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 30, 2020

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 69,403,969 on July 29, 2020.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1 — Financial Statements (Unaudited) — Texas Roadhouse, Inc. and Subsidiaries	3
Condensed Consolidated Balance Sheets — June 30, 2020 and December 31, 2019	3
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) — For the 13 and 26 Weeks Ended June 30, 2020 and June 25, 2019	4
Condensed Consolidated Statement of Stockholders’ Equity — For the 13 and 26 Weeks Ended June 30, 2020 and June 25, 2019	5
Condensed Consolidated Statements of Cash Flows — For the 26 Weeks Ended June 30, 2020 and June 25, 2019	7
Notes to Condensed Consolidated Financial Statements	8
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3 — Quantitative and Qualitative Disclosures About Market Risk	31
Item 4 — Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1 — Legal Proceedings	33
Item 1A — Risk Factors	33
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3 — Defaults Upon Senior Securities	34
Item 4 — Mine Safety Disclosures	35
Item 5 — Other Information	35
Item 6 — Exhibits	35
Signatures	36

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 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	282,493	$	107,879
Receivables, net of allowance for doubtful accounts of $28 at June 30, 2020 and $12 at December 31, 2019		30,285		99,305
Inventories, net		23,102		20,267
Prepaid income taxes		9,306		2,015
Prepaid expenses		14,191		18,433
Total current assets		359,377		247,899
Property and equipment, net of accumulated depreciation of $723,320 at June 30, 2020 and $678,988 at December 31, 2019		1,072,173		1,056,563
Operating lease right-of-use assets, net		517,260		499,801
Goodwill		124,748		124,748
Intangible assets, net of accumulated amortization of $14,020 at June 30, 2020 and $14,141 at December 31, 2019		993		1,234
Other assets		55,933		53,320
Total assets	$	2,130,484	$	1,983,565
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of operating lease liabilities	$	17,913	$	17,263
Current maturities of long-term debt		50,000		—
Accounts payable		63,363		61,653
Deferred revenue-gift cards		156,362		209,258
Accrued wages		33,889		39,699
Income taxes payable		767		—
Accrued taxes and licenses		24,334		30,433
Other accrued liabilities		55,614		58,914
Total current liabilities		402,242		417,220
Operating lease liabilities, net of current portion		557,543		538,710
Long-term debt		190,000		—
Restricted stock and other deposits		8,339		8,249
Deferred tax liabilities, net		11,760		22,695
Other liabilities		77,881		65,522
Total liabilities		1,247,765		1,052,396
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, 69,403,969 and 69,400,252 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively)		69		69
Additional paid-in-capital		135,068		140,501
Retained earnings		733,136		775,649
Accumulated other comprehensive loss		(252)		(225)
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity		868,021		915,994
Noncontrolling interests		14,698		15,175
Total equity		882,719		931,169
Total liabilities and equity	$	2,130,484	$	1,983,565

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 30, 2020		June 25, 2019		June 30, 2020		June 25, 2019
Revenue:
Restaurant and other sales	$	473,090	$	684,373	$	1,120,716	$	1,369,490
Franchise royalties and fees		3,335		5,455		8,233		10,946
Total revenue		476,425		689,828		1,128,949		1,380,436
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Cost of sales		164,041		221,266		374,221		444,978
Labor		194,622		225,490		435,701		449,370
Rent		13,251		13,051		26,722		26,179
Other operating		89,348		103,811		193,637		205,613
Pre-opening		4,290		4,197		9,402		8,065
Depreciation and amortization		29,016		28,454		58,070		56,227
Impairment and closure, net		(440)		316		155		333
General and administrative		29,615		39,960		62,569		75,943
Total costs and expenses		523,743		636,545		1,160,477		1,266,708
(Loss) income from operations		(47,318)		53,283		(31,528)		113,728
Interest expense (income), net		1,030		(691)		1,099		(1,445)
Equity (loss) income from investments in unconsolidated affiliates		(90)		141		(598)		254
(Loss) income before taxes	$	(48,438)	$	54,115	$	(33,225)	$	115,427
Income tax (benefit) expense		(15,132)		7,427		(17,071)		16,546
Net (loss) income including noncontrolling interests		(33,306)		46,688	$	(16,154)	$	98,881
Less: Net income attributable to noncontrolling interests		247		1,843		1,370		3,646
Net (loss) income attributable to Texas Roadhouse, Inc. and subsidiaries	$	(33,553)	$	44,845	$	(17,524)	$	95,235
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment, net of tax of $(4), $28, $9 and ($5), respectively		10		(82)		(27)		15
Total comprehensive (loss) income	$	(33,543)	$	44,763	$	(17,551)	$	95,250
Net (loss) income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
Basic	$	(0.48)	$	0.63	$	(0.25)	$	1.33
Diluted	$	(0.48)	$	0.63	$	(0.25)	$	1.32
Weighted average shares outstanding:
Basic		69,361		71,362		69,391		71,558
Diluted		69,361		71,733		69,391		71,961
Cash dividends declared per share	$	—	$	0.30	$	0.36	$	0.60

