Chili's 2009 Annual Report Download - page 58

BRINKER INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. OTHER GAINS AND CHARGES
2009 2008 2007
Restaurant closure charges .................. $ 71,178 $ 51,143 $ 12,854
Charges related to the sale of Macaroni Grill
(see Note 2) ........................... 40,362 155,661 —
Restaurant impairment charges ............... 14,254 7,450 —
Impairment of goodwill ..................... 7,713 — —
Severance and other benefits ................. 6,047 7,237 —
Gains on the sale of assets, net (also see Note 3) . . (3,861) (29,684) (19,116)
Development-related costs ................... — 13,223 —
Other gains and charges, net ................. (906) (1,080) (2,737)
$134,787 $203,950 $ (8,999)
In fiscal 2009, we recorded $71.2 million in charges primarily related to long-lived asset impairments
resulting from the decision to close or decline lease renewals for 43 company-owned restaurants, including
eight international restaurants. The charges related to the domestic restaurant closures include
$44.2 million of long-lived asset impairments, $14.1 million in lease termination charges and $1.2 million of
charges related to the write-off of other assets and liabilities. The charges related to the international
restaurant closures include $5.6 million of long-lived asset impairments and $2.1 million of charges related
to realized foreign currency translation losses. Additionally, we recorded a goodwill impairment charge of
$7.7 million as a result of the international restaurant closings. The decision to close the restaurants and
decline lease renewals was based on a comprehensive analysis that examined restaurants not performing at
required levels of return.
Additionally, we recorded a $14.3 million charge in fiscal 2009 related to the impairment of long-lived
assets associated with 16 underperforming restaurants. The impairment charge was measured as the excess
of the carrying amount of the long-lived assets over the fair value based on projected discounted future
operating cash flows of the restaurant.
In fiscal 2009, we made organizational changes designed to streamline decision making and maximize
our leadership talent while achieving better operational efficiencies across our brands. As a result, we
incurred $6.0 million in severance and other benefits, net of income related to the forfeiture of stock-based
compensation awards resulting from these actions. We also incurred gains of $3.9 million related to the
sale of nine restaurants to a franchisee and other land sales.
In fiscal 2008, we recorded $51.1 million in charges primarily related to long-lived asset impairments
resulting from the decision to close or decline lease renewals for 61 company-owned restaurants. The
charges include $39.8 million of long-lived asset impairments and $9.3 million in lease obligation charges.
The decision to close the restaurants and decline lease renewals was based on a comprehensive analysis
that examined restaurants not performing at required levels of return. Also included is a $1.9 million
charge related to the decrease in the estimated sales value of land associated with previously closed
restaurants. Additionally, we recorded a $7.5 million charge related to the impairment of long-lived assets
associated with two underperforming restaurants. The impairment charge was measured as the excess of
the carrying amount of the long-lived assets over the fair value based on projected discounted future
operating cash flows of the restaurants.
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