Cover Page
Cover Page - shares | 3 Months Ended | |
Aug. 25, 2019 | Sep. 13, 2019 | |
Cover page. | ||
Entity Registrant Name | DARDEN RESTAURANTS INC | |
Entity Central Index Key | 0000940944 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Aug. 25, 2019 | |
Current Fiscal Year End Date | --05-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Transition Report | false | |
Entity File Number | 1-13666 | |
Entity Incorporation, State or Country Code | FL | |
Entity Tax Identification Number | 59-3305930 | |
Entity Address, Address Line One | 1000 Darden Center Drive | |
Entity Address, City or Town | Orlando, | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 32837 | |
City Area Code | 407 | |
Local Phone Number | 245-4000 | |
Title of 12(b) Security | Common Stock, without par value | |
Trading Symbol | DRI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 122,601,536 |
Consolidated Statements of Earn
Consolidated Statements of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Sales | $ 2,133.9 | $ 2,061.4 |
Costs and expenses: | ||
Restaurant labor | 703.8 | 679.3 |
Marketing expenses | 68.7 | 66.5 |
General and administrative expenses | 98 | 104.5 |
Depreciation and amortization | 86.2 | 80.7 |
Impairments and disposal of assets, net | 0 | 0.1 |
Total operating costs and expenses | 1,932.4 | 1,872.3 |
Operating income | 201.5 | 189.1 |
Interest, net | 11.1 | 13.1 |
Earnings before income taxes | 190.4 | 176 |
Income tax expense | 18.6 | 7.1 |
Earnings from continuing operations | 171.8 | 168.9 |
Losses from discontinued operations, net of tax benefit of $0.2 and $1.1, respectively | (1.2) | (2.7) |
Net earnings | $ 170.6 | $ 166.2 |
Basic net earnings per share: | ||
Earnings from continuing operations (in dollars per share) | $ 1.40 | $ 1.36 |
Losses from discontinued operations (in dollars per share) | (0.01) | (0.02) |
Net earnings (in dollars per share) | 1.39 | 1.34 |
Diluted net earnings per share: | ||
Earnings from continuing operations (in dollars per share) | 1.38 | 1.34 |
Losses from discontinued operations (in dollars per share) | (0.01) | (0.02) |
Net earnings (in dollars per share) | $ 1.37 | $ 1.32 |
Average number of common shares outstanding: | ||
Basic (in shares) | 122.9 | 123.8 |
Diluted (in shares) | 124.6 | 125.8 |
Food and beverage | ||
Costs and expenses: | ||
Food and beverage costs and restaurant expenses | $ 603.3 | $ 583.3 |
Restaurant expenses | ||
Costs and expenses: | ||
Food and beverage costs and restaurant expenses | $ 372.4 | $ 357.9 |
Consolidated Statements of Ea_2
Consolidated Statements of Earnings (Unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Income Statement [Abstract] | ||
Losses from discontinued operations, net of tax benefit | $ 0.2 | $ 1.1 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 170.6 | $ 166.2 |
Other comprehensive income (loss): | ||
Foreign currency adjustment | 0 | 0.4 |
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $(0.2) and $0.0, respectively | (2.9) | 8.6 |
Amortization of unrecognized net actuarial (loss) gain, net of taxes of $0.0 and $0.0, respectively, related to pension and other post-employment benefits | 0.1 | (0.2) |
Other comprehensive income (loss) | (2.8) | 8.8 |
Total comprehensive income | $ 167.8 | $ 175 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Change in fair value of derivatives, tax | $ (0.2) | $ 0 |
Amortization of unrecognized net actuarial (loss) gain, tax | $ 0 | $ 0 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Aug. 25, 2019 | May 26, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 350.8 | $ 457.3 |
Receivables, net | 51.1 | 88.3 |
Inventories | 199 | 207.3 |
Prepaid income taxes | 1 | 41.6 |
Prepaid expenses and other current assets | 68.4 | 98.1 |
Total current assets | 670.3 | 892.6 |
Land, buildings and equipment, net of accumulated depreciation and amortization of $2,515.2 and $2,482.6, respectively | 2,611 | 2,552.6 |
Operating lease right-of-use assets | 3,996.7 | 0 |
Goodwill | 1,199.7 | 1,183.7 |
Trademarks | 950.8 | 950.8 |
Other assets | 291 | 313.1 |
Total assets | 9,719.5 | 5,892.8 |
Current liabilities: | ||
