x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Florida | 59-3305930 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1000 Darden Center Drive Orlando, Florida | 32837 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | o | |||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o | |||
Emerging growth company | o |
Page | |||
Part I - | Financial Information | ||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
Part II - | Other Information | ||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 6. | |||
Three Months Ended | Nine Months Ended | ||||||||||||||
February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||
Sales | $ | 2,128.4 | $ | 1,878.7 | $ | 5,946.0 | $ | 5,235.6 | |||||||
Costs and expenses: | |||||||||||||||
Food and beverage | 603.3 | 541.5 | 1,701.4 | 1,512.8 | |||||||||||
Restaurant labor | 683.0 | 578.3 | 1,929.6 | 1,662.2 | |||||||||||
Restaurant expenses | 360.8 | 320.4 | 1,055.2 | 929.4 | |||||||||||
Marketing expenses | 58.9 | 54.6 | 183.0 | 175.4 | |||||||||||
General and administrative expenses | 110.1 | 87.2 | 307.0 | 254.4 | |||||||||||
Depreciation and amortization | 79.2 | 67.9 | 234.1 | 202.5 | |||||||||||
Impairments and disposal of assets, net | (0.3 | ) | (0.7 | ) | (1.1 | ) | (8.4 | ) | |||||||
Total operating costs and expenses | $ | 1,895.0 | $ | 1,649.2 | $ | 5,409.2 | $ | 4,728.3 | |||||||
Operating income | 233.4 | 229.5 | 536.8 | 507.3 | |||||||||||
Interest, net | 117.4 | 9.3 | 147.9 | 28.7 | |||||||||||
Earnings before income taxes | 116.0 | 220.2 | 388.9 | 478.6 | |||||||||||
Income tax (benefit) expense | (102.5 | ) | 53.9 | (39.5 | ) | 121.5 | |||||||||
Earnings from continuing operations | $ | 218.5 | $ | 166.3 | $ | 428.4 | $ | 357.1 | |||||||
Losses from discontinued operations, net of tax benefit of $(0.5), $(0.9), $(4.0) and $(2.2), respectively | (0.7 | ) | (0.7 | ) | (6.9 | ) | (1.8 | ) | |||||||
Net earnings | $ | 217.8 | $ | 165.6 | $ | 421.5 | $ | 355.3 | |||||||
Basic net earnings per share: | |||||||||||||||
Earnings from continuing operations | $ | 1.77 | $ | 1.34 | $ | 3.45 | $ | 2.88 | |||||||
Losses from discontinued operations | (0.01 | ) | (0.01 | ) | (0.06 | ) | (0.02 | ) | |||||||
Net earnings | $ | 1.76 | $ | 1.33 | $ | 3.39 | $ | 2.86 | |||||||
Diluted net earnings per share: | |||||||||||||||
Earnings from continuing operations | $ | 1.74 | $ | 1.32 | $ | 3.40 | $ | 2.84 | |||||||
Losses from discontinued operations | (0.01 | ) | — | (0.06 | ) | (0.02 | ) | ||||||||
Net earnings | $ | 1.73 | $ | 1.32 | $ | 3.34 | $ | 2.82 | |||||||
Average number of common shares outstanding: | |||||||||||||||
Basic | 123.6 | 124.1 | 124.2 | 124.1 | |||||||||||
Diluted | 125.7 | 125.9 | 126.1 | 125.8 | |||||||||||
Dividends declared per common share | $ | 0.63 | $ | 0.56 | $ | 1.89 | $ | 1.68 |
Three Months Ended | Nine Months Ended | ||||||||||||||
February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||
Net earnings | $ | 217.8 | $ | 165.6 | $ | 421.5 | $ | 355.3 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency adjustment | (0.4 | ) | (0.1 | ) | (1.1 | ) | 0.5 | ||||||||
Change in fair value of marketable securities, net of taxes of $0.0, $0.0, $0.0 and $0.0, respectively | — | — | (0.1 | ) | — | ||||||||||
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $0.0, $0.0, $0.0, and $0.0, respectively | 3.6 | (0.7 | ) | (0.8 | ) | 2.1 | |||||||||
Amortization of unrecognized net actuarial (loss) gain, net of taxes of $(0.1), $0.1, $(0.1) and $0.3 respectively, related to pension and other post-employment benefits | — | 0.1 | (0.1 | ) | 0.4 | ||||||||||
Reclassification of tax effect | (15.4 | ) | — | (15.4 | ) | — | |||||||||
Other comprehensive income (loss) | $ | (12.2 | ) | $ | (0.7 | ) | $ | (17.5 | ) | $ | 3.0 | ||||
Total comprehensive income | $ | 205.6 | $ | 164.9 | $ | 404.0 | $ | 358.3 |
February 25, 2018 | May 28, 2017 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 146.8 | $ | 233.1 | |||
Receivables, net | 50.6 | 75.9 | |||||
Inventories | 208.0 | 178.9 | |||||
Prepaid income taxes | 62.7 | 6.2 | |||||
Prepaid expenses and other current assets | 90.4 | 80.6 | |||||
Assets held for sale | 11.1 | 13.2 | |||||
Total current assets | $ | 569.6 | $ | 587.9 | |||
Land, buildings and equipment, net of accumulated depreciation and amortization of $2,167.0 and $1,996.8, respectively | 2,404.8 | 2,272.3 | |||||
Goodwill | 1,182.0 | 1,201.7 | |||||
Trademarks | 950.2 | 950.2 | |||||
Other assets | 348.1 | 280.2 | |||||
Total assets | $ | 5,454.7 | $ | 5,292.3 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 291.5 | $ | 249.5 | |||
Short-term debt | 50.6 | — | |||||
Accrued payroll | 157.3 | 149.1 | |||||
Accrued income taxes | — | 1.9 | |||||
Other accrued taxes | 53.1 | 54.2 | |||||
Unearned revenues | 456.6 | 388.6 | |||||
Other current liabilities | 458.4 | 445.9 | |||||
Total current liabilities | $ | 1,467.5 | $ | 1,289.2 | |||
Long-term debt | 926.4 | 936.6 | |||||
Deferred income taxes | 106.4 | 145.6 | |||||
Deferred rent | 310.6 | 282.8 | |||||
Other liabilities | 518.9 | 536.4 | |||||
Total liabilities | $ | 3,329.8 | $ | 3,190.6 | |||
Stockholders’ equity: | |||||||
Common stock and surplus | $ | 1,628.4 | $ | 1,614.6 | |||
Retained earnings | 586.4 | 560.1 | |||||
Treasury stock | (7.8 | ) | (7.8 | ) | |||
Accumulated other comprehensive income (loss) | (80.4 | ) | (62.9 | ) | |||
Unearned compensation | (1.7 | ) | (2.3 | ) | |||
Total stockholders’ equity | $ | 2,124.9 | $ | 2,101.7 | |||
Total liabilities and stockholders’ equity | $ | 5,454.7 | $ | 5,292.3 |
Common Stock And Surplus | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Unearned Compensation | Total Stockholders’ Equity | ||||||||||||||||||
Balance at May 28, 2017 | $ | 1,614.6 | $ | 560.1 | $ | (7.8 | ) | $ | (62.9 | ) | $ | (2.3 | ) | $ | 2,101.7 | ||||||||
Net earnings | — | 421.5 | — | — | — | 421.5 | |||||||||||||||||
Other comprehensive loss | — | — | — | (17.5 | ) | — | (17.5 | ) | |||||||||||||||
Dividends declared | — | (234.9 | ) | — | — | — | (234.9 | ) | |||||||||||||||
Stock option exercises (0.8 shares) | 31.1 | — | — | — | — | 31.1 | |||||||||||||||||
Stock-based compensation | 16.7 | — | — | — | — | 16.7 | |||||||||||||||||
Repurchases of common stock (2.5 shares) | (31.9 | ) | (175.7 | ) | — | — | — | (207.6 | ) | ||||||||||||||
Issuance of stock under Employee Stock Purchase Plan and other plans (0.1 shares) | 4.3 | — | — | — | 0.1 | 4.4 | |||||||||||||||||
Other | (6.4 | ) | 15.4 | — | — | 0.5 | $ | 9.5 | |||||||||||||||
Balance at February 25, 2018 | $ | 1,628.4 | $ | 586.4 | $ | (7.8 | ) | $ | (80.4 | ) | $ | (1.7 | ) | $ | 2,124.9 | ||||||||
Balance at May 29, 2016 | $ | 1,502.6 | $ | 547.5 | $ | (7.8 | ) | $ | (87.0 | ) | $ | (3.3 | ) | $ | 1,952.0 | ||||||||
Net earnings | — | 355.3 | — | — | — | 355.3 | |||||||||||||||||
Other comprehensive income | — | — | — | 3.0 | — | 3.0 | |||||||||||||||||
Dividends declared | — | (208.9 | ) | — | — | — | (208.9 | ) | |||||||||||||||
Stock option exercises (1.5 shares) | 58.5 | — | — | — | — | 58.5 | |||||||||||||||||
Stock-based compensation | 11.4 | — | — | — | — | 11.4 | |||||||||||||||||
Income tax benefits credited to equity | 12.1 | — | — | — | — | 12.1 | |||||||||||||||||
Repurchases of common stock (3.5 shares) | (41.5 | ) | (173.4 | ) | — | — | — | (214.9 | ) | ||||||||||||||
Issuance of stock under Employee Stock Purchase Plan and other plans (0.1 shares) | 3.9 | — | — | — | 0.1 | 4.0 | |||||||||||||||||
Other | — | (0.5 | ) | — | — | 0.8 | 0.3 | ||||||||||||||||
Balance at February 26, 2017 | $ | 1,547.0 | $ | 520.0 | $ | (7.8 | ) | $ | (84.0 | ) | $ | (2.4 | ) | $ | 1,972.8 |
Nine Months Ended | |||||||
February 25, 2018 | February 26, 2017 | ||||||
Cash flows—operating activities | |||||||
Net earnings | $ | 421.5 | $ | 355.3 | |||
Losses from discontinued operations, net of tax | 6.9 | 1.8 | |||||
Adjustments to reconcile net earnings from continuing operations to cash flows: | |||||||
Depreciation and amortization | 234.1 | 202.5 | |||||
Impairments and disposal of assets, net | (1.1 | ) | (8.4 | ) | |||
Amortization of loan costs and losses on interest-rate related derivatives | 1.2 | 0.7 | |||||
Stock-based compensation expense | 32.2 | 27.3 | |||||
Change in current assets and liabilities | 13.9 | 91.7 | |||||
Contributions to pension and postretirement plans | (61.6 | ) | (1.2 | ) | |||
Change in cash surrender value of trust-owned life insurance | (10.7 | ) | (8.2 | ) | |||
Deferred income taxes | (29.0 | ) | (12.9 | ) | |||
Change in deferred rent | 27.8 | 24.5 | |||||
Change in other assets and liabilities | 11.0 | 19.5 | |||||
Loss on extinguishment of debt | 102.2 | — | |||||
Other, net | 2.6 | 8.7 | |||||
Net cash provided by operating activities of continuing operations | $ | 751.0 | $ | 701.3 | |||
Cash flows—investing activities | |||||||
Purchases of land, buildings and equipment | (294.9 | ) | (214.0 | ) | |||
Proceeds from disposal of land, buildings and equipment | 3.3 | 8.2 | |||||
Cash used in business acquisitions, net of cash acquired | (40.4 | ) | — | ||||
Purchases of capitalized software and other assets | (14.7 | ) | (18.8 | ) | |||
Other, net | 4.4 | 4.3 | |||||
Net cash used in investing activities of continuing operations | $ | (342.3 | ) | $ | (220.3 | ) | |
Cash flows—financing activities | |||||||
Proceeds from issuance of common stock | 35.5 | 62.5 | |||||
Income tax benefits credited to equity | — | 12.1 | |||||
Dividends paid | (234.9 | ) | (208.9 | ) | |||
Repurchases of common stock | (207.6 | ) | (214.9 | ) | |||
Proceeds from issuance of short-term debt | 812.2 | — | |||||
Repayments of short-term debt | (761.6 | ) | — | ||||
Repayments of long-term debt | (408.2 | ) | — | ||||
Proceeds from issuance of long-term debt | 300.0 | — | |||||
Principal payments on capital and financing leases | (3.9 | ) | (3.0 | ) | |||
Other, net | (11.5 | ) | 0.8 | ||||
Net cash used in financing activities of continuing operations | $ | (480.0 | ) | $ | (351.4 | ) | |
Cash flows—discontinued operations | |||||||
Net cash used in operating activities of discontinued operations | (15.2 | ) | (13.8 | ) | |||
Net cash provided by investing activities of discontinued operations | 0.2 | 0.8 | |||||
Net cash used in discontinued operations | $ | (15.0 | ) | $ | (13.0 | ) | |
Increase (decrease) in cash and cash equivalents | (86.3 | ) | 116.6 | ||||
Cash and cash equivalents - beginning of period | 233.1 | 274.8 | |||||
Cash and cash equivalents - end of period | $ | 146.8 | $ | 391.4 | |||
Nine Months Ended | |||||||
February 25, 2018 | February 26, 2017 | ||||||
Cash flows from changes in current assets and liabilities | |||||||
Receivables, net | 25.8 | 24.5 | |||||
Inventories | (29.1 | ) | 7.3 | ||||
Prepaid expenses and other current assets | (12.9 | ) | (1.3 | ) | |||
Accounts payable | 28.9 | (46.8 | ) | ||||
