4 unchanged sentences
Changes in internal control
−Removed: On December 26, 2018, the Company adopted ASC 842, Leases.
−Removed: As a result, changes to processes and procedures occurred that affect the Company’s internal control over financial reporting.
−Removed: These changes were monitored during the year and did not impact the effectiveness of our internal control over financial reporting.
−Removed: Except for the changes noted above, there were no other significant changes to the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2019 that materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
+Added: There were no significant changes to the Company’s internal control over financial reporting that occurred during the quarter ended December 29, 2020 that materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
49 unchanged sentences
Registration Rights Agreement, dated as of May 7, 2004, among Registrant and others (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-1 of Registrant (File No.
−Removed: Description of Securities
+Added: Description of Securities (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No.
Form of Director and Executive Officer Indemnification Agreement (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-1 of Registrant (File No.
12 unchanged sentences
Employment Agreement between the Registrant and W.
−Removed: Kent Taylor entered into as of December 26, 2017 (incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K ended December 25, 2018 (File No.
−Removed: Employment Agreement between the Registrant and Scott M.
−Removed: Colosi entered into as of December 26, 2017 (incorporated by reference to Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K ended December 26, 2017 (File No.
−Removed: Employment Agreement between the Registrant and Celia Catlett entered into as of December 26, 2017 (incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K ended December 26, 2017 (File No.
+Added: Kent Taylor entered into as of December 26, 2017 (incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the year ended December 25, 2018 (File No.
Employment Agreement between the Registrant and S.
−Removed: Chris Jacobsen entered into as of December 26, 2017 (incorporated by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K ended December 26, 2017 (File No.
+Added: Chris Jacobsen entered into as of December 26, 2017 (incorporated by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K for the year ended December 26, 2017 (File No.
Form of Performance Stock Unit Award Agreement under the Texas Roadhouse, Inc.
2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2015 (File No.
−Removed: First Amendment to Employment Agreement between Texas Roadhouse Management Corp.
−Removed: Colosi entered into as of May 17, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated May 18, 2018 (File No.
Employment Agreement between Texas Roadhouse Management Corp.
20 unchanged sentences
Assignment and Assumption Agreement between Texas Roadhouse Holdings LLC and Texas Roadhouse, Inc.
−Removed: dated October 26, 2018
+Added: dated October 26, 2018 (incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No.
First Amendment to Paragon Centre Master Lease Agreement between Paragon Centre Holdings, LLC and Texas Roadhouse, Inc.
−Removed: dated December 13, 2019
+Added: dated December 13, 2019 (incorporated by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No.
+Added: First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp.
+Added: Kent Taylor dated March 24, 2020 (incorporated by reference to Exhibit 10.1 the Registrant's Current Report on 8-K dated March 24, 2020 (File No.
+Added: First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp.
+Added: and Doug Thompson dated April 6, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on 8-K dated April 6, 2020 (File No.
+Added: First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp.
+Added: Chris Jacobsen dated April 6, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on 8-K dated April 6, 2020 (File No.
+Added: First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp.
+Added: and Tonya Robinson dated April 6, 2020 (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on 8-K dated April 6, 2020 (File No.
+Added: First Amendment to Amended and Restated Credit Agreement, dated as of May 11, 2020, by and among Texas Roadhouse, Inc., and the lenders named therein and JPMorgan Chase Bank, N.A.
+Added: as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on 8-K dated May 11, 2020 (File No.
+Added: Employment Agreement between Registrant and Gerald L.
+Added: Morgan entered into as of December 17, 2020
+Added: Employment Agreement between Registrant and W.
+Added: Kent Taylor entered into as of December 30, 2020
+Added: Employment Agreement between Registrant and Doug Thompson entered into as of December 30, 2020
+Added: Employment Agreement between Registrant and S.
+Added: Chris Jacobsen entered into as of December 30, 2020
+Added: Employment Agreement between Registrant and Tonya Robinson entered into as of December 30, 2020
List of Subsidiaries
26 unchanged sentences
February 26, 2021
+Added: /s/ Michael A.
+Added: February 26, 2021
/s/ Gregory N.
6 unchanged sentences
Report of Independent Registered Public Accounting Firm
−Removed: To the Stockholders and Board of Directors Texas Roadhouse, Inc.:
+Added: To the Stockholders and Board of Directors
+Added: Texas Roadhouse, Inc.:
Opinion on the Consolidated Financial Statements
4 unchanged sentences
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 29, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
−Removed: Changes in Accounting Principle
−Removed: As discussed in Notes 2 and 8 to the consolidated financial statements, effective December 26, 2018, the Company changed its method of accounting for leases due to the adoption of Financial Accounting Standards Board Accounting Standard Codification Topic 842, Leases .
−Removed: As discussed in Note 2 to the consolidated financial statements, effective December 27, 2017, the Company has changed its method of accounting for revenue from contracts with customers due to the adoption of Financial Accounting Standards Board Accounting Standard Codification Topic 606, Revenue from Contracts with Customers .
+Added: Change in Accounting Principle
+Added: As discussed in Note 2 to the consolidated financial statements, effective December 26, 2018, the Company changed its method of accounting for leases due to the adoption of Financial Accounting Standards Board Accounting Standard Codification Topic 842, Leases .
Basis for Opinion
13 unchanged sentences
The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Assessment of potential indicators of impairment of long-lived assets
−Removed: As discussed in Notes 2 and 16 to the consolidated financial statements, the Company assesses long-lived assets related to restaurants held and used in the business, including property and equipment and right-of- use assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of a restaurant may not be recoverable.
+Added: Potential indicators of impairment of long-lived assets
+Added: As discussed in Notes 2 and 16 to the consolidated financial statements, the Company assesses long-lived assets, primarily related to restaurants held and used in the business, including property and equipment and
+Added: right-of-use assets, for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a restaurant, or asset group, may not be recoverable.
Trailing 12-month cash flows under predetermined amounts at the individual restaurant level are the Company’s primary indicator that the carrying amount of a restaurant may not be recoverable.
−Removed: The property and equipment, net of accumulated depreciation, balance as of December 31, 2019 was $1.06 billion, or 53% of total assets.
−Removed: The operating lease right-of-use asset, net, balance as of December 31, 2019 was $500 million, or 25% of total assets.
+Added: Property and equipment, net of accumulated depreciation, and the operating lease right-of-use asset, net as of December 29, 2020 were $1,088.6 million and $530.6 million, respectively.
We identified the assessment of the Company’s determination of potential indicators of impairment of long-lived assets as a critical audit matter.
−Removed: There was subjectivity in identifying events or circumstances indicating the carrying amount of an asset group may not be recoverable, including the determination of the cash flow thresholds and the period of cash flows utilized to identify a potential impairment trigger.
−Removed: The primary procedures we performed to address this critical audit matter included the following.
−Removed: We tested certain internal controls over the Company’s process to determine and identify potential indicators of impairment.
−Removed: We evaluated the cash flow thresholds and the period of cash flows utilized by the Company to identify a potential impairment trigger.
+Added: Subjective auditor judgement was required to evaluate the events or circumstances indicating the carrying amount of an asset group may not be recoverable, including the determination of the cash flow thresholds, the utilization of the trailing 12-month cash flows to identify a potential impairment trigger, and the consideration of the impact of the pandemic on the Company’s cash flows.
+Added: The following are the primary procedures we performed to address this critical audit matter.
+Added: We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s long-lived asset impairment process, including controls relating to determination and identification of potential indicators of impairment.
+Added: We evaluated the Company’s methodology of using trailing 12-month cash flow results under predetermined thresholds at the individual restaurant level as a potential indicator of impairment.
+Added: Specifically, we evaluated the Company’s assessment of the factors considered, including the cash flows at the individual restaurant level and the cash flow thresholds used in the Company’s analysis, as well as the impact of the pandemic.
