0000940944-15-000079.txt : 20151113 0000940944-15-000079.hdr.sgml : 20151113 20151113164351 ACCESSION NUMBER: 0000940944-15-000079 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20151109 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20151113 DATE AS OF CHANGE: 20151113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DARDEN RESTAURANTS INC CENTRAL INDEX KEY: 0000940944 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 593305930 STATE OF INCORPORATION: FL FISCAL YEAR END: 0529 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13666 FILM NUMBER: 151229747 BUSINESS ADDRESS: STREET 1: 1000 DARDEN CENTER DRIVE CITY: ORLANDO STATE: FL ZIP: 32837 BUSINESS PHONE: 4072454000 MAIL ADDRESS: STREET 1: 1000 DARDEN CENTER DRIVE CITY: ORLANDO STATE: FL ZIP: 32837 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL MILLS RESTAURANTS INC DATE OF NAME CHANGE: 19950313 8-K 1 drispinproforma8-k.htm FORM 8-K 8-K



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report: November 9, 2015
(Date of earliest event reported)

DARDEN RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)

Commission File Number: 1-13666
 
 
 
 
Florida
 
59-3305930
(State or other jurisdiction of incorporation)
 
(IRS Employer Identification No.)

1000 Darden Center Drive, Orlando, Florida 32837
(Address of principal executive offices, including zip code)

(407) 245-4000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 2.01.
Completion of Acquisition or Disposition of Assets.

As previously announced, on November 9, 2015, Darden Restaurants, Inc. (the “Company”) completed the spin-off of select real estate and restaurant assets into Four Corners Property Trust, Inc. (“FCPT”). The Company effected the spin-off by distributing one share of FCPT common stock for every three shares of the Company’s common stock held of record as of November 2, 2015, the record date for the spin-off. No fractional FCPT shares were distributed in connection with the spin-off, with a cash payment instead being made in lieu of any fractional shares. In connection with the completion of the spin-off, unaudited pro forma consolidated financial information of the Company is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 5.03.
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On November 10, 2015, the Company filed articles of amendment to its articles of incorporation with the State of Florida which eliminated from the Company’s articles of incorporation all matters set forth in the articles of incorporation with respect to the Series A Junior Participating Preferred Stock, without par value (the “Series A Junior Participating Preferred Stock”), of the Company. No shares of the Series A Junior Participating Preferred Stock were issued and outstanding at the time of the filing of the articles of amendment. A copy of the articles of amendment is filed as Exhibit 3.1 to this report and incorporated herein by reference.

Item 9.01.
Financial Statements and Exhibits.

(b)     Pro forma financial information.

Unaudited pro forma consolidated financial information of the Company giving effect to the spin-off of FCPT and related transactions, and the related notes thereto, required by Article 11 of Regulation S-X is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

(d)    Exhibits.

Exhibit
Number
 
Description
3.1
 
Articles of Amendment to the Articles of Incorporation, as amended, of Darden Restaurants, Inc. filed November 10, 2015.
99.1
 
Unaudited Pro Forma Consolidated Financial Information of Darden Restaurants, Inc.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
DARDEN RESTAURANTS, INC.
 
 
 
 
By:
/s/ Jeffrey A. Davis
 
 
Jeffrey A. Davis
Date: November 13, 2015
 
Senior Vice President and Chief Financial Officer









EXHIBIT INDEX

Exhibit
Number
 
Description of Exhibit
3.1
 
Articles of Amendment to the Articles of Incorporation, as amended, of Darden Restaurants, Inc. filed November 10, 2015.
99.1
 
Unaudited Pro Forma Consolidated Financial Information of Darden Restaurants, Inc.



 EX-3.1 2 ex31articles.htm EXHIBIT 3.1 Exhibit
Exhibit 3.1

ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION, AS AMENDED,
OF
DARDEN RESTAURANTS, INC.
DELETING THE AUTHORIZATION FOR THE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
OF DARDEN RESTAURANTS, INC.

