Chili's 2007 Annual Report Download - page 82

11. SAVINGS PLANS
We sponsor a qualified defined contribution retirement plan (‘‘Plan I’’) covering all employees who
have attained the age of twenty-one and have completed one year and 1,000 hours of service. Plan I allows
eligible employees to contribute, subject to IRS limitations on total annual contributions, up to 50% of
their base compensation and 100% of their eligible bonuses, as defined in the plan, to various investment
funds. We match in cash at a rate of 100% of the first 3% an employee contributes and 50% of the next 2%
the employee contributes with immediate vesting. In fiscal 2007, 2006, and 2005, we contributed
approximately $8.2 million, $3.5 million, and $940,000, respectively.
In October 2004, Congress enacted the American Jobs Creation Act of 2004 which added
section 409A to the Internal Revenue Code and changed the tax rules governing non-qualified deferred
compensation plans. After evaluating the new tax rules, effective January 1, 2005, we froze our existing
non-qualified defined contribution plan (‘‘Plan II’’), closing it to future contributions. Existing participants
in Plan II became fully vested in their company contributions due to these plan changes. In October 2005,
Plan II was partially terminated resulting in a distribution of approximately $31.8 million to participants. In
fiscal 2005, we contributed approximately $456,000. On January 1, 2006, all remaining Plan II balances
became part of the Brinker International Deferred Income Plan (‘‘Deferred Plan’’) which, when finalized
after the issuance of final regulations under 409A, will amend and completely restate Plan II. The
Deferred Plan is a non-qualified defined contribution plan covering a select group of highly compensated
employees, as defined in the plan. Eligible employees are allowed to defer receipt of up to 50% of their
base compensation, as defined in the plan. There is no company match, but employee contributions earn
interest based on a rate determined and announced in November prior to the start of the plan year.
Employee contributions and earnings thereon vest immediately. At the inception of Plan II, we established
a Rabbi Trust to fund Plan II obligations. The trust continues to be used to fund obligations of the
Deferred Plan. The market value of the trust assets is included in other assets and the liability to plan
participants is included in other liabilities.
12. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and income taxes is as follows (in thousands):
2007 2006 2005
Income taxes, net of refunds .................. $100,593 $115,877 $46,080
Interest, net of amounts capitalized ............. 26,167 22,319 22,460
Non-cash investing and financing activities are as follows (in thousands):
2007 2006 2005
Retirement of fully depreciated assets ........... $ 40,133 $ 49,488 $20,515
Net (decrease) increase in fair value of interest rate
swaps ................................. —(12,101) 4,597
Conversion of debt into common stock .......... ——10,796
13. CONTINGENCIES
As of June 27, 2007, we guaranteed lease payments totaling $150.6 million as a result of the sale of
certain brands and the sale of restaurants to franchisees. This amount represents the maximum potential
liability of future payments under the guarantees. These leases have been assigned to the buyers and expire
at the end of the respective lease terms, which range from fiscal 2008 through fiscal 2022. We remain
secondarily liable for the leases. In the event of default, the indemnity and default clauses in our
assignment agreements govern our ability to pursue and recover damages incurred. No material liabilities
have been recorded as of June 27, 2007.
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