Darden Restaurants (DRI) Completes Testing for Impairment of Intangible Assets for Q2
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Darden Restaurants, Inc. (NYSE: DRI) reported that it had completed its testing for impairment of intangible assets for the second quarter ended November 23, 2008, concluding there was no impairment to the Company's intangible assets, including goodwill. The Company had previously announced in its December 18, 2008 press release that it was performing impairment testing for its intangible assets, including goodwill, in accordance with Statement of Financial Accounting Standards (SFAS) No. 142.
The Company conducts an annual impairment test of goodwill and other intangible assets during the fourth quarter of each fiscal year. Given the uncertainty surrounding the global economy and stock price volatility generally, and volatility in the Company's stock price in particular, the Company conducted an impairment test of its goodwill and other intangible assets at the end of the second quarter.
On November 23, 2008, the Company had $520 million and $455 million of goodwill and other intangible assets, respectively, related primarily to LongHorn Steakhouse and The Capital Grille concepts. Based on the results of the test, no write-downs or impairment charges were required at that time in relation to the goodwill and other intangible assets.
Although the Company determined that its goodwill and other intangible assets were not impaired for the second quarter ended November 23, 2008, the estimate of fair value is an integral part of the impairment determination and is sensitive to the judgments and assumptions established by management. As such, factors including a decline in the market value of the Company as well as the market value of others in the restaurant industry, declines in sales at the Company's restaurants beyond current forecasts, increases in the cost of capital and significant adverse changes in the restaurant industry operating environment could result in a future impairment charge.
Darden Restaurants, Inc. (Darden) operates in the full-service dining segment of the restaurant industry, primarily in the United States. [SM]
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