Pursuant to the provisions of Section 607.1002 of the Florida Business Corporation Act, the undersigned corporation hereby submits the following amendment for the purpose of deleting the authorization for its Series A Junior Participating Preferred Stock:
1.    The name of the corporation is Darden Restaurants, Inc. (the “Corporation”).
2.    The amendment to the Articles of Incorporation, as amended, of the Corporation adopted by the Board of Directors of the Corporation is as follows:
The Articles of Incorporation, as amended, of the Corporation are amended to delete the authorization for the Series A Junior Participating Preferred Stock of the Corporation previously established as a series of its Preferred Stock, thereby deleting Section 4 of Article III in its entirety.
3.    No shares of the Series A Junior Participating Preferred Stock of the Corporation have been issued.
4.    This amendment was duly adopted by the Board of Directors of the Corporation on October 20, 2015 without shareholder action, which action was not required pursuant to Section 607.1002(5) of the Florida Business Corporation Act.

[signature page follows]

1


IN WITNESS WHEREOF, the Corporation has caused the foregoing Articles of Amendment to the Corporation’s Articles of Incorporation, as amended, to be executed in its name by the undersigned, thereunto duly authorized, on November 10, 2015.
DARDEN RESTAURANTS, INC.
By:     /s/ Anthony G. Morrow    
Name: Anthony G. Morrow
Title: Corporate Secretary

2

 EX-99.1 3 dri-spinproformafs.htm PRO FORMA FINANCIALS Exhibit

EXHIBIT 99.1

DARDEN RESTAURANTS, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

On November 9, 2015, Darden Restaurants, Inc. (“Darden”) completed the pro rata distribution (the “Spin-Off”) to our shareholders of all of the outstanding shares of common stock of Four Corners Property Trust, Inc. (“Four Corners”). Unless the context otherwise requires, any references to “we”, “our” and “us” refers to Darden and its consolidated subsidiaries.
The following unaudited pro forma consolidated financial statements, prepared in accordance with Article 11 of Regulation S-X, present our unaudited pro forma consolidated balance sheet as of August 30, 2015 and our unaudited pro forma consolidated statements of earnings for the three months ended August 30, 2015 and the year ended May 31, 2015.
The unaudited pro forma consolidated financial statements have been derived by the application of pro forma adjustments to our historical financial statements. The unaudited pro forma consolidated financial statements give effect to events that are (1) directly attributable to the transactions referred to below, (2) factually supportable, and (3) with respect to the statements of earnings, expected to have a continuing impact on us. The adjustments necessary to fairly present the unaudited pro forma consolidated financial statements have been based on available information and assumptions that we believe are reasonable. The adjustments are described in the notes to the unaudited pro forma consolidated financial statements and present how our financial statements may have appeared had our capital structure reflected the below transactions as of the dates noted below.
The unaudited pro forma consolidated balance sheet assumes the Spin-Off and the related transactions occurred on August 30, 2015. The unaudited pro forma statements of earnings for the three months ended August 30, 2015 and the year ended May 31, 2015 assumes the Spin-Off and related transactions occurred on May 26, 2014.
The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and do not purport to represent our financial position or results of operations that would actually have occurred had the transactions referred to below been consummated on August 30, 2015 for the unaudited pro forma consolidated balance sheet and on May 26, 2014 for the unaudited pro forma consolidated statements of earnings, or to project our financial positions or results of operations for any future date or period.
The following unaudited pro forma consolidated financial statements give effect to the Spin-Off and related transactions, including: (i) the transfer of six LongHorn Steakhouse restaurants located in the San Antonio, Texas area (the “LongHorn San Antonio Business”) and 418 restaurant properties (the “Four Corners Properties”) to Four Corners; (ii) the issuance to us of all of the outstanding common stock of Four Corners and corresponding pro rata distribution to our shareholders of the outstanding shares of Four Corners common stock as a tax-free stock dividend; (iii) the cash dividend received by us from Four Corners; (iv) the retirement of certain debt; (v) the rental expense associated with the leasing of the Four Corners Properties from Four Corners; (vi) the removal of depreciation expense associated with the assets contributed in the Spin-Off; (vii) incremental revenue related to the franchise agreements entered into with the LongHorn San Antonio Business; (viii) the transaction fee due to our financial advisor and (ix) the adjustment to income taxes for the above items.
Our unaudited pro forma consolidated financial statements do not give effect to the potential impact of cost savings that may result from the transactions described above. We are providing Four Corners with certain administrative and support services on a transitional basis pursuant to a transition services agreement. These costs are expected to be immaterial. Our unaudited pro forma consolidated financial statements do not give effect to the transition services agreement with Four Corners, as the majority of these services are not expected to be recurring in nature and therefore do not have a continuing impact on our unaudited pro forma consolidated statements of earnings.
In addition, as noted above, the unaudited pro forma consolidated financial statements only give effect to the transactions directly attributable to the Spin-Off. As we have previously disclosed, we intend to pay down a total of $1 billion of debt with proceeds from the Spin-Off, sale leaseback of certain real estate properties, including certain restaurant properties and our Restaurant Support Center, along with cash on hand. The transactions to pay down an additional approximately $700 million in debt, along with all related costs and expenses, are not reflected in the accompanying unaudited pro forma consolidated financial statements.
This information should be read in conjunction with our audited consolidated financial statements and the related notes filed with the Securities and Exchange Commission as part of our Annual Report on Form 10-K for the fiscal year ended May 31, 2015, our unaudited consolidated financial statements included in our Quarterly Report on Form 10-Q for the three months ended August 30, 2015, and our publicly available press releases related to those filings.

