QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
Page | |||||||||||
Part I - | Financial Information | ||||||||||
Item 1. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
Part II - | Other Information | ||||||||||
Item 1. | |||||||||||
Item 1A. | |||||||||||
Item 2. | |||||||||||
Item 5. | |||||||||||
Item 6. | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||
Sales | $ | $ | $ | $ | |||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Food and beverage | |||||||||||||||||||||||
Restaurant labor | |||||||||||||||||||||||
Restaurant expenses | |||||||||||||||||||||||
Marketing expenses | |||||||||||||||||||||||
General and administrative expenses | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Impairments and disposal of assets, net | |||||||||||||||||||||||
Total operating costs and expenses | $ | $ | $ | $ | |||||||||||||||||||
Operating income | |||||||||||||||||||||||
Interest, net | |||||||||||||||||||||||
Other (income) expense, net | |||||||||||||||||||||||
Earnings before income taxes | |||||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Earnings from continuing operations | $ | $ | $ | $ | |||||||||||||||||||
Losses from discontinued operations, net of tax benefit of $ | ( | ( | ( | ( | |||||||||||||||||||
Net earnings | $ | $ | $ | $ | |||||||||||||||||||
Basic net earnings per share: | |||||||||||||||||||||||
Earnings from continuing operations | $ | $ | $ | $ | |||||||||||||||||||
Losses from discontinued operations | ( | ( | |||||||||||||||||||||
Net earnings | $ | $ | $ | $ | |||||||||||||||||||
Diluted net earnings per share: | |||||||||||||||||||||||
Earnings from continuing operations | $ | $ | $ | $ | |||||||||||||||||||
Losses from discontinued operations | ( | ( | ( | ||||||||||||||||||||
Net earnings | $ | $ | $ | $ | |||||||||||||||||||
Average number of common shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||
Net earnings | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||
Foreign currency adjustment | |||||||||||||||||||||||
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $ | ( | ||||||||||||||||||||||
Net unamortized gain (loss) arising during the period, including amortization of unrecognized net actuarial gain (loss), net of taxes of $ | ( | ||||||||||||||||||||||
Other comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
Total comprehensive income | $ | $ | $ | $ |
February 28, 2021 | May 31, 2020 | ||||||||||
(Unaudited) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Receivables, net | |||||||||||
Inventories | |||||||||||
Prepaid income taxes | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | $ | $ | |||||||||
Land, buildings and equipment, net of accumulated depreciation and amortization of $ | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Trademarks | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Short-term debt | |||||||||||
Accrued payroll | |||||||||||
Accrued income taxes | |||||||||||
Other accrued taxes | |||||||||||
Unearned revenues | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | $ | $ | |||||||||
Long-term debt | |||||||||||
Deferred income taxes | |||||||||||
Operating lease liabilities - non-current | |||||||||||
Other liabilities | |||||||||||
Total liabilities | $ | $ | |||||||||
Stockholders’ equity: | |||||||||||
Common stock and surplus | $ | $ | |||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
Total stockholders’ equity | $ | $ | |||||||||
Total liabilities and stockholders’ equity | $ | $ |
Common Stock And Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Unearned Compensation | Total Stockholders’ Equity | |||||||||||||||||||||||||
Balance at November 29, 2020 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Net earnings | — | — | — | ||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||
Dividends declared ($ | — | ( | — | — | ( | ||||||||||||||||||||||||
Stock option exercises ( | — | — | — | ||||||||||||||||||||||||||
Stock-based compensation | — | — | — | ||||||||||||||||||||||||||
Repurchases of common stock ( | ( | — | — | ( | |||||||||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan and other plans ( | — | — | — | ||||||||||||||||||||||||||
Other | ( | — | — | ( | |||||||||||||||||||||||||
Balance at February 28, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Balance at May 31, 2020 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Net earnings | — | — | — | ||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||
Dividends declared ($ | ( | — | — | ( | |||||||||||||||||||||||||
Stock option exercises ( | — | — | — | ||||||||||||||||||||||||||
Stock-based compensation | — | — | — | ||||||||||||||||||||||||||
Repurchases of common stock ( | ( | ( | — | — | ( | ||||||||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan and other plans ( | — | — | |||||||||||||||||||||||||||
Other | ( | — | — | ( | |||||||||||||||||||||||||
Balance at February 28, 2021 | $ | $ | $ | $ | $ |
Balance at November 24, 2019 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
Net earnings | — | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | ||||||||||||||||||||||||||
Dividends declared ($ | — | ( | — | — | ( | ||||||||||||||||||||||||
Stock option exercises ( | — | — | — | ||||||||||||||||||||||||||
Stock-based compensation | — | — | — | ||||||||||||||||||||||||||
Repurchases of common stock ( | ( | ( | — | — | ( | ||||||||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan and other plans ( | — | — | — | ||||||||||||||||||||||||||
Other | — | ||||||||||||||||||||||||||||
Balance at February 23, 2020 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Balance at May 26, 2019 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
Net earnings | — | — | — | ||||||||||||||||||||||||||
Other comprehensive income | — | — | — | ||||||||||||||||||||||||||
Dividends declared ($ | — | ( | — | — | ( | ||||||||||||||||||||||||
Stock option exercises ( | — | — | — | ||||||||||||||||||||||||||
Stock-based compensation | — | — | — | ||||||||||||||||||||||||||
Repurchases of common stock ( | ( | ( | — | — | ( | ||||||||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan and other plans ( | — | — | — | ||||||||||||||||||||||||||
Other | — | ||||||||||||||||||||||||||||
Balance at February 23, 2020 | $ | $ | $ | ( | $ | $ |
Nine Months Ended | |||||||||||
February 28, 2021 | February 23, 2020 | ||||||||||
Cash flows—operating activities | |||||||||||
Net earnings | $ | $ | |||||||||
Losses from discontinued operations, net of tax | |||||||||||
Adjustments to reconcile net earnings from continuing operations to cash flows: | |||||||||||
Depreciation and amortization | |||||||||||
Impairments and disposal of assets, net | |||||||||||
Stock-based compensation expense | |||||||||||
Change in current assets and liabilities | |||||||||||
Contributions to pension and postretirement plans | ( | ( | |||||||||
Deferred income taxes | ( | ( | |||||||||
Change in other assets and liabilities | |||||||||||
Pension settlement charge | |||||||||||
Other, net | ( | ( | |||||||||
Net cash provided by operating activities of continuing operations | $ | $ | |||||||||
Cash flows—investing activities | |||||||||||
Purchases of land, buildings and equipment | ( | ( | |||||||||
Proceeds from disposal of land, buildings and equipment | |||||||||||
Cash used in business acquisitions, net of cash acquired | ( | ||||||||||
Purchases of capitalized software and other assets | ( | ( | |||||||||
Other, net | ( | ||||||||||
Net cash used in investing activities of continuing operations | $ | ( | $ | ( | |||||||
Cash flows—financing activities | |||||||||||
Proceeds from issuance of common stock | |||||||||||
Dividends paid | ( | ( | |||||||||
Repurchases of common stock | ( | ( | |||||||||
Repayments of short-term debt | ( | ||||||||||
Principal payments on finance leases | ( | ( | |||||||||
Other, net | ( | ||||||||||
Net cash used in financing activities of continuing operations | $ | ( | $ | ( | |||||||
Cash flows—discontinued operations | |||||||||||
Net cash provided by (used in) operating activities of discontinued operations | ( | ||||||||||
Net cash provided by (used in) discontinued operations | $ | $ | ( | ||||||||
Increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents - beginning of period | |||||||||||
