Red Lobster 2004 Annual Report Download - page 43

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Notes฀to฀
Consolidated Financial Statements
RESTRUCTURING฀AND฀ASSET฀IMPAIRMENT฀ACTIVITIES
3During fiscal 2004, we recorded pre-tax asset impair-
ment charges of $36,526 for long-lived asset impair-
ments associated with the closing of six Bahama Breeze
restaurants and the write-down of the carrying value of
four other Bahama Breeze restaurants, one Olive Garden restaurant,
and one Red Lobster restaurant, which continued to operate. We
also recorded a restructuring charge of $1,112 primarily related
to severance payments made to certain restaurant employees and
exit costs associated with the closing of the six Bahama Breeze res-
taurants in accordance with SFAS No. 146, “Accounting for Costs
Associated with Exit or Disposal Activities.” Below is a summary of
the restructuring costs and the remaining liability for fiscal 2004:
฀ ฀ ฀ ฀ Balance฀at฀ ฀ ฀ Balance฀at฀฀
฀ ฀ ฀ ฀ May฀25,฀2003฀ Additions฀ Utilizations฀ ฀May฀30,฀2004
One-time฀฀
฀ termination฀benefits฀ $฀฀฀–฀ $฀฀฀433฀ $(384)฀ $฀฀฀49
Lease฀termination฀฀
฀ costs฀ –฀ 113฀ (113)฀ –
Other฀exit฀costs฀ –฀ 566฀ (255)฀ 311
฀ ฀ ฀ ฀ $฀฀฀–฀ $1,112฀ $(752)฀ $360
Asset impairment charges related to the decision to relocate
or rebuild certain restaurants amounted to $5,667 and $4,876
in fiscal 2004 and 2003, respectively. Asset impairment credits
related to assets sold that were previously impaired amounted to
$1,437 and $594 in fiscal 2004 and 2003, respectively. All impair-
ment amounts are included in asset impairment and restructuring
charges (credits) in the consolidated statements of earnings.
During fiscal 2003 and fiscal 2002, we recognized restructur-
ing credits of $358 and $2,568, respectively, resulting from lease
terminations completed on more favorable terms than previously
anticipated from our fiscal 1997 restructuring action. All restaurant
closings and other activities under this restructuring action were
completed as of May 25, 2003.
LAND,฀BUILDINGS,฀AND฀EQUIPMENT
4The components of land, buildings, and equipment are
as follows:
฀฀฀฀ ฀ May฀30,฀฀ May฀25,
฀฀฀฀ ฀ 2004฀ 2003
Land฀ ฀ $฀฀฀฀฀฀545,191฀ $฀฀฀฀฀505,444
Buildings฀ ฀ 2,138,376฀ 1,898,716
Equipment฀ ฀ 1,008,133฀ 922,592
Construction฀in฀progress฀ ฀ 87,655฀ 195,078
Total฀land,฀buildings,฀and฀equipment฀฀ 3,779,355฀ 3,521,830
Less฀accumulated฀depreciation฀ ฀ (1,528,739)฀ (1,364,698)
Net฀land,฀buildings,฀and฀equipment฀ ฀ $฀฀2,250,616฀ $฀฀2,157,132
OTHER฀ASSETS
5The components of other assets are as follows:
฀฀฀฀ ฀ May฀30,฀฀ May฀25,
฀฀฀฀ ฀ 2004฀ 2003
Prepaid฀pension฀costs฀ ฀ $฀฀฀67,077฀ $฀฀฀68,873
Trust-owned฀life฀insurance฀ ฀ 40,422฀ 34,316
Capitalized฀software฀costs,฀net฀ ฀ 32,328฀ 34,055
Liquor฀licenses฀ ฀ 22,201฀ 21,219
Prepaid฀interest฀and฀loan฀costs฀ ฀ 12,396฀ 14,863
Miscellaneous฀ ฀ 9,001฀ 8,546
Total฀other฀assets฀ ฀ $183,425฀ $181,872
SHORT-TERM฀DEBT
6Short-term debt at May 30, 2004, and May 25, 2003,
consisted of $14,500 and $0, respectively, of unsecured
commercial paper borrowings with original maturities
of one month or less. The debt bore an interest rate of
1.09 percent at May 30, 2004.
43
Financial Review 2004