Accounts payable | 343.7 | 332.6 |
Accrued payroll | 136.3 | 175.3 |
Accrued income taxes | 19.8 | 11.6 |
Other accrued taxes | 61.7 | 54.2 |
Unearned revenues | 388.8 | 428.5 |
Other current liabilities | 598.3 | 471.9 |
Total current liabilities | 1,548.6 | 1,474.1 |
Long-term debt | 928 | 927.7 |
Deferred income taxes | 165.5 | 156.9 |
Operating lease liabilities - non-current | 4,265.5 | 0 |
Deferred rent | 0 | 354.4 |
Other liabilities | 430.6 | 587.1 |
Total liabilities | 7,338.2 | 3,500.2 |
Stockholders’ equity: | ||
Common stock and surplus | 1,692.9 | 1,685 |
Retained earnings | 789.9 | 806.6 |
Accumulated other comprehensive income (loss) | (101) | (98.2) |
Unearned compensation | (0.5) | (0.8) |
Total stockholders’ equity | 2,381.3 | 2,392.6 |
Total liabilities and stockholders’ equity | $ 9,719.5 | $ 5,892.8 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions | Aug. 25, 2019 | May 26, 2019 |
Statement of Financial Position [Abstract] | ||
Land, buildings and equipment, net of accumulated depreciation and amortization of $2,515.2 and $2,482.6, respectively | $ 2,515.2 | $ 2,482.6 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Millions | Total | Common Stock And Surplus | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Unearned Compensation |
Beginning balance at May. 27, 2018 | $ 2,194.8 | $ 1,631.9 | $ 657.6 | $ (7.8) | $ (85.2) | $ (1.7) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | 166.2 | 166.2 | ||||
Other comprehensive income (loss) | 8.8 | 8.8 | ||||
Dividends declared | (93.5) | (93.5) | ||||
Stock option exercises | 31.6 | 31.6 | ||||
Stock-based compensation | 5.6 | 5.6 | ||||
Repurchases of common stock | (31.3) | (4.1) | (27.2) | |||
Issuance of stock under Employee Stock Purchase Plan and other plans | 1.7 | 1.7 | ||||
Other | (8.7) | 0.7 | (9.6) | 0.2 | ||
Ending balance at Aug. 26, 2018 | 2,275.2 | 1,667.4 | 693.5 | (7.8) | (76.4) | (1.5) |
Beginning balance at May. 26, 2019 | 2,392.6 | 1,685 | 806.6 | 0 | (98.2) | (0.8) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | 170.6 | 170.6 | ||||
Other comprehensive income (loss) | (2.8) | (2.8) | ||||
Dividends declared | (108.4) | (108.4) | ||||
Stock option exercises | 9.2 | 9.2 | ||||
Stock-based compensation | 7.6 | 7.6 | ||||
Repurchases of common stock | (94.8) | (10.9) | (83.9) | |||
Issuance of stock under Employee Stock Purchase Plan and other plans | 2 | 2 | ||||
Other | 5.3 | 5 | 0.3 | |||
Ending balance at Aug. 25, 2019 | $ 2,381.3 | $ 1,692.9 | $ 789.9 | $ 0 | $ (101) | $ (0.5) |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares shares in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared (in dollars per share) | $ 0.88 | $ 0.75 |
Stock option exercised (in shares) | 0.2 | 0.7 |
Repurchases of common stock, (in shares) | 0.8 | 0.3 |
Issuance of stock under Employee Stock Purchase Plan and other plans (in shares) | 0 | 0.1 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Cash flows—operating activities | ||
Net earnings | $ 170.6 | $ 166.2 |
Losses from discontinued operations, net of tax | 1.2 | 2.7 |
Adjustments to reconcile net earnings from continuing operations to cash flows: | ||
Depreciation and amortization | 86.2 | 80.7 |
Impairments and disposal of assets, net | 0 | 0.1 |
Stock-based compensation expense | 14.2 | 17.9 |
Change in current assets and liabilities | (30.6) | (79.2) |
Contributions to pension and postretirement plans | (0.4) | (0.4) |
Deferred income taxes | 7 | 3.8 |
Change in deferred rent | 0 | 9.6 |
Change in other assets and liabilities | 3.7 | 8.1 |
Other, net | 1.9 | (3.1) |
Net cash provided by operating activities of continuing operations | 253.8 | 206.4 |
Cash flows—investing activities | ||
Purchases of land, buildings and equipment | (117.1) | (106.4) |
Proceeds from disposal of land, buildings and equipment | 2.6 | 0.8 |
Cash used in business acquisitions, net of cash acquired | (37) | 0 |
Purchases of capitalized software and other assets | (5.4) | (5.4) |
Other, net | (10) | 1.8 |
Net cash used in investing activities of continuing operations | (166.9) | (109.2) |
Cash flows—financing activities | ||
Proceeds from issuance of common stock | 11.2 | 33.3 |
