Texas Roadhouse, Inc. and SubsidiariesNotes to Consolidated Financial Statements(Tabular amounts in thousands, except share and per share data)F-15
Compensation – Stock Compensation
(Accounting Standards Update 2017-09, "ASU 2017-09")In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of
Modification Accounting, which clarifies when a change in the terms or conditions of a share-based payment award must
be accounted for as a modification. ASU 2017-09 requires modification accounting if the fair value, vesting condition or
the classification of the award is not the same immediately before and after a change in the terms and conditions of the
award. We adopted this guidance as of the beginning of our 2018 fiscal year. The adoption of this guidance did not
have a material impact on our consolidated financial position, results of operations or cash flows.
Leases
(Accounting Standards Update 2016-02, "ASU 2016-02")In February 2016, the FASB issued ASU 2016-02, Leases, which requires an entity to recognize a right-of-use asset
and a lease liability for virtually all leases. This update also requires additional disclosures about the amount, timing,
and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2018 (our 2019 fiscal year). In March 2018, the FASB approved an
amendment that allowed a modified retrospective approach and new required lease disclosures for all leases existing or
entered into after either the beginning of the year of adoption or the earliest comparative period in the consolidated
financial statements. We will adopt ASU 2016-02 using a modified retrospective approach as of the beginning of the
year of adoption. As a result, the comparative financial information will not be updated and the disclosures required
under the new standard will not be provided for dates and periods before December 26, 2018. We will take advantage of
the transition package of practical expedients permitted within the new standard which will allow us to carryforward the
historical lease classification. We will also elect the practical expedient to not separate lease and non-lease components
for all leases as well as the hindsight practical expedient. The election of the hindsight practical expedient will result in
a change in lease terms for certain existing leases.
We estimate the adoption of this standard will result in the recognition of a right-of-use asset of approximately
$470.0 million, net of deferred rent of $48.1 million, and a lease liability of $520.0 million as of December 26, 2018, our
initial date of adoption. There will be no significant impact to our results of operations, cash flows, or the related notes.
We do not believe this standard will have a significant impact on our liquidity. The standard will have no impact on our
compliance with our financial covenants associated with our credit facility.
Financial Instruments
(Accounting Standards Update 2016-13, "ASU 2016-13")In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments, which requires measurement and recognition of expected versus incurred losses
for financial assets held. ASU 2016-13 is effective for annual periods beginning after December 15, 2019 (our 2020
fiscal year), with early adoption permitted for annual periods beginning after December 15, 2018. We are currently
assessing the impact of this new standard on our consolidated financial position, results of operations and cash flows.
Goodwill
(Accounting Standards Update 2017-04, "ASU 2017-04")In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the
Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment and is expected to reduce the
cost and complexity of accounting for goodwill. ASU 2017-04 removes Step 2 of the goodwill impairment test, which
requires a hypothetical purchase price allocation. Instead, goodwill impairment will be the amount by which a reporting
unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. ASU 2017-04 is effective
for fiscal years beginning after December 15, 2019 (our 2020 fiscal year) and will be applied on a prospective