Accrued payroll | 5.7 | (7.7 | ) | ||||
Prepaid/accrued income taxes | (56.8 | ) | 52.2 | ||||
Other accrued taxes | (1.9 | ) | (1.5 | ) | |||
Unearned revenues | 74.0 | 79.2 | |||||
Other current liabilities | (19.8 | ) | (14.2 | ) | |||
Change in current assets and liabilities | $ | 13.9 | $ | 91.7 |
Balances at | ||||||||||||
(in millions) | Preliminary | Adjustments | February 25, 2018 | |||||||||
Current assets | $ | 48.2 | $ | (0.5 | ) | $ | 47.7 | |||||
Land, buildings and equipment | 191.9 | 22.6 | 214.5 | |||||||||
Trademark | 375.0 | — | 375.0 | |||||||||
Other assets | 2.2 | 20.4 | 22.6 | |||||||||
Goodwill | 329.4 | (30.9 | ) | 298.5 | ||||||||
Total assets acquired | $ | 946.7 | $ | 11.6 | $ | 958.3 | ||||||
Current liabilities | 43.4 | 7.9 | 51.3 | |||||||||
Other liabilities | 104.3 | 2.9 | 107.2 | |||||||||
Total liabilities assumed | $ | 147.7 | $ | 10.8 | $ | 158.5 | ||||||
Net assets acquired | $ | 799.0 | $ | 0.8 | $ | 799.8 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | |||||||||||
Costs and expenses: | |||||||||||||||
Restaurant and marketing expenses | $ | (0.1 | ) | $ | 0.3 | $ | (0.4 | ) | $ | 0.2 | |||||
Other income and expenses | 1.3 | 1.3 | 11.3 | 3.8 | |||||||||||
Losses before income taxes | (1.2 | ) | (1.6 | ) | (10.9 | ) | (4.0 | ) | |||||||
Income tax benefit | (0.5 | ) | (0.9 | ) | (4.0 | ) | (2.2 | ) | |||||||
Losses from discontinued operations, net of tax | $ | (0.7 | ) | $ | (0.7 | ) | $ | (6.9 | ) | $ | (1.8 | ) |
Cash paid for interest and income taxes are as follows: | Nine Months Ended | |||||||
(in millions) | February 25, 2018 | February 26, 2017 | ||||||
Interest paid, net of amounts capitalized (1) | $ | 142.2 | $ | 24.9 | ||||
Income taxes paid, net of refunds | 40.3 | 61.3 |
Non-cash investing activities are as follows: | Nine Months Ended | |||||||
(in millions) | February 25, 2018 | February 26, 2017 | ||||||
Increase in land, buildings and equipment through accrued purchases | $ | 35.7 | $ | 25.2 |
(1) | Interest paid for the nine months ended February 25, 2018 includes approximately $97.3 million of payments associated with the retirement of long-term debt. See Note 15. |
Three Months Ended | Nine Months Ended | |||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||
Anti-dilutive stock-based compensation awards | 0.4 | — | 0.2 | 0.4 |
(in millions) | Olive Garden | LongHorn Steakhouse | Fine Dining | Other Business | Corporate | Consolidated | ||||||||||||||||||
For the three months ended February 25, 2018 | ||||||||||||||||||||||||
Sales | $ | 1,073.2 | $ | 452.8 | $ | 164.4 | $ | 438.0 | $ | — | $ | 2,128.4 | ||||||||||||
Restaurant and marketing expenses | 846.5 | 362.9 | 124.1 | 372.5 | — | 1,706.0 | ||||||||||||||||||
Segment profit | $ | 226.7 | $ | 89.9 | $ | 40.3 | $ | 65.5 | $ | — | $ | 422.4 | ||||||||||||
Depreciation and amortization | $ | 33.7 | $ | 16.5 | $ | 7.9 | $ | 21.1 | $ | — | $ | 79.2 | ||||||||||||
Impairments and disposal of assets, net | 0.1 | (0.3 | ) | — | — | (0.1 | ) | (0.3 | ) |
(in millions) | Olive Garden | LongHorn Steakhouse | Fine Dining | Other Business | Corporate | Consolidated | ||||||||||||||||||
For the three months ended February 26, 2017 | ||||||||||||||||||||||||
Sales | $ | 1,035.1 | $ | 434.3 | $ | 153.7 | $ | 255.6 | $ | — | $ | 1,878.7 | ||||||||||||
Restaurant and marketing expenses | 817.4 | 349.3 | 117.3 | 210.8 | — | 1,494.8 | ||||||||||||||||||
Segment profit | $ | 217.7 | $ | 85.0 | $ | 36.4 | $ | 44.8 | $ | — | $ | 383.9 | ||||||||||||
Depreciation and amortization | $ | 31.1 | $ | 16.4 | $ | 7.2 | $ | 13.2 | $ | — | $ | 67.9 | ||||||||||||
Impairments and disposal of assets, net | 0.1 | — | — | — | (0.8 | ) | (0.7 | ) |
(in millions) | Olive Garden | LongHorn Steakhouse | Fine Dining | Other Business | Corporate | Consolidated | ||||||||||||||||||
For the nine months ended February 25, 2018 | ||||||||||||||||||||||||
Sales | $ | 3,014.6 | $ | 1,245.0 | $ | 427.1 | $ | 1,259.3 | $ | — | $ | 5,946.0 | ||||||||||||
Restaurant and marketing expenses | 2,421.2 | 1,031.0 | 340.5 | 1,076.5 | — | 4,869.2 | ||||||||||||||||||
Segment profit | $ | 593.4 | $ | 214.0 | $ | 86.6 | $ | 182.8 | $ | — | $ | 1,076.8 | ||||||||||||
Depreciation and amortization | $ | 99.2 | $ | 49.3 | $ | 23.5 | $ | 62.1 | $ | — | $ | 234.1 | ||||||||||||
Impairments and disposal of assets, net | 0.1 | (0.3 | ) | — | — | (0.9 | ) | (1.1 | ) | |||||||||||||||
Purchases of land, buildings and equipment | 125.8 | 55.6 | 21.6 | 87.7 | 4.2 | 294.9 |
(in millions) | Olive Garden | LongHorn Steakhouse | Fine Dining | Other Business | Corporate | Consolidated | ||||||||||||||||||
For the nine months ended February 26, 2017 | ||||||||||||||||||||||||
Sales | $ | 2,911.3 | $ | 1,185.6 | $ | 396.6 | $ | 742.1 | $ | — | $ | 5,235.6 | ||||||||||||
Restaurant and marketing expenses | 2,353.8 | 988.1 | 319.9 | 618.0 | — | 4,279.8 | ||||||||||||||||||
Segment profit | $ | 557.5 | $ | 197.5 | $ | 76.7 | $ | 124.1 | $ | — | $ | 955.8 | ||||||||||||
Depreciation and amortization | $ | 92.3 | $ | 49.0 | $ | 21.6 | $ | 39.6 | $ | — | $ | 202.5 | ||||||||||||
Impairments and disposal of assets, net | (1.5 | ) | (0.2 | ) | — | (6.1 | ) | (0.6 | ) | (8.4 | ) | |||||||||||||
Purchases of land, buildings and equipment | 97.0 | 43.1 | 31.1 | 40.5 | 2.3 | 214.0 |
Three Months Ended | Nine Months Ended | |||||||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||
Segment profit | $ | 422.4 | $ | 383.9 | $ | 1,076.8 | $ | 955.8 | ||||||||
Less general and administrative expenses | (110.1 | ) | (87.2 | ) | (307.0 | ) | (254.4 | ) | ||||||||
Less depreciation and amortization | (79.2 | ) | (67.9 | ) | (234.1 | ) | (202.5 | ) | ||||||||
Less impairments and disposal of assets, net | 0.3 | 0.7 | 1.1 | 8.4 | ||||||||||||
Less interest, net | (117.4 | ) | (9.3 | ) | (147.9 | ) | (28.7 | ) | ||||||||
Earnings before income taxes | $ | 116.0 | $ | 220.2 | $ | 388.9 | $ | 478.6 |
Three Months Ended | Nine Months Ended | |||||||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||
Disposal gains | $ | (0.3 | ) | $ | (1.4 | ) | $ | (1.1 | ) | $ | (10.4 | ) | ||||
Other | — | 0.7 | — | 2.0 | ||||||||||||
Impairments and disposal of assets, net | $ | (0.3 | ) | $ | (0.7 | ) | $ | (1.1 | ) | $ | (8.4 | ) |
(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 November 26, 2017 | $ | (1.4 | ) | $ | — | $ | 3.8 | $ | (70.6 | ) | $ | (68.2 | ) | |||||||
Gain (loss) | (0.4 | ) | — | 3.7 | — | 3.3 | ||||||||||||||
Reclassification realized in net earnings | — | — | (0.1 | ) | — | (0.1 | ) | |||||||||||||
Reclassification of tax effect (1) | — | — | (0.2 | ) | (15.2 | ) | (15.4 | ) | ||||||||||||
Balance at February 25, 2018 | $ | (1.8 | ) | $ | — | $ | 7.2 | $ | (85.8 | ) | $ | (80.4 | ) | |||||||
Balance at November 27, 2016 | $ | (0.6 | ) | $ | 0.1 | $ | 6.7 | $ | (89.5 | ) | $ | (83.3 | ) | |||||||
Gain (loss) | (0.1 | ) | — | (0.7 | ) | — | (0.8 | ) | ||||||||||||
Reclassification realized in net earnings | — | — | — | 0.1 | 0.1 | |||||||||||||||
Balance at February 26, 2017 | $ | (0.7 | ) | $ | 0.1 | $ | 6.0 | $ | (89.4 | ) | $ | (84.0 | ) |
(1) | Stranded tax effects reclassified from accumulated other comprehensive income (loss) to retained earnings from the adoption of ASU 2018-02. |
(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) | |||||||||||||||
Balances at May 28, 2017 | $ | (0.7 | ) | $ | 0.1 | $ | 8.2 | $ | (70.5 | ) | $ | (62.9 | ) | |||||||
Gain (loss) | (1.1 | ) | — | (0.9 | ) | — | (2.0 | ) | ||||||||||||
Reclassification realized in net earnings | — | (0.1 | ) | 0.1 | (0.1 | ) | (0.1 | ) | ||||||||||||
Reclassification of tax effect (1) | — | — | (0.2 | ) | (15.2 | ) | (15.4 | ) | ||||||||||||
Balance at February 25, 2018 | $ | (1.8 | ) | $ | — | $ | 7.2 | $ | (85.8 | ) | $ | (80.4 | ) | |||||||
Balance at May 29, 2016 | $ | (1.2 | ) | $ | 0.1 | $ | 3.9 | $ | (89.8 | ) | $ | (87.0 | ) | |||||||
Gain (loss) | 0.5 | — | 0.7 | — | 1.2 | |||||||||||||||
Reclassification realized in net earnings | — | — | 1.4 | 0.4 | 1.8 | |||||||||||||||
Balance at February 26, 2017 | $ | (0.7 | ) | $ | 0.1 | $ | 6.0 | $ | (89.4 | ) | $ | (84.0 | ) |
(1) | Stranded tax effects reclassified from accumulated other comprehensive income (loss) to retained earnings from the adoption of ASU 2018-02. |
Amount Reclassified from AOCI into Net Earnings | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
(in millions) AOCI Components | Location of Gain (Loss) Recognized in Earnings | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||
Derivatives | |||||||||||||||||
Commodity contracts | (1) | $ | 0.2 | $ | — | $ | 0.2 | $ | — | ||||||||
Equity contracts | (2) | — | — | (0.2 | ) | (1.4 | ) | ||||||||||
Interest rate contracts | (3) | (0.1 | ) | — | (0.1 | ) | — | ||||||||||
Total before tax | $ | 0.1 | $ | — | $ | (0.1 | ) | $ | (1.4 | ) | |||||||
Tax benefit | — | — | — | — | |||||||||||||
Net of tax | $ | 0.1 | $ | — | $ | (0.1 | ) | $ | (1.4 | ) | |||||||
Benefit plan funding position | |||||||||||||||||
Recognized net actuarial loss - pension/postretirement plans | (4) | $ | (0.7 | ) | $ | (0.8 | ) | $ | (2.1 | ) | $ | (2.4 | ) | ||||
Recognized net actuarial gain - other plans | (5) | 0.8 | 0.6 | 2.3 | 1.7 | ||||||||||||
Total before tax | $ | 0.1 | $ | (0.2 | ) | $ | 0.2 | $ | (0.7 | ) | |||||||
Tax benefit (expense) | (0.1 | ) | 0.1 | (0.1 | ) | 0.3 | |||||||||||
Net of tax | $ | — | $ | (0.1 | ) | $ | 0.1 | $ | (0.4 | ) |
(1) | Primarily included in food and beverage costs and restaurant expenses. See Note 12 for additional details. |
(2) | Primarily included in restaurant labor costs and general and administrative expenses. See Note 12 for additional details. |
(3) | Included in interest, net, on our consolidated statement of earnings. |
(4) | Included in the computation of net periodic benefit costs - pension and postretirement plans, which is a component of restaurant labor expenses and general and administrative expenses. See Note 10 for additional details. |
(5) | Included in the computation of net periodic benefit costs - other plans, which is a component of general and administrative expenses. |
Defined Benefit Plans | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||
Interest cost | $ | 2.1 | $ | 2.5 | $ | 6.4 | $ | 7.6 | ||||||||
Expected return on plan assets | (3.0 | ) | (3.9 | ) | (9.0 | ) | (11.9 | ) | ||||||||
Recognized net actuarial loss | 0.7 | 0.8 | 2.1 | 2.4 | ||||||||||||
Net periodic benefit (credit) cost | $ | (0.2 | ) | $ | (0.6 | ) | $ | (0.5 | ) | $ | (1.9 | ) |
Postretirement Benefit Plan | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||
Service cost | $ | — | $ | — | $ | 0.1 | $ | 0.1 | ||||||||
Interest cost | 0.2 | 0.1 | 0.5 | 0.5 | ||||||||||||
Amortization of unrecognized prior service credit | (1.2 | ) | (1.2 | ) | (3.6 | ) | (3.6 | ) | ||||||||
Recognized net actuarial loss | 0.4 | 0.5 | 1.3 | 1.3 | ||||||||||||
