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FISCAL 2020 CHILI'S RESTAURANT ACQUISITION | 3 Months Ended
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Sep. 23, 2020
Business Combinations [Abstract] |
Fiscal 2020 Chili's Restaurant Acquisition | In the first quarter of fiscal 2020, on September 5, 2019, we completed the acquisition of certain assets and liabilities related to 116 previously franchised Chili’s restaurants located in the Midwest United States. Pro-forma financial information of the acquisition is not presented due to the immaterial impact of the financial results of the acquired restaurants in the Consolidated Financial Statements (Unaudited). Total cash consideration of $96.0 million, including post-closing adjustments, was funded with borrowings from our existing credit facility. We accounted for this acquisition as a business combination. The results of operations, and assets and liabilities, of these restaurants are included in the Consolidated Financial Statements (Unaudited) from the date of acquisition. The assets and liabilities of these restaurants are recorded at their fair values. A preliminary net acquisition-related gain of $0.5 million was recorded during the thirteen week period ended September 25, 2019 to Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited) that consisted of $2.6 million of franchise deferred revenues balance that were fully recognized at the date of the acquisition, partially offset by $1.5 million of professional services, transaction and transition related costs associated with the purchase, and $0.6 million of related franchise straight-line rent balances, net of market leasehold improvement adjustments that were fully recognized at the date of the acquisition. The final purchase price accounting was completed in the third quarter of fiscal 2020, and the final amounts recorded for the fair value of acquired assets and liabilities at the acquisition date were as follows:
| Fair Value September 5, 2019
Current assets(1) | $ | 7.3 |
Property and equipment | 60.3 |
Operating lease assets | 163.5 |
Reacquired franchise rights(2) | 6.9 |
Goodwill(3) | 22.4 |
Total assets acquired | 260.4 |
Current liabilities(4) | 9.1 |
Operating lease liabilities, less current portion | 158.3 |
Total liabilities assumed | 167.4 |
Net assets acquired(5) | $ | 93.0 |
(1)Current assets included petty cash, inventory, and restaurant supplies. (2)Reacquired franchise rights have a weighted average amortization period of approximately 8 years. (3)Goodwill is expected to be deductible for tax purposes. The portion of the purchase price attributable to goodwill represents the benefits expected as a result of the acquisition, including sales and unit growth opportunities, and the benefit of the assembled workforce of the acquired restaurants. (4)Current liabilities included current portion of operating lease liabilities, gift card liability and accrued property tax. (5)Net assets acquired at fair value are equal to the total purchase price of $99.0 million, less $3.2 million of closing adjustments and $2.8 million allocated to prepayment of leases entered into between us and the franchisee.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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- References No definition available. + Details
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