Red Lobster 2004 Annual Report Download - page 42

42
Adoption of New Accounting Standards
In June 2001, the FASB issued SFAS No. 143, “Accounting for
Asset Retirement Obligations.” SFAS No. 143 establishes account-
ing standards for the recognition and measurement of an asset
retirement obligation and its associated asset retirement cost. It
also provides accounting guidance for legal obligations associated
with the retirement of tangible long-lived assets. SFAS No. 143 is
effective for financial statements issued for fiscal years beginning
after June 15, 2002. We adopted SFAS No. 143 in the first quarter of
fiscal 2004. Adoption of SFAS No. 143 did not materially impact
our consolidated financial statements.
In January 2003, the FASB issued Interpretation No. 46,
“Consolidation of Variable Interest Entities, an interpretation of
ARB No. 51.” Interpretation No. 46, which was revised in
December 2003, addresses the consolidation by business enter-
prises of variable interest entities as defined in the Interpretation.
Interpretation No. 46 is effective for interests in structures that
are commonly referred to as special-purpose entities for periods
ending after December 15, 2003. Interpretation No. 46 is also
effective for all other types of variable interest entities for periods
ending after March 15, 2004. We do not have any interests that
would change our current consolidated reporting entity or require
additional disclosures required by Interpretation No. 46.
In April 2003, the FASB issued SFAS No. 149, “Amendment to
Statement 133 on Derivative Instruments and Hedging Activities.”
SFAS No. 149 amends and clarifies the financial accounting and
reporting for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activi-
ties under SFAS No. 133, “Accounting for Derivative Instruments
and Hedging Activities.” This statement is effective for hedging
relationships designated and contracts entered into or modified
after June 30, 2003, except for the provisions that relate to SFAS
No. 133 implementation issues, which will continue to be applied
in accordance with their respective dates. We adopted SFAS No.
149 in the first quarter of fiscal 2004. Adoption of SFAS No. 149
did not materially impact our consolidated financial statements.
In May 2003, the FASB issued SFAS No. 150, “Accounting
for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity.” SFAS No. 150 establishes accounting
standards for the classification and measurement of certain finan-
cial instruments with characteristics of both liabilities and equity.
It requires certain financial instruments that were previously classi-
fied as equity to be classified as assets or liabilities. SFAS No. 150
is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the
first interim period starting after June 15, 2003. We adopted
SFAS No. 150 in the second quarter of fiscal 2004. Adoption
of SFAS No. 150 did not materially impact our consolidated
financial statements.
In December 2003, the FASB revised SFAS No. 132, “Employers’
Disclosures about Pensions and Other Postretirement Benefits.”
SFAS No. 132, as revised, establishes additional disclosures for
defined benefit pension and other postretirement plans. It requires
additional annual disclosures about the assets, obligations, cash
flows, net periodic benefit cost and other quantitative and quali-
tative information regarding defined benefit pension and other
postretirement plans. It also requires quarterly disclosures of the
components of the net periodic benefit cost recognized for each
period presented and significant changes in the estimated amount
of annual contributions previously disclosed for defined benefit
pension and other postretirement plans. The additional disclosure
requirements of SFAS No. 132, as revised, are effective for annual
periods ending after December 15, 2003, and interim periods
beginning after December 15, 2003. We adopted the additional
disclosure requirements of SFAS No. 132 in the fourth quarter
of fiscal 2004. Adoption of the additional disclosure requirements
of SFAS No. 132 did not materially impact our consolidated
financial statements.
ACCOUNTS฀RECEIVABLE
2Our accounts receivable is primarily comprised of
receivables from national storage and distribution com-
panies with which we contract to provide services that
are billed to us on a per-case basis. In connection with
these services, certain of our inventory items are conveyed to these
storage and distribution companies to transfer ownership and risk
of loss prior to delivery of the inventory to our restaurants. We
reacquire these items when the inventory is subsequently delivered
to our restaurants. These transactions do not impact the consolidated
statements of earnings. Receivables from national storage and dis-
tribution companies amounted to $20,276 and $19,628 at May 30,
2004, and May 25, 2003, respectively. The allowance for doubtful
accounts associated with all of our receivables amounted to $350
and $330 at May 30, 2004, and May 25, 2003, respectively.
Notes฀to฀
Consolidated Financial Statements
42
Financial Review 2004