Dispositions

On July 28, 2014, we closed on the sale of 705 Red Lobster restaurants, however, as of February 22, 2015, 17 of the properties remain subject to landlord consents and satisfaction of other contractual requirements, which are expected to be satisfied within the next six months. Therefore, the assets of these remaining restaurants continue to be classified as held for sale and recognition of the gain on the related proceeds was deferred. The proceeds of approximately $53.2 million associated with landlord consents are classified as other current liabilities on our consolidated balance sheet as of February 22, 2015. As the landlord consents and remaining contractual requirements are satisfied, we will derecognize the related assets and record the commensurate gain on the transaction. In conjunction with the sale of Red Lobster, there were 19 locations where Red Lobster shared a land parcel with another Darden brand. The land and related buildings for these 19 Darden locations were included in the sale transaction and simultaneously leased back to Darden. The proceeds associated with the sale of these properties are classified as a financing lease obligation on our consolidated balance sheet as a component of other liabilities and the associated lease payments will amortize the obligation over the life of the properties. Additionally, in the fourth quarter of fiscal 2014, in connection with the expected sale of Red Lobster, we closed two of the six restaurants that housed both a Red Lobster and an Olive Garden in the same building (synergy restaurants). In the first quarter of fiscal 2015, we completed the conversion of the four remaining synergy restaurants to stand-alone Olive Garden restaurants.

As of February 22, 2015, we received $2.08 billion in cash proceeds, net of transaction-related costs of approximately $29.3 million. During the nine months ended February 22, 2015, we recognized a gain on the sale of Red Lobster of $825.9 million, which is included in earnings from discontinued operations in our consolidated statement of earnings.

For the quarters and nine months ended February 22, 2015 and February 23, 2014, all gains on disposition, impairment charges and disposal costs, along with the sales, costs and expenses and income taxes attributable to these restaurants, have been aggregated in a single caption entitled “Earnings from discontinued operations, net of tax expense” in our consolidated statements of earnings for all periods presented. No amounts for shared general and administrative operating support expense or interest expense were allocated to discontinued operations. Assets associated with those restaurants not yet disposed of, that are considered held for sale, have been segregated from continuing operations and presented as assets held for sale on our accompanying consolidated balance sheets. In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This update modifies the requirements for reporting discontinued operations. Under the amendments in ASU 2014-08, the definition of discontinued operation has been modified to only include those disposals of an entity that represent a strategic shift that has (or will have) a major effect on an entity's operations and financial results. This update also expands the disclosure requirements for disposals that meet the definition of a discontinued operation and requires entities to disclose information about disposals of individually significant components that do not meet the definition of discontinued operations. We elected to early adopt these provisions in the third quarter of fiscal 2015.

Earnings from discontinued operations, net of taxes in our accompanying consolidated statements of earnings are comprised of the following:



	Three Months Ended					Nine Months Ended
(in millions)	February 22, 2015			February 23, 2014		February 22, 2015			February 23, 2014
Sales	$	—		$	614.5	$	400.4		$	1,805.9

Total cost of sales	(0.6		)	495.0		324.0			1,457.8
Selling, general and administrative (1)	(7.9		)	54.8		(772.1		)	164.8
Depreciation and amortization	—			32.2		0.2			95.9
Earnings before income taxes	8.5			32.5		848.3			87.4
Income tax expense	3.1			9.4		322.4			22.6
Earnings from discontinued operations, net of tax	$	5.4		$	23.1	$	525.9		$	64.8


(1)	Amounts for the quarter and nine months ended February 22, 2015 include the gain recognized on the sale of Red Lobster.

The following table presents the carrying amounts of the major classes of assets and liabilities classified as held for sale on our accompanying consolidated balance sheets:



(in millions)	February 22, 2015		May 25, 2014
Current assets	$	—	$	241.0
Land, buildings and equipment, net	45.4		1,084.8
Other assets	—		64.5
Total assets	$	45.4	$	1,390.3

Current liabilities	$	—	$	130.6
Other liabilities	—		84.9
Total liabilities	$	—	$	215.5

During the quarter ended February 22, 2015, we divested all of our interest in our lobster aquaculture activities and we have no further commitments or obligations with respect to such activities. This divestiture did not represent a strategic shift in our operations, and, accordingly, it did not meet the definition to be reported as a discontinued operation.