Red Lobster 2008 Annual Report Download - page 70

Notes to Consolidated Financial Statements
66 DARDEN RESTAURANTS, INC.
NOTE 17
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, that have been frozen, for a group of
salaried employees in the United States, in which benefits are
based on various formulas that include years of service and
compensation factors; and for a group of hourly employees
in the United States, in which a fixed level of benefits is pro-
vided. Pension plan assets are primarily invested in U.S., inter-
national 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 2008, 2007 and 2006, we funded the defined benefit
pension plans in the amounts of $0.5 million, $0.5 million and
$0.3 million, respectively. We expect to contribute approximately
$0.4 million to our defined benefit pension plans during fiscal
2009. During fiscal 2008, 2007 and 2006, we funded the
postretirement benefit plan in the amounts of $1.2 million,
$0.8 million and $0.4 million, respectively. We expect to
contribute approximately $0.6 million to our postretirement
benefit plan during fiscal 2009.
Effective May 27, 2007, we implemented the recognition
and measurement provisions of SFAS No. 158, “Employers’
Accounting for Defined Benefit Pension and Other Postretire-
ment Plans (an amendment of FASB Statements No. 87, 88,
106 and 132R).” 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 measurement
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 unrecognized prior service costs and actuarial gains and
losses to be recognized as a component of accumulated other
comprehensive income (loss).
The following provides a reconciliation of the changes in the plan benefit obligation, fair value of plan assets and the funded
status of the plans as of February 29, 2008 and February 28, 2007 (in accordance with the provisions of SFAS No. 158, we will be
required to value our plan assets and funded status as of the end of our fiscal year starting in fiscal 2009 and the adoption of the
requirement is considered to have minimal impact on our financial condition):
Defined Benefit Plans Postretirement Benefit Plan
(in millions) 2008 2007 2008 2007
Change in Benefit Obligation:
Benefit obligation at beginning of period $ 177.7 $ 168.3 $ 20.1 $ 17.7
Service cost 6.1 6.0 0.7 0.7
Interest cost 9.7 9.0 1.2 1.0
Plan amendments 0.7 – – (0.3)
Participant contributions – – 0.4 0.2
Benefits paid (8.6) (7.2) (1.4) (0.8)
Actuarial (gain) loss (15.9) 1.6 4.7 1.6
Benefit obligation at end of period $ 169.7 $ 177.7 $ 25.7 $ 20.1
Change in Plan Assets:
Fair value at beginning of period $ 189.7 $ 175.3 $ – $ –
Actual return on plan assets 10.2 21.2 – –
Employer contributions 0.4 0.4 1.0 0.6
Participant contributions – – 0.4 0.2
Benefits paid (8.6) (7.2) (1.4) (0.8)
Fair value at end of period $ 191.7 $ 189.7 $ – $ –
Reconciliation of the Plan’s Funded Status:
Funded status at end of period $ 22.0 $ 12.0 $ (25.7) $ (20.1)
Contributions for March to May 0.1 0.1 0.3 0.2
Prepaid (accrued) benefit costs $ 22.1 $ 12.1 $ (25.4) $ (19.9)