x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 26, 2013 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to |
Florida | 59-3305930 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
1000 Darden Center Drive, Orlando, Florida | 32837 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of each exchange on which registered New York Stock Exchange | |
Common Stock, without par value and Preferred Stock Purchase Rights |
PART I | Page | |
Item 1. | ||
Item 1A. | ||
Item 1B. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 5. | ||
Item 6. | ||
Item 7. | ||
Item 7A. | ||
Item 8. | ||
Item 9. | ||
Item 9A. | ||
Item 9B. | ||
PART III | ||
Item 10. | ||
Item 11. | ||
Item 12. | ||
Item 13. | ||
Item 14. | ||
PART IV | ||
Item 15. | ||
Fiscal Year | Red Lobster | Olive Garden | LongHorn Steakhouse | The Capital Grille | Bahama Breeze | Seasons 52 | Eddie V's | Yard House | Total Restaurants (1)(4) | Total Company Sales ($ in Millions) (2)(3) | ||||||||||
1970 | 6 | 6 | 3.5 | |||||||||||||||||
1971 | 24 | 24 | 9.1 | |||||||||||||||||
1972 | 47 | 47 | 27.1 | |||||||||||||||||
1973 | 70 | 70 | 48.0 | |||||||||||||||||
1974 | 97 | 97 | 72.6 | |||||||||||||||||
1975 | 137 | 137 | 108.5 | |||||||||||||||||
1976 | 174 | 174 | 174.1 | |||||||||||||||||
1977 | 210 | 210 | 229.2 | |||||||||||||||||
1978 | 236 | 236 | 291.4 | |||||||||||||||||
1979 | 244 | 244 | 337.5 | |||||||||||||||||
1980 | 260 | 260 | 397.6 | |||||||||||||||||
1981 | 291 | 291 | 528.4 | |||||||||||||||||
1982 | 328 | 328 | 614.3 | |||||||||||||||||
1983 | 360 | 1 | 361 | 718.5 | ||||||||||||||||
1984 | 368 | 2 | 370 | 782.3 |
Fiscal Year | Red Lobster | Olive Garden | LongHorn Steakhouse | The Capital Grille | Bahama Breeze | Seasons 52 | Eddie V's | Yard House | Total Restaurants (1)(4) | Total Company Sales ($ in Millions) (2)(3) | ||||||||||
1985 | 372 | 4 | 376 | 842.2 | ||||||||||||||||
1986 | 401 | 14 | 415 | 917.3 | ||||||||||||||||
1987 | 433 | 52 | 485 | 1,097.7 | ||||||||||||||||
1988 | 443 | 92 | 535 | 1,300.8 | ||||||||||||||||
1989 | 490 | 145 | 635 | 1,621.5 | ||||||||||||||||
1990 | 521 | 208 | 729 | 1,927.7 | ||||||||||||||||
1991 | 568 | 272 | 840 | 2,212.3 | ||||||||||||||||
1992 | 619 | 341 | 960 | 2,542.0 | ||||||||||||||||
1993 | 638 | 400 | 1,038 | 2,737.0 | ||||||||||||||||
1994 | 675 | 458 | 1,133 | 2,963.0 | ||||||||||||||||
1995 | 715 | 477 | 1,192 | 3,163.3 | ||||||||||||||||
1996 | 729 | 487 | 1 | 1,217 | 3,191.8 | |||||||||||||||
1997 | 703 | 477 | 2 | 1,182 | 3,171.8 | |||||||||||||||
1998 | 682 | 466 | 3 | 1,151 | 3,261.6 | |||||||||||||||
1999 | 669 | 464 | 6 | 1,139 | 3,432.4 | |||||||||||||||
2000 | 654 | 469 | 11 | 1,134 | 3,671.3 | |||||||||||||||
2001 | 661 | 477 | 16 | 1,154 | 3,966.2 | |||||||||||||||
2002 | 667 | 496 | 22 | 1,185 | 4,303.5 | |||||||||||||||
2003 | 673 | 524 | 25 | 1 | 1,223 | 4,530.4 | ||||||||||||||
2004 | 680 | 543 | 23 | 1 | 1,247 | 4,794.7 | ||||||||||||||
2005 | 679 | 563 | 23 | 3 | 1,268 | 4,977.6 | ||||||||||||||
2006 | 682 | 582 | 23 | 5 | 1,292 | 5,353.6 | ||||||||||||||
2007 | 680 | 614 | 23 | 7 | 1,324 | 5,567.1 | ||||||||||||||
2008 | 680 | 653 | 305 | 32 | 23 | 7 | 1,700 | 6,626.5 | ||||||||||||
2009 | 690 | 691 | 321 | 37 | 24 | 8 | 1,771 | 7,217.5 | ||||||||||||
2010 | 694 | 723 | 331 | 40 | 25 | 11 | 1,824 | 7,113.1 | ||||||||||||
2011 | 698 | 754 | 354 | 44 | 26 | 17 | 1,894 | 7,500.2 | ||||||||||||
2012 | 704 | 792 | 386 | 46 | 30 | 23 | 11 | 1,994 | 7,998.7 | |||||||||||
2013 | 705 | 828 | 430 | 49 | 33 | 31 | 12 | 44 | 2,138 | 8,551.9 |
(1) | Includes only restaurants included in continuing operations. Excludes other restaurant brands operated by us in these years that are no longer owned by us, and restaurants that were included in discontinued operations. |
(2) | From fiscal 1996 forward, includes only net sales from continuing operations and excludes sales related to all restaurants that were closed and considered discontinued operations. Periods prior to fiscal 1996 include total sales from all of our operations, including sales from restaurant brands that are no longer owned or operated by us. Total company sales from 1970 through fiscal 1995 were included in the consolidated operations of our former parent company, General Mills, Inc., prior to our spin-off as a separate publicly traded corporation in May 1995. |
(3) | Financial Accounting Standards Board Accounting Standards Codification Topic 605 requires sales incentives to be classified as a reduction of sales. For purposes of this presentation, sales incentives have been reclassified as a reduction of sales for fiscal 1998 through 2013. Sales incentives for fiscal years prior to 1998 have not been reclassified. |
(4) | Includes one test synergy restaurant in 2011, two in 2012 and six in 2013, housing two restaurant brands in the same building. |
• | Integrity and fairness; |
• | Respect and caring; |
• | Diversity; |
• | Always learning/always teaching; |
• | Being “of service;” |
• | Teamwork; and |
• | Excellence. |
• | Brand relevance; |
• | Brand support; |
• | A vibrant business model; |
• | Competitively superior leadership; and |
• | A unifying, motivating culture. |
Actual Net New Restaurant Openings Fiscal 2013 | Projected Net New Restaurant Openings Fiscal 2014 | ||
Red Lobster | 1 | 1 | |
Olive Garden | 36 | 15 | |
LongHorn Steakhouse | 44 | 37-40 | |
Specialty Restaurant Group | |||
The Capital Grille | 3 | 4-5 | |
Bahama Breeze | 3 | 3-4 | |
Seasons 52 | 8 | 7-8 | |
Eddie V's | 1 | 1-2 | |
Yard House (1) | 4 | 7-8 | |
Synergy restaurants | 4 | — | |
Totals | 104 | Approximately 80 |
Capital Investment(1) | Square Feet(2) | Dining Seats(3) | Dining Tables(4) | ||||
Red Lobster | $4,219,000 | 5,979 | 208 | 47 | |||
Olive Garden | $4,110,000 | 7,780 | 237 | 58 | |||
LongHorn Steakhouse | $3,393,000 | 6,342 | 227 | 49 |
(1) | Estimated final cost includes net present value of lease obligations and working capital credit, but excludes internal overhead. |
(2) | Includes all space under the roof, including the coolers and freezers. |
(3) | Includes bar dining seats and patio seating, but excludes bar stools. |
(4) | Includes patio dining tables. |
Item 1A. | RISK FACTORS |
Item 2. | PROPERTIES |
Alabama (42) | Illinois (71) | Montana (3) | Rhode Island (3) | |||
Alaska (2) | Indiana (52) | Nebraska (11) | South Carolina (41) | |||
Arkansas (18) | Iowa (20) | Nevada (18) | South Dakota (5) | |||
Arizona (53) | Kansas (27) | New Hampshire (10) | Tennessee (58) | |||
California (140) | Kentucky (28) | New Jersey (61) | Texas (182) | |||
Colorado (34) | Louisiana (20) | New Mexico (13) | Utah (20) | |||
Connecticut (17) | Maine (9) | New York (70) | Vermont (2) | |||
Delaware (8) | Maryland (45) | North Carolina (66) | Virginia (68) | |||
District of Columbia (1) | Massachusetts (37) | North Dakota (8) | Washington (32) | |||
Florida (229) | Michigan (58) | Ohio (107) | West Virginia (13) | |||
Georgia (130) | Minnesota (26) | Oklahoma (23) | Wisconsin (26) | |||
Hawaii (2) | Mississippi (18) | Oregon (14) | Wyoming (4) | |||
Idaho (8) | Missouri (50) | Pennsylvania (102) | Canada (33) |
Land-Only Leases (we own buildings and equipment) | 802 | |
Ground and Building Leases | 75 | |
Space/In-Line/Other Leases | 213 | |
Total | 1,090 |
Item 3. | LEGAL PROCEEDINGS |
Item 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (2) |
February 25, 2013 through March 31, 2013 | — | — | — | 15,463,737 |
April 1, 2013 through April 28, 2013 | 210 | $51.68 | 210 | 15,463,527 |
April 29, 2013 through May 26, 2013 | — | — | — | 15,463,527 |
Total | 210 | $51.68 | 210 | 15,463,527 |
(1) | All of the shares purchased during the quarter ended May 26, 2013 were purchased as part of our repurchase program, the most recent authority for which was announced in a press release issued on December 20, 2010. There is no expiration date for our program. 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 reduce the repurchase authority granted by our Board. The number of shares repurchased excludes shares we reacquired pursuant to forfeiture of restricted stock. |
(2) | 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 additional shares. |
Item 6. | SELECTED FINANCIAL DATA |
Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
Item 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Item 11. | EXECUTIVE COMPENSATION |
Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a) | 1. Financial Statements: |
Report of Management Responsibilities. | |
Management’s Report on Internal Control over Financial Reporting. | |
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting. | |
Report of Independent Registered Public Accounting Firm. | |
Consolidated Statements of Earnings for the fiscal years ended May 26, 2013, May 27, 2012 and May 29, 2011. | |
Consolidated Balance Sheets at May 26, 2013 and May 27, 2012. | |
Consolidated Statements of Comprehensive Income for the fiscal years ended May 26, 2013, May 27, 2012 and May 29, 2011. | |
Consolidated Statements of Changes in Stockholders’ Equity for the fiscal years ended May 26, 2013, May 27, 2012 and May 29, 2011. | |
Consolidated Statements of Cash Flows for the fiscal years ended May 26, 2013, May 27, 2012 and May 29, 2011. | |
Notes to Consolidated Financial Statements. | |
2. Financial Statement Schedules: | |
Not applicable. | |
3. Exhibits: |
Date: | July 19, 2013 | DARDEN RESTAURANTS, INC. | |||
By: | /s/ Clarence Otis, Jr. | ||||
Clarence Otis, Jr., Chairman of the Board and Chief Executive Officer |
Signature | Title | Date | ||
/s/ Clarence Otis, Jr. | Director, Chairman of the Board and Chief Executive Officer (Principal executive officer) | July 19, 2013 | ||
Clarence Otis, Jr. | ||||
/s/ C. Bradford Richmond | Senior Vice President and Chief Financial Officer (Principal financial and accounting officer) | July 19, 2013 | ||
C. Bradford Richmond | ||||
/s/ Michael W. Barnes* | Director | |||
Michael W. Barnes | ||||
/s/ Leonard L. Berry* | Director | |||
Leonard L. Berry | ||||
/s/ Christopher J. (CJ) Fraleigh* | Director | |||
Christopher J. (CJ) Fraleigh | ||||
/s/ Victoria D. Harker* | Director | |||
Victoria D. Harker | ||||
/s/ David H. Hughes* | Director | |||
David H. Hughes | ||||
/s/ Charles A. Ledsinger, Jr.* | Director | |||
Charles A. Ledsinger, Jr. | ||||
/s/ William M. Lewis, Jr.* | Director | |||
William M. Lewis, Jr. | ||||
/s/ Andrew H. Madsen* | Director | |||
Andrew H. Madsen | ||||
/s/ Cornelius McGillicuddy, III* ** | Director | |||
Cornelius McGillicuddy, III | ||||
/s/ Michael D. Rose* | Director | |||
Michael D. Rose | ||||
/s/ Maria A. Sastre* | Director | |||
Maria A. Sastre | ||||
/s/ William S. Simon* | Director | |||
William S. Simon |
*By: | /s/ Teresa M. Sebastian | ||
Teresa M. Sebastian, Attorney-In-Fact | |||
July 19, 2013 |
** | Popularly known as Senator Connie Mack, III. Senator Mack signs legal documents, including this Form 10-K, under his legal name of Cornelius McGillicuddy, III. |
EXHIBIT INDEX | ||
Exhibit Number | Title | |
2(a) | Agreement and Plan of Merger, dated as of August 16, 2007, among Darden Restaurants, Inc., Surf & Turf Merger Corp. and RARE Hospitality International, Inc. (incorporated herein by reference to Exhibit 2.01 to our Current Report on Form 8-K filed August 17, 2007). | |
2(b) | Agreement and Plan of Merger, dated as of July 12, 2012, by and among Darden Restaurants, Inc., Stout Acquisition Corp., Yard House USA, Inc., and certain stockholders of Yard House USA, Inc. (incorporated herein by reference to Exhibit 2.1 to our Current Report on Form 8-K filed July 12, 2012). | |
3(a) | Articles of Incorporation as amended May 26, 2005 (incorporated by reference to Exhibit 3(a) to our Annual Report on Form 10-K for the fiscal year ended May 29, 2005 filed July 29, 2005). | |
3(b) | Bylaws as amended effective June 20, 2012 (incorporated by reference to Exhibit 3 to our Current Report on Form 8-K filed June 22, 2012). | |
4(a) | Rights Agreement dated as of May 16, 2005, by and between Darden Restaurants, Inc. and Wachovia Bank, National Association, as Rights Agent (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed May 16, 2005). | |
4(b) | Amendment to Rights Agreement dated as of June 2, 2006, by and between Darden Restaurants, Inc., Wachovia Bank, National Association and Wells Fargo Bank, National Association, as successor Rights Agent (incorporated by reference to Exhibit 4 to our Current Report on Form 8-K filed June 5, 2006). | |
4(c) | Indenture dated as of January 1, 1996, between Darden Restaurants, Inc. and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association) (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form S-3 (Commission File No. 333-146582) filed October 9, 2007). | |
4(d) | Officers’ Certificate and Authentication Order, dated October 10, 2007, for the 5.625% Senior Notes due 2012 (which includes the form of Note) issued pursuant to the Indenture dated as of January 1, 1996, between Darden Restaurants, Inc. and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as Trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed October 16, 2007). | |
4(e) | Officers’ Certificate and Authentication Order, dated October 10, 2007, for the 6.200% Senior Notes due 2017 (which includes the form of Note) issued pursuant to the Indenture dated as of January 1, 1996, between Darden Restaurants, Inc. and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as Trustee (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed October 16, 2007). | |
4(f) | Officers’ Certificate and Authentication Order, dated October 10, 2007, for the 6.800% Senior Notes due 2037 (which includes the form of Note) issued pursuant to the Indenture dated as of January 1, 1996, between Darden Restaurants, Inc. and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as Trustee (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed October 16, 2007). | |
4(g) | Officers’ Certificate and Authentication Order, dated October 5, 2011, for the 4.50% Senior Notes due 2021 (which includes the form of Note) issued pursuant to the Indenture dated as of January 1, 1996, between Darden Restaurants, Inc. and Wells Fargo Bank. National Association (as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as Trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed October 11, 2011). | |
4(h) | Officers’ Certificate and Authentication Order, dated October 4, 2012, for the 3.350% Senior Notes due 2022 (which includes the form of Note) issued pursuant to the Indenture dated as of January 1, 1996, between Darden Restaurants, Inc. and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as Trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed October 4, 2012). | |
4(i) | Note Purchase Agreement dated June 18, 2012, between Darden Restaurants, Inc. and the purchasers named therein (incorporated herein by reference to Exhibit 4.1 to our Current Report on Form 8-K filed June 20, 2012). | |
*10(a) | Darden Restaurants, Inc. Stock Option and Long-Term Incentive Plan of 1995, as amended March 19, 2003 (incorporated herein by reference to Exhibit 10(b) to our Quarterly Report on Form 10-Q for the fiscal quarter ended February 23, 2003). |
*10(b) | Darden Restaurants, Inc. FlexComp Plan, as amended (incorporated herein by reference to Exhibit 10(a) to our Quarterly Report on Form 10-Q for the quarter ended November 23, 2008). | |
