Chili's 2013 Annual Report Download - page 55

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converted into common stock. For the calculation of diluted net income per share, the basic weighted average
number of shares is increased by the dilutive effect of stock options and restricted share awards, determined
using the treasury stock method. We had approximately 193,000 stock options and restricted share awards
outstanding at June 26, 2013, 287,000 stock options and restricted share awards outstanding at June 27, 2012,
and 1.7 million stock options and restricted share awards outstanding at June 29, 2011 that were not included in
the dilutive earnings per share calculation because the effect would have been antidilutive.
(v) Segment Reporting
Operating segments are components of an enterprise about which separate financial information is available
that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in
assessing performance. Two or more operating segments may be aggregated into a single operating segment if
they have similar economic characteristics and are similar in the following areas:
• The nature of products and services
• Nature of production processes
• Type or class of customer
• Methods used to distribute products or provide services
• The nature of the regulatory environment, if applicable
Our two brands have similar types of products, contracts, customers and employees and all operate as full-
service restaurants offering lunch and dinner in the casual-dining segment of the industry. In addition, we have
similar long-term average margins across our brands. Therefore, we believe we meet the criteria for aggregating
operating segments into a single reporting segment.
2. ACQUISITION OF CHILI’S RESTAURANTS
On June 1, 2013, we completed the acquisition of 11 Chili’s restaurants in Alberta, Canada from an existing
franchisee for $24.6 million in cash. The results of operations of the Canadian restaurants are included in our
consolidated financial statements from the date of acquisition. The assets and liabilities of the Canadian
restaurants were recorded at their respective fair values as of the date of acquisition. We are in the process of
evaluating the fair value of the reacquired franchise rights through internal studies and third-party valuations.
When the valuation process is complete, we will record the reacquired franchise rights at their estimated fair
value with a corresponding decrease to goodwill.
The preliminary allocation of the purchase price is as follows (in thousands):
Current assets ......................................................... 341
Property and equipment ................................................. 8,017
Goodwill ............................................................ 16,499
Other assets .......................................................... 585
Total assets acquired ............................................... 25,442
Current liabilities ...................................................... 25
Other liabilities ....................................................... 795
Total liabilities assumed ............................................ 820
Net assets acquired .................................................... 24,622
F-23