What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-23 compared with 2023-02-24 · 311 added, 303 removed, 762 unchanged (45% of the section changed)

ITEM 9A—CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to, and as defined in, Rules 13a-15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report.

Based on the evaluation, performed under the supervision and with the participation of our management, including the Chief Executive Officer (the "CEO") and the Chief Financial Officer (the "CFO"), our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of December 27, 2022.

Changes in internal control

There were no significant changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 27, 2022 that materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 26, 2023 that materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

4 unchanged sentences

Under the supervision and with the participation of our management, including our CEO and CFO, we assessed the effectiveness of the Company’s internal control over financial reporting as of the end of the period covered by this report.

In this assessment, the Company applied criteria based on the "Internal Control—Integrated Framework (2013)"

issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In this assessment, the Company applied criteria based on the "Internal Control—Integrated Framework (2013)" issued by the Committee of Sponsoring Organizations of the Treadway Commission.

These criteria are in the areas of control environment, risk assessment, control activities, information and communication, and monitoring.

2 unchanged sentences

KPMG LLP, the independent registered public accounting firm that audited our Consolidated Financial Statements included in the Annual Report on Form 10-K, has also audited the effectiveness of the Company’s internal control over financial reporting as of December 26, 2023 as stated in their report at F-3.

ITEM 9B—OTHER INFORMATION

ITEM 9C—DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

ITEM 10—DIRECTORS, EXECUTIV E OFFICERS AND CORPORATE GOVERNANCE

Information regarding our directors is incorporated herein by reference to the information set forth under "Election of Directors"

in our Definitive Proxy Statement to be dated on or about March 31, 2023.

Information regarding our executive officers has been included in Part I of this Annual Report under the caption "Executive Officers of the Company."

Information regarding our corporate governance is incorporated herein by reference to the information set forth in our Definitive Proxy Statement to be dated on or about March 31, 2023.

ITEM 11—EXECUTIVE COMPENSATION

Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023.

ITEM 12—SECURITY OWNERSHI P OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023.

OTHER INFORMATION

Rule 10b5-1 Trading Plans

In accordance with the disclosure requirement set forth in Item 408 of Regulation S-K, the following table discloses any executive officer or director who is subject to the filing requirements of Section 16 of the Securities Exchange Act of 1934 that adopted a Rule 10b5-1 trading arrangement during the 13 weeks ended December 26, 2023.

These trading arrangements are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).

Adoption Date

Aggregate Number of Securities to be Sold

Chief Technology Officer

(1) A trading plan may expire on such earlier date that all transactions under the trading plan are completed.

Other than as disclosed above, no other executive officer or director adopted, modified or terminated a Rule 10b5-1 or a non-Rule 10b5-1 trading arrangement during the 13 weeks ended December 26, 2023.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIV E OFFICERS AND CORPORATE GOVERNANCE

Information regarding our directors is incorporated herein by reference to the information set forth under "Election of Directors" in our Definitive Proxy Statement to be dated on or about April 5, 2024.

Information regarding our executive officers has been included in Part I of this Annual Report under the caption "Executive Officers of the Company."

Information regarding our corporate governance is incorporated herein by reference to the information set forth in our Definitive Proxy Statement to be dated on or about April 5, 2024.

EXECUTIVE COMPENSATION

Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 5, 2024.

SECURITY OWNERSHI P OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 5, 2024.

Equity Compensation Plan Information

5 unchanged sentences

Future Grants

Plans approved by stockholders

Plans not approved by stockholders

Plans approved by shareholders

Plans not approved by shareholders

(1) Total number of shares consist of 442,327 restricted stock units and 35,700 performance stock units.

Shares in this column are excluded from the Shares Available for Future Grants column.

No stock options were outstanding as of December 27, 2022.

ITEM 13—CERTAIN RELATIONSHIP S AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023.

ITEM 14—PRINCIPAL ACCOUNTANT FEES AND SERVICES

Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023.

ITEM 15—EXHIBITS, FINANCIA L STATEMENT SCHEDULES

CERTAIN RELATIONSHIP S AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 5, 2024.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 5, 2024.

EXHIBIT AND FINANCIA L STATEMENT SCHEDULES

Consolidated Financial Statements

7 unchanged sentences

Omitted due to inapplicability or because required information is shown in our Consolidated Financial Statements or Notes thereto.

Amended and Restated Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q for the period ended June 28, 2016) (File No.

Bylaws of Registrant (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S-1 of Registrant (File No.

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 Indemnification Agreement for Director and Executive Officer

Form of Limited Partnership Agreement and Operating Agreement for certain company-managed Texas Roadhouse restaurants, including schedule of the owners of such restaurants and the aggregate interests held by directors, executive officers and 5% stockholders who are parties to such an agreement (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form S-1 of Registrant (File No.

Form of Franchise Agreement and Preliminary Agreement for a Texas Roadhouse restaurant franchise, including schedule of directors, executive officers and 5% stockholders which have entered into either agreement (incorporated by reference to Exhibit 10.14 to the Registration Statement on Form S-1 of Registrant (File No.

Amended and Restated Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q for the period ended June 28, 2016)

Amended and Restated Bylaws for Texas Roadhouse, Inc.

dated February 23, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K dated February 23, 2023)

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)

Form of Indemnification Agreement for Director and Executive Officer (incorporated by reference to Exhibit 10.1 of Registrant’s Annual Report on Form 10-K for the year ended December 28, 2021)

Schedule of the owners of company-managed Texas Roadhouse restaurants and the aggregate interests held by directors, executive officers and 5% stockholders who are parties to Limited Partnership Agreements and Operating Agreements as of December 26, 2023 the form of which is set forth in Exhibit 10.2 of this Form 10-K

2 unchanged sentences

2013 Long-Term Incentive Plan (incorporated by reference from Appendix A to the Texas Roadhouse, Inc.

Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 5, 2013 (File No.

Form of Restricted Stock Unit Award under the Texas Roadhouse, Inc.

2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 25, 2013 (File No.

Texas Roadhouse, Inc.

Cash Bonus Plan for cash incentive awards granted pursuant to the Texas Roadhouse, Inc.

2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 25, 2013 (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.

Amended and Restated Form of Restricted Stock Unit Award Agreement under the Texas Roadhouse, Inc.

2013 Long-Term Incentive Plan for officers (incorporated by reference to Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014 (File No.

Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 5, 2013)

Amended and Restated Form of Restricted Stock Unit Award Agreement under the Texas Roadhouse, Inc.

2013 Long-Term Incentive Plan for non-officers (incorporated by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014 (File No.

Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp., as amended December 19, 2007 and December 31, 2008 (incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014 (File No.

Third Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp., effective January 1, 2010 (incorporated by reference to Exhibit 10.43 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014 (File No.

Form of Nonqualified Stock Option Agreement under Texas Roadhouse, Inc.

2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.47 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2015 (File No.

Master Lease Agreement dated October 26, 2018 between Paragon Centre Holdings, LLC and Texas Roadhouse Holdings LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 25, 2018 (File No.

Amended and Restated Credit Agreement dated as of August 7, 2017, by and among Texas Roadhouse Inc., and the lenders named therein and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 7, 2017 (File No.

2013 Long-Term Incentive Plan for non-officers (incorporated by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014)

Assignment and Assumption Agreement between Texas Roadhouse Holdings LLC and Texas Roadhouse, Inc.

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.

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)

First Amendment to Paragon Centre Master Lease Agreement between Paragon Centre Holdings, LLC and Texas Roadhouse, Inc.

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.

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)

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.