1


This discussion of the unaudited pro forma consolidated financial information contains forward-looking statements with respect to the financial condition, results of operations, plans, objectives and our remaining businesses. Statements preceded by, followed by or that include words such as “may,” “will,” “expect,” “intend,” “anticipate,” “continue,” “estimate,” “project,” “believe,” “plan” or similar expressions are intended to identify some of the forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are included, along with this statement, for purposes of complying with the safe harbor provisions of the Act. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the risks and uncertainties described under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2015 and quarterly results filed with the Securities and Exchange Commission on Form 10-Q for the three months ended August 30, 2015. We undertake no obligation to update publicly or revise any forward-looking statements for any reason, whether as a result of new information, future events or otherwise.


2


DARDEN RESTAURANTS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF AUGUST 30, 2015
(In millions)
 
Historical
 
Pro Forma
Adjustments (1)
 
 
 
Pro Forma
ASSETS
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
690.1

 
$
315.0

 
(b)
 
$
690.1

 
 
 
(311.8
)
 
(c)
 
 
 
 
 
(3.2
)
 
(d)
 
 
Receivables, net
60.8

 
—

 
 
 
60.8

Inventories
162.6

 
—

 
 
 
162.6

Prepaid income taxes
26.4

 
—

 
 
 
26.4

Prepaid expenses and other current assets
74.3

 
—

 
 
 
74.3

Deferred income taxes
166.6

 
—

 
 
 
166.6

Assets held for sale
23.8

 
—

 
 
 
23.8

Total current assets
$
1,204.6

 
$
—

 

 
$
1,204.6

Land, buildings and equipment, net
3,104.2

 
(838.2
)
 
(a)
 
2,266.0

Goodwill
872.4

 
—

 
 
 
872.4

Trademarks
574.6

 
—

 
 
 
574.6

Other assets
270.7

 
—

 
 
 
270.7

Total assets
$
6,026.5

 
$
(838.2
)
 

 
$
5,188.3

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 

Current liabilities:
 
 
 
 
 
 

Accounts payable
$
210.2

 
$
—

 
 
 
$
210.2

Accrued payroll
106.5

 
—

 
 
 
106.5

Accrued income taxes
32.4

 
(12.3
)
 
(c)
 
18.9

 
 
 
(1.2
)
 
