Dispositions

On July 28, 2014, we closed on the sale of 705 Red Lobster restaurants; however, as of August 30, 2015, 3 of the properties remain subject to landlord consents and satisfaction of other contractual requirements. 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 $14.1 million associated with the remaining landlord consents are classified as other current liabilities on our consolidated balance sheet as of August 30, 2015. As the landlord consents and remaining contractual requirements are satisfied, which we expect to occur in the second quarter of fiscal 2016, we will derecognize the related assets and record the commensurate gain on the transaction. All direct cash flows related to operating these businesses were eliminated at the date of sale. Our continuing involvement has been limited to a transition service agreement for up to two years from the date of sale with minimal impact to our cash flows. 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. In total, we have recognized a pre-tax gain on the sale of Red Lobster of $845.2 million, which is included in earnings from discontinued operations in our consolidated statements of earnings.

For the quarters ended August 30, 2015 and August 24, 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.

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



	Three Months Ended
(in millions)	August 30, 2015			August 24, 2014
Sales	$	—		$	400.4
Costs and expenses:
Restaurant and marketing expenses	0.3			354.6
Depreciation and amortization	—			0.2
Other costs and expenses (1)	(8.8		)	(797.6		)
Earnings before income taxes	8.5			843.2
Income tax expense	3.1			320.7
Earnings from discontinued operations, net of tax	$	5.4		$	522.5


(1)	Amounts include the gain recognized on the sale of Red Lobster.

Assets classified as held for sale on our accompanying consolidated balance sheets as of August 30, 2015 and May 31, 2015, consisted of land, buildings and equipment with carrying amounts of $23.8 million and $32.9 million, respectively.