*10(c) | Darden Restaurants, Inc. Stock Plan for Directors, as amended (incorporated by reference to Exhibit 10(c) to our Quarterly Report on Form 10-Q for the fiscal quarter ended November 23, 2008). | |
*10(d) | Darden Restaurants, Inc. Compensation Plan for Non-Employee Directors, as amended (incorporated herein by reference to Exhibit 10(d) to our Quarterly Report on Form 10-Q for the fiscal quarter ended November 23, 2008). | |
*10(e) | Darden Restaurants, Inc. Management and Professional Incentive Plan, as amended (incorporated herein by reference to Exhibit 10(e) to our Annual Report on Form 10-K for the fiscal year ended May 31, 2009, filed July 24, 2009). | |
*10(f) | Amended and Restated Darden Restaurants, Inc. Benefits Trust Agreement dated as of March 23, 2011, between Darden Restaurants, Inc. and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association) (incorporated herein by reference to Exhibit 10 to our Quarterly Report on Form 10-Q for the quarter ended February 27, 2011, filed April 4, 2011). | |
*10(g) | Form of Amended and Restated Management Continuity Agreement between Darden Restaurants, Inc. and our executive officers (incorporated herein by reference to Exhibit 10(i) to our Annual Report on Form 10-K for the fiscal year ended May 31, 2009, filed July 24, 2009). | |
*10(h) | Darden Restaurants, Inc. Restaurant Management and Employee Stock Plan of 2000, as amended June 19, 2003 (incorporated by reference to Exhibit 10(l) to our Annual Report on Form 10-K for the fiscal year ended May 25, 2003, filed August 22, 2003). | |
*10(i) | Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorporated herein by reference to Exhibit 10 to our Current Report on Form 8-K filed September 17, 2010). | |
10(j) | Credit Agreement, dated as of October 3, 2011, among Darden Restaurants, Inc., certain lenders party thereto and Bank of America, N.A., as administrative agent (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed October 3, 2011). | |
*10(k) | Darden Restaurants, Inc. Director Compensation Program, as amended (incorporated herein by reference to Exhibit 10(b) to our Quarterly Report on Form 10-Q for the fiscal quarter ended November 23, 2008). | |
*10(l) | Form of Non-Qualified Stock Option Award Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorporated herein by reference to Exhibit 10(o) to our Annual Report on Form 10-K for the fiscal year ended May 31, 2009, filed July 24, 2009). | |
*10(m) | Form of fiscal 2010 Performance Stock Units Award Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorporated herein by reference to Exhibit 10(p) to our Annual Report on Form 10-K for the fiscal year ended May 31, 2009, filed July 24, 2009). | |
*10(n) | Form of fiscal 2014 Performance Stock Units Award Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (United States). | |
*10(o) | Form of Amendment to Exhibit A to the form of fiscal 2009 Performance Stock Unit Award Agreements under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorporated herein by reference to Exhibit 10(t) to our Annual Report on Form 10-K for the fiscal year ended May 31, 2009, filed July 24, 2009). | |
*10(p) | Employment Agreement dated April 28, 2003 between RARE Hospitality International, Inc. and Eugene I. Lee, Jr. (incorporated herein by reference from Exhibit 10.2 of the RARE Hospitality International, Inc. Quarterly Report on Form 10-Q (Commission File No. 000-19924) for the fiscal quarter ended June 29, 2003). | |
*10(q) | First Amendment of Employment Agreement dated October 27, 2004 between RARE Hospitality International, Inc. and Eugene I. Lee, Jr. (incorporated herein by reference from Exhibit 10.2 of the RARE Hospitality International, Inc. Quarterly Report on Form 10-Q (Commission File No. 000-19924) for the fiscal quarter ended September 26, 2004). | |
*10(r) | Second Amendment of Employment Agreement, dated October 27, 2005 between RARE Hospitality International, Inc. and Eugene I. Lee, Jr. (incorporated herein by reference from Exhibit 10.2 of the RARE Hospitality International, Inc. Quarterly Report on Form 10-Q (Commission File No. 000-19924) for the fiscal quarter ended September 25, 2005). | |
*10(s) | Third Amendment of Employment Agreement, dated October 27, 2006 between RARE Hospitality International, Inc. and Eugene I. Lee, Jr. (incorporated herein by reference from Exhibit 10.2 of the RARE Hospitality International, Inc. Quarterly Report on Form 10-Q (Commission File No. 000-19924) for the fiscal quarter ended October 1, 2006). |
*10(t) | Fourth Amendment of Employment Agreement, dated December 15, 2006 between RARE Hospitality International, Inc. and Eugene I. Lee, Jr. (incorporated herein by reference from Exhibit 10(24) of the RARE Hospitality International, Inc. Annual Report filed on Form 10-K (Commission File No. 000-19924) for fiscal year ended December 31, 2006). | |
*10(u) | Letter Agreement, dated August 16, 2007, between us and Eugene I. Lee, Jr. (incorporated herein by reference from Exhibit (e)(22) of the RARE Hospitality International, Inc. Schedule 14D-9 (Commission File No. 000-19924) filed August 31, 2007). | |
*10(v) | RARE Hospitality International, Inc. Amended and Restated 2002 Long-Term Incentive Plan, as amended (incorporated herein by reference to Exhibit 10(aa) to our Annual Report on Form 10-K for the fiscal year ended May 31, 2009, filed July 24, 2009). | |
*10(w) | Form of Non-Qualified Stock Option Award Agreement under the RARE Hospitality International, Inc. Amended and Restated 2002 Long-Term Incentive Plan, as amended (incorporated herein by reference to Exhibit 10(bb) to our Annual Report on Form 10-K for the fiscal year ended May 31, 2009, filed July 24, 2009). | |
*10(x) | Term Loan Agreement, dated as of August 22, 2012, among Darden Restaurants, Inc. and certain lenders parties thereto and Bank of America, N.A., as administrative agent (incorporated herein by reference to Exhibit 99 to our Current Report on Form 8-K filed August 28,2012. | |
12 | Computation of Ratio of Consolidated Earnings to Fixed Charges. | |
13 | Portions of 2013 Annual Report to Shareholders. | |
21 | Subsidiaries of Darden Restaurants, Inc. | |
23 | Consent of Independent Registered Public Accounting Firm. | |
24 | Powers of Attorney. | |
31(a) | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31(b) | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32(a) | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32(b) | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
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 |
PSU Rating Average | Vesting Percentage |
0.00 | 0% |
0.50 | 25% |
1.00 | 50% |
1.40 | 100% |
1.60 | 125% |
1.80 or Greater | 150% |
Fiscal Year Ended | |||||||||||||||||||
May 26, 2013 | May 27, 2012 | May 29, 2011 | May 30, 2010 | May 31, 2009 | |||||||||||||||
Consolidated earnings from continuing operations before income taxes | $ | 522.4 | $ | 638.0 | $ | 647.6 | $ | 543.6 | $ | 512.5 | |||||||||
Plus fixed charges: | |||||||||||||||||||
Gross interest expense(1) | 129.8 | 106.4 | 97.5 | 99.6 | 117.6 | ||||||||||||||
40% of restaurant and equipment minimum rent expense | 63.1 | 52.4 | 48.2 | 44.7 | 40.8 | ||||||||||||||
Total fixed charges | 192.9 | 158.8 | 145.7 | 144.3 | 158.4 | ||||||||||||||
Less capitalized interest | (3.0 | ) | (3.9 | ) | (3.0 | ) | (4.4 | ) | (9.3 | ) | |||||||||
Consolidated earnings from continuing operations before income taxes available to cover fixed charges | $ | 712.3 | $ | 792.9 | $ | 790.3 | $ | 683.5 | $ | 661.6 | |||||||||
Ratio of consolidated earnings from continuing operations to fixed charges | 3.7 | 5.0 | 5.4 | 4.7 | 4.2 |
• | Brand relevance; |
• | Brand support; |
• | A vibrant business model; |
• | Competitively superior leadership; and |
• | A unifying, motivating culture. |
• | Same-restaurant sales – which is a year-over-year comparison of each period’s sales volumes for restaurants open at least 16 months, including recently acquired restaurants, regardless of when the restaurants were acquired; and |
• | Restaurant earnings – which is restaurant-level profitability (restaurant sales, less restaurant-level cost of sales, marketing and depreciation). |
Fiscal Years | ||||||||
2013 | 2012 | 2011 | ||||||
Sales | 100.0 | % | 100.0 | % | 100.0 | % | ||
Costs and expenses: | ||||||||
Cost of sales: | ||||||||
Food and beverage | 30.7 | 30.8 | 29.0 | |||||
Restaurant labor | 31.5 | 31.3 | 32.0 | |||||
Restaurant expenses | 15.7 | 15.0 | 15.1 | |||||
Total cost of sales, excluding restaurant depreciation and amortization of 4.4%, 4.1% and 3.9%, respectively | 77.9 | % | 77.1 | % | 76.1 | % | ||
Selling, general and administrative | 9.9 | 9.2 | 9.9 | |||||
Depreciation and amortization | 4.6 | 4.4 | 4.2 | |||||
Interest, net | 1.5 | 1.3 | 1.2 | |||||
Total costs and expenses | 93.9 | % | 92.0 | % | 91.4 | % | ||
Earnings before income taxes | 6.1 | 8.0 | 8.6 | |||||
Income taxes | 1.3 | 2.0 | 2.2 | |||||
Earnings from continuing operations | 4.8 | 6.0 | 6.4 | |||||
Losses from discontinued operations, net of taxes | — | (0.1 | ) | — | ||||
Net earnings | 4.8 | % | 5.9 | % | 6.4 | % |
May 26, 2013 | May 27, 2012 | May 29, 2011 | |||||||
Red Lobster – USA | 678 | 677 | 670 | ||||||
Red Lobster – Canada | 27 | 27 | 28 | ||||||
Total | 705 | 704 | 698 | ||||||
Olive Garden – USA | 822 | 786 | 748 | ||||||
Olive Garden – Canada | 6 | 6 | 6 | ||||||
Total | 828 | 792 | 754 | ||||||
LongHorn Steakhouse | 430 | 386 | 354 | ||||||
The Capital Grille | 49 | 46 | 44 | ||||||
Bahama Breeze | 33 | 30 | 26 | ||||||
Seasons 52 | 31 | 23 | 17 | ||||||
Eddie V's (1) | 12 | 11 | — | ||||||
Yard House (1) | 44 | — | — | ||||||
Other (2) | 6 | 2 | 1 | ||||||
Total | 2,138 | 1,994 | 1,894 |
(1) | Includes the 11 Eddie V's and Wildfish restaurants acquired on November 14, 2011 and the 40 Yard House restaurants acquired on August, 29, 2012. |
(2) | Represents synergy restaurants that combine two existing brands in one building. |
• | $100.0 million of unsecured 7.125 percent debentures due in February 2016; |
• | $300.0 million unsecured, variable-rate term loan maturing in August 2017; |
• | $500.0 million of unsecured 6.200 percent senior notes due in October 2017; |
• | $80.0 million of unsecured 3.790 percent senior notes due in August 2019; |
• | $400.0 million of unsecured 4.500 percent senior notes due in October 2021; |
• | $450.0 million of unsecured 3.350 percent senior notes due in November 2022; |
• | $220.0 million of unsecured 4.520 percent senior notes due in August 2024; |
• | $150.0 million of unsecured 6.000 percent senior notes due in August 2035; and |
• | $300.0 million of unsecured 6.800 percent senior notes due in October 2037 |
(in millions) | Payments Due by Period | |||||||||||||||||||
Contractual Obligations | Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | |||||||||||||||
Short-term debt | $ | 164.5 | $ | 164.5 | $ | — | $ | — | $ | — | ||||||||||
Long-term debt (1) | 3,817.8 | 119.0 | 369.0 | 974.5 | 2,355.3 | |||||||||||||||
Operating leases | 1,163.3 | 186.0 | 341.7 | 268.9 | 366.7 | |||||||||||||||
Purchase obligations (2) | 635.4 | 581.1 | 54.3 | — | — | |||||||||||||||
Capital lease obligations (3) | 89.5 | 5.4 | 11.2 | 11.6 | 61.3 | |||||||||||||||
Benefit obligations (4) | 477.4 | 25.1 | 79.2 | 90.4 | 282.7 | |||||||||||||||
Unrecognized income tax benefits (5) | 31.1 | 19.1 | 6.5 | 5.5 | — | |||||||||||||||
Total contractual obligations | $ | 6,379.0 | $ | 1,100.2 | $ | 861.9 | $ | 1,350.9 | $ | 3,066.0 | ||||||||||
(in millions) | Amount of Commitment Expiration per Period | |||||||||||||||||||
Other Commercial Commitments | Total Amounts Committed | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | |||||||||||||||
Standby letters of credit (6) | $ | 127.6 | $ | 127.6 | $ | — | $ | — | $ | — | ||||||||||
Guarantees (7) | 4.2 | 1.1 | 1.9 | 0.8 | 0.4 | |||||||||||||||
Total commercial commitments | $ | 131.8 | $ | 128.7 | $ | 1.9 | $ | 0.8 | $ | 0.4 |
(1) | Includes interest payments associated with existing long-term debt, including the current portion. Variable-rate interest payments associated with the term loan were estimated based on an average interest rate of 2.1 percent. Excludes issuance discount of $5.7 million. |
(2) | Includes commitments for food and beverage items and supplies, capital projects, information technology and other miscellaneous commitments. |
(3) | Includes total imputed interest of $35.1 million over the life of the capital lease obligations. |
(4) | Includes expected contributions associated with our defined benefit plans and payments associated with our postretirement benefit plan and our non-qualified deferred compensation plan through fiscal 2023. |
(5) | Includes interest on unrecognized income tax benefits of $1.2 million, $0.5 million of which relates to contingencies expected to be resolved within one year. |
(6) | Includes letters of credit for $107.0 million of workers’ compensation and general liabilities accrued in our consolidated financial statements, letters of credit for $0.6 million of lease payments included in the contractual operating lease obligation payments noted above and other letters of credit totaling $20.0 million. |
(7) | Consists solely of guarantees associated with leased properties that have been assigned to third parties. We are not aware of any non-performance under these arrangements that would result in our having to perform in accordance with the terms of the guarantees. |
(In millions, except ratios) | May 26, 2013 | May 27, 2012 | ||||||
CAPITAL STRUCTURE | ||||||||
Short-term debt | $ | 164.5 | $ | 262.7 | ||||
Current portion long-term debt | — | 350.0 | ||||||
Long-term debt, excluding unamortized discounts | 2,501.9 | 1,459.1 | ||||||
Capital lease obligations | 54.4 | 56.0 | ||||||
Total debt | $ | 2,720.8 | $ | 2,127.8 | ||||
Stockholders’ equity | 2,059.5 | 1,842.0 | ||||||
Total capital | $ | 4,780.3 | $ | 3,969.8 | ||||
CALCULATION OF ADJUSTED CAPITAL | ||||||||
Total debt | $ | 2,720.8 | $ | 2,127.8 | ||||
Lease-debt equivalent | 1,026.9 | 853.8 | ||||||
Guarantees | 4.2 | 5.4 | ||||||
Adjusted debt | $ | 3,751.9 | $ | 2,987.0 | ||||
Stockholders’ equity | 2,059.5 | 1,842.0 | ||||||
Adjusted total capital | $ | 5,811.4 | $ | 4,829.0 | ||||
CAPITAL STRUCTURE RATIOS | ||||||||
Debt to total capital ratio | 57 | % | 54 | % | ||||
Adjusted debt to adjusted total capital ratio | 65 | % | 62 | % |
• | 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 health care reform, environmental matters, minimum wage, unionization, data privacy, menu labeling, immigration requirements and taxes; |
• | Labor and insurance costs; |
• | 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; |
• | 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; |
• | Failure to successfully integrate the Yard House business, and the risks associated with the additional indebtedness incurred to finance the Yard House acquisition; |
• | Our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, and the testing of synergy restaurants and other new business ventures, that have not yet proven their long-term viability; |
• | 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; |
• | A failure to identify and execute innovative marketing and customer relationship tactics, ineffective or improper use of social media or 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 unemployment, 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 service marks or other intellectual property; |
• | Impairment of the carrying value of our goodwill or other intangible assets; |
