Chili's 2009 Annual Report Download - page 45

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factors. In the event that these assumptions change in the future, we may be required to record impairment
charges related to goodwill.
Self-Insurance
We are self-insured for certain losses related to health, general liability and workers’ compensation.
We maintain stop loss coverage with third party insurers to limit our total exposure. The self-insurance
liability represents an estimate of the ultimate cost of claims incurred and unpaid as of the balance sheet
date. The estimated liability is not discounted and is established based upon analysis of historical data and
actuarial estimates, and is reviewed on a quarterly basis to ensure that the liability is appropriate. If actual
trends, including the severity or frequency of claims, differ from our estimates, our financial results could
be impacted.
Recent Accounting Pronouncements
In December 2006, the FASB issued SFAS No. 157, ‘‘Fair Value Measurements,’’ (‘‘SFAS 157’’).
SFAS 157 clarifies the definition of fair value, describes methods used to appropriately measure fair value,
and expands fair value disclosure requirements, but does not change existing guidance as to whether or not
an instrument is carried at fair value. For financial assets and liabilities, SFAS 157 is effective for fiscal
years beginning after November 15, 2007, which required that we adopt these provisions in first quarter
fiscal 2009. For nonfinancial assets and liabilities, SFAS 157 is effective for fiscal years beginning after
November 15, 2008, which will require us to adopt these provisions in fiscal 2010. We do not expect the
adoption of SFAS 157 to have a material impact on our consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141R, ‘‘Business Combinations,’’ (‘‘SFAS 141R’’).
Under SFAS 141R, all business combinations will be accounted for by applying the acquisition method.
SFAS 141R requires most identifiable assets, liabilities, noncontrolling interests, and goodwill acquired in a
business combination to be recorded at full fair value. SFAS 141R is effective for annual reporting periods
beginning on or after December 15, 2008 and will be effective for us beginning in the first quarter of fiscal
2010 for business combinations occurring on or after the effective date.
In December 2007, the FASB issued SFAS No. 160, ‘‘Noncontrolling Interests in Consolidated
Financial Statements—an amendment of ARB No. 51,’’ (‘‘SFAS 160’’). SFAS 160 will require
noncontrolling interests (previously referred to as minority interests) to be treated as a separate
component of equity, not as a liability or other item outside of permanent equity. The Statement applies to
the accounting for noncontrolling interests and transactions with noncontrolling interest holders in
consolidated financial statements. SFAS 160 is effective for periods beginning on or after December 15,
2008, which required that we adopt these provisions beginning in the third quarter of fiscal 2009. The
adoption of SFAS 160 did not have a material impact on our financial statements.
In June 2008, the FASB issued FSP EITF 03-6-1, ‘‘Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities.’’ FSP EITF 03-6-1 provides that unvested
share-based payment awards that contain nonforfeitable rights to dividends that are paid or unpaid are
participating securities and shall be included in the computation of earnings per share based on the
two-class method. The two-class method is an earnings allocation method for computing earnings per
share when an entity’s capital structure includes either two or more classes of common stock or common
stock and participating securities. FSP EITF 03-6-1 is effective for fiscal years beginning after
December 15, 2008, which will require us to adopt these provisions in fiscal 2010. We do not expect the
adoption of FSP EITF 03-6-1 to have a material impact on our financial statements.
In May 2009, the FASB issued SFAS No. 165, ‘‘Subsequent Events’’ (‘‘SFAS 165’’) which establishes
the requirements for evaluating, recording and disclosing events or transactions occurring after the balance
sheet date in an entity’s financial statements. SFAS 165 is effective for interim and annual periods ending
F-11