Cash and cash equivalents - end of period | $ | $ | |||||||||
Nine Months Ended | |||||||||||
February 28, 2021 | February 23, 2020 | ||||||||||
Cash flows from changes in current assets and liabilities | |||||||||||
Receivables, net | |||||||||||
Inventories | ( | ||||||||||
Prepaid expenses and other current assets | ( | ||||||||||
Accounts payable | ( | ||||||||||
Accrued payroll | ( | ||||||||||
Prepaid/accrued income taxes | |||||||||||
Other accrued taxes | ( | ||||||||||
Unearned revenues | |||||||||||
Other current liabilities | |||||||||||
Change in current assets and liabilities | $ | $ |
(in millions) | February 28, 2021 | May 31, 2020 | ||||||||||||
Unearned revenues | ||||||||||||||
Deferred gift card revenue | $ | $ | ||||||||||||
Deferred gift card discounts | ( | ( | ||||||||||||
Other | ||||||||||||||
Total | $ | $ | ||||||||||||
Other liabilities | ||||||||||||||
Deferred franchise fees - non-current | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
(in millions) | February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | ||||||||||||||||||||||
Activations | ||||||||||||||||||||||||||
Redemptions and breakage | ( | ( | ( | ( | ||||||||||||||||||||||
Ending balance | $ | $ | $ | $ |
(in millions) | Balance Sheet Classification | February 28, 2021 | May 31, 2020 | |||||||||||||||||
Operating lease right-of-use assets | Operating lease right-of-use assets | $ | $ | |||||||||||||||||
Finance lease right-of-use assets | Land, buildings and equipment, net | |||||||||||||||||||
Total lease assets, net | $ | $ | ||||||||||||||||||
Operating lease liabilities - current | Other current liabilities | $ | $ | |||||||||||||||||
Finance lease liabilities - current | Other current liabilities | |||||||||||||||||||
Operating lease liabilities - non-current | Operating lease liabilities - non-current | |||||||||||||||||||
Finance lease liabilities - non-current | Other liabilities | |||||||||||||||||||
Total lease liabilities | $ | $ |
Cash paid for interest and income taxes are as follows: | Nine Months Ended | |||||||||||||
(in millions) | February 28, 2021 | February 23, 2020 | ||||||||||||
Interest, net of amounts capitalized | $ | $ | ||||||||||||
Income taxes, net of refunds |
Non-cash investing and financing activities are as follows: | Nine Months Ended | |||||||||||||
(in millions) | February 28, 2021 | February 23, 2020 | ||||||||||||
Increase in land, buildings and equipment through accrued purchases | $ | $ | ||||||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||||||||
Right-of-use assets obtained in exchange for new finance lease liabilities |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
(in millions) | February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||||
Anti-dilutive stock-based compensation awards |
(in millions) | Olive Garden | LongHorn Steakhouse | Fine Dining | Other Business | Corporate | Consolidated | ||||||||||||||||||||||||||||||||
For the three months ended February 28, 2021 | ||||||||||||||||||||||||||||||||||||||
Sales | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Restaurant and marketing expenses | ||||||||||||||||||||||||||||||||||||||
Segment profit | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Depreciation and amortization | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Impairments and disposal of assets, net | ( | |||||||||||||||||||||||||||||||||||||
(in millions) | Olive Garden | LongHorn Steakhouse | Fine Dining | Other Business | Corporate | Consolidated | ||||||||||||||||||||||||||||||||
For the nine months ended February 28, 2021 | ||||||||||||||||||||||||||||||||||||||
Sales | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Restaurant and marketing expenses | ||||||||||||||||||||||||||||||||||||||
Segment profit | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Depreciation and amortization | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Impairments and disposal of assets, net | ( | |||||||||||||||||||||||||||||||||||||
Purchases of land, buildings and equipment |
(in millions) | Olive Garden | LongHorn Steakhouse | Fine Dining | Other Business | Corporate | Consolidated | ||||||||||||||||||||||||||||||||
For the three months ended February 23, 2020 | ||||||||||||||||||||||||||||||||||||||
Sales | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Restaurant and marketing expenses | ||||||||||||||||||||||||||||||||||||||
Segment profit | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Depreciation and amortization | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Impairments and disposal of assets, net | ( | |||||||||||||||||||||||||||||||||||||
(in millions) | Olive Garden | LongHorn Steakhouse | Fine Dining | Other Business | Corporate | Consolidated | ||||||||||||||||||||||||||||||||
For the nine months ended February 23, 2020 | ||||||||||||||||||||||||||||||||||||||
Sales | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Restaurant and marketing expenses | ||||||||||||||||||||||||||||||||||||||
Segment profit | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Depreciation and amortization | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Impairments and disposal of assets, net | ( | |||||||||||||||||||||||||||||||||||||
Purchases of land, buildings and equipment |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
(in millions) | February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||||
Segment profit | $ | $ | $ | $ | ||||||||||||||||||||||
Less general and administrative expenses | ( | ( | ( | ( | ||||||||||||||||||||||
Less depreciation and amortization | ( | ( | ( | ( | ||||||||||||||||||||||
Less impairments and disposal of assets, net | ( | ( | ( | ( | ||||||||||||||||||||||
Less interest, net | ( | ( | ( | ( | ||||||||||||||||||||||
Less other (income) expense, net | ( | ( | ( | |||||||||||||||||||||||
Earnings before income taxes | $ | $ | $ | $ |
(in millions) | Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Derivatives | Benefit Plan Funding Position | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||
Balance at November 29, 2020 | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||
Gain (loss) | ||||||||||||||||||||||||||
Reclassification realized in net earnings | ( | ( | ||||||||||||||||||||||||
Balance at February 28, 2021 | $ | $ | $ | ( | $ | |||||||||||||||||||||
Balance at May 31, 2020 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
Gain (loss) | ||||||||||||||||||||||||||
Reclassification realized in net earnings | ( | |||||||||||||||||||||||||
Balance at February 28, 2021 | $ | $ | $ | ( | $ |
(in millions) | Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Derivatives | Benefit Plan Funding Position | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||
Balance at November 24, 2019 | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||
Gain (loss) | ||||||||||||||||||||||||||
Reclassification realized in net earnings | ( | ( | ||||||||||||||||||||||||
Balance at February 23, 2020 | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||
Balance at May 26, 2019 | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
Gain (loss) | ( | ( | ( | |||||||||||||||||||||||
Reclassification realized in net earnings | ||||||||||||||||||||||||||
Balance at February 23, 2020 | $ | $ | $ | ( | $ | ( |
Amount Reclassified from AOCI into Net Earnings | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(in millions) AOCI Components | Location of Gain (Loss) Recognized in Earnings | February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||||||||
Commodity contracts | (1) | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||
Equity contracts | (2) | ||||||||||||||||||||||||||||
Interest rate contracts | (3) | ( | ( | ||||||||||||||||||||||||||
Total before tax | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
Tax (expense) benefit | |||||||||||||||||||||||||||||
Net of tax | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
Benefit plan funding position | |||||||||||||||||||||||||||||
Recognized net actuarial loss - pension/postretirement plans | (4) | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||
Recognized net actuarial gain (loss) - other plans | (5) | ( | ( | ||||||||||||||||||||||||||
Total before tax | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||