• | A failure of our internal controls over financial reporting and future changes in accounting standards; and |
• | An inability or failure to recognize, respond to and effectively manage the accelerated impact of social media. |
May 26, 2013 | May 27, 2012 | May 29, 2011 | |||||||||
Sales | $ | 8,551.9 | $ | 7,998.7 | $ | 7,500.2 | |||||
Costs and expenses: | |||||||||||
Cost of sales: | |||||||||||
Food and beverage | 2,628.6 | 2,460.6 | 2,173.6 | ||||||||
Restaurant labor | 2,698.0 | 2,502.0 | 2,396.9 | ||||||||
Restaurant expenses | 1,334.4 | 1,200.6 | 1,129.0 | ||||||||
Total cost of sales, excluding restaurant depreciation and amortization of $373.7, $326.9 and $295.6, respectively | $ | 6,661.0 | $ | 6,163.2 | $ | 5,699.5 | |||||
Selling, general and administrative | 847.8 | 746.8 | 742.7 | ||||||||
Depreciation and amortization | 394.8 | 349.1 | 316.8 | ||||||||
Interest, net | 125.9 | 101.6 | 93.6 | ||||||||
Total costs and expenses | $ | 8,029.5 | $ | 7,360.7 | $ | 6,852.6 | |||||
Earnings before income taxes | 522.4 | 638.0 | 647.6 | ||||||||
Income taxes | 109.8 | 161.5 | 168.9 | ||||||||
Earnings from continuing operations | $ | 412.6 | $ | 476.5 | $ | 478.7 | |||||
Losses from discontinued operations, net of tax benefit of $0.4, $0.7, and $1.5, respectively | (0.7 | ) | (1.0 | ) | (2.4 | ) | |||||
Net earnings | $ | 411.9 | $ | 475.5 | $ | 476.3 | |||||
Basic net earnings per share: | |||||||||||
Earnings from continuing operations | $ | 3.20 | $ | 3.66 | $ | 3.50 | |||||
Losses from discontinued operations | (0.01 | ) | (0.01 | ) | (0.02 | ) | |||||
Net earnings | $ | 3.19 | $ | 3.65 | $ | 3.48 | |||||
Diluted net earnings per share: | |||||||||||
Earnings from continuing operations | $ | 3.14 | $ | 3.58 | $ | 3.41 | |||||
Losses from discontinued operations | (0.01 | ) | (0.01 | ) | (0.02 | ) | |||||
Net earnings | $ | 3.13 | $ | 3.57 | $ | 3.39 | |||||
Average number of common shares outstanding: | |||||||||||
Basic | 129.0 | 130.1 | 136.8 | ||||||||
Diluted | 131.6 | 133.2 | 140.3 | ||||||||
Dividends declared per common share | $ | 2.00 | $ | 1.72 | $ | 1.28 |
May 26, 2013 | May 27, 2012 | May 29, 2011 | |||||||||
Net earnings | $ | 411.9 | $ | 475.5 | $ | 476.3 | |||||
Other comprehensive income (loss): | |||||||||||
Foreign currency adjustment | (0.2 | ) | (1.2 | ) | 1.8 | ||||||
Change in fair value of marketable securities, net of tax expense (benefit) of $0.1, $0.1 and $(0.1), respectively | (0.2 | ) | (0.1 | ) | 0.2 | ||||||
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of tax expense (benefit) of $0.6, $27.8 and $4.8, respectively | (4.1 | ) | (45.6 | ) | (5.2 | ) | |||||
Net unamortized gain (loss) arising during period, including amortization of unrecognized net actuarial loss, net of tax expense (benefit) of $(11.3), $24.8 and $(9.0), respectively | 18.3 | (39.9 | ) | 14.5 | |||||||
Other comprehensive income (loss) | $ | 13.8 | $ | (86.8 | ) | $ | 11.3 | ||||
Total comprehensive income | $ | 425.7 | $ | 388.7 | $ | 487.6 |
May 26, 2013 | May 27, 2012 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 88.2 | $ | 70.5 | |||
Receivables, net | 85.4 | 71.4 | |||||
Inventories | 356.9 | 404.1 | |||||
Prepaid income taxes | 6.4 | 12.2 | |||||
Prepaid expenses and other current assets | 83.4 | 74.9 | |||||
Deferred income taxes | 144.6 | 124.5 | |||||
Total current assets | $ | 764.9 | $ | 757.6 | |||
Land, buildings and equipment, net | 4,391.1 | 3,951.3 | |||||
Goodwill | 908.3 | 538.6 | |||||
Trademarks | 573.8 | 464.9 | |||||
Other assets | 298.8 | 231.8 | |||||
Total assets | $ | 6,936.9 | $ | 5,944.2 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 296.5 | $ | 260.7 | |||
Short-term debt | 164.5 | 262.7 | |||||
Accrued payroll | 150.5 | 154.3 | |||||
Accrued income taxes | 16.5 | — | |||||
Other accrued taxes | 67.6 | 60.4 | |||||
Unearned revenues | 270.5 | 231.7 | |||||
Current portion of long-term debt | — | 349.9 | |||||
Other current liabilities | 450.3 | 454.4 | |||||
Total current liabilities | $ | 1,416.4 | $ | 1,774.1 | |||
Long-term debt, less current portion | 2,496.2 | 1,453.7 | |||||
Deferred income taxes | 356.4 | 312.9 | |||||
Deferred rent | 230.5 | 204.4 | |||||
Obligations under capital leases, net of current installments | 52.5 | 54.4 | |||||
Other liabilities | 325.4 | 302.7 | |||||
Total liabilities | $ | 4,877.4 | $ | 4,102.2 | |||
Stockholders’ equity: | |||||||
Common stock and surplus, no par value. Authorized 500.0 shares; issued 131.6 and 289.0 shares, respectively; outstanding 130.3 and 129.0 shares, respectively | 1,207.6 | 2,518.8 | |||||
Preferred stock, no par value. Authorized 25.0 shares; none issued and outstanding | — | — | |||||
Retained earnings | 998.9 | 3,172.8 | |||||
Treasury stock, 1.3 and 160.0 shares, at cost, respectively | (8.1 | ) | (3,695.8 | ) | |||
Accumulated other comprehensive income (loss) | (132.8 | ) | (146.6 | ) | |||
Unearned compensation | (6.1 | ) | (7.2 | ) | |||
Total stockholders’ equity | $ | 2,059.5 | $ | 1,842.0 | |||
Total liabilities and stockholders’ equity | $ | 6,936.9 | $ | 5,944.2 |
Common Stock And Surplus | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Unearned Compensation | Total Stockholders’ Equity | ||||||||||||||||||
Balances at May 30, 2010 | $ | 2,297.9 | $ | 2,621.9 | $ | (2,943.5 | ) | $ | (71.1 | ) | $ | (11.2 | ) | $ | 1,894.0 | ||||||||
Net earnings | — | 476.3 | — | — | — | 476.3 | |||||||||||||||||
Other comprehensive income | — | — | — | 11.3 | — | 11.3 | |||||||||||||||||
Dividends declared ($1.28 per share) | — | (176.3 | ) | — | — | — | (176.3 | ) | |||||||||||||||
Stock option exercises (2.3 shares) | 53.1 | — | 2.6 | — | — | 55.7 | |||||||||||||||||
Stock-based compensation | 33.9 | — | — | — | — | 33.9 | |||||||||||||||||
ESOP note receivable repayments | — | — | — | — | 1.8 | 1.8 | |||||||||||||||||
Income tax benefits credited to equity | 17.7 | — | — | — | — | 17.7 | |||||||||||||||||
Repurchases of common stock (8.6 shares) | — | — | (385.5 | ) | — | — | (385.5 | ) | |||||||||||||||
Issuance of treasury stock under Employee Stock Purchase Plan and other plans (0.2 shares) | 6.2 | — | 1.1 | — | — | 7.3 | |||||||||||||||||
Balances at May 29, 2011 | $ | 2,408.8 | $ | 2,921.9 | $ | (3,325.3 | ) | $ | (59.8 | ) | $ | (9.4 | ) | $ | 1,936.2 | ||||||||
Net earnings | — | 475.5 | — | — | — | 475.5 | |||||||||||||||||
Other comprehensive income | — | — | — | (86.8 | ) | — | (86.8 | ) | |||||||||||||||
Dividends declared ($1.72 per share) | — | (224.6 | ) | — | — | — | (224.6 | ) | |||||||||||||||
Stock option exercises (2.2 shares) | 59.4 | — | 3.5 | — | — | 62.9 | |||||||||||||||||
Stock-based compensation | 26.5 | — | — | — | — | 26.5 | |||||||||||||||||
ESOP note receivable repayments | — | — | — | — | 2.1 | 2.1 | |||||||||||||||||
Income tax benefits credited to equity | 17.9 | — | — | — | — | 17.9 | |||||||||||||||||
Repurchases of common stock (8.2 shares) | — | — | (375.1 | ) | — | — | (375.1 | ) | |||||||||||||||
Issuance of treasury stock under Employee Stock Purchase Plan and other plans (0.2 shares) | 6.2 | — | 1.1 | — | 0.1 | 7.4 | |||||||||||||||||
Balances at May 27, 2012 | $ | 2,518.8 | $ | 3,172.8 | $ | (3,695.8 | ) | $ | (146.6 | ) | $ | (7.2 | ) | $ | 1,842.0 | ||||||||
Net earnings | — | 411.9 | — | — | — | 411.9 | |||||||||||||||||
Other comprehensive income | — | — | — | 13.8 | — | 13.8 | |||||||||||||||||
Dividends declared ($2.00 per share) | 0.4 | (259.6 | ) | — | — | — | (259.2 | ) | |||||||||||||||
Stock option exercises (2.0 shares) | 55.2 | — | 1.8 | — | — | 57.0 | |||||||||||||||||
Stock-based compensation | 24.3 | — | — | — | — | 24.3 | |||||||||||||||||
ESOP note receivable repayments | — | — | — | — | 1.1 | 1.1 | |||||||||||||||||
Income tax benefits credited to equity | 13.6 | — | — | — | — | 13.6 | |||||||||||||||||
Repurchases of common stock (1.0 shares) | — | (0.1 | ) | (52.3 | ) | — | — | (52.4 | ) | ||||||||||||||
Issuance of treasury stock under Employee Stock Purchase Plan and other plans (0.2 shares) | 6.7 | — | 0.7 | — | — | 7.4 | |||||||||||||||||
Treasury shares retirement (159.3 shares) | (1,411.4 | ) | (2,326.1 | ) | 3,737.5 | — | — | — | |||||||||||||||
Balances at May 26, 2013 | $ | 1,207.6 | $ | 998.9 | $ | (8.1 | ) | $ | (132.8 | ) | $ | (6.1 | ) | $ | 2,059.5 |
Fiscal Year Ended | |||||||||||
May 26, 2013 | May 27, 2012 | May 29, 2011 | |||||||||
Cash flows - operating activities | |||||||||||
Net earnings | $ | 411.9 | $ | 475.5 | $ | 476.3 | |||||
Losses from discontinued operations, net of tax | 0.7 | 1.0 | 2.4 | ||||||||
Adjustments to reconcile net earnings from continuing operations to cash flows: | |||||||||||
Depreciation and amortization | 394.8 | 349.1 | 316.8 | ||||||||
Asset impairment charges, net | 0.8 | 0.5 | 4.7 | ||||||||
Amortization of loan costs | 13.0 | 6.7 | 2.8 | ||||||||
Stock-based compensation expense | 49.3 | 56.1 | 66.6 | ||||||||
Change in current assets and liabilities | 40.1 | (191.4 | ) | 12.2 | |||||||
Contributions to pension and postretirement plan | (3.2 | ) | (22.7 | ) | (13.2 | ) | |||||
Loss on disposal of land, buildings and equipment | 8.1 | 7.1 | 6.9 | ||||||||
Change in cash surrender value of trust-owned life insurance | (16.8 | ) | 4.1 | (13.7 | ) | ||||||
Deferred income taxes | (2.1 | ) | 36.1 | 28.8 | |||||||
Change in deferred rent | 26.8 | 18.5 | 17.1 | ||||||||
Change in other assets and liabilities | 17.1 | 15.8 | (15.4 | ) | |||||||
Income tax benefits from exercise of stock-based compensation credited to goodwill | 0.1 | 0.6 | 0.2 | ||||||||
Other, net | 8.9 | 5.2 | 2.2 | ||||||||
Net cash provided by operating activities of continuing operations | $ | 949.5 | $ | 762.2 | $ | 894.7 | |||||
Cash flows - investing activities | |||||||||||
Purchases of land, buildings and equipment | (685.6 | ) | (639.7 | ) | (547.7 | ) | |||||
Proceeds from disposal of land, buildings and equipment | 0.4 | 3.3 | 7.0 | ||||||||
Purchases of marketable securities | (12.9 | ) | (32.1 | ) | (6.5 | ) | |||||
Proceeds from sale of marketable securities | 26.0 | 21.3 | 5.1 | ||||||||
Cash used in business acquisitions, net of cash acquired | (577.4 | ) | (58.5 | ) | — | ||||||
Increase in other assets | (40.9 | ) | (15.9 | ) | (10.6 | ) | |||||
Net cash used in investing activities of continuing operations | $ | (1,290.4 | ) | $ | (721.6 | ) | $ | (552.7 | ) | ||
Cash flows - financing activities | |||||||||||
Proceeds from issuance of common stock | 64.4 | 70.2 | 63.0 | ||||||||
Income tax benefits credited to equity | 13.6 | 17.9 | 17.7 | ||||||||
Dividends paid | (258.2 | ) | (223.9 | ) | (175.5 | ) | |||||
Purchases of common stock | (52.4 | ) | (375.1 | ) | (385.5 | ) | |||||
ESOP note receivable repayments | 1.1 | 2.1 | 1.8 | ||||||||
Proceeds from issuance of short-term debt | 2,670.3 | 2,321.0 | 1,454.9 | ||||||||
Repayments of short-term debt | (2,768.4 | ) | (2,243.8 | ) | (1,269.4 | ) | |||||
Repayments of long-term debt | (355.9 | ) | (2.1 | ) | (226.8 | ) | |||||
Proceeds from issuance of long-term debt | 1,050.0 | 400.0 | — | ||||||||
Payment of debt issuance costs | (7.4 | ) | (5.1 | ) | — | ||||||
Principal payments on capital leases | (1.7 | ) | (1.6 | ) | (1.2 | ) | |||||
Net cash provided by (used in) financing activities of continuing operations | $ | 355.4 | $ | (40.4 | ) | $ | (521.0 | ) | |||
Cash flows - discontinued operations | |||||||||||
Net cash used in operating activities of discontinued operations | (0.2 | ) | (0.5 | ) | (2.1 | ) | |||||
Net cash provided by investing activities of discontinued operations | 3.4 | 0.3 | 2.8 | ||||||||
Net cash provided by (used in) discontinued operations | $ | 3.2 | $ | (0.2 | ) | $ | 0.7 | ||||
Increase (decrease) in cash and cash equivalents | 17.7 | — | (178.3 | ) | |||||||
Cash and cash equivalents - beginning of year | 70.5 | 70.5 | 248.8 | ||||||||
Cash and cash equivalents - end of year | $ | 88.2 | $ | 70.5 | $ | 70.5 | |||||
Cash flows from changes in current assets and liabilities | |||||||||||
Receivables, net | (9.4 | ) | (6.1 | ) | (5.9 | ) | |||||
Inventories | 50.6 | (103.0 | ) | (79.3 | ) | ||||||
Prepaid expenses and other current assets | (11.7 | ) | (6.6 | ) | (5.0 | ) | |||||
Accounts payable | 10.8 | (10.2 | ) | 5.5 | |||||||
Accrued payroll | (9.3 | ) | (13.3 | ) | 5.3 | ||||||
Prepaid/accrued income taxes | 22.5 | (16.3 | ) | 4.7 | |||||||
Other accrued taxes | 6.4 | (3.9 | ) | 2.3 | |||||||
Unearned revenues | 36.4 | 31.1 | 27.3 | ||||||||
Other current liabilities | (56.2 | ) | (63.1 | ) | 57.3 | ||||||
Change in current assets and liabilities | $ | 40.1 | $ | (191.4 | ) | $ | 12.2 |
(in millions) | Final | |||
Current assets | $ | 16.0 | ||
Buildings and equipment | 152.2 | |||
Trademark | 109.3 | |||
Other assets | 9.8 | |||
Goodwill | 369.8 | |||
Total assets acquired | $ | 657.1 | ||
Current liabilities | 40.8 | |||
Other liabilities | 31.3 | |||
Total liabilities assumed | $ | 72.1 | ||
Net assets acquired | $ | 585.0 |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Depreciation and amortization on buildings and equipment | $ | 387.2 | $ | 340.6 | $ | 308.7 | |||||
Losses on disposal of land, buildings and equipment | 8.1 | 7.1 | 6.9 |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Capitalized software | $ | 107.9 | $ | 84.3 | |||
Accumulated amortization | (67.5 | ) | (63.4 | ) | |||
Capitalized software, net of accumulated amortization | $ | 40.4 | $ | 20.9 |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Other definite-lived intangibles | $ | 19.1 | $ | 13.2 | |||
Accumulated amortization | (7.6 | ) | (6.2 | ) | |||
Other definite-lived intangible assets, net of accumulated amortization | $ | 11.5 | $ | 7.0 | |||
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Below-market leases | $ | 29.2 | $ | 24.0 | |||
Accumulated amortization | (7.8 | ) | (7.1 | ) | |||
Below-market leases, net of accumulated amortization | $ | 21.4 | $ | 16.9 | |||
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Above-market leases | $ | (21.4 | ) | $ | (8.6 | ) | |
Accumulated amortization | 3.5 | 2.3 | |||||
Above-market leases, net of accumulated amortization | $ | (17.9 | ) | $ | (6.3 | ) |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Amortization expense - capitalized software | $ | 6.4 | $ | 7.8 | $ | 7.7 | |||||
Amortization expense - other definite-lived intangibles | 1.2 | 0.7 | 0.4 |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Restaurant expense - below-market leases | $ | 1.8 | $ | 1.8 | $ | 2.2 | |||||
Restaurant expense - above-market leases | (1.2 | ) | (0.5 | ) | (0.5 | ) |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Goodwill: | |||||||
The Capital Grille | $ | 401.7 | $ | 401.8 | |||
LongHorn Steakhouse | 49.5 | 49.5 | |||||
Olive Garden (1) | 30.2 | 30.2 | |||||
Red Lobster (1) | 35.0 | 35.0 | |||||
Eddie V's | 22.1 | 22.1 | |||||
Yard House | 369.8 | — | |||||
Total Goodwill | $ | 908.3 | $ | 538.6 | |||
Trademarks: | |||||||
The Capital Grille | $ | 147.0 | $ | 147.0 | |||
LongHorn Steakhouse | 307.0 | 307.0 | |||||
Eddie V's | 10.5 | 10.9 | |||||
Yard House | 109.3 | — | |||||
Total Trademarks | $ | 573.8 | $ | 464.9 |
(1) | Goodwill related to Olive Garden and Red Lobster is associated with the RARE Hospitality International, Inc. (RARE) acquisition and the direct benefits derived by Olive Garden and Red Lobster as a result of the RARE acquisition. |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Advertising expense | $ | 409.2 | $ | 357.2 | $ | 340.2 |
