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Three Months Ended | |||||||
(in millions) | August 24, 2014 | August 25, 2013 | |||||
Sales | $ | 400.4 | $ | 627.0 | |||
Earnings before income taxes | 843.2 | 38.7 | |||||
Income tax expense | 320.7 | 10.7 | |||||
Earnings from discontinued operations, net of tax | $ | 522.5 | $ | 28.0 |
(in millions) | August 24, 2014 | May 25, 2014 | |||||
Current assets | $ | — | $ | 241.0 | |||
Land, buildings and equipment, net | 54.3 | 1,084.8 | |||||
Other assets | — | 64.5 | |||||
Total assets | $ | 54.3 | $ | 1,390.3 | |||
Current liabilities | $ | — | $ | 130.6 | |||
Other liabilities | — | 84.9 | |||||
Total liabilities | $ | — | $ | 215.5 |
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Three Months Ended | ||||||||
(in millions) | August 24, 2014 | August 25, 2013 | ||||||
Interest paid, net of amounts capitalized | $ | 54.0 | $ | 9.0 | ||||
Income taxes paid, net of refunds | 10.2 | 19.0 |
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Stock Options Granted | |||||||
Three Months Ended | |||||||
August 24, 2014 | August 25, 2013 | ||||||
Weighted-average fair value | $ | 10.35 | $ | 12.07 | |||
Dividend yield | 4.5 | % | 4.4 | % | |||
Expected volatility of stock | 37.3 | % | 39.6 | % | |||
Risk-free interest rate | 2.1 | % | 1.9 | % | |||
Expected option life (in years) | 6.5 | 6.4 |
(in millions) | Stock Options | Restricted Stock/ Restricted Stock Units | Darden Stock Units | Performance Stock Units | ||||||||
Outstanding beginning of period | 11.2 | 0.2 | 2.1 | 0.3 | ||||||||
Awards granted | 1.0 | — | 0.5 | 0.1 | ||||||||
Awards exercised | (0.2 | ) | — | (0.4 | ) | (0.1 | ) | |||||
Awards forfeited | (0.2 | ) | — | (0.6 | ) | (0.2 | ) | |||||
Performance unit adjustment | — | — | — | 0.4 | ||||||||
Outstanding end of period | 11.8 | 0.2 | 1.6 | 0.5 |
Three Months Ended | ||||||||
(in millions) | August 24, 2014 | August 25, 2013 | ||||||
Stock options | $ | 3.2 | $ | 4.2 | ||||
Restricted stock/restricted stock units | 0.4 | 0.4 | ||||||
Darden stock units | 1.3 | 1.8 | ||||||
Performance stock units | 0.9 | 1.8 | ||||||
Employee stock purchase plan | 0.4 | 0.5 | ||||||
Total stock-based compensation expense | $ | 6.2 | $ | 8.7 |
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(in millions) | Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Marketable Securities | Unrealized Gains (Losses) on Derivatives | Benefit Plan Funding Position | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||
Balance at May 25, 2014 | $ | (4.7 | ) | $ | 0.1 | $ | (50.4 | ) | $ | (73.1 | ) | $ | (128.1 | ) | |||||
Gain (loss) | (1.2 | ) | (0.1 | ) | (2.0 | ) | — | (3.3 | ) | ||||||||||
Reclassification realized in net earnings | 2.7 | — | 25.9 | 0.3 | 28.9 | ||||||||||||||
Balance at August 24, 2014 | $ | (3.2 | ) | $ | — | $ | (26.5 | ) | $ | (72.8 | ) | $ | (102.5 | ) | |||||
Balance at May 26, 2013 | $ | (1.8 | ) | $ | 0.2 | $ | (53.8 | ) | $ | (77.4 | ) | $ | (132.8 | ) | |||||
Gain (loss) | (1.0 | ) | (0.1 | ) | (4.4 | ) | — | (5.5 | ) | ||||||||||
Reclassification realized in net earnings | — | — | 2.3 | 1.6 | 3.9 | ||||||||||||||
Balance at August 25, 2013 | $ | (2.8 | ) | $ | 0.1 | $ | (55.9 | ) | $ | (75.8 | ) | $ | (134.4 | ) |
Amount Reclassified from AOCI into Net Earnings | |||||||||
Three Months Ended | |||||||||
(in millions) AOCI Components | Location of Gain (Loss) Recognized in Earnings | August 24, 2014 | August 25, 2013 | ||||||
Derivatives | |||||||||
Commodity contracts | (1) | $ | — | $ | (0.2 | ) | |||
Equity contracts | (2) | (0.9 | ) | (0.7 | ) | ||||
Interest rate contracts | Interest, net | (40.5 | ) | (2.6 | ) | ||||
Foreign currency contracts | (2) | — | 0.1 | ||||||
Total before tax | $ | (41.4 | ) | $ | (3.4 | ) | |||