Net periodic benefit (credit) cost | $ | (0.6 | ) | $ | (0.6 | ) | $ | (1.7 | ) | $ | (1.7 | ) |
Stock Options Granted | |||||||
Nine Months Ended | |||||||
February 25, 2018 | February 26, 2017 | ||||||
Weighted-average fair value | $ | 14.63 | $ | 9.08 | |||
Dividend yield | 3.0 | % | 3.5 | % | |||
Expected volatility of stock | 23.5 | % | 24.3 | % | |||
Risk-free interest rate | 2.0 | % | 1.4 | % | |||
Expected option life (in years) | 6.4 | 6.5 | |||||
Weighted-average exercise price per share | $ | 85.83 | $ | 59.70 |
(in millions) | Stock Options | Restricted Stock/ Restricted Stock Units | Darden Stock Units | Cash-Settled Performance Stock Units | Equity-Settled Performance Stock Units | ||||||||||
Outstanding beginning of period | 4.01 | 0.19 | 1.35 | 0.09 | 0.33 | ||||||||||
Awards granted | 0.35 | 0.11 | 0.42 | — | 0.24 | ||||||||||
Awards exercised/vested | (0.77 | ) | (0.05 | ) | (0.30 | ) | (0.09 | ) | — | ||||||
Awards forfeited | (0.03 | ) | — | (0.06 | ) | — | (0.01 | ) | |||||||
Outstanding end of period | 3.56 | 0.25 | 1.41 | — | 0.56 |
Three Months Ended | Nine Months Ended | |||||||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||
Stock options | $ | 1.3 | $ | 1.3 | $ | 3.7 | $ | 4.4 | ||||||||
Restricted stock/restricted stock units | 1.1 | 0.6 | 2.9 | 1.3 | ||||||||||||
Darden stock units | 8.0 | 4.3 | 15.5 | 13.6 | ||||||||||||
Cash-settled performance stock units | — | 1.0 | — | 2.3 | ||||||||||||
Equity-settled performance stock units | 3.1 | 1.5 | 8.2 | 3.9 | ||||||||||||
Employee stock purchase plan | 0.3 | 0.3 | 0.9 | 0.9 | ||||||||||||
Director compensation program/other | 0.3 | 0.3 | 1.0 | 0.9 | ||||||||||||
Total stock-based compensation expense | $ | 14.1 | $ | 9.3 | $ | 32.2 | $ | 27.3 |
Fair Values | |||||||||||||||||||||||
(in millions, except per share data) | Number of Shares Outstanding | Weighted-Average Per Share Forward Rates | Notional Values | Derivative Assets (1) | Derivative Liabilities (1) | ||||||||||||||||||
February 25, 2018 | February 25, 2018 | May 28, 2017 | February 25, 2018 | May 28, 2017 | |||||||||||||||||||
Equity forwards: | |||||||||||||||||||||||
Designated | 0.4 | $76.80 | $ | 32.7 | $ | — | $ | — | $ | 1.0 | $ | 0.1 | |||||||||||
Not designated | 0.6 | $58.29 | $ | 32.4 | — | — | 1.3 | 0.3 | |||||||||||||||
Total equity forwards | $ | — | $ | — | $ | 2.3 | $ | 0.4 | |||||||||||||||
Commodity contracts | N/A | N/A | $ | 10.3 | $ | 0.4 | $ | — | $ | 0.2 | $ | — | |||||||||||
Total derivative contracts | $ | 0.4 | $ | — | $ | 2.5 | $ | 0.4 |
(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. |
Amount of Gain (Loss) Recognized in AOCI (effective portion) | Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) | Amount of Gain (Loss) Recognized in Earnings (ineffective portion) | ||||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||||||||
Equity (1) | $ | 3.5 | $ | (0.7 | ) | $ | — | $ | — | $ | — | $ | 0.2 | |||||||||||
Commodity (2) | 0.2 | — | 0.2 | — | — | — | ||||||||||||||||||
Interest rate (3) | — | — | (0.1 | ) | — | — | — | |||||||||||||||||
Total | $ | 3.7 | $ | (0.7 | ) | $ | 0.1 | $ | — | $ | — | $ | 0.2 |
Amount of Gain (Loss) Recognized in AOCI (effective portion) | Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) | Amount of Gain (Loss) Recognized in Earnings (ineffective portion) | ||||||||||||||||||||||
Nine Months Ended | Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||||||||
Equity (1) | $ | (1.3 | ) | $ | 0.7 | $ | (0.2 | ) | $ | (1.4 | ) | $ | 0.1 | $ | 0.5 | |||||||||
Commodity (2) | 0.5 | — | 0.2 | — | — | — | ||||||||||||||||||
Interest rate (3) | — | — | (0.1 | ) | — | — | — | |||||||||||||||||
Total | $ | (0.8 | ) | $ | 0.7 | $ | (0.1 | ) | $ | (1.4 | ) | $ | 0.1 | $ | 0.5 |
(1) | 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 and general and administrative expenses. |
(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. |
(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 interest, net. |
Amount of Gain (Loss) Recognized in Earnings | ||||||||||||||||
(in millions) | Three Months Ended | Nine Months Ended | ||||||||||||||
Location of Gain (Loss) Recognized in Earnings on Derivatives | February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||||||
Restaurant labor expenses | $ | 3.3 | $ | 0.5 | $ | 2.7 | $ | 2.0 | ||||||||
General and administrative expenses | 5.5 | 0.7 | 4.2 | 3.6 | ||||||||||||
Total | $ | 8.8 | $ | 1.2 | $ | 6.9 | $ | 5.6 |
Items Measured at Fair Value at February 25, 2018 | |||||||||||||||||
(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) | |||||||||||||
Derivatives: | |||||||||||||||||
Commodities futures, swaps & options | (1) | $ | 0.2 | $ | — | $ | 0.2 | $ | — | ||||||||
Equity forwards | (2) | (2.3 | ) | — | (2.3 | ) | — | ||||||||||
Total | $ | (2.1 | ) | $ | — | $ | (2.1 | ) | $ | — |
Items Measured at Fair Value at May 28, 2017 | |||||||||||||||||
(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 | (3) | $ | 1.1 | $ | — | $ | 1.1 | $ | — | ||||||||
U.S. Treasury securities | (4) | 2.0 | 2.0 | — | — | ||||||||||||
Mortgage-backed securities | (3) | 1.0 | — | 1.0 | — | ||||||||||||
Derivatives: | |||||||||||||||||
Equity forwards | (2) | (0.4 | ) | — | (0.4 | ) | — | ||||||||||
Total | $ | 3.7 | $ | 2.0 | $ | 1.7 | $ | — |
(1) | The fair value of our commodities futures, swaps and options is based on closing market prices of the contracts, inclusive nonperformance. |
(2) | The fair value of equity forwards is based on the closing market value of Darden stock, inclusive of the risk of nonperformance. |
(3) | 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. |
(4) | The fair value of our U.S. Treasury securities is based on closing market prices. |
• | $500.0 million of unsecured 3.850 percent senior notes due in May 2027; |
• | $96.3 million of unsecured 6.000 percent senior notes due in August 2035; |
• | $42.8 million of unsecured 6.800 percent senior notes due in October 2037; and |
• | $300.0 million of unsecured 4.550 percent senior notes due in February 2048. |
• | $53.7 million of unsecured 6.000 percent senior notes due in August 2035; and |
• | $257.2 million of unsecured 6.800 percent senior notes due in October 2037. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | % Chg | February 25, 2018 | February 26, 2017 | % Chg | |||||||||||||||
Sales | $ | 2,128.4 | $ | 1,878.7 | 13.3 | % | $ | 5,946.0 | $ | 5,235.6 | 13.6 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Food and beverage | 603.3 | 541.5 | 11.4 | 1,701.4 | 1,512.8 | 12.5 | |||||||||||||||
Restaurant labor | 683.0 | 578.3 | 18.1 | 1,929.6 | 1,662.2 | 16.1 | |||||||||||||||
Restaurant expenses | 360.8 | 320.4 | 12.6 | 1,055.2 | 929.4 | 13.5 | |||||||||||||||
Marketing expenses | 58.9 | 54.6 | 7.9 | 183.0 | 175.4 | 4.3 | |||||||||||||||
General and administrative expenses | 110.1 | 87.2 | 26.3 | 307.0 | 254.4 | 20.7 | |||||||||||||||
Depreciation and amortization | 79.2 | 67.9 | 16.6 | 234.1 | 202.5 | 15.6 | |||||||||||||||
Impairments and disposal of assets, net | (0.3 | ) | (0.7 | ) | NM | (1.1 | ) | (8.4 | ) | NM | |||||||||||
Total costs and expenses | $ | 1,895.0 | $ | 1,649.2 | 14.9 | $ | 5,409.2 | $ | 4,728.3 | 14.4 | |||||||||||
Operating income | 233.4 | 229.5 | 1.7 | 536.8 | 507.3 | 5.8 | |||||||||||||||
Interest, net | 117.4 | 9.3 | NM | 147.9 | 28.7 | NM | |||||||||||||||
Earnings before income taxes | 116.0 | 220.2 | (47.3 | ) | 388.9 | 478.6 | (18.7 | ) | |||||||||||||
Income tax (benefit) expense (1) | (102.5 | ) | 53.9 | NM | (39.5 | ) | 121.5 | NM | |||||||||||||
Earnings from continuing operations | $ | 218.5 | $ | 166.3 | 31.4 | $ | 428.4 | $ | 357.1 | 20.0 | |||||||||||
Losses from discontinued operations, net of tax | (0.7 | ) | (0.7 | ) | NM | (6.9 | ) | (1.8 | ) | NM | |||||||||||
Net earnings | $ | 217.8 | $ | 165.6 | 31.5 | % | $ | 421.5 | $ | 355.3 | 18.6 | % | |||||||||
Diluted net earnings per share: | |||||||||||||||||||||
Earnings from continuing operations | $ | 1.74 | $ | 1.32 | 31.8 | % | $ | 3.40 | $ | 2.84 | 19.7 | % | |||||||||
Losses from discontinued operations | (0.01 | ) | — | NM | (0.06 | ) | (0.02 | ) | NM | ||||||||||||
Net earnings | $ | 1.73 | $ | 1.32 | 31.1 | % | $ | 3.34 | $ | 2.82 | 18.4 | % | |||||||||
(1) Effective tax rate | (88.4 | )% | 24.5 | % | (10.2 | )% | 25.4 | % | |||||||||||||
NM- Not meaningful. Percentage increases and decreases over 100 percent were not considered meaningful. |
February 25, 2018 | May 28, 2017 | February 26, 2017 | |||||||
Olive Garden (1) | 853 | 846 | 843 | ||||||
LongHorn Steakhouse | 499 | 490 | 488 | ||||||
Cheddar’s Scratch Kitchen (2) | 154 | 140 | — | ||||||
Yard House | 71 | 67 | 65 | ||||||
The Capital Grille | 57 | 56 | 56 | ||||||
Bahama Breeze | 39 | 37 | 36 | ||||||
Seasons 52 | 41 | 41 | 40 | ||||||
Eddie V’s | 19 | 18 | 17 | ||||||
Total | 1,733 | 1,695 | 1,545 |
(1) | Includes six locations in Canada for all periods presented. |
(2) | Includes the 140 restaurants acquired on April 24, 2017 and the 11 restaurants acquired on August 28, 2017. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
(in millions) | February 25, 2018 | February 26, 2017 | % Chg | SRS (1) | February 25, 2018 | February 26, 2017 | % Chg | SRS (1) | |||||||||||||||||||
Olive Garden | $ | 1,073.2 | $ | 1,035.1 | 3.7 | % | 2.2 | % | $ | 3,014.6 | $ | 2,911.3 | 3.5 | % | 2.4 | % | |||||||||||
LongHorn Steakhouse | $ | 452.8 | $ | 434.3 | 4.3 | % | 2.0 | % | $ | 1,245.0 | $ | 1,185.6 | 5.0 | % | 2.8 | % | |||||||||||
Cheddar’s Scratch Kitchen | $ | 165.1 | $ | — | NM | (2.2 | )% | $ | 478.4 | $ | — | NM | (1.4 | )% | |||||||||||||
Yard House | $ | 145.1 | $ | 132.1 | 9.8 | % | 1.9 | % | $ | 420.0 | $ | 391.7 | 7.2 | % | 1.1 | % | |||||||||||
The Capital Grille | $ | 128.1 | $ | 122.3 | 4.7 | % | 2.8 | % | $ | 328.0 | $ | 313.9 | 4.5 | % | 2.9 | % | |||||||||||
Bahama Breeze | $ | 56.5 | $ | 51.4 | 9.9 | % | 0.2 | % | $ | 170.3 | $ | 156.4 | 8.9 | % | 1.3 | % | |||||||||||
Seasons 52 | $ | 69.1 | $ | 68.0 | 1.6 | % | (0.2 | )% | $ | 184.1 | $ | 181.7 | 1.3 | % | (1.0 | )% | |||||||||||
Eddie V’s | $ | 36.3 | $ | 31.4 | 15.6 | % | 2.7 | % | $ | 99.1 | $ | 82.7 | 19.8 | % | 4.0 | % |
(1) | Same-restaurant sales is a year-over-year comparison of each period’s sales volumes for a 52-week year and is limited to restaurants open at least 16 months, including recently acquired restaurants, absent consideration of when the restaurants were acquired. |
Three Months Ended | Nine Months Ended | ||||||||||
February 25, 2018 | February 26, 2017 | February 25, 2018 | February 26, 2017 | ||||||||
Sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Costs and expenses: | |||||||||||
Food and beverage | 28.3 | 28.8 | 28.6 | 28.9 | |||||||
Restaurant labor | 32.1 | 30.8 | 32.5 | 31.7 | |||||||
Restaurant expenses | 17.0 | 17.1 | 17.7 | 17.8 | |||||||
Marketing expenses | 2.8 | 2.9 | 3.1 | 3.4 | |||||||
