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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2021

OR

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to

Commission File Number 000-50972

Texas Roadhouse, Inc.

(Exact name of registrant specified in its charter)

Delaware

20-1083890

(State or other jurisdiction of

(IRS Employer

incorporation or organization)

Identification Number)

6040 Dutchmans Lane, Suite 200

Louisville, Kentucky 40205

(Address of principal executive offices) (Zip Code)

(502) 426-9984

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

TXRH

NASDAQ Global Select Market

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes     No  .

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No  .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  

Accelerated Filer  

Non-accelerated Filer  

Smaller Reporting Company  

Emerging Growth Company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes    No  .

The number of shares of common stock outstanding were 69,830,389 on July 28, 2021.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1 — Financial Statements (Unaudited) — Texas Roadhouse, Inc. and Subsidiaries

3

Condensed Consolidated Balance Sheets — June 29, 2021 and December 29, 2020

3

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) — For the 13 and 26 Weeks Ended June 29, 2021 and June 30, 2020

4

Condensed Consolidated Statement of Stockholders’ Equity — For the 13 and 26 Weeks Ended June 29, 2021 and June 30, 2020

5

Condensed Consolidated Statements of Cash Flows — For the 26 Weeks Ended June 29, 2021 and June 30, 2020

7

Notes to Condensed Consolidated Financial Statements

8

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3 — Quantitative and Qualitative Disclosures About Market Risk

29

Item 4 — Controls and Procedures

30

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings

31

Item 1A — Risk Factors

31

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3 — Defaults Upon Senior Securities

31

Item 4 — Mine Safety Disclosures

31

Item 5 — Other Information

31

Item 6 — Exhibits

32

Signatures

33

2

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

    

June 29, 2021

    

December 29, 2020

 

Assets

Current assets:

Cash and cash equivalents

$

483,419

$

363,155

Receivables, net of allowance for doubtful accounts of $10 at June 29, 2021 and $11 at December 29, 2020

 

48,600

 

98,418

Inventories, net

 

25,634

 

22,364

Prepaid income taxes

 

5,161

 

4,502

Prepaid expenses and other current assets

 

18,959

 

22,212

Total current assets

 

581,773

 

510,651

Property and equipment, net of accumulated depreciation of $816,085 at June 29, 2021 and $763,700 at December 29, 2020

 

1,117,393

 

1,088,623

Operating lease right-of-use assets, net

547,387

530,625

Goodwill

 

127,001

 

127,001

Intangible assets, net of accumulated amortization of $14,731 at June 29, 2021 and $14,341 at December 29, 2020

 

1,881

 

2,271

Other assets

 

73,510

 

65,990

Total assets

$

2,448,945

$

2,325,161

Liabilities and Stockholders’ Equity

Current liabilities:

Current portion of operating lease liabilities

$

20,578

$

19,271

Current maturities of long-term debt

50,000

Accounts payable

 

89,300

 

66,977

Deferred revenue-gift cards

 

177,946

 

232,812

Accrued wages and payroll taxes

 

71,837

 

51,982

Income taxes payable

6,107

2,859

Accrued taxes and licenses

 

31,976

 

24,751

Other accrued liabilities

 

82,064

 

57,666

Total current liabilities

 

479,808

 

506,318

Operating lease liabilities, net of current portion

590,443

572,171

Long-term debt

 

190,000

 

190,000

Restricted stock and other deposits

 

7,490

 

7,481

Deferred tax liabilities, net

 

5,753

 

2,802

Other liabilities

 

112,768

 

103,338

Total liabilities

 

1,386,262

 

1,382,110

Texas Roadhouse, Inc. and subsidiaries stockholders’ equity:

Preferred stock ($0.001 par value, 1,000,000 shares authorized; no shares issued or outstanding)

 

 

Common stock ($0.001 par value, 100,000,000 shares authorized, 69,830,389 and 69,561,861 shares issued and outstanding at June 29, 2021 and December 29, 2020, respectively)

 

70

 

70

Additional paid-in-capital

 

153,248

 

145,626

Retained earnings

 

893,613

 

781,915

Accumulated other comprehensive loss

 

(96)

 

(106)

Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity

 

1,046,835

 

927,505

Noncontrolling interests

 

15,848

 

15,546

Total equity

 

1,062,683

 

943,051

Total liabilities and equity

$

2,448,945

$

2,325,161

See accompanying notes to condensed consolidated financial statements.

