill investment under the equity method of accounting
and record our share of the net income or loss of the investees within operating income since their operations are
similar to our ongoing operations. These amounts have been included in restaurant expense in our consolidated
statements of income due to the immaterial nature of the amounts.
(b) Other Dispositions
During fiscal 2010, we sold 21 restaurants to a franchisee for $19.0 million in cash and recorded a gain of
$2.8 million in other gains and charges in the consolidated statements of income.
4. OTHER GAINS AND CHARGES
2012 2011 2010
Restaurant impairment charges .............................. $3,139 $ 1,937 $19,789
Restaurant closure charges ................................. 4,655 4,515 13,409
Impairment of liquor licenses ............................... 2,641 0 0
Severance and other benefits ............................... 0 5,034 1,887
Gains on the sale of assets, net (see Note 3) .................... (3,306) (2,100) (4,878)
Other gains and charges, net ................................ 1,845 1,397 (1,722)
$ 8,974 $10,783 $28,485
We recorded impairment charges for the excess of the carrying amount of property and equipment over the
fair value related to underperforming restaurants that are continuing to operate. Restaurant impairment charges
were $3.1 million, $1.9 million and $19.8 million during fiscal 2012, 2011 and 2010, respectively. Additionally,
we recorded $2.6 million of impairment charges for the excess of the carrying amount of certain transferable
liquor licenses over the fair value. See Note 10 for fair value disclosures related to the fiscal 2012 and 2011
charges.
In fiscal 2012, we recorded $4.7 million in charges, including $3.2 million of lease termination charges and
$0.4 million of long-lived asset impairment charges resulting from closures.
In fiscal 2011, we recorded $4.5 million in charges, including $3.0 million in lease termination charges
associated with restaurants closed in prior years.
In fiscal 2010, we recorded $13.4 million in charges primarily related to long-lived asset impairments
resulting from the decision to close nine underperforming restaurants. The charges included $5.4 million of long-
lived asset impairments and $4.0 million in lease termination charges. Also included is $2.4 million in lease
termination charges related to restaurants closed in prior years.
During fiscal 2011 and 2010, we made organizational changes designed to streamline decision making and
support our strategic goals and evolving business model. We incurred $5.0 million and $1.9 million in severance
and other benefits resulting from these actions in fiscal 2011 and 2010, respectively. The severance charges are
net of income related to the forfeiture of stock-based compensation awards.
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