Red Lobster 2016 Annual Report Download - page 34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DARDEN
30
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 peri-
ods, 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 15 years also using the straight-line method. See Note 5 for additional
information. Gains and losses on the disposal of land, buildings and equipment
are included in impairments and disposal of assets, net, while the write-off
of undepreciated book value associated with the replacement of equipment
in the normal course of business is recorded as a component of restaurant
expenses in our accompanying consolidated statements of earnings.
Depreciation and amortization expense from continuing operations associated
with buildings and equipment and losses on replacement of equipment were
as follows:
Fiscal Year
(in millions) 2016 2015 2014
Depreciation and amortization
on buildings and equipment $274.4 $305.0 $296.3
Losses on replacement of equipment 5.5 5.5 4.4
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:
May 29, May 31,
(in millions) 2016 2015
Capitalized software $169.7 $148.0
Accumulated amortization (93.1) (80.4)
Capitalized software, net of
accumulated amortization $ 76.6 $ 67.6
We have other definite-lived intangible assets, including assets related
to the value of below-market leases resulting from our acquisitions that 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 resulting from our acquisitions that 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:
May 29, May 31,
(in millions) 2016 2015
Other definite-lived intangibles $ 14.2 $ 15.1
Accumulated amortization (7.3) (7.3)
Other definite-lived intangible assets,
net of accumulated amortization $ 6.9 $ 7.8
Below-market leases $ 29.2 $ 29.2
Accumulated amortization (13.3) (11.5)
Below-market leases, net of
accumulated amortization $ 15.9 $ 17.7
Above-market leases $(21.4) $(21.4)
Accumulated amortization 8.3 6.4
Above-market leases, net of
accumulated amortization $(13.1) $(15.0)
Amortization expense from continuing operations 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) 2016 2015 2014
Amortization expense –
capitalized software $14.9 $13.3 $7.0
Amortization expense –
other definite-lived intangibles 0.9 1.0 1.1
Amortization expense from continuing operations associated with
above- and-below-market leases included in restaurant expenses as a
component of rent expense in our consolidated statements of earnings was
as follows:
Fiscal Year
(in millions) 2016 2015 2014
Restaurant expense –
below-market leases $ 1.8 $ 1.8 $ 1.8
Restaurant expense –
above-market leases (1.4) (1.4) (1.4)
Amortization of capitalized software and other definite-lived intangible
assets will be approximately $17.6 million annually for fiscal 2017
through 2021.