Stock Options Granted in Fiscal Year | |||||||||||
2013 | 2012 | 2011 | |||||||||
Weighted-average fair value | $ | 12.22 | $ | 14.31 | $ | 12.88 | |||||
Dividend yield | 4.0 | % | 3.5 | % | 3.0 | % | |||||
Expected volatility of stock | 39.7 | % | 39.4 | % | 39.1 | % | |||||
Risk-free interest rate | 0.8 | % | 2.1 | % | 2.2 | % | |||||
Expected option life (in years) | 6.5 | 6.5 | 6.7 |
(in millions, except per share data) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Earnings from continuing operations | $ | 412.6 | $ | 476.5 | $ | 478.7 | |||||
Losses from discontinued operations | (0.7 | ) | (1.0 | ) | (2.4 | ) | |||||
Net earnings | $ | 411.9 | $ | 475.5 | $ | 476.3 | |||||
Average common shares outstanding – Basic | 129.0 | 130.1 | 136.8 | ||||||||
Effect of dilutive stock-based compensation | 2.6 | 3.1 | 3.5 | ||||||||
Average common shares outstanding – Diluted | 131.6 | 133.2 | 140.3 | ||||||||
Basic net earnings per share: | |||||||||||
Earnings from continuing operations | $ | 3.20 | $ | 3.66 | $ | 3.50 | |||||
Losses from discontinued operations | (0.01 | ) | (0.01 | ) | (0.02 | ) | |||||
Net earnings | $ | 3.19 | $ | 3.65 | $ | 3.48 | |||||
Diluted net earnings per share: | |||||||||||
Earnings from continuing operations | $ | 3.14 | $ | 3.58 | $ | 3.41 | |||||
Losses from discontinued operations | (0.01 | ) | (0.01 | ) | (0.02 | ) | |||||
Net earnings | $ | 3.13 | $ | 3.57 | $ | 3.39 |
(in millions) | Fiscal Year Ended | |||||||
May 26, 2013 | May 27, 2012 | May 29, 2011 | ||||||
Anti-dilutive restricted stock and options | 2.8 | 2.6 | 1.2 |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Sales | $ | — | $ | — | $ | — | |||||
Losses before income taxes | (1.1 | ) | (1.7 | ) | (3.9 | ) | |||||
Income tax benefit | 0.4 | 0.7 | 1.5 | ||||||||
Net losses from discontinued operations | $ | (0.7 | ) | $ | (1.0 | ) | $ | (2.4 | ) |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Retail outlet gift card sales | $ | 37.5 | $ | 33.4 | |||
Landlord allowances due | 26.5 | 9.4 | |||||
Storage and distribution | 5.8 | 6.5 | |||||
Allowance for doubtful accounts | (0.3 | ) | (0.3 | ) |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Land | $ | 888.1 | $ | 854.1 | |||
Buildings | 4,474.5 | 3,959.7 | |||||
Equipment | 1,860.9 | 1,701.2 | |||||
Assets under capital leases | 67.7 | 68.1 | |||||
Construction in progress | 149.7 | 142.5 | |||||
Total land, buildings and equipment | $ | 7,440.9 | $ | 6,725.6 | |||
Less accumulated depreciation and amortization | (3,030.2 | ) | (2,758.3 | ) | |||
Less amortization associated with assets under capital leases | (19.6 | ) | (16.0 | ) | |||
Land, buildings and equipment, net | $ | 4,391.1 | $ | 3,951.3 |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Trust-owned life insurance (1) | $ | 85.7 | $ | 68.9 | |||
Capitalized software costs, net (2) | 40.4 | 20.9 | |||||
Liquor licenses | 49.6 | 47.3 | |||||
Acquired below-market leases, net | 21.4 | 16.9 | |||||
Loan costs, net | 19.1 | 15.3 | |||||
Marketable securities | 22.3 | 33.0 | |||||
Deferred-tax charge (3) | 21.3 | — | |||||
Insurance-related | 18.0 | 16.7 | |||||
Miscellaneous | 21.0 | 12.8 | |||||
Total other assets | $ | 298.8 | $ | 231.8 |
(1) | The increase is attributable to market-driven changes in the value of our trust-owned life insurance. |
(2) | The increase is attributable to upgrades to our information technology platform in support of technology initiatives. |
(3) | The deferred tax charge is related to U.S. federal and state income taxes paid on the sale of intellectual property related to our foreign franchise and lobster aquaculture business to foreign subsidiaries in fiscal 2013. |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Non-qualified deferred compensation plan | $ | 224.3 | $ | 201.4 | |||
Sales and other taxes | 74.3 | 60.6 | |||||
Insurance-related | 40.8 | 35.2 | |||||
Employee benefits | 44.7 | 59.7 | |||||
Derivative liabilities | 2.2 | 45.3 | |||||
Accrued interest | 17.7 | 15.6 | |||||
Miscellaneous | 46.3 | 36.6 | |||||
Total other current liabilities | $ | 450.3 | $ | 454.4 |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
5.625% senior notes due October 2012 | $ | — | $ | 350.0 | |||
7.125% debentures due February 2016 | 100.0 | 100.0 | |||||
Variable-rate term loan (1.44% at May 26, 2013) due August 2017 | 300.0 | — | |||||
6.200% senior notes due October 2017 | 500.0 | 500.0 | |||||
3.790% senior notes due August 2019 | 80.0 | — | |||||
4.500% senior notes due October 2021 | 400.0 | 400.0 | |||||
3.350% senior notes due November 2022 | 450.0 | — | |||||
4.520% senior notes due August 2024 | 220.0 | — | |||||
6.000% senior notes due August 2035 | 150.0 | 150.0 | |||||
6.800% senior notes due October 2037 | 300.0 | 300.0 | |||||
ESOP loan | — | 5.9 | |||||
Total long-term debt | $ | 2,500.0 | $ | 1,805.9 | |||
Fair value hedge | 1.9 | 3.2 | |||||
Less issuance discount | (5.7 | ) | (5.5 | ) | |||
Total long-term debt less issuance discount | $ | 2,496.2 | $ | 1,803.6 | |||
Less current portion | — | (349.9 | ) | ||||
Long-term debt, excluding current portion | $ | 2,496.2 | $ | 1,453.7 |
(in millions) | |||
Fiscal Year | Amount | ||
2014 | $ | — | |
2015 | 15.0 | ||
2016 | 115.0 | ||
2017 | 15.0 | ||
2018 | 755.0 | ||
Thereafter | 1,600.0 | ||
Long-term debt | $ | 2,500.0 |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Derivative contracts designated as hedging instruments: | |||||||
Commodities | $ | 18.2 | $ | 8.7 | |||
Foreign currency | 20.3 | 19.4 | |||||
Interest rate swaps | 100.0 | 550.0 | |||||
Equity forwards | 24.9 | 21.7 | |||||
Derivative contracts not designated as hedging instruments: | |||||||
Equity forwards | $ | 49.1 | $ | 50.0 | |||
Commodities | 0.6 | — |
(in millions) | Balance Sheet Location | Derivative Assets | Derivative Liabilities | |||||||||||||||
May 26, 2013 | May 27, 2012 | May 26, 2013 | May 27, 2012 | |||||||||||||||
Derivative contracts designated as hedging instruments | ||||||||||||||||||
Commodity contracts | (1 | ) | $ | 0.1 | $ | 0.3 | $ | (0.3 | ) | $ | (0.4 | ) | ||||||
Equity forwards | (1 | ) | — | 0.9 | (0.6 | ) | — | |||||||||||
Interest rate related | (1 | ) | 1.9 | 3.2 | — | (44.9 | ) | |||||||||||
Foreign currency forwards | (1 | ) | 0.6 | 0.5 | — | — | ||||||||||||
$ | 2.6 | $ | 4.9 | $ | (0.9 | ) | $ | (45.3 | ) | |||||||||
Derivative contracts not designated as hedging instruments | ||||||||||||||||||
Commodity contracts | (1 | ) | $ | — | $ | — | $ | — | $ | — | ||||||||
Equity forwards | (1 | ) | — | 1.9 | (1.3 | ) | — | |||||||||||
$ | — | $ | 1.9 | $ | (1.3 | ) | $ | — | ||||||||||
Total derivative contracts | $ | 2.6 | $ | 6.8 | $ | (2.2 | ) | $ | (45.3 | ) |
(1) | Derivative assets and liabilities are included in receivables, net, prepaid expenses and other current assets, and other current liabilities, as applicable, on our consolidated balance sheets. |
(in millions) | Amount of Gain (Loss) Recognized in AOCI (Effective Portion) | Location of Gain (Loss) Reclassified from AOCI to Earnings | Amount of Gain (Loss) Reclassified from AOCI to Earnings (Effective Portion) | Location of Gain (Loss) Recognized in Earnings (Ineffective Portion) | (1) Amount of Gain (Loss) Recognized in Earnings (Ineffective Portion) | ||||||||||||||||||||||||||||||||||
Fiscal Year | Fiscal Year | Fiscal Year | |||||||||||||||||||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||||||
Commodity | $ | 0.7 | $ | (2.2 | ) | $ | (0.2 | ) | (2) | $ | 0.4 | $ | (1.7 | ) | $ | (0.9 | ) | (2) | $ | — | $ | — | $ | — | |||||||||||||||
Equity | (2.8 | ) | (0.7 | ) | 2.6 | (3) | 0.2 | — | — | (3) | 1.1 | 0.6 | 0.2 | ||||||||||||||||||||||||||
Interest rate | (10.1 | ) | (75.2 | ) | (12.2 | ) | Interest, net | (8.3 | ) | (2.9 | ) | 0.7 | Interest, net | — | (0.7 | ) | (0.5 | ) | |||||||||||||||||||||
Foreign currency | (0.5 | ) | 0.9 | (0.1 | ) | (4) | — | 0.8 | 0.4 | (4) | — | — | — | ||||||||||||||||||||||||||
$ | (12.7 | ) | $ | (77.2 | ) | $ | (9.9 | ) | $ | (7.7 | ) | $ | (3.8 | ) | $ | 0.2 | $ | 1.1 | $ | (0.1 | ) | $ | (0.3 | ) |
(1) | Generally, all of our derivative instruments designated as cash flow hedges have some level of ineffectiveness, which is recognized currently in earnings. However, as these amounts are generally nominal and our consolidated financial statements are presented “in millions,” these amounts may appear as zero in this tabular presentation. |
(2) | Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is food and beverage costs and restaurant expenses, which are components of cost of sales. |
(3) | Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is restaurant labor expenses, which is a component of cost of sales, and selling, general and administrative expenses. |
(4) | Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is food and beverage costs, which is a component of cost of sales, and selling, general and administrative expenses. |
(in millions) | Amount of Gain (Loss) Recognized in Earnings on Derivatives | Location of Gain (Loss) Recognized in Earnings on Derivatives | Hedged Item in Fair Value Hedge Relationship | Amount of Gain (Loss) Recognized in Earnings on Related Hedged Item | Location of Gain (Loss) Recognized in Earnings on Related Hedged Item | ||||||||||||||||||||||||
Fiscal Year | Fiscal Year | ||||||||||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||
Interest rate | $ | (1.3 | ) | $ | (0.4 | ) | $ | 0.2 | Interest, net | Debt | $ | 1.3 | $ | 0.4 | $ | (0.2 | ) | Interest, net |
Location of Gain (Loss) Recognized in Earnings | Amount of Gain (Loss) Recognized in Earnings | ||||||||||||
Fiscal Year | |||||||||||||
(in millions) | 2013 | 2012 | 2011 | ||||||||||
Commodity contracts | Cost of sales (1) | $ | (0.1 | ) | $ | (7.9 | ) | $ | 0.6 | ||||
Equity forwards | Cost of sales (2) | 1.6 | 2.3 | 3.3 | |||||||||
Equity forwards | Selling, general and administrative | 1.4 | 6.0 | 3.3 | |||||||||
$ | 2.9 | $ | 0.4 | $ | 7.2 |
(1) | Location of the gain (loss) recognized in earnings is food and beverage costs and restaurant expenses, which are components of cost of sales. |
(2) | Location of the gain (loss) recognized in earnings is restaurant labor expenses, which is a component of cost of sales. |
Items Measured at Fair Value at May 26, 2013 | |||||||||||||||||
(in millions) | Fair Value of Assets (Liabilities) | Quoted Prices in Active Market for Identical Assets (Liabilities) (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Fixed-income securities: | |||||||||||||||||
Corporate bonds | (1) | $ | 10.0 | $ | — | $ | 10.0 | $ | — | ||||||||
U.S. Treasury securities | (2) | 8.7 | 8.7 | — | — | ||||||||||||
Mortgage-backed securities | (1) | 5.6 | — | 5.6 | — | ||||||||||||
Derivatives: | |||||||||||||||||
Commodities futures, swaps & options | (3) | (0.2 | ) | — | (0.2 | ) | — | ||||||||||
Equity forwards | (4) | (1.9 | ) | — | (1.9 | ) | — | ||||||||||
Interest rate swaps | (5) | 1.9 | — | 1.9 | — | ||||||||||||
Foreign currency forwards | (6) | 0.6 | — | 0.6 | — | ||||||||||||
Total | $ | 24.7 | $ | 8.7 | $ | 16.0 | $ | — |
Items Measured at Fair Value at May 27, 2012 | |||||||||||||||||
(in millions) | Fair Value of Assets (Liabilities) | Quoted Prices in Active Market for Identical Assets (Liabilities) (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Fixed-income securities: | |||||||||||||||||
Corporate bonds | (1) | $ | 14.5 | $ | — | $ | 14.5 | $ | — | ||||||||
U.S. Treasury securities | (2) | 13.3 | 13.3 | — | — | ||||||||||||
Mortgage-backed securities | (1) | 9.9 | — | 9.9 | — | ||||||||||||
Derivatives: | |||||||||||||||||
Commodities futures, swaps & options | (3) | (0.1 | ) | — | (0.1 | ) | — | ||||||||||
Equity forwards | (4) | 2.8 | — | 2.8 | — | ||||||||||||
Interest rate locks & swaps | (5) | (41.7 | ) | — | (41.7 | ) | — | ||||||||||
Foreign currency forwards | (6) | 0.5 | — | 0.5 | — | ||||||||||||
Total | $ | (0.8 | ) | $ | 13.3 | $ | (14.1 | ) | $ | — |
(1) | The fair value of these securities is based on closing market prices of the investments, when applicable, or, alternatively, valuations utilizing market data and other observable inputs, inclusive of the risk of nonperformance. |
(2) | The fair value of our U.S. Treasury securities is based on closing market prices. |
(3) | The fair value of our commodities futures, swaps and options is based on closing market prices of the contracts, inclusive of the risk of nonperformance. |
(4) | The fair value of our equity forwards is based on the closing market value of Darden stock, inclusive of the risk of nonperformance. |
(5) | The fair value of our interest rate lock and swap agreements is based on current and expected market interest rates, inclusive of the risk of nonperformance. |
(6) | The fair value of our foreign currency forward contracts is based on closing forward exchange market prices, inclusive of the risk of nonperformance. |
(in millions) | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Market Value | |||||||||||
Available-for-sale securities | $ | 24.1 | $ | 0.2 | $ | — | $ | 24.3 |
(in millions) | Cost | Market Value | |||||
Less than 1 year | $ | 2.0 | $ | 2.0 | |||
1 to 3 years | 13.9 | 14.1 | |||||
3 to 5 years | 8.2 | 8.2 | |||||
Total | $ | 24.1 | $ | 24.3 |
(in millions) | May 26, 2013 |
Share repurchase authorizations | 187.4 |
Cumulative shares repurchased | 171.9 |
(in millions) | Fiscal Year | |||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Shares | Cost | Shares | Cost | Shares | Cost | |||||||||||||||
Repurchases of common stock | 1.0 | $ | 52.4 | 8.2 | $ | 375.1 | 8.6 | $ | 385.5 |
(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 29, 2011 | $ | (0.4 | ) | $ | 0.5 | $ | (4.1 | ) | $ | (55.8 | ) | $ | (59.8 | ) | |||||
Gain (loss) | (1.2 | ) | (0.1 | ) | (47.9 | ) | (45.6 | ) | (94.8 | ) | |||||||||
Reclassification realized in net earnings | — | — | 2.3 | 5.7 | 8.0 | ||||||||||||||
Balances at May 27, 2012 | $ | (1.6 | ) | $ | 0.4 | $ | (49.7 | ) | $ | (95.7 | ) | $ | (146.6 | ) | |||||
Gain (loss) | (0.2 | ) | (0.2 | ) | (8.8 | ) | 11.4 | 2.2 | |||||||||||
Reclassification realized in net earnings | — | — | 4.7 | 6.9 | 11.6 | ||||||||||||||
Balances at May 26, 2013 | $ | (1.8 | ) | $ | 0.2 | $ | (53.8 | ) | $ | (77.4 | ) | $ | (132.8 | ) |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Restaurant minimum rent | $ | 157.7 | $ | 130.9 | $ | 120.6 | |||||
Restaurant percentage rent | 6.6 | 5.6 | 5.3 | ||||||||
Restaurant rent averaging expense | 16.6 | 12.9 | 11.1 | ||||||||
Transportation equipment | 3.8 | 3.5 | 3.2 | ||||||||
Office equipment | 0.9 | 0.6 | 0.4 | ||||||||
Office space | 1.5 | 1.0 | 0.9 | ||||||||
Warehouse space | 0.4 | 0.6 | 0.5 | ||||||||
Total rent expense | $ | 187.5 | $ | 155.1 | $ | 142.0 |
(in millions) | |||||||
Fiscal Year | Capital | Operating | |||||
2014 | $ | 5.4 | $ | 186.0 | |||
2015 | 5.5 | 178.6 | |||||
2016 | 5.7 | 163.1 | |||||
2017 | 5.7 | 144.4 | |||||
2018 | 5.9 | 124.5 | |||||
Thereafter | 61.3 | 366.7 | |||||
Total future lease commitments | $ | 89.5 | $ | 1,163.3 | |||
Less imputed interest (at 6.5%) | (35.1 | ) | |||||
Present value of future lease commitments | $ | 54.4 | |||||
Less current maturities | (1.9 | ) | |||||
Obligations under capital leases, net of current maturities | $ | 52.5 |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Interest expense | $ | 126.2 | $ | 102.7 | $ | 93.7 | |||||
Imputed interest on capital leases | 3.6 | 3.7 | 3.8 | ||||||||