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 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
	For the 13 Weeks Ended June 25, 2019
								Accumulated		Total Texas
				Additional				Other		Roadhouse, Inc.
		Par		Paid-in-		Retained		Comprehensive		and		Noncontrolling
	Shares	Value		Capital		Earnings		Loss		Subsidiaries		Interests		Total
Balance, March 26, 2019	71,827,836	$	72	$	259,050	$	714,502	$	(131)	$	973,493	$	14,654	$	988,147
Net income	—		—		—		44,845		—		44,845		1,843		46,688
Other comprehensive loss, net of tax	—		—		—		—		(82)		(82)		—		(82)
Distributions to noncontrolling interest holders	—		—		—		—		—		—		(1,731)		(1,731)
Dividends declared ($0.30 per share)	—		—		—		(21,224)		—		(21,224)		—		(21,224)
Shares issued under share-based compensation plans including tax effects	103,289		—		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(32,898)		—		(1,869)		—		—		(1,869)		—		(1,869)
Repurchase of shares of common stock	(2,096,677)		(2)		(112,050)		—		—		(112,052)				(112,052)
Share-based compensation	—		—		7,741		—		—		7,741		—		7,741
Balance, June 25, 2019	69,801,550	$	70	$	152,872	$	738,123	$	(213)	$	890,852	$	14,766	$	905,618

See accompanying notes to condensed consolidated financial statements.

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 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
	For the 26 Weeks Ended June 25, 2019
								Accumulated		Total Texas
				Additional				Other		Roadhouse, Inc.
		Par		Paid-in-		Retained		Comprehensive		and		Noncontrolling
	Shares	Value		Capital		Earnings		Loss		Subsidiaries		Interests		Total
Balance, December 25, 2018	71,617,510	$	72	$	257,388	$	688,337	$	(228)	$	945,569	$	15,139	$	960,708
Net income	—		—		—		95,235		—		95,235		3,646		98,881
Other comprehensive income, net of tax	—		—		—		—		15		15		—		15
Distributions to noncontrolling interest holders	—		—		—		—		—		—		(3,346)		(3,346)
Acquisition of noncontrolling interest holders	—		—		(70)		—		—		(70)		(673)		(743)
Dividends declared ($0.60 per share)	—		—		—		(42,771)		—		(42,771)		—		(42,771)
Shares issued under share-based compensation plans including tax effects	433,917		—		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(153,200)		—		(9,269)		—		—		(9,269)		—		(9,269)
Repurchase of shares of common stock	(2,096,677)		(2)		(112,050)		—		—		(112,052)		—		(112,052)
Cumulative effect of adoption of ASC 842, Leases, net of tax	—		—		—		(2,678)		—		(2,678)		—		(2,678)
Share-based compensation	—		—		16,873		—		—		16,873		—		16,873
Balance, June 25, 2019	69,801,550	$	70	$	152,872	$	738,123	$	(213)	$	890,852	$	14,766	$	905,618

See accompanying notes to condensed consolidated financial statements.