Tax (expense) benefit | ( | ||||||||||||||||||||||||||||
Net of tax | $ | ( | $ | $ | ( | $ | ( |
Nine Months Ended | |||||||||||
February 28, 2021 | February 23, 2020 | ||||||||||
Weighted-average fair value | $ | $ | |||||||||
Dividend yield | % | % | |||||||||
Expected volatility of stock | % | % | |||||||||
Risk-free interest rate | % | % | |||||||||
Expected option life (in years) | |||||||||||
Weighted-average exercise price per share | $ | $ |
Nine Months Ended | |||||||||||
February 28, 2021 | February 23, 2020 | ||||||||||
Dividend yield (1) | % | % | |||||||||
Expected volatility of stock | |||||||||||
Risk-free interest rate | |||||||||||
Expected life (in years) | |||||||||||
Weighted-average grant date fair value per unit | $ | $ |
(in millions) | Stock Options | Restricted Stock/ Restricted Stock Units | Equity-Settled Performance Stock Units | Cash-Settled Darden Stock Units | ||||||||||||||||||||||
Outstanding beginning of period | ||||||||||||||||||||||||||
Awards granted | ||||||||||||||||||||||||||
Awards exercised/vested | ( | ( | ( | ( | ||||||||||||||||||||||
Awards forfeited | ( | ( | ( | |||||||||||||||||||||||
Outstanding end of period |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
(in millions) | February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||||
Stock options | $ | $ | $ | $ | ||||||||||||||||||||||
Restricted stock/restricted stock units | ||||||||||||||||||||||||||
Equity-settled performance stock units | ||||||||||||||||||||||||||
Cash-settled Darden stock units | ||||||||||||||||||||||||||
Employee stock purchase plan | ||||||||||||||||||||||||||
Director compensation program/other | ||||||||||||||||||||||||||
Total stock-based compensation expense | $ | $ | $ | $ |
Fair Values | |||||||||||||||||||||||||||||||||||||||||
(in millions, except per share data) | Number of Shares Outstanding | Weighted-Average Per Share Forward Rates | Notional Values | Derivative Assets (1) | Derivative Liabilities (1) | ||||||||||||||||||||||||||||||||||||
February 28, 2021 | February 28, 2021 | May 31, 2020 | February 28, 2021 | May 31, 2020 | |||||||||||||||||||||||||||||||||||||
Equity forwards: | |||||||||||||||||||||||||||||||||||||||||
Designated | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Not designated | $ | $ | |||||||||||||||||||||||||||||||||||||||
Total equity forwards | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Commodity contracts: | |||||||||||||||||||||||||||||||||||||||||
Designated | N/A | N/A | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Not designated | N/A | N/A | $ | ||||||||||||||||||||||||||||||||||||||
Total commodity contracts | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Total derivative contracts | $ | $ | $ | $ |
Amount of Gain (Loss) Recognized in AOCI | Amount of Gain (Loss) Reclassified from AOCI to Earnings | |||||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||
(in millions) | February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||||
Equity (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Commodity (2) | ( | ( | ( | |||||||||||||||||||||||
Interest rate (3) | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ( | |||||||||||||||||||||
Amount of Gain (Loss) Recognized in AOCI | Amount of Gain (Loss) Reclassified from AOCI to Earnings | |||||||||||||||||||||||||
Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||||
(in millions) | February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||||
Equity (1) | $ | $ | ( | $ | $ | |||||||||||||||||||||
Commodity (2) | ( | ( | ( | |||||||||||||||||||||||
Interest rate (3) | ( | ( | ||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( |
Amount of Gain (Loss) Recognized in Earnings | ||||||||||||||||||||||||||
(in millions) | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
Location of Gain (Loss) Recognized in Earnings on Derivatives | February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||||
Food and beverage costs and restaurant expenses | $ | $ | $ | $ | ||||||||||||||||||||||
General and administrative expenses | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Items Measured at Fair Value at February 28, 2021 | |||||||||||||||||||||||||||||
(in millions) | Fair value of assets (liabilities) | Quoted prices in active market for identical assets (liabilities) (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||||||||||
Derivatives: | |||||||||||||||||||||||||||||
Commodities futures, swaps & options | (1) | $ | $ | $ | $ | ||||||||||||||||||||||||
Equity forwards | (2) | ||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Items Measured at Fair Value at May 31, 2020 | |||||||||||||||||||||||||||||
(in millions) | Fair value of assets (liabilities) | Quoted prices in active market for identical assets (liabilities) (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||||||||||
Derivatives: | |||||||||||||||||||||||||||||
Commodities futures, swaps & options | (1) | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||
Equity forwards | (2) | ||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
(in millions) | Initial Liability | Payments | Balance at February 28, 2021 | |||||||||||||||||
Accrued liability (1) | $ | $ | ( | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
(in millions) | February 28, 2021 | February 23, 2020 | % Chg | February 28, 2021 | February 23, 2020 | % Chg | |||||||||||||||||||||||||||||
Sales | $ | 1,733.0 | $ | 2,346.5 | (26.1)% | $ | 4,916.9 | $ | 6,536.8 | (24.8)% | |||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||
Food and beverage | 499.4 | 658.0 | (24.1) | 1,409.0 | 1,844.3 | (23.6) | |||||||||||||||||||||||||||||
Restaurant labor | 559.4 | 753.8 | (25.8) | 1,595.6 | 2,149.9 | (25.8) | |||||||||||||||||||||||||||||
Restaurant expenses | 336.8 | 396.7 | (15.1) | 958.2 | 1,144.7 | (16.3) | |||||||||||||||||||||||||||||
Marketing expenses | 19.2 | 71.6 | (73.2) | 66.8 | 206.6 | (67.7) | |||||||||||||||||||||||||||||
General and administrative expenses | 78.9 | 100.3 | (21.3) | 298.8 | 289.6 | 3.2 | |||||||||||||||||||||||||||||
Depreciation and amortization | 88.2 | 87.7 | 0.6 | 261.8 | 261.5 | 0.1 | |||||||||||||||||||||||||||||
Impairments and disposal of assets, net | 3.1 | 0.1 | NM | 1.4 | 0.2 | NM | |||||||||||||||||||||||||||||
Total costs and expenses | $ | 1,585.0 | $ | 2,068.2 | (23.4) | $ | 4,591.6 | $ | 5,896.8 | (22.1) | |||||||||||||||||||||||||
Operating income | 148.0 | 278.3 | (46.8) | 325.3 | 640.0 | (49.2) | |||||||||||||||||||||||||||||
Interest, net | 15.2 | 13.2 | 15.2 | 46.4 | 37.4 | 24.1 | |||||||||||||||||||||||||||||
Other (income) expense, net | 0.5 | — | NM | 8.4 | 153.3 | (94.5) | |||||||||||||||||||||||||||||
Earnings before income taxes | 132.3 | 265.1 | (50.1) | 270.5 | 449.3 | (39.8) | |||||||||||||||||||||||||||||
Income tax expense (1) | 3.1 | 31.8 | (90.3) | 7.1 | 18.8 | (62.2) | |||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 129.2 | $ | 233.3 | (44.6) | $ | 263.4 | $ | 430.5 | (38.8) | |||||||||||||||||||||||||
Losses from discontinued operations, net of tax | (0.5) | (1.0) | (50.0) | (2.6) | (2.9) | (10.3) | |||||||||||||||||||||||||||||
Net earnings | $ | 128.7 | $ | 232.3 | (44.6)% | $ | 260.8 | $ | 427.6 | (39.0)% | |||||||||||||||||||||||||
Diluted net earnings per share: | |||||||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 0.98 | $ | 1.90 | (48.4)% | $ | 2.00 | $ | 3.48 | (42.5)% | |||||||||||||||||||||||||
Losses from discontinued operations | — | (0.01) | (100.0) | (0.02) | (0.02) | — | |||||||||||||||||||||||||||||
Net earnings | $ | 0.98 | $ | 1.89 | (48.1)% | $ | 1.98 | $ | 3.46 | (42.8)% | |||||||||||||||||||||||||
(1) Effective tax rate | 2.3 | % | 12.0 | % | 2.6 | % | 4.2 | % | |||||||||||||||||||||||||||
NM- Percentage not considered meaningful. |
February 28, 2021 | May 31, 2020 | February 23, 2020 | ||||||||||||||||||
Olive Garden | 874 | 868 | 870 | |||||||||||||||||
LongHorn Steakhouse | 528 | 522 | 522 | |||||||||||||||||
Cheddar’s Scratch Kitchen | 170 | 165 | 169 | |||||||||||||||||
Yard House | 81 | 81 | 81 | |||||||||||||||||
The Capital Grille (1) | 60 | 60 | 60 | |||||||||||||||||
Seasons 52 | 43 | 44 | 45 | |||||||||||||||||
Bahama Breeze | 41 | 41 | 42 | |||||||||||||||||
Eddie V’s | 25 | 23 | 23 | |||||||||||||||||
