Red Lobster 2014 Annual Report Download - page 37

Notes to Consolidated Financial Statements
Darden
2014 Annual Report 35
NOTE 4
ASSET IMPAIRMENTS, NET
During fiscal 2014, 2013 and 2012, we recognized long-lived asset
impairment charges of $18.3 million ($11.3 million net of tax), $0.7 million
($0.4 million net of tax) and $0.2 million ($0.1 million net of tax), respectively.
Impairment charges resulted primarily from the carrying value of restaurant
assets exceeding the estimated fair market value, which is based on projected
cash flows. These costs are included in asset impairments, net as a compo-
nent of earnings from continuing operations in the accompanying consolidated
statements of earnings for fiscal 2014, 2013 and 2012. 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.
NOTE 5
LAND, BUILDINGS AND EQUIPMENT, NET
The components of land, buildings and equipment, net, are as follows:
(in millions) May 25, 2014 May 26, 2013
Land $ 659.7 $ 888.1
Buildings 3,234.5 4,474.5
Equipment 1,378.4 1,860.9
Assets under capital leases 69.5 67.7
Construction in progress 89.1 149.7
Total land, buildings and equipment $ 5,431.2 $ 7,440.9
Less accumulated depreciation
and amortization (2,027.0) (3,030.2)
Less amortization associated with
assets under capital leases (23.2) (19.6)
Land, buildings and equipment, net $ 3,381.0 $ 4,391.1
NOTE 6
WORKFORCE REDUCTION
During fiscal 2014, we performed comprehensive reviews of our operations and support structure resulting in changes in our growth plans and related support
structure needs. As a result, we had workforce reductions and program spending cuts in September 2013 (September 2013 Plan), January 2014 (January 2014
Plan) and May 2014 (May 2014 Plan). In accordance with these actions, we incurred employee termination benefits costs and other costs which are
included in selling, general and administrative expenses in our consolidated statements of earnings as follows:
Fiscal Year
(in millions) 2014
Employee termination benefits (1) $17.2
Other (2) 0.9
Total $18.1
(1) Includes salary and stock-based compensation expense.
(2) Includes postemployment medical, outplacement and relocation costs.
The following table summarizes the accrued employee termination benefits and other costs which are primarily included in other current liabilities on our
consolidated balance sheet as of May 25, 2014:
September January May Balance at
(in millions) 2013 Plan 2014 Plan 2014 Plan Payments Adjustments May 25, 2014
Employee termination benefits (1) $7.7 $0.7 $5.0 $(4.9) $(0.3) $8.2
Other 0.8 0.1 0.2 (0.5) (0.2) 0.4
Total $8.5 $0.8 $5.2 $(5.4) $(0.5) $8.6
(1) Excludes costs associated with stock options and restricted stock that will be settled in shares upon vesting.
We expect the majority of the remaining liability to be paid by the first quarter of fiscal 2015 and the remainder to be paid by the first quarter of fiscal 2016.
NOTE 7
SHORT-TERM DEBT
As of May 25, 2014, amounts outstanding as short-term debt, which consist of unsecured commercial paper borrowings, bearing an interest rate of
0.80 percent, were $207.6 million. As of May 26, 2013, amounts outstanding as short-term debt, which consist of unsecured commercial paper borrowings,
bearing an interest rate of 0.20 percent, were $164.5 million.