Red Lobster 2002 Annual Report Download - page 41

DARDEN RESTAURANTS
This is the Bottom Line
During fiscal 2002, 2001, and 2000, the Company paid income
taxes of $56,839, $63,893, and $53,688, 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 statements of earnings:
Fiscal Year
2002 2001 2000
U.S. statutory rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal tax benefits 3.1 3.1 3.3
Benefit of federal income
tax credits (3.9) (4.1) (3.9)
Other, net 0.4 0.6 1.1
Effective income tax rate 34.6% 34.6% 35.5%
The tax effects of temporary differences that give rise to
deferred tax assets and liabilities are as follows:
May 26, May 27,
2002 2001
Accrued liabilities $ 19,052 $ 14,899
Compensation and
employee benefits 52,804 50,902
Asset disposition and
restructuring liabilities 2,283 5,306
Net assets held for disposal 301 937
Other 2,392 2,436
Gross deferred tax assets $ 76,832 $ 74,480
Buildings and equipment (93,752) (73,578)
Prepaid pension costs (18,096) (17,376)
Prepaid interest (3,478) (3,812)
Deferred rent and interest income (12,496) (13,474)
Capitalized software and other assets (12,127) (5,840)
Other (2,465) (3,182)
Gross deferred tax liabilities $(142,414) $(117,262)
Net deferred tax liabilities $ (65,582) $ (42,782)
A valuation allowance for deferred tax assets is provided
when it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Realization is depend-
ent upon the generation of future taxable income or the rever-
sal of deferred tax liabilities during the periods in which those
temporary differences become deductible. Management con-
siders the scheduled reversal of deferred tax liabilities, pro-
jected future taxable income, and tax planning strategies in
making this assessment. As of May 26, 2002, and May 27,
2001, no valuation allowance has been recognized for
deferred tax assets because the Company believes that suffi-
cient projected future taxable income will be generated to
fully utilize the benefits of these deductible amounts.
NOTE 14 RETIREMENT PLANS
Defined Benefit Plans and Post-Retirement
Benefit Plan
Substantially all of the Company’s employees are eligible to
participate in a retirement plan. The Company sponsors non-
contributory defined benefit pension plans for its salaried
employees, in which benefits are based on various formulas
that include years of service and compensation factors, and a
group of hourly employees, in which a frozen level of benefits
is provided. The Company’s policy is to fund, at a minimum, the
amount necessary on an actuarial basis to provide for benefits in
accordance with the requirements of the Employee Retirement
Income Security Act of 1974, as amended. The Company also
sponsors a contributory post-retirement benefit plan that pro-
vides health care benefits to its salaried retirees.
Notes to Consolidated Financial Statements
Great Food and Beverage 38 Produce Great Results in 2002