General and administrative expenses | 5.2 | 4.6 | 5.2 | 4.9 | |||||||
Depreciation and amortization | 3.7 | 3.6 | 3.9 | 3.9 | |||||||
Impairments and disposal of assets, net | — | — | — | (0.2 | ) | ||||||
Total operating costs and expenses | 89.0 | % | 87.8 | % | 91.0 | % | 90.3 | % | |||
Operating income | 11.0 | 12.2 | 9.0 | 9.7 | |||||||
Interest, net | 5.5 | 0.5 | 2.5 | 0.5 | |||||||
Earnings before income taxes | 5.5 | 11.7 | 6.5 | 9.1 | |||||||
Income tax (benefit) expense | (4.8 | ) | 2.9 | (0.7 | ) | 2.3 | |||||
Earnings from continuing operations | 10.3 | 8.9 | 7.2 | 6.8 |
• | Food and beverage costs decreased as a percent of sales due to a 0.5% impact related to cost savings initiatives and a 0.4% impact from pricing, partially offset by a 0.2% impact from unfavorable menu mix and inflation. |
• | Restaurant labor costs increased as a percent of sales primarily due to a 0.9% impact from wage-rate inflation, a 0.4% impact from Cheddar’s Scratch Kitchen’s higher labor costs relative to Darden legacy brands and a 0.3% impact related to workforce reinvestment costs partially offset by a 0.8% impact from sales leverage. |
• | General and administrative expenses increased as a percent of sales primarily due to a 0.3% impact from expenses related to the integration of Cheddar’s Scratch Kitchen and a 0.2% impact from market-based compensation partially offset by a 0.2% impact from sales leverage. |
• | Food and beverage costs decreased as a percent of sales due to a 0.4% impact from pricing and a 0.4% impact related to cost savings initiatives, partially offset by a 0.5% impact from unfavorable menu mix and inflation. |
• | Restaurant labor costs increased as a percent of sales primarily due to a 0.9% impact from wage-rate inflation and a 0.4% impact from Cheddar’s Scratch Kitchen’s higher labor costs relative to Darden legacy brands partially offset by a 0.8% impact from sales leverage. |
• | Marketing expenses decreased as a percent of sales, primarily due to a 0.2% impact from Cheddar’s Scratch Kitchen’s lower marketing spend relative to Darden legacy brands. |
• | General and administrative expenses increased as a percent of sales primarily due to a 0.3% impact from expenses related to the integration of Cheddar’s Scratch Kitchen and a 0.2% impact from an unfavorable legal outcome partially offset by a 0.2% impact from sales leverage. |
Three Months Ended | Nine Months Ended | |||||||||||||||
Segment | February 25, 2018 | February 26, 2017 | Change | February 25, 2018 | February 26, 2017 | Change | ||||||||||
Olive Garden | 21.1% | 21.0% | 10 | BP | 19.7% | 19.1% | 60 | BP | ||||||||
LongHorn Steakhouse | 19.9% | 19.6% | 30 | BP | 17.2% | 16.7% | 50 | BP | ||||||||
Fine Dining | 24.5% | 23.7% | 80 | BP | 20.3% | 19.3% | 100 | BP | ||||||||
Other Business | 15.0% | 17.5% | (250 | ) | BP | 14.5% | 16.7% | (220 | ) | BP |
• | Moody’s Investors Service “Baa2”; |
• | Standard & Poor’s “BBB”; and |
• | Fitch “BBB”. |
• | Moody’s Investors Service “P-2”; |
• | Standard & Poor’s “A-2”; and |
• | Fitch “F-2”. |
• | $500.0 million of unsecured 3.850 percent senior notes due in May 2027; |
• | $96.3 million of unsecured 6.000 percent senior notes due in August 2035; |
• | $42.8 million of unsecured 6.800 percent senior notes due in October 2037; and |
• | $300.0 million of unsecured 4.550 percent senior notes due in February 2048. |
• | $53.7 million of unsecured 6.000 percent senior notes due in August 2035; and |
• | $257.2 million of unsecured 6.800 percent senior notes due in October 2037. |
• | Inability to integrate Cheddar’s Scratch Kitchen into our business and failure to achieve the cost savings and other benefits we expect to be able to realize in the Cheddar’s Scratch Kitchen operations; |
• | Insufficient guest or employee facing technology, or a failure to maintain a continuous and secure cyber network, free from material failure, interruption or security breach; |
• | Food safety and food-borne illness concerns throughout the supply chain; |
• | Litigation, including allegations of illegal, unfair or inconsistent employment practices; |
• | Unfavorable publicity, or a failure to respond effectively to adverse publicity; |
• | Risks relating to public policy changes and federal, state and local regulation of our business, including in the areas of environmental matters, minimum wage, unionization, data privacy, menu labeling, immigration requirements and taxes; |
• | The inability to cancel long-term, non-cancelable leases that we may want to cancel or the inability to renew the leases that we may want to extend at the end of their terms; |
• | Labor and insurance costs; |
• | Our inability or failure to execute a comprehensive business continuity plan following a major natural disaster such as a hurricane or manmade disaster, including terrorism; |
• | Health concerns arising from food-related pandemics, outbreaks of flu viruses or other diseases; |
• | Intense competition, or an insufficient focus on competition and the consumer landscape; |
• | Our failure to drive both short-term and long-term profitable sales growth through brand relevance, operating excellence, opening new restaurants of existing brands and developing or acquiring new dining brands; |
• | A lack of suitable new restaurant locations or a decline in the quality of the locations of our current restaurants; |
• | Higher-than-anticipated costs to open, close, relocate or remodel restaurants; |
• | An inability or failure to recognize, respond to and effectively manage the accelerated impact of social media; |
• | A failure to identify and execute innovative marketing and guest relationship tactics and ineffective or improper use of other marketing initiatives and increased advertising and marketing costs; |
• | A failure to recruit, develop and retain effective leaders or the loss or shortage of key personnel, or an inability to adequately monitor and respond to employee dissatisfaction; |
• | A failure to address cost pressures, including rising costs for commodities, health care and utilities used by our restaurants, and a failure to effectively deliver cost management activities and achieve economies of scale in purchasing; |
• | The impact of shortages or interruptions in the delivery of food and other products from third-party vendors and suppliers; |
• | Adverse weather conditions and natural disasters; |
• | Volatility in the market value of derivatives we use to hedge commodity prices; |
• | Economic and business factors specific to the restaurant industry and other general macroeconomic factors including energy prices and interest rates that are largely out of our control; |
• | Disruptions in the financial markets that may impact consumer spending patterns, affect the availability and cost of credit and increase pension plan expenses; |
• | Risks associated with doing business with franchisees, business partners and vendors in foreign markets; |
• | Failure to protect our intellectual property; |
• | Impairment of the carrying value of our goodwill or other intangible assets; and |
• | A failure of our internal controls over financial reporting and future changes in accounting standards. |
(Dollars in millions, except per share data) | Total Number of Shares Purchased (1) (2) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (3) | ||||||||||
November 27, 2017 through December 31, 2017 | 25,838 | $ | 93.63 | 25,838 | $ | 278.5 | ||||||||
January 1, 2018 through January 28, 2018 | 130,699 | $ | 98.59 | 130,699 | $ | 265.6 | ||||||||
January 29, 2018 through February 25, 2018 | 35,447 | $ | 94.97 | 35,447 | $ | 262.3 | ||||||||
Total | 191,984 | $ | 97.26 | 191,984 | $ | 262.3 |
(1) | All of the shares purchased during the quarter ended February 25, 2018 were purchased as part of our repurchase program. On September 29, 2016, our Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $500.0 million of its outstanding common stock. This repurchase program, which was announced publicly in a press release issued on October 4, 2016, does not have an expiration and replaces the previously existing share repurchase authorizations. |
(2) | The number of shares purchased includes shares withheld for taxes on vesting of restricted stock, shares delivered or deemed to be delivered to us on tender of stock in payment for the exercise price of options, and shares reacquired pursuant to tax withholding on option exercises. These shares are included as part of our repurchase program and deplete the repurchase authority granted by our Board. The number of shares repurchased excludes shares we reacquired pursuant to forfeiture of restricted stock. |
(3) | Repurchases are subject to prevailing market prices, may be made in open market or private transactions and may occur or be discontinued at any time. There can be no assurance that we will repurchase any shares. |
DARDEN RESTAURANTS, INC. | |||
Dated: | April 3, 2018 | By: | /s/ Ricardo Cardenas |
Ricardo Cardenas | |||
Senior Vice President and Chief Financial Officer | |||
(Principal financial officer) |
Exhibit No. | Exhibit Title | |
4.5 | ||
4.6 | ||
31(a) | ||
31(b) | ||
32(a) | ||
32(b) | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Schema Document | |
101.CAL | XBRL Calculation Linkbase Document | |
101.DEF | XBRL Definition Linkbase Document | |
101.LAB | XBRL Label Linkbase Document | |
101.PRE | XBRL Presentation Linkbase Document |
1. | I have reviewed this quarterly report on Form 10-Q of Darden Restaurants, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
April 3, 2018 | |
/s/ Eugene I. Lee, Jr. | |
Eugene I. Lee, Jr. | |
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Darden Restaurants, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
April 3, 2018 | |
/s/ Ricardo Cardenas | |
Ricardo Cardenas | |
Senior Vice President and Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
April 3, 2018 | |
/s/ Eugene I. Lee, Jr. | |
Eugene I. Lee, Jr. | |
President and Chief Executive Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
April 3, 2018 | |
/s/ Ricardo Cardenas | |
Ricardo Cardenas | |
Senior Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Feb. 25, 2018 |
Mar. 15, 2018 |
|
Document And Entity Information Abstract | ||
Entity Registrant Name | DARDEN RESTAURANTS INC | |
Entity Central Index Key | 0000940944 | |
Current Fiscal Year End Date | --05-27 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Feb. 25, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 123,789,512 |
Consolidated Statements of Earnings (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Income Statement [Abstract] | ||||
Earnings (losses) from discontinued operations, tax expense (benefit) | $ (0.5) | $ (0.9) | $ (4.0) | $ (2.2) |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 217.8 | $ 165.6 | $ 421.5 | $ 355.3 |
Other comprehensive income (loss): | ||||
Foreign currency adjustment | (0.4) | (0.1) | (1.1) | 0.5 |