(d)
 
 
Other accrued taxes
53.5

 
—

 
 
 
53.5

Unearned revenues
298.8

 
—

 
 
 
298.8

Current portion of long-term debt
15.0

 
—

 
 
 
15.0

Other current liabilities
426.2

 
(6.6
)
 
(c)
 
419.6

Total current liabilities
$
1,142.6

 
$
(20.1
)
 

 
$
1,122.5

Long-term debt, less current portion
1,437.6

 
(273.2
)
 
(c)
 
1,164.4

Deferred income taxes
331.6

 
(86.2
)
 
(a)
 
245.4

Deferred rent
230.8

 
—

 
 
 
230.8

Other liabilities
459.8

 
—

 
 
 
459.8

Total liabilities
$
3,602.4

 
$
(379.5
)
 

 
$
3,222.9

Stockholders’ equity:
 
 
 
 
 
 

Common stock and surplus
1,478.5

 
 
 
 
 
1,478.5

Retained earnings
1,042.3

 
(752.0
)
 
(a)
 
583.6

 
 
 
315.0

 
(b)
 
 
 
 
 
(19.7
)
 
(c)
 
 
 
 
 
(2.0
)
 
(d)
 
 
Treasury stock
(7.8
)
 
—

 
 
 
(7.8
)
Accumulated other comprehensive income (loss)
(85.2
)
 
—

 
 
 
(85.2
)
Unearned compensation
(3.7
)
 
—

 
 
 
(3.7
)
Total stockholders’ equity
$
2,424.1

 
$
(458.7
)
 

 
$
1,965.4

Total liabilities and stockholders’ equity
$
6,026.5

 
$
(838.2
)
 

 
$
5,188.3

(1) See accompanying notes to unaudited pro forma consolidated financial statements for explanation of pro forma adjustments. Adjustments only give effect to transactions directly attributable to the Spin-Off and do not give effect to any other transactions contemplated by Darden, including the expected pay down of additional debt with cash on hand and the related effects.

3


DARDEN RESTAURANTS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE THREE MONTHS ENDED AUGUST 30, 2015
(In millions, except per share data)
 
Historical
 
Pro Forma Adjustments (1)
 
 
Pro Forma
Sales
$
1,687.0

 
$
(4.7
)
(e)
 
$
1,682.6

 
 
 
0.3

(i)
 
 
Costs and expenses:
 
 
 
 
 
 
Food and beverage
502.8

 
(1.9
)
(e)
 
500.9

Restaurant labor
536.0

 
(1.2
)
(e)
 
534.8

Restaurant expenses
271.9

 
(0.6
)
(e)
 
271.3

 
 
 
25.8

(h)
 
25.8

Marketing expenses
65.6

 
(0.2
)
(e)
 
65.4

General and administrative expenses
97.1

 
—

 
 
97.1

Depreciation and amortization
81.1

 
(0.2
)
(e)
 
80.9

 
 
 
(11.6
)
(f)
 
(11.6
)
Impairments and disposal of assets, net
(1.7
)
 
—

 
 
(1.7
)
Total operating costs and expenses
$
1,552.8

 
$
10.1

 
 
$
1,562.9

Operating income
134.2

 
(14.5
)
 
 
119.7

Interest, net
22.4

 
(4.4
)
(g)
 
18.0

Earnings (loss) before income taxes
111.8

 
(10.1
)
 
 
101.7

Income tax expense (benefit)
30.8

 
(3.9
)
(j)
 
26.9

Earnings from continuing operations
$
81.0

 
$
(6.2
)
 
 
$
74.8

 
 
 
 
 
 
 
Net earnings per share from continuing operations:
 
 
 
 
 

Basic
$
0.64

 
 
 
 
$
0.59

Diluted
$
0.63

 


 
 
$
0.58

Average number of common shares outstanding:

 
 
 
 

Basic
127.4

 
 
 
 


Diluted
129.3

 
 
 
 
 
(1) See accompanying notes to unaudited pro forma consolidated financial statements for explanation of pro forma adjustments. Adjustments only give effect to transactions directly attributable to the Spin-Off and do not give effect to any other transactions contemplated by Darden, including the expected pay down of additional debt with cash on hand and the related effects.