We tested that those restaurants with trailing 12-month cash flows were evaluated for potential impairment triggers and we compared the trailing 12-month cash flows to historical financial data.
−Removed: We assessed other events and circumstances that could have been indicative of a potential impairment trigger.
+Added: We also assessed other events and circumstances that could have been indicative of a potential impairment trigger by reviewing management’s development reports and related meeting minutes and the board of directors meeting minutes.
We have served as the Company’s auditor since 1998.
25 unchanged sentences
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
−Removed: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
+Added: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
+Added: inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Louisville, Kentucky
11 unchanged sentences
Prepaid income taxes
−Removed: Prepaid expenses
+Added: Prepaid expenses and other current assets
Total current assets
Property and equipment, net of accumulated depreciation of $ 763,700 at December 29, 2020 and $ 678,988 at December 31, 2019
−Removed: Operating lease right-of-use asset, net
+Added: Operating lease right-of-use assets, net
Intangible assets, net of accumulated amortization of $ 14,341 at December 29, 2020 and $ 14,141 at December 31, 2019
2 unchanged sentences
Current portion of operating lease liabilities
+Added: Current maturities of long-term debt
Accounts payable
Deferred revenue-gift cards
−Removed: Accrued wages
+Added: Accrued wages and payroll taxes
+Added: Income taxes payable
Accrued taxes and licenses
−Removed: Dividends payable
Other accrued liabilities
1 unchanged sentence
Operating lease liabilities, net of current portion
+Added: Long-term debt
Restricted stock and other deposits
−Removed: Deferred rent
Deferred tax liabilities, net
24 unchanged sentences
Restaurant operating costs (excluding depreciation and amortization shown separately below):
−Removed: Cost of sales
+Added: Food and beverage
Other operating
4 unchanged sentences
Income from operations
−Removed: Interest income (expense), net
−Removed: Equity income from investments in unconsolidated affiliates
+Added: Interest expense (income), net
+Added: Equity (loss) income from investments in unconsolidated affiliates
Income before taxes
−Removed: Provision for income taxes
+Added: Income tax (benefit) expense
Net income including noncontrolling interests
18 unchanged sentences
Balance, December 26, 2017
−Removed: Other comprehensive income, net of tax
−Removed: Noncontrolling interests contribution
−Removed: Distributions to noncontrolling interest holders
−Removed: Dividends declared ($ 0.84 per share)
−Removed: Shares issued under share-based compensation plans including tax effects
−Removed: Indirect repurchase of shares for minimum tax withholdings
−Removed: Cumulative effect of change in accounting principle
−Removed: Share-based compensation
−Removed: Balance, December 26, 2017
Other comprehensive loss, net of tax
20 unchanged sentences
Balance, December 31, 2019
+Added: Other comprehensive income, net of tax
+Added: Noncontrolling interests contribution
+Added: Distributions to noncontrolling interest holders
+Added: Dividends declared ($ 0.36 per share)
+Added: Shares issued under share-based compensation plans including tax effects
+Added: Indirect repurchase of shares for minimum tax withholdings
+Added: Repurchase of shares of common stock
+Added: Share-based compensation
+Added: Balance, December 29, 2020
See accompanying notes to Consolidated Financial Statements.
11 unchanged sentences
Contribution from executive officer
−Removed: Equity income from investments in unconsolidated affiliates
+Added: Equity loss (income) from investments in unconsolidated affiliates
Distributions of income received from investments in unconsolidated affiliates
2 unchanged sentences
Changes in operating working capital:
−Removed: Prepaid expenses
+Added: Prepaid expenses and other current assets
Accounts payable
Deferred revenue—gift cards
−Removed: Accrued wages
+Added: Accrued wages and payroll taxes
Prepaid income taxes and income taxes payable
9 unchanged sentences
Proceeds from sale of property and equipment
+Added: Proceeds from sale leaseback transaction
Net cash used in investing activities
Cash flows from financing activities:
+Added: Proceeds from revolving credit facility
Debt issuance costs
2 unchanged sentences
Acquisition of noncontrolling interest
−Removed: Proceeds from restricted stock and other deposits, net
+Added: (Repayments) proceeds from restricted stock and other deposits, net
Indirect repurchase of shares for minimum tax withholdings
−Removed: Principal payments on long-term debt
−Removed: Proceeds from exercise of stock options
Repurchase of shares of common stock
+Added: Principal payments on long-term debt
Dividends paid to shareholders
−Removed: Net cash used in financing activities
−Removed: Net (decrease) increase in cash and cash equivalents
+Added: Net cash provided by (used in) financing activities
+Added: Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents—beginning of period
18 unchanged sentences
Of the 97 franchise restaurants, 69 were domestic and 28 were international restaurants.
−Removed: As of December 25, 2018, we owned and operated 491 restaurants and franchised an additional 91 restaurants in 49 states and nine foreign countries.
+Added: As of December 31, 2019, we owned and operated 514 restaurants and franchised an additional 97 restaurants in 49 states and ten foreign countries.
Of the 514 company restaurants that were operating at December 31, 2019, 494 were wholly-owned and 20 were majority-owned.
Of the 97 franchise restaurants, 69 were domestic and 28 were international restaurants .
+Added: Risks and Uncertainties
+Added: The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic (the "pandemic").
+Added: On March 13, 2020, the pandemic was declared a National Public Health Emergency.
+Added: Shortly after the national emergency declaration, state and local officials began placing restrictions on restaurants, some of which allowed To-Go or curbside service only while others limited capacity in the dining room.
+Added: By late March all of our domestic company and franchise restaurants were under state or local order which only allowed for To-Go or curbside service.
+Added: Beginning in early May 2020, state and local guidelines began to allow dining rooms to re-open, typically at a limited capacity.
+Added: While all of our dining rooms were able to re-open in some capacity, many were required to close again in areas more severely impacted by the pandemic.
+Added: As of December 29, 2020, 82 % of our company restaurants had their dining rooms operating under various limited capacity restrictions.
+Added: Our remaining restaurants were limited to outdoor and/or To-Go or curbside service only.
+Added: In response to the impact of the pandemic on our restaurant operations, we have developed a hybrid operating model that accommodates our limited capacity dining rooms together with enhanced To-Go, which includes a curbside and/or drive-up operating model, as permitted by local guidelines.
+Added: This includes design changes to our building to better accommodate the increased To-Go sales and the expansion of outdoor seating areas where allowed.
+Added: We also have installed booth partitions in all of our restaurants as an added safety measure for our guests.
+Added: In addition, we have increased our already strict sanitation requirements, are conducting daily health and temperature checks for all employees before they begin their shift and are requiring personal protective equipment to be worn by all restaurant employees at all times.
+Added: As we work through the local regulations at each of our locations, the safety of our employees and guests remains our top priority.
+Added: As a result of the dining room restrictions and temporary closures, we have experienced a significant decrease in traffic which has impacted our operating results.
+Added: While the majority of our dining rooms have re-opened, a significant portion continue to operate under capacity restrictions that severely limit the number of guests we can serve.
+Added: In addition, while we have seen significant sales growth in our To-Go program, even with dining rooms re-opened, we currently do not expect these sales will generate a similar profit margin and cash flows to our normal operating model.
+Added: We expect our operating results to continue to be impacted until at least such time that all state and local restrictions are lifted, and our dining rooms can operate at full capacity.
+Added: We cannot predict how long the pandemic will last, how long it will take until all state and local restrictions will be lifted, or the extent to which our dining rooms will have to close again.
+Added: In addition, we cannot predict the overall impact on the economy or consumer spending habits.
+Added: The extent of these dining room restrictions and temporary closures will determine the significance of the impact to our financial condition, financial results, and liquidity in future periods.
+Added: In addition, significant items subject to estimates and assumptions including the carrying amount of property and equipment, goodwill, and lease related assets could be impacted.