Tax benefit | 15.5 | 1.1 | |||||||
Net of tax | $ | (25.9 | ) | $ | (2.3 | ) | |||
Benefit plan funding position | |||||||||
Recognized net actuarial loss - pension/postretirement plans | (3) | $ | (0.6 | ) | $ | (2.3 | ) | ||
Recognized net actuarial loss - other plans | (4) | (0.2 | ) | (0.3 | ) | ||||
Total before tax | $ | (0.8 | ) | $ | (2.6 | ) | |||
Tax benefit | 0.5 | 1.0 | |||||||
Net of tax | $ | (0.3 | ) | $ | (1.6 | ) |
(1) | Primarily included in cost of sales. See Note 9 for additional details. |
(2) | Primarily included in cost of sales and selling, general and administrative expenses. See Note 9 for additional details. |
(3) | Included in the computation of net periodic benefit costs - pension and postretirement plans, which is a component of restaurant labor expenses and selling, general and administrative expenses. See Note 8 for additional details. |
(4) | Included in the computation of net periodic benefit costs - other plans, which is a component of selling, general and administrative expenses. |
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Defined Benefit Plans | ||||||||
Three Months Ended | ||||||||
(in millions) | August 24, 2014 | August 25, 2013 | ||||||
Service cost | $ | 0.2 | $ | 1.1 | ||||
Interest cost | 2.1 | 2.5 | ||||||
Expected return on plan assets | (3.1 | ) | (4.3 | ) | ||||
Recognized net actuarial loss | 0.5 | 2.3 | ||||||
Net periodic benefit cost | $ | (0.3 | ) | $ | 1.6 |
Postretirement Benefit Plan | ||||||||
Three Months Ended | ||||||||
(in millions) | August 24, 2014 | August 25, 2013 | ||||||
Service cost | $ | 0.2 | $ | 0.2 | ||||
Interest cost | 0.4 | 0.3 | ||||||
Recognized net actuarial loss | 0.1 | — | ||||||
Net periodic benefit cost | $ | 0.7 | $ | 0.5 |
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Notional Values | ||||||||
(in millions) | August 24, 2014 | May 25, 2014 | ||||||
Derivative contracts designated as hedging instruments | ||||||||
Commodities | $ | — | $ | 0.9 | ||||
Foreign currency | — | 0.3 | ||||||
Interest rate swaps | 200.0 | 200.0 | ||||||
Equity forwards | 18.0 | 20.6 | ||||||
Derivative contracts not designated as hedging instruments | ||||||||
Equity forwards | $ | 45.1 | $ | 47.4 |
Balance Sheet Location | Derivative Assets | Derivative Liabilities | ||||||||||||||||
(in millions) | August 24, 2014 | May 25, 2014 | August 24, 2014 | May 25, 2014 | ||||||||||||||
Derivative contracts designated as hedging instruments | ||||||||||||||||||
Equity forwards | (1) | 0.5 | — | — | (0.5 | ) | ||||||||||||
Interest rate related | (1) | 2.3 | 1.6 | — | — | |||||||||||||
Foreign currency forwards | (1) | — | 0.1 | — | — | |||||||||||||
$ | 2.8 | $ | 1.7 | $ | — | $ | (0.5 | ) | ||||||||||
Derivative contracts not designated as hedging instruments | ||||||||||||||||||
Equity forwards | (1) | 0.8 | — | — | (1.2 | ) | ||||||||||||
$ | 0.8 | $ | — | $ | — | $ | (1.2 | ) | ||||||||||
Total derivative contracts | $ | 3.6 | $ | 1.7 | $ | — | $ | (1.7 | ) |
(1) | Derivative assets and liabilities are included in receivables, net, prepaid expenses and other current assets and other current liabilities, as applicable, on our consolidated balance sheets. |
(in millions) | Amount of Gain (Loss) Recognized in AOCI (effective portion) | Location of Gain (Loss) Reclassified from AOCI to Earnings | Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) | Location of Gain (Loss) Recognized in Earnings (ineffective portion) | (1) Amount of Gain (Loss) Recognized in Earnings (ineffective portion) | |||||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||
Type of Derivative | August 24, 2014 | August 25, 2013 | August 24, 2014 | August 25, 2013 | August 24, 2014 | August 25, 2013 | ||||||||||||||||||||||