3

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(in thousands, except per share data)

(unaudited)

13 Weeks Ended

26 Weeks Ended

    

June 29, 2021

    

June 30, 2020

    

June 29, 2021

    

June 30, 2020

 

Revenue:

Restaurant and other sales

$

892,444

$

473,090

$

1,687,367

$

1,120,716

Franchise royalties and fees

6,344

3,335

12,050

8,233

Total revenue

 

898,788

 

476,425

 

1,699,417

 

1,128,949

Costs and expenses:

Restaurant operating costs (excluding depreciation and amortization shown separately below):

Food and beverage

 

295,504

164,041

546,986

374,221

Labor

 

288,147

194,622

546,183

435,701

Rent

 

14,956

13,251

29,408

26,722

Other operating

 

135,606

89,348

258,985

193,637

Pre-opening

 

6,319

4,290

10,587

9,402

Depreciation and amortization

 

31,650

29,016

62,519

58,070

Impairment and closure, net

 

17

(440)

521

155

General and administrative

 

36,861

29,615

73,573

62,569

Total costs and expenses

 

809,060

 

523,743

 

1,528,762

 

1,160,477

Income (loss) from operations

 

89,728

 

(47,318)

 

170,655

 

(31,528)

Interest expense, net

 

975

1,030

2,435

1,099

Equity income (loss) from investments in unconsolidated affiliates

 

239

(90)

22

(598)

Income (loss) before taxes

$

88,992

$

(48,438)

$

168,242

$

(33,225)

Income tax expense (benefit)

 

11,067

(15,132)

23,887

(17,071)

Net income (loss) including noncontrolling interests

77,925

(33,306)

$

144,355

$

(16,154)

Less: Net income attributable to noncontrolling interests

 

2,445

247

4,725

1,370

Net income (loss) attributable to Texas Roadhouse, Inc. and subsidiaries

$

75,480

$

(33,553)

$

139,630

$

(17,524)

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment, net of tax of ($7), ($4), ($3) and $9, respectively

22

10

10

(27)

Total comprehensive income (loss)

$

75,502

$

(33,543)

$

139,640

$

(17,551)

Net income (loss) per common share attributable to Texas Roadhouse, Inc. and subsidiaries:

Basic

$

1.08

$

(0.48)

$

2.00

$

(0.25)

Diluted

$

1.08

$

(0.48)

$

1.99

$

(0.25)

Weighted average shares outstanding:

Basic

 

69,790

69,361

69,713

69,391

Diluted

 

70,161

69,361

70,150

69,391

Cash dividends declared per share

$

0.40

$

$

0.40

$

0.36

See accompanying notes to condensed consolidated financial statements.

4

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders' Equity

(in thousands, except share and per share data)

(unaudited)

For the 13 Weeks Ended June 29, 2021

    

    

    

    

    

Accumulated

    

Total Texas

    

    

 

Additional

Other

Roadhouse, Inc.