Capitalized interest | (3.0 | ) | (3.9 | ) | (3.0 | ) | |||||
Interest income | (0.9 | ) | (0.9 | ) | (0.9 | ) | |||||
Interest, net | $ | 125.9 | $ | 101.6 | $ | 93.6 |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Interest paid, net of amounts capitalized | $ | 112.5 | $ | 94.8 | $ | 98.3 |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Earnings from continuing operations | $ | 109.8 | $ | 161.5 | $ | 168.9 | |||||
Losses from discontinued operations | (0.4 | ) | (0.7 | ) | (1.5 | ) | |||||
Total consolidated income tax expense | $ | 109.4 | $ | 160.8 | $ | 167.4 |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Earnings from continuing operations before income taxes: | |||||||||||
U.S. | $ | 509.4 | $ | 621.4 | $ | 631.4 | |||||
Foreign | 13.0 | 16.6 | 16.2 | ||||||||
Earnings from continuing operations before income taxes | $ | 522.4 | $ | 638.0 | $ | 647.6 | |||||
Income taxes: | |||||||||||
Current: | |||||||||||
Federal | $ | 86.7 | $ | 97.0 | $ | 121.9 | |||||
State and local | 20.4 | 26.0 | 17.5 | ||||||||
Foreign | 3.5 | 2.4 | 0.1 | ||||||||
Total current | $ | 110.6 | $ | 125.4 | $ | 139.5 | |||||
Deferred (principally U.S.): | |||||||||||
Federal | 6.9 | 37.6 | 28.3 | ||||||||
State and local | (7.7 | ) | (1.5 | ) | 1.1 | ||||||
Total deferred | $ | (0.8 | ) | $ | 36.1 | $ | 29.4 | ||||
Total income taxes | $ | 109.8 | $ | 161.5 | $ | 168.9 |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Income taxes paid | $ | 98.5 | $ | 123.5 | $ | 126.4 |
Fiscal Year | ||||||||
2013 | 2012 | 2011 | ||||||
U.S. statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
State and local income taxes, net of federal tax benefits | 1.6 | 2.5 | 1.8 | |||||
Benefit of federal income tax credits | (12.9 | ) | (11.1 | ) | (8.3 | ) | ||
Other, net | (2.7 | ) | (1.1 | ) | (2.4 | ) | ||
Effective income tax rate | 21.0 | % | 25.3 | % | 26.1 | % |
(in millions) | |||
Balances at May 27, 2012 | $ | 15.7 | |
Additions related to current-year tax positions | 16.9 | ||
Reductions to tax positions due to settlements with taxing authorities | (1.1 | ) | |
Reductions to tax positions due to statute expiration | (1.6 | ) | |
Balances at May 26, 2013 | $ | 29.9 |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Interest expense on unrecognized tax benefits | $ | 0.5 | $ | 0.4 | $ | 1.6 |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Accrued liabilities | $ | 85.5 | $ | 65.9 | |||
Compensation and employee benefits | 212.9 | 221.2 | |||||
Deferred rent and interest income | 83.3 | 61.3 | |||||
Net operating loss, credit and charitable contribution carryforwards | 50.7 | 18.4 | |||||
Other | 6.8 | 10.2 | |||||
Gross deferred tax assets | $ | 439.2 | $ | 377.0 | |||
Valuation allowance | (15.4 | ) | (5.2 | ) | |||
Deferred tax assets, net of valuation allowance | $ | 423.8 | $ | 371.8 | |||
Trademarks and other acquisition related intangibles | (205.6 | ) | (175.3 | ) | |||
Buildings and equipment | (403.2 | ) | (363.3 | ) | |||
Capitalized software and other assets | (19.4 | ) | (15.1 | ) | |||
Other | (7.4 | ) | (6.5 | ) | |||
Gross deferred tax liabilities | $ | (635.6 | ) | $ | (560.2 | ) | |
Net deferred tax liabilities | $ | (211.8 | ) | $ | (188.4 | ) |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Defined benefit pension plans funding | $ | 2.4 | $ | 22.2 | $ | 12.9 | |||||
Postretirement benefit plan funding | 0.8 | 0.5 | 0.3 |
(in millions) | Defined Benefit Plans | Postretirement Benefit Plan | |||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Change in Benefit Obligation: | |||||||||||||||
Benefit obligation at beginning of period | $ | 274.4 | $ | 215.8 | $ | 29.6 | $ | 27.0 | |||||||
Service cost | 4.7 | 5.1 | 0.8 | 0.8 | |||||||||||
Interest cost | 9.9 | 9.6 | 1.3 | 1.5 | |||||||||||
Participant contributions | — | — | 0.4 | 0.3 | |||||||||||
Benefits paid | (11.2 | ) | (9.8 | ) | (1.2 | ) | (0.8 | ) | |||||||
Actuarial loss (gain) | (1.0 | ) | 53.7 | (1.0 | ) | 0.8 | |||||||||
Benefit obligation at end of period | $ | 276.8 | $ | 274.4 | $ | 29.9 | $ | 29.6 |
Change in Plan Assets: | |||||||||||||||
Fair value at beginning of period | $ | 203.5 | $ | 187.4 | $ | — | $ | — | |||||||
Actual return on plan assets | 39.4 | 3.7 | — | — | |||||||||||
Employer contributions | 2.4 | 22.2 | 0.8 | 0.5 | |||||||||||
Participant contributions | — | — | 0.4 | 0.3 | |||||||||||
Benefits paid | (11.2 | ) | (9.8 | ) | (1.2 | ) | (0.8 | ) | |||||||
Fair value at end of period | $ | 234.1 | $ | 203.5 | $ | — | $ | — |
Reconciliation of the Plans’ Funded Status: | |||||||||||||||
Unfunded status at end of period | $ | (42.7 | ) | $ | (70.9 | ) | $ | (29.9 | ) | $ | (29.6 | ) |
(in millions) | Defined Benefit Plans | Postretirement Benefit Plan | |||||||||||||
May 26, 2013 | May 27, 2012 | May 26, 2013 | May 27, 2012 | ||||||||||||
Components of the Consolidated Balance Sheets: | |||||||||||||||
Non-current liabilities | 42.7 | 70.9 | 29.9 | 29.6 | |||||||||||
Net amounts recognized | $ | 42.7 | $ | 70.9 | $ | 29.9 | $ | 29.6 | |||||||
Amounts Recognized in Accumulated Other Comprehensive Income (Loss), net of tax: | |||||||||||||||
Prior service (cost) credit | $ | (0.2 | ) | $ | (0.2 | ) | $ | 0.1 | $ | 0.1 | |||||
Net actuarial loss | (69.0 | ) | (87.4 | ) | (1.3 | ) | (1.9 | ) | |||||||
Net amounts recognized | $ | (69.2 | ) | $ | (87.6 | ) | $ | (1.2 | ) | $ | (1.8 | ) |
(in millions) | May 26, 2013 | May 27, 2012 | |||||
Accumulated benefit obligation for all pension plans | $ | 267.6 | $ | 265.0 | |||
Pension plans with accumulated benefit obligations in excess of plan assets: | |||||||
Accumulated benefit obligation | 267.6 | 265.0 | |||||
Fair value of plan assets | 234.1 | 203.5 | |||||
Projected benefit obligations for all plans with projected benefit obligations in excess of plan assets | 276.8 | 274.4 |
Defined Benefit Plans | Postretirement Benefit Plan | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||
Weighted-average assumptions used to determine benefit obligations at May 26 and May 27 (1) | |||||||||||
Discount rate | 4.60 | % | 4.35 | % | 4.74 | % | 4.52 | % | |||
Rate of future compensation increases | 4.04 | % | 4.22 | % | N/A | N/A | |||||
Weighted-average assumptions used to determine net expense for fiscal years ended May 26 and May 27 (2) | |||||||||||
Discount rate | 4.35 | % | 5.37 | % | 4.52 | % | 5.46 | % | |||
Expected long-term rate of return on plan assets | 9.00 | % | 9.00 | % | N/A | N/A | |||||
Rate of future compensation increases | 4.22 | % | 3.75 | % | N/A | N/A |
(in millions) | Defined Benefit Plans | Postretirement Benefit Plan | |||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||
Service cost | $ | 4.7 | $ | 5.1 | $ | 5.9 | $ | 0.8 | $ | 0.8 | $ | 0.9 | |||||||||||
Interest cost | 9.9 | 9.6 | 9.5 | 1.3 | 1.5 | 2.3 | |||||||||||||||||
Expected return on plan assets | (19.4 | ) | (17.8 | ) | (16.6 | ) | — | — | — | ||||||||||||||
Amortization of unrecognized prior service cost | 0.1 | 0.1 | 0.1 | (0.1 | ) | (0.1 | ) | — | |||||||||||||||
Recognized net actuarial loss | 8.8 | 8.2 | 4.5 | — | — | 1.3 | |||||||||||||||||
Net pension and postretirement cost (benefit) | $ | 4.1 | $ | 5.2 | $ | 3.4 | $ | 2.0 | $ | 2.2 | $ | 4.5 |
Items Measured at Fair Value at May 26, 2013 | |||||||||||||||||
(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) | |||||||||||||
Equity: | |||||||||||||||||
U.S. Commingled Funds | (1) | $ | 97.2 | $ | — | $ | 97.2 | $ | — | ||||||||
International Commingled Funds | (2) | 33.4 | — | 33.4 | — | ||||||||||||
Emerging Market Commingled Funds | (3) | 13.8 | — | 13.8 | — | ||||||||||||
Real Estate Commingled Funds | (4) | 11.6 | — | 11.6 | — | ||||||||||||
Fixed-Income: | |||||||||||||||||
U.S. Treasuries | (5) | 16.3 | 16.3 | — | — | ||||||||||||
U.S. Corporate Securities | (5) | 42.5 | — | 42.5 | — | ||||||||||||
International Securities | (5) | 8.2 | — | 8.2 | — | ||||||||||||
Public Sector Utility Securities | (5) | 9.4 | — | 9.4 | — | ||||||||||||
Cash & Accruals | 1.7 | 1.7 | — | — | |||||||||||||
Total | $ | 234.1 | $ | 18.0 | $ | 216.1 | $ | — |
Items Measured at Fair Value at May 27, 2012 | |||||||||||||||||
(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) | |||||||||||||
Equity: | |||||||||||||||||
U.S. Commingled Funds | (1) | $ | 80.5 | $ | — | $ | 80.5 | $ | — | ||||||||
International Commingled Funds | (2) | 26.8 | — | 26.8 | — | ||||||||||||
Emerging Market Commingled Funds | (3) | 11.3 | — | 11.3 | — | ||||||||||||
Real Estate Commingled Funds | (4) | 10.0 | — | 10.0 | — | ||||||||||||
Fixed-Income: | |||||||||||||||||
U.S. Treasuries | (5) | 20.0 | 20.0 | — | — | ||||||||||||
U.S. Corporate Securities | (5) | 37.7 | — | 37.7 | — | ||||||||||||
International Securities | (5) | 2.7 | — | 2.7 | — | ||||||||||||
Public Sector Utility Securities | (5) | 10.4 | — | 10.4 | — | ||||||||||||
Cash & Accruals | 4.1 | 4.1 | — | — | |||||||||||||
Total | $ | 203.5 | $ | 24.1 | $ | 179.4 | $ | — |
(1) | U.S. commingled funds are comprised of investments in funds that purchase publicly traded U.S. common stock for total return purposes. Investments are valued at unit values provided by the investment managers which are based on the fair value of the underlying investments. There are no redemption restrictions associated with these funds. |
(2) | International commingled funds are comprised of investments in funds that purchase publicly traded non-U.S. common stock for total return purposes. Investments are valued at unit values provided by the investment managers which are based on the fair value of the underlying investments. There are no redemption restrictions associated with these funds. |
(3) | Emerging market commingled funds and developed market securities are comprised of investments in funds that purchase publicly traded common stock of non-U.S. companies for total return purposes. Funds are valued at unit values provided by the investment managers which are based on the fair value of the underlying investments. There are no redemption restrictions associated with these funds. |
(4) | Real estate commingled funds are comprised of investments in funds that purchase publicly traded common stock of real estate securities for purposes of total return. These investments are valued at unit values provided by the investment managers which are based on the fair value of the underlying investments. There are no redemption restrictions associated with these funds. |
(5) | Fixed-income securities are comprised of investments in government and corporate debt securities. These securities are valued by the trustee at closing prices from national exchanges or pricing vendors on the valuation date. |
The following table presents the changes in Level 3 investments for the defined benefit pension plans at May 27, 2012: | ||||||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
(in millions) | Private Equity Partnerships | Private Equity Securities | Energy & Real Estate Public Sector | Real Asset Private Funds | Total | |||||||||||||||
Beginning balance at May 29, 2011 | $ | 25.6 | $ | — | $ | 4.3 | $ | 10.8 | $ | 40.7 | ||||||||||
Actual return on plan assets: | ||||||||||||||||||||
Relating to assets still held at the reporting date | — | — | — | — | — | |||||||||||||||
Relating to assets sold during the period | 0.3 | — | — | — | 0.3 | |||||||||||||||
Purchases, sales, and settlements | (25.9 | ) | — | (4.3 | ) | (10.8 | ) | (41.0 | ) | |||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | — | |||||||||||||||
Ending balance at May 27, 2012 | $ | — | $ | — | $ | — | $ | — | $ | — |
(in millions) | Defined Benefit Plans | Postretirement Benefit Plan | ||||||
2014 | $ | 11.1 | $ | 0.7 | ||||
2015 | 11.3 | 0.8 | ||||||
2016 | 11.8 | 0.9 | ||||||
2017 | 12.6 | 0.9 | ||||||
2018 | 13.5 | 1.0 | ||||||
2018-2023 | 79.4 | 6.5 |
(in millions) | Fiscal Year | ||||||||||
2013 | 2012 | 2011 | |||||||||
Stock options | $ | 18.4 | $ | 19.0 | $ | 20.7 | |||||
Restricted stock/restricted stock units | 2.6 | 4.3 | 9.9 | ||||||||
Darden stock units | 19.9 | 17.1 | 17.1 | ||||||||
Performance stock units | 5.1 | 12.6 | 15.6 | ||||||||
Employee stock purchase plan | 1.8 | 1.8 | 1.9 | ||||||||
Director compensation program/other | 1.5 | 1.3 | 1.4 | ||||||||
$ | 49.3 | $ | 56.1 | $ | 66.6 |
Options (in millions) | Weighted-Average Exercise Price Per Share | Weighted-Average Remaining Contractual Life (Yrs) | Aggregate Intrinsic Value (in millions) | ||||
Outstanding beginning of period | 12.3 | $36.05 | 5.58 | $209.3 | |||
Options granted | 1.7 | 49.03 | |||||
Options exercised | (2.0) | 28.96 | |||||
Options canceled | (0.4) | 45.11 | |||||
Outstanding end of period | 11.6 | $38.81 | 5.47 | 162.6 | |||
Exercisable | 6.9 | $33.84 | 3.73 | $130.7 |
Shares (in millions) | Weighted-Average Grant Date Fair Value Per Share | ||
Outstanding beginning of period | 0.3 | $39.63 | |
Shares granted | 0.1 | 50.23 | |
Shares vested | (0.2) | 36.49 | |
Outstanding end of period | 0.2 | $35.13 |
(All units settled in cash) | Units (in millions) | Weighted-Average Fair Value Per Unit | |
Outstanding beginning of period | 2.1 | $53.06 | |
Units granted | 0.6 | 50.76 | |
Units vested | (0.3) | 51.92 | |
Units canceled | (0.2) | 42.86 | |
Outstanding end of period | 2.2 | $52.83 |
Units (in millions) | Weighted-Average Fair Value Per Unit | ||
Outstanding beginning of period | 1.1 | $39.33 | |
Units granted | 0.3 | 49.58 | |
Units vested | (0.4) | 51.97 | |
Units canceled | (0.1) | 42.03 | |
Outstanding end of period | 0.9 | $36.83 |
Fiscal 2013 - Quarters Ended | |||||||||||||||||||
(in millions, except per share data) | Aug. 26 | Nov. 25 | Feb. 24 | May 26 | Total | ||||||||||||||
Sales | $ | 2,034.8 | $ | 1,960.0 | $ | 2,258.2 | $ | 2,299.0 | $ | 8,551.9 | |||||||||
Earnings before income taxes | 146.3 | 43.1 | 173.2 | 159.8 | 522.4 | ||||||||||||||
Earnings from continuing operations | 111.0 | 33.7 | 134.5 | 133.3 | 412.6 | ||||||||||||||
Losses from discontinued operations, net of tax | (0.2 | ) | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.7 | ) | |||||||||
Net earnings | 110.8 | 33.6 | 134.4 | 133.2 | 411.9 | ||||||||||||||
Basic net earnings per share: | |||||||||||||||||||
Earnings from continuing operations | 0.87 | 0.26 | 1.04 | 1.03 | 3.20 | ||||||||||||||
Losses from discontinued operations | (0.01 | ) | — | — | — | (0.01 | ) | ||||||||||||
Net earnings | 0.86 | 0.26 | 1.04 | 1.03 | 3.19 | ||||||||||||||
Diluted net earnings per share: | |||||||||||||||||||
Earnings from continuing operations | 0.85 | 0.26 | 1.02 | 1.01 | 3.14 | ||||||||||||||
Losses from discontinued operations | — | — | — | — | (0.01 | ) | |||||||||||||
Net earnings | 0.85 | 0.26 | 1.02 | 1.01 | 3.13 | ||||||||||||||
Dividends paid per share | 0.50 | 0.50 | 0.50 | 0.50 | 2.00 | ||||||||||||||
Stock price: | |||||||||||||||||||
High | 54.09 | 57.93 | 54.19 | 54.21 | 57.93 | ||||||||||||||
Low | 48.39 | 50.00 | 44.11 | 44.81 | 44.11 | ||||||||||||||
Fiscal 2012 - Quarters Ended | |||||||||||||||||||
(in millions, except per share data) | Aug. 28 | Nov. 27 | Feb. 26 | May 27 | Total | ||||||||||||||
Sales | $ | 1,942.0 | $ | 1,831.5 | $ | 2,159.7 | $ | 2,065.6 | $ | 7,998.7 | |||||||||
Earnings before income taxes | 147.0 | 72.5 | 217.8 | 200.7 | 638.0 | ||||||||||||||
Earnings from continuing operations | 106.8 | 54.1 | 164.1 | 151.6 | 476.5 | ||||||||||||||
Losses from discontinued operations, net of tax | (0.2 | ) | (0.4 | ) | — | (0.4 | ) | (1.0 | ) | ||||||||||
