Fair Value Measurements

12 Months Ended

May 26, 2013

FAIR VALUE MEASUREMENTS

The fair values of cash equivalents, receivables, net, accounts payable and short-term debt approximate their carrying amounts due to their short duration.

The following tables summarize the fair values of financial instruments measured at fair value on a recurring basis at May 26, 2013 and May 27, 2012:



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.

The carrying value and fair value of long-term debt as of May 26, 2013, was $2.50 billion and $2.40 billion, respectively. The carrying value and fair value of long-term debt, including the amounts included in current liabilities, as of May 27, 2012, was $1.80 billion and $1.99 billion, respectively. The fair value of long-term debt is determined based on market prices or, if market prices are not available, the present value of the underlying cash flows discounted at our incremental borrowing rates.

Adjustments to the fair values of non-financial assets measured at fair value on a non-recurring basis as of May 26, 2013 and May 27, 2012 were generally related to impairments of property to be disposed of and were not material.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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Reference 3: http://www.xbrl.org/2003/role/presentationRef

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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