 

Par

Paid-in-

Retained

Comprehensive

and

Noncontrolling

 

Shares

Value

Capital

Earnings

Loss

Subsidiaries

Interests

Total

 

Balance, March 30, 2021

 

69,742,520

$

70

$

147,604

$

846,065

$

(118)

$

993,621

$

16,397

$

1,010,018

Net income

 

 

 

 

75,480

 

 

75,480

 

2,445

 

77,925

Other comprehensive income, net of tax

22

22

22

Distributions to noncontrolling interest holders

 

 

 

 

 

 

 

(2,994)

 

(2,994)

Dividends declared ($0.40 per share)

 

 

 

 

(27,932)

 

 

(27,932)

 

 

(27,932)

Shares issued under share-based compensation plans including tax effects

 

128,590

 

 

 

 

 

 

 

Indirect repurchase of shares for minimum tax withholdings

 

(40,721)

 

 

(4,265)

 

 

 

(4,265)

 

 

(4,265)

Share-based compensation

 

 

 

9,909

 

 

 

9,909

 

 

9,909

Balance, June 29, 2021

 

69,830,389

$

70

$

153,248

$

893,613

$

(96)

$

1,046,835

$

15,848

$

1,062,683

For the 13 Weeks Ended June 30, 2020

    

    

    

    

    

Accumulated

    

Total Texas

    

    

Additional

Other

Roadhouse, Inc.

Par

Paid-in-

Retained

Comprehensive

and

Noncontrolling

Shares

Value

Capital

Earnings

Loss

Subsidiaries

Interests

Total

Balance, March 31, 2020

 

69,310,804

$

69

$

129,796

$

766,689

$

(262)

$

896,292

$

14,451

$

910,743

Net (loss) income

 

 

 

 

(33,553)

 

 

(33,553)

 

247

 

(33,306)

Other comprehensive income, net of tax

10

10

10

Shares issued under share-based compensation plans including tax effects

 

136,685

 

 

 

 

 

 

 

Indirect repurchase of shares for minimum tax withholdings

 

(43,520)

 

 

(1,971)

 

 

 

(1,971)

 

 

(1,971)

Share-based compensation

 

 

 

7,243

 

 

 

7,243

 

 

7,243

Balance, June 30, 2020

 

69,403,969

$

69

$

135,068

$

733,136

$

(252)

$

868,021

$

14,698

$

882,719

5

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders' Equity

(in thousands, except share and per share data)

(unaudited)

For the 26 Weeks Ended June 29, 2021

    

    

    

    

    

Accumulated

    

Total Texas

    

    

 

Additional

Other

Roadhouse, Inc.

 

Par

Paid-in-

Retained

Comprehensive

and

Noncontrolling

 

Shares

Value

Capital

Earnings

Loss

Subsidiaries

Interests

Total

 

Balance, December 29, 2020

 

69,561,861

$

70

$

145,626

$

781,915

$

(106)

$

927,505

$

15,546

$

943,051

Net income

 

 

 

 

139,630

 

 

139,630

 

4,725

 

144,355

Other comprehensive income, net of tax

10

10

10

Distributions to noncontrolling interest holders

 

 

 

 

 

 

 

(4,423)

 

(4,423)

Dividends declared ($0.40 per share)

 

 

 

 

(27,932)

 

 

(27,932)

 

 

(27,932)

Shares issued under share-based compensation plans including tax effects

 

398,508

 

 

 

 

 

 

 

Indirect repurchase of shares for minimum tax withholdings

 

(129,980)

 

 

(12,195)

 

 

 

(12,195)

 

 

(12,195)

Share-based compensation

 

 

 

19,817

 

 

 

19,817

 

 

19,817

Balance, June 29, 2021

 

69,830,389

$

70

$

153,248

$

893,613

$

(96)

$

1,046,835

$

15,848

$

1,062,683

For the 26 Weeks Ended June 30, 2020

    

    

    

    

    

Accumulated

    

Total Texas

    

    

Additional

Other

Roadhouse, Inc.

