Red Lobster 1999 Annual Report Download - page 14

Notes
to Consolidated Financial Statements
35
The tax effects of temporary differences that give rise to
deferred tax assets and liabilities are as follows:
May 30, May 31,
1999 1998
Accrued liabilities $ 14,042)$ 14,004)
Compensation and
employee benefits 43,784)39,575)
Asset disposition liabilities 24,701)32,104)
Operating loss and tax credit
carryforwards 1,900)8,461)
Net assets held for disposal 1,339)2,074)
Other 1,989)2,090)
Gross deferred tax assets 87,755)98,308)
Buildings and equipment (58,026) (68,405)
Prepaid pension asset (15,779) (14,979)
Prepaid interest (4,379) (4,696)
Deferred rent and interest income (10,194)
Other (5,801) (2,685)
Gross deferred tax liabilities (94,179) (90,765)
Net deferred tax asset (liability) $ (6,424) $ 7,543)
A valuation allowance for deferred tax assets is provided
when it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Realization is
dependent upon the generation of future taxable income
or the reversal of deferred tax liabilities during the periods
in which those temporary differences become deductible.
Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income
and tax planning strategies in making this assessment.
As of May 30, 1999, and May 31, 1998, no valuation
allowance has been recognized in the accompanying
consolidated financial statements for the deferred tax
assets because the Company believes that sufficient
projected future taxable income will be generated to fully
utilize the benefits of these deductible amounts.
NOTE 5 – LAND, BUILDINGS AND EQUIPMENT
The components of land, buildings and equipment are
as follows:
May 30, May 31,
1999 1998
Land $ 387,050)$ 382,999)
Buildings 1,344,625)1,320,388)
Equipment 647,687)634,626)
Construction in progress 38,859)30,418)
Total land, buildings and equipment 2,418,221)2,368,431)
Less accumulated depreciation (944,686) (878,083)
Net land, buildings and equipment $1,473,535)$1,490,348)
NOTE 6 – OTHER ASSETS
The components of other assets are as follows:
May 30, May 31,
1999 1998
Prepaid pension $ 41,253 $ 39,160
Prepaid interest and loan costs 22,391 24,781
Liquor licenses 17,657 18,140
Intangible assets 10,504 9,459
Prepaid equipment maintenance 6,565
Miscellaneous 6,018 5,313
Total other assets $104,388 $ 96,853
NOTE 7 – SHORT-TERM DEBT
Short-term debt at May 30, 1999, and May 31, 1998,
consisted of $23,500 and $75,100 of unsecured
commercial paper borrowings with original maturities
of one month or less, and interest rates ranging from
5.05 percent to 5.80 percent, and 5.65 percent to
5.81 percent, respectively.
NOTE 8 – LONG-TERM DEBT
The components of long-term debt are as follows:
May 30, May 31,
1999 1998
10-year notes and 20-year
debentures as described below $250,000)$250,000)
ESOP loan with variable rate of
interest (5.31 percent at May 30,
1999), due December 31, 2018 60,200)62,000)
Other 7,546)24)
Total long-term debt 317,746)312,024)
Less issuance discount (1,295) (1,416)
Total long-term debt less
issuance discount 316,451)310,608)
Less current portion (2,386) (5)
Long-term debt, excluding
current portion $314,065)$310,603)
In January 1996, the Company issued $150,000 of
unsecured 6.375 percent notes due in February 2006
and $100,000 of unsecured 7.125 percent debentures
due in February 2016. The proceeds from the issuance
were used to refinance commercial paper borrowings.
Concurrent with the issuance of the notes and deben-
tures, the Company terminated, and settled for cash,
interest-rate swap agreements with notional amounts
totaling $200,000, which hedged the movement of interest