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.

as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on 8-K dated May 11, 2020)

Employment Agreement between Registrant and Gerald L.

Morgan entered into as of December 17, 2020 (incorporated by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2020 (File No.

Morgan entered into as of December 17, 2020 (incorporated by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2020)

Employment Agreement between Registrant and S.

Chris Jacobsen entered into as of December 30, 2020 (incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2020 (File No.

Employment Agreement between Registrant and Tonya Robinson entered into as of December 30, 2020 (incorporated by reference to Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2020 (File No.

Chris Jacobsen entered into as of December 30, 2020 (incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2020)

Employment Agreement between Registrant and Christopher C.

Colson entered into as of March 31, 2021 (incorporated by reference to Exhibit 10.6 of the Registrant’s Quarterly Report on Form 10-Q for the period ended March 30, 2021 (File No.

Colson entered into as of March 31, 2021 (incorporated by reference to Exhibit 10.6 of the Registrant’s Quarterly Report on Form 10-Q for the period ended March 30, 2021)

First Amendment to Employment Agreement between Texas Roadhouse Management Corp.

and Gerald L.

Morgan dated March 31, 2021, with a retroactive effective date of March 18, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated March 31, 2021 (File No.

Morgan dated March 31, 2021, with a retroactive effective date of March 18, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated March 31, 2021)

Employment Agreement between Registrant and Regina A.

Tobin entered into as of June 15, 2021 with an effective date of June 30, 2021 (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q for the period ended June 29, 2021 (File No.

Employment Agreement between Registrant and Hernan E.

Mujica entered into as of June 15, 2021 with an effective date of June 30, 2021 (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q for the period ended June 29, 2021 (File No.

Second Amendment to Amended and Restated Credit Agreement dated as of May 4, 2021 by and among Texas Roadhouse, Inc.

and the lenders named therein and JPMorgan Chase Bank, N.A.

as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated May 4, 2021 (File No.

as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated May 4, 2021)

Texas Roadhouse, Inc.

2021 Long-Term Incentive Plan (incorporated by reference from Appendix A to the Texas Roadhouse, Inc.

Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 2, 2021 (File No.

Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 2, 2021)

Form of Texas Roadhouse, Inc.

2021 Long-Term Incentive Plan Performance Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated June 15, 2021 (File No.

2021 Long-Term Incentive Plan Performance Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated June 15, 2021)

Form of Texas Roadhouse, Inc.

2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement (Officers) (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated June 15, 2021 (File No.

2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement (Officers) (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated June 15, 2021)

Form of Texas Roadhouse, Inc.

2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement (Member of Board of Directors) (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated June 15, 2021 (File No.

Second Amendment to Employment Agreement between Texas Roadhouse Management Corp.

and Gerald L.

Morgan dated January 9, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No.

Morgan dated January 9, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated January 6, 2023)

First Amendment to Employment Agreement between Texas Roadhouse Management Corp.

and Regina A.

Tobin dated January 9, 2023 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No.

Tobin dated January 9, 2023 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated January 6, 2023)

First Amendment to Employment Agreement between Texas Roadhouse Management Corp.

and Hernan E.

Mujica dated January 9, 2023 (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No.

Mujica dated January 9, 2023 (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K dated January 6, 2023)

First Amendment to Employment Agreement between Texas Roadhouse Management Corp.

and Christopher C.

Colson dated January 9, 2023 (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No.

Colson dated January 9, 2023 (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K dated January 6, 2023)

Separation Agreement and Release of Claims dated January 5, 2023 by and between Tonya R.

Robinson and Texas Roadhouse Management Corp.

(incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated January 4, 2023 (File No.

(incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated January 4, 2023)

Employment Agreement between Texas Roadhouse Management Corp.

and David Christopher Monroe dated May 17, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated May 17, 2023)

Amendment No.

3 to Amended and Restated Credit Agreement dated May 19, 2023 by and among Texas Roadhouse, Inc., the lenders named therein and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8 ‑ K dated May 19, 2023)

Separation Agreement and Release of Claims dated August 3, 2023 by and between S.

Chris Jacobsen and Texas Roadhouse Management Corp.

(incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated August 3, 2023)

Form of Texas Roadhouse, Inc.

2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement (Non-Officers) (incorporated by reference to Exhibit 10.2 to Registrant’s of the Registrant’s Quarterly Report on Form 10-Q for the period ended September 26, 2023)

Employment Agreement between Texas Roadhouse Management Corp.

and Travis C.

Doster dated November 9, 2023

List of Subsidiaries

Consent of KPMG LLP, Independent Registered Public Accounting Firm

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer pursuant to 18 U.S.C.

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certifications pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Texas Roadhouse, Inc.

Policy for Recovery of Incentive Compensation for Executive Officers dated November 9, 2023

The following financial statements from the Texas Roadhouse, Inc.

13 unchanged sentences

Chief Executive Officer, Director

February 23, 2024

(Principal Executive Officer)

Christopher Monroe

Chief Financial Officer

February 23, 2024

Interim Chief Financial Officer

Christopher Monroe

(Principal Financial Officer)

(Principal Accounting Officer)

Vice President of Finance

February 23, 2024

/s/ G regory N.

(Principal Accounting Officer)

/s/ Gregory N.

Chairman of the Board, Director

3 unchanged sentences

February 23, 2024

/s/ Curtis A.

28 unchanged sentences

Potential indicators of impairment of long-lived assets

As discussed in Notes 2 and 17 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 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.

As discussed in Note 2 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 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.

Property and equipment, net of accumulated depreciation, and the operating lease right-of-use asset, net as of December 27, 2022 were $1,270.3 million and $630.3 million, respectively.

Property and equipment, net of accumulated depreciation, and the operating lease right-of-use assets, net as of December 26, 2023 were $1,474.7 million and $694.0 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.

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 and the utilization of the trailing 12-month cash flows to identify a potential impairment trigger.

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 and the utilization of trailing 12-month cash flows to identify a potential impairment trigger.

The following are the primary procedures we performed to address this critical audit matter.

2 unchanged sentences

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.

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.

We tested that those restaurants with trailing 12-month cash flows were evaluated for potential impairment triggers, and we compared trailing 12-month cash flows to historical financial data.

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.

51 unchanged sentences

Deferred revenue-gift cards

Accrued wages and payroll taxes

Accrued wages

Income taxes payable

37 unchanged sentences

Income from operations

Interest expense, net

Interest income (expense), net

Equity income (loss) from investments in unconsolidated affiliates

Income before taxes

Income tax expense (benefit)

Income tax expense

Net income including noncontrolling interests

3 unchanged sentences

Other comprehensive income, net of tax:

Foreign currency translation adjustment, net of tax of $—, ($ 36 ) and ($ 40 ), respectively

Foreign currency translation adjustment, net of tax of $ — , $ — and

($ 36 ), respectively

Total comprehensive income

9 unchanged sentences

Roadhouse, Inc.

