Red Lobster 2010 Annual Report Download - page 58

The following table summarizes the fair values of non-financial assets measured at fair value on a non-recurring basis at May 30, 2010:
Items Measured at Fair Value
Fair Value Quoted Prices in Active Market Significant Other Significant
of Assets at for Identical Assets (Liabilities) Observable Inputs Unobservable Inputs
(in millions) May 30, 2010 (Level 1) (Level 2) (Level 3)
Long-lived assets held for disposal (1) $13.3 $ – $ – $13.3
Long-lived assets held and used (2) 1.6 – – 1.6
Total $14.9 $ – $ – $14.9
(1) In accordance with the provisions of ASC Topic 360, long-lived assets held for disposal with a carrying amount of $17.6 were written down to their fair value of $13.3 million, resulting in an
impairment charge of $4.3 million, of which $3.2 was included in earnings from continuing operations and $1.1 million was included in losses from discontinued operations.
(2) In accordance with the provisions of ASC Topic 360, long-lived assets held and used with a carrying amount of $2.9 million were written down to their fair value of $1.6 million, resulting in an
impairment charge of $1.3 million, which was included in earnings from continuing operations.
56 DARDEN RESTAURANTS, INC. | 2010 ANNUAL REPORT
Notes to Consolidated Financial Statements
Darden
NOTE 12
FINANCIAL INSTRUMENTS
Marketable securities are carried at fair value and consist of $31.7 million
of available-for-sale securities related to insurance funding requirements for
our workers compensation and general liability claims. The following table
summarizes cost and market value for our securities that qualify as available-
for-sale as of May 30, 2010:
Gross Gross
Unrealized Unrealized Market
(in millions) Cost Gains Losses Value
Available-for-sale฀securities฀ $31.3฀ $0.4฀ $฀ –฀ $31.7
Earnings include insignificant realized gains and loss from sales
of available-for-sale securities. At May 30, 2010, the scheduled maturities
of our available-for-sale securities are as follows:
(in millions) Cost Market Value
Less than 1 year $ 3.5 $ 3.5
1 to 3 years 20.3 20.5
3 to 5 years 7.5 7.7
Total $31.3 $31.7
NOTE 13
STOCKHOLDERS’ EQUITY
TREASURY STOCK
On June 16, 2006, our Board of Directors authorized an additional share
repurchase authorization totaling 25.0 million shares in addition to the previous
authorization of 137.4 million shares, bringing our total authorizations to
162.4 million. In fiscal 2010, 2009 and 2008, we purchased treasury stock
totaling $85.1 million, $144.9 million and $159.4 million, respectively. At
May 30, 2010, a total of 154.1 million shares had been repurchased under
the authorizations. The repurchased common stock is reflected as a reduction
of stockholders’ equity.
STOCK PURCHASE/LOAN PROGRAM
We have share ownership guidelines for our officers. To assist them in meeting
these guidelines, we implemented the 1998 Stock Purchase/Option Award
Loan Program (Loan Program) in conjunction with our Stock Option and Long-
Term Incentive Plan of 1995. The Loan Program provided loans to our officers
and awarded two options for every new share purchased, up to a maximum
total share value equal to a designated percentage of the officer’s base
compensation. Loans are full recourse and interest bearing, with a maximum
principal amount of 75 percent of the value of the stock purchased. The stock
purchased is held on deposit with us until the loan is repaid. The interest rate
for loans under the Loan Program is fixed and is equal to the applicable federal
rate for mid-term loans with semi-annual compounding for the month in which the
loan originates. Interest is payable on a weekly basis. Loan principal is payable
in installments with 25 percent, 25 percent and 50 percent of the total loan
due at the end of the fifth, sixth and seventh years of the loan, respectively.
Effective July 30, 2002, and in compliance with the Sarbanes-Oxley Act of
2002, we no longer issue new loans under the Loan Program. As of May 30,
2010, there were no loans outstanding under the Loan Program.
STOCKHOLDERS’ RIGHTS PLAN
Under our Rights Agreement dated May 16, 2005, each share of our common
stock has associated with it one right to purchase one-thousandth of a share
of our Series A Participating Cumulative Preferred Stock at a purchase price
of $120 per share, subject to adjustment under certain circumstances to
prevent dilution. The rights are exercisable when, and are not transferable
apart from our common stock until, a person or group has acquired 15 percent
or more, or makes a tender offer for 15 percent or more, of our common stock.
If the specified percentage of our common stock is then acquired, each right
will entitle the holder (other than the acquiring company) to receive, upon
exercise, common stock of either us or the acquiring company having a value
equal to two times the exercise price of the right. The rights are redeemable by
our Board of Directors under certain circumstances and expire on May 25, 2015.