Red Lobster 2001 Annual Report Download - page 33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Asset impairment charges of $12,000 included in
the beginning 2000 restructuring liability have been
reclassified to reduce the carrying value of land for all
periods presented. This reclassification related to asset
impairment charges recorded in 1997 for long-lived
assets associated with Canadian restaurants.
NOTE 4
INCOME TAXES
The components of earnings before income taxes and
the provision for income taxes thereon are as follows:
Fiscal Year
2001 2000 1999
Earnings before
income taxes:
U.S. $296,160 $269,802 $212,585
Canada 5,058 4,105 3,290
Earnings before
income taxes $301,218 $273,907 $215,875
Income taxes:
Current:
Federal $ 79,285 $ 61,528 $ 53,621
State and local 13,049 10,861 7,577
Canada 134 204 172
Total current 92,468 72,593 61,370
Deferred
(principally U.S.) 11,750 24,609 13,967
Total income taxes $104,218 $ 97,202 $ 75,337
During 2001, 2000, and 1999, Darden paid income
taxes of $63,893, $53,688, and $34,790, respectively.
The following table is a reconciliation of the U.S.
statutory income tax rate to the effective income tax
rate included in the accompanying consolidated state-
ments of earnings:
Fiscal Year
2001 2000 1999
U.S. statutory rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal tax benefits 3.1 3.3 3.3
Benefit of federal income
tax credits (4.1) (3.9) (4.5)
Other, net 0.6 1.1 1.1
Effective income tax rate 34.6% 35.5% 34.9%
The tax effects of temporary differences that give
rise to deferred tax assets and liabilities are as follows:
May 27, 2001 May 28, 2000
Accrued liabilities $ 14,899 $ 15,836
Compensation and
employee benefits 50,902 48,310
Asset disposition and
restructuring liabilities 5,306 7,616
Net assets held for disposal 937 1,837
Other 2,436 2,210
Gross deferred tax assets 74,480 75,809
Buildings and equipment (73,578) (64,071)
Prepaid pension asset (17,376) (16,406)
Prepaid interest (3,812) (4,161)
Deferred rent and interest income (13,474) (14,560)
Intangibles (5,840) (4,497)
Other (3,182) (3,146)
Gross deferred tax liabilities (117,262) (106,841)
Net deferred tax liabilities $ (42,782) $ (31,032)
A valuation allowance for deferred tax assets is pro-
vided when it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Realization
is dependent upon the generation of future taxable income
or the reversal of deferred tax liabilities during the periods
in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment. As of
May 27, 2001, and May 28, 2000, no valuation
allowance has been recognized in the accompanying
consolidated financial statements for the deferred tax
assets because the Company believes that sufficient
projected future taxable income will be generated to
fully utilize the benefits of these deductible amounts.
NOTE 5
LAND, BUILDINGS, AND EQUIPMENT
The components of land, buildings, and equipment are
as follows:
May 27, 2001 May 28, 2000
Land $ 426,171 $ 409,069
Buildings 1,562,107 1,425,557
Equipment 759,812 680,178
Construction in progress 128,976 75,027
Total land, buildings, and equipment 2,877,066 2,589,831
Less accumulated depreciation (1,097,551) (1,011,290)
Net land, buildings, and equipment $ 1,779,515 $ 1,578,541
31
2001
DARDEN RESTAURANTS