Comprehensive

Noncontrolling

Comprehensive Loss

and Subsidiaries

Balance, December 29, 2020

Other comprehensive income, net of tax

Noncontrolling interest contribution

Distributions to noncontrolling interest holders

5 unchanged sentences

Balance, December 28, 2021

Other comprehensive income, net of tax

Distributions to noncontrolling interest holders

Acquisition of noncontrolling interest

Dividends declared ($ 1.84 per share)

2 unchanged sentences

Repurchase of shares of common stock

( 2,734,005 )

Share-based compensation

1 unchanged sentence

Distributions to noncontrolling interest holders

Acquisition of noncontrolling interest

Dividends declared ($ 2.20 per share)

1 unchanged sentence

Indirect repurchase of shares for minimum tax withholdings

Repurchase of shares of common stock

( 2,734,005 )

Repurchase of shares of common stock, including excise tax

Share-based compensation

17 unchanged sentences

Share-based compensation expense

Changes in operating working capital:

Changes in operating working capital, net of acquisitions:

Prepaid expenses and other current assets

1 unchanged sentence

Deferred revenue—gift cards

Accrued wages and payroll taxes

Accrued wages

Prepaid income taxes and income taxes payable

7 unchanged sentences

Acquisition of franchise restaurants, net of cash acquired

Proceeds from sale of investment in unconsolidated affiliate

Proceeds from the sale of property and equipment

Proceeds from sale of investments in unconsolidated affiliates

Proceeds from sale of property and equipment

Proceeds from sale leaseback transactions

1 unchanged sentence

Cash flows from financing activities:

(Payments on) proceeds from revolving credit facility, net

Payments on revolving credit facility

Debt issuance costs

Proceeds from noncontrolling interest contribution

Distributions to noncontrolling interest holders

Acquisition of noncontrolling interest

Proceeds from (payments on) restricted stock and other deposits, net

Proceeds from restricted stock and other deposits, net

Indirect repurchase of shares for minimum tax withholdings

1 unchanged sentence

Dividends paid to shareholders

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net cash used in financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents—beginning of period

11 unchanged sentences

Texas Roadhouse, Inc.

(collectively, the "Company,"

"we,"

"our"

and/or "us"), is a growing restaurant company operating predominately in the casual dining segment.

and subsidiaries (collectively, the "Company," "we," "our" and/or "us"), is a growing restaurant company operating predominantly in the casual dining segment.

Our late founder, W.

Kent Taylor, started the business in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana.

The Company maintains three restaurant concepts operating as Texas Roadhouse, Bubba’s 33 and Jaggers.

As of December 26, 2023, we owned and operated 635 restaurants and franchised an additional 106 restaurants in 49 states and ten foreign countries.

Of the 597 company restaurants that were operating at December 27, 2022, 577 were wholly-owned and 20 were majority-owned and we operated 552 as Texas Roadhouse restaurants, 40 as Bubba’s 33 restaurants and five as Jaggers restaurants.

Of the 100 franchise restaurants, 62 were domestic and 38 were international restaurants, all of which were operated as Texas Roadhouse restaurants .

Of the 106 franchise restaurants, there were 58 domestic and 48 international restaurants.

As of December 27, 2022, we owned and operated 597 restaurants and franchised an additional 100 restaurants in 49 states and ten foreign countries.

Of the 566 company restaurants that were operating at December 28, 2021, 546 were wholly-owned and 20 were majority-owned and we operated 526 as Texas Roadhouse restaurants, 36 as Bubba’s 33 restaurants and four as Jaggers restaurants.

Of the 101 franchise restaurants, 70 were domestic and 31 were international restaurants , all of which were operated as Texas Roadhouse restaurants .

Risks and Uncertainties

The Company has been subject to risks and uncertainties as a result of the COVID-19 pandemic (the "pandemic"

These include federal, state and local restrictions on restaurants, some of which limited capacity or seating in dining rooms while others allowed to-go or curbside service only.

In 2022, all of our domestic company and franchise restaurants operated without restriction.

In 2021 and 2020, all of our domestic company and franchise restaurants operated under various forms of capacity restrictions, which included outdoor and/or to-go or curbside service only.

Of the 100 franchise restaurants, 62 were domestic and 38 were international restaurants.

(2) Summary of Significant Accounting Policies

(a) Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements present the financial position, results of operations and cash flows of the Company and its majority-owned subsidiaries.

All significant intercompany balances and transactions have been eliminated in consolidation.

As of December 27, 2022 and December 28, 2021, we had majority ownership in 20 restaurants.

The portion of income attributable to noncontrolling interests in these restaurants is reflected in the line item entitled "Net income attributable to noncontrolling interests"

in our consolidated statements of income and comprehensive income.

As of December 27, 2022 and December 28, 2021, we owned a 5.0 % to 10.0 % equity interest in 23 and 24 restaurants, respectively.

Additionally, as of December 28, 2021, we owned a 40 % interest in four non-Texas Roadhouse restaurants in China that was fully impaired in 2021.

The unconsolidated restaurants are accounted for using the equity method.

As of December 26, 2023 and December 27, 2022, we owned a majority interest in 20 company restaurants.

The operating results of these majority-owned restaurants are consolidated and the portion of income attributable to noncontrolling interests is reflected in the line item net income attributable to noncontrolling interests in our consolidated statements of income and comprehensive income.

As of December 26, 2023 and December 27, 2022, we owned a 5.0 % to 10.0 % equity interest in 20 and 23 domestic franchise restaurants, respectively.

These unconsolidated restaurants are accounted for using the equity method.

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 (loss) from investments in unconsolidated affiliates.

(b) Fiscal Year

We utilize a 52 or 53 week accounting period that typically ends on the last Tuesday in December.

1 unchanged sentence

Fiscal years 2023, 2022 and 2021 were 52 weeks in length.

Use of Estimates

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reporting of revenue and expenses during the period to prepare these consolidated financial statements in conformity with U.S.

generally accepted accounting principles ("GAAP").

Significant items subject to such estimates and assumptions include the valuation of property and equipment, goodwill, lease liabilities and right-of-use assets, obligations related to insurance reserves, legal reserves, income taxes and gift card breakage.

Actual results could differ from those estimates.

Segment Reporting

Operating segments are defined as components of a company that engage in business activities from which it may earn revenue and incur expenses, and for which separate financial information is available and is regularly reviewed by the chief operating decision maker ( " CODM " ) to assess the performance of the individual segments and make decisions about resources to be allocated to the segments.

The Company’s operating segments have been identified in accordance

Texas Roadhouse, Inc.

2 unchanged sentences

(Tabular amounts in thousands, except share and per share data)

generally accepted accounting principles ("GAAP").

Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill, obligations related to insurance reserves, leases and leasehold improvements, legal reserves, gift card breakage and third-party fees and income taxes.

Actual results could differ from those estimates.

(d) Segment Reporting

), to assess the performance of the individual segments and make decisions about resources to be allocated to the segments.

The Company’s operating segments have been identified in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC 280, Segment Reporting .

with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC 280, Segment Reporting .

We have identified Texas Roadhouse, Bubba’s 33, Jaggers and our retail initiatives as separate operating segments.

1 unchanged sentence

For further discussion of segment reporting, refer to Note 19.

(e) Cash and Cash Equivalents

Cash and Cash Equivalents

We consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.

1 unchanged sentence

These amounted to $ 27.8 million and $ 22.0 million at December 26, 2023 and December 27, 2022, respectively.

(f) Receivables

Receivables consist principally of amounts due from retail gift card providers, certain franchise restaurants for reimbursement of labor costs, pre-opening and other expenses, and franchise restaurants for royalty fees.

1 unchanged sentence

The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable.

We determine the allowance based on historical collection experience and the age of receivables.

We determine the allowance based on historical collection experience, adjusted for current and forecasted economic conditions and other factors such as credit risk or industry trends, and the age of receivables.

We review our allowance for doubtful accounts quarterly.

1 unchanged sentence

Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

(g) Inventories

Inventories, consisting principally of food, beverages and supplies, are valued at the lower of cost (first-in, first-out) or net realizable value.

(h) Property and Equipment

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation.