Commodity | $ | — | $ | (0.4 | ) | (2) | $ | — | $ | (0.2 | ) | (2) | $ | — | $ | — | ||||||||||||
Equity | (2.0 | ) | (4.3 | ) | (3) | (0.9 | ) | (0.7 | ) | (3) | 0.3 | 0.3 | ||||||||||||||||
Interest rate | — | — | Interest, net | (40.5 | ) | (2.6 | ) | Interest, net | — | — | ||||||||||||||||||
Foreign currency | — | 0.2 | (4) | — | 0.1 | (4) | — | — | ||||||||||||||||||||
$ | (2.0 | ) | $ | (4.5 | ) | $ | (41.4 | ) | $ | (3.4 | ) | $ | 0.3 | $ | 0.3 |
(1) | Generally, all of our derivative instruments designated as cash flow hedges have some level of ineffectiveness, which is recognized currently in earnings. However, as these amounts are generally nominal and our consolidated financial statements are presented “in millions,” these amounts may appear as zero in this tabular presentation. |
(2) | Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is food and beverage costs and restaurant expenses, which are components of cost of sales. |
(3) | Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is restaurant labor expenses, which is a component of cost of sales, and selling, general and administrative expenses. |
(4) | Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is food and beverage costs, which is a component of cost of sales, and selling, general and administrative expenses. |
(in millions) | Amount of Gain (Loss) Recognized in Earnings on Derivatives | Location of Gain (Loss) Recognized in Earnings on Derivatives | Hedged Item in Fair Value Hedge Relationship | Amount of Gain (Loss) Recognized in Earnings on Related Hedged Item | Location of Gain (Loss) Recognized in Earnings on Related Hedged Item | |||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||
August 24, 2014 | August 25, 2013 | August 24, 2014 | August 25, 2013 | |||||||||||||||||||
Interest rate | $ | 0.7 | $ | (4.9 | ) | Interest, net | Fixed-rate debt | $ | (0.7 | ) | $ | 4.9 | Interest, net |
Location of Gain (Loss) Recognized in Earnings on Derivatives | Amount of Gain (Loss) Recognized in Earnings | |||||||||
Three Months Ended | ||||||||||
August 24, 2014 | August 25, 2013 | |||||||||
(in millions) | ||||||||||
Commodity contracts | Cost of Sales (1) | $ | — | $ | (0.5 | ) | ||||
Equity forwards | Cost of Sales (2) | (0.6 | ) | (1.5 | ) | |||||
Equity forwards | Selling, General and Administrative | (1.8 | ) | (4.0 | ) | |||||
$ | (2.4 | ) | $ | (6.0 | ) |
(1) | Location of the gain (loss) recognized in earnings is food and beverage costs and restaurant expenses, which are components of cost of sales. |
(2) | Location of the gain (loss) recognized in earnings is restaurant labor expenses, which is a component of cost of sales. |
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Items Measured at Fair Value at August 24, 2014 | ||||||||||||||||||
(in millions) | Fair value of assets (liabilities) | Quoted prices in active market for identical assets (liabilities) (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||
Fixed-income securities: | ||||||||||||||||||
Corporate bonds | (1 | ) | $ | 5.6 | $ | — | $ | 5.6 | $ | — | ||||||||
U.S. Treasury securities | (2 | ) | 5.1 | 5.1 | — | — | ||||||||||||
Mortgage-backed securities | (1 | ) | 2.6 | — | 2.6 | — | ||||||||||||
Derivatives: | ||||||||||||||||||
Equity forwards | (3 | ) | 1.3 | — | 1.3 | — | ||||||||||||
Interest rate swaps | (4 | ) | 2.3 | — | 2.3 | — | ||||||||||||
Foreign currency forwards | (5 | ) | — | — | — | — | ||||||||||||
Total | $ | 16.9 | $ | 5.1 | $ | 11.8 | $ | — |
Items Measured at Fair Value at May 25, 2014 | ||||||||||||||||||
(in millions) | Fair value of assets (liabilities) | Quoted prices in active market for identical assets (liabilities) (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||
Fixed-income securities: | ||||||||||||||||||