Dividends paid | (108.1) | (93) |
Repurchases of common stock | (94.8) | (31.3) |
Principal payments on capital and financing leases | (1.3) | (1.6) |
Other, net | 0.3 | 0.2 |
Net cash used in financing activities of continuing operations | (192.7) | (92.4) |
Cash flows—discontinued operations | ||
Net cash provided by (used in) operating activities of discontinued operations | (0.7) | 0.1 |
Net cash provided by (used in) discontinued operations | (0.7) | 0.1 |
Increase (decrease) in cash and cash equivalents | (106.5) | 4.9 |
Cash and cash equivalents - beginning of period | 457.3 | 146.9 |
Cash and cash equivalents - end of period | 350.8 | 151.8 |
Cash flows from changes in current assets and liabilities | ||
Receivables, net | 13 | 14.8 |
Inventories | 8.4 | 10.7 |
Prepaid expenses and other current assets | (6.9) | (9.8) |
Accounts payable | 3.3 | (21.3) |
Accrued payroll | (39) | (39.3) |
Prepaid/accrued income taxes | 48.8 | 0.8 |
Other accrued taxes | 7.5 | 5.6 |
Unearned revenues | (39.7) | (35.5) |
Other current liabilities | (26) | (5.2) |
Change in current assets and liabilities | $ (30.6) | $ (79.2) |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Aug. 25, 2019 | |
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 August 25, 2019 , 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 32 franchised restaurants. We also have 33 franchised restaurants in operation located in Latin America and the Middle East. 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 31, 2020 will contain 53 weeks of operation, with the 53rd week occurring in our fiscal fourth quarter. 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 26, 2019 . 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. On June 26, 2019, we completed the acquisition of five Cheddar's Scratch Kitchen restaurants ( four operating and one closed) and certain assets and liabilities from WOW Food Concepts, LLC, an existing franchisee. The acquisition was funded with cash on hand for $37.8 million in total consideration, of which $19.0 million was allocated to land, buildings and equipment. The results of operations of these restaurants are included in our consolidated financial statements from the date of acquisition. Pro-forma financial information of the combined entities for periods prior to the acquisition is not presented due to the immaterial impact of the financial results of the acquired restaurants on our consolidated financial statements. Recently Adopted Accounting Standards As of May 27, 2019, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) (ASC 842) which replaced existing lease guidance with comprehensive lease measurement and recognition guidance and expanded disclosure requirements. This new guidance requires lessees to recognize on the balance sheet a liability based on the present value of minimum lease payments and a corresponding right-of-use asset. We adopted this guidance using the modified retrospective transition method which means we did not adjust the balance sheet for comparative periods but recorded a $3.8 million cumulative-effect adjustment to retained earnings as of May 27, 2019. We elected the package of practical expedients which allowed us to not reassess previous accounting conclusions regarding lease identification, lease classification and initial direct costs. We elected the land easement practical expedient which allowed us to not evaluate our existing land easements for lease accounting treatment. We elected the short-term lease recognition exemption which provided the option to not recognize right-of-use assets and related liabilities that arise from certain leases with terms of 12 months or less. We also elected the accounting policy election to not separate lease and non-lease components for real estate leases entered into after adoption. See Note 14. As of May 27, 2019, we adopted FASB ASU 2017-12, Derivatives and Hedging (Topic 815). The amendments in this update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The adoption of this guidance did not have a material impact on our consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Aug. 25, 2019 | |
