Red Lobster 2016 Annual Report Download - page 45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DARDEN
DARDEN RESTAURANTS, INC. • 2016 ANNUAL REPORT 41
Our fixed-income securities are carried at fair value and consist of
available-for-sale securities related to insurance funding requirements for
our workers’ compensation and general liability claims. As of May 29, 2016,
the cost and market value for our securities that qualify as available-for-sale
was $6.9 million. Earnings include insignificant realized gains and loss from
sales of available-for-sale securities. At May 29, 2016, our available-for-sale
securities of $2.5 million have maturities of less than one year and $4.4 million
have maturities within one to three years.
The carrying value and fair value of long-term debt, as of May 29, 2016,
was $440.0 million and $499.5 million, respectively. The carrying value and
fair value of long-term debt including the amounts included in current liabilities
as of May 31, 2015, was $1.47 billion and $1.57 billion, respectively. The
fair value of long-term debt, which is classified as Level 2 in the fair value
hierarchy, is determined based on market prices or, if market prices are not
available, the present value of the underlying cash flows discounted at our
incremental borrowing rates.
The fair value of non-financial assets measured at fair value on a
non-recurring basis, which is classified as Level 3 in the fair value hierarchy,
is determined based on appraisals or sales prices of comparable assets and
estimates of future cash flows. As of May 29, 2016, long-lived assets held
and used with a carrying value of $5.4 million, primarily related to two
underperforming restaurants, were determined to have no fair value resulting
in an impairment charge of $5.4 million. As of May 31, 2015, long-lived
assets held and used with a carrying value of $70.5 million, primarily related
to restaurant assets involved in sale-leaseback arrangements, were written
down to their fair value of $55.4 million, resulting in an impairment charge
of $15.1 million. As of May 29, 2016, long-lived assets held for sale with
a carrying value of $17.5 million, related to excess land parcels adjacent
to our corporate headquarters, were written down to their fair value of
$16.9 million, resulting in an impairment charge of $0.6 million. As of May 31,
2015, long-lived assets held for sale with a carrying value of $21.1 million,
related to excess land parcels adjacent to our corporate headquarters, were
written down to their fair value of $17.0 million, resulting in an impairment
charge of $4.1 million.
NOTE 10
STOCKHOLDERS’ EQUITY
SHARE REPURCHASE PROGRAM
Repurchased common stock has historically been reflected as a reduction
of stockholders’ equity. On December 16, 2015, our Board of Directors
authorized a new share repurchase program under which we may repurchase
up to $500.0 million of our outstanding common stock. As of May 29, 2016,
$315.6 million remains under this authorization. This repurchase program
does not have an expiration and replaces all other outstanding share
repurchase authorizations.
SHARE RETIREMENTS
As of May 29, 2016, of the 185.0 million cumulative shares repurchased
under the current and previous authorizations, 172.3 million shares were
retired and restored to authorized but unissued shares of common stock.
We expect that all shares of common stock acquired in the future will also
be retired and restored to authorized but unissued shares of common stock.
STOCKHOLDERS’ RIGHTS PLAN
In connection with the announced REIT transaction, our Board approved a
Rights Agreement dated June 23, 2015, to deter any person from acquiring
ownership of more than 9.8 percent of our common stock during the period
leading up to the REIT transaction. Under the Rights Agreement, each share
of our common stock had associated with it one right to purchase one thou-
sandth of a share of our Series A Junior Participating Cumulative Preferred
Stock at a purchase price of $156.26 per share, subject to adjustment under
certain circumstances to prevent dilution. On November 10, 2015, the rights
expired by their terms following completion of the spin-off of Four Corners.
As a result, each share of our common stock is no longer accompanied
by a right. The holders of common stock are not entitled to any payment
as a result of the expiration of the Rights Agreement and the rights
issued thereunder.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The components of accumulated other comprehensive income (loss), net of tax, are as follows:
Foreign Currency Unrealized Gains (Losses) Unrealized Gains (Losses) Benefit Plan Accumulated Other
(in millions) Translation Adjustment on Marketable Securities on Derivatives Funding Position Comprehensive Income (Loss)
Balances at May 25, 2014 $(4.7) $0.1 $(50.4) $(73.1) $(128.1)
Gain (loss) (4.3) — 2.1 3.1 0.9
Reclassification realized in net earnings 7.3 — 29.2 4.1 40.6
Balances at May 31, 2015 $(1.7) $0.1 $(19.1) $(65.9) $ (86.6)
Gain (loss) 0.5 — 2.0 (23.5) (21.0)
Reclassification realized in net earnings — — 21.0 (0.4) 20.6
Balances at May 29, 2016 $(1.2) $0.1 $ 3.9 $(89.8) $ (87.0)