Corporate bonds | (1 | ) | $ | 9.7 | $ | — | $ | 9.7 | $ | — | ||||||||
U.S. Treasury securities | (2 | ) | 6.1 | 6.1 | — | — | ||||||||||||
Mortgage-backed securities | (1 | ) | 2.6 | — | 2.6 | — | ||||||||||||
Derivatives: | ||||||||||||||||||
Equity forwards | (3 | ) | (1.7 | ) | — | (1.7 | ) | — | ||||||||||
Interest rate locks & swaps | (4 | ) | 1.6 | — | 1.6 | — | ||||||||||||
Foreign currency forwards | (5 | ) | 0.1 | — | 0.1 | — | ||||||||||||
Total | $ | 18.4 | $ | 6.1 | $ | 12.3 | $ | — |
(1) | The fair value of these securities is based on closing market prices of the investments when applicable, or, alternatively, valuations utilizing market data and other observable inputs, inclusive of the risk of nonperformance. |
(2) | The fair value of our U.S. Treasury securities is based on closing market prices. |
(3) | The fair value of our equity forwards is based on the closing market value of Darden stock, inclusive of the risk of nonperformance. |
(4) | The fair value of our interest rate lock and swap agreements is based on current and expected market interest rates, inclusive of the risk of nonperformance. |
(5) | The fair value of our foreign currency forward contracts is based on closing forward exchange market prices, inclusive of the risk of nonperformance. |
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(in millions) | September 2013 Plan | January 2014 Plan | May 2014 Plan | Payments | Adjustments | Balance at August 24, 2014 | ||||||||||||||||||
Employee termination benefits (1) | $ | 7.7 | $ | 0.7 | $ | 5.0 | $ | (8.0 | ) | $ | (0.6 | ) | $ | 4.8 | ||||||||||
Other | 0.8 | 0.1 | 0.2 | (0.7 | ) | (0.2 | ) | 0.2 | ||||||||||||||||
Total | $ | 8.5 | $ | 0.8 | $ | 5.2 | $ | (8.7 | ) | $ | (0.8 | ) | $ | 5.0 |
(1) | Excludes costs associated with stock options and restricted stock that will be settled in shares upon vesting. |
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Three Months Ended | |||||||
(in millions) | August 24, 2014 | August 25, 2013 | |||||
Sales | $ | 400.4 | $ | 627.0 | |||
Earnings before income taxes | 843.2 | 38.7 | |||||
Income tax expense | 320.7 | 10.7 | |||||
Earnings from discontinued operations, net of tax | $ | 522.5 | $ | 28.0 |
(in millions) | August 24, 2014 | May 25, 2014 | |||||
Current assets | $ | — | $ | 241.0 | |||
Land, buildings and equipment, net | 54.3 | 1,084.8 | |||||
Other assets | — | 64.5 | |||||
Total assets | $ | 54.3 | $ | 1,390.3 | |||
Current liabilities | $ | — | $ | 130.6 | |||
Other liabilities | — | 84.9 | |||||
Total liabilities | $ | — | $ | 215.5 |
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Three Months Ended | ||||||||
(in millions) | August 24, 2014 | August 25, 2013 | ||||||
Interest paid, net of amounts capitalized | $ | 54.0 | $ | 9.0 | ||||
Income taxes paid, net of refunds | 10.2 | 19.0 |
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Stock Options Granted | |||||||
Three Months Ended | |||||||
August 24, 2014 | August 25, 2013 | ||||||
Weighted-average fair value | $ | 10.35 | $ | 12.07 | |||
Dividend yield | 4.5 | % | 4.4 | % | |||
Expected volatility of stock | 37.3 | % | 39.6 | % | |||
Risk-free interest rate | 2.1 | % | 1.9 | % | |||
Expected option life (in years) | 6.5 | 6.4 |
(in millions) | Stock Options | Restricted Stock/ Restricted Stock Units | Darden Stock Units | Performance Stock Units | ||||||||
Outstanding beginning of period | 11.2 | 0.2 | 2.1 | 0.3 | ||||||||
Awards granted | 1.0 | — | 0.5 | 0.1 | ||||||||
Awards exercised | (0.2 | ) | — | (0.4 | ) | (0.1 | ) | |||||
Awards forfeited | (0.2 | ) | — | (0.6 | ) | (0.2 | ) | |||||
Performance unit adjustment | — | — | — | 0.4 | ||||||||
Outstanding end of period | 11.8 | 0.2 | 1.6 | 0.5 |
Three Months Ended | ||||||||
(in millions) | August 24, 2014 | August 25, 2013 | ||||||