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
(2) Summary of Significant Accounting Policies
3 unchanged sentences
The unconsolidated restaurants are accounted for using the equity method.
−Removed: Our investments in these unconsolidated affiliates are included in other assets in our consolidated balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our consolidated statements of income and comprehensive income under equity income from investments in unconsolidated affiliates.
+Added: Our investments in these unconsolidated affiliates are included in other assets in our consolidated balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our consolidated statements of income and comprehensive income under equity (loss) income from investments in unconsolidated affiliates.
All significant intercompany balances and transactions for these unconsolidated restaurants as well as the entities whose accounts have been consolidated have been eliminated.
2 unchanged sentences
We utilize a 13 week accounting period for quarterly reporting purposes, except in years containing 53 weeks when the fourth quarter contains 14 weeks.
−Removed: Fiscal year 2019 was 53 weeks in length.
+Added: Fiscal years 2020 and 2018 were 52 weeks in length and fiscal year 2019 was 53 weeks in length.
In fiscal year 2019, the 53 rd week added $ 59.0 million to restaurant and other sales and $ 0.10 to $ 0.11 to diluted earnings per share in our consolidated statements of income and comprehensive income.
−Removed: Fiscal years 2018 and 2017 were 52 weeks in length.
(c) Cash and Cash Equivalents
7 unchanged sentences
We review our allowance for doubtful accounts quarterly.
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
−Removed: balances over 120 days and a specified amount are reviewed individually for collectability.
+Added: Past due balances over 120 days are reviewed individually for collectability.
Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
7 unchanged sentences
See note 2(g) for further discussion of leases.
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
The estimated useful lives are:
17 unchanged sentences
In 2019, we changed the annual assessment date to the beginning of our fourth quarter.
−Removed: As our primary indicator of impairment is a decrease in cash flows and because we have a significant number of reporting units with goodwill, an earlier evaluation date will allow us to more timely identify potential impairments.
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
−Removed: was not due to any goodwill impairment concerns within any of our reporting units.
+Added: As our primary indicator of impairment is a decrease in cash flows and because we have a significant number of reporting units with goodwill, an earlier evaluation date allows us to more timely identify potential impairments.
+Added: This change was not due to any goodwill impairment concerns within any of our reporting units.
In addition, we determined this did not represent a material change to a method of applying an accounting principle.
−Removed: In the first step of the review process, we compare the estimated fair value of the restaurant with its carrying value, including goodwill.
−Removed: If the estimated fair value of the restaurant exceeds its carrying amount, no further analysis is needed.
−Removed: If the estimated fair value of the restaurant is less than its carrying amount, the second step of the review process requires the calculation of the implied fair value of the goodwill by allocating the estimated fair value of the restaurant to all of the assets and liabilities of the restaurant as if it had been acquired in a business combination.
−Removed: The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.
−Removed: If the carrying value of the goodwill associated with the restaurant exceeds the implied fair value of the goodwill, an impairment loss is recognized for that excess amount.
+Added: The determination of impairment consists of two steps.
+Added: First, we determine the fair value of the reporting unit and compare it to its carrying amount.
+Added: The fair value of the reporting unit may be based on several valuation approaches including capitalization of earnings, discounted cash flows, comparable public company market multiples and comparable acquisition market multiples.
+Added: Second, if the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount over the fair value of the reporting unit.
The valuation approaches used to determine fair value are subject to key judgments and assumptions that are sensitive to change such as judgments and assumptions about appropriate revenue growth rates, operating margins, weighted average cost of capital and comparable company and acquisition market multiples.
2 unchanged sentences
When developing these key judgments and assumptions, we consider economic, operational and market conditions that could impact fair value.
−Removed: The judgments and assumptions used are consistent with what we believe hypothetical market participants would use.
+Added: The judgments and assumptions used are consistent with what we believe hypothetical market
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
+Added: participants would use.
However, estimates are inherently uncertain and represent only our reasonable expectations regarding future developments.
−Removed: If the estimates used in performing the impairment test prove inaccurate, the fair value of the restaurants may ultimately prove to be significantly lower, thereby causing the carrying value to exceed the fair value and indicating impairment has occurred.
−Removed: In 2019, 2018 and 2017, as a result of our annual goodwill impairment analysis, we determined that there was no goodwill impairment.
+Added: If the estimates used in performing the impairment test prove inaccurate, the fair value of the restaurants may ultimately prove to be significantly lower, thereby causing the carrying value to exceed the fair value and resulting in an impairment.
+Added: In 2020, as a result of our annual goodwill impairment analysis, we recorded goodwill impairment of $ 1.1 million related to two reporting units.
+Added: In 2019 and 2018, we determined that there was no goodwill impairment.
Refer to note 7 for additional information related to goodwill and intangible assets.
3 unchanged sentences
(j) Impairment or Disposal of Long-lived Assets
−Removed: In accordance with ASC 360, Property, Plant and Equipment , long-lived assets related to each restaurant to be held and used in the business, such as property and equipment, right-of-use assets and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of a restaurant may not be recoverable.
−Removed: When we evaluate restaurants, cash flows are the primary indicator of impairment.
+Added: In accordance with ASC 360, Property, Plant and Equipment , long-lived assets related to each restaurant to be held and used in the business, such as property and equipment, operating lease right-of-use assets and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of a restaurant may not be recoverable.
+Added: For the purposes of this evaluation, we define the asset group at the individual restaurant level.
+Added: When we evaluate the restaurants, cash flows are the primary indicator of impairment.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the restaurant to estimated undiscounted future cash flows expected to be generated by the restaurant.
4 unchanged sentences
If the carrying amount of the restaurant exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount exceeds the estimated fair value of the assets.
−Removed: We generally measure fair value by independent third party appraisal or discounting estimated future cash flows.
−Removed: When fair value is measured by discounting estimated future cash flows, the
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
−Removed: assumptions used are consistent with what we believe hypothetical market participants would use.
+Added: We generally measure fair value by discounting estimated future cash flows.
+Added: When fair value is measured by discounting estimated future cash flows, the assumptions used are consistent with what we believe hypothetical market participants would use.
We also use a discount rate that is commensurate with the risk inherent in the projected cash flows.
8 unchanged sentences
Employee healthcare
−Removed: We record a liability for unresolved claims and for an estimate of incurred but not reported claims based on estimates provided by management, a third party administrator and/or actuary.
−Removed: The estimated liability is based on a number of assumptions and factors regarding economic conditions, the frequency and severity of claims and claim development history and settlement practices.
+Added: We record a liability for unresolved claims and for an estimate of incurred but not reported claims based on historical experience.
+Added: The estimated liability is based on a number of assumptions and factors regarding economic
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
+Added: conditions, the frequency and severity of claims and claim development history and settlement practices.
Our assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances.
13 unchanged sentences
This includes franchise royalties, initial and upfront franchise fees, fees paid to our domestic marketing and advertising fund, and fees for supervisory and administrative services.
−Removed: For further discussion of revenue, see note 3.
−Removed: We adopted ASC 606, Revenue from Contracts with Customers, as of the beginning of our 2018 fiscal year.
+Added: We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers .
This ASC requires an entity to allocate the transaction price received from customers to each separate and distinct performance obligation and recognize revenue as these performance obligations are satisfied.
−Removed: This standard replaces most existing revenue recognition guidance in conformity with generally accepted accounting principles in the United States ("GAAP").
−Removed: The adoption of this standard did not have an impact on our recognition of sales from company restaurants or our recognition of continuing fees from franchisees, which are based on a percentage of franchise restaurant sales.
−Removed: As further detailed below, the adoption of this standard did have an impact on the recognition of initial franchise fees and upfront fees from international development agreements.
−Removed: In addition, certain transactions that were previously recorded as expense prior to adoption are now classified as revenue.