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: (in millions) August 25, 2019 May 26, 2019 Unearned revenues Deferred gift card revenue $ 410.2 $ 453.6 Deferred gift card discounts (22.7 ) (26.4 ) Other 1.3 1.3 Total $ 388.8 $ 428.5 Other liabilities Deferred franchise fees - non-current $ 3.4 $ 3.9 The following table presents a rollforward of deferred gift card revenue: Three Months Ended (in millions) August 25, 2019 August 26, 2018 Beginning balance $ 453.6 $ 443.1 Activations 116.4 117.9 Redemptions and breakage (159.8 ) (156.7 ) Ending balance $ 410.2 $ 404.3 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Aug. 25, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Cash paid for interest and income taxes are as follows: Three Months Ended (in millions) August 25, 2019 August 26, 2018 Interest, net of amounts capitalized $ 12.4 $ 11.8 Income taxes, net of refunds (39.6 ) (0.1 ) Non-cash investing activities are as follows: Three Months Ended (in millions) August 25, 2019 August 26, 2018 Increase in land, buildings and equipment through accrued purchases $ 45.9 $ 50.6 |
Income Taxes
Income Taxes | 3 Months Ended |
Aug. 25, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective income tax rate for continuing operations for the quarter ended August 25, 2019 was 9.8 percent compared to an effective income tax rate of 4.0 percent for the quarter ended August 26, 2018 . The effective income tax rate increased primarily due to fiscal 2019 favorable tax impacts associated with market-driven changes related to our equity-based compensation and tax benefits from stock-option exercises. Included in our remaining balance of unrecognized tax benefits is $11.7 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
Net Earnings per Share | 3 Months Ended |
Aug. 25, 2019 | |
Earnings Per Share [Abstract] | |
Net Earnings per Share | Net Earnings per Share Outstanding 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: Three Months Ended (in millions) August 25, August 26, Anti-dilutive stock-based compensation awards 0.1 0.1 |
Segment Information
Segment Information | 3 Months Ended |
Aug. 25, 2019 | |
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”). In the first quarter of fiscal 2020, we changed our internal management reporting related to non-cash lease-related expenses, as these are expenses for which our operating segments are no longer being evaluated. This change reallocates non-cash lease-related expenses from our operating segments to the corporate level for restaurant expenses (which is a component of segment profit) and depreciation and amortization. Additionally, our lease-related right-of-use assets are not managed or evaluated at the operating segment level, but rather at the corporate level. Fiscal 2019 segment profit and depreciation and amortization have been restated for comparability. The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP: (in millions) Olive Garden LongHorn Steakhouse Fine Dining Other Business Corporate Consolidated For the three months ended August 25, 2019 Sales $ 1,090.2 $ 450.2 $ 136.1 $ 457.4 $ — $ 2,133.9 Restaurant and marketing expenses 861.3 375.7 115.8 393.0 2.4 1,748.2 Segment profit $ 228.9 $ 74.5 $ 20.3 $ 64.4 $ (2.4 ) $ 385.7 Depreciation and amortization $ 36.1 $ 16.8 $ 7.8 $ 24.0 $ 1.5 $ 86.2 Impairments and disposal of assets, net 1.4 — — — (1.4 ) — Purchases of land, buildings and equipment 50.8 16.1 18.1 30.0 2.1 117.1 (in millions) Olive Garden LongHorn Steakhouse Fine Dining Other Business Corporate Consolidated For the three months ended August 26, 2018 Sales $ 1,052.0 $ 430.4 $ 129.9 $ 449.1 $ — $ 2,061.4 Restaurant and marketing expenses 835.0 358.8 109.7 381.2 2.3 1,687.0 Segment profit $ 217.0 $ 71.6 $ 20.2 $ 67.9 $ (2.3 ) $ 374.4 Depreciation and amortization $ 33.6 $ 16.7 $ 7.2 $ 21.8 $ 1.4 $ 80.7 Impairments and disposal of assets, net — 0.1 — — — 0.1 Purchases of land, buildings and equipment 41.4 19.1 8.3 35.7 1.9 106.4 Reconciliation of segment profit to earnings from continuing operations before income taxes: Three Months Ended (in millions) August 25, 2019 August 26, 2018 Segment profit $ 385.7 $ 374.4 Less general and administrative expenses (98.0 ) (104.5 ) Less depreciation and amortization (86.2 ) (80.7 ) Less impairments and disposal of assets, net — (0.1 ) Less interest, net (11.1 ) (13.1 ) Earnings before income taxes $ 190.4 $ 176.0 |