Stock options | $ | 3.2 | $ | 4.2 | ||||
Restricted stock/restricted stock units | 0.4 | 0.4 | ||||||
Darden stock units | 1.3 | 1.8 | ||||||
Performance stock units | 0.9 | 1.8 | ||||||
Employee stock purchase plan | 0.4 | 0.5 | ||||||
Total stock-based compensation expense | $ | 6.2 | $ | 8.7 |
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(in millions) | Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Marketable Securities | Unrealized Gains (Losses) on Derivatives | Benefit Plan Funding Position | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||
Balance at May 25, 2014 | $ | (4.7 | ) | $ | 0.1 | $ | (50.4 | ) | $ | (73.1 | ) | $ | (128.1 | ) | |||||
Gain (loss) | (1.2 | ) | (0.1 | ) | (2.0 | ) | — | (3.3 | ) | ||||||||||
Reclassification realized in net earnings | 2.7 | — | 25.9 | 0.3 | 28.9 | ||||||||||||||
Balance at August 24, 2014 | $ | (3.2 | ) | $ | — | $ | (26.5 | ) | $ | (72.8 | ) | $ | (102.5 | ) | |||||
Balance at May 26, 2013 | $ | (1.8 | ) | $ | 0.2 | $ | (53.8 | ) | $ | (77.4 | ) | $ | (132.8 | ) | |||||
Gain (loss) | (1.0 | ) | (0.1 | ) | (4.4 | ) | — | (5.5 | ) | ||||||||||
Reclassification realized in net earnings | — | — | 2.3 | 1.6 | 3.9 | ||||||||||||||
Balance at August 25, 2013 | $ | (2.8 | ) | $ | 0.1 | $ | (55.9 | ) | $ | (75.8 | ) | $ | (134.4 | ) |
Amount Reclassified from AOCI into Net Earnings | |||||||||
Three Months Ended | |||||||||
(in millions) AOCI Components | Location of Gain (Loss) Recognized in Earnings | August 24, 2014 | August 25, 2013 | ||||||
Derivatives | |||||||||
Commodity contracts | (1) | $ | — | $ | (0.2 | ) | |||
Equity contracts | (2) | (0.9 | ) | (0.7 | ) | ||||
Interest rate contracts | Interest, net | (40.5 | ) | (2.6 | ) | ||||
Foreign currency contracts | (2) | — | 0.1 | ||||||
Total before tax | $ | (41.4 | ) | $ | (3.4 | ) | |||
Tax benefit | 15.5 | 1.1 | |||||||
Net of tax | $ | (25.9 | ) | $ | (2.3 | ) | |||
Benefit plan funding position | |||||||||
Recognized net actuarial loss - pension/postretirement plans | (3) | $ | (0.6 | ) | $ | (2.3 | ) | ||
Recognized net actuarial loss - other plans | (4) | (0.2 | ) | (0.3 | ) | ||||
Total before tax | $ | (0.8 | ) | $ | (2.6 | ) | |||
Tax benefit | 0.5 | 1.0 | |||||||
Net of tax | $ | (0.3 | ) | $ | (1.6 | ) |
(1) | Primarily included in cost of sales. See Note 9 for additional details. |
(2) | Primarily included in cost of sales and selling, general and administrative expenses. See Note 9 for additional details. |
(3) | Included in the computation of net periodic benefit costs - pension and postretirement plans, which is a component of restaurant labor expenses and selling, general and administrative expenses. See Note 8 for additional details. |
(4) | Included in the computation of net periodic benefit costs - other plans, which is a component of selling, general and administrative expenses. |
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Defined Benefit Plans | ||||||||
Three Months Ended | ||||||||
(in millions) | August 24, 2014 | August 25, 2013 | ||||||
Service cost | $ | 0.2 | $ | 1.1 | ||||
Interest cost | 2.1 | 2.5 | ||||||
Expected return on plan assets | (3.1 | ) | (4.3 | ) | ||||
Recognized net actuarial loss | 0.5 | 2.3 | ||||||
Net periodic benefit cost | $ | (0.3 | ) | $ | 1.6 |
Postretirement Benefit Plan | ||||||||
Three Months Ended | ||||||||
(in millions) | August 24, 2014 | August 25, 2013 | ||||||
Service cost | $ | 0.2 | $ | 0.2 | ||||
Interest cost | 0.4 | 0.3 | ||||||
Recognized net actuarial loss | 0.1 | — | ||||||
Net periodic benefit cost | $ | 0.7 | $ | 0.5 |
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Notional Values | ||||||||
(in millions) | August 24, 2014 | May 25, 2014 | ||||||