−Removed: We utilized the cumulative-effect
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
−Removed: method of adoption and recorded a $ 0.9 million reduction, net of tax, to retained earnings as of the first day of fiscal 2018 to reflect the change in the recognition pattern of initial franchise fees and upfront fees.
−Removed: The comparative financial information prior to adoption has not been restated and continues to be reported under the accounting standards in effect for those periods.
−Removed: The impact of adopting ASC 606 as compared to the previous revenue recognition guidance on our consolidated balance sheet and our consolidated statements of income and comprehensive income was not significant.
−Removed: Under ASC 606, because the services we provide related to initial franchise fees and upfront fees from international development agreements do not contain separate and distinct performance obligations from the franchise right, these fees are recognized on a straight-line basis over the term of the associated franchise agreement.
−Removed: Under previous guidance, initial franchise fees were recognized when the related services had been provided, which was generally upon the opening of the restaurant, and upfront fees were recognized on a pro-rata basis as restaurants under the development agreement were opened.
−Removed: These fees continue to be recorded as a component of franchise royalties and fees in our consolidated statements of income and comprehensive income.
−Removed: ASC 606 requires sales-based royalties to continue to be recognized as franchise restaurant sales occur.
−Removed: In addition, certain transactions that were previously recorded as expense prior to adoption are now classified as revenue.
−Removed: These transactions include breakage income and third party gift card fees from our gift card program as well as accounting fees, supervision fees and advertising contributions received from our franchisees.
−Removed: Under ASC 606, breakage income and third party gift card fees are recorded as a component of restaurant and other sales in our consolidated statements of income and comprehensive income.
−Removed: Under previous guidance, these transactions were recorded as a component of other operating expense.
−Removed: Also under ASC 606, accounting fees, supervision fees and advertising contributions received from our franchisees are recorded as a component of franchise royalties and fees in our consolidated statements of income and comprehensive income.
−Removed: Under previous guidance, these transactions were recorded as a reduction of general and administrative expense.
−Removed: As noted above, we adopted ASC 606 as of the beginning of our 2018 fiscal year.
−Removed: The comparative financial information prior to adoption has not been restated and continues to be reported under the accounting standards in effect for those periods.
+Added: We recognize sales-based royalties as franchise restaurant sales occur.
+Added: For initial and upfront franchise fees from international development agreements, because the services we provide related to these fees do not contain separate and distinct performance obligations from the franchise right, these fees are recognized on a straight-line basis over the term of the associated franchise agreement.
For further discussion of revenue, see note 3.
7 unchanged sentences
We have a domestic system-wide marketing and advertising fund.
−Removed: We maintain control of the marketing and advertising fund and, as such, have consolidated the fund’s activity for the years ended December 31, 2019, December 25, 2018 and December 26, 2017.
+Added: We maintain control of the marketing and advertising fund and, as such, have consolidated the fund’s activity for all the years presented.
Domestic company and franchise restaurants are required to remit a designated portion of sales, currently 0.3 % , to the advertising fund.
2 unchanged sentences
Other costs related to local restaurant area marketing initiatives are included in other operating costs in our consolidated statements of income and comprehensive income.
−Removed: These costs and the company-owned restaurant
+Added: These costs and the company restaurant contribution amounted to $ 13.8 million, $ 18.3 million and $ 17.1 million for the years ended December 29, 2020, December 31, 2019 and December 25, 2018, respectively.
Texas Roadhouse, Inc.
2 unchanged sentences
(Tabular amounts in thousands, except share and per share data)
−Removed: contribution amounted to $ 18.3 million, $ 17.1 million and $ 14.5 million for the years ended December 31, 2019, December 25, 2018 and December 26, 2017, respectively.
(p) Pre-opening Expenses
15 unchanged sentences
(t) Recent Accounting Pronouncements
−Removed: (Accounting Standards Codification 842, "ASC 842")
−Removed: On December 26, 2018, we adopted ASC 842, Leases , which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases.
−Removed: As further described in note 8, we lease land and/or buildings for the majority of our restaurants under non-cancelable lease agreements.
−Removed: We adopted ASC 842 using a modified retrospective approach.
−Removed: As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods.
−Removed: ASC 842 also permitted the election of certain practical expedients upon adoption.
−Removed: We elected the transition package of practical expedients which allowed us to carryforward the historical lease classification.
−Removed: We also elected the practical expedient to not separate lease and non-lease components for all leases entered into after the date of adoption.
−Removed: Finally, we elected the hindsight practical expedient which required us to assess the lease term for all existing leases.
−Removed: This resulted in extending the terms for certain existing leases in which renewal options had already been exercised or were reasonably certain of being exercised and shortening the terms for certain existing leases in which renewal options were not reasonably certain of being exercised.
−Removed: As a result of the hindsight election, we recorded a $ 2.7 million reduction, net of tax, to retained earnings as of the first day of fiscal 2019 to reflect the change in lease terms.
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
−Removed: The adoption of this standard had a significant impact on our consolidated balance sheet.
−Removed: There was no significant impact to our results of operations or cash flows.
−Removed: This standard did not have a significant impact on our liquidity or on our compliance with our financial covenants associated with our credit facility.
Financial Instruments
2 unchanged sentences
Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected versus incurred losses for financial assets held.
−Removed: ASU 2016-13 is effective for annual periods beginning after December 15, 2019 (our 2020 fiscal year), and for interim periods within those years, with early adoption permitted for annual periods beginning after December 15, 2018.
−Removed: We do not believe this standard will have a significant impact on our consolidated financial statements.
+Added: We adopted ASU 2016-13 as of the beginning of our 2020 fiscal year.
+Added: The adoption of this standard did not have a significant impact on our consolidated financial statements.
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
(Accounting Standards Update 2017-04, "ASU 2017-04")
3 unchanged sentences
Instead, goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill.
−Removed: ASU 2017-04 is effective for annual and interim periods for fiscal years beginning after December 15, 2019 (our 2020 fiscal year) and will be applied on a prospective basis.
−Removed: Early adoption is permitted for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017.
−Removed: We do not believe this standard will have a significant impact on our consolidated financial statements.
+Added: We adopted ASU 2017-04 as of the beginning of our 2020 fiscal year.
+Added: The adoption of this standard did not have a significant impact on our consolidated financial statements.
Fair Value Measurement
2 unchanged sentences
Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which changes disclosure requirements for fair value measurements.
+Added: We adopted ASU 2018-13 as of the beginning of our 2020 fiscal year.
+Added: The adoption of this standard did not have a significant impact on our consolidated financial statements.
+Added: (Accounting Standards Update 2019-12, "ASU 2019-12")
+Added: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes, which removes certain exceptions related to the approach for intraperiod tax allocations, the calculation of income taxes in interim periods, and the recognition of deferred taxes for investments.
+Added: This guidance also simplifies aspects of accounting for recognizing deferred taxes for taxable goodwill.
ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 (our 2021 fiscal year) and for interim periods within those years, with early adoption permitted.
−Removed: We do not believe this standard will have a significant impact on our consolidated financial statements.
+Added: We are currently assessing the impact of this new standard on our consolidated financial statements.
+Added: Reference Rate Reform
+Added: (Accounting Standards Update 2020-04, "ASU 2020-04")
+Added: In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):
+Added: Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting.
+Added: These changes are intended to simplify the market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.
+Added: This guidance is effective upon issuance to modifications made as early as the beginning of the interim period through December 31, 2022.
+Added: We are currently assessing the impact of this new standard on our consolidated financial statements.
The following table disaggregates our revenue by major source (in thousands):
19 unchanged sentences
When the likelihood of a gift card's redemption is determined to be remote, we record a breakage adjustment and reduce deferred revenue by the amount never expected to be redeemed.
−Removed: We use historic gift card redemption patterns to determine when the likelihood of a gift card's redemption becomes remote and have determined that 4 % of the value of the gift cards sold by our company and our third party retailers will never be redeemed.
−Removed: This breakage adjustment is recorded consistent with the historic redemption pattern of the associated gift card.