1 unchanged sentence

Depreciation is computed on property and equipment, including assets located on leased properties, over the shorter of the estimated useful lives of the related assets or the underlying lease term using the straight- line method.

In most cases, assets on

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

leased properties are depreciated over a period of time which includes both the initial term of the lease and one or more option periods.

Refer to Note 2(i) for further discussion of leases.

In most cases, assets on leased properties are depreciated over a period of time which includes both the initial term of the lease and one or more option periods.

The estimated useful lives are:

5 unchanged sentences

The cost of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived assets and included in Property and equipment, net.

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

Cloud Computing Arrangements

The Company capitalizes cloud computing implementation costs and amortizes these costs on a straight-line basis over the term of the related service agreement, including renewal periods that are reasonably certain to be exercised.

Capitalized cloud computing implementation costs were $ 3.0 million and $ 1.9 million, net of accumulated amortization, as of December 26, 2023 and December 27, 2022, respectively.

These costs are included in prepaid expenses and other current assets and other assets in our consolidated balance sheets.

Related amortization expense was $ 1.4 million, $ 1.0 million and $ 0.2 million f or the years ended December 26, 2023, December 27, 2022, and December 28, 2021, respectively, and is included in general and administrative expenses in our consolidated statements of income and comprehensive income.

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.

2 unchanged sentences

For real estate and restaurant equipment leases commencing in 2019 and later, we account for lease and non-lease components as a single lease component.

Reductions of the right-of-use asset and the changes in the lease liability are included within the changes in operating lease right-of-use assets and lease liabilities in our consolidated statements of cash flows.

Certain of our operating leases contain predetermined fixed escalations of the minimum rent over the lease term.

5 unchanged sentences

Certain of our operating leases contain clauses that provide for additional contingent rent based on a percentage of sales greater than certain specified target amounts.

We recognize contingent rent expense prior to the achievement of the specified target that triggers the contingent rent, provided achievement of the target is considered probable.

We recognize contingent rent expense as variable rent expense prior to the achievement of the specified target that triggers the contingent rent, provided achievement of the target is considered probable.

In addition, certain of our operating leases have variable escalations of the minimum rent that depend on an index or rate.

5 unchanged sentences

Goodwill represents the excess of cost over fair value of assets of businesses acquired.

In accordance with ASC 350, Intangibles—Goodwill and Other ("ASC 350"), goodwill is not subject to amortization and is evaluated for impairment on an annual basis, or sooner if an event or other circumstance indicates that goodwill may be impaired.

The annual assessment date is the first day of our fourth quarter.

ASC 350 requires that goodwill be tested for impairment at the reporting unit level, or the level of internal reporting that reflects the way in which an entity manages its businesses.

A reporting unit is defined as an operating segment, or one level below an operating segment.

Historically, we designated our operating segment and reporting unit to be at the

Texas Roadhouse, Inc.

2 unchanged sentences

(Tabular amounts in thousands, except share and per share data)

same level which we defined to be the individual restaurant.

In 2021, we changed the designation of our operating segment and reporting unit to be at the concept level.

As a result of this change, in 2021, we performed the goodwill impairment analysis at both the individual restaurant and concept level to substantiate that our goodwill was not impaired under either reporting unit definition.

In 2022, we performed the goodwill impairment analysis at the concept level.

ASC 350 requires that goodwill be tested for impairment at the reporting unit level, or the level of internal reporting that reflects the way in which an entity manages its businesses.

A reporting unit is defined as an operating segment, or one level below an operating segment.

Our goodwill reporting units are at the concept level.

As stated in ASC 350, an entity may first assess qualitative factors in order to determine if it is necessary to perform the quantitative test.

1 unchanged sentence

This review included evaluating factors such as macroeconomic conditions, industry and market considerations, cost factors, changes in management or key personnel, sustained decreases in share price and the overall financial performance of the Company’s reporting units at the concept level.

As a result of the qualitative assessment, no indicators of impairment were identified, and no additional indicators of impairment were identified through the end of the fourth quarter that would require additional testing.

As a result of the qualitative assessment, no indicators of impairment were identified, and no additional indicators of impairment were identified through the end of the fiscal year that would require additional testing.

In 2023, 2022 and 2021, we determined there was no goodwill impairment.

In 2020, as a result of our annual goodwill impairment analysis, we recorded goodwill impairment of $ 1.1 million.

Refer to Note 7 for additional information related to goodwill and intangible assets.

(k) Other Assets

Other assets consist primarily of deferred compensation plan assets, investments in unconsolidated affiliates and deposits.

For further discussion of the deferred compensation plan, refer to Note 15 and Note 16.

(l) Impairment or Disposal of Long-lived Assets

Impairment or Disposal of Long-lived Assets

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.

3 unchanged sentences

Under our policies, trailing 12- month cash flow results under a predetermined amount at the individual restaurant level signals potential impairment.

In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows from operating the restaurant over its estimated useful life, which can be for a period of over 20 years .

In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows from operating the restaurant over its remaining useful life, which can be for a period of over 20 years .

In the estimation of future cash flows, we consider the period of time the restaurant has been open, the trend of operations over such period and future periods and expectations of future sales growth.

10 unchanged sentences

(Tabular amounts in thousands, except share and per share data)

(m) Insurance Reserves

Insurance Reserves

We self- insure a significant portion of expected losses under our health, workers’ compensation, general liability, employment practices liability, and property insurance programs.

2 unchanged sentences

December 27, 2022

Employment practices liability ("EPL")

EPL Class Action

2 unchanged sentences

Employee healthcare

(1) In addition to the retention amount of $ 2,500,000 , we have an additional retention corridor that includes claim costs between $ 5,000,000 and $ 10,000,000 related to dram shop statutes.

We record a liability for unresolved claims and for an estimate of incurred but not reported claims based on historical experience.

1 unchanged sentence

Our assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances.

(n) Revenue Recognition

Revenue Recognition

We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers, which 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.

10 unchanged sentences

These fees are also deferred and generally recorded consistent with the actual redemption pattern of the associated gift cards.

We also recognize revenue from our franchising of Texas Roadhouse restaurants.

We also recognize revenue from our franchising of Texas Roadhouse and Jaggers restaurants.

This includes franchise royalties and domestic marketing and advertising fees, initial and upfront franchise fees, domestic and international development agreements and supervisory and administrative service fees.

6 unchanged sentences

(Tabular amounts in thousands, except share and per share data)

(o) Income Taxes

We account for income taxes in accordance with ASC 740, Income Taxes , under which deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying values of assets and liabilities and their respective tax bases.

3 unchanged sentences

For all years presented, no valuation allowances have been recorded.

(p) Advertising

We have a domestic system- wide marketing and advertising fund.

5 unchanged sentences

These costs and the company restaurant contribution amounted to $ 28.3 million, $ 25.0 million and $ 21.1 million for the years ended December 26, 2023, December 27, 2022, and December 28, 2021, respectively.

(q) Pre-opening Expenses

Pre-opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening of a new or relocated restaurant and are comprised principally of opening team and training team compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses.

(r) Comprehensive Income

ASC 220, Comprehensive Income , establishes standards for reporting and the presentation of comprehensive income and its components in a full set of financial statements.

Pre-opening Expenses

Pre-opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening of a new or relocated restaurant and consist principally of opening team and training team compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses.

Comprehensive Income

ASC 220, Income Statement—Reporting Comprehensive Income , establishes standards for reporting and the presentation of comprehensive income and its components in a full set of financial statements.