4


DARDEN RESTAURANTS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED MAY 31, 2015
(In millions, except per share data)
 
Historical
 
Pro Forma Adjustments (1)
 
 
Pro Forma
Sales
$
6,764.0

 
$
(18.5
)
(e)
 
$
6,746.7

 
 
 
1.2

(i)
 
 
Costs and expenses:
 
 
 
 
 
 
Food and beverage
2,085.1

 
(7.4
)
(e)
 
2,077.7

Restaurant labor
2,135.6

 
(4.7
)
(e)
 
2,130.9

Restaurant expenses
1,120.8

 
(2.5
)
(e)
 
1,118.3

 
 
 
106.4

(h)
 
106.4

Marketing expenses
243.3

 
(0.9
)
(e)
 
242.4

General and administrative expenses
430.2

 
—

 
 
430.2

Depreciation and amortization
319.3

 
(1.0
)
(e)
 
318.3

 
 
 
(47.0
)
(f)
 
(47.0
)
Impairments and disposal of assets, net
62.1

 
—

 
 
62.1

Total operating costs and expenses
$
6,396.4

 
$
42.9

 
 
$
6,439.3

Operating income
367.6

 
(60.2
)
 
 
307.4

Interest, net
192.3

 
(18.0
)
(g)
 
174.3

Earnings (loss) before income taxes
175.3

 
(42.2
)
 
 
133.1

Income tax benefit
(21.1
)
 
(16.2
)
(j)
 
(37.3
)
Earnings from continuing operations
$
196.4

 
$
(26.0
)
 
 
$
170.4

 
 
 
 
 
 
 
Net earnings per share from continuing operations:
 
 
 
 
 
 
Basic
$
1.54

 
 
 
 
$
1.33

Diluted
$
1.51

 
 
 
 
$
1.31

Average number of common shares outstanding:
 
 
 
 
 
 
Basic
127.7

 
 
 
 
 
Diluted
129.7

 
 
 
 
 
(1) See accompanying notes to unaudited pro forma consolidated financial statements for explanation of pro forma adjustments. Adjustments only give effect to transactions directly attributable to the Spin-Off and do not give effect to any other transactions contemplated by Darden, including the expected pay down of additional debt with cash on hand and the related effects.