Derivative contracts designated as hedging instruments | ||||||||
Commodities | $ | — | $ | 0.9 | ||||
Foreign currency | — | 0.3 | ||||||
Interest rate swaps | 200.0 | 200.0 | ||||||
Equity forwards | 18.0 | 20.6 | ||||||
Derivative contracts not designated as hedging instruments | ||||||||
Equity forwards | $ | 45.1 | $ | 47.4 |
Balance Sheet Location | Derivative Assets | Derivative Liabilities | ||||||||||||||||
(in millions) | August 24, 2014 | May 25, 2014 | August 24, 2014 | May 25, 2014 | ||||||||||||||
Derivative contracts designated as hedging instruments | ||||||||||||||||||
Equity forwards | (1) | 0.5 | — | — | (0.5 | ) | ||||||||||||
Interest rate related | (1) | 2.3 | 1.6 | — | — | |||||||||||||
Foreign currency forwards | (1) | — | 0.1 | — | — | |||||||||||||
$ | 2.8 | $ | 1.7 | $ | — | $ | (0.5 | ) | ||||||||||
Derivative contracts not designated as hedging instruments | ||||||||||||||||||
Equity forwards | (1) | 0.8 | — | — | (1.2 | ) | ||||||||||||
$ | 0.8 | $ | — | $ | — | $ | (1.2 | ) | ||||||||||
Total derivative contracts | $ | 3.6 | $ | 1.7 | $ | — | $ | (1.7 | ) |
(1) | Derivative assets and liabilities are included in receivables, net, prepaid expenses and other current assets and other current liabilities, as applicable, on our consolidated balance sheets. |
(in millions) | Amount of Gain (Loss) Recognized in AOCI (effective portion) | Location of Gain (Loss) Reclassified from AOCI to Earnings | Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) | Location of Gain (Loss) Recognized in Earnings (ineffective portion) | (1) Amount of Gain (Loss) Recognized in Earnings (ineffective portion) | |||||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||
Type of Derivative | August 24, 2014 | August 25, 2013 | August 24, 2014 | August 25, 2013 | August 24, 2014 | August 25, 2013 | ||||||||||||||||||||||
Commodity | $ | — | $ | (0.4 | ) | (2) | $ | — | $ | (0.2 | ) | (2) | $ | — | $ | — | ||||||||||||
Equity | (2.0 | ) | (4.3 | ) | (3) | (0.9 | ) | (0.7 | ) | (3) | 0.3 | 0.3 | ||||||||||||||||
Interest rate | — | — | Interest, net | (40.5 | ) | (2.6 | ) | Interest, net | — | — | ||||||||||||||||||
Foreign currency | — | 0.2 | (4) | — | 0.1 | (4) | — | — | ||||||||||||||||||||
$ | (2.0 | ) | $ | (4.5 | ) | $ | (41.4 | ) | $ | (3.4 | ) | $ | 0.3 | $ | 0.3 |
(1) | Generally, all of our derivative instruments designated as cash flow hedges have some level of ineffectiveness, which is recognized currently in earnings. However, as these amounts are generally nominal and our consolidated financial statements are presented “in millions,” these amounts may appear as zero in this tabular presentation. |
(2) | Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is food and beverage costs and restaurant expenses, which are components of cost of sales. |
(3) | Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is restaurant labor expenses, which is a component of cost of sales, and selling, general and administrative expenses. |
(4) | Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is food and beverage costs, which is a component of cost of sales, and selling, general and administrative expenses. |
(in millions) | Amount of Gain (Loss) Recognized in Earnings on Derivatives | Location of Gain (Loss) Recognized in Earnings on Derivatives | Hedged Item in Fair Value Hedge Relationship | Amount of Gain (Loss) Recognized in Earnings on Related Hedged Item | Location of Gain (Loss) Recognized in Earnings on Related Hedged Item | |||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||
August 24, 2014 | August 25, 2013 | August 24, 2014 | August 25, 2013 | |||||||||||||||||||
Interest rate | $ | 0.7 | $ | (4.9 | ) | Interest, net | Fixed-rate debt | $ | (0.7 | ) | $ | 4.9 | Interest, net |