+Added: We use historic gift card redemption patterns to determine when the likelihood of a gift card's redemption becomes remote and have determined that 4 % of the value of the gift cards sold by the Company and our third party retailers will never be redeemed.
+Added: This breakage adjustment is recorded consistent with the historic redemption pattern of the associated gift card or on actual redemptions in periods where redemptions do not align with historic redemption patterns.
In addition, we incur fees on all gift cards that are sold through third party retailers.
−Removed: These fees are also deferred and recorded consistent with the historic redemption pattern of the associated gift cards.
+Added: These fees are also deferred and recorded consistent with the historic redemption pattern of the associated gift cards or on actual redemptions in periods where redemptions do not align with historic redemption patterns.
For the years ended December 29, 2020 and December 31, 2019, we recognized gift card fees, net of gift card breakage income, of $ 6.8 million and $ 9.1 million, respectively.
17 unchanged sentences
Finally, we perform supervisory and administrative services for certain franchise restaurants for which we receive management fees, which are recognized as the services are performed.
−Removed: Total deferred revenue related to our franchise agreements is included in other liabilities in our consolidated balance sheets and was $ 1.9 million as of December 31, 2019 and $ 1.8 million as of December 25, 2018.
−Removed: We recognized revenue of $ 0.3 million for both years ended December 31, 2019 and December 25, 2018 related to the amounts in deferred revenue as of December 25, 2018 and December 26, 2017, respectively.
−Removed: (4) Acquisitions
−Removed: On October 28, 2019, we acquired one franchise restaurant in Georgia which was subsequently relocated.
−Removed: Pursuant to the terms of the acquisition agreement, we paid a total purchase price of $ 1.5 million.
−Removed: This transaction was accounted for using the purchase method as defined in ASC 805, Business Combinations ( "
−Removed: ASC 805 "
−Removed: As a result of this
+Added: Total deferred revenue related to our franchise agreements is included in other liabilities in our consolidated balance sheets and was $ 1.9 million as of December 29, 2020 and December 31, 2019.
+Added: We recognized revenue of $ 0.4 million and $ 0.3 million for the years ended December 29, 2020 and December 31, 2019, respectively, related to the amounts in deferred revenue as of December 31, 2019 and December 25, 2018, respectively.
Texas Roadhouse, Inc.
2 unchanged sentences
(Tabular amounts in thousands, except share and per share data)
−Removed: acquisition, $ 1.5 million of goodwill was generated, which is not amortizable for book purposes, but is deductible for tax purposes.
−Removed: On December 3, 2018, we acquired one franchise restaurant in Florida which was subsequently relocated.
−Removed: Pursuant to the terms of the acquisition agreement, we paid a total purchase price of $ 2.2 million, net of a $ 0.3 million charge to settle a pre-existing relationship.
−Removed: This transaction was accounted for using the purchase method as defined in ASC 805 .
−Removed: As a result of this acquisition, $ 2.2 million of goodwill was generated, which is not amortizable for book purposes, but is deductible for tax purposes.
+Added: (4) Acquisitions
+Added: In late 2020, we separately acquired two franchise restaurants.
+Added: Pursuant to the terms of the acquisition agreements, we paid a total purchase price of $ 10.6 million.
+Added: These transactions were accounted for using the purchase method as defined in ASC 805, Business Combinations ( "
+Added: ASC 805 "
+Added: These acquisitions generated goodwill of $ 3.3 million, which is not amortizable for book purposes, but is deductible for tax purposes.
+Added: We also acquired an intangible reacquired franchise right asset of $ 1.6 million which will be amortized over 3.4 years based on the remaining term of the franchise agreement.
+Added: In late 2019, we acquired one franchise restaurant which was subsequently relocated.
+Added: Pursuant to the terms of the acquisition agreement, we paid a total purchase price of $ 1.5 million and accounted for this transaction using the purchase method as defined in ASC 805.
+Added: This acquisition generated goodwill of $ 1.5 million, which is not amortizable for book purposes, but is deductible for tax purposes.
These acquisitions are consistent with our long-term strategy to increase net income and earnings per share.
2 unchanged sentences
On August 7, 2017, we entered into the Amended and Restated Credit Agreement (the "Amended Credit Agreement") with respect to our revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A., PNC Bank, N.A., and Wells Fargo Bank, N.A.
−Removed: The amended revolving credit facility remains an unsecured, revolving credit agreement under which we may borrow up to $ 200.0 million with the option to increase the amended revolving credit facility by an additional $ 200.0 million subject to certain limitations.
−Removed: The Amended Credit Agreement extends the maturity date of our revolving credit facility until August 5, 2022.
−Removed: The terms of the Amended Credit Agreement require us to pay interest on outstanding borrowings at the London Interbank Offered Rate ("LIBOR") plus a margin of 0.875 % to 1.875 % and to pay a commitment fee of 0.125 % to 0.30 % per year on any unused portion of the amended revolving credit facility, in each case depending on our leverage ratio, or the Alternate Base Rate, which is the highest of the issuing banks’ prime lending rate, the Federal Reserve Bank of New York rate plus 0.50 % or the Adjusted Eurodollar Rate for a one month interest period on such day plus 1.0 % .
−Removed: In April 2018, we paid off our outstanding credit facility of $ 50.0 million.
−Removed: The weighted-average interest rate for the amended revolving credit facility as of December 31, 2019 and December 25, 2018 was 2.64 % and 3.81 % , respectively.
−Removed: As of December 31, 2019, we had $ 191.8 million of availability, net of $ 8.2 million of outstanding letters of credit.
−Removed: The lenders’ obligation to extend credit pursuant to the Amended Credit Agreement depends on us maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio of 2.00 to 1.00 and a maximum consolidated leverage ratio of 3.00 to 1.00.
−Removed: The Amended Credit Agreement permits us to incur additional secured or unsecured indebtedness outside the amended revolving credit facility, except for the incurrence of secured indebtedness that in the aggregate is equal to or greater than $ 125.0 million and 20 % of our consolidated tangible net worth.
−Removed: We were in compliance with all financial covenants as of December 31, 2019.
+Added: The amended revolving credit facility remains an unsecured, revolving credit agreement under which we may borrow up to $ 200.0 million with the option to increase the amended revolving credit facility by an additional $ 200.0 million subject to certain limitations, including approval by the syndicate of lenders.
+Added: On May 11, 2020, we amended the revolving credit facility to provide for an incremental revolving credit facility of up to $ 82.5 million.
+Added: This amount reduced the additional $ 200.0 million that was available under the revolving credit facility.
+Added: The maturity date for the incremental revolving credit facility is May 10, 2021.
+Added: The maturity date for the original revolving credit facility remains August 5, 2022.
+Added: The terms of the amendment require us to pay interest on outstanding borrowings of the original revolving credit facility at the London Interbank Offered Rate ("LIBOR") plus a margin of 1.50 % and to pay a commitment fee of 0.25 % per year on any unused portion of the amended revolving credit facility through the end of our Q1 2021 fiscal quarter.
+Added: The amendment also provides an Alternate Base Rate that may be substituted for LIBOR.
+Added: Subsequent to our Q1 2021 fiscal quarter, we are required to pay interest on outstanding borrowings at LIBOR plus a margin of 0.875 % to 2.25 % and to pay a commitment fee of 0.125 % to 0.40 % depending on our consolidated net leverage ratio.
+Added: As of December 29, 2020, we had $ 190.0 million outstanding on the original revolving credit facility and $ 1.8 million of availability, net of $ 8.2 million of outstanding letters of credit.
+Added: This outstanding amount is included as long-term debt on our consolidated balance sheet.
+Added: The terms of the amendment also require us to pay interest on outstanding borrowings of the incremental revolving credit facility at LIBOR, which is subject to a floor of 1.0 %, plus a margin of 2.25 % and to pay a commitment fee of 0.50 % per year on any unused portion of the incremental revolving credit facility through the maturity date.