Par

Paid-in-

Retained

Comprehensive

and

Noncontrolling

Shares

Value

Capital

Earnings

Loss

Subsidiaries

Interests

Total

Balance, December 31, 2019

 

69,400,252

$

69

$

140,501

$

775,649

$

(225)

$

915,994

$

15,175

$

931,169

Net (loss) income

 

 

 

 

(17,524)

 

 

(17,524)

 

1,370

 

(16,154)

Other comprehensive loss, net of tax

(27)

(27)

(27)

Distributions to noncontrolling interest holders

 

 

 

 

 

 

 

(1,847)

 

(1,847)

Dividends declared ($0.36 per share)

 

 

 

 

(24,989)

 

 

(24,989)

 

 

(24,989)

Shares issued under share-based compensation plans including tax effects

 

388,477

 

 

 

 

 

 

 

Indirect repurchase of shares for minimum tax withholdings

 

(132,351)

 

 

(7,302)

 

 

 

(7,302)

 

 

(7,302)

Repurchase of shares of common stock

(252,409)

(12,621)

(12,621)

(12,621)

Share-based compensation

 

 

 

14,490

 

 

 

14,490

 

 

14,490

Balance, June 30, 2020

 

69,403,969

$

69

$

135,068

$

733,136

$

(252)

$

868,021

$

14,698

$

882,719

6

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

26 Weeks Ended

    

June 29, 2021

    

June 30, 2020

Cash flows from operating activities:

Net income (loss) including noncontrolling interests

$

144,355

$

(16,154)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

 

62,519

 

58,070

Deferred income taxes

 

2,948

 

(10,926)

Loss on disposition of assets

 

1,072

 

2,165

Impairment and closure costs

 

505

 

89

Equity income (loss) from investments in unconsolidated affiliates

 

(22)

 

598

Distributions of income received from investments in unconsolidated affiliates

 

401

 

184

Provision for doubtful accounts

 

(1)

 

16

Share-based compensation expense

 

19,817

 

14,490

Changes in operating working capital:

Receivables

 

50,143

 

69,004

Inventories

 

(3,270)

 

(2,835)

Prepaid expenses and other current assets

 

2,782

 

4,242

Other assets

 

(7,178)

 

(2,790)

Accounts payable

 

21,301

 

(91)

Deferred revenue—gift cards

 

(54,866)

 

(52,896)

Accrued wages and payroll taxes

 

19,855

 

(5,810)

Prepaid income taxes and income taxes payable

 

2,589

 

(6,524)

Accrued taxes and licenses

 

7,225

 

(6,099)

Other accrued liabilities

 

14,649

 

2,280

Operating lease right-of-use assets and lease liabilities

 

2,592

 

2,257

Other liabilities

 

9,430

 

12,575

Net cash provided by operating activities

 

296,846

 

61,845

Cash flows from investing activities:

Capital expenditures—property and equipment

 

(85,068)

(81,833)

Proceeds from sale leaseback transactions

 

3,285

 

2,167

Net cash used in investing activities

 

(81,783)

 

(79,666)

Cash flows from financing activities:

(Payments on) proceeds from revolving credit facility, net

(50,000)

240,000

Debt issuance costs

(708)

(641)

Distributions to noncontrolling interest holders

 

(4,423)

(1,847)

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

 

459

(165)

Indirect repurchase of shares for minimum tax withholdings

 

(12,195)

(7,302)

Repurchase of shares of common stock

 

(12,621)

Dividends paid to shareholders

 

(27,932)

(24,989)

Net cash (used in) provided by financing activities

 

(94,799)

 

192,435

Net increase in cash and cash equivalents

 

120,264

 

174,614

Cash and cash equivalents—beginning of period

 

363,155

107,879

Cash and cash equivalents—end of period

$

483,419

$

282,493

Supplemental disclosures of cash flow information:

Interest paid, net of amounts capitalized

$

2,078

$

1,223

Income taxes paid

$

18,351

$

388

Capital expenditures included in current liabilities

$

25,030

$

11,516

See accompanying notes to condensed consolidated financial statements.

7

Texas Roadhouse, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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

(unaudited)

(1)  Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Texas Roadhouse, Inc. ("TRI"), our wholly-owned subsidiaries and subsidiaries in which we have a controlling interest (collectively the "Company," "we," "our" and/or "us") as of June 29, 2021 and December 29, 2020 and for the 13 and 26 weeks ended June 29, 2021 and June 30, 2020.