6

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	26 Weeks Ended
	June 30, 2020		June 25, 2019
Cash flows from operating activities:
Net (loss) income including noncontrolling interests	$	(16,154)	$	98,881
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		58,070		56,227
Deferred income taxes		(10,926)		(2,734)
Loss on disposition of assets		2,165		2,322
Impairment and closure costs		89		312
Equity loss (income) from investments in unconsolidated affiliates		598		(254)
Distributions of income received from investments in unconsolidated affiliates		184		346
Provision for doubtful accounts		16		(19)
Share-based compensation expense		14,490		16,873
Changes in operating working capital:
Receivables		69,004		53,894
Inventories		(2,835)		920
Prepaid expenses		4,242		1,215
Other assets		(2,790)		(7,653)
Accounts payable		(91)		(299)
Deferred revenue—gift cards		(52,896)		(72,685)
Accrued wages		(5,810)		1,733
Prepaid income taxes and income taxes payable		(6,524)		12,152
Accrued taxes and licenses		(6,099)		(381)
Other accrued liabilities		2,280		13,749
Operating lease right-of-use assets and lease liabilities		2,257		2,799
Other liabilities		12,575		9,618
Net cash provided by operating activities		61,845		187,016
Cash flows from investing activities:
Capital expenditures—property and equipment		(81,833)		(87,782)
Proceeds from sale leaseback transaction		2,167		—
Net cash used in investing activities		(79,666)		(87,782)
Cash flows from financing activities:
Proceeds from revolving credit facility		240,000		—
Debt issuance costs		(641)		—
Distributions to noncontrolling interest holders		(1,847)		(3,346)
Acquisition of noncontrolling interest		—		(743)
Proceeds from restricted stock and other deposits, net		(165)		340
Indirect repurchase of shares for minimum tax withholdings		(7,302)		(9,269)
Repurchase of shares of common stock		(12,621)		(112,050)
Dividends paid to shareholders		(24,989)		(39,452)
Net cash provided by (used in) financing activities		192,435		(164,520)
Net increase (decrease) in cash and cash equivalents		174,614		(65,286)
Cash and cash equivalents—beginning of period		107,879		210,125
Cash and cash equivalents—end of period	$	282,493	$	144,839
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	1,223	$	367
Income taxes paid	$	388	$	7,128
Capital expenditures included in current liabilities	$	11,516	$	15,267

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 30, 2020 and December 31, 2019 and for the 13 and 26 weeks ended June 30, 2020 and June 25, 2019.

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. Included within these restaurant totals are one company restaurant and five international franchise restaurants that remain temporarily closed due to the global COVID-19 pandemic (the "pandemic"). These stores continue to be included in the above totals as we believe they will re-open once it is considered safe to do so.

As of June 25, 2019, we owned and operated 498 restaurants and franchised an additional 93 restaurants in 49 states and ten foreign countries. Of the 498 company restaurants that were operating at June 25, 2019, 478 were wholly-owned and 20 were majority-owned. Of the 93 franchise restaurants, 70 were domestic restaurants and 23 were international restaurants.

As of June 30, 2020 and June 25, 2019, we owned a 5.0% to 10.0% equity interest in 24 domestic franchise restaurants. Additionally, as of June 30, 2020 and June 25, 2019, we owned a 40% equity interest in four non-Texas Roadhouse restaurants 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 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 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 29, 2020. 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 31, 2019.

8

Risks and Uncertainties

The Company is subject to risks and uncertainties as a result of the pandemic. On March 13, 2020, the COVID-19 pandemic was declared a National Public Health Emergency. Shortly after the national emergency declaration, state and local officials began placing restrictions on restaurants, some of which allowed To-Go or curbside service only while others limited capacity in the dining room. By March 31, 2020, the last day of our Q1 2020 fiscal quarter, all of our domestic company and franchise restaurants were under state or local order which only allowed for To-Go or curbside service. Beginning in early May 2020, state and local guidelines began to allow dining rooms to re-open, typically at a limited capacity. By June 30, 2020, the last day of our Q2 2020 fiscal quarter, 499 of our 521 company-owned restaurants had re-opened their dining rooms under various limited capacity restrictions. Our remaining restaurants, with the exception of one that is temporarily closed, are limited to outdoor dining and/or To-Go or curbside service only.