Net earnings | 106.6 | 53.7 | 164.1 | 151.2 | 475.5 | ||||||||||||||
Basic net earnings per share: | |||||||||||||||||||
Earnings from continuing operations | 0.80 | 0.42 | 1.28 | 1.18 | 3.66 | ||||||||||||||
Losses from discontinued operations | — | (0.01 | ) | — | — | (0.01 | ) | ||||||||||||
Net earnings | 0.80 | 0.41 | 1.28 | 1.18 | 3.65 | ||||||||||||||
Diluted net earnings per share: | |||||||||||||||||||
Earnings from continuing operations | 0.78 | 0.41 | 1.25 | 1.15 | 3.58 | ||||||||||||||
Losses from discontinued operations | — | (0.01 | ) | — | — | (0.01 | ) | ||||||||||||
Net earnings | 0.78 | 0.40 | 1.25 | 1.15 | 3.57 | ||||||||||||||
Dividends paid per share | 0.43 | 0.43 | 0.43 | 0.43 | 1.72 | ||||||||||||||
Stock price: | |||||||||||||||||||
High | 53.81 | 49.20 | 51.90 | 55.84 | 55.84 | ||||||||||||||
Low | 43.85 | 40.69 | 41.65 | 48.49 | 40.69 | ||||||||||||||
Five-Year Financial Summary | |||||||||||||||||||
Financial Review 2013 | |||||||||||||||||||
Fiscal Year Ended | |||||||||||||||||||
(Dollars in millions, except per share data) | May 26, 2013 | May 27, 2012 | May 29, 2011 | May 30, 2010 | May 31, 2009(2) | ||||||||||||||
Operating Results (3) Sales | $ | 8,551.9 | $ | 7,998.7 | $ | 7,500.2 | $ | 7,113.1 | $ | 7,217.5 | |||||||||
Costs and expenses: | |||||||||||||||||||
Cost of sales: | |||||||||||||||||||
Food and beverage | 2,628.6 | 2,460.6 | 2,173.6 | 2,051.2 | 2,200.3 | ||||||||||||||
Restaurant labor | 2,698.0 | 2,502.0 | 2,396.9 | 2,350.6 | 2,308.2 | ||||||||||||||
Restaurant expenses | 1,334.4 | 1,200.6 | 1,129.0 | 1,082.2 | 1,128.4 | ||||||||||||||
Total cost of sales, excluding restaurant depreciation and amortization (4) | $ | 6,661.0 | $ | 6,163.2 | $ | 5,699.5 | $ | 5,484.0 | $ | 5,636.9 | |||||||||
Selling, general and administrative (1) | 847.8 | 746.8 | 742.7 | 690.7 | 677.6 | ||||||||||||||
Depreciation and amortization | 394.8 | 349.1 | 316.8 | 300.9 | 283.1 | ||||||||||||||
Interest, net | 125.9 | 101.6 | 93.6 | 93.9 | 107.4 | ||||||||||||||
Total costs and expenses | $ | 8,029.5 | $ | 7,360.7 | $ | 6,852.6 | $ | 6,569.5 | $ | 6,705.0 | |||||||||
Earnings before income taxes | 522.4 | 638.0 | 647.6 | 543.6 | 512.5 | ||||||||||||||
Income taxes | 109.8 | 161.5 | 168.9 | 136.6 | 140.7 | ||||||||||||||
Earnings from continuing operations | $ | 412.6 | $ | 476.5 | $ | 478.7 | $ | 407.0 | $ | 371.8 | |||||||||
(Losses) earnings from discontinued operations, net of tax (benefit) expense of $(0.4), (0.7), $(1.5), $(1.5) and $0.2 | (0.7 | ) | (1.0 | ) | (2.4 | ) | (2.5 | ) | 0.4 | ||||||||||
Net earnings | $ | 411.9 | $ | 475.5 | $ | 476.3 | $ | 404.5 | $ | 372.2 | |||||||||
Basic net earnings per share: | |||||||||||||||||||
Earnings from continuing operations | $ | 3.20 | $ | 3.66 | $ | 3.50 | $ | 2.92 | $ | 2.71 | |||||||||
(Losses) earnings from discontinued operations | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | — | |||||
Net earnings | $ | 3.19 | $ | 3.65 | $ | 3.48 | $ | 2.90 | $ | 2.71 | |||||||||
Diluted net earnings per share: | |||||||||||||||||||
Earnings from continuing operations | $ | 3.14 | $ | 3.58 | $ | 3.41 | $ | 2.86 | $ | 2.65 | |||||||||
(Losses) earnings from discontinued operations | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | — | |||||
Net earnings | $ | 3.13 | $ | 3.57 | $ | 3.39 | $ | 2.84 | $ | 2.65 | |||||||||
Average number of common shares outstanding: | |||||||||||||||||||
Basic | 129.0 | 130.1 | 136.8 | 139.3 | 137.4 | ||||||||||||||
Diluted | 131.6 | 133.2 | 140.3 | 142.4 | 140.4 | ||||||||||||||
Financial Position | |||||||||||||||||||
Total assets | $ | 6,936.9 | $ | 5,944.2 | $ | 5,466.6 | $ | 5,276.1 | $ | 5,056.6 | |||||||||
Land, buildings and equipment, net | $ | 4,391.1 | $ | 3,951.3 | $ | 3,622.0 | $ | 3,403.7 | $ | 3,306.7 | |||||||||
Working capital (deficit) | $ | (651.5 | ) | $ | (1,016.5 | ) | $ | (623.0 | ) | $ | (519.6 | ) | $ | (493.8 | ) | ||||
Long-term debt, less current portion | $ | 2,496.2 | $ | 1,453.7 | $ | 1,407.3 | $ | 1,408.7 | $ | 1,632.3 | |||||||||
Stockholders’ equity | $ | 2,059.5 | $ | 1,842.0 | $ | 1,936.2 | $ | 1,894.0 | $ | 1,606.0 | |||||||||
Stockholders’ equity per outstanding share | $ | 15.81 | $ | 14.28 | $ | 14.38 | $ | 13.47 | $ | 11.53 |
Fiscal Year Ended | |||||||||||||||||||
(Dollars in millions, except per share data) | May 26, 2013 | May 27, 2012 | May 29, 2011 | May 30, 2010 | May 31, 2009(2) | ||||||||||||||
Other Statistics | |||||||||||||||||||
Cash flows from operations (3) | $ | 949.5 | $ | 762.2 | $ | 894.7 | $ | 903.4 | $ | 783.5 | |||||||||
Capital expenditures (3) | $ | 685.6 | $ | 639.7 | $ | 547.7 | $ | 432.1 | $ | 535.3 | |||||||||
Dividends paid | $ | 258.2 | $ | 223.9 | $ | 175.5 | $ | 140.0 | $ | 110.2 | |||||||||
Dividends paid per share | $ | 2.00 | $ | 1.72 | $ | 1.28 | $ | 1.00 | $ | 0.80 | |||||||||
Advertising expense (3) | $ | 409.2 | $ | 357.2 | $ | 340.2 | $ | 311.9 | $ | 308.3 | |||||||||
Stock price: | |||||||||||||||||||
High | $ | 57.93 | $ | 55.84 | $ | 52.12 | $ | 49.01 | $ | 40.26 | |||||||||
Low | $ | 44.11 | $ | 40.69 | $ | 37.08 | $ | 29.94 | $ | 13.54 | |||||||||
Close | $ | 52.83 | $ | 53.06 | $ | 50.92 | $ | 42.90 | $ | 36.17 | |||||||||
Number of employees | 206,578 | 181,468 | 178,380 | 174,079 | 178,692 | ||||||||||||||
Number of restaurants (3) | 2,138 | 1,994 | 1,894 | 1,824 | 1,773 |
(1) | Includes asset impairment charges of $0.8 million, $0.5 million, $4.7 million, $6.2 million and $12.0 million, respectively. |
(2) | Fiscal year 2009 consisted of 53 weeks while all other fiscal years consisted of 52 weeks. |
(3) | Consistent with our consolidated financial statements, information has been presented on a continuing operations basis. Accordingly, the activities related to Smokey Bones, Rocky River Grillhouse and the nine Bahama Breeze restaurants closed or sold in fiscal 2007 and 2008 have been excluded. |
(4) | Excludes restaurant depreciation and amortization of $373.7 million, $326.9 million, $295.6 million, $283.4 million and $267.1 million, respectively. |
(a) | One wholly-owned subsidiary operating in the same line of business in the United States has been omitted. |
(b) | One wholly-owned subsidiary operating in the same line of business in the United States has been omitted. |
By: /s/ Michael W. Barnes Michael W. Barnes | By: /s/ Cornelius McGillicuddy, III Cornelius McGillicuddy, III |
By: /s/ Leonard L. Berry Leonard L. Berry | By: /s/ Andrew H. Madsen Andrew H. Madsen |
By: /s/ Christopher J. Fraleigh Christopher J. Fraleigh | By: /s/ Clarence Otis, Jr. Clarence Otis, Jr. |
By: /s/ Victoria D. Harker Victoria D. Harker | By: /s/ Michael D. Rose Michael D. Rose |
By: /s/ David H. Hughes David H. Hughes | By: /s/ Maria A. Sastre Maria A. Sastre |
By: /s/ Charles A. Ledsinger, Jr. Charles A. Ledsinger, Jr. | By: /s/ William S. Simon William S. Simon |
By: /s/ William M. Lewis, Jr. William M. Lewis, Jr. |
1. | I have reviewed this Annual Report on Form 10-K 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 this 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. |
/s/ Clarence Otis, Jr. |
Clarence Otis, Jr. |
Chairman and Chief Executive Officer |
July 19, 2013 |
1. | I have reviewed this Annual Report on Form 10-K 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 this 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. |
/s/ C. Bradford Richmond |
C. Bradford Richmond |
Senior Vice President and Chief Financial Officer |
July 19, 2013 |
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. |
/s/ Clarence Otis, Jr. |
Clarence Otis, Jr. |
Chairman and Chief Executive Officer |
July 19, 2013 |
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. |
/s/ C. Bradford Richmond |
C. Bradford Richmond |
Senior Vice President and Chief Financial Officer |
July 19, 2013 |
Derivative Instruments And Hedging Activities (Effects Of Derivative Instruments In Cash Flow Hedging Relationships) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 26, 2013
|
May 27, 2012
|
May 29, 2011
|
||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||
Amount of Gain (Loss) Recognized in AOCI (Effective Portion) | $ (12.7) | $ (77.2) | $ (9.9) | |||||||||||
Amount of Gain (Loss) Reclassified from AOCI to Earnings (Effective Portion) | (7.7) | (3.8) | 0.2 | |||||||||||
Amount of Gain (Loss) Recognized in Earnings (Ineffective Portion) | 1.1 | [1] | (0.1) | [1] | (0.3) | [1] | ||||||||
Commodity
|
||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||
Amount of Gain (Loss) Recognized in AOCI (Effective Portion) | 0.7 | (2.2) | (0.2) | |||||||||||
Commodity | Cost of Sales
|
||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||
Amount of Gain (Loss) Reclassified from AOCI to Earnings (Effective Portion) | 0.4 | [2] | (1.7) | [2] | (0.9) | [2] | ||||||||
Amount of Gain (Loss) Recognized in Earnings (Ineffective Portion) | 0 | [1],[2] | 0 | [1],[2] | 0 | [1],[2] | ||||||||
Equity
|
||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||
Amount of Gain (Loss) Recognized in AOCI (Effective Portion) | (2.8) | (0.7) | 2.6 | |||||||||||
Equity | Cost Of Sales And Selling General And Administrative Expense
|
||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||
Amount of Gain (Loss) Reclassified from AOCI to Earnings (Effective Portion) | 0.2 | [3] | 0 | [3] | 0 | [3] | ||||||||
Amount of Gain (Loss) Recognized in Earnings (Ineffective Portion) | 1.1 | [1],[3] | 0.6 | [1],[3] | 0.2 | [1],[3] | ||||||||
Interest rate
|
||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||
Amount of Gain (Loss) Recognized in AOCI (Effective Portion) | (10.1) | (75.2) | (12.2) | |||||||||||
Interest rate | Interest, net
|
||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||
Amount of Gain (Loss) Reclassified from AOCI to Earnings (Effective Portion) | (8.3) | (2.9) | 0.7 | |||||||||||
Amount of Gain (Loss) Recognized in Earnings (Ineffective Portion) | 0 | [1] | (0.7) | [1] | (0.5) | [1] | ||||||||
Foreign currency
|
||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||
Amount of Gain (Loss) Recognized in AOCI (Effective Portion) | (0.5) | 0.9 | (0.1) | |||||||||||
Foreign currency | Cost Of Sales And Selling General And Administrative Expense
|
||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||
Amount of Gain (Loss) Reclassified from AOCI to Earnings (Effective Portion) | 0 | [4] | 0.8 | [4] | 0.4 | [4] | ||||||||
Amount of Gain (Loss) Recognized in Earnings (Ineffective Portion) | $ 0 | [1],[4] | $ 0 | [1],[4] | $ 0 | [1],[4] | ||||||||
|
Derivative Instruments And Hedging Activities (Effects Of Derivatives Not Designated As Hedging Instruments) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
May 26, 2013
|
May 27, 2012
|
May 29, 2011
|
||||||||
Derivative [Line Items] | ||||||||||
Amount of Gain (Loss) Recognized in Earnings | $ 2.9 | $ 0.4 | $ 7.2 | |||||||
Commodity contracts | Cost of Sales
|
||||||||||
Derivative [Line Items] | ||||||||||
Amount of Gain (Loss) Recognized in Earnings | (0.1) | [1] | (7.9) | [1] | 0.6 | [1] | ||||
Equity forwards | Cost of Sales
|
||||||||||
Derivative [Line Items] | ||||||||||
Amount of Gain (Loss) Recognized in Earnings | 1.6 | [2] | 2.3 | [2] | 3.3 | [2] | ||||
Equity forwards | Selling, general and administrative
|
||||||||||
Derivative [Line Items] | ||||||||||
Amount of Gain (Loss) Recognized in Earnings | $ 1.4 | $ 6.0 | $ 3.3 | |||||||
|
Income Taxes (Allocation Of Total Income Tax Expense) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
May 26, 2013
|
May 27, 2012
|
May 29, 2011
|
|
Income Tax Disclosure [Abstract] | |||
Earnings from continuing operations | $ 109.8 | $ 161.5 | $ 168.9 |
Losses from discontinued operations | (0.4) | (0.7) | (1.5) |
Total consolidated income tax expense | $ 109.4 | $ 160.8 | $ 167.4 |
Retirement Plans (Defined Benefit And Postretirement Benefit Plans) (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
May 26, 2013
|
May 27, 2012
|
May 29, 2011
|
|||||
Defined Benefit Plans
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Expected long-term rate of return on plan assets (percentage) | 9.00% | [1] | 9.00% | [1] | 9.00% | ||
Effect of quarter percentage point change in discount rate on earnings before income taxes | $ 0.6 | ||||||
Effect of quarter percentage point change in expected long term rate of return on plan assets on earnings before income taxes | 0.5 | ||||||
Amortization of net actuarial loss | 9.1 | ||||||
Defined Benefit Plans | U.S. Equities
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Target asset fund allocation (percentage) | 40.00% | ||||||
Defined Benefit Plans | Fixed-Income Securities
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Target asset fund allocation (percentage) | 35.00% | ||||||
Defined Benefit Plans | International Equities
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Target asset fund allocation (percentage) | 20.00% | ||||||
Defined Benefit Plans | Real Assets
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Target asset fund allocation (percentage) | 5.00% | ||||||
Defined Benefit Plans | US Comingled Fund
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Concentration of market risk related to large investments in a single fund or sector (percentage) | 41.50% | ||||||
Defined Benefit Plans | U.S. Corporate Securities
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Concentration of market risk related to large investments in a single fund or sector (percentage) | 18.10% | ||||||
Defined Benefit Plans | International Comingled Fund
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Concentration of market risk related to large investments in a single fund or sector (percentage) | 14.30% | ||||||
Defined Benefit Plans | U.S. Treasury securities
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Concentration of market risk related to large investments in a single fund or sector (percentage) | 7.10% | ||||||
Defined Benefit Plans | Emerging Markets Comingled Fund
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Concentration of market risk related to large investments in a single fund or sector (percentage) | 5.90% | ||||||
Defined Benefit Plans | Real Estate Funds
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Concentration of market risk related to large investments in a single fund or sector (percentage) | 4.90% | ||||||
Defined Benefit Plans | Other Investments
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Concentration of market risk related to large investments in a single fund or sector (percentage) | 5.00% | ||||||
Postretirement Benefit Plan
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Expected employer contribution to the benefit plans | 0.7 | ||||||
Assumed health care cost trend rate increase in per-capita charges (percentage) | 7.10% | ||||||
Ultimate health care cost trend rate (percentage) | 5.00% | ||||||
Year that rate reaches ultimate trend rate | 2021 | ||||||
Effect of one percentage point increase on service and interest cost components | 0.5 | ||||||
Effect of one percentage point decrease on service and interest cost components | 0.4 | ||||||
Effect of one percentage point increase on accumulated postretirement benefit obligation | 6.6 | ||||||
Effect of one percentage point decrease on accumulated postretirement benefit obligation | 5.2 | ||||||
Amortization of net actuarial loss | 0 | ||||||
Maximum | Defined Benefit Plans
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Expected employer contribution to the benefit plans | $ 0.4 | ||||||
