Red Lobster 2007 Annual Report Download - page 52

50 Darden Restaurants, Inc. Annual Report 2007
Notes to Consolidated Financial Statements
N
Note16
Retirement Plans
Defined Benefit Plans and Postretirement
Benefit Plan
Substantially all of our employees are eligible to participate in a
retirement plan. We sponsor non-contributory defined benefit
pension plans for our salaried employees, in which benefits are
based on various formulas that include years of service and
compensation factors and for a group of hourly employees, in
which a fixed level of benefits is provided. Pension plan assets are
primarily invested in U.S., international and private equities, long
duration fixed-income securities and real assets. Our 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.
We also sponsor a contributory postretirement benefit plan that
provides health care benefits to our salaried retirees. During fiscal
2007, 2006 and 2005, we funded the defined benefit pension plans
in the amount of $0.5 million, $0.3 million and $0.1 million, respec-
tively. We expect to contribute approximately $0.4 million to our
defined benefit pension plans during fiscal 2008. During fiscal
2007, 2006 and 2005, we funded the postretirement benefit plan
in the amount of $0.8 million, $0.4 million and $0.5 million, respec-
tively. We expect to contribute approximately $0.4 million to our
postretirement benefit plan during fiscal 2008.
Effective May 27, 2007, we implemented the recognition and
measurement provisions of SFAS No. 158. The purpose of SFAS No.
158 is to improve the overall financial statement presentation of
pension and other postretirement plans, but SFAS No. 158 does not
impact the determination of net periodic benefit cost or measure-
ment of plan assets or obligations. SFAS No. 158 requires companies
to recognize the over or under-funded status of the plan as an asset
or liability as measured by the difference between the fair value of
the plan assets and the benefit obligation and requires any unrecog-
nized prior service costs and actuarial gains and losses to be recog-
nized as a component of accumulated other comprehensive
income (loss).
The following table illustrates the incremental effect of the
adoption of SFAS No. 158 on individual financial statement captions in
our accompanying consolidated balance sheet as of May 27, 2007.
Before Application SFAS No. 158 After Application
(in millions) of SFAS No. 158 Adjustments of SFAS No. 158
Other assets $ 185.8 $ (34.8) $ 151.0
Total assets 2,915.6 (34.8) 2,880.8
Other liabilities $ 50.8 $ 16.6 $ 67.4
Deferred income taxes 45.4 (19.6) 25.8
Total liabilities 1,789.3 (3.0) 1,786.3
Accumulated other comprehensive
income (loss) (1.0) (31.8) (32.8)
Total stockholders’ equity $1,126.3 $ (31.8) $1,094.5
The effect of the adoption of SFAS No. 158 on our consolidated
financial statements was primarily attributable to our defined
benefit pension plans and our postretirement health plan.
However, we also accrue for postemployment severance costs
in accordance with SFAS No. 112, “Employers’ Accounting for
Postemployment Benefits – an amendment of FASB statements
No. 5 and 43,” and use guidance found in SFAS No. 106, “Employers’
Accounting for Postretirement Benefits Other Than Pensions,” to
measure the cost recognized in our consolidated financial state-
ments. As a result, we used the provisions of SFAS No. 158 to reclas-
sify the unrecognized actuarial gains and losses related to our
postemployment severance accrual from liabilities to a compo-
nent of other accumulated comprehensive income (loss).
Accordingly, of the $31.8 million adjustment to accumulated other
comprehensive income (loss) noted above, $24.8 million related to
our defined benefit pension and postretirement health plans,
while the remaining $7.0 million related to our postemployment
severance accrual.