As of June 29, 2021, we owned and operated 548 restaurants and franchised an additional 99 restaurants in 49 states and ten foreign countries. Of the 548 company restaurants that were operating at June 29, 2021, 528 were wholly-owned and 20 were majority-owned. Of the 99 franchise restaurants, 69 were domestic restaurants and 30 were international restaurants.

As of June 30, 2020, we owned and operated 521 restaurants and franchised an additional 96 restaurants in 49 states and ten foreign countries. Of the 521 company restaurants that were operating at June 30, 2020, 501 were wholly-owned and 20 were majority-owned. Of the 96 franchise restaurants, 70 were domestic restaurants and 26 were international restaurants.

As of June 29, 2021 and June 30, 2020, we owned a 5.0% to 10.0% equity interest in 24 domestic franchise restaurants. Additionally, as of June 29, 2021 and June 30, 2020, we owned a 40% equity interest in three and four non-Texas Roadhouse restaurants, respectively, as part of a joint venture agreement with a casual dining restaurant operator in China. The unconsolidated restaurants are accounted for using the equity method. Our investments in these unconsolidated affiliates are included in other assets in our unaudited condensed consolidated balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our unaudited condensed consolidated statements of income (loss) and comprehensive income (loss) under equity income (loss) from investments in unconsolidated affiliates. All significant intercompany balances and transactions for these unconsolidated restaurants as well as the entities whose accounts have been consolidated have been eliminated.

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

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, results of operations and cash flows for the periods presented. The unaudited condensed consolidated financial statements have been prepared in accordance with GAAP, except that certain information and footnotes have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (the "SEC"). Operating results for the 13 and 26 weeks ended June 29, 2021 are not necessarily indicative of the results that may be expected for the year ending December 28, 2021. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 29, 2020.

Our significant interim accounting policies include the recognition of income taxes using an estimated annual effective tax rate.

8

Risks and Uncertainties

The Company continues to be subject to risks and uncertainties as a result of the COVID-19 pandemic (the “pandemic”). These include state and local restrictions on restaurants, some of which have limited capacity or seating in the dining rooms while others have allowed To-Go or curbside service only. As of June 29, 2021, nearly all of our domestic company and franchise locations were operating without restriction. As of June 30, 2020, nearly all of our domestic company and franchise restaurants had re-opened their dining rooms under various limited capacity restrictions.

As a result of these restrictions, we developed a hybrid operating model to accommodate our dining room restrictions together with enhanced To-Go. We continue to see increased sales in our To-Go program over pre-pandemic levels, even with dining rooms re-opened and operating with fewer restrictions, which has offset the decrease in dining room traffic. We cannot predict how long we will continue to be impacted by the pandemic, the extent to which our dining rooms will have to close again, or if the increased sales in our To-Go program will continue. The extent to which COVID-19 impacts our business, results of operations, or financial condition will depend on future developments which are outside of our control, including the efficacy and public acceptance of vaccination programs in curbing the spread of the virus, the introduction and spread of new variants of the virus, which may prove resistant to currently approved vaccines, and new or reinstated restrictions on our operations. In addition, significant items subject to estimates and assumptions including the carrying amount of property and equipment, goodwill, and lease related assets could be impacted.

(2) Recent Accounting Pronouncements

Income Taxes

(Accounting Standards Update 2019-12, "ASU 2019-12")

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removed certain exceptions related to the approach for intraperiod tax allocations, the calculation of income taxes in interim periods, and the recognition of deferred taxes for investments. This guidance also simplified aspects of accounting for recognizing deferred taxes for taxable goodwill. We adopted ASU 2019-12 as of the beginning of our 2021 fiscal year. The adoption of this standard did not have a significant impact on our condensed consolidated financial statements.