Impairments and Disposal of Ass
Impairments and Disposal of Assets, Net | 3 Months Ended |
Aug. 25, 2019 | |
Asset Impairment Charges [Abstract] | |
Impairments and Disposal of Assets, Net | Impairments and Disposal of Assets, Net Impairments and disposal of assets, net, in our accompanying consolidated statements of earnings are comprised of the following: Three Months Ended (in millions) August 25, 2019 August 26, 2018 Restaurant impairments $ 1.4 $ 0.1 Disposal gains (1.4 ) — Impairments and disposal of assets, net $ — $ 0.1 Restaurant impairments for the quarter ended August 25, 2019 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Aug. 25, 2019 | |
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 ended August 25, 2019 are as follows: (in millions) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Derivatives Benefit Plan Funding Position Accumulated Other Comprehensive Income (Loss) Balance at May 26, 2019 $ (1.0 ) $ 9.0 $ (106.2 ) $ (98.2 ) Gain (loss) — (2.2 ) — (2.2 ) Reclassification realized in net earnings — (0.7 ) 0.1 (0.6 ) Balance at August 25, 2019 $ (1.0 ) $ 6.1 $ (106.1 ) $ (101.0 ) The components of accumulated other comprehensive income (loss), net of tax, for the quarter ended August 26, 2018 are as follows: (in millions) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Derivatives Benefit Plan Funding Position Accumulated Other Comprehensive Income (Loss) Balance at May 27, 2018 $ (1.6 ) $ 3.4 $ (87.0 ) $ (85.2 ) Gain (loss) 0.4 13.7 — 14.1 Reclassification realized in net earnings — (5.1 ) (0.2 ) (5.3 ) Balance at August 26, 2018 $ (1.2 ) $ 12.0 $ (87.2 ) $ (76.4 ) 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: Amount Reclassified from AOCI into Net Earnings Three Months Ended (in millions) AOCI Components Location of Gain (Loss) Recognized in Earnings August 25, August 26, Derivatives Commodity contracts (1) $ (0.4 ) $ 0.2 Equity contracts (2) 1.0 4.9 Total before tax $ 0.6 $ 5.1 Tax (expense) benefit 0.1 — Net of tax $ 0.7 $ 5.1 Benefit plan funding position Recognized net actuarial loss - pension/postretirement plans (3) $ (0.9 ) $ (0.6 ) Recognized net actuarial gain - other plans (4) 0.8 0.8 Total before tax $ (0.1 ) $ 0.2 Tax (expense) benefit — — Net of tax $ (0.1 ) $ 0.2 (1) Primarily included in food and beverage costs and restaurant expenses. See Note 11 for additional details. (2) For fiscal 2020, included in general and administrative expenses. For fiscal 2019, included in restaurant labor costs and general and administrative expenses. See Note 11 for additional details. (3) Included in the computation of net periodic benefit costs - pension and postretirement plans, which is a component of restaurant labor expenses and general and administrative expenses. See Note 9 for additional details. (4) |
Retirement Plans
Retirement Plans | 3 Months Ended |
Aug. 25, 2019 | |
Retirement Benefits [Abstract] | |
Retirement Plans | Retirement Plans Components of net periodic benefit cost are as follows: Defined Benefit Plans Three Months Ended (in millions) August 25, August 26, Interest cost $ 1.6 $ 2.4 Expected return on plan assets (2.0 ) (2.8 ) Recognized net actuarial loss 0.9 0.6 Net periodic benefit cost $ 0.5 $ 0.2 Postretirement Benefit Plan Three Months Ended (in millions) August 25, August 26, Interest cost $ 0.2 $ 0.2 Amortization of unrecognized prior service credit (1.2 ) (1.2 ) Recognized net actuarial loss 0.4 0.4 Net periodic benefit credit $ (0.6 ) $ (0.6 ) |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Aug. 25, 2019 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation We 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 were as follows. Stock Options Granted Three Months Ended August 25, 2019 August 26, 2018 Weighted-average fair value $ 19.94 $ 18.78 Dividend yield 3.0 % 3.2 % Expected volatility of stock 22.5 % 22.6 % Risk-free interest rate 1.9 % 2.9 % Expected option life (in years) 6.3 6.4 Weighted-average exercise price per share $ 124.24 $ 107.05 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 are as follows: Granted in Fiscal Year Ended Three Months Ended August 25, 2019 August 26, 2018 Dividend yield (1) 0.0 % 0.0 % Expected volatility of stock 23.1 % 23.4 % Risk-free interest rate 1.8 % 2.7 % Expected option life (in years) 2.9 2.9 Weighted-average grant date fair value per unit $ 124.41 $ 115.07 (1) Assumes a reinvestment of dividends. The following table presents a summary of our stock-based compensation activity for the three months ended August 25, 2019 : (in millions) Stock Options Restricted Stock/ Restricted Stock Units Equity-Settled Cash-Settled Darden Stock Units Outstanding beginning of period 2.60 0.28 0.60 1.20 Awards granted 0.31 0.05 0.18 0.18 Awards exercised/vested (0.21 ) (0.03 ) (0.21 ) (0.26 ) Awards forfeited — (0.01 ) (0.01 ) (0.03 ) Outstanding end of period 2.70 0.29 0.56 1.09 We recognized expense from stock-based compensation as follows: Three Months Ended (in millions) August 25, August 26, Stock options $ 1.3 $ 1.2 Restricted stock/restricted stock units 1.8 1.3 Equity-settled performance stock units 3.8 2.5 Cash-settled Darden stock units 6.6 12.3 Employee stock purchase plan 0.4 0.3 Director compensation program/other 0.3 0.3 Total stock-based compensation expense $ 14.2 $ 17.9 |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Aug. 25, 2019 | |
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. Ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period in which it occurs. 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 August 25, 2019 , 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 currently extend through May 2020 . 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 three and five years and currently extend through July 2024 . 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 can only be net settled in cash. 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 September 2023 . The notional and fair values of our derivative contracts are as follows: 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) August 25, 2019 August 25, May 26, August 25, May 26, Equity forwards: Designated 0.4 $100.51 $ 38.6 $ 2.2 $ — $ — $ 0.3 Not designated 0.5 $81.76 $ 38.6 2.6 — — 0.5 Total equity forwards $ 4.8 $ — $ — $ 0.8 Commodity contracts N/A N/A $ 9.6 $ — $ 0.1 $ 1.0 $ 0.1 Total derivative contracts $ 4.8 $ 0.1 $ 1.0 $ 0.9 (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: Amount of Gain (Loss) Recognized in AOCI (effective portion) Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) Amount of Gain (Loss) Recognized in Earnings (ineffective portion) Three Months Ended Three Months Ended Three Months Ended (in millions) August 25, August 26, August 25, August 26, August 25, August 26, Equity (1)(2) $ (1.0 ) $ 13.8 $ 1.0 $ 4.9 $ (0.2 ) $ — Commodity (3) (1.4 ) (0.1 ) (0.4 ) 0.2 — — Total $ (2.4 ) $ 13.7 $ 0.6 $ 5.1 $ (0.2 ) $ — (1) In fiscal 2020, location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is general and administrative expenses. (2) In fiscal 2019, location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is restaurant labor expenses and general and administrative expenses. (3) Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is food and beverage costs and restaurant expenses. 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) Three Months Ended Location of Gain (Loss) Recognized in Earnings on Derivatives August 25, 2019 August 26, 2018 Food and beverage costs and restaurant expenses $ 0.3 $ — Restaurant labor expenses — 7.0 General and administrative expenses 0.6 10.4 Total $ 0.9 $ 17.4 Based on the fair value of our derivative instruments designated as cash flow hedges as of August 25, 2019 , we expect to reclassify $0.8 million of net gains |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Aug. 25, 2019 | |