Comprehensive income consists of net income and foreign currency translation adjustments which are excluded from net income under GAAP.

Foreign currency translation adjustment represents the unrealized impact of translating the financial statements of our foreign investment.

(s) Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair value is defined as the price that we would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants on the measurement date.

ASC 820, Fair Value Measurements and Disclosures , establishes a framework for measuring fair value and expands disclosures about fair value measurements.

This includes a three- level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value.

ASC 820, Fair Value Measurement , establishes a framework for measuring fair value and expands disclosures about fair value measurements.

This includes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

inputs in measuring fair value.

The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.

4 unchanged sentences

Refer to Note 16 for further discussion of fair value measurement.

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

(t) Recent Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848):

Recently Adopted Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848):

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.

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.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

We do not anticipate that the adoption of this standard will have a significant impact on our consolidated financial statements .

We adopted this guidance during the 2023 fiscal year and the adoption did not have an impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure.

This ASU primarily provides enhanced disclosures about significant segment expenses including requiring segment disclosures to include a description of other segment items by reportable segment and any additional measures of a segment’s profit or loss used by the CODM when deciding how to allocate resources.

The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods as well as the title of the CODM and an explanation of how the CODM uses the reported measure of segment profit or loss in assessing performance and allocating resources.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

We are currently assessing the impact of this new standard on our segment reporting disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

This ASU primarily provides enhanced disclosures about an entity’s income tax including requiring consistent categories and greater disaggregation of the information included in the rate reconciliation and income taxes paid disaggregated by jurisdiction.

The amendments in this update are effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025.

We are currently assessing the impact of this new standard on our income tax disclosures.

The following table disaggregates our revenue by major source:

7 unchanged sentences

Total revenue

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

The following table presents a rollforward of deferred revenue-gift cards:

Fiscal Year Ended

December 26, 2023

1 unchanged sentence

Beginning balance

Gift card activations, net

Gift card activations, net of third-party fees

Gift card redemptions and breakage

Ending balance

We recognized restaurant sales of $ 190.5 million for the year ended December 27, 2022 related to the amount in deferred revenue as of December 28, 2021.

We recognized restaurant sales of $ 140.1 million for the year ended December 28, 2021 related to the amount in deferred revenue as of December 29, 2020.

We recognized restaurant sales of $ 209.2 million for the year ended December 26, 2023 related to amounts in deferred revenue as of December 27, 2022.

We recognized restaurant sales of $ 190.5 million for the year ended December 27, 2022 related to amounts in deferred revenue as of December 28, 2021.

(4) Acquisitions

On March 30, 2022, we completed the acquisition of one franchise Texas Roadhouse restaurant located in Nebraska in which we previously held a 5.49 % equity interest.

Pursuant to the terms of the acquisition agreement, we paid a total purchase price of $ 6.6 million, net of cash acquired for 100 % of the entity.

The transaction was accounted for as a step acquisition and we recorded a gain of $ 0.3 million on our previous investment in equity income from investments in unconsolidated affiliates in the consolidated statements of income and comprehensive income.

Additionally, on December 29, 2021, we completed the acquisition of seven franchise Texas Roadhouse restaurants located in South Carolina and Georgia.

Pursuant to the terms of the acquisition agreements, we paid a total purchase price of $ 26.4 million, net of cash acquired.

On December 28, 2022, the first day of the 2023 fiscal year, we completed the acquisition of eight franchise Texas Roadhouse restaurants located in Maryland and Delaware, including four in which we previously held a 5.0 % equity interest.

Pursuant to the terms of the acquisition agreements, we paid a total purchase price of $ 39.1 million, net of cash acquired, for 100 % of the entities.

The transactions in which we held an equity interest were accounted for as step acquisitions and we recorded a gain of $ 0.6 million on our previous investments in equity income from investments in unconsolidated affiliates in the consolidated statements of income and comprehensive income.

These transactions were accounted for using the acquisition method as defined in ASC 805, Business Combinations .

These acquisitions are consistent with our long-term strategy to increase net income and earnings per share.

The following table summarizes the consideration paid for these acquisitions and the estimated preliminary fair value of the assets acquired and the liabilities assumed at the acquisition date, which are adjusted for measurement-period adjustments through December 26, 2023.

Property and equipment

Operating lease right-of-use assets

Intangible assets

Deferred revenue-gift cards

Current portion of operating lease liabilities

Operating lease liabilities, net of current portion

The aggregate purchase price is preliminary as we are finalizing working capital adjustments.

Intangible assets represent reacquired franchise rights which are being amortized over a weighted-average useful life of 2.2 years.

We expect all of the goodwill will be deductible for tax purposes and believe the resulting amount of goodwill reflects the benefit of sales and unit growth opportunities as well as the benefit of the assembled workforce of the acquired restaurants.

Pro forma financial detail and operating results for the year ended December 26, 2023 have not been presented as the results of the acquired restaurants are not material to our consolidated financial position, results of operations or cash flows.

Texas Roadhouse, Inc.

2 unchanged sentences

(Tabular amounts in thousands, except share and per share data)

These transactions were accounted for using the acquisition method as defined in ASC 805, Business Combinations .

On March 30, 2022, we completed the acquisition of one franchise Texas Roadhouse restaurant located in Nebraska in which we previously held a 5.49 % equity interest.

Pursuant to the terms of the acquisition agreement, we paid a total purchase price of $ 6.6 million, net of cash acquired, for 100 % of the entity.

On December 29, 2021, the first day of the 2022 fiscal year, we completed the acquisition of seven franchise Texas Roadhouse restaurants located in South Carolina and Georgia.

Pursuant to the terms of the acquisition agreements, we paid a total purchase price of $ 26.5 million, net of cash acquired.

These acquisitions are consistent with our long-term strategy to increase net income and earnings per share.

The following table summarizes the consideration paid (in thousands) for the acquisitions, and the estimated fair value of the assets acquired, and the liabilities assumed at the acquisition date, which are adjusted for measurement-period adjustments through December 27, 2022.

The transactions were accounted for using the acquisition method as defined in ASC 805, Business Combinations .

The following table summarizes the consideration paid for these acquisitions and the estimated fair value of the assets acquired and the liabilities assumed at the acquisition date, which are adjusted for final measurement-period adjustments.

Property and equipment

4 unchanged sentences

Operating lease liabilities, net of current portion

The aggregate purchase prices are preliminary as the Company is finalizing working capital adjustments.

Intangible assets represent reacquired franchise rights which will be amortized over a weighted-average useful life of 3.5 years.

We expect all of the goodwill and intangible asset amortization will be deductible for tax purposes and believe the resulting amount of goodwill reflects the benefit of sales and unit growth opportunities as well as the benefit of the assembled workforce of the acquired restaurants.

Pro forma operating results for the year ended December 27, 2022 have not been presented as the results of the acquired restaurants are not material to our consolidated financial position, results of operations or cash flows.

Intangible assets represent reacquired franchise rights which are being amortized over a weighted-average useful life of 3.4 years.

Pro forma financial detail and operating results for the year ended December 27, 2022 have not been presented as the results of the acquired restaurants are not material to our consolidated financial position, results of operations or cash flows.

(5) Long-term Debt

On May 4, 2021, we entered into an agreement to amend our revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A.

We maintain a revolving credit facility (the "credit facility") with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A.

and PNC Bank, N.A.

The amended revolving credit facility remains an unsecured, revolving credit agreement and has a borrowing capacity of up to $ 300.0 million with the option to increase by an additional $ 200.0 million subject to certain limitations, including approval by the syndicate of lenders.

