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Derivative Instruments and Hedging Activities
 6 Months Ended
Nov. 26, 2023
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, commodity and compensation risks inherent in our business operations. Cash flows related to derivatives are included in operating activities.
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. 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.
In the first quarter of fiscal 2024, we entered into an interest rate swap derivative instrument with $500.0 million of notional value to hedge a portion of the risk of changes in the benchmark interest rate related to our $600 million Term Loan or any related refinancing of the Term Loan, as changes in the benchmark interest rate could have caused variability in our forecasted interest payments. As discussed above under Note 2, the Term Loan was subsequently paid in full on October 10, 2023 with the proceeds from our issuance of $500 million aggregate amount of 2033 Notes along with $100 million from cash on hand. As a result of paying down the Term Loan, we settled the interest rate swap designated as a cash flow hedge at the issuance of the 2033 Notes for a gain of $34.9 million. This amount was recorded in accumulated other comprehensive income (loss) and will be amortized to interest expense as interest payments are made on the 2033 Notes.
We designate commodity contracts and equity forward contracts as cash flow hedging instruments. We have one interest rate swap agreement remaining which is designated as a fair value hedge of the related debt. Further, we entered into equity forward contracts to hedge the risk of changes in future cash flows associated with recognized, employee-directed investments in our common 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 our common stock investments in the non-qualified deferred compensation plan.
The notional and fair values of our derivative contracts were 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)
November 26, 2023November 26,
2023		May 28,
2023		November 26,
2023		May 28,
2023
Equity forwards:
Designated0.3$140.49$36.0 $— $2.2 $— $— 
Not designated0.5131.5565.3 0.1 5.1 — — 
Total equity forwards (2)$0.1 $7.3 $— $— 
Commodity contracts:
DesignatedN/AN/A$19.4 $— $— $2.4 $5.6 
Not designatedN/AN/A— — — — — 
Total commodity contracts (3)$— $— $2.4 $5.6 
Interest rate related
Designated - Fair Value HedgeN/AN/A$300.0 $— $— $53.0 $45.4 
Not designatedN/AN/A— — — — 
Total interest rate related$— $— $53.0 $45.4 
Total derivative contracts$0.1 $7.3 $55.4 $51.0 
 
(1)Derivative assets and liabilities are included in receivables, net and other current liabilities, as applicable, on our consolidated balance sheets.
(2)Designated and undesignated equity forwards extend through fiscal July 2028.
(3)Commodity contracts extend through fiscal June 2025.

    
The effects of derivative instruments accounted for as cash flow hedging instruments in the consolidated statements of earnings were as follows:
Amount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Reclassified from AOCI to Earnings
Three Months EndedThree Months Ended
(in millions)November 26,
2023		November 27,
2022		November 26,
2023		November 27,
2022
Equity (1)$(0.9)$7.3 $— $— 
Commodity (2)(1.6)(1.6)(1.2)0.7 
Interest rate (3)17.0 —0.4(0.1)
Total$14.5 $5.7 $(0.8)$0.6 
Amount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Reclassified from AOCI to Earnings
Six Months EndedSix Months Ended
(in millions)November 26,
2023		November 27,
2022		November 26,
2023		November 27,
2022
Equity (1)$(3.1)$6.8 $1.3 $(0.8)
Commodity (2)0.1 1.0 (3.1)0.8 
Interest rate (3)34.9 — 0.4 (0.1)
Total$31.9 $7.8 $(1.4)$(0.1)
(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 statement of earnings were as follows:

Amount of Gain (Loss) Recognized in Earnings on DerivativesAmount of Gain (Loss) Recognized in Earnings on Related Hedged Item
Three Months EndedThree Months Ended
(in millions)November 26,
2023		November 27,
2022		November 26,
2023		November 27,
2022
Interest rate (1)(2)$(0.7)$(9.7)$0.7 $9.7 
Amount of Gain (Loss) Recognized in Earnings on DerivativesAmount of Gain (Loss) Recognized in Earnings on Related Hedged Item
Six Months EndedSix Months Ended
(in millions)November 26,
2023		November 27,
2022		November 26,
2023		November 27,
2022
Interest rate (1)(2)$(7.6)$(16.0)$7.6 $16.0 

 (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 were as follows:
Amount of Gain (Loss) Recognized in Earnings
(in millions)Three Months EndedSix Months Ended
Location of Gain (Loss) Recognized in Earnings on DerivativesNovember 26, 2023November 27, 2022November 26, 2023November 27, 2022
General and administrative expenses$0.6 $10.8 $0.5 $9.7 
Based on the fair value of our derivative instruments designated as cash flow hedges as of November 26, 2023, we expect to reclassify $2.1 million of net gains on derivative instruments from AOCI to earnings during the next 12 months based on the maturity of our contracts. However, the amounts ultimately realized in earnings may change and will be dependent on the fair value of the contracts on the respective settlement dates.