Red Lobster 2013 Annual Report Download - page 50

Notes to Consolidated Financial Statements
Darden
46 Darden Restaurants, Inc. 2013 Annual Report
NOTE 2
DISCONTINUED OPERATIONS
For fiscal 2013, 2012 and 2011, all gains and losses on disposition, impairment
charges and disposal costs related to the closure and disposition of Smokey Bones
and Rocky River Grillhouse restaurants and closure of nine Bahama Breeze restau-
rants in fiscal 2007 and 2008 have been aggregated to a single caption entitled
losses from discontinued operations, net of tax benefit in our consolidated
statements of earnings and are comprised of the following:
Fiscal Year
(in millions) 2013 2012 2011
Sales $ – $– $–
Losses before income taxes (1.1) (1.7) (3.9)
Income tax benefit 0.4 0.7 1.5
Net losses from discontinued operations $(0.7) $(1.0) $(2.4)
As of May 26, 2013 and May 27, 2012, we had $3.1 million and $5.6 million,
respectively, of assets associated with the closed restaurants reported as discon-
tinued operations, which are included in land, buildings and equipment, net on
the accompanying consolidated balance sheets.
NOTE 3
RECEIVABLES, NET
Receivables, net are primarily comprised of amounts owed to us from the sale of
gift cards in national retail outlets, allowances due from landlords based on lease
terms 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 transac-
tions do not impact the consolidated statements of earnings. Receivables from
the sale of gift cards in national retail outlets, landlord allowances, national stor-
age and distribution companies and our overall allowance for doubtful accounts
are as follows:
(in millions) May 26, 2013 May 27, 2012
Retail outlet gift card sales $37.5 $33.4
Landlord allowances due 26.5 9.4
Storage and distribution 5.8 6.5
Allowance for doubtful accounts (0.3) (0.3)
NOTE 4
ASSET IMPAIRMENTS
During fiscal 2013, we recognized long-lived asset impairment charges of
$0.8 million ($0.5 million net of tax), primarily related to the write-down of
assets held for disposition based on updated valuations. During fiscal 2012,
we recognized long-lived asset impairment charges of $0.5 million ($0.3 million
net of tax), primarily related to the permanent closure of one Red Lobster
restaurant, and the write-down of assets held for disposition based on updated
valuations. During fiscal 2011 we recognized long-lived asset impairment
charges of $4.7 million ($2.9 million net of tax), primarily related to the permanent
closure of two Red Lobster restaurants, the write-down of another Red Lobster
restaurant based on an evaluation of expected cash flows, and the write-down
of assets held for disposition based on updated valuations. These costs are
included in selling, general and administrative expenses as a component of
earnings from continuing operations in the accompanying consolidated state-
ments of earnings for fiscal 2013, 2012 and 2011. 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 restaurants permanently closed in fiscal 2013,
2012 and 2011 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:
(in millions) May 26, 2013 May 27, 2012
Land $ 888.1 $ 854.1
Buildings 4,474.5 3,959.7
Equipment 1,860.9 1,701.2
Assets under capital leases 67.7 68.1
Construction in progress 149.7 142.5
Total land, buildings and equipment $ 7,440.9 $ 6,725.6
Less accumulated depreciation and amortization (3,030.2) (2,758.3)
Less amortization associated with assets
under capital leases (19.6) (16.0)
Land, buildings and equipment, net $ 4,391.1 $ 3,951.3