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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 12 Months Ended
May 29, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
We use financial derivatives to manage commodity price, interest rate and equity-based compensation risks inherent in our business operations. 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 May 29, 2022, 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 of our 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 extend through May 2023.
We are currently party to interest-rate swap agreements with $300.0 million of notional value to limit the risk of change in fair value through fiscal 2031, of the $300.0 million 4.550 percent senior notes due February 2048. The swap agreements effectively swap the fixed-rate obligations for floating-rate obligations over the term of the agreements, thereby mitigating changes in fair value of the related debt. The swap agreements were designated as fair value hedges of the related debt and met the requirements to be accounted for under the short-cut method, resulting in no ineffectiveness in the hedging relationship. During fiscal 2022, $4.1 million was recorded as a reduction to interest expense related to net swap settlements.
We enter into equity forward contracts to hedge the risk of changes in future cash flows associated with the unvested, unrecognized stock-based awards we grant to certain employees (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 three and five years and currently extend through July 2026. The contracts were 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 dividends on the underlying shares. These amounts are recognized currently in earnings as they are incurred or received.
We enter 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 do 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 April 2027.

The notional and fair values of our derivative contracts are as follows:
Fair Values
(in millions, except
per share data)		Number of Shares OutstandingWeighted-Average
 Per Share Forward Rates		Notional ValuesDerivative Assets (1)Derivative Liabilities (1)
May 29, 2022May 29, 2022May 30, 2021May 29, 2022May 30, 2021
Equity Forwards
Designated
0.3 $127.29 $34.0 $— $0.9 $0.1 $— 
Not designated
0.5 $120.53 $58.6 — 2.0 0.2 — 
Total equity forwards$— $2.9 $0.3 $— 
Commodity contracts
     DesignatedN/AN/A$1.3 $0.6 $0.1 $— $— 
     Not designatedN/AN/A$— — — — — 
Total commodity contracts$0.6 $0.1 $— $— 
Interest rate related
     DesignatedN/AN/A$300.0 $— $— $28.0 $0.2 
     Not designatedN/AN/A$— $— $— $— 
Total interest rate related$— $— $28.0 $0.2 
Total derivative contracts$0.6 $3.0 $28.3 $0.2 
(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 in cash flow hedging relationships in the consolidated statements of earnings are as follows:
Amount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Reclassified from AOCI to Earnings
Fiscal Year EndedFiscal Year Ended
(in millions)May 29, 2022May 30, 2021May 31, 2020May 29, 2022May 30, 2021May 31, 2020
Equity (1)$(7.9)$16.9 $(15.5)$0.8 $1.6 $1.0 
Commodity (2)2.4 0.8 (3.7)1.9 (0.7)(2.3)
Interest rate (3)— — — (0.1)(0.1)(0.1)
Total$(5.5)$17.7 $(19.2)$2.6 $0.8 $(1.4)
(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 derivative instruments in fair value hedging relationships in the consolidated statements of earnings are as follows:
Amount of Gain (Loss) Recognized in Earnings on DerivativesAmount of Gain (Loss) Recognized in Earnings on Related Hedged Item
Fiscal Year EndedFiscal Year Ended
(in millions)May 29, 2022May 30, 2021May 31, 2020May 29, 2022May 30, 2021May 31, 2020
Interest rate (1)(2)$(27.8)$(0.2)$— $27.8 $0.2 $— 
Total$(27.8)$(0.2)$— $27.8 $0.2 $— 

(1) Location of the gain (loss) recognized in earnings on derivatives and related hedged item is interest, net.
(2) Hedged item in fair value hedge relationship is debt.

The effects of derivatives not designated as hedging instruments in the consolidated statements of earnings are as follows:
Amount of Gain (Loss)
Recognized in Earnings
(in millions)Fiscal Year Ended
Location of Gain (Loss) Recognized in Earnings on DerivativesMay 29, 2022May 30, 2021May 31, 2020
Food and beverage costs and restaurant expenses$— $0.1 $0.3 
General and administrative expenses(3.6)32.7 (12.3)
Total$(3.6)$32.8 $(12.0)
Based on the fair value of our derivative instruments designated as cash flow hedges as of May 29, 2022, we expect to reclassify $0.6 million of net gains on derivative instruments from accumulated other comprehensive income (loss) to earnings during the next 12 months based on the maturity of equity forward, commodity, and interest rate contracts. However, the amounts ultimately realized in earnings will be dependent on the fair value of the contracts on the settlement dates.