+Added: As of December 29, 2020, we had $ 50.0 million outstanding and $ 32.5 million of availability on the incremental revolving credit facility.
+Added: This outstanding amount is included as current maturities of long-term debt on our consolidated balance sheet.
+Added: The weighted-average interest rate for the $ 240.0 million of combined borrowings on our revolving credit facility as of December 29, 2020 was 1.98 % .
+Added: The weighted-average interest rate for the amended revolving credit facility as of December 31, 2019 was 2.64 %.
Texas Roadhouse, Inc.
2 unchanged sentences
(Tabular amounts in thousands, except share and per share data)
+Added: The lenders’ obligation to extend credit pursuant to the Amended Credit Agreement depends on us maintaining certain financial covenants.
+Added: The amendment to the revolving credit facility also modified the financial covenants through the end of our Q1 2021 fiscal quarter.
+Added: We were in compliance with all financial covenants as of December 29, 2020.
(6) Property and Equipment, Net
6 unchanged sentences
Accumulated depreciation and amortization
+Added: For the year ended December 29, 2020, the amount of interest capitalized in connection with restaurant construction was $ 0.3 million.
There was no interest capitalized in connection with restaurant construction for the year ended December 31, 2019.
−Removed: For the years ended December 25, 2018 and December 26, 2017, the amount of interest capitalized in connection with restaurant construction was $ 0.1 million and $ 0.4 million, respectively.
+Added: For the year ended December 25, 2018, the amount of interest capitalized in connection with restaurant construction was $ 0.1 million.
(7) Goodwill and Intangible Assets
14 unchanged sentences
Amortization expense for the next five years is expected to range from $ 0.1 million to $ 0.8 million.
−Removed: Refer to note 4 for discussion of the acquisitions completed for the years ended December 31, 2019 and December 25, 2018.
+Added: As further discussed in note 16, as a result of our 2020 goodwill impairment analysis, we determined that goodwill related to two restaurants was impaired.
+Added: Refer to note 4 for discussion of the
Texas Roadhouse, Inc.
2 unchanged sentences
(Tabular amounts in thousands, except share and per share data)
+Added: acquisitions completed for the years ended December 29, 2020 and December 31, 2019.
We recognize right-of-use assets and lease liabilities for both real estate and equipment leases that have a term in excess of one year .
−Removed: As of December 31, 2019, these amounts were as follows:
+Added: As of December 29, 2020 and December 31, 2019, these amounts were as follows:
+Added: As of December 29, 2020
Operating lease right-of-use assets
2 unchanged sentences
Total operating lease liabilities
−Removed: Information related to our real estate leases as of and for the fiscal year ended December 31, 2019 was as follows (in thousands):
+Added: As of December 31, 2019
+Added: Operating lease right-of-use assets
+Added: Current portion of operating lease liabilities
+Added: Operating lease liabilities, net of current portion
+Added: Total operating lease liabilities
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
+Added: Information related to our real estate leases as of and for the fiscal year ended December 29, 2020 and December 31, 2019 was as follows (in thousands):
Fiscal Year Ended
1 unchanged sentence
December 29, 2020
+Added: December 31, 2019
Operating lease
3 unchanged sentences
Real estate lease liability maturity analysis
+Added: As of December 29, 2020
Less interest
3 unchanged sentences
December 29, 2020
+Added: December 31, 2019
Cash paid for amounts included in measurement of operating lease liabilities
4 unchanged sentences
In addition to the above operating leases, as of December 29, 2020 we had one finance lease with a right-of-use asset balance and lease liability balance of $ 1.7 million and $ 2.1 million, respectively.
+Added: The right-of-use asset balance is included as a component of other assets and the lease liability balance as a component of other liabilities in the consolidated balance sheets.
+Added: In 2020, we entered into a sale leaseback transaction involving land that had recently been acquired.
+Added: The sale generated proceeds of $ 2.2 million and no gain or loss was recognized on the transaction.
+Added: The resulting operating lease is included in the operating lease right-of-use assets and lease liabilities noted above.
+Added: We recognize operating lease right-of-use assets and operating lease liabilities for real estate leases, including our restaurant leases and Support Center lease, as well as certain restaurant equipment leases based on the present value of the lease payments over the lease term.
+Added: We estimate the present value based on our incremental borrowing rate which corresponds to the underlying lease term.
+Added: In addition, operating lease right-of-use assets are reduced for accrued rent
Texas Roadhouse, Inc.
2 unchanged sentences
(Tabular amounts in thousands, except share and per share data)
−Removed: right-of-use asset balance is included as a component of other assets and the lease liability balance as a component of other liabilities in the consolidated balance sheets.
−Removed: Beginning in 2019, we recognize operating lease right-of-use assets and operating lease liabilities for real estate leases, including our restaurant leases and Support Center lease, as well as certain restaurant equipment leases based on the present value of the lease payments over the lease term.
−Removed: We estimate the present value based on our incremental borrowing rate which corresponds to the underlying lease term.
−Removed: In addition, operating lease right-of-use assets are reduced for accrued rent and increased for any initial direct costs recognized at lease inception.
+Added: and increased for any initial direct costs recognized at lease inception.
For leases commencing in 2019 and later, we account for lease and non-lease components as a single lease component.
9 unchanged sentences
In addition, certain of our operating leases have variable escalations of the minimum rent that depend on an index or rate.
−Removed: We recognize variable rent expense when the escalation is determinable.
+Added: For these leases, we recognize operating lease right-of-use assets and operating lease liabilities based on the index or rate at the commencement date.
+Added: Any subsequent changes to the index or rate are recognized as variable rent expense when the escalation is determinable.
Contingent rent and variable rent expense are included as variable lease costs in the table above.
−Removed: The following is a schedule of future minimum lease payments required for operating leases that have remaining terms in excess of one year as of December 25, 2018:
−Removed: Operating Leases
−Removed: Rent expense for operating leases consisted of the following:
−Removed: Fiscal Year Ended
−Removed: December 25, 2018
−Removed: December 26, 2017
+Added: Rent expense for operating leases for the fiscal year ended December 25, 2018 consisted of the following:
Minimum rent—occupancy
2 unchanged sentences
Minimum rent—equipment and other
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
(9) Income Taxes
−Removed: Components of our income tax provision for the years ended December 31, 2019, December 25, 2018 and December 26, 2017 are as follows:
+Added: Components of our income tax (benefit) expense for the years ended December 29, 2020, December 31, 2019 and December 25, 2018 are as follows:
Fiscal Year Ended
4 unchanged sentences
Total deferred
−Removed: Income tax provision
+Added: Income tax (benefit) expense
Our pre-tax income is substantially derived from domestic restaurants.
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
A reconciliation of the statutory federal income tax rate to our effective tax rate for December 29, 2020, December 31, 2019 and December 25, 2018 is as follows:
10 unchanged sentences
Officers compensation
+Added: Our effective tax rate was a benefit of 81.4 % in 2020 compared to expense of 15.1 % in 2019.
+Added: This was primarily due to the impact of FICA tip and Work opportunity tax credits on lower pre-tax income.
+Added: Additionally, these credits exceeded our federal tax liability in 2020 but we expect to utilize these credits in future years or by carrying back to our 2019 tax year.
Our effective tax rate increased to 15.1 % in 2019 compared to 12.9 % in 2018 primarily due to lower excess tax benefits related to our share-based compensation program partially offset by lower non-deductible officer compensation.
In addition, the prior year tax rate benefitted from an adjustment related to tax reform that we recorded in conjunction with the filing of our 2017 tax return.
−Removed: Our effective tax rate decreased to 12.9 % in 2018 compared to 26.1 % in 2017 primarily due to new tax legislation enacted in late 2017.
