Chili's 2009 Annual Report Download - page 57

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BRINKER INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SALE OF MACARONI GRILL (Continued)
On December 18, 2008, we contributed $6.0 million representing an 18.2% ownership interest in the
new entity. We account for the investment under the equity method of accounting and record our share of
the net income or loss from the investee within operating income since the operations of Macaroni Grill
are similar to our ongoing operations. This amount is included in restaurant expense in our consolidated
statements of income due to the immaterial nature of the amount. In April 2009, we received a $6.0 million
distribution representing substantially all of our equity investment while retaining our ownership interest.
As part of the sale, we entered into an agreement with Mac Acquisition whereby we provide corporate
support services for the new entity for one year following closing with an option for one additional year.
During fiscal 2008, we recorded impairment charges of $152.7 million to write-down the net assets of
Macaroni Grill to their estimated fair value less costs to sell in accordance with SFAS 144. This amount has
been included in other gains and charges in the consolidated statements of income. Our estimate of fair
value was based on the executed purchase agreement.
3. OTHER EQUITY METHOD INVESTMENTS AND RESTAURANT DISPOSITIONS
In November 2007, we entered into an agreement with CMR, S.A.B. de C.V. for a joint venture
investment in a new corporation to develop 50 Chili’s and Maggiano’s restaurants in Mexico. We made a
$4.6 million and an $8.7 million capital contribution to the joint venture in fiscal 2009 and fiscal 2008,
respectively. We account for the investment under the equity method of accounting and record our share
of the net income or loss of the investee within operating income since the operations of the joint venture
are similar to our ongoing operations. This amount has been included in restaurant expense in our
consolidated statements of income due to the immaterial nature of the amount. At June 24, 2009, 16
Chili’s restaurants were operating in the joint venture.
In May 2007, we entered into an agreement with ERJ Dining IV, LLC to sell 76 company-owned
Chili’s restaurants for approximately $121.9 million. The sale was completed in November 2007 and we
recorded a gain of $29.7 million in other gains and charges in the consolidated statement of income in
fiscal 2008. The net assets sold totaled approximately $88.2 million and consisted primarily of property and
equipment of $86.4 million and goodwill of $2.7 million.
In January 2007, we entered into an agreement with Pepper Dining, Inc. to sell 95 company-owned
Chili’s restaurants for approximately $155.0 million. The sale was completed in June 2007 and we recorded
a gain of $17.1 million in other gains and charges in the consolidated statement of income in fiscal 2007.
The net assets sold totaled approximately $127.9 million and consisted primarily of property and
equipment of $126.1 million and goodwill of $3.9 million.
F-23