The amendment also extended the maturity date to May 1, 2026.

Prior to the amendment, our original revolving credit facility had a borrowing capacity of up to $ 200.0 million with the option to increase by an additional $ 200.0 million subject to certain limitations, including approval by the syndicate of lenders.

The terms of the amendment require us to pay interest on outstanding borrowings at LIBOR plus a margin of 0.875 % to 1.875 % and 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.

The agreement also provides an Alternate Base Rate that may be substituted for LIBOR.

As of December 27, 2022, we had $ 50.0 million outstanding on the amended revolving credit facility and $ 233.5 million of availability, net of $ 16.5 million of outstanding letters of credit.

As of December 28, 2021, we had $ 100.0 million outstanding on the amended revolving credit facility and $ 189.1 million of availability, net of $ 10.9 million of outstanding letters of credit.

These outstanding amounts are included as long-term debt on our consolidated balance sheets.

The credit facility is an unsecured, revolving credit agreement and has a borrowing capacity of up to $ 300.0 million with the option to increase by an additional $ 200.0 million subject to certain limitations, including approval by the syndicate of lenders.

The credit facility has a maturity date of May 1, 2026.

On May 19, 2023, we amended the credit facility to provide for the transition from LIBOR to the Secured Overnight Financing Rate ("SOFR") as the benchmark rate for purposes of calculating interest on outstanding borrowings.

Pursuant to the amendment, we are required to pay interest on outstanding borrowings at the Term SOFR, plus a fixed adjustment of 0.10 % and a variable adjustment of 0.875 % to 1.875 % depending on our leverage ratio.

At the time of transition to the Term SOFR, we had no outstanding borrowings under the credit facility.

Texas Roadhouse, Inc.

2 unchanged sentences

(Tabular amounts in thousands, except share and per share data)

The interest rate for the $ 50.0 million outstanding as of December 27, 2022 was 5.21 % .

The interest rate for the $ 100.0 million outstanding as of December 28, 2021 was 0.98 %.

The lenders’ obligation to extend credit pursuant to the amended revolving credit facility depends on us maintaining certain financial covenants.

As of December 26, 2023, we had no outstanding balance on the credit facility and had $ 295.3 million of availability, net of $ 4.7 million of outstanding letters of credit.

As of December 27, 2022, we had $ 50.0 million outstanding on the credit facility, which was repaid in 2023, and $ 233.5 million of availability, net of $ 16.5 million of outstanding letters of credit.

The outstanding amount as of December 27, 2022 is included as long-term debt on our consolidated balance sheet.

The interest rate for the credit facility as of December 26, 2023 and December 27, 2022 was 6.23 % and 5.21 % , respectively.

The lenders’ obligation to extend credit pursuant to the credit facility depends on us maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio and a maximum consolidated leverage ratio.

The credit facility permits us to incur additional secured or unsecured indebtedness, 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.

We were in compliance with all financial covenants as of December 26, 2023 and December 27, 2022.

7 unchanged sentences

Accumulated depreciation and amortization

( 1,078,855 )

For the years ended December 26, 2023, December 27, 2022 and December 28, 2021, the amount of interest capitalized in connection with restaurant construction was $ 0.5 million, $ 1.3 million and $ 0.2 million, respectively.

1 unchanged sentence

All of our goodwill and intangible assets reside within the Texas Roadhouse reportable segment.

The changes in the carrying amount of goodwill and intangible assets are as follows:

The gross carrying amounts of goodwill and intangible assets were as follows:

Intangible Assets

1 unchanged sentence

Amortization expense

Disposals and other, net

Balance as of December 27, 2022

Amortization expense

Disposals and other, net

Balance as of December 26, 2023

(1) Net of $ 5.9 million of accumulated goodwill impairment losses.

Intangible assets consist of reacquired franchise rights.

The gross carrying amount and accumulated amortization of the intangible assets at December 26, 2023 were $ 24.4 million and $ 20.9 million, respectively.

As of December 28, 2021, the gross carrying amount and accumulated amortization of the intangible assets were $ 16.6 million and $ 15.1 million, respectively.

We amortize reacquired franchise rights on a straight-line basis over the remaining term of the franchise operating agreements, which varies by franchise agreement.

Amortization expense for the next four years is expected to range from $ 0.1 million to $ 2.6 million.

Refer to Note 4 for discussion of the acquisitions completed for the year ended December 27, 2022.

As of December 27, 2022, the gross carrying amount and accumulated amortization of the intangible assets were $ 23.5 million and $ 17.9

Texas Roadhouse, Inc.

2 unchanged sentences

(Tabular amounts in thousands, except share and per share data)

million, respectively.

We amortize reacquired franchise rights on a straight-line basis over the remaining term of the franchise operating agreements, which varies by franchise agreement.

Amortization expense for the next four years is expected to range from zero to $ 2.2 million.

Refer to Note 4 for discussion of the acquisitions completed for the years ended December 26, 2023 and December 27, 2022.

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 .

14 unchanged sentences

(Tabular amounts in thousands, except share and per share data)

Information related to our real estate operating leases as of and for the fiscal year ended December 27, 2022 and December 28, 2021 was as follows:

Information related to our real estate operating leases for the fiscal years ended December 26, 2023 and December 27, 2022 were as follows:

Fiscal Year Ended

21 unchanged sentences

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.

In 2022, we entered into four sale leaseback transactions involving land that had recently been acquired.

These sales generated proceeds of $ 12.9 million and no gain or loss was recognized on the transactions.

In 2021, we entered into three sale leaseback transactions involving land that had recently been acquired.

These sales generated proceeds of $ 5.6 million and no gain or loss was recognized on the transactions.

In 2023, we entered into six sale leaseback transactions that generated proceeds of $ 16.3 million and no gain or loss was recognized on the transactions.

In 2022, we entered into four sale leaseback that generated proceeds of $ 12.9 million and no gain or loss was recognized on the transactions.

The resulting operating leases are included in the operating lease right-of-use assets and lease liabilities noted above.

4 unchanged sentences

(9) Income Taxes

Components of our income tax expense (benefit) for the years ended December 27, 2022, December 28, 2021 and December 29, 2020 are as follows:

Components of our income tax expense for the years ended December 26, 2023, December 27, 2022, and December 28, 2021 were as follows:

Fiscal Year Ended

4 unchanged sentences

Total deferred

Income tax expense (benefit)

Income tax expense

Our pre-tax income is substantially derived from domestic restaurants.

8 unchanged sentences

Work opportunity tax credit

Stock compensation

Share-based compensation

Net income attributable to noncontrolling interests

Officers compensation

Our effective tax rate increased to 13.6 % in 2022 compared to 13.5 % in 2021.

The increase was primarily due to lower excess tax benefits related to our share-based compensation program partially offset by an increase in the FICA tip tax credit.

Our effective tax rate was 13.5 % in 2021 compared to a tax benefit of 81.4 % in 2020.

The increase was primarily due to the significant increase in pre-tax income.

In 2020, our FICA tip and Work opportunity tax credits exceeded our federal tax liability which resulted in a tax rate benefit.

Texas Roadhouse, Inc.

2 unchanged sentences

(Tabular amounts in thousands, except share and per share data)

Components of deferred tax liabilities, net are as follows:

Components of deferred tax liabilities, net were as follows:

December 26, 2023

3 unchanged sentences

Insurance reserves

Deferred payroll taxes

Other reserves

11 unchanged sentences

Net deferred tax liability

As of December 27, 2022 and December 28, 2021, we had tax credit carryforwards of $ 2.7 million and $ 3.6 million, respectively, primarily related to FICA tip and Work opportunity tax credit carryforwards that exceeded credit limitations.