Total | 1,822 | 1,804 | 1,812 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(in millions) | February 28, 2021 | February 23, 2020 | % Chg | SRS (1) | February 28, 2021 | February 23, 2020 | % Chg | SRS (1) | |||||||||||||||||||||
Olive Garden | $ | 872.0 | $ | 1,169.3 | (25.4) | % | (25.8) | % | $ | 2,489.7 | $ | 3,283.0 | (24.2) | % | (24.7) | % | |||||||||||||
LongHorn Steakhouse | $ | 454.3 | $ | 510.7 | (11.0) | % | (12.6) | % | $ | 1,238.4 | $ | 1,408.2 | (12.1) | % | (13.9) | % | |||||||||||||
Fine Dining | $ | 104.4 | $ | 188.4 | (44.6) | % | (45.2) | % | $ | 295.6 | $ | 479.4 | (38.3) | % | (38.8) | % | |||||||||||||
Other Business | $ | 302.3 | $ | 478.1 | (36.8) | % | (36.9) | % | $ | 893.2 | $ | 1,366.2 | (34.6) | % | (35.0) | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
February 28, 2021 | February 23, 2020 | February 28, 2021 | February 23, 2020 | ||||||||||||||||||||
Sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Food and beverage | 28.8 | 28.0 | 28.7 | 28.2 | |||||||||||||||||||
Restaurant labor | 32.3 | 32.1 | 32.5 | 32.9 | |||||||||||||||||||
Restaurant expenses | 19.4 | 16.9 | 19.5 | 17.5 | |||||||||||||||||||
Marketing expenses | 1.1 | 3.1 | 1.4 | 3.2 | |||||||||||||||||||
General and administrative expenses | 4.6 | 4.3 | 6.1 | 4.4 | |||||||||||||||||||
Depreciation and amortization | 5.1 | 3.7 | 5.3 | 4.0 | |||||||||||||||||||
Impairments and disposal of assets, net | 0.2 | — | — | — | |||||||||||||||||||
Total operating costs and expenses | 91.5 | % | 88.1 | % | 93.4 | % | 90.2 | % | |||||||||||||||
Operating income | 8.5 | 11.9 | 6.6 | 9.8 | |||||||||||||||||||
Interest, net | 0.9 | 0.6 | 0.9 | 0.6 | |||||||||||||||||||
Other (income) expense, net | — | — | 0.2 | 2.3 | |||||||||||||||||||
Earnings before income taxes | 7.6 | 11.3 | 5.5 | 6.9 | |||||||||||||||||||
Income tax expense | 0.2 | 1.4 | 0.1 | 3.0 | |||||||||||||||||||
Earnings from continuing operations | 7.5 | % | 9.9 | % | 5.4 | % | 6.6 | % |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
Segment | February 28, 2021 | February 23, 2020 | Change | February 28, 2021 | February 23, 2020 | Change | ||||||||||||||||||||||||||||||||
Olive Garden | 23.2% | 21.1% | 210 BPS | 22.1% | 20.3% | 180 | BPS | |||||||||||||||||||||||||||||||
LongHorn Steakhouse | 18.1% | 20.5% | (240) BPS | 16.6% | 17.8% | (120) | BPS | |||||||||||||||||||||||||||||||
Fine Dining | 15.7% | 24.8% | (910) BPS | 15.8% | 20.3% | (450) | BPS | |||||||||||||||||||||||||||||||
Other Business | 10.5% | 14.5% | (400) BPS | 12.0% | 13.3% | (130) | BPS |
(Dollars in millions, except per share data) | Total Number of Shares Purchased (1) (2) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (3) | ||||||||||||||||||||||
November 30, 2020 through January 3, 2021 | — | $ | — | — | $ | 283.8 | ||||||||||||||||||||
January 4, 2021 through January 31, 2021 | 3,959 | $ | 121.98 | 3,959 | $ | 283.3 | ||||||||||||||||||||
February 1, 2021 through February 28, 2021 | — | $ | — | — | $ | 283.3 | ||||||||||||||||||||
Total | 3,959 | $ | 121.98 | 3,959 | $ | 283.3 |
Exhibit No. | Exhibit Title | |||||||
31(a) | ||||||||
31(b) | ||||||||
32(a) | ||||||||
32(b) | ||||||||
101.INS | XBRL Instance Document | |||||||
101.SCH | XBRL Schema Document | |||||||
101.CAL | XBRL Calculation Linkbase Document | |||||||
101.DEF | XBRL Definition Linkbase Document | |||||||
101.LAB | XBRL Label Linkbase Document | |||||||
101.PRE | XBRL Presentation Linkbase Document |
DARDEN RESTAURANTS, INC. | |||||||||||
Dated: | April 6, 2021 | By: | /s/ Rajesh Vennam | ||||||||
Rajesh Vennam | |||||||||||
Senior Vice President, Chief Financial Officer and Treasurer | |||||||||||
(Principal financial officer) |
April 6, 2021 | |||||
/s/ Eugene I. Lee, Jr. | |||||
Eugene I. Lee, Jr. | |||||
Chairman and Chief Executive Officer |
April 6, 2021 | |||||
/s/ Rajesh Vennam | |||||
Rajesh Vennam | |||||
Senior Vice President, Chief Financial Officer and Treasurer |
April 6, 2021 | |||||
/s/ Eugene I. Lee, Jr. | |||||
Eugene I. Lee, Jr. | |||||
Chairman and Chief Executive Officer |
April 6, 2021 | |||||
/s/ Rajesh Vennam | |||||
Rajesh Vennam | |||||
Senior Vice President, Chief Financial Officer and Treasurer |
Consolidated Statements of Earnings (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2021 |
Feb. 23, 2020 |
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Income Statement [Abstract] | ||||
Tax expense (benefit) of discontinued operations | $ 0.8 | $ 0.7 | $ 2.4 | $ 1.6 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2021 |
Feb. 23, 2020 |
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 128.7 | $ 232.3 | $ 260.8 | $ 427.6 |
Other comprehensive income: | ||||
Foreign currency adjustment | 0.2 | 0.0 | 0.4 | 5.5 |
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $0.2, $0.0, $0.5 and $(0.1), respectively | 7.1 | 0.7 | 16.6 | (4.9) |
Net unamortized gain (loss) arising during the period, including amortization of unrecognized net actuarial gain (loss), net of taxes of $0.1, $(0.1), $0.4 and $32.3, respectively, related to pension and other post-employment benefits | 0.5 | (0.6) | 1.3 | 97.2 |
Other comprehensive income | 7.8 | 0.1 | 18.3 | 97.8 |
Total comprehensive income | $ 136.5 | $ 232.4 | $ 279.1 | $ 525.4 |
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2021 |
Feb. 23, 2020 |
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Statement of Comprehensive Income [Abstract] | ||||
Change in fair value of derivatives and amortization of unrecognized gain (loss) on derivatives, tax | $ 0.2 | $ 0.0 | $ 0.5 | $ (0.1) |
Amortization of unrecognized net actuarial (loss) gain, tax | $ 0.1 | $ (0.1) | $ 0.4 | $ 32.3 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Feb. 28, 2021 |
May 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Land, buildings and equipment, net of accumulated depreciation and amortization | $ 2,785.1 | $ 2,640.9 |
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2021 |
Feb. 23, 2020 |
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Dividends declared (in dollars per share) | $ 0.37 | $ 0.88 | $ 0.67 | $ 2.64 |
Stock options exercised (in shares) | 0.4 | 0.1 | 0.5 | 0.3 |
Repurchases of common stock (in shares) | 0.0 | 0.6 | 0.1 | 2.6 |
Issuance of stock under Employee Stock Purchase Plan and other plans (in shares) | 0.0 | 0.0 | 0.1 | 0.1 |
Basis of Presentation |
9 Months Ended |
---|---|
Feb. 28, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Darden Restaurants, Inc. (we, our, Darden or the Company) owns and operates full-service dining restaurants in the United States and Canada under the trade names Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capital Grille®, Seasons 52®, Bahama Breeze®, and Eddie V’s Prime Seafood®. As of February 28, 2021, through subsidiaries, we own and operate all of our restaurants in the United States and Canada, except for 3 joint venture restaurants managed by us and 31 franchised restaurants. We also have 24 franchised restaurants in operation located in Latin America. We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. We operate on a 52/53-week fiscal year which ends on the last Sunday in May. Our fiscal year ending May 30, 2021 will contain 52 weeks of operation. Operating results for interim periods presented are not necessarily indicative of results that may be expected for the full fiscal year. These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2020. We prepare our consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and costs and expenses during the reporting period. Actual results could differ from those estimates. We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation. COVID-19 Pandemic The COVID-19 pandemic has resulted in a significant reduction in guest traffic at our restaurants due to changes in consumer behavior as public health officials encouraged social distancing and state and local governments mandated restrictions including suspension of dine-in operations, reduced restaurant seating capacity, table spacing requirements, bar closures and additional physical barriers. Beginning in late March 2020, we operated with all of our dining rooms closed and served our guests in a To Go only or To Go and delivery format. In late April 2020, state and local governments began to allow us to open