Red Lobster 2012 Annual Report Download - page 44

Notes to Consolidated Financial Statements
Darden
40 Darden Restaurants, Inc. 2012 Annual Report
RECEIVABLES, NET
Receivables, net of the allowance for doubtful accounts, represent their estimated
net realizable value. Provisions for doubtful accounts are recorded based on
historical collection experience and the age of the receivables. Receivables are
written฀off฀when฀they฀are฀deemed฀uncollectible.฀See฀Note฀3฀–฀Receivables,฀Net฀
for additional information.
INVENTORIES
Inventories consist of food and beverages and are valued at the lower of weighted-
average cost or market.
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
comprehensive 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฀infor-
mation. 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) 2012 2011 2010
Depreciation and amortization on
buildings and equipment $340.6 $308.7 $293.2
Losses on disposal of land,
buildings and equipment 7.1 6.9 0.3
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 27, 2012 May 29, 2011
Capitalized software $ 84.3 $ 79.9
Accumulated amortization (63.4) (56.1)
Capitalized software, net of
accumulated amortization $ 20.9 $ 23.8
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) and Eddie V’s acquisitions 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 and Eddie V’s acquisitions 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 27, 2012 May 29, 2011
Other definite-lived intangibles $13.2 $11.1
Accumulated amortization (6.2) (5.6)
Other definite-lived intangible assets,
net of accumulated amortization $ 7.0 $ 5.5
(in millions) May 27, 2012 May 29, 2011
Below-market leases $24.0 $25.3
Accumulated amortization (7.1) (8.6)
Below-market leases, net of
accumulated amortization $16.9 $16.7
(in millions) May 27, 2012 May 29, 2011
Above-market leases $(8.6) $(8.4)
Accumulated amortization 2.3 1.8
Above-market leases, net of
accumulated amortization $(6.3) $(6.6)