−Removed: As a result of the new tax legislation, significant tax changes were enacted including a reduction of the federal corporate tax rate from 35.0 % to 21.0 % and changes in the federal taxes paid on foreign sourced earnings.
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
Components of deferred tax liabilities, net are as follows:
4 unchanged sentences
Insurance reserves
+Added: Long-term deferred payroll taxes
Other reserves
1 unchanged sentence
Operating lease liabilities
−Removed: Deferred rent
Deferred compensation
8 unchanged sentences
Net deferred tax liability
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
As of December 29, 2020, we have federal tax credit carryforwards of $ 10.2 million expiring in 2040 and state tax credit carryforwards of $ 0.2 million expiring in 2023.
−Removed: We have not provided any valuation allowance as we believe the realization of our deferred tax assets is more likely than not.
+Added: The federal tax credits include FICA tip and Work opportunity tax credits that exceeded credit limitations in the current year.
+Added: We expect to generate sufficient earnings in future periods and/or may implement tax planning strategies that would allow us to fully utilize these credits.
+Added: As such, we have not provided any valuation allowances for these credits, or any of our other deferred tax assets, as their realization is more likely than not.
A reconciliation of the beginning and ending liability for unrecognized tax benefits, all of which would impact the effective tax rate if recognized, is as follows:
15 unchanged sentences
Additionally, as of December 29, 2020, no event occurred that is likely to result in a significant increase or decrease in the unrecognized tax benefits through December 28, 2021.
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
(10) Preferred Stock
8 unchanged sentences
For the year ended December 29, 2020, we paid $ 12.6 million to repurchase 252,409 shares of our common stock.
+Added: On March 17, 2020, we suspended all share repurchase activity.
+Added: For the year ended December 31, 2019, we paid $ 139.8
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
+Added: million to repurchase 2,625,245 shares of our common stock.
This includes repurchases of $ 89.6 million under the new repurchase program and repurchases of $ 50.2 million under the previous stock repurchase program.
−Removed: We did not repurchase any shares of common stock during the years ended December 25, 2018 and December 26, 2017.
+Added: We did not repurchase any shares of common stock during the year ended December 25, 2018.
As of December 29, 2020, we had $ 147.8 million remaining under our authorized stock repurchase program.
1 unchanged sentence
The share and net income per share data for all periods presented are based on the historical weighted-average shares outstanding.
−Removed: The diluted earnings per share calculations show the effect of the weighted- average restricted stock units and stock options outstanding from our equity incentive plans.
+Added: The diluted earnings per share calculations show the effect of the weighted- average restricted stock units outstanding from our equity incentive plans.
Performance stock units are not included in the diluted earnings per share calculation until the performance-based criteria have been met.
See note 14 for further discussion of our equity incentive plans.
−Removed: For all years presented, shares of non-vested stock that were not included because they would have had an anti-dilutive effect were not significant.
+Added: For the years ended December 29, 2020, December 31, 2019, and December 25, 2018, the shares of non-vested stock that were not included because they would have had an anti-dilutive effect were not significant.
The following table sets forth the calculation of earnings per share and weighted average shares outstanding (in thousands) as presented in the accompanying consolidated statements of income and comprehensive income:
6 unchanged sentences
Shares-diluted
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
(13) Commitments and Contingencies
4 unchanged sentences
No material liabilities have been recorded as of December 29, 2020 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
Assignment Date
17 unchanged sentences
We have subsequently assigned the leases to the franchisees, but remain contingently liable, under the terms of the lease, if the franchisee defaults.
−Removed: (2) As discussed in note 17, these restaurants are owned, in whole or part, by certain officers, directors and 5 % shareholders of the Company.
+Added: (2) As discussed in note 17, this restaurant is owned in part by our founder.
(3) Leases associated with restaurants which were sold.
5 unchanged sentences
We have no material minimum purchase commitments with our vendors that extend beyond a year.
−Removed: We and the U.S.
−Removed: Equal Employment Opportunity Commission entered into a consent decree dated March 31, 2017 (the "Consent Decree") to settle the lawsuit styled Equal Employment Opportunity Commission v.
−Removed: Texas Roadhouse, Inc., Texas Roadhouse Holdings LLC and Texas Roadhouse Management Corp.
−Removed: in the United States District Court, District of Massachusetts, Civil Action Number 1:11-cv-11732 (the "Lawsuit").
−Removed: The Consent Decree resolves the issues litigated in the Lawsuit.
−Removed: Under the Consent Decree, among other terms, we have established a fund of $ 12.0 million, from which awards of monetary relief, allocated as wages for tax purposes, may be made to eligible claimants in accordance with procedures set forth in the Consent Decree.
−Removed: For the year ended December 26, 2017, we recorded a pre-tax charge of $ 14.9 million ($ 9.2 million after-tax) related to the Lawsuit and Consent Decree which included costs associated with the legal settlement and legal fees associated with the defense of the case.
−Removed: For the year ended December 25, 2018, we recorded $ 1.5 million of claims administration costs.
−Removed: These amounts were recorded in general and administrative expense in our consolidated statements of income and comprehensive income.
Occasionally, we are a defendant in litigation arising in the ordinary course of business, including "slip and fall"
accidents, employment related claims, claims related to our service of alcohol, and claims from guests or employees alleging illness, injury or food quality, health or operational concerns.
−Removed: None of these types of litigation, most of which
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
−Removed: are covered by insurance, has had a material effect on us and, as of the date of this report, we are not party to any litigation that we believe could have a material adverse effect on our business.
+Added: None of these types of litigation, most of which are covered by insurance, has had a material effect on us and, as of the date of this report, we are not party to any litigation that we believe could have a material adverse effect on our business.
(14) Share-based Compensation
9 unchanged sentences
The following table summarizes the share-based compensation recorded in the accompanying consolidated statements of income and comprehensive income:
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
Fiscal Year Ended
16 unchanged sentences
The excess tax benefit associated with vested RSUs for the years ended December 29, 2020, December 31, 2019 and December 25, 2018 was $ 0.4 million, $ 0.3 million and $ 1.9 million, respectively, which was recognized in the income tax provision.
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
Summary Details for PSUs
7 unchanged sentences
Outstanding at December 29, 2020
−Removed: (1) Additional shares from the December 2017 PSU grant that vested in January 2019 due to exceeding the initial 100 % target.
+Added: (1) Additional shares from the January 2019 PSU grant that vested in January 2020 due to exceeding the initial 100 % target.
We grant PSUs to certain of our executives subject to a one-year vesting and the achievement of certain earnings targets, which determine the number of units to vest at the end of the vesting period.
3 unchanged sentences
On January 8, 2021, 5,199 shares vested related to the January 2020 PSU grant and are expected to be distributed during the 13 weeks ending March 30, 2021.
−Removed: This included 77,000 granted shares and 18,946 incremental shares due to the grant exceeding the initial 100 % target.
−Removed: As of December 31, 2019, with respect to unvested PSUs, there was $ 0.1 million of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 0.1 year.
−Removed: There was no allowable excess tax benefit associated with vested PSUs for the year ended December 31, 2019.
−Removed: The excess tax benefit associated with vested PSUs for the years ended December 25, 2018 and December 26, 2017 was $ 0.7 million and $ 0.8 million, respectively, which was recognized within the income tax provision.
−Removed: Summary Details for Stock Options
−Removed: No stock options were granted or vested during the fiscal years ended December 31, 2019, December 25, 2018 and December 26, 2017.
−Removed: The total intrinsic value of options exercised during the year ended December 26, 2017 was $ 4.0 million.
−Removed: For the year ended December 26, 2017, cash received before tax withholdings from options exercised was $ 1.6 million.
−Removed: The excess tax benefit for the year ended December 26, 2017 was $ 1.0 million which was recognized within the income tax provision.
+Added: As of December 29, 2020, with respect to unvested PSUs, the amount of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 0.1 year was not
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
+Added: There was no allowable excess tax benefit associated with vested PSUs for the years ended December 29, 2020 and December 31, 2019.