Change in fair value of marketable securities, net of taxes of $0.0, $0.0, $0.0 and $0.0, respectively | 0.0 | 0.0 | (0.1) | 0.0 |
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $0.0, $0.0, $0.0, and $0.0, respectively | 3.6 | (0.7) | (0.8) | 2.1 |
Amortization of unrecognized net actuarial (loss) gain, net of taxes of $(0.1), $0.1, $(0.1) and $0.3 respectively, related to pension and other post-employment benefits | 0.0 | 0.1 | (0.1) | 0.4 |
Reclassification of tax effect | (15.4) | 0.0 | (15.4) | 0.0 |
Other comprehensive income (loss) | (12.2) | (0.7) | (17.5) | 3.0 |
Total comprehensive income | $ 205.6 | $ 164.9 | $ 404.0 | $ 358.3 |
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Change in fair value of marketable securities, net of taxes of $0.0, $0.0, $0.0 and $0.0, respectively | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 |
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $0.0, $0.0, $0.0, and $0.0, respectively | 0.0 | 0.0 | 0.0 | 0.0 |
Amortization of unrecognized net actuarial (loss) gain, net of taxes of $(0.1) ,$0.1, $(0.1) and $0.3 respectively, related to pension and other post-employment benefits | $ (0.1) | $ 0.1 | $ (0.1) | $ 0.3 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Feb. 25, 2018 |
May 28, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accumulated depreciation and amortization | $ 2,167.0 | $ 1,996.8 |
Consolidated Statements of Changes In Stockholders' Equity (Parenthetical) - shares shares in Millions |
9 Months Ended | |
---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||
Stock option exercised (in shares) | 0.8 | 1.5 |
Repurchases of common stock, (in shares) | 2.5 | 3.5 |
Issuance of treasury stock under Employee Stock Purchase Plan and other plans (in shares) | 0.1 | 0.1 |
Basis of Presentation |
9 Months Ended |
---|---|
Feb. 25, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Darden Restaurants, Inc. (we, our, Darden or the Company) owns and operates full-service dining restaurants in the United States and Canada under the trade names Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capital Grille®, Bahama Breeze®, Seasons 52®, and Eddie V’s Prime Seafood® and Wildfish Seafood Grille® (collectively “Eddie V’s”). As of February 25, 2018, through subsidiaries, we own and operate all of our restaurants in the United States and Canada, except for 3 joint venture restaurants managed by us and 35 franchised restaurants. We also have 34 franchised restaurants in operation located in Latin America, the Middle East and Malaysia. We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. We operate on a 52/53-week fiscal year which ends on the last Sunday in May, and our fiscal year ending May 27, 2018 will contain 52 weeks of operation. Operating results for interim periods presented are not necessarily indicative of results that may be expected for the full fiscal year. These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 28, 2017. We prepare our consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and costs and expenses during the reporting period. Actual results could differ from those estimates. Recently Adopted Accounting Standards As of May 29, 2017, we adopted Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). This update requires that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. Upon adoption, we applied this guidance retrospectively which resulted in a reclassification of current deferred tax assets of $211.8 million on our consolidated balance sheet for the period ended May 28, 2017. As of May 29, 2017, we adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718). The amendments in this update cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. The primary impact for us upon adoption is the recognition of excess tax benefits in our provision for income taxes rather than in equity as previously recognized. This change is required to be applied prospectively. The cash flows related to excess tax benefits will be presented as an operating activity rather than a financing activity in our consolidated statements of cash flows. We elected to apply the presentation requirements for the cash flows related to excess tax benefits prospectively and therefore have not adjusted prior periods. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in our consolidated statements of cash flows since such cash flows have historically been presented as a financing activity. Additionally, we have elected to continue our current accounting policy of estimating forfeitures rather than accounting for forfeitures as they occur. In August 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-15, Statement of Cash Flows (Topic 230). This update provides clarification regarding how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This update is effective for us in the first quarter of fiscal 2019, however, we elected to early adopt this guidance during the quarter ended February 25, 2018, using a retrospective approach. The adoption of this guidance did not have a material impact on our consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). The amendments in the update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (Tax Act). This update is effective for us in the first quarter of fiscal 2020, however, we elected to early adopt this guidance during the quarter ended February 25, 2018. The adoption of this guidance resulted in a $15.4 million reclassification from accumulated other comprehensive income (loss) to retained earnings resulting from the Tax Act. See Note 9. New Accounting Standards In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This update is effective for us in the first quarter of fiscal 2019, which is when we plan to adopt these provisions using the cumulative effect transition method. We do not believe this guidance will impact the recognition of our primary source of revenue from company-owned restaurants, which also includes gift card revenue. We expect this guidance will impact the recognition of our franchise revenue, however, due to the relative insignificance of these amounts, we do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. This update is effective for us in the first quarter of fiscal 2020, which is when we plan to adopt these provisions. This guidance requires us to use a modified retrospective approach upon adoption with certain practical expedients available. We expect our balance sheet presentation to be materially impacted upon adoption due to the recognition of right-of-use assets and lease liabilities for operating leases. However, we do not expect adoption to have a material impact on our consolidated statements of earnings. We do not expect our accounting for capital leases to substantially change. We are continuing to evaluate the effect this guidance will have on our consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740). This update addresses the income tax consequences of intra-entity transfers of assets other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. In addition, interpretations of this guidance have developed in practice over the years for transfers of certain intangible and tangible assets. The amendments in the update will require recognition of current and deferred income taxes resulting from an intra-entity transfer of an asset other than inventory when the transfer occurs. This update is effective for us in the first quarter of fiscal 2019, which is when we plan to adopt these provisions using a modified retrospective approach. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715). The amendments in this update require that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization. This update is effective for us in the first quarter of fiscal 2019, which is when we plan to adopt these provisions. The guidance will be applied retrospectively or prospectively, depending on the area covered in this update. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815). The amendments in this update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This update is effective for us in the first quarter of fiscal 2020. The guidance will be applied retrospectively or prospectively, depending on the area covered in this update. Early adoption is permitted. We are evaluating the effect this guidance will have on our consolidated financial statements and related disclosures. |
Acquisition of Cheddar's Scratch Kitchen |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Cheddar's Scratch Kitchen | Acquisition of Cheddar’s Scratch Kitchen On April 24, 2017, we acquired 100 percent of the equity interest in Cheddar’s Scratch Kitchen for $799.8 million in total consideration. We funded the acquisition with the proceeds from the issuance of $500.0 million in senior notes combined with cash on hand. The acquired operations of Cheddar’s Scratch Kitchen included 140 company-owned restaurants and 25 franchised restaurants. The results of Cheddar’s Scratch Kitchen operations are included in our consolidated financial statements from the date of acquisition. The assets and liabilities of Cheddar’s Scratch Kitchen were recorded at their respective fair values as of the date of acquisition. We are in the process of confirming, through internal studies and third-party valuations, the fair value of these assets, including land, buildings and equipment, intangible assets, and income tax assets and liabilities. The fair values set forth below are based on preliminary valuations and are subject to adjustment as additional information is obtained. When the valuation process is completed, adjustments to goodwill may result. The preliminary allocation of the purchase price is as follows:
The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill. Of the $298.5 million recorded as goodwill, none is expected to be deductible for tax purposes. The portion of the purchase price attributable to goodwill represents benefits expected as a result of the acquisition, including sales and unit growth opportunities in addition to supply-chain and support-cost synergies. The trademark has an indefinite life based on the expected use of the asset and the regulatory and economic environment within which it is being used. The trademark represents a highly respected brand with positive connotations and we intend to cultivate and protect the use of this brand. Goodwill and indefinite-lived trademarks are not amortized but are reviewed annually for impairment or more frequently if indicators of impairment exist. Buildings and equipment will be depreciated over a period of 2 years to 30 years. Pro-forma financial information of the combined entities for periods prior to the acquisition is not presented due to the immaterial impact of the financial results of Cheddar’s Scratch Kitchen on our consolidated financial statements. On August 28, 2017, we completed the acquisition of 11 Cheddar’s Scratch Kitchen restaurants and certain assets and liabilities from C&P Restaurant Company, LLC, an existing franchisee. The acquisition was funded with cash on hand for $39.6 million in total consideration, of which $22.5 million was allocated to reacquired franchise rights. The results of operations of these restaurants are included in our consolidated financial statements from the date of acquisition. The assets and liabilities of these restaurants were recorded at their respective fair values as of the date of acquisition. We are in the process of confirming, through internal studies and third-party valuations, the fair value of these assets and liabilities. When the valuation process is completed, adjustments to goodwill may result. The excess purchase price over the aggregate fair value of net assets acquired of $11.2 million was allocated to goodwill and is expected to be deductible for tax purposes. The portion of the purchase price attributable to goodwill represents benefits expected as a result of the acquisition, including sales and unit growth opportunities in addition to supply-chain and support-cost synergies. Pro-forma financial information of the combined entities for periods prior to the acquisition is not presented due to the immaterial impact of the financial results of the acquired restaurants on our consolidated financial statements. As a result of the integration efforts for these acquisitions, we incurred expenses of approximately $6.7 million and $17.3 million during the quarter and nine months ended February 25, 2018, respectively, which are included in general and administrative expenses in our consolidated statements of earnings. |
Discontinued Operations and Assets Held for Sale |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Assets Held for Sale | Discontinued Operations and Assets Held for Sale Discontinued Operations Losses from discontinued operations, net of taxes in our accompanying consolidated statements of earnings is primarily related to the run-off of retained rights and obligations from the Red Lobster disposition and is comprised of the following:
Assets Held For Sale Assets classified as held for sale on our accompanying consolidated balance sheets as of February 25, 2018 and May 28, 2017, primarily related to excess land parcels adjacent to our corporate headquarters with carrying amounts of $11.1 million and $13.2 million, respectively. |
Supplemental Cash Flow Information |
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Supplemental Cash Flow Information | Supplemental Cash Flow Information
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Income Taxes |
9 Months Ended |
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Feb. 25, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Tax Act was enacted on December 22, 2017, and includes, among other items, a reduction in the federal corporate income tax rate from 35.0 percent to 21.0 percent effective January 1, 2018. Our federal corporate income tax rate for fiscal 2018 is now 29.4 percent, representing a blended income tax rate for the current fiscal year. For fiscal 2019, our federal statutory rate will be 21.0 percent. Additionally, for the quarter ended February 25, 2018, in accordance with FASB Accounting Standards Codification (ASC) 740, we remeasured our deferred tax balances to reflect the reduced rate that will apply when these deferred taxes are settled or realized in future periods. The remeasurement resulted in a $77.3 million one-time adjustment of our net deferred tax liabilities reflected in our consolidated balance sheet as of February 25, 2018 and a corresponding income tax benefit reflected in our consolidated statements of earnings for the quarter and nine months ended February 25, 2018. The SEC staff issued Staff Accounting Bulletin 118 which allows companies to record provisional amounts during a measurement period that is similar to the measurement period used when accounting for business combinations. While we are able to make a reasonable estimate of the impacts of the Tax Act, adjustments may occur and may be affected by other factors, including, but not limited to, changes to the current year deferred tax balance estimates. The effective income tax rate for continuing operations for the quarter ended February 25, 2018 was an 88.4 percent benefit compared to an effective income tax rate of 24.5 percent expense for the quarter ended February 26, 2017. The effective income tax rate for continuing operations for the nine months ended February 25, 2018 was a 10.2 percent benefit compared to an effective income tax rate of 25.4 percent expense for the nine months ended February 26, 2017. The decrease in the effective income tax rate for the quarter and nine months ended February 25, 2018 was primarily due to the Tax Act and lower earnings before income taxes for fiscal 2018 driven primarily by debt retirement costs recorded during the quarter ended February 25, 2018. Included in our remaining balance of unrecognized tax benefits is $1.4 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve months based on the outcome of examinations or as a result of the expiration of the statute of limitations for specific jurisdictions. |
Net Earnings per Share |
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Feb. 25, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Earnings per Share | Net Earnings per Share Outstanding stock options, restricted stock and equity-settled performance stock units granted by us represent the only dilutive effect reflected in diluted weighted average shares outstanding, none of which impact the numerator of the diluted net earnings per share computation. Stock options, restricted stock and equity-settled performance stock units excluded from the calculation of diluted net earnings per share because the effect would have been anti-dilutive, are as follows:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Bahama Breeze, Seasons 52 and Eddie V’s in North America as operating segments. The brands operate principally in the U.S. within full-service dining. We aggregate our operating segments into reportable segments based on a combination of the size, economic characteristics and sub-segment of full-service dining within which each brand operates. We have four reportable segments: (1) Olive Garden, (2) LongHorn Steakhouse, (3) Fine Dining and (4) Other Business. The Olive Garden segment includes the results of our company-owned Olive Garden restaurants in the U.S. and Canada. The LongHorn Steakhouse segment includes the results of our company-owned LongHorn Steakhouse restaurants in the U.S. The Fine Dining segment aggregates our premium brands that operate within the fine-dining sub-segment of full-service dining and includes the results of our company-owned The Capital Grille and Eddie V’s restaurants in the U.S. The Other Business segment aggregates our remaining brands and includes the results of our company-owned Cheddar’s Scratch Kitchen, Yard House, Seasons 52 and Bahama Breeze restaurants in the U.S and results from our franchise operations. For periods prior to fiscal 2018, this segment also included results from our consumer-packaged goods sales. Beginning with the first quarter of fiscal 2018, the results from consumer-packaged goods are included in net sales of the associated brand, primarily Olive Garden. External sales are derived principally from food and beverage sales. We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our reportable segments are predominantly in the U.S. There were no material transactions among reportable segments. Our management uses segment profit as the measure for assessing performance of our segments. Segment profit includes revenues and expenses directly attributable to restaurant-level results of operations (sometimes referred to as restaurant-level earnings). These expenses include food and beverage costs, restaurant labor costs, restaurant expenses and marketing expenses (collectively “restaurant and marketing expenses”). The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
Reconciliation of segment profit to earnings from continuing operations before income taxes:
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Impairment and Disposal of Assets, Net |
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Asset Impairment Charges [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment and Disposal of Assets, Net | Impairments and Disposal of Assets, Net Impairments and disposal of assets, net, in our accompanying consolidated statements of earnings are comprised of the following:
Disposal gains for the quarter ended February 25, 2018 were not material. Disposal gains for the nine months ended February 25, 2018 were primarily related to the sale of excess land parcels. For the quarter and nine months ended February 26, 2017, disposal gains were primarily related to the sale of restaurant properties, favorable lease terminations and the sale of excess land parcels. Other impairment charges for the quarter ended February 26, 2017 were not material. During the nine months ended February 26, 2017, other impairment charges primarily related to a cost-method investment, which has no remaining carrying value. |
Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Accumulated Other Comprehensive Income (Loss) (AOCI) The components of accumulated other comprehensive income (loss), net of tax, for the quarters ended February 25, 2018 and February 26, 2017 are as follows:
The components of accumulated other comprehensive income (loss), net of tax, for the nine months ended February 25, 2018 and February 26, 2017 are as follows:
The following table presents the amounts and line items in our consolidated statements of earnings where adjustments reclassified from AOCI into net earnings were recorded:
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Retirement Plans |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans | Retirement Plans Components of net periodic benefit cost are as follows:
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Stock-Based Compensation |
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation We grant stock options for a fixed number of shares to certain employees with an exercise price equal to the fair value of the shares at the date of grant. We also grant restricted stock, restricted stock units, and performance stock units with a fair value generally determined based on our closing stock price on the date of grant. In addition, we also grant cash settled stock units (Darden stock units) which are classified as liabilities and are marked to market as of the end of each period. The weighted-average fair value of non-qualified stock options and the related assumptions used in the Black-Scholes option pricing model were as follows.