These federal carryforwards expire in 2042.

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.

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 is as follows:

As of December 27, 2022, we had a tax credit carryforward of $ 2.7 million primarily related to FICA tip and Work opportunity tax credits that exceeded credit limitations.

This federal carryforward was fully utilized during 2023.

A reconciliation of the beginning and ending liability for unrecognized tax benefits was as follows:

Balance at December 28, 2021

13 unchanged sentences

As a result, as of December 26, 2023, the tax years ended December 27, 2022, December 28, 2021 and December 29, 2020 remain subject to examination by all tax jurisdictions.

As of December 27, 2022, no audits were in process by a

As of December 26, 2023, no audits were in process by a tax jurisdiction that, if completed during the next twelve months, would be expected to result in a material change to our unrecognized tax benefits.

Additionally, as of December 26, 2023, no event occurred that is likely to result in a significant increase or decrease in the unrecognized tax benefits through December 31, 2024.

Texas Roadhouse, Inc.

2 unchanged sentences

(Tabular amounts in thousands, except share and per share data)

tax jurisdiction that, if completed during the next twelve months, would be expected to result in a material change to our unrecognized tax benefits.

Additionally, as of December 27, 2022, no event occurred that is likely to result in a significant increase or decrease in the unrecognized tax benefits through December 26, 2023.

(10) Preferred Stock

Our Board of Directors (the "Board") is authorized, without further vote or action by the holders of common stock, to issue from time to time up to an aggregate of 1,000,000 shares of preferred stock in one or more series.

Each series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by the Board, which may include, but are not limited to, dividend rights, voting rights, redemption and sinking fund provisions, liquidation preferences, conversion rights and preemptive rights.

2 unchanged sentences

On March 17, 2022, our Board approved a stock repurchase program under which we may repurchase up to $ 300.0 million of our common stock.

This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on May 31, 2019 that authorized the Company to repurchase up to $ 250.0 million of our common stock.

This stock repurchase program has no expiration date.

All repurchases to date under our stock repurchase programs have been made through open market transactions.

1 unchanged sentence

For the year ended December 26, 2023, we paid $ 50.0 million to repurchase 455,026 shares of our common stock.

This includes $ 133.1 million repurchased under our current authorized stock repurchase program and $ 79.7 million repurchased under our prior authorization.

For the year ended December 27, 2022, we paid $ 212.9 million to repurchase 2,734,005 shares of our common stock.

This included $ 133.1 million repurchased under our current authorized stock repurchase program and $ 79.7 million repurchased under our prior authorization.

As of December 26, 2023, we had $ 116.9 million remaining under our authorized stock repurchase program.

4 unchanged sentences

Refer to Note 14 for further discussion of our equity incentive plans.

For the years ended December 27, 2022, December 28, 2021, and December 29, 2020, the shares of non-vested stock that were not included because they would have had an anti-dilutive effect were not significant.

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

For all periods presented, the weighted-average shares of nonvested stock units that were outstanding but not included in the computation of diluted earnings per share 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 as presented in the accompanying consolidated statements of income and comprehensive income:

4 unchanged sentences

Weighted-average common shares outstanding

Dilutive effect of nonvested stock

Dilutive effect of nonvested stock units

Shares-diluted

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

(13) Commitments and Contingencies

3 unchanged sentences

In the event of default, the indemnity and default clauses in our assignment agreements govern our ability to pursue and recover damages incurred.

No liabilities have been recorded as of December 27, 2022 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.

During the year ended December 27, 2022, we bought most of our beef from four suppliers.

No liabilities have been recorded as of December 26, 2023 or December 27, 2022, as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.

During the year ended December 26, 2023, we bought our beef primarily from four suppliers.

Although there are a limited number of beef suppliers, we believe that other suppliers could provide a similar product on comparable terms.

We have no material minimum purchase commitments with our vendors that extend beyond a year.

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.

Occasionally, we are a defendant in litigation arising in the ordinary course of business, including "slip and fall" accidents, employment related claims, dram shop statutes related to our service of alcohol, and claims from guests or employees alleging illness, injury or food quality, health or operational concerns.

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

On May 13, 2021, our stockholders approved the Texas Roadhouse, Inc.

2021 Long-Term Incentive Plan (the "Plan").

On May 13, 2021, our shareholders approved the Texas Roadhouse, Inc.

2021 Long-Term Incentive Plan (the "Plan").

The Plan provides for the granting of various forms of equity awards including options, stock appreciation rights, full value awards, and performance-based awards.

This plan replaced the 2013 Long-Term Incentive Plan and no subsequent awards will be granted under the 2013 plan.

The Company provides restricted stock units ("RSUs") to employees as a form of share-based compensation.

A RSU is the conditional right to receive one share of common stock upon satisfaction of the vesting requirement.

In addition to RSUs, the Company provides performance stock units ("PSUs") to executives as a form of share-based compensation.

In addition to RSUs, the Company provides performance stock units ("PSUs") to certain members of management as a form of share-based compensation.

A PSU is the conditional right to receive one share of common stock upon meeting a performance obligation along with the satisfaction of the vesting requirement.

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

The following table summarizes the share-based compensation recorded in the accompanying consolidated statements of income and comprehensive income:

3 unchanged sentences

Total share-based compensation expense

Share- based compensation activity by type of grant as of December 27, 2022 and changes during the period then ended are presented below.

We recognize expense for RSUs and PSUs over the vesting term based on the grant date fair value of the award.

We do not estimate forfeitures as we record them as they occur.

We record forfeitures as they occur.

Activity for our share- based compensation by type of grant for the year ended December 26, 2023 is presented below.

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

Summary Details for RSUs

7 unchanged sentences

As of December 26, 2023, with respect to unvested RSUs, there was $ 20.6 million of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 0.9 years.

The vesting terms of the RSUs range from 1.0 to 5.0 years.

The vesting terms of all RSUs range from 1.0 to 5.0 years.

The total intrinsic value of RSUs vested during the years ended December 26, 2023, December 27, 2022 and December 28, 2021 was $ 37.8 million, $ 37.1 million and $ 54.7 million, respectively.

10 unchanged sentences

(1) Additional shares from the January 2022 PSU grant that vested in January 2023 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.

We grant PSUs to certain members of management 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.

Share-based compensation expense is recognized for the number of units expected to vest at the end of the period and is expensed beginning on the grant date and through the performance period.

1 unchanged sentence

The total intrinsic value of PSUs vested during the years ended December 26, 2023, December 27, 2022 and December 28, 2021 was $ 3.3 million, $ 5.4 million and $ 0.4 million, respectively.

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

On January 8, 2023, 31,379 shares vested related to the January 2022 PSU grant and are expected to be distributed during the 13 weeks ending March 28, 2023.

On January 8, 2024, approximately 43,000 shares vested related to the January 2023 PSU grant and are expected to be distributed during the 13 weeks ending March 26, 2024.

As of December 26, 2023, 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 significant.

There was no allowable excess tax benefit associated with vested PSUs for the years ended December 27, 2022, December 28, 2021 and December 29, 2020.

The allowable excess tax benefit associated with vested PSUs for the years ended December 26, 2023, December 27, 2022 and December 28, 2021 was not significant.

(15) Employee Benefit Plans

We have a defined contribution benefit plan ("401(k) Plan") that is available to our Support Center employees and managers in our restaurants who meet certain compensation and eligibility requirements.