Reference Rate Reform

(Accounting Standards Update 2020-04, "ASU 2020-04")

In March 2020, the FASB issued 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. This guidance is effective upon issuance to modifications made as early as the beginning of the interim period through December 31, 2022. We are currently assessing the impact of this new standard on our condensed consolidated financial statements.

(3)   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. 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.

9

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. On May 11, 2020, we amended the original revolving credit facility to provide for an incremental revolving credit facility of up to $82.5 million. This amount reduced the additional $200.0 million that was available under the original revolving credit facility.

As of May 4, 2021, before the amendment, we had $190.0 million outstanding on the original revolving credit facility and $50.0 million outstanding on the incremental revolving credit facility. As part of the amendment, the $190.0 million remained outstanding on the amended revolving credit facility and the $50.0 million was repaid.

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 revolving credit facility, in each case depending on our leverage ratio. The amendment also provides an Alternate Base Rate that may be substituted for LIBOR.

As of June 29, 2021, we had $190.0 million outstanding on the amended revolving credit facility and $101.8 million of availability, net of $8.2 million of outstanding letters of credit. This outstanding amount is included as long-term debt on our unaudited condensed consolidated balance sheet.

As of December 29, 2020, we had $190.0 million outstanding on the original revolving credit facility which is included as long-term debt on our unaudited condensed consolidated balance sheet. In addition, we had $50.0 million outstanding on the incremental revolving credit facility which is included as current maturities of long-term debt on our unaudited condensed consolidated balance sheet.

The weighted-average interest rate for the $190.0 million outstanding as of June 29, 2021 was 0.98%. ​The weighted-average interest rate for the $240.0 million of combined borrowings as of December 29, 2020 was 1.98%.

The lenders’ obligation to extend credit pursuant to the revolving credit facility depends on us maintaining certain financial covenants. We were in compliance with all financial covenants as of June 29, 2021.

(4) Revenue

The following table disaggregates our revenue by major source (in thousands):

13 weeks ended

26 weeks ended

June 29, 2021

June 30, 2020

June 29, 2021

June 30, 2020

Restaurant and other sales

$

892,444

$

473,090

$

1,687,367

$

1,120,716

Franchise royalties

5,555

2,766

10,528

7,054

Franchise fees

789

569

1,522

1,179

Total revenue

$

898,788

$

476,425

$

1,699,417

$

1,128,949

We record deferred revenue for gift cards which includes cards that have been sold but not yet redeemed, a breakage adjustment for a percentage of gift cards that are not expected to be redeemed, and fees paid on gift cards sold through third-party retailers. When the gift cards are redeemed, we recognize restaurant sales and reduce deferred revenue. We amortize breakage and third-party fees consistent with the historic redemption pattern of the associated gift card or on actual redemptions in periods where redemptions do not align with historic redemption patterns. We recognize these amounts as a component of other sales. As of June 29, 2021 and December 29, 2020, our deferred revenue balance related to gift cards was $177.9 million and $232.8 million, respectively. We recognized sales of $28.8 million and $100.2 million for the 13 and 26 weeks ended June 29, 2021, respectively, related to the amount in deferred revenue as of December 29, 2020. We recognized sales of $12.6 million and $86.1 million for the 13 and 26 weeks ended June 30, 2020, respectively, related to the amount in deferred revenue as of December 31, 2019.

10

(5) Income Taxes

Our effective tax rate was 12.4% and 14.2% for the 13 and 26 weeks ended June 29, 2021, respectively. For these periods we recognized income tax expense using an estimated effective annual tax rate. Our effective tax benefit was 31.2% and 51.4% for the 13 and 26 weeks ended June 30, 2020, respectively. For these periods we recognized income tax benefit using a discrete tax calculation as we were unable to reliably estimate our full year effective income tax rate. This was primarily due to the inability to estimate the increased impact of the FICA tip and Work opportunity tax credits on our effective tax rate as a result of the significant decrease in our pre-tax income. The impact of these credits was the primary driver of the difference between our statutory and effective tax rates for all periods presented. Additionally, the FICA tip and Work opportunity tax credits exceeded our federal tax liability for fiscal year 2020 but we expect to fully utilize these credits in our 2021 tax year.

