Red Lobster 2009 Annual Report Download - page 54

52 Darden Restaurants, Inc. 2009 Annual Report
Notes to Consolidated Financial Statements
For fiscal 2009, 2008 and 2007, all gains and losses on disposition,
impairment charges and disposal costs, along with the sales, costs
and expenses and income taxes attributable to these restaurants have
been aggregated to a single caption entitled earnings (losses) from
discontinued operations, net of tax in our consolidated statements of
earnings for all periods presented. Earnings (losses) from discontin-
ued operations, net of tax expense (benefit) on our accompanying
consolidated statements of earnings are comprised of the following:
Fiscal Year Ended
May 31, May 25, May 27,
(In millions) 2009 2008 2007
Sales $ – $120.7 $ 357.9
Earnings (losses) before income taxes $ 0.6 $ 10.7 $(288.6)
Income tax (expense) benefit (0.2) (3.0) 112.9
Net earnings (losses) from
discontinued operations $ 0.4 $ 7.7 $(175.7)
As of May 31, 2009 and May 25, 2008, we had $14.7 million and
$25.3 million, respectively, of assets associated with the closed
restaurants reported as discontinued operations, which are included in
land, buildings and equipment, net on the accompanying consolidated
balance sheets.
NOTE 3
receiVaBleS, net
Our accounts receivable is primarily comprised of receivables from
national storage and distribution companies 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 distribu-
tion companies amounted to $10.4 million and $21.5 million at May 31,
2009 and May 25, 2008, respectively. In addition, at the end of fiscal
2008, a vendor owed us $18.0 million as part of an advance payment
on a service agreement, which was included in accounts receivable and
was collected in fiscal 2009. The amount earned each period, related
to the advance vendor payment, is being reflected as a reduction to
restaurant expenses. The allowance for doubtful accounts associated
with all of our receivables amounted to $3.6 million at May 31, 2009
and May 25, 2008.
NOTE 4
aSSet imPairment, net
During fiscal 2009 we recorded $12.0 million of long-lived asset
impairment charges primarily related to the write-down of assets to
be disposed of, the permanent closure of one LongHorn Steakhouse
and the write-down of another LongHorn Steakhouse based on an
evaluation of expected cash flows. During fiscal 2008 we recorded no
long-lived asset impairment charges. During fiscal 2007, we recorded
$2.6 million of long-lived asset impairment charges primarily related
to the permanent closure of one Red Lobster and one Olive Garden
restaurant. During fiscal 2007, we also recorded $0.2 million of gains
related to the sale of previously impaired restaurants. These costs are
included in asset impairment, net as a component of earnings from
continuing operations in the accompanying consolidated statements
of earnings for fiscal 2009, 2008 and 2007. Impairment charges
were measured based on the amount by which the carrying amount
of these assets exceeded their fair value. Fair value is generally
determined based on appraisals or sales prices of comparable assets
and estimates of future cash flows.
The results of operations for all Red Lobster, Olive Garden and
LongHorn restaurants permanently closed in fiscal 2009, 2008 and
2007 that would otherwise have met the criteria for discontinued
operations reporting are not material to our consolidated financial
position, results of operations or cash flows and, therefore, have not
been presented as discontinued operations.
NOTE 5
lanD, BuilDingS anD eQuiPment, net
The components of land, buildings and equipment, net, are as follows:
May 31, May 25,
(In millions) 2009 2008
Land $ 769.1 $ 751.8
Buildings 3,078.8 2,846.4
Equipment 1,302.8 1,187.2
Assets under capital leases 68.6 68.6
Construction in progress 209.8 137.7
Total land, buildings and equipment 5,429.1 4,991.7
Less accumulated depreciation and amortization (2,116.5) (1,923.4)
Less depreciation associated with assets under
capital leases (5.9) (2.3)
Land, buildings and equipment, net $ 3,306.7 $ 3,066.0