The 401(k) Plan allows participating employees to defer the receipt of a portion of their compensation and contribute such amount to one or more investment options.

Beginning in 2022, we implemented a company match of a certain percentage of the employee contributions to the 401(k) Plan.

Company contributions totaling $ 5.4 million and $ 1.6 million were recorded in labor expense and general and administrative expense, respectively, within the consolidated statements of income and comprehensive income.

For the year ended December 26, 2023, company contributions totaling $ 7.1

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

million and $ 1.8 million were recorded in labor expense and general and administrative expense, respectively, within the consolidated statements of income and comprehensive income.

For the year ended December 27, 2022, company contributions totaling $ 5.4 million and $ 1.6 million were recorded in labor expense and general and administrative expense, respectively, within the consolidated statements of income and comprehensive income.

We also have a deferred compensation plan which allows highly compensated employees to defer a portion of their compensation and contribute such amounts to one or more investment funds held in a rabbi trust.

The Company did not provide any contributions into this plan for any period presented.

Beginning in 2023, we implemented a company match of a certain percentage of the employee contributions to the deferred compensation plan.

For the year ended December 26, 2023, company contributions totaling $ 1.6 million and $ 1.5 million were recorded in labor expense and general and administrative expense, respectively, within the consolidated statements of income and comprehensive income.

Refer to Note 16 for further discussion on the fair value measurement of the deferred compensation plan assets and liabilities.

1 unchanged sentence

At December 26, 2023 and December 27, 2022, 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.

At December 27, 2022 and December 28, 2021, the fair value of our amended revolving credit facility approximated its carrying value since it is a variable rate credit facility (Level 2).

At December 27, 2022, the fair value of our credit facility approximated its carrying value since it is a variable rate credit facility (Level 2).

There were no transfers among levels within the fair value hierarchy during the year ended December 26, 2023.

15 unchanged sentences

Operating lease right-of-use assets

Investments in unconsolidated affiliates

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

Long-lived assets held for sale include land and building at a site that was relocated and had a carrying amount of $ 1.2 million as of December 28, 2021.

These assets were included in prepaid expenses and other current assets in our consolidated balance sheets and were valued using a Level 3 input.

Long-lived assets held for sale included land and building at a site that relocated.

These assets were sold during the fiscal year ended December 27, 2022 and resulted in a gain of $ 0.7 million which is included in impairment and closure, net in our consolidated statements of income and comprehensive income.

We recorded a loss of $ 0.5 million related to these assets for the year ended December 28, 2021, which is included in impairment and closure, net in our consolidated statements of income and comprehensive income.

Long-lived assets held for use include the land and building for one underperforming restaurant that was impaired down to fair value in 2022.

These assets are valued using a Level 3 input.

These assets were valued using a Level 3 input.

This impairment, which totaled $ 1.0 million, is included in impairment and closure costs , net in our consolidated statements of income and comprehensive income.

For further discussion of impairment charges, refer to Note 17.

Operating lease right-of-use assets as of December 27, 2022 includes the lease related asset for two restaurants that were relocated in 2022.

Operating lease right-of-use assets as of December 27, 2022 includes the lease related assets for two restaurants that

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

were relocated in 2022.

These assets were reduced to a fair value of zero in 2022.

This resulted in a loss of $ 0.7 million for the fiscal year ended December 27, 2022, which is included in impairment and closure, net in our consolidated statements of income and comprehensive income.

Investments in unconsolidated affiliates included a 40 % equity interest in a joint venture in China which was fully impaired in late 2021.

This asset was valued using a Level 3 input, or the amount we expected to receive upon the sale of this investment.

This resulted in a loss of $ 1.5 million for the year ended December 28, 2021, which is included in equity income (loss) from investments in unconsolidated affiliates in our consolidated statements of income and comprehensive income.

(17) Impairment and Closure Costs

We recorded impairment and closure costs of $ 0.3 million, $ 1.6 million and $ 0.7 million for the years ended December 26, 2023, December 27, 2022 and December 28, 2021, respectively.

Impairment and closure costs in 2022 included $ 1.7 million related to the impairment of the land, building and operating lease right-of-use assets at three restaurants, two of which have relocated and $ 0.6 million related to ongoing closure costs.

Impairment and closure costs in 2023 included $ 0.3 million related to ongoing closure costs for stores which have relocated.

Impairment and closure costs in 2022 included $ 1.7 million related to the impairment of the land, building and operating lease right-of-use assets at three restaurants, two of which were relocated and $ 0.6 million related to ongoing closure costs.

This was partially offset by a $ 0.7 million gain on the sale of land and building that was previously classified as assets held for sale.

Impairment and closure costs in 2021 included $ 0.7 million related to the impairment of the fixed assets and operating lease right-of-use assets at two restaurants, both of which have relocated.

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.

In addition, in 2020, we recorded goodwill impairment of $ 1.1 million related to two restaurants.

(18) Related Party Transactions

1 unchanged sentence

We recognized revenue of $ 2.0 million, $ 1.8 million and $ 1.7 million for the years ended December 26, 2023, December 27, 2022, and December 28, 2021, respectively, related to these restaurants.

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

(19) Segment Information

3 unchanged sentences

The Bubba's 33 reportable segment includes the results of our domestic company Bubba's 33 restaurants.

Our remaining operating segments, which include the results of our domestic company Jaggers restaurants and the results of our retail initiatives, are included in Other.

Our remaining operating segments, which include the results of our domestic company and franchise Jaggers restaurants and the results of our retail initiatives, are included in Other.

In addition, Corporate-related segment assets, depreciation and amortization and capital expenditures are also included in Other.

Management uses restaurant margin as the measure for assessing performance of our segments.

Restaurant margin (in dollars and as a percentage of restaurant and other sales) represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent and other operating costs.

Restaurant margin represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent and other operating costs.

Restaurant margin also includes sales and operating costs related to our non-royalty based retail initiatives.

Restaurant margin is used by our CODM to evaluate core restaurant-level operating efficiency and performance over various reporting periods on a consistent basis.

In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance.

Restaurant margin is used by our CODM to evaluate core restaurant-level operating efficiency and performance.

In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance.

We exclude pre-opening expense as it occurs at irregular intervals and would impact comparability to prior period results.

We exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants.

We also exclude impairment and closure expense as we believe this provides a clearer perspective of the Company’s ongoing operating performance and a more useful comparison to prior period results.

We exclude impairment and closure expense as we believe this provides a clearer perspective of the Company’s ongoing operating performance and a more useful comparison to prior period results.

Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in our industry.

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

Restaurant and other sales for all operating segments are derived primarily from food and beverage sales.

10 unchanged sentences

Capital expenditures

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

Fiscal Year Ended December 27, 2022

12 unchanged sentences

Depreciation and amortization

Segment assets

Capital expenditures

Texas Roadhouse, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share data)

A reconciliation of restaurant margin to income from operations is presented below.

We do not allocate interest expense, net and equity income (loss) from investments in unconsolidated affiliates to reportable segments.

We do not allocate interest income (expense), net and equity income (loss) from investments in unconsolidated affiliates to reportable segments.

Fiscal Year Ended

8 unchanged sentences

Income from operations

(20) Subsequent Events

On December 28, 2022, the first day of our 2023 fiscal year, we completed the acquisition of eight domestic franchise restaurants.

Pursuant to the terms of the acquisition agreements, we paid an aggregate purchase price of approximately $ 39.0 million.

We expect to complete the preliminary purchase price allocations relating to these transactions in the first quarter of fiscal 2023.

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.

What changed 10-K

Item 9A. Controls and Procedures