(6)

Commitments and Contingencies

The estimated cost of completing capital project commitments at June 29, 2021 and December 29, 2020 was $119.3 million and $95.9 million, respectively.

As of June 29, 2021 and December 29, 2020, we were contingently liable for $12.6 million and $13.0 million, respectively, for seven lease guarantees, listed in the table below. These amounts represent the maximum potential liability of future payments under the guarantees. In the event of default, the indemnity and default clauses in our assignment agreements govern our ability to pursue and recover damages incurred. No material liabilities have been recorded as of June 29, 2021 and December 29, 2020 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.

    

Lease
Assignment Date

    

Current Lease
Term Expiration

 

Everett, Massachusetts (1)

 

September 2002

 

February 2023

Longmont, Colorado (1)

 

October 2003

 

May 2029

Montgomeryville, Pennsylvania (1)

 

October 2004

 

March 2026

Fargo, North Dakota (1)

 

February 2006

 

July 2026

Logan, Utah (1)

 

January 2009

 

August 2024

Irving, Texas (2)

December 2013

December 2024

Louisville, Kentucky (2)(3)

December 2013

November 2023

(1) Real estate lease agreements for restaurant locations which we entered into before granting franchise rights to those restaurants.  We have subsequently assigned the leases to the franchisees, but remain contingently liable under the terms of the lease if the franchisee defaults.
(2) Leases associated with non-Texas Roadhouse restaurants which were sold.  The leases were assigned to the acquirer, but we remain contingently liable under the terms of the lease if the acquirer defaults.
(3) We may be released from liability after the initial contractual lease term expiration contingent upon certain conditions being met by the acquirer.

During the 13 and 26 weeks ended June 29, 2021, we bought most of our beef from three suppliers. 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 our 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.  None of these types of litigation, most of which are covered by insurance, has had a material adverse effect on us during the periods covered by this report 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.

11

(7)   Related Party Transactions

As of June 29, 2021 and June 30, 2020, we had three franchise restaurants and two majority-owned company restaurants owned in part by current officers of the Company. These franchise entities paid us fees of $0.5 million and $0.2 million for the 13 weeks ended June 29, 2021 and June 30, 2020, respectively. These franchise entities paid us fees of $0.9 million and $0.4 million for the 26 weeks ended June 29, 2021 and June 30, 2020, respectively.

(8)   Earnings Per Share

The share and net income per share data for all periods presented are based on the historical weighted-average shares outstanding.  The diluted earnings per share calculations show the effect of the weighted-average restricted stock units from our equity incentive plans, except during loss periods as the effect would be anti-dilutive. Performance stock units are not included in the diluted earnings per share calculation until the performance-based criteria have been met.

For the 13 and 26 weeks ended June 29, 2021, there were 52,620 and 27,186 weighted-average shares of nonvested stock, respectively, that were outstanding but not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect. For the 13 and 26 weeks ended June 30, 2020, there were 367,968 and 400,291 weighted-average shares of nonvested stock, respectively, that were outstanding but not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect. This included all outstanding restricted stock unit grants as the Company was in a net loss position for both periods.

The following table sets forth the calculation of earnings per share and weighted-average shares outstanding (in thousands) as presented in the accompanying unaudited condensed consolidated statements of income (loss) and comprehensive income (loss):

13 Weeks Ended

26 Weeks Ended

    

June 29, 2021

    

June 30, 2020

    

June 29, 2021

    

June 30, 2020

 

Net income (loss) attributable to Texas Roadhouse, Inc. and subsidiaries

$

75,480

$

(33,553)

$

139,630

$

(17,524)

Basic EPS:

Weighted-average common shares outstanding

 

69,790

69,361

69,713

69,391

Basic EPS

$

1.08

$

(0.48)

$

2.00

$

(0.25)

Diluted EPS:

Weighted-average common shares outstanding

 

69,790

69,361

69,713

69,391

Dilutive effect of nonvested stock

 

371

-

437

-

Shares-diluted

 

70,161

 

69,361

 

70,150

 

69,391

Diluted EPS

$

1.08

$

(0.48)

$

1.99

$

(0.25)

(9) Fair Value Measurements

Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures ("ASC 820"), establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 establishes 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. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.

