Chili's 2002 Annual Report Download - page 58

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
by Eatzi’s. Due to the uncertainty of collecting the $4.0 million promissory note, the Company will establish a
reserve for the entire principal balance. As a result of the divesture, in fiscal 2002 an approximate $8.7 million
impairment charge was recorded in restaurant expenses to reduce the notes to their net realizable value.
14. CONTINGENCIES
During fiscal 2002, the Company recorded an approximate $11.0 million charge to restaurant expenses
stemming from an agreement reached with the California Department of Labor Standards Enforcement
(‘‘DLSE’’). The DLSE’s primary allegation involved the Company’s documentation policies related to breaks
provided to employees. The Company believes it has been in substantial compliance with the California labor
laws related to employee breaks and other employee related matters, but was unable to document all issues to
the DLSE’s satisfaction. The Company agreed to the settlement to avoid a potentially costly and protracted
litigation.
The Company is engaged in various legal proceedings and has certain unresolved claims pending. The
ultimate liability, if any, for the aggregate amounts claimed cannot be determined at this time. However,
management of the Company, based upon consultation with legal counsel, is of the opinion that there are no
matters pending or threatened which are expected to have a material adverse effect, individually or in the
aggregate, on the Company’s consolidated financial condition or results of operations.
15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table summarizes the unaudited consolidated quarterly results of operations for fiscal 2002
and 2001 (in thousands, except per share amounts):
Fiscal Year 2002
Quarters Ended
Sept. 26 Dec. 26 March 27 June 26
Revenues ........................... $672,655 $685,752 $745,786 $782,918
Income before provision for income taxes .... 60,695 52,960 51,617 66,577
Net income.......................... 39,634 34,636 34,170 44,273
Basic net income per share .............. 0.40 0.35 0.35 0.45
Diluted net income per share ............ 0.39 0.35 0.34 0.44
Basic weighted average shares outstanding . . . 98,963 97,718 97,694 97,675
Diluted weighted average shares outstanding . 101,572 100,131 100,652 100,491
Fiscal Year 2001
Quarters Ended
Sept. 27 Dec. 27 March 28 June 27
Revenues ........................... $573,925 $567,546 $608,192 $657,211
Income before provision for income taxes .... 54,311 49,714 53,801 64,101
Net income.......................... 35,194 32,215 34,863 42,876
Basic net income per share .............. 0.36 0.33 0.35 0.43
Diluted net income per share ............ 0.35 0.32 0.34 0.42
Basic weighted average shares outstanding . . . 98,753 98,497 99,450 99,800
Diluted weighted average shares outstanding . 101,570 101,718 102,498 102,577
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