dining rooms at limited capacities, along with other operating restrictions. While increasing our in-restaurant dining capacity is subject to the ordinances in the jurisdictions where we operate, we are focused on increasing capacity where possible, while continuing to provide a safe environment for our team members and guests, and maintaining many of the operating efficiencies established during this time. As we navigate through the pandemic, we have taken significant steps to adapt our business to allow us to continue to serve guests, support our team members and secure our liquidity position to provide financial flexibility. During November 2020, rising case rates resulted in certain jurisdictions implementing restrictions that reduced dining room capacity or mandated the closure of dining rooms. However, starting in January 2021, many jurisdictions began lifting these restrictions and by the end of February, most of our dining jurisdictions allowed at least some indoor dining. As of the date of this filing, nearly all of our restaurants were able to open their dining rooms to some extent. With approved vaccines being distributed, we expect our restaurants’ dining room capacity to increase as public health conditions improve and restrictions are eased. However, it is possible additional outbreaks could require us to reduce our capacity or further suspend our in-restaurant dining operations. Recently Adopted Accounting Standards As of June 1, 2020, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-13 Financial Instruments - Credit Losses (Topic 326). The amendments in this update require entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. This guidance impacts, among other items, how a company determines liabilities associated with financial guarantees related to assigned leases. We remain contingently liable for lease payments under certain restaurant leases related to dispositions. We adopted this guidance using the modified retrospective transition method. Upon adoption, we recorded a $7.5 million (net of tax of $2.5 million) cumulative-effect adjustment to the beginning balance of retained earnings related to an expected credit loss liability for the contingent aspect of our lease guarantees. See Note 11 for information regarding contingent lease guarantees. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740). The amendments in this update are intended to simplify the accounting for income taxes by removing certain exceptions in the existing guidance and simplify areas such as franchise taxes, recognizing deferred taxes for tax goodwill, separate entity financial statements and interim recognition of enactment of tax laws or tax rate changes. This update is effective for us in the first quarter of fiscal 2022, however we elected to early adopt this guidance during the quarter ended August 30, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition Deferred revenue liabilities from contracts with customers included on our accompanying consolidated balance sheets is comprised of the following:
The following table presents a rollforward of deferred gift card revenue.
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Additional Financial Information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Financial Information | Additional Financial Information Supplemental Balance Sheet Information The components of lease assets and liabilities on the consolidated balance sheet are as follows:
Supplemental Cash Flow Information
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Income Taxes |
9 Months Ended |
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Feb. 28, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective income tax rate for continuing operations for the quarter ended February 28, 2021 was 2.3 percent, compared to an effective income tax rate for the quarter ended February 23, 2020 of 12.0 percent. The effective income tax rate for continuing operations for the nine months ended February 28, 2021 was 2.6 percent, compared to an effective income tax rate of 4.2 percent for the nine months ended February 23, 2020. The change was driven by lower net earnings from continuing operations in the quarter ended February 28, 2021 compared to the quarter ended February 23, 2020 and the impact of certain tax credits on our lower earnings before income taxes, in addition to tax benefits related to stock option exercises and hedge mark to market impacts related to deferred compensation. Included in our remaining balance of unrecognized tax benefits is $6.4 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve months based on the outcome of examinations or as a result of the expiration of the statute of limitations for specific jurisdictions. |
Net Earnings per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Earnings per Share | Net Earnings per ShareOutstanding stock options, restricted stock and equity-settled performance stock units granted by us represent the only dilutive effect reflected in diluted weighted average shares outstanding, none of which impact the numerator of the diluted net earnings per share computation. Stock options, restricted stock and equity-settled performance stock units excluded from the calculation of diluted net earnings per share because the effect would have been anti-dilutive, are as follows:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s, in North America as operating segments. The brands operate principally in the U.S. within full-service dining. We aggregate our operating segments into reportable segments based on a combination of the size, economic characteristics and sub-segment of full-service dining within which each brand operates. We have four reportable segments: (1) Olive Garden, (2) LongHorn Steakhouse, (3) Fine Dining and (4) Other Business. The Olive Garden segment includes the results of our company-owned Olive Garden restaurants in the U.S. and Canada. The LongHorn Steakhouse segment includes the results of our company-owned LongHorn Steakhouse restaurants in the U.S. The Fine Dining segment aggregates our premium brands that operate within the fine-dining sub-segment of full-service dining and includes the results of our company-owned The Capital Grille and Eddie V’s restaurants in the U.S. The Other Business segment aggregates our remaining brands and includes the results of our company-owned Cheddar’s Scratch Kitchen, Yard House, Seasons 52 and Bahama Breeze restaurants in the U.S and results from our franchise operations. External sales are derived principally from food and beverage sales. We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our reportable segments are predominantly in the U.S. There were no material transactions among reportable segments. Our management uses segment profit as the measure for assessing performance of our segments. Segment profit includes revenues and expenses directly attributable to restaurant-level results of operations (sometimes referred to as restaurant-level earnings). These expenses include food and beverage costs, restaurant labor costs, restaurant expenses and marketing expenses (collectively “restaurant and marketing expenses”). Non-cash lease-related expenses included in restaurant expenses (which is a component of segment profit) and lease-related depreciation and amortization are reported at the corporate level as these are expenses for which our operating segments are not being evaluated. Additionally, our lease-related right-of-use assets are not managed or evaluated at the operating segment level, but rather at the corporate level. The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP.
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Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Accumulated Other Comprehensive Income (Loss) (AOCI) The components of accumulated other comprehensive income (loss), net of tax, for the quarter and nine months ended February 28, 2021 are as follows:
The components of accumulated other comprehensive income (loss), net of tax, for the quarter and nine months ended February 23, 2020 are as follows:
The following table presents the amounts and line items in our consolidated statements of earnings where adjustments reclassified from AOCI into net earnings were recorded.