Level 1

Inputs based on quoted prices in active markets for identical assets.

Level 2

Inputs other than quoted prices included within Level 1 that are observable for the assets, either directly or indirectly.

Level 3

Inputs that are unobservable for the asset.

12

There were no transfers among levels within the fair value hierarchy during the 13 and 26 weeks ended June 29, 2021.

The following table presents the fair values for our financial assets and liabilities measured on a recurring basis:

Fair Value Measurements

 

    

Level

    

June 29, 2021

    

December 29, 2020

 

Deferred compensation plan—assets

 

1

$

62,948

$

55,633

Deferred compensation plan—liabilities

 

1

$

(62,868)

$

(55,614)

The Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp. (as amended, the "Deferred Compensation Plan") is a nonqualified deferred compensation plan which allows highly compensated employees to defer receipt of a portion of their compensation and contribute such amounts to one or more investment funds held in a rabbi trust. We report the amounts of the rabbi trust in other assets and the corresponding liability in other liabilities in our unaudited condensed consolidated financial statements. These investments are considered trading securities and are reported at fair value based on quoted market prices. The realized and unrealized holding gains and losses related to these investments, as well as the offsetting compensation expense, are recorded in general and administrative expense in the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss).

The following table presents the fair value of our assets measured on a nonrecurring basis:

Fair Value Measurements

Total loss

13 Weeks Ended

26 Weeks Ended

    

    

June 29,

    

December 29,

    

June 29,

    

June 30,

June 29,

    

June 30,

Level

2021

2020

2021

2020

2021

2020

Long-lived assets held for sale

3

$

1,175

$

1,645

$

$

$

(470)

$

Goodwill

3

$

$

2,625

$

$

$

$

Investments in unconsolidated affiliates

3

$

1,000

$

1,531

$

$

$

(531)

$

(528)

Long-lived assets held for sale include land and building at a site that was relocated. These assets are included in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheets. These assets are valued using a Level 3 input. This resulted in a loss of $0.5 million which is included in impairment and closure, net in our unaudited condensed consolidated statement of income and comprehensive income for the 26 weeks ended June 29, 2021.

 Goodwill includes two restaurants whose carrying values were determined to be in excess of their fair values as part of our most recent annual goodwill impairment assessment in 2020. In determining the fair value, multiple valuation approaches were utilized which considered the historical results and anticipated future trends of operations for these restaurants. We consider this a Level 3 input.

Investments in unconsolidated affiliates include a 40% equity interest in a joint venture in China that was reduced to fair value. This asset is valued using a Level 3 input, i.e., the amount we expect to receive upon the sale of this investment. This resulted in a loss of $0.5 million which is included in equity income from investments in unconsolidated affiliates in our unaudited condensed consolidated statement of income and comprehensive income for the 26 weeks ended June 29, 2021.

At June 29, 2021 and December 29, 2020, 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 June 29, 2021 and December 29, 2020, the fair value of our revolving credit facility approximated its carrying value since it is a variable rate credit facility (Level 2).

13

(10) Share Based Compensation

On May 13, 2021, our stockholders 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. An 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 certain executives 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. The following table summarizes the share-based compensation recorded in the accompanying unaudited condensed consolidated statements of income (loss) and comprehensive income (loss):

13 Weeks Ended

26 Weeks Ended

    

June 29, 2021

    

June 30, 2020

    

June 29, 2021

    

June 30, 2020

 

Labor expense

$

2,495

$

2,532

$

5,079