Red Lobster 2011 Annual Report Download - page 50

Notes to Consolidated Financial Statements
Darden
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Darden Restaurants, Inc.
48
MARKETABLE SECURITIES
Available-for-sale securities are carried at fair value. Classification of marketable
securities as current or noncurrent is dependent upon management’s intended
holding period, the security’s maturity date, or both. Unrealized gains and losses, net
of tax, on available-for-sale securities are carried in accumulated other comprehen-
sive income (loss) within the consolidated financial statements and are reclassified
into earnings when the securities mature or are sold.
LAND, BUILDINGS AND EQUIPMENT, NET
Land, buildings and equipment are recorded at cost less accumulated depreciation.
Building components are depreciated over estimated useful lives ranging from
7 to 40 years using the straight-line method. Leasehold improvements, which are
reflected on our consolidated balance sheets as a component of buildings in land,
buildings and equipment, net, are amortized over the lesser of the expected lease
term, including cancelable option periods, or the estimated useful lives of the related
assets using the straight-line method. Equipment is depreciated over estimated
useful lives ranging from 2 to 10 years also using the straight-line method. See
Note฀5฀—฀Land,฀Buildings฀and฀Equipment,฀Net฀for฀additional฀information.฀Gains฀and฀
losses on the disposal of land, buildings and equipment are included in selling,
general and administrative expenses in our accompanying consolidated statements
of earnings. Depreciation and amortization expense from continuing operations
associated with buildings and equipment and losses on disposal of land, buildings
and equipment were as follows:
Fiscal Year
(in millions)
2011 2010 2009
Depreciation and amortization on
buildings and equipment $308.7 $293.2 $273.2
Losses on disposal of land,
buildings and equipment 6.9 0.3 1.1
CAPITALIZED SOFTWARE COSTS AND
OTHER DEFINITE-LIVED INTANGIBLES
Capitalized software, which is a component of other assets, is recorded at cost
less accumulated amortization. Capitalized software is amortized using the
straight-line method over estimated useful lives ranging from 3 to 10 years.
The cost of capitalized software and related accumulated amortization was
as follows:
(in millions)
May 29, 2011 May 30, 2010
Capitalized software $ 79.9 $ 72.9
Accumulated amortization (56.1) (49.3)
Capitalized software, net of
accumulated amortization $ 23.8 $ 23.6
We have other definite-lived intangible assets, including assets related to the
value of below-market leases, which were acquired as part of the RARE Hospitality
International, Inc. (RARE) acquisition and are included as a component of other
assets on our consolidated balance sheets. We also have definite-lived intangible
liabilities related to the value of above-market leases, which were acquired as part
of the RARE acquisition and are included in other liabilities on our consolidated
balance sheets. Definite-lived intangibles are amortized on a straight-line basis
over estimated useful lives of 1 to 20 years. The cost and related accumulated
amortization was as follows:
(in millions)
May 29, 2011 May 30, 2010
Other definite-lived intangibles $ 11.1 $10.6
Accumulated amortization (5.6) (5.1)
Other definite-lived intangible assets,
net of accumulated amortization $ 5.5 $ 5.5
(in millions)
May 29, 2011 May 30, 2010
Below-market leases $25.3 $25.3
Accumulated amortization (8.6) (6.4)
Below market-leases, net of
accumulated amortization $16.7 $18.9
(in millions)
May 29, 2011 May 30, 2010
Above-market leases $(8.4) $(8.4)
Accumulated amortization 1. 8 1.3
Above-market leases, net of
accumulated amortization $(6.6) $(7.1)
Amortization expense associated with capitalized software and other
definite-lived intangibles included in depreciation and amortization in our
accompanying consolidated statements of earnings was as follows:
Fiscal Year
(in millions)
2011 2010 2009
Amortization฀expense฀—฀
capitalized software $7.7 $7.3 $8.4
Amortization฀expense฀—฀
other definite-lived intangibles 0.4 0.4 1.5
Amortization expense associated with above- and below-market leases
included in restaurant expenses as a component of rent expense on our
consolidated statements of earnings was as follows:
Fiscal Year
(in millions)
2011 2010 2009
Restaurant฀expense฀—
below-market leases $ 2.2 $ 2.6 $ 2.3
Restaurant฀expense฀—
above-market leases (0.5) (0.5) (0.5)
Amortization of capitalized software and other definite-lived intangible
assets will be approximately $10.4 million annually for fiscal 2012 through 2016.