10-Year Rates | Defined Benefit Plans
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Actual rate of return on plan assets (percentage) | 9.50% | ||||||
15-Year Rates | Defined Benefit Plans
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Actual rate of return on plan assets (percentage) | 8.00% | ||||||
20-Year Rates | Defined Benefit Plans
|
|||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Actual rate of return on plan assets (percentage) | 9.40% | ||||||
|
Short-Term Debt
|
12 Months Ended |
---|---|
May 26, 2013
|
|
Short-term Debt [Abstract] | |
Short-Term Debt | SHORT-TERM DEBT As of May 26, 2013, amounts outstanding as short-term debt, which consist of unsecured commercial paper borrowings, bearing an interest rate of 0.20 percent, were $164.5 million. As of May 27, 2012, amounts outstanding as short-term debt, which consist of unsecured commercial paper borrowings, bearing an interest rate of 0.32 percent, were $262.7 million. |
Summary Of Significant Accounting Policies (Capitalized Software Costs And Related Accumulated Amortization) (Details) (USD $)
In Millions, unless otherwise specified |
May 26, 2013
|
May 27, 2012
|
||||
---|---|---|---|---|---|---|
Accounting Policies [Abstract] | ||||||
Capitalized software | $ 107.9 | $ 84.3 | ||||
Accumulated amortization | (67.5) | (63.4) | ||||
Capitalized software, net of accumulated amortization | $ 40.4 | [1] | $ 20.9 | [1] | ||
|
Consolidated Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
May 26, 2013
|
May 27, 2012
|
May 29, 2011
|
|
Net earnings | $ 411.9 | $ 475.5 | $ 476.3 |
Other comprehensive income (loss): | |||
Foreign currency adjustment | (0.2) | (1.2) | 1.8 |
Change in fair value of marketable securities, net of tax expense (benefit) of $0.1, $0.1 and $(0.1), respectively | (0.2) | (0.1) | 0.2 |
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of tax expense (benefit) of $0.6, $27.8 and $4.8, respectively | (4.1) | (45.6) | (5.2) |
Net unamortized gain (loss) arising during period, including amortization of unrecognized net actuarial loss, net of tax expense (benefit) of $(11.3), $24.8 and $(9.0), respectively | 18.3 | (39.9) | 14.5 |
Other comprehensive income (loss) | 13.8 | (86.8) | 11.3 |
Total comprehensive income | $ 425.7 | $ 388.7 | $ 487.6 |
Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
May 26, 2013
|
May 27, 2012
|
May 29, 2011
|
|
Cash flows - operating activities | |||
Net earnings | $ 411.9 | $ 475.5 | $ 476.3 |
Losses from discontinued operations, net of tax | 0.7 | 1.0 | 2.4 |
Adjustments to reconcile net earnings from continuing operations to cash flows: | |||
Depreciation and amortization | 394.8 | 349.1 | 316.8 |
Asset impairment charges, net | 0.8 | 0.5 | 4.7 |
Amortization of loan costs | 13.0 | 6.7 | 2.8 |
Stock-based compensation expense | 49.3 | 56.1 | 66.6 |
Change in current assets and liabilities | 40.1 | (191.4) | 12.2 |
Contributions to pension and postretirement plan | (3.2) | (22.7) | (13.2) |
Loss on disposal of land, buildings and equipment | 8.1 | 7.1 | 6.9 |
Change in cash surrender value of trust-owned life insurance | (16.8) | 4.1 | (13.7) |
Deferred income taxes | (2.1) | 36.1 | 28.8 |
Change in deferred rent | 26.8 | 18.5 | 17.1 |
Change in other assets and liabilities | 17.1 | 15.8 | (15.4) |
Income tax benefits from exercise of stock-based compensation credited to goodwill | 0.1 | 0.6 | 0.2 |
Other, net | 8.9 | 5.2 | 2.2 |
Net cash provided by operating activities of continuing operations | 949.5 | 762.2 | 894.7 |
Cash flows - investing activities | |||
Purchases of land, buildings and equipment | (685.6) | (639.7) | (547.7) |
Proceeds from disposal of land, buildings and equipment | 0.4 | 3.3 | 7.0 |
Purchases of marketable securities | (12.9) | (32.1) | (6.5) |
Proceeds from sale of marketable securities | 26.0 | 21.3 | 5.1 |
Cash used in business acquisitions, net of cash acquired | (577.4) | (58.5) | 0 |
Increase in other assets | (40.9) | (15.9) | (10.6) |
Net cash used in investing activities of continuing operations | (1,290.4) | (721.6) | (552.7) |
Cash flows - financing activities | |||
Proceeds from issuance of common stock | 64.4 | 70.2 | 63.0 |
Income tax benefits credited to equity | 13.6 | 17.9 | 17.7 |
Dividends paid | (258.2) | (223.9) | (175.5) |
Purchases of common stock | (52.4) | (375.1) | (385.5) |
ESOP note receivable repayments | 1.1 | 2.1 | 1.8 |
Proceeds from issuance of short-term debt | 2,670.3 | 2,321.0 | 1,454.9 |
Repayments of short-term debt | (2,768.4) | (2,243.8) | (1,269.4) |
Repayments of long-term debt | (355.9) | (2.1) | (226.8) |
Proceeds from issuance of long-term debt | 1,050.0 | 400.0 | 0 |
Payment of debt issuance costs | (7.4) | (5.1) | 0 |
Principal payments on capital leases | (1.7) | (1.6) | (1.2) |
Net cash provided by (used in) financing activities of continuing operations | 355.4 | (40.4) | (521.0) |
Cash flows - discontinued operations | |||
Net cash used in operating activities of discontinued operations | (0.2) | (0.5) | (2.1) |
Net cash provided by investing activities of discontinued operations | 3.4 | 0.3 | 2.8 |
Net cash provided by (used in) discontinued operations | 3.2 | (0.2) | 0.7 |
Increase (decrease) in cash and cash equivalents | 17.7 | 0 | (178.3) |
Cash and cash equivalents - beginning of year | 70.5 | 70.5 | 248.8 |
Cash and cash equivalents - end of year | 88.2 | 70.5 | 70.5 |
Cash flows from changes in current assets and liabilities | |||
Receivables, net | (9.4) | (6.1) | (5.9) |
Inventories | 50.6 | (103.0) | (79.3) |
Prepaid expenses and other current assets | (11.7) | (6.6) | (5.0) |
Accounts payable | 10.8 | (10.2) | 5.5 |
Accrued payroll | (9.3) | (13.3) | 5.3 |
Prepaid/accrued income taxes | 22.5 | (16.3) | 4.7 |
Other accrued taxes | 6.4 | (3.9) | 2.3 |
Unearned revenues | 36.4 | 31.1 | 27.3 |
Other current liabilities | (56.2) | (63.1) | 57.3 |
Change in current assets and liabilities | $ 40.1 | $ (191.4) | $ 12.2 |
Stock-Based Compensation (Darden Stock Unit Activity) (Narrative) (Details) (Darden stock units, USD $)
In Millions, unless otherwise specified |
12 Months Ended | |
---|---|---|
May 26, 2013
|
May 27, 2012
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | ||
Total stock unit liability | $ 61.1 | $ 50.3 |
Unrecognized compensation cost related to unvested stock options granted | 43.0 | |
Unrecognized compensation cost, period of recognition, in years (years) | 2 years 9 months 7 days | |
Fair market value on grant date | 13.4 | |
Other Current Liabilities
|
||
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | ||
Current stock unit liability | 19.9 | 11.1 |
Other Liabilities
|
||
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | ||
Noncurrent stock unit liability | $ 41.2 | $ 39.2 |
Leases
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 26, 2013
|
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LEASES An analysis of rent expense incurred related to restaurants in continuing operations is as follows:
The annual future lease commitments under capital lease obligations and noncancelable operating leases, including those related to restaurants reported as discontinued operations, for each of the five fiscal years subsequent to May 26, 2013 and thereafter is as follows:
|
Stock-Based Compensation (Narrative) (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified |
12 Months Ended |
---|---|
May 26, 2013
Stock_Option_Plan
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Number of active stock option and stock grant plans (plans) | 2 |
Number of stock plans that no longer issue shares (plans) | 4 |
Maximum terms of awards (years) | 10 years |
Vesting period (years) | 4 years |
2002 Plan
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Shares available for issuance (shares) | 18,300 |
RARE Plan
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Shares available for issuance (shares) | 3,900 |
Director Stock Plan
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Shares available for issuance (shares) | 375 |
Director Compensation Program
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Shares available for issuance (shares) | 100 |
Annual award common stock, fair value | $ 0.1 |
1995 Plan
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Shares available for issuance (shares) | 33,300 |
2000 Plan
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Shares available for issuance (shares) | 5,400 |
Minimum
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Vesting period (years) | 1 year |
Minimum | 2002 Plan
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Vesting period (years) | 3 years |
Vesting percentage (percentage) | 0.00% |
Minimum | Restricted stock/restricted stock units
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Vesting period (years) | 3 years |
Maximum
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Vesting period (years) | 4 years |
Maximum | 2002 Plan
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Vesting period (years) | 5 years |
Vesting percentage (percentage) | 150.00% |
Maximum | Restricted stock/restricted stock units
|
|
Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Line Items] | |
Vesting period (years) | 5 years |
Other Assets (Components Of Other Assets) (Details) (USD $)
In Millions, unless otherwise specified |
May 26, 2013
|
May 27, 2012
|
||||||||
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Other Assets [Abstract] | ||||||||||
Trust-owned life insurance | $ 85.7 | [1] | $ 68.9 | [1] | ||||||
Capitalized software costs, net | 40.4 | [2] | 20.9 | [2] | ||||||
Liquor licenses | 49.6 | 47.3 | ||||||||
Acquired below-market leases, net | 21.4 | 16.9 | ||||||||
Loan costs, net | 19.1 | 15.3 | ||||||||
Marketable securities | 22.3 | 33.0 | ||||||||
Deferred-tax charge | 21.3 | [3] | 0 | [3] | ||||||
Insurance-related | 18.0 | 16.7 | ||||||||
Miscellaneous | 21.0 | 12.8 | ||||||||
Total other assets | $ 298.8 | $ 231.8 | ||||||||
|
Summary Of Significant Accounting Policies (Amortization Expense Related To Acquired Definite-Lived Intangible Assets) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
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May 26, 2013
|
May 27, 2012
|
May 29, 2011
|
|
Accounting Policies [Abstract] | |||
Restaurant expense - below-market leases | $ 1.8 | $ 1.8 | $ 2.2 |
Restaurant expense - above-market leases | $ (1.2) | $ (0.5) | $ (0.5) |
Other Current Liabilities
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 26, 2013
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Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities | OTHER CURRENT LIABILITIES The components of other current liabilities are as follows:
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Leases (Analysis Of Rent Expense) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
May 26, 2013
|
May 27, 2012
|
May 29, 2011
|
|
Operating Leased Assets [Line Items] | |||
Total rent expense | $ 187.5 | $ 155.1 | $ 142.0 |
Restaurant minimum rent
|
|||
Operating Leased Assets [Line Items] | |||
Total rent expense | 157.7 | 130.9 | 120.6 |
Restaurant percentage rent
|
|||
Operating Leased Assets [Line Items] | |||
Total rent expense | 6.6 | 5.6 | 5.3 |
Restaurant rent averaging expense
|
|||
Operating Leased Assets [Line Items] | |||
Total rent expense | 16.6 | 12.9 | 11.1 |
Transportation equipment
|
|||
Operating Leased Assets [Line Items] | |||
Total rent expense | 3.8 | 3.5 | 3.2 |
Office equipment
|
|||
Operating Leased Assets [Line Items] | |||
Total rent expense | 0.9 | 0.6 | 0.4 |
Office space
|
|||
Operating Leased Assets [Line Items] | |||
Total rent expense | 1.5 | 1.0 | 0.9 |
Warehouse space
|
|||
Operating Leased Assets [Line Items] | |||
Total rent expense | $ 0.4 | $ 0.6 | $ 0.5 |
Stock-Based Compensation (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 26, 2013
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recognized Stock-Based Compensation Expense | Stock-based compensation expense included in continuing operations was as follows:
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Summary Of Stock Option Activity | The following table presents a summary of our stock option activity as of and for the year ended May 26, 2013:
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Summary Of Restricted Stock And RSU Activity | The following table presents a summary of our restricted stock and RSU activity as of and for the fiscal year ended May 26, 2013:
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Summary Of Darden Stock Unit Activity | The following table presents a summary of our Darden stock unit activity as of and for the fiscal year ended May 26, 2013:
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Summary Of Performance Stock Unit Activity | The following table presents a summary of our performance stock unit activity as of and for the fiscal year ended May 26, 2013:
|
Fair Value Measurements (Carrying Value And Fair Value Of Long-Term Debt) (Details) (USD $)
|
May 26, 2013
|
May 27, 2012
|
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Carrying value of long-term debt | $ 2,496,200,000 | $ 1,803,600,000 |
Carrying Value
|
||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Carrying value of long-term debt | 2,500,000,000 | 1,800,000,000 |
Fair Value
|
||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of long-term debt | $ 2,400,000,000 | $ 1,990,000,000 |
Summary Of Significant Accounting Policies (Goodwill And Trademark Balances) (Details) (USD $)
In Millions, unless otherwise specified |
May 26, 2013
|
May 27, 2012
|
||||
---|---|---|---|---|---|---|
Goodwill And Other Intangibles [Line Items] | ||||||
Goodwill | $ 908.3 | $ 538.6 | ||||
Trademarks | 573.8 | 464.9 | ||||
The Capital Grille
|
||||||
Goodwill And Other Intangibles [Line Items] | ||||||
Goodwill | 401.7 | 401.8 | ||||
Trademarks | 147.0 | 147.0 | ||||
LongHorn Steakhouse
|
||||||
Goodwill And Other Intangibles [Line Items] | ||||||
Goodwill | 49.5 | 49.5 | ||||
Trademarks | 307.0 | 307.0 | ||||
Olive Garden
|
||||||
Goodwill And Other Intangibles [Line Items] | ||||||
Goodwill | 30.2 | [1] | 30.2 | [1] | ||
Red Lobster
|
||||||
Goodwill And Other Intangibles [Line Items] | ||||||
Goodwill | 35.0 | [1] | 35.0 | [1] | ||
Eddie V's
|
||||||
Goodwill And Other Intangibles [Line Items] | ||||||
Goodwill | 22.1 | 22.1 | ||||
Trademarks | 10.5 | 10.9 | ||||
Yard House
|
||||||
Goodwill And Other Intangibles [Line Items] | ||||||
Goodwill | 369.8 | 0 | ||||
Trademarks | $ 109.3 | $ 0 | ||||
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Other Current Liabilities (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 26, 2013
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Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of Other Current Liabilities | The components of other current liabilities are as follows:
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Retirement Plans
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 26, 2013