(1)Primarily included in food and beverage costs and restaurant expenses. See Note 9 for additional details. (2)Included in general and administrative expenses. See Note 9 for additional details. (3)Included in interest, net on our consolidated statements of earnings. (4)Included in the computation of net periodic benefit costs - pension and postretirement plans, which, for fiscal 2021, is a component of general and administrative expenses and other (income) expense, net, and for fiscal 2020, is a component of restaurant labor expenses, general and administrative expenses and other (income) expense, net. (5)Included in the computation of net periodic benefit costs - other plans, which, for fiscal 2021, is a component of restaurant labor, general and administrative expenses and other (income) expense, net, and for fiscal 2020, is a component of general and administrative expenses.
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Stock-Based Compensation |
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Share-based Payment Arrangement, Noncash Expense [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based CompensationWe grant stock options for a fixed number of shares to certain employees with an exercise price equal to the fair value of the shares at the date of grant. We also grant restricted stock, restricted stock units and performance stock units with a fair value generally determined based on our closing stock price on the date of grant. In addition, we grant cash settled stock units (Darden stock units) which are classified as liabilities and are marked to market as of the end of each period. The weighted-average fair value of non-qualified stock options and the related assumptions used in the Black-Scholes option pricing model for options granted during the periods presented, were as follows:
The weighted-average grant date fair value of performance-based restricted stock units and the related assumptions used in the Monte Carlo simulation to record stock-based compensation for units granted during the periods presented, were as follows:
(1)Assumes a reinvestment of dividends. The following table presents a summary of our stock-based compensation activity for the nine months ended February 28, 2021.
We recognized expense from stock-based compensation as follows:
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Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments as provided by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. We use financial derivatives to manage interest rate and compensation risks inherent in our business operations. To the extent our cash-flow hedging instruments are effective in offsetting the variability of the hedged cash flows, and otherwise meet the cash flow hedge accounting criteria required by Topic 815 of the FASB ASC, changes in the derivatives’ fair value are not included in current earnings, but are included in accumulated other comprehensive income (loss), net of tax. These changes in fair value will be reclassified into earnings at the time of the forecasted transaction. To the extent the cash flow hedge accounting criteria are not met, the derivative contracts are utilized as economic hedges and changes in the fair value of such contracts are recorded currently in earnings in the period in which they occur. By using these instruments, we expose ourselves, from time to time, to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. We minimize this credit risk by entering into transactions with high quality counterparties. We currently do not have any provisions in our agreements with counterparties that would require either party to hold or post collateral in the event that the market value of the related derivative instrument exceeds a certain limit. As such, the maximum amount of loss due to counterparty credit risk we would incur at February 28, 2021, if counterparties to the derivative instruments failed completely to perform, would approximate the values of derivative instruments currently recognized as assets on our consolidated balance sheet. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices, or the market price of our common stock. We minimize this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. We periodically enter into commodity futures, swaps and option contracts (collectively, commodity contracts) to reduce the risk of variability in cash flows associated with fluctuations in the price we pay for commodities, such as natural gas and diesel fuel. For certain commodity purchases, changes in the price we pay for these commodities are highly correlated with changes in the market price of these commodities. For these commodity purchases, we designate commodity contracts as cash flow hedging instruments. For the remaining commodity purchases, changes in the price we pay for these commodities are not highly correlated with changes in the market price, generally due to the timing of when changes in the market prices are reflected in the price we pay. For these commodity purchases, we utilize these commodity contracts as economic hedges. Our commodity contracts currently extend through May 2021. We enter into equity forward contracts to hedge the risk of changes in future cash flows associated with the unvested, unrecognized Darden stock units. The equity forward contracts will be settled at the end of the vesting periods of their underlying Darden stock units, which range between and five years and currently extend through July 2025. The contracts are initially designated as cash flow hedges to the extent the Darden stock units are unvested and, therefore, unrecognized as a liability in our financial statements. The forward contracts have net cash settlement terms and net settle every three months. As the Darden stock units vest, we will de-designate that portion of the equity forward contract that no longer qualifies for hedge accounting, and changes in fair value associated with that portion of the equity forward contract will be recognized in current earnings. We periodically incur interest on the notional value of the contracts and receive dividend equivalents on the underlying shares. These amounts are recognized currently in earnings as they are incurred or received. We entered into equity forward contracts to hedge the risk of changes in future cash flows associated with recognized, employee-directed investments in Darden stock within the non-qualified deferred compensation plan. We did not elect hedge accounting with the expectation that changes in the fair value of the equity forward contracts would offset changes in the fair value of Darden stock investments in the non-qualified deferred compensation plan within general and administrative expenses in our consolidated statements of earnings. These contracts currently extend through July 2024. The notional and fair values of our derivative contracts are as follows:
(1)Derivative assets and liabilities are included in receivables, net and other current liabilities, as applicable, on our consolidated balance sheets. The effects of derivative instruments accounted for as cash flow hedging instruments in the consolidated statements of earnings are as follows:
(1)Location of the gain (loss) reclassified from AOCI to earnings is general and administrative expenses. (2)Location of the gain (loss) reclassified from AOCI to earnings is food and beverage costs and restaurant expenses. (3)Location of the gain (loss) reclassified from AOCI to earnings is interest, net. The effects of derivatives not designated as hedging instruments in the consolidated statements of earnings are as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The fair values of cash equivalents, receivables, net, accounts payable and short-term debt approximate their carrying amounts due to their short duration. The following tables summarize the fair values of financial instruments measured at fair value on a recurring basis as of February 28, 2021 and May 31, 2020.
(1)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. (2)The fair value of equity forwards is based on the closing market value of Darden stock, inclusive of the risk of nonperformance. The carrying value and fair value of long-term debt as of February 28, 2021, was $929.7 million and $1.02 billion, respectively. The carrying value and fair value of long-term debt as of May 31, 2020, was $928.8 million and $1.20 billion, respectively. The fair value of long-term debt, which is classified as Level 2 in the fair value hierarchy, is determined based on market prices or, if market prices are not available, the present value of the underlying cash flows discounted at our incremental borrowing rates. The fair value of non-financial assets measured at fair value on a non-recurring basis, classified as Level 2 in the fair value hierarchy, is determined based on third-party market appraisals. As of February 28, 2021, adjustments to the fair values of non-financial assets measured at fair value on a non-recurring basis, classified as Level 2, were not material. As of May 31, 2020, operating lease right-of-use assets with a carrying amount of $24.2 million, primarily related to seven restaurants, were determined to have a fair value of $17.6 million resulting in an impairment of $6.6 million. The fair value of non-financial assets measured at fair value on a non-recurring basis, classified as Level 3 in the fair value hierarchy, is determined based on appraisals, sales prices of comparable assets, or estimates of discounted future cash flows. As of February 28, 2021, adjustments to the fair values of non-financial assets, classified as Level 3, were not material. As of May 31, 2020, long-lived assets held and used with a carrying amount of $35.1 million, primarily related to thirteen underperforming restaurants as well as two restaurants damaged by natural disasters, were determined to have a fair value of $0.2 million resulting in an impairment of $34.9 million. Also as of May 31, 2020, goodwill and trademarks for our Cheddar’s Scratch Kitchen brand with carrying values of $334.3 million and $375.1 million, respectively, were determined to have fair values of $165.1 million and $230.1 million, respectively, resulting in a total impairment of $314.2 million.