We continue to monitor state and local plans as they move along their phased approach to re-open their economies. We have developed a hybrid operating model that accommodates our limited capacity dining rooms together with enhanced To-Go, which includes a curbside and/or drive-up operating model, as permitted by local guidelines. This includes design changes to our building to better accommodate the increased To-Go sales and the expansion of outdoor seating areas where allowed. We also installed booth partitions in all of our restaurants as an added safety measure for our guests. In addition, we have increased our already strict sanitation requirements, are conducting daily health and temperature checks for all employees before they begin their shift, and are requiring personal protective equipment to be worn by all restaurant employees at all times. As we work through the re-opening phases at each of our locations, the safety of our employees and guests remains our top priority.

As a result of the temporary dining room closures and the subsequent limited capacity restrictions for in-person dining, we have experienced a significant decrease in traffic which has impacted our operating results. While many of our dining rooms have re-opened, the capacity restrictions severely limit the number of guests we can serve. In addition, while we have seen significant sales growth in our To-Go program, even in those stores with dining rooms re-opened, we currently do not expect these sales will generate a similar profit margin and cash flows to our normal operating model. We expect our operating results to continue to be impacted until at least such time that state and local restrictions are lifted, and our dining rooms can re-open at full capacity. We cannot predict how long the pandemic will last, how long it will take until all state and local restrictions will be lifted, or if dining rooms will be required to close again in areas severely impacted by the pandemic. In addition, we cannot predict the overall impact on the economy or consumer spending habits. The extent of this re-opening process will determine the significance of the impact to our financial condition, financial results, and liquidity in future periods. 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

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.  We adopted ASU 2016-13 as of the beginning of our 2020 fiscal year.  The adoption of this standard did not have a significant impact on our condensed consolidated financial statements.

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

9

unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill.  We adopted ASU 2017-04 as of the beginning of our 2020 fiscal year. The adoption of this standard did not have a significant impact on our condensed consolidated financial statements.

Fair Value Measurement

(Accounting Standards Update 2018-13, "ASU 2018-13")

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which changes disclosure requirements for fair value measurements. We adopted ASU 2018-13 as of the beginning of our 2020 fiscal year. The adoption of this standard did not have a significant impact on our condensed consolidated financial statements.

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 removes certain exceptions related to the approach for intraperiod tax allocations, the calculation of income taxes in interim periods, and the recognition of deferred taxes for investments. This guidance also simplifies aspects of accounting for recognizing deferred taxes for taxable goodwill. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 (our 2021 fiscal year) and for interim periods within those years, with early adoption permitted. We are currently assessing the impact of this new standard on our 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 consolidated financial statements.

(3)   Long-term Debt

On August 7, 2017, we entered into the Amended and Restated Credit Agreement (the "Amended Credit Agreement") with respect to our revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A., PNC Bank, N.A., and Wells Fargo Bank, N.A. The revolving credit facility remains an unsecured, revolving credit agreement under which we may borrow up to $200.0 million with the option to increase the revolving credit facility by an additional $200.0 million subject to certain limitations, including approval by the syndicate of lenders. On May 11, 2020, we amended the 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 revolving credit facility. The maturity date for the incremental revolving credit facility is May 10, 2021. The maturity date for the original revolving credit facility remains August 5, 2022.

The terms of the amendment require us to pay interest on outstanding borrowings of the original revolving credit facility at LIBOR plus a margin of 1.50% and to pay a commitment fee of 0.25% per year on any unused portion of the revolving credit facility through the end of our Q1 2021 fiscal quarter. The amendment also provides an Alternate Base Rate that may be substituted for LIBOR. Subsequent to our Q1 2021 fiscal quarter, we are required to pay interest on outstanding borrowings at LIBOR plus a margin of 0.875% to 2.25% and to pay a commitment fee of 0.125% to 0.40% depending on our consolidated net leverage ratio. As of June 30, 2020, we had $190.0 million outstanding on the original revolving credit facility and $1.8 million of availability, net of $8.2 million of outstanding letters of credit. This outstanding amount is included as long-term debt on our condensed consolidated balance sheet.

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The terms of the amendment also require us to pay interest on outstanding borrowings of the incremental revolving credit facility at LIBOR, which is subject to a floor of 1.0%, plus a margin of 2.25% and to pay a commitment fee of 0.50% per year on any unused portion of the incremental revolving credit facility through the maturity date. As of June 30, 2020, we had $