Red Lobster 2010 Annual Report Download - page 51

in any undistributed earnings. This guidance is effective for fiscal years
beginning after December 15, 2008, which required us to adopt these
provisions in fiscal 2010. The adoption of this guidance did not have a
significant impact on our consolidated financial statements.
In December 2008, the FASB issued FSP 132(R)-1, “Employers’
Disclosures about Postretirement Benefit Plan Assets,” which expands the
disclosure requirements about fair value measurements of plan assets for
pension plans, postretirement medical plans, and other funded postretirement
plans. This guidance has been incorporated into the Compensation-Retirement
Benefits Topic of the FASB ASC (Topic 715) and is effective for fiscal years
ending after December 15, 2009, which required us to adopt these provisions
during the fourth quarter of fiscal 2010. The additional disclosures are included
in฀Note฀17฀–฀Retirement฀Plans.฀
In April 2009, the FASB issued FSP SFAS No. 107-1 and Accounting
Principles Board (APB) Opinion No. 28-1, “Interim Disclosures about Fair
Value of Financial Instruments,” which amends SFAS No. 107, “Disclosures
about Fair Value of Financial Instruments” and APB Opinion No. 28, “Interim
Financial Reporting,” to require disclosures about the fair value of instruments
for interim reporting periods. This FSP has been codified into the Financial
Instruments Topic of the FASB ASC, within Subtopic 825-10. This guidance
is effective for interim reporting periods ending after June 15, 2009, which
required us to adopt these provisions during the first quarter of fiscal 2010.
In May 2009, the FASB issued SFAS No. 165, “Subsequent Events,”
which has been incorporated into the Subsequent Events Topic of the FASB
ASC, within Subtopic 855-10. Subtopic 855-10 establishes general stan-
dards of accounting for and disclosing events that occur after the balance
sheet date but before financial statements are issued or are available to be
issued. This guidance is effective for interim and annual periods ending after
June 15, 2009, which required that we adopt these provisions in the first
fiscal quarter of 2010. In February 2010, the FASB issued ASU 2010-09,
“Subsequent฀Events฀(Topic฀855)฀–฀Amendments฀to฀Certain฀Recognition฀and฀
Disclosure Requirements.” This update removes the definition of a public
entity from the ASC and amends disclosure requirements by only requiring
those entities that do not file or furnish financial statements with the Securities
Exchange Commission to disclose the date through which subsequent events
have been evaluated.
In July 2009, the FASB issued SFAS No. 168, “FASB Accounting Standards
Codification,” as the single source of authoritative nongovernmental U.S. GAAP.
As a result, all existing accounting standard documents have been superseded.
All other accounting literature not included in the ASC will be considered
non-authoritative. The ASC did not change GAAP but instead combined all
authoritative guidance into a comprehensive, topically organized structure.
Upon adoption of the ASC, this statement is now codified in FASB ASC Topic
105, “Generally Accepted Accounting Principles.” This statement is effective
for interim and annual periods ending after September 15, 2009, which required
us to adopt this statement during the second fiscal quarter of 2010. The adoption
of this Statement did not impact the consolidated financial statements but does
require that all references to authoritative accounting literature be referenced
in accordance with the FASB ASC.
In January 2010, the FASB issued Accounting Standards Update (ASU)
2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving
Disclosures about Fair Value Measurements, which required additional
disclosure of significant transfers in and out of instruments categorized as
Level 1 and 2 in the Fair Value hierarchy. This update also clarified existing
disclosure requirements by defining the level of disaggregation of instruments
into classes as well as additional disclosure around the valuation techniques
and inputs used to measure fair value. This update is effective for interim and
annual reporting periods beginning after December 15, 2009, which required
us to adopt this update during the fourth quarter of 2010. The additional
disclosures฀are฀included฀in฀Note฀11฀–฀Fair฀Value฀Measurements.
NOTE 2
DISCONTINUED OPERATIONS
During fiscal 2007, we closed nine under-performing Bahama Breeze
restaurants and announced the closure of 54 Smokey Bones and two Rocky
River Grillhouse restaurants, as well as our intention to offer the remaining
73 operating Smokey Bones restaurants for sale. During fiscal 2008, we
closed on the sale of the 73 operating Smokey Bones restaurants to Barbeque
Integrated, Inc., an affiliate of Sun Capital Partners, Inc., a worldwide private
investment firm, for $82.0 million, net of selling costs of approximately
$1.8 million. As a result we recognized a gain on the sale of $18.0 million,
which is included in earnings from discontinued operations for the fiscal year
ended May 25, 2008.
For fiscal 2010, 2009 and 2008, 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 (losses) earnings from discontinued
operations, net of tax (benefit) expense in our consolidated statements of
earnings for all periods presented. (Losses) earnings from discontinued
operations, net of tax (benefit) expense on our accompanying consolidated
statements of earnings are comprised of the following:
Fiscal Year Ended
(in millions)
May 30, 2010 May 31, 2009 May 25, 2008
Sales $ –฀ $฀ ฀–฀ $120.7
(Losses) earnings before income taxes (4.0) 0.6 10.7
Income tax benefit (expense) 1.5 (0.2) (3.0)
Net (losses) earnings from
discontinued operations $(2.5) $0.4 $ 7.7
As of May 30, 2010 and May 31, 2009, we had $11.0 million and
$14.7 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
Accounts receivable is primarily comprised of amounts owed to us from
the sale of gift cards in national retail outlets and 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
DARDEN RESTAURANTS, INC. | 2010 ANNUAL REPORT 49
Notes to Consolidated Financial Statements
Darden