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 August 25, 2019 and May 26, 2019 : Items Measured at Fair Value at August 25, 2019 (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) $ (1.0 ) $ — $ (1.0 ) $ — Equity forwards (2) $ 4.8 $ — $ 4.8 $ — Total $ 3.8 $ — $ 3.8 $ — Items Measured at Fair Value at May 26, 2019 (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: Equity forwards (2) (0.8 ) — (0.8 ) — Total $ (0.8 ) $ — $ (0.8 ) $ — (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 August 25, 2019 , was $928.0 million and $1.02 billion , respectively. The carrying value and fair value of long-term debt as of May 26, 2019 , was $927.7 million and $955.7 million , 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, which is classified as Level 3 in the fair value hierarchy, is determined based on appraisals or sales prices of comparable assets and estimates of future cash flows. As of August 25, 2019 , long-lived assets held and used with a carrying amount of $1.4 million related to one underperforming restaurant, were determined to have no fair value resulting in an impairment of $1.4 million . As of May 26, 2019 , long-lived assets held and used with a carrying amount of $21.7 million , primarily related to seven underperforming restaurants, were determined to have a fair value of $2.5 million resulting in an impairment charge of $19.2 million |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Aug. 25, 2019 | |
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 August 25, 2019 and May 26, 2019 , we had $67.4 million and $75.9 million , respectively, of standby letters of credit related to workers’ compensation and general liabilities accrued in our consolidated financial statements. As of August 25, 2019 and May 26, 2019 , we had $24.8 million and $21.6 million , respectively, of surety bonds related to other payments. Most surety bonds are renewable annually. As of August 25, 2019 and May 26, 2019 , we had $141.5 million and $151.6 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 August 25, 2019 and May 26, 2019 , amounted to $115.7 million and $123.2 million , respectively. We did not record a liability for the guarantees, as the likelihood of the third parties defaulting on the assignment agreements was deemed to be remote. 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 2020 through fiscal 2034 . 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. |
Leases
Leases | 3 Months Ended |
Aug. 25, 2019 | |
Leases [Abstract] | |
Leases | Leases The majority of our restaurant locations, as well as our restaurant support center, are subject to a lease. We evaluate our leases at the commencement of the lease to determine the classification as an operating or finance lease. For operating leases, upon adoption of ASC 842, we recognized operating lease liabilities based on the present value of minimum lease payments over the remaining expected lease term and corresponding right-of-use assets. We recognize lease expense related to operating leases on a straight-line basis. For finance leases, we record finance lease liabilities at an amount equal to the present value of the minimum lease payments over the remaining expected lease term and corresponding right-of-use assets. Amortization expense and interest expense related to finance leases are included in depreciation and amortization and interest, net, respectively, in our consolidated statements of earnings. Sale-leasebacks are transactions through which we sell assets (such as restaurant properties) at fair value and subsequently lease them back. The resulting leases generally qualify and are accounted for as operating leases. Failed sale-leaseback transactions are generally classified as finance leases and result in retention of the “sold” assets within land, buildings and equipment with a finance lease liability equal to the amount of proceeds received recorded as a component of other liabilities on our consolidated balance sheets. Within the provisions of certain of our leases, there are rent holidays and escalations in payments over the base lease term, as well as renewal periods. The effects of the holidays and escalations have been reflected in lease expense on a straight-line basis for operating leases over the expected lease term. The lease term commences on the date when we have the right to control