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans | RETIREMENT PLANS Defined Benefit Plans and Postretirement Benefit Plan Substantially all of our employees are eligible to participate in a retirement plan. We sponsor non-contributory defined benefit pension plans, which have been frozen, for a group of salaried employees in the United States, in which benefits are based on various formulas that include years of service and compensation factors; and for a group of hourly employees in the United States, in which a fixed level of benefits is provided. Pension plan assets are primarily invested in U.S. and International equities as well as long-duration bonds and real estate investments. Our policy is to fund, at a minimum, the amount necessary on an actuarial basis to provide for benefits in accordance with the requirements of the Employee Retirement Income Security Act of 1974, as amended and the Internal Revenue Code (IRC), as amended by the Pension Protection Act of 2006. We also sponsor a contributory postretirement benefit plan that provides health care benefits to our salaried retirees. Fundings related to the defined benefit pension plans and postretirement benefit plans, which are funded on a pay-as-you-go basis, were as follows:
We expect to contribute approximately $0.4 million to our defined benefit pension plans and approximately $0.7 million to our postretirement benefit plan during fiscal 2014. We are required to recognize the over-or-under-funded status of the plans as an asset or liability as measured by the difference between the fair value of the plan assets and the benefit obligation and any unrecognized prior service costs and actuarial gains and losses as a component of accumulated other comprehensive income (loss), net of tax. The following provides a reconciliation of the changes in the plan benefit obligation, fair value of plan assets and the funded status of the plans as of May 26, 2013 and May 27, 2012:
The following is a detail of the balance sheet components of each of our plans and a reconciliation of the amounts included in accumulated other comprehensive income (loss):
The following is a summary of our accumulated and projected benefit obligations:
The following table presents the weighted-average assumptions used to determine benefit obligations and net expense:
(1) Determined as of the end of fiscal year. (2) Determined as of the beginning of fiscal year. We set the discount rate assumption annually for each of the plans at their valuation dates to reflect the yield of high-quality fixed-income debt instruments, with lives that approximate the maturity of the plan benefits. The expected long-term rate of return on plan assets and health care cost trend rates are based upon several factors, including our historical assumptions compared with actual results, an analysis of current market conditions, asset fund allocations and the views of leading financial advisers and economists. For fiscal 2013, 2012 and 2011, we have used an expected long-term rate of return on plan assets for our defined benefit plan of 9.0 percent. In developing our expected rate of return assumption, we have evaluated the actual historical performance and long-term return projections of the plan assets, which give consideration to the asset mix and the anticipated timing of the pension plan outflows. We employ a total return investment approach whereby a mix of equity and fixed-income investments are used to maximize the long-term return of plan assets for what we consider a prudent level of risk. Our historical 10-year, 15-year and 20-year rates of return on plan assets, calculated using the geometric method average of returns, are approximately 9.5 percent, 8.0 percent and 9.4 percent, respectively, as of May 26, 2013. Our Benefit Plans Committee sets the investment policy for the Defined Benefit Plans and oversees the investment allocation, which includes setting long-term strategic targets. Our overall investment strategy is to achieve appropriate diversification through a mix of equity investments, which may include U.S., International, and private equities, as well as long-duration bonds and real estate investments. Our target asset fund allocation is 40 percent U.S. equities, 35 percent high-quality, long-duration fixed-income securities, 20 percent international equities, 5 percent real estate securities. The investment policy establishes a re-balancing band around the established targets within which the asset class weight is allowed to vary. Equity securities, international equities and fixed-income securities include investments in various industry sectors. Investments in real estate securities follow different strategies designed to maximize returns, allow for diversification and provide a hedge against inflation. Our current positioning is neutral on investment style between value and growth companies and large and small cap companies. We monitor our actual asset fund allocation to ensure that it approximates our target allocation and believe that our long-term asset fund allocation will continue to approximate our target allocation. Investments held in the U.S. commingled fund, U.S. corporate securities, an international commingled fund, U.S. government fixed-income securities, an emerging markets commingled fund and a real estate commingled fund represented approximately 41.5 percent, 18.1 percent, 14.3 percent, 7.1 percent, 5.9 percent and 4.9 percent, respectively, of total plan assets and represents the only significant concentrations of risk related to a single entity, sector, country, commodity or investment fund. No other single sector concentration of assets exceeded 5.0 percent of total plan assets. The discount rate and expected return on plan assets assumptions have a significant effect on amounts reported for defined benefit pension plans. A quarter percentage point change in the defined benefit plans’ discount rate and the expected long-term rate of return on plan assets would increase or decrease earnings before income taxes by $0.6 million and $0.5 million, respectively. The assumed health care cost trend rate increase in the per-capita charges for postretirement benefits was 7.1 percent for fiscal 2014. The rate gradually decreases to 5.0 percent through fiscal 2021 and remains at that level thereafter. The assumed health care cost trend rate has a significant effect on amounts reported for retiree health care plans. A one percentage point increase or decrease in the assumed health care cost trend rate would affect the service and interest cost components of net periodic postretirement benefit cost by $0.5 million and $0.4 million, respectively, and would increase or decrease the accumulated postretirement benefit obligation by $6.6 million and $5.2 million, respectively. Components of net periodic benefit cost included in continuing operations are as follows:
The amortization of the net actuarial loss component of our fiscal 2014 net periodic benefit cost for the defined benefit plans and postretirement benefit plan is expected to be approximately $9.1 million and $0.0 million, respectively. The fair values of the defined benefit pension plans assets at their measurement dates of May 26, 2013 and May 27, 2012, are as follows:
The following benefit payments are expected to be paid between fiscal 2014 and fiscal 2023:
Postemployment Severance Plan We accrue for postemployment severance costs in our consolidated financial statements and recognize actuarial gains and losses related to our postemployment severance accrual as a component of accumulated other comprehensive income (loss). As of May 26, 2013 and May 27, 2012, $6.1 million and $4.8 million, respectively, of unrecognized actuarial losses related to our postemployment severance plan were included in accumulated other comprehensive income (loss) on a net of tax basis. Defined Contribution Plan We have a defined contribution (401(k)) plan covering most employees age 21 and older. We match contributions for participants with at least one year of service up to 6 percent of compensation, based on our performance. The match ranges from a minimum of $0.25 to $1.20 for each dollar contributed by the participant. The plan had net assets of $719.0 million at May 26, 2013 and $664.9 million at May 27, 2012. Expense recognized in fiscal 2013, 2012 and 2011 was $0.9 million, $0.9 million and $0.7 million, respectively. Employees classified as “highly compensated” under the IRC are not eligible to participate in this plan. Instead, highly compensated employees are eligible to participate in a separate non-qualified deferred compensation (FlexComp) plan. This plan allows eligible employees to defer the payment of part of their annual salary and all or part of their annual bonus and provides for awards that approximate the matching contributions and other amounts that participants would have received had they been eligible to participate in our defined contribution and defined benefit plans. Amounts payable to highly compensated employees under the FlexComp plan totaled $224.3 million and $201.4 million at May 26, 2013 and May 27, 2012, respectively. These amounts are included in other current liabilities. The defined contribution plan includes an Employee Stock Ownership Plan (ESOP). The ESOP borrowed $16.9 million from us at a variable rate of interest in July 1996. At May 26, 2013, the ESOP’s original debt to us had a balance of $4.9 million with a variable rate of interest of 0.55 percent and is due to be repaid no later than December 2014. At the end of fiscal 2005, the ESOP borrowed an additional $1.6 million (Additional Loan) from us at a variable interest rate and acquired an additional 0.05 million shares of our common stock, which were held in suspense within the ESOP at that time. At May 26, 2013, the Additional Loan had a balance of $1.3 million with a variable interest rate of 0.55 percent and is due to be repaid no later than December 2018. Compensation expense is recognized as contributions are accrued. Fluctuations in our stock price impact the amount of expense to be recognized. Contributions to the plan, plus the dividends accumulated on unallocated shares held by the ESOP, are used to pay principal, interest and expenses of the plan. As loan payments are made, common stock is allocated to ESOP participants. In each of the fiscal years 2013, 2012 and 2011, the ESOP incurred interest expense of $0.0 million, $0.0 million and $0.1 million, respectively, and used dividends received of $1.0 million, $1.9 million and $1.4 million, respectively, and contributions received from us of $0.1 million, $0.5 million and $0.1 million, respectively, to pay principal and interest on our debt. ESOP shares are included in weighted-average common shares outstanding for purposes of calculating net earnings per share with the exception of those shares acquired under the Additional Loan which are accounted for in accordance with FASB ASC Subtopic 718-40, Employee Stock Ownership Plans. Fluctuations in our stock price are recognized as adjustments to common stock and surplus when the shares are committed to be released. The ESOP shares acquired under the additional loan are not considered outstanding until they are committed to be released and, therefore, unreleased shares have been excluded for purposes of calculating basic and diluted net earnings per share. As of May 26, 2013, the ESOP shares included in the basic and diluted net earnings per share calculation totaled 4.4 million shares, representing 3.5 million allocated shares and 0.9 million suspense shares. |
Income Taxes
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May 26, 2013
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES Total income tax expense was allocated as follows:
The components of earnings before income taxes from continuing operations and the provision for income taxes thereon are as follows:
Income taxes paid were as follows:
The following table is a reconciliation of the U.S. statutory income tax rate to the effective income tax rate from continuing operations included in the accompanying consolidated statements of earnings:
As of May 26, 2013, we had estimated current prepaid state income taxes of $6.4 million, which is included on our accompanying consolidated balance sheets as prepaid income taxes, and estimated current federal income taxes payable of $16.5 million, which is included on our accompanying consolidated balance sheets as accrued income taxes. As of May 26, 2013, we had unrecognized tax benefits of $29.9 million, which represents the aggregate tax effect of the differences between tax return positions and benefits recognized in our consolidated financial statements, all of which would favorably affect the effective tax rate if resolved in our favor. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
We recognize accrued interest related to unrecognized tax benefits in interest expense. Penalties, when incurred, are recognized in selling, general and administrative expense. Interest expense associated with unrecognized tax benefits, excluding the release of accrued interest related to prior year matters due to settlement or the lapse of the statute of limitations was as follows:
At May 26, 2013, we had $1.2 million accrued for the payment of interest associated with unrecognized tax benefits. For U.S. federal income tax purposes, we participate in the Internal Revenue Service's (IRS) Compliance Assurance Process (CAP) whereby our U.S. federal income tax returns are reviewed by the IRS both prior to and after their filing. During fiscal 2013, we were placed on CAP Maintenance by the IRS, signaling our strong relationship of transparency and trust with the IRS team. The U.S. federal income tax returns that we filed through the fiscal year ended May 29, 2011 have been audited by the IRS. In the first quarter of fiscal 2013, the IRS issued a partial acceptance letter for the fiscal year ended May 27, 2012 tax return. The outstanding item as of the end of the current fiscal year relates to our deductibility of the Domestic Manufacturing Deduction under IRC Section 199, and is expected to be completed by the second quarter of fiscal 2014. The IRS commenced examination of our U.S. federal income tax returns for May 26, 2013 in the first quarter of fiscal 2013. The examination is anticipated to be completed by the second quarter of fiscal 2015. Income tax returns are subject to audit by state and local governments, generally years after the returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws. The major jurisdictions in which the Company files income tax returns include the U.S. federal jurisdiction, Canada, and all states in the U.S. that have an income tax. With a few exceptions, the Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before fiscal 2012, and state and local, or non-U.S. income tax examinations by tax authorities for years before fiscal 2009. Included in the balance of unrecognized tax benefits at May 26, 2013 is $18.6 million related to tax positions for which it is reasonably possible that the total amounts could change during the next 12 months based on the outcome of examinations. The $18.6 million relates to items that would impact our effective income tax rate. The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows:
Some of our net operating loss, credit and charitable contribution carryforwards have the potential to expire beginning in fiscal 2014. We have taken these potential expirations into consideration when evaluating the need for valuation allowances against these deferred tax assets. A valuation allowance for deferred tax assets is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization is dependent upon the generation of future taxable income or the reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. |
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