Location of Gain (Loss) Recognized in Earnings on Derivatives | Amount of Gain (Loss) Recognized in Earnings | |||||||||
Three Months Ended | ||||||||||
August 24, 2014 | August 25, 2013 | |||||||||
(in millions) | ||||||||||
Commodity contracts | Cost of Sales (1) | $ | — | $ | (0.5 | ) | ||||
Equity forwards | Cost of Sales (2) | (0.6 | ) | (1.5 | ) | |||||
Equity forwards | Selling, General and Administrative | (1.8 | ) | (4.0 | ) | |||||
$ | (2.4 | ) | $ | (6.0 | ) |
(1) | Location of the gain (loss) recognized in earnings is food and beverage costs and restaurant expenses, which are components of cost of sales. |
(2) | Location of the gain (loss) recognized in earnings is restaurant labor expenses, which is a component of cost of sales. |
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Items Measured at Fair Value at August 24, 2014 | ||||||||||||||||||
(in millions) | Fair value of assets (liabilities) | Quoted prices in active market for identical assets (liabilities) (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||
Fixed-income securities: | ||||||||||||||||||
Corporate bonds | (1 | ) | $ | 5.6 | $ | — | $ | 5.6 | $ | — | ||||||||
U.S. Treasury securities | (2 | ) | 5.1 | 5.1 | — | — | ||||||||||||
Mortgage-backed securities | (1 | ) | 2.6 | — | 2.6 | — | ||||||||||||
Derivatives: | ||||||||||||||||||
Equity forwards | (3 | ) | 1.3 | — | 1.3 | — | ||||||||||||
Interest rate swaps | (4 | ) | 2.3 | — | 2.3 | — | ||||||||||||
Foreign currency forwards | (5 | ) | — | — | — | — | ||||||||||||
Total | $ | 16.9 | $ | 5.1 | $ | 11.8 | $ | — |
Items Measured at Fair Value at May 25, 2014 | ||||||||||||||||||
(in millions) | Fair value of assets (liabilities) | Quoted prices in active market for identical assets (liabilities) (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||
Fixed-income securities: | ||||||||||||||||||
Corporate bonds | (1 | ) | $ | 9.7 | $ | — | $ | 9.7 | $ | — | ||||||||
U.S. Treasury securities | (2 | ) | 6.1 | 6.1 | — | — | ||||||||||||
Mortgage-backed securities | (1 | ) | 2.6 | — | 2.6 | — | ||||||||||||
Derivatives: | ||||||||||||||||||
Equity forwards | (3 | ) | (1.7 | ) | — | (1.7 | ) | — | ||||||||||
Interest rate locks & swaps | (4 | ) | 1.6 | — | 1.6 | — | ||||||||||||
Foreign currency forwards | (5 | ) | 0.1 | — | 0.1 | — | ||||||||||||
Total | $ | 18.4 | $ | 6.1 | $ | 12.3 | $ | — |
(1) | The fair value of these securities is based on closing market prices of the investments when applicable, or, alternatively, valuations utilizing market data and other observable inputs, inclusive of the risk of nonperformance. |
(2) | The fair value of our U.S. Treasury securities is based on closing market prices. |
(3) | The fair value of our equity forwards is based on the closing market value of Darden stock, inclusive of the risk of nonperformance. |
(4) | The fair value of our interest rate lock and swap agreements is based on current and expected market interest rates, inclusive of the risk of nonperformance. |
(5) | The fair value of our foreign currency forward contracts is based on closing forward exchange market prices, inclusive of the risk of nonperformance. |
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(in millions) | September 2013 Plan | January 2014 Plan | May 2014 Plan | Payments | Adjustments | Balance at August 24, 2014 | ||||||||||||||||||
Employee termination benefits (1) | $ | 7.7 | $ | 0.7 | $ | 5.0 | $ | (8.0 | ) | $ | (0.6 | ) | $ | 4.8 | ||||||||||
Other | 0.8 | 0.1 | 0.2 | (0.7 | ) | (0.2 | ) | 0.2 | ||||||||||||||||
Total | $ | 8.5 | $ | 0.8 | $ | 5.2 | $ | (8.7 | ) | $ | (0.8 | ) | $ | 5.0 |
(1) | Excludes costs associated with stock options and restricted stock that will be settled in shares upon vesting. |
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