The following table presents a summary of our stock-based compensation activity for the nine months ended February 25, 2018:
We recognized expense from stock-based compensation as follows:
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Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments as provided by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. We use financial derivatives to manage interest rate and compensation risks inherent in our business operations. To the extent our cash-flow hedging instruments are effective in offsetting the variability of the hedged cash flows, and otherwise meet the cash flow hedge accounting criteria required by Topic 815 of the FASB ASC, changes in the derivatives’ fair value are not included in current earnings, but are included in accumulated other comprehensive income (loss), net of tax. These changes in fair value will be reclassified into earnings at the time of the forecasted transaction. Ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period in which it occurs. To the extent the cash flow hedge accounting criteria are not met, the derivative contracts are utilized as economic hedges and changes in the fair value of such contracts are recorded currently in earnings in the period in which they occur. By using these instruments, we expose ourselves, from time to time, to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. We minimize this credit risk by entering into transactions with high quality counterparties. We currently do not have any provisions in our agreements with counterparties that would require either party to hold or post collateral in the event that the market value of the related derivative instrument exceeds a certain limit. As such, the maximum amount of loss due to counterparty credit risk we would incur at February 25, 2018, if counterparties to the derivative instruments failed completely to perform, would approximate the values of derivative instruments currently recognized as assets on our consolidated balance sheet. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices, or the market price of our common stock. We minimize this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. We periodically enter into commodity futures, swaps and option contracts (collectively, commodity contracts) to reduce the risk of variability in cash flows associated with fluctuations in the price we pay for commodities, such as natural gas and diesel fuel. For certain of our commodity purchases, changes in the price we pay for these commodities are highly correlated with changes in the market price of these commodities. For these commodity purchases, we designate commodity contracts as cash flow hedging instruments. For the remaining commodity purchases, changes in the price we pay for these commodities are not highly correlated with changes in the market price, generally due to the timing of when changes in the market prices are reflected in the price we pay. For these commodity purchases, we utilize these commodity contracts as economic hedges. Our commodity contracts currently extend through April 2019. We enter into equity forward contracts to hedge the risk of changes in future cash flows associated with the unvested, unrecognized Darden stock units. The equity forward contracts will be settled at the end of the vesting periods of their underlying Darden stock units, which range between three and five years and currently extend through July 2022. The contracts were initially designated as cash flow hedges to the extent the Darden stock units are unvested and, therefore, unrecognized as a liability in our financial statements. The forward contracts can only be net settled in cash. As the Darden stock units vest, we will de-designate that portion of the equity forward contract that no longer qualifies for hedge accounting, and changes in fair value associated with that portion of the equity forward contract will be recognized in current earnings. We periodically incur interest on the notional value of the contracts and receive dividend equivalents on the underlying shares. These amounts are recognized currently in earnings as they are incurred or received. We entered into equity forward contracts to hedge the risk of changes in future cash flows associated with recognized, employee-directed investments in Darden stock within the non-qualified deferred compensation plan. We did not elect hedge accounting with the expectation that changes in the fair value of the equity forward contracts would offset changes in the fair value of Darden stock investments in the non-qualified deferred compensation plan within general and administrative expenses in our consolidated statements of earnings. These contracts currently extend through July 2021. The notional and fair values of our derivative contracts are as follows:
The effects of derivative instruments accounted for as cash flow hedging instruments in the consolidated statements of earnings are as follows:
The effects of derivatives not designated as hedging instruments in the consolidated statements of earnings are as follows:
Based on the fair value of our derivative instruments designated as cash flow hedges as of February 25, 2018, we expect to reclassify $1.0 million of net gains on derivative instruments from accumulated other comprehensive income (loss) to earnings during the next 12 months based on the maturity of our equity forward contracts. However, the amounts ultimately realized in earnings will be dependent on the fair value of the contracts on the settlement dates. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The fair values of cash equivalents, receivables, net, accounts payable and short-term debt approximate their carrying amounts due to their short duration. The following tables summarize the fair values of financial instruments measured at fair value on a recurring basis as of February 25, 2018 and May 28, 2017:
The carrying value and fair value of long-term debt as of February 25, 2018, was $926.4 million and $953.7 million, respectively. The carrying value and fair value of long-term debt as of May 28, 2017, was $936.6 million and $1.05 billion, respectively. The fair value of long-term debt, which is classified as Level 2 in the fair value hierarchy, is determined based on market prices or, if market prices are not available, the present value of the underlying cash flows discounted at our incremental borrowing rates. The fair value of non-financial assets measured at fair value on a non-recurring basis, which is classified as Level 3 in the fair value hierarchy, is determined based on appraisals or sales prices of comparable assets and estimates of future cash flows. During the quarter and nine months ended February 25, 2018, there were no adjustments to the fair values of non-financial assets measured at fair value on a non-recurring basis. As of May 28, 2017, adjustments to the fair values of non-financial assets were not material. |
Commitments And Contingencies |
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Feb. 25, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As collateral for performance on contracts and as credit guarantees to banks and insurers, we are contingently liable for guarantees of subsidiary obligations under standby letters of credit. As of February 25, 2018 and May 28, 2017, we had $96.9 million and $127.5 million, respectively, of standby letters of credit related to workers’ compensation and general liabilities accrued in our consolidated financial statements. As of February 25, 2018 and May 28, 2017, we had $17.3 million and $10.6 million, respectively, of standby letters of credit related to contractual operating lease obligations and other payments. All standby letters of credit are renewable annually. As of February 25, 2018 and May 28, 2017, we had $149.4 million and $163.2 million, respectively, of guarantees associated with leased properties that have been assigned to third parties. These amounts represent the maximum potential amount of future payments under the guarantees. The fair value of the maximum potential future payments discounted at our weighted-average cost of capital as of February 25, 2018 and May 28, 2017, amounted to $127.2 million and $137.6 million, respectively. We did not record a liability for the guarantees, as the likelihood of the third parties defaulting on the assignment agreements was deemed to be remote. In the event of default by a third party, the indemnity and default clauses in our assignment agreements govern our ability to recover from and pursue the third party for damages incurred as a result of its default. We do not hold any third-party assets as collateral related to these assignment agreements, except to the extent that the assignment allows us to repossess the building and personal property. These guarantees expire over their respective lease terms, which range from fiscal 2019 through fiscal 2028. We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employees and others related to operational issues common to the restaurant industry, and can also involve infringement of, or challenges to, our trademarks. While the resolution of a lawsuit, proceeding or claim may have an impact on our financial results for the period in which it is resolved, we believe that the final disposition of the lawsuits, proceedings and claims in which we are currently involved, either individually or in the aggregate, will not have a material adverse effect on our financial position, results of operations or liquidity. |
Long-Term Debt |
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Long-Term Debt | Long-Term Debt As of February 25, 2018, our outstanding long-term debt consisted principally of:
On February 22, 2018, we completed the issuance of $300.0 million aggregate principal amount of unsecured 4.550 percent senior notes due in February 2048 under a registration statement filed with the SEC on October 6, 2016. Discount and issuance costs, which totaled $3.5 million, are being amortized over the term of the notes using the straight-line method, the results of which approximate the effective interest method. Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year commencing August 15, 2018. We may redeem the notes at any time in whole or from time to time in part, at the principal amount plus a make-whole premium. If we experience a change in control triggering event, unless we have previously exercised our right to redeem the notes, we may be required to purchase the notes from the holders at a purchase price equal to 101 percent of their principal amount plus accrued and unpaid interest. We utilized the proceeds from this issuance, along with cash on hand, to retire $310.9 million aggregate principal amount of long-term debt consisting of:
For the quarter and nine months ended February 25, 2018, we recorded approximately $102.2 million of expenses associated with the retirements, including cash costs of approximately $97.3 million, primarily for repurchase premiums and non-cash charges of approximately $4.9 million associated with loan cost write-offs. These amounts were recorded in interest, net in our consolidated statements of earnings for the quarter and nine months ended February 25, 2018. |
Subsequent Events |
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Feb. 25, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On March 21, 2018, the Board of Directors declared a cash dividend of $0.63 per share to be paid May 1, 2018 to all shareholders of record as of the close of business on April 10, 2018. |
Basis of Presentation (Policies) |
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Feb. 25, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Darden Restaurants, Inc. (we, our, Darden or the Company) owns and operates full-service dining restaurants in the United States and Canada under the trade names Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capital Grille®, Bahama Breeze®, Seasons 52®, and Eddie V’s Prime Seafood® and Wildfish Seafood Grille® (collectively “Eddie V’s”). As of February 25, 2018, through subsidiaries, we own and operate all of our restaurants in the United States and Canada, except for 3 joint venture restaurants managed by us and 35 franchised restaurants. We also have 34 franchised restaurants in operation located in Latin America, the Middle East and Malaysia. We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. We operate on a 52/53-week fiscal year which ends on the last Sunday in May, and our fiscal year ending May 27, 2018 will contain 52 weeks of operation. Operating results for interim periods presented are not necessarily indicative of results that may be expected for the full fiscal year. These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 28, 2017. We prepare our consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and costs and expenses during the reporting period. Actual results could differ from those estimates. |
Application of New Accounting Standards | Recently Adopted Accounting Standards As of May 29, 2017, we adopted Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). This update requires that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. Upon adoption, we applied this guidance retrospectively which resulted in a reclassification of current deferred tax assets of $211.8 million on our consolidated balance sheet for the period ended May 28, 2017. As of May 29, 2017, we adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718). The amendments in this update cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. The primary impact for us upon adoption is the recognition of excess tax benefits in our provision for income taxes rather than in equity as previously recognized. This change is required to be applied prospectively. The cash flows related to excess tax benefits will be presented as an operating activity rather than a financing activity in our consolidated statements of cash flows. We elected to apply the presentation requirements for the cash flows related to excess tax benefits prospectively and therefore have not adjusted prior periods. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in our consolidated statements of cash flows since such cash flows have historically been presented as a financing activity. Additionally, we have elected to continue our current accounting policy of estimating forfeitures rather than accounting for forfeitures as they occur. In August 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-15, Statement of Cash Flows (Topic 230). This update provides clarification regarding how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This update is effective for us in the first quarter of fiscal 2019, however, we elected to early adopt this guidance during the quarter ended February 25, 2018, using a retrospective approach. The adoption of this guidance did not have a material impact on our consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). The amendments in the update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (Tax Act). This update is effective for us in the first quarter of fiscal 2020, however, we elected to early adopt this guidance during the quarter ended February 25, 2018. The adoption of this guidance resulted in a $15.4 million reclassification from accumulated other comprehensive income (loss) to retained earnings resulting from the Tax Act. See Note 9. New Accounting Standards In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This update is effective for us in the first quarter of fiscal 2019, which is when we plan to adopt these provisions using the cumulative effect transition method. We do not believe this guidance will impact the recognition of our primary source of revenue from company-owned restaurants, which also includes gift card revenue. We expect this guidance will impact the recognition of our franchise revenue, however, due to the relative insignificance of these amounts, we do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. This update is effective for us in the first quarter of fiscal 2020, which is when we plan to adopt these provisions. This guidance requires us to use a modified retrospective approach upon adoption with certain practical expedients available. We expect our balance sheet presentation to be materially impacted upon adoption due to the recognition of right-of-use assets and lease liabilities for operating leases. However, we do not expect adoption to have a material impact on our consolidated statements of earnings. We do not expect our accounting for capital leases to substantially change. We are continuing to evaluate the effect this guidance will have on our consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740). This update addresses the income tax consequences of intra-entity transfers of assets other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. In addition, interpretations of this guidance have developed in practice over the years for transfers of certain intangible and tangible assets. The amendments in the update will require recognition of current and deferred income taxes resulting from an intra-entity transfer of an asset other than inventory when the transfer occurs. This update is effective for us in the first quarter of fiscal 2019, which is when we plan to adopt these provisions using a modified retrospective approach. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715). The amendments in this update require that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization. This update is effective for us in the first quarter of fiscal 2019, which is when we plan to adopt these provisions. The guidance will be applied retrospectively or prospectively, depending on the area covered in this update. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815). The amendments in this update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This update is effective for us in the first quarter of fiscal 2020. The guidance will be applied retrospectively or prospectively, depending on the area covered in this update. Early adoption is permitted. We are evaluating the effect this guidance will have on our consolidated financial statements and related disclosures. |
Acquisition of Cheddar's Scratch Kitchen (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The preliminary allocation of the purchase price is as follows:
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Discontinued Operations and Assets Held for Sale (Tables) |
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Feb. 25, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | Losses from discontinued operations, net of taxes in our accompanying consolidated statements of earnings is primarily related to the run-off of retained rights and obligations from the Red Lobster disposition and is comprised of the following:
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Supplemental Cash Flow Information (Tables) |
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Feb. 25, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures |
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Net Earnings per Share (Tables) |
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Feb. 25, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Stock options, restricted stock and equity-settled performance stock units excluded from the calculation of diluted net earnings per share because the effect would have been anti-dilutive, are as follows:
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Segment Information (Tables) |
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Feb. 25, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated | Reconciliation of segment profit to earnings from continuing operations before income taxes:
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Impairment and Disposal of Assets, Net (Tables) |
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Feb. 25, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Impairment Charges [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairments and Disposal of Assets | Impairments and disposal of assets, net, in our accompanying consolidated statements of earnings are comprised of the following:
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Stockholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss), net of tax, for the quarters ended February 25, 2018 and February 26, 2017 are as follows:
The components of accumulated other comprehensive income (loss), net of tax, for the nine months ended February 25, 2018 and February 26, 2017 are as follows:
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Reclassification out of Accumulated Other Comprehensive Income | The following table presents the amounts and line items in our consolidated statements of earnings where adjustments reclassified from AOCI into net earnings were recorded:
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Retirement Plans (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 25, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | Components of net periodic benefit cost are as follows:
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Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 25, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-average fair value of non-qualified stock options and the related assumptions used in the Black-Scholes option pricing model were as follows.