5


DARDEN RESTAURANTS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

NOTE 1 - BASIS OF PRESENTATION
    
On June 23, 2015, Darden announced its plan to separate its business into two separate and independent publicly traded companies: Darden, which will continue to operate a wide range of restaurant and dining options at various price points through its existing operations; and Four Corners. We accomplished this separation on November 9, 2015 with the pro rata distribution of Four Corners common stock to holders of Darden common stock. In connection with the separation approximately $315.0 million in cash from the proceeds of Four Corners’ term loan borrowings was transferred to us.
The accompanying unaudited pro forma consolidated financial statements are presented to reflect the following:
Transfer of Assets and Liabilities - Immediately prior to the Spin-Off, we contributed the Four Corners Properties and the LongHorn San Antonio Business to Four Corners. We recorded a reduction to retained earnings attributable to the LongHorn San Antonio Business and Four Corners Properties.
Distribution of Shares and Proceeds from Four Corners' Debt - Four Corners distributed all shares of its common stock to us, all of which were distributed pro rata to our shareholders through a tax-free distribution in the Spin-Off. In connection with the Spin-Off, approximately $315.0 million in cash from the proceeds of Four Corners’ term loan borrowings was transferred to us. We will use $311.8 million of the $315.0 million of cash received in the Spin-Off to repay principal of approximately $273.2 million of our senior notes due in 2017, $32.0 million of prepayment costs and $6.6 million of accrued interest. The remaining $3.2 million will be used to pay an agreed upon transaction fee to our financial advisor.
Agreements with Four Corners - Pursuant to the lease agreements, we leased the Four Corners Properties from Four Corners on a triple net basis with terms comparable to similar leases negotiated on an arm’s length basis. Under the lease agreements our subsidiaries are the tenant while Four Corners is the landlord. The leases are triple-net leases that provide for an average initial term of approximately fifteen years with stated annual rental payments and no purchase options provided that we have a right of first offer with respect to Four Corners’ sale of any property and Four Corners is prohibited from selling any properties to (i) any nationally recognized casual or fine dining brand restaurant or entity operating the same or (ii) any other regionally recognized casual or fine dining brand restaurant or entity operating the same, with 25 or more units. Under the lease agreements the rent is subject to annual escalations of 1.5%, as well as, in most of the leases, a fair market value adjustment at the start of one of the renewal options.
The franchise agreement provides that we agree to provide certain franchising services to Four Corners’ subsidiary which operates the LongHorn San Antonio Business. The franchising services consist of licensing the right to use and display certain trademarks in connection with the operation of the LongHorn San Antonio Business, marketing services, training and access to certain LongHorn operating procedures. The franchise agreements also contain provisions under which Darden may provide certain technical support for the LongHorn San Antonio Business. The fees and conditions of these franchising services are on terms comparable to similar franchising services negotiated on an arm’s length basis.

6



NOTE 2 - ADJUSTMENTS TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(a)
Reflects the transfer of fixed assets and deferred taxes of the LongHorn San Antonio Business and Four Corners Properties to Four Corners and the related reduction of retained earnings. While there were other assets and liabilities of the LongHorn San Antonio Business, they were deemed immaterial and therefore not reflected in the pro forma consolidated balance sheet.
(b)
Reflects the receipt of $315.0 million of cash from Four Corners and the related increase to retained earnings.
(c)
Reflects the retirement of $273.2 million aggregate principal amount and $6.6 million of accrued interest of our senior notes due in 2017. Also reflects $32.0 million of breakage fees to retire this debt and the associated income tax benefit of $12.3 million recorded as a reduction to accrued income taxes. The net expense of the breakage fees after the tax benefit of $19.7 million is recorded as a reduction of retained earnings. The tax benefit was determined using our blended statutory rate of 38.41%.
(d)
Reflects an adjustment to retained earnings of $2.0 million (net of a tax benefit of $1.2 million) related to the $3.2 million owed to our financial advisor upon the closing of the transaction. The tax benefit was determined using our blended statutory rate of 38.41%. As the fee of $3.2 million is non-recurring in nature, the fee is not reflected in the pro forma consolidated statements of earnings. Additionally, a contingent fee will be owed to our financial advisor; as this fee is not known and is not factually supportable at this time the fee is not reflected in these pro forma consolidated financial statements.
(e)
Reflects the removal of the historical results of operations of the LongHorn San Antonio Business that was transferred to Four Corners.
(f)
Reflects the removal of depreciation expense for the Four Corners Properties that were transferred to Four Corners.
(g)
Reflects a reduction in interest expense based on the anticipated retirement of approximately $273.2 million in principal of our senior notes due in 2017. As the $32.0 million of breakage fees are non-recurring in nature, they have not been reflected in the pro forma consolidated statements of earnings.
(h)
Reflects the rent expense associated with the leases we have entered into to lease the Four Corners Properties from Four Corners, recognized on a straight line basis to include the effects of base rent escalators of 1.5% annually over the initial term of the lease. Cash rent to be paid in the first lease year is expected to be $94.4 million.
(i)
Reflects the incremental revenue related to the franchise agreements we have entered into with Four Corners pursuant to which we and our affiliates will provide to Four Corners for an agreed upon charge, various services to support the operations of the LongHorn San Antonio Business.
(j)
Reflects the associated income tax benefit for all of the adjustments noted above. The income tax provision was based on our blended statutory rate of 38.41%.


7