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Commitments and Contingencies |
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Feb. 28, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As collateral for performance on contracts and as credit guarantees to banks and insurers, we are contingently liable for guarantees of subsidiary obligations under standby letters of credit. As of February 28, 2021 and May 31, 2020, we had $70.5 million and $65.2 million, respectively, of standby letters of credit related to workers’ compensation and general liabilities accrued in our consolidated financial statements. As of February 28, 2021 and May 31, 2020, we had $28.7 million and $44.0 million, respectively, of surety bonds related to other payments. Most surety bonds are renewable annually. As of February 28, 2021 and May 31, 2020, we had $128.6 million and $151.5 million, respectively, of guarantees associated with leased properties that have been assigned to third parties. These amounts represent the maximum potential amount of future payments under the guarantees. The fair value of the maximum potential future payments discounted at our weighted-average cost of capital as of February 28, 2021 and May 31, 2020, amounted to $105.1 million and $122.4 million, respectively. In the event of default by a third party, the indemnity and default clauses in our assignment agreements govern our ability to recover from and pursue the third party for damages incurred as a result of its default. We do not hold any third-party assets as collateral related to these assignment agreements, except to the extent that the assignment allows us to repossess the building and personal property. These guarantees expire over their respective lease terms, which range from fiscal 2021 through fiscal 2034. The likelihood of the third parties defaulting on the assignment agreements was deemed to be remote. In conjunction with the adoption of ASU 2016-13 in the first quarter of fiscal 2021, the liability recorded for our expected credit losses under these leases as of February 28, 2021 was $10.0 million. See Note 1. We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employees and others related to operational issues common to the restaurant industry, and can also involve infringement of, or challenges to, our trademarks. While the resolution of a lawsuit, proceeding or claim may have an impact on our financial results for the period in which it is resolved, we believe that the final disposition of the lawsuits, proceedings and claims in which we are currently involved, either individually or in the aggregate, will not have a material adverse effect on our financial position, results of operations or liquidity.
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Corporate Restructuring |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate Restructuring | Corporate Restructuring During the first quarter of fiscal 2021, as a result of the impact of the COVID-19 pandemic on our business operations, we undertook a strategic restructuring of our corporate organization and workforce in order to reduce costs and better align corporate expenses to our sales levels in the current environment. The corporate restructuring included a voluntary early retirement incentive program and other involuntary strategic workforce reductions. In accordance with these actions, we incurred employee termination benefits costs and other costs of $47.8 million, including cash and non-cash components of $38.1 million and $9.7 million, respectively. These costs are reflected in general and administrative expenses and other (income) expense, net in our consolidated statements of earnings for the nine months ended February 28, 2021. The following table summarizes the accrued employee termination benefits and other costs which are included in other current liabilities and other liabilities on our consolidated balance sheet as of February 28, 2021. We expect the remaining liability to be paid by the second quarter of fiscal 2022.
(1)Excludes costs associated with equity awards that will be settled in shares upon vesting and postretirement benefit plan valuation adjustment.
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Subsequent Events |
9 Months Ended |
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Feb. 28, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On March 23, 2021, the Board of Directors declared a cash dividend of $0.88 per share to be paid May 3, 2021 to all shareholders of record as of the close of business on April 9, 2021. |
Basis of Presentation (Policies) |
9 Months Ended |
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Feb. 28, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. We operate on a 52/53-week fiscal year which ends on the last Sunday in May. Our fiscal year ending May 30, 2021 will contain 52 weeks of operation. Operating results for interim periods presented are not necessarily indicative of results that may be expected for the full fiscal year.These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2020. We prepare our consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and costs and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassification | We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards As of June 1, 2020, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-13 Financial Instruments - Credit Losses (Topic 326). The amendments in this update require entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. This guidance impacts, among other items, how a company determines liabilities associated with financial guarantees related to assigned leases. We remain contingently liable for lease payments under certain restaurant leases related to dispositions. We adopted this guidance using the modified retrospective transition method. Upon adoption, we recorded a $7.5 million (net of tax of $2.5 million) cumulative-effect adjustment to the beginning balance of retained earnings related to an expected credit loss liability for the contingent aspect of our lease guarantees. See Note 11 for information regarding contingent lease guarantees. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740). The amendments in this update are intended to simplify the accounting for income taxes by removing certain exceptions in the existing guidance and simplify areas such as franchise taxes, recognizing deferred taxes for tax goodwill, separate entity financial statements and interim recognition of enactment of tax laws or tax rate changes. This update is effective for us in the first quarter of fiscal 2022, however we elected to early adopt this guidance during the quarter ended August 30, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.
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Revenue Recognition (Tables) |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Contract with Customer | Deferred revenue liabilities from contracts with customers included on our accompanying consolidated balance sheets is comprised of the following:
The following table presents a rollforward of deferred gift card revenue.
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Additional Financial Information (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Assets and Liabilities | The components of lease assets and liabilities on the consolidated balance sheet are as follows:
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Schedule of Cash Flow, Supplemental Disclosures |
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Net Earnings per Share (Tables) |
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Feb. 28, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Stock options, restricted stock and equity-settled performance stock units excluded from the calculation of diluted net earnings per share because the effect would have been anti-dilutive, are as follows:
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP.
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated | Reconciliation of segment profit to earnings from continuing operations before income taxes:
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Stockholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss), net of tax, for the quarter and nine months ended February 28, 2021 are as follows:
The components of accumulated other comprehensive income (loss), net of tax, for the quarter and nine months ended February 23, 2020 are as follows:
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Reclassification out of Accumulated Other Comprehensive Income | The following table presents the amounts and line items in our consolidated statements of earnings where adjustments reclassified from AOCI into net earnings were recorded.
(1)Primarily included in food and beverage costs and restaurant expenses. See Note 9 for additional details. (2)Included in general and administrative expenses. See Note 9 for additional details. (3)Included in interest, net on our consolidated statements of earnings. (4)Included in the computation of net periodic benefit costs - pension and postretirement plans, which, for fiscal 2021, is a component of general and administrative expenses and other (income) expense, net, and for fiscal 2020, is a component of restaurant labor expenses, general and administrative expenses and other (income) expense, net. (5)Included in the computation of net periodic benefit costs - other plans, which, for fiscal 2021, is a component of restaurant labor, general and administrative expenses and other (income) expense, net, and for fiscal 2020, is a component of general and administrative expenses.
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Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Share Activity | The following table presents a summary of our stock-based compensation activity for the nine months ended February 28, 2021.
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Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | We recognized expense from stock-based compensation as follows:
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Non-qualified Stock Options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-average fair value of non-qualified stock options and the related assumptions used in the Black-Scholes option pricing model for options granted during the periods presented, were as follows:
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Equity-Settled Performance Stock Units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-average grant date fair value of performance-based restricted stock units and the related assumptions used in the Monte Carlo simulation to record stock-based compensation for units granted during the periods presented, were as follows:
(1)Assumes a reinvestment of dividends.
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Derivative Instruments and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivative Contracts Designated and Not Designated as Hedging Instruments | The notional and fair values of our derivative contracts are as follows:
(1)Derivative assets and liabilities are included in receivables, net and other current liabilities, as applicable, on our consolidated balance sheets.
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Notional Values of Derivative Contracts Designated and Not Designated as Hedging Instruments | The notional and fair values of our derivative contracts are as follows:
(1)Derivative assets and liabilities are included in receivables, net and other current liabilities, as applicable, on our consolidated balance sheets.
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Cash Flow Hedging | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects of Derivative Instruments in Hedging Relationships | The effects of derivative instruments accounted for as cash flow hedging instruments in the consolidated statements of earnings are as follows:
(1)Location of the gain (loss) reclassified from AOCI to earnings is general and administrative expenses. (2)Location of the gain (loss) reclassified from AOCI to earnings is food and beverage costs and restaurant expenses. (3)Location of the gain (loss) reclassified from AOCI to earnings is interest, net.
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Not Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects of Derivative Instruments in Hedging Relationships | The effects of derivatives not designated as hedging instruments in the consolidated statements of earnings are as follows:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Financial Instruments Measured at Fair Value on Recurring Basis | The following tables summarize the fair values of financial instruments measured at fair value on a recurring basis as of February 28, 2021 and May 31, 2020.