+Added: The excess tax benefit associated with vested PSUs for the year ended December 25, 2018 was $ 0.7 million which was recognized within the income tax provision.
(15) Fair Value Measurement
5 unchanged sentences
Inputs that are unobservable for the asset.
−Removed: Texas Roadhouse, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (Tabular amounts in thousands, except share and per share data)
There were no transfers among levels within the fair value hierarchy during the year ended December 29, 2020.
13 unchanged sentences
Fiscal Year Ended
+Added: Long-lived assets held for sale
Long-lived assets held for use
Operating lease right-of-use assets
−Removed: Long-lived assets held for use include leasehold improvements for one restaurant that is subject to a forced relocation.
−Removed: These assets are valued using a Level 1 input, or the contractually negotiated price we will receive.
−Removed: These assets are included in property and equipment in our consolidated balance sheets.
−Removed: These assets were recorded at their fair value, resulting in a gain of $ 1.2 million, which is included in impairment and closure, net in our consolidated statements of income.
−Removed: For further discussion of impairment charges, see note 16.
−Removed: Operating lease right-of-use assets include the lease related assets for one underperforming restaurant in which the carrying value of the right-of-use asset for the associated land and building lease was reduced to fair value.
−Removed: These assets are valued using a Level 3 input, or the discounted cashflows we expect to receive based on the future operations of this location.
−Removed: This resulted in a loss of $ 1.1 million, which is included in impairment and closure, net in our consolidated statements of income.
−Removed: For further discussion of impairment charges, see note 16.
+Added: Investments in unconsolidated affiliates
+Added: Long-lived assets held for sale include land and building at a site that was relocated.
+Added: These assets are included in prepaid expenses and other current assets in our consolidated balance sheets.
+Added: These assets are valued using a Level 3 input, i.e., information from broker listings discounted for estimated selling costs.
+Added: This resulted in a loss of $ 0.4 million which is included in impairment and closure, net in our consolidated statements of income and comprehensive income.
+Added: Long-lived assets held for use as of December 29, 2020 include leasehold improvements for one restaurant
+Added: Texas Roadhouse, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: (Tabular amounts in thousands, except share and per share data)
+Added: scheduled to be relocated in 2021.
+Added: These assets were reduced to a fair value of zero in 2020.
+Added: This resulted in a loss of $ 0.4 million which is included in impairment and closure, net in our consolidated statements of income and comprehensive income.
+Added: Long-lived assets held for use as of December 31, 2019 include leasehold improvements for one restaurant that was subject to a forced relocation.
+Added: This restaurant was relocated in February 2020 at which time the contractually negotiated amount for these assets was received.
+Added: Operating lease right-of-use assets as of December 29, 2020 include the lease related assets for one restaurant that relocated in February 2020 and one restaurant scheduled to be relocated in 2021.
+Added: These assets were reduced to a fair value of zero in 2020.
+Added: This resulted in a loss of $ 0.4 million which is included in impairment and closure, net in our consolidated statements of income and comprehensive income.
+Added: Operating lease right-of-use assets as of December 31, 2019, include the lease related assets for one store that was permanently closed in April 2020.
+Added: Goodwill includes two restaurants whose carrying values were determined to be in excess of their fair values as part of our annual goodwill impairment assessment.
+Added: In determining the fair value, multiple valuation approaches were utilized which considered the historical results and anticipated future trends of operations for these restaurants.
+Added: We consider this a Level 3 input.
+Added: This resulted in a loss of $ 1.1 million which is included in impairment and closure, net in our consolidated statements of income and comprehensive income.
+Added: Investments in unconsolidated affiliates include a 40 % equity interest in a China joint venture.
+Added: This asset is valued using a Level 3 input, i.e., the amount we expect to receive upon the sale of this investment.
+Added: This resulted in a loss of $ 1.1 million which is included in equity (loss) income from investments in unconsolidated affiliates in our consolidated statements of income and comprehensive income.
At December 29, 2020 and December 31, 2019, the fair values of cash and cash equivalents, accounts receivable and accounts payable approximated their carrying values based on the short-term nature of these instruments.
+Added: At December 29, 2020, the fair value of our revolving credit facility approximated its carrying value since it is a variable rate credit facility (Level 2).
(16) Impairment and Closure Costs
We recorded impairment and closure costs of $ 2.3 million, ($ 0.9 ) million and $ 0.3 million for the years ended December 29, 2020, December 31, 2019 and December 25, 2018.
+Added: Impairment and closure costs in 2020 included $ 1.2 million related to the impairment of the fixed assets and operating lease right-of-use assets at four restaurants, all of which have relocated or are scheduled to be relocated.
+Added: In addition, in 2020, we recorded goodwill impairment of $ 1.1 million related to two restaurants.
Impairment and closure costs in 2019 included a gain of $ 2.6 million related to the forced relocation of one restaurant.
This included a gain of $ 1.2 million related to the leasehold improvements and a gain of $ 1.4 million to settle a favorable operating lease.
−Removed: Also, in 2019, we recorded a charge of $ 1.1 million related to the impairment of the right-of-use asset at an underperforming restaurant.
+Added: Also, in 2019, we recorded a charge of $ 1.1 million related to the impairment of the operating lease right-of-use asset at an underperforming restaurant.
The remaining costs of $ 0.6 million related to costs associated with the relocation of restaurants.
+Added: Impairment and closure costs in 2018 were related to costs associated with the relocation of restaurants.
+Added: (17) Related Party Transactions
+Added: As of December 29, 2020, we had seven franchise restaurants and two majority-owned company restaurants owned in part by certain of our officers.
+Added: These franchise entities paid us fees of $ 1.6 million for the year ended December 29, 2020.
+Added: As of December 31, 2019 and December 25, 2018, we had six franchise restaurants and one majority-owned company restaurant owned in part by certain of our officers.
+Added: These franchise entities paid us fees of $ 1.4 million and $ 1.3 million for the years ended December 31, 2019 and December 25, 2018, respectively.
+Added: As discussed in note 13, we
Texas Roadhouse, Inc.
2 unchanged sentences
(Tabular amounts in thousands, except share and per share data)
−Removed: Impairment and closure costs in 2018 and 2017 were related to costs associated with the relocation of restaurants.
−Removed: (17) Related Party Transactions
−Removed: As of December 31, 2019 and December 25, 2018, we had nine franchise restaurants and one majority-owned company restaurant owned in part by certain of our officers or the former president of the Company.
−Removed: As of December 26, 2017, we had ten franchise restaurants owned in part by certain of our officers, directors and 5 % stockholders of the Company.
−Removed: These franchise entities paid us fees of $ 2.2 million, $ 2.1 million and $ 2.1 million for the years ended December 31, 2019, December 25, 2018 and December 26, 2017, respectively.
−Removed: As discussed in note 13, we are contingently liable on leases which are related to two of these restaurants.
+Added: are contingently liable on a lease related to one of these franchise restaurants.
On December 3, 2018, we acquired one franchise restaurant owned in part by our founder.
This entity paid us fees of $ 0.1 million for the year ended December 25, 2018.
−Removed: See note 4 for further discussion of this acquisition.
In addition, in 2018, our founder made a personal contribution of $ 1.0 million to cover a portion of the planned expenses incurred as part of the annual managing partner conference which marked our 25th anniversary.
2 unchanged sentences
Total costs and expenses
−Removed: Income from operations
−Removed: Net income attributable to Texas Roadhouse, Inc.
+Added: Income (loss) from operations
+Added: Net income (loss) attributable to Texas Roadhouse, Inc.
and subsidiaries
−Removed: Basic earnings per common share
−Removed: Diluted earnings per common share
+Added: Basic earnings (loss) per common share
+Added: Diluted earnings (loss) per common share
Cash dividends declared per share
8 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.