Chili's 2011 Annual Report Download - page 41

Other gains and charges in fiscal 2011 consisted of $5.0 million in severance and other benefits resulting
from organizational changes, $3.0 million in lease termination charges related to previously closed restaurants
and $1.9 million in long-lived asset impairments related to underperforming restaurants that are continuing to
operate. Additionally, we recorded a $1.5 million charge related to litigation and net gains of $1.7 million related
to land sales.
Other gains and charges in fiscal 2010 included a $19.8 million impairment charge related to 22
underperforming restaurants that are continuing to operate. We also recorded $4.0 million in lease termination
charges and $5.4 million in long-lived asset impairments resulting from the decision to close nine
underperforming restaurants. Additionally, we recorded $2.4 million in lease termination charges related to
restaurants closed in prior years and $1.9 million in severance and other benefits resulting from organizational
changes. These charges were partially offset by gains of $4.9 million related to the sale of 21 restaurants to a
franchisee and land sales.
Other gains and charges in fiscal 2009 included $59.4 million in charges primarily resulting from the decision
to close 37 underperforming restaurants, including eight international restaurants. The charges include $40.8 million
in long-lived asset impairments, $5.2 million in lease termination charges, $1.2 million of charges related to the
write-off of other assets and liabilities, and $2.1 million of charges related to realized foreign currency translation
losses. Also included is $6.2 million in lease termination charges associated with restaurants closed in prior years.
Additionally, we recorded a $10.5 million impairment charge related to underperforming restaurants, a $7.7 million
goodwill impairment charge as a result of the international restaurant closings and organizational changes resulted
in charges of $5.5 million for severance and other costs. In December 2008, we sold Macaroni Grill to Mac
Acquisition and recorded a loss on the sale of $40.4 million. The charges were partially offset by a $3.9 million gain
related to the sale of nine restaurants to a franchisee and land sales.
Interest expense remained flat in fiscal 2011 as a result of higher average interest rates on our debt carrying
variable interest rates, offset by the impact of a lower average borrowing balance and $1.7 million in accelerated
expense in the prior year related to the remaining capitalized financing costs associated with the terminated
revolving credit facility in fiscal 2010. Interest expense decreased $4.8 million in fiscal 2010 primarily as a result
of a lower average borrowing balance and a decrease in interest rates on our debt carrying variable interest rates.
We repaid $190.0 million on the three-year term loan during the year. These decreases were partially offset by
$1.7 million in accelerated expense related to the remaining capitalized financing costs associated with the
terminated revolving credit facility.
Other, net in fiscal 2011 includes $5.3 million of sublease income from Mac Acquisition and franchisees as
part of the sale agreements and other subtenants as well as $0.6 million of interest income on short-term
investment balances. Other, net in fiscal 2010 includes $4.7 million of sublease income from Mac Acquisition as
part of the sale agreement and other subtenants as well as $0.6 million of interest income on short-term
investment balances. Other, net in fiscal 2009 includes a $5.5 million gain from insurance proceeds, $1.7 million
of sublease income and $1.6 million of interest income on short-term investment balances.
Income from discontinued operations, net of taxes, increased to $34.0 million in fiscal 2010 from $7.0
million in fiscal 2009. In fiscal 2010, we recorded a $16.5 million pre-tax gain on the sale of the On The Border
restaurants.
INCOME TAXES
The effective income tax rate from continuing operations increased to 23.1% for fiscal 2011 from 21.4% in
fiscal 2010 primarily due to an increase in earnings, partially offset by the resolution of certain tax positions
resulting in a positive impact in the current year greater than the prior year. Excluding the impact of special items
and resolved tax positions, the effective income tax rate from continuing operations increased to 27.8% in fiscal
2011 from 26.0% in fiscal 2010 due to an increase in earnings, partially offset by a decrease in state income tax
expense.
F-7