(1)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. (2)The fair value of equity forwards is based on the closing market value of Darden stock, inclusive of the risk of nonperformance.
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Corporate Restructuring (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Employee Termination Benefits and Other Costs | The following table summarizes the accrued employee termination benefits and other costs which are included in other current liabilities and other liabilities on our consolidated balance sheet as of February 28, 2021. We expect the remaining liability to be paid by the second quarter of fiscal 2022.
(1)Excludes costs associated with equity awards that will be settled in shares upon vesting and postretirement benefit plan valuation adjustment.
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Basis of Presentation (Details) $ in Millions |
Feb. 28, 2021
USD ($)
restaurant
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Jun. 01, 2020
USD ($)
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May 31, 2020
USD ($)
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---|---|---|---|
Summary Of Significant Accounting Policies [Line Items] | |||
Retained earnings | $ | $ (303.0) | $ (143.5) | |
Cumulative Effect, Period of Adoption, Adjustment | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Retained earnings | $ | $ 7.5 | ||
Retained earnings, net of tax | $ | $ 2.5 | ||
Entity Operated Units | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of restaurants | restaurant | 3 | ||
Franchised Units | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of restaurants | restaurant | 31 | ||
Franchised Units | Latin America | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of restaurants | restaurant | 24 |
Revenue Recognition (Deferred Revenue from Contract with Customer) (Details) - USD ($) $ in Millions |
Feb. 28, 2021 |
Nov. 29, 2020 |
May 31, 2020 |
Feb. 23, 2020 |
Nov. 24, 2019 |
May 26, 2019 |
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Unearned revenues | ||||||
Unearned revenues | $ 493.8 | $ 467.9 | ||||
Other liabilities | ||||||
Deferred franchise fees - non-current | 2.2 | 2.8 | ||||
Gift Card | ||||||
Unearned revenues | ||||||
Unearned revenues | 522.6 | $ 469.3 | 494.6 | $ 505.4 | $ 412.4 | $ 453.6 |
Unearned revenues - discounts | (29.2) | (28.2) | ||||
Other | ||||||
Unearned revenues | ||||||
Unearned revenues | $ 0.4 | $ 1.5 |
Revenue Recognition (Deferred Gift Card Revenue) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2021 |
Feb. 23, 2020 |
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Change in Contract with Customer, Liability [Roll Forward] | ||||
Beginning balance | $ 467.9 | |||
Ending balance | $ 493.8 | 493.8 | ||
Gift Card | ||||
Change in Contract with Customer, Liability [Roll Forward] | ||||
Beginning balance | 469.3 | $ 412.4 | 494.6 | $ 453.6 |
Activations | 230.2 | 362.7 | 400.6 | 606.5 |
Redemptions and breakage | (176.9) | (269.7) | (372.6) | (554.7) |
Ending balance | $ 522.6 | $ 505.4 | $ 522.6 | $ 505.4 |
Additional Financial Information (Supplemental Cash Flow Information) (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Interest, net of amounts capitalized | $ 45.7 | $ 40.2 |
Income taxes, net of refunds | 12.4 | 1.1 |
Increase in land, buildings and equipment through accrued purchases | 29.8 | 44.7 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 30.1 | 164.5 |
Right-of-use assets obtained in exchange for new finance lease liabilities | $ 128.1 | $ 166.2 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2021 |
Feb. 23, 2020 |
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Income Tax Contingency [Line Items] | ||||
Tax position, change is reasonably possible in the next twelve months | $ 6.4 | $ 6.4 | ||
Continuing Operations | ||||
Income Tax Contingency [Line Items] | ||||
Effective income tax rate (percentage) | 2.30% | 12.00% | 2.60% | 4.20% |
Net Earnings per Share (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2021 |
Feb. 23, 2020 |
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Earnings Per Share [Abstract] | ||||
Anti-dilutive stock-based compensation awards (in shares) | 0.3 | 0.7 | 0.7 | 0.6 |
Segment Information (Narrative) (Details) |
9 Months Ended |
---|---|
Feb. 28, 2021
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Segment Information (Reconciliation of Segment Profit to Earnings from Continuing Operations Before Income Taxes) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2021 |
Feb. 23, 2020 |
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Segment Reporting [Abstract] | ||||
Segment profit | $ 318.2 | $ 466.4 | $ 887.3 | $ 1,191.3 |
Less general and administrative expenses | (78.9) | (100.3) | (298.8) | (289.6) |
Less depreciation and amortization | (88.2) | (87.7) | (261.8) | (261.5) |
Less impairments and disposal of assets, net | (3.1) | (0.1) | (1.4) | (0.2) |
Less interest, net | (15.2) | (13.2) | (46.4) | (37.4) |
Less other (income) expense, net | (0.5) | 0.0 | (8.4) | (153.3) |
Earnings before income taxes | $ 132.3 | $ 265.1 | $ 270.5 | $ 449.3 |
Derivative Instruments and Hedging Activities (Narrative) (Details) $ in Millions |
9 Months Ended |
---|---|
Feb. 28, 2021
USD ($)
| |
Derivative [Line Items] | |
Cash flow hedge gain to be reclassified within twelve months | $ 1.2 |
Darden Stock Units | Minimum | |
Derivative [Line Items] | |
Vesting period | 3 years |
Darden Stock Units | Maximum | |
Derivative [Line Items] | |
Vesting period | 5 years |
Derivative Instruments and Hedging Activities (Effects of Derivatives Not Designated as Hedging Instruments) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2021 |
Feb. 23, 2020 |
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Earnings | $ 13.6 | $ 2.4 | $ 28.8 | $ 2.1 |
Food and beverage costs and restaurant expenses | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Earnings | 0.0 | 0.0 | 0.1 | 0.3 |
General and administrative expenses | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Earnings | $ 13.6 | $ 2.4 | $ 28.7 | $ 1.8 |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
Feb. 28, 2021 |
May 31, 2020 |
---|---|---|
ASU 2016-13 | ||
Loss Contingencies [Line Items] | ||
Allowance for credit loss | $ 10.0 | |
Workers Compensation and General Liabilities Accrued | ||
Loss Contingencies [Line Items] | ||
Standby letters of credit | 70.5 | $ 65.2 |
Surety Bonds and Other Payments | ||
Loss Contingencies [Line Items] | ||
Standby letters of credit | 28.7 | 44.0 |
Property Lease Guarantee | ||
Loss Contingencies [Line Items] | ||
Fair value of potential payments discounted at pre-tax cost of capital related to guarantee obligations | 105.1 | 122.4 |
Property Lease Guarantee | Maximum | ||
Loss Contingencies [Line Items] | ||
Loss contingency, estimate of possible loss | $ 128.6 | $ 151.5 |
Corporate Restructuring (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Aug. 30, 2020 |
Feb. 28, 2021 |
|
Restructuring and Related Activities [Abstract] | ||
Employee termination benefits costs and other costs | $ 47.8 | |
Restructuring charges, requiring cash settlement | 38.1 | $ 38.1 |
Restructuring reserve, settled without cash | $ 9.7 |
Corporate Restructuring (Accrued Employee Termination Benefit and Other Costs) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Aug. 30, 2020 |
Feb. 28, 2021 |
|
Restructuring and Related Activities [Abstract] | ||
Initial liability | $ 38.1 | $ 38.1 |
Payments | (16.3) | |
Balance at February 28, 2021 | $ 21.8 |
Subsequent Events (Details) - $ / shares |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Mar. 23, 2021 |
Feb. 28, 2021 |
Feb. 23, 2020 |
Feb. 28, 2021 |
Feb. 23, 2020 |
|
Subsequent Event [Line Items] | |||||
Dividends declared (in dollars per share) | $ 0.37 | $ 0.88 | $ 0.67 | $ 2.64 | |
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividends declared (in dollars per share) | $ 0.88 |
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