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Schedule of Nonvested Share Activity | The following table presents a summary of our stock-based compensation activity for the nine months ended February 25, 2018:
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Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | We recognized expense from stock-based compensation as follows:
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Derivative Instruments and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 25, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Of Derivative Contracts Designated And Not Designated As Hedging Instruments | The notional and fair values of our derivative contracts are as follows:
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Notional Values Of Derivative Contracts Designated And Not Designated As Hedging Instruments | The notional and fair values of our derivative contracts are as follows:
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Cash Flow Hedging | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects Of Derivative Instruments In Hedging Relationships | The effects of derivative instruments accounted for as cash flow hedging instruments in the consolidated statements of earnings are as follows:
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Not Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects Of Derivative Instruments In Hedging Relationships | The effects of derivatives not designated as hedging instruments in the consolidated statements of earnings are as follows:
|
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 25, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Financial Instruments Measured at Fair Value on Recurring Basis | The following tables summarize the fair values of financial instruments measured at fair value on a recurring basis as of February 25, 2018 and May 28, 2017:
|
Basis of Presentation (Details) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Feb. 25, 2018
USD ($)
restaurant
|
Feb. 26, 2017
USD ($)
|
Feb. 25, 2018
USD ($)
restaurant
|
Feb. 26, 2017
USD ($)
|
May 28, 2017
USD ($)
|
|
Summary Of Significant Accounting Policies [Line Items] | |||||
Reclassification of tax effect | $ | $ (15.4) | $ 0.0 | $ (15.4) | $ 0.0 | |
Accumulated Other Comprehensive Income (Loss) | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Reclassification of tax effect | $ | $ (15.4) | $ (15.4) | |||
Accounting Standards Update 2015-17 | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Reclassification of deferred tax asset | $ | $ 211.8 | ||||
Latin America, the Middle East and Malaysia | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Number of restaurants | restaurant | 34 | 34 | |||
Entity Operated Units | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Number of restaurants | restaurant | 3 | 3 | |||
Franchised Units | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Number of restaurants | restaurant | 35 | 35 |
Discontinued Operations and Assets Held for Sale (Income Statement Disclosure) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Income tax benefit | $ (0.5) | $ (0.9) | $ (4.0) | $ (2.2) |
Losses from discontinued operations, net of tax | (0.7) | (0.7) | (6.9) | (1.8) |
Red Lobster | Discontinued Operations, Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Restaurant and marketing expenses | (0.1) | 0.3 | (0.4) | 0.2 |
Other income and expenses | 1.3 | 1.3 | 11.3 | 3.8 |
Losses before income taxes | (1.2) | (1.6) | (10.9) | (4.0) |
Income tax benefit | (0.5) | (0.9) | (4.0) | (2.2) |
Losses from discontinued operations, net of tax | $ (0.7) | $ (0.7) | $ (6.9) | $ (1.8) |
Discontinued Operations and Assets Held for Sale (Narrative) (Details) - USD ($) $ in Millions |
Feb. 25, 2018 |
May 28, 2017 |
---|---|---|
Discontinued Operations and Disposal Groups [Abstract] | ||
Assets held for sale | $ 11.1 | $ 13.2 |
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Feb. 25, 2018 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Supplemental Cash Flow Elements [Abstract] | |||
Interest paid, net of amounts capitalized (1) | $ 142.2 | $ 24.9 | |
Income taxes paid, net of refunds | 40.3 | 61.3 | |
Increase in land, buildings and equipment through accrued purchases | 35.7 | $ 25.2 | |
Debt retirement costs, cash portion | $ 97.3 | $ 97.3 |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Income Tax Contingency [Line Items] | ||||
Tax Cuts and Jobs Act of 2017, blended income tax rate | 29.40% | |||
Tax Cuts and Jobs Act of 2017, remeasurement of deferred tax liabilities | $ 77.3 | |||
Tax position, change is reasonably possible in the next twelve months | $ 1.4 | $ 1.4 | ||
Continuing Operations | ||||
Income Tax Contingency [Line Items] | ||||
Effective income tax rate | (88.40%) | 24.50% | (10.20%) | 25.40% |
Net Earnings per Share (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Earnings Per Share [Abstract] | ||||
Anti-dilutive stock-based compensation awards (in shares) | 0.4 | 0.0 | 0.2 | 0.4 |
Segment Information (Narrative) (Details) |
9 Months Ended |
---|---|
Feb. 25, 2018
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Segment Information (Reconciliation of Segment Profit to Earnings from Continuing Operations Before Income Taxes) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Segment Reporting [Abstract] | ||||
Segment profit | $ 422.4 | $ 383.9 | $ 1,076.8 | $ 955.8 |
Less general and administrative expenses | (110.1) | (87.2) | (307.0) | (254.4) |
Less depreciation and amortization | (79.2) | (67.9) | (234.1) | (202.5) |
Less impairments and disposal of assets, net | 0.3 | 0.7 | 1.1 | 8.4 |
Less interest, net | (117.4) | (9.3) | (147.9) | (28.7) |
Earnings before income taxes | $ 116.0 | $ 220.2 | $ 388.9 | $ 478.6 |
Impairment and Disposal of Assets, Net (Schedule of Impairments and Disposal of Assets) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Asset Impairment Charges [Abstract] | ||||
Disposal gains | $ (0.3) | $ (1.4) | $ (1.1) | $ (10.4) |
Other | 0.0 | 0.7 | 0.0 | 2.0 |
Impairments and disposal of assets, net | $ (0.3) | $ (0.7) | $ (1.1) | $ (8.4) |
Retirement Plans (Components Of Net Periodic Benefit Cost) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Defined Benefit Plans | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Interest cost | $ 2.1 | $ 2.5 | $ 6.4 | $ 7.6 |
Expected return on plan assets | (3.0) | (3.9) | (9.0) | (11.9) |
Recognized net actuarial loss | 0.7 | 0.8 | 2.1 | 2.4 |
Net periodic benefit (credit) cost | (0.2) | (0.6) | (0.5) | (1.9) |
Postretirement Benefit Plan | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | 0.0 | 0.0 | 0.1 | 0.1 |
Interest cost | 0.2 | 0.1 | 0.5 | 0.5 |
Amortization of unrecognized prior service credit | (1.2) | (1.2) | (3.6) | (3.6) |
Recognized net actuarial loss | 0.4 | 0.5 | 1.3 | 1.3 |
Net periodic benefit (credit) cost | $ (0.6) | $ (0.6) | $ (1.7) | $ (1.7) |
Stock-Based Compensation (Option Pricing Assumptions) (Details) - Stock Options - $ / shares |
9 Months Ended | |
---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted-average fair value (in dollars per share) | $ 14.63 | $ 9.08 |
Dividend yield | 3.00% | 3.50% |
Expected volatility of stock | 23.50% | 24.30% |
Risk-free interest rate | 2.00% | 1.40% |
Expected option life (in years) | 6 years 5 months | 6 years 6 months |
Weighted-average exercise price per share (in dollars per share) | $ 85.83 | $ 59.70 |
Derivative Instruments and Hedging Activities (Narrative) (Details) $ in Millions |
9 Months Ended |
---|---|
Feb. 25, 2018
USD ($)
| |
Derivative [Line Items] | |
Amount of gain reclassified from AOCI to earnings (effective portion) | $ 1.0 |
Darden Stock Units | Minimum | |
Derivative [Line Items] | |
Vesting period | 3 years |
Darden Stock Units | Maximum | |
Derivative [Line Items] | |
Vesting period | 5 years |
Derivative Instruments and Hedging Activities (Effects Of Derivatives Not Designated As Hedging Instruments) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 25, 2018 |
Feb. 26, 2017 |
Feb. 25, 2018 |
Feb. 26, 2017 |
|
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Earnings | $ 8.8 | $ 1.2 | $ 6.9 | $ 5.6 |
Equity forwards | Restaurant labor expenses | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Earnings | 3.3 | 0.5 | 2.7 | 2.0 |
Equity forwards | General and administrative expenses | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Earnings | $ 5.5 | $ 0.7 | $ 4.2 | $ 3.6 |
Fair Value Measurements (Carrying Value And Fair Value Of Long-Term Debt) (Details) - USD ($) $ in Millions |
Feb. 25, 2018 |
May 28, 2017 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Carrying value of long-term debt | $ 926.4 | $ 936.6 |
Fair value of long-term debt | $ 953.7 | $ 1,050.0 |
Commitments And Contingencies (Details) - USD ($) $ in Millions |
Feb. 25, 2018 |
May 28, 2017 |
---|---|---|
Workers Compensation and General Liabilities Accrued | ||
Loss Contingencies [Line Items] | ||
Standby letters of credit | $ 96.9 | $ 127.5 |
Operating Lease Obligations and Other Payments | ||
Loss Contingencies [Line Items] | ||
Standby letters of credit | 17.3 | 10.6 |
Property Lease Guarantee | ||
Loss Contingencies [Line Items] | ||
Fair value of potential payments discounted at pre-tax cost of capital related to guarantee obligations | 127.2 | 137.6 |
Property Lease Guarantee | Maximum | ||
Loss Contingencies [Line Items] | ||
Loss contingency, estimate of possible loss | $ 149.4 | $ 163.2 |
Subsequent Events (Details) |
Mar. 21, 2018
$ / shares
|
---|---|
Subsequent Event | Dividend Declared | |
Subsequent Event [Line Items] | |
Cash dividend declared, per share (in dollars per share) | $ 0.63 |
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