the use of the leased property, which is typically before lease payments are due under the terms of the lease. Many of our leases have renewal periods totaling 5 to 20 years , exercisable at our option, and require payment of property taxes, insurance and maintenance costs in addition to the lease payments. At lease inception, we include option periods that we are reasonably assured to exercise as failure to renew the lease would impose an economic penalty. The consolidated financial statements reflect the same lease term for amortizing leasehold improvements as we use to determine finance versus operating lease classifications. Variable lease expense is generally based on sales levels and is accrued at the point in time we determine that it is probable that such sales levels will be achieved. Landlord allowances are recorded as an adjustment to the right-of-use assets. Gains and losses on sale-leaseback transactions are recognized immediately. The components of lease expense in the consolidated statement of earnings are as follows: Three Months Ended (in millions) August 25, 2019 Operating lease expense $ 96.4 Finance lease expense Amortization of leased assets 1.5 Interest on lease liabilities 3.3 Variable lease expense 1.4 Total lease expense $ 102.6 The components of lease assets and liabilities on the consolidated balance sheet are as follows: (in millions) Balance Sheet Classification August 25, 2019 Operating lease right-of-use assets Operating lease right-of-use assets $ 3,996.7 Finance lease right-of-use assets Land, buildings and equipment, net 130.9 Total lease assets, net $ 4,127.6 Operating lease liabilities - current Other current liabilities $ 148.4 Finance lease liabilities - current Other current liabilities 6.1 Operating lease liabilities - non-current Operating lease liabilities - non-current 4,265.5 Finance lease liabilities - non-current Other liabilities 262.7 Total lease liabilities $ 4,682.7 Supplemental cash flow information related to leases: Three Months Ended (in millions) August 25, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 88.9 Operating cash flows from finance leases 3.3 Financing cash flows from finance leases 1.3 Right-of-use assets obtained in exchange for new operating lease liabilities 14.4 Right-of-use assets obtained in exchange for new finance lease liabilities 78.5 The weighted-average remaining lease terms and discount rates as of August 25, 2019 are as follows: August 25, 2019 (in millions) Weighted-Average Remaining Lease Term (Years) Weighted-Average Discount Rate (1) Operating leases 17.3 4.2 % Finance leases 18.4 5.3 % (1) We cannot determine the interest rate implicit in our leases. Therefore, the discount rate represents our incremental borrowing rate and is determined based on the risk-free rate, adjusted for the risk premium attributed to our corporate credit rating for a secured or collateralized instrument. The annual maturities of our lease liabilities as of August 25, 2019 are as follows: (in millions) Fiscal Year Operating Leases Finance Leases Nine months ended May 31, 2020 $ 278.0 $ 15.2 2021 374.4 21.8 2022 375.1 22.0 2023 378.8 22.3 2024 380.7 22.5 2025 385.3 22.6 Thereafter 4,331.6 311.5 Total future lease commitments (1) $ 6,503.9 $ 437.9 Less imputed interest (2,090.0 ) (169.1 ) Present value of lease liabilities (2) $ 4,413.9 $ 268.8 (1) Of the $6.50 billion of total future operating lease commitments and $437.9 million of total future finance lease commitments, $3.01 billion and $280.4 million , respectively, are noncancelable. (2) Excludes approximately $127.0 million of net present value of lease payments related to 27 real estate leases signed, but not yet commenced. The annual future lease commitments under capital lease and financing lease obligations and noncancelable operating leases, including those related to restaurants reported as discontinued operations, for each of the five fiscal years subsequent to May 26, 2019 and thereafter is as follows: (in millions) Fiscal Year Capital Financing Operating 2020 $ 8.9 $ 12.2 $ 372.9 2021 8.9 12.4 355.0 2022 8.8 12.6 326.7 2023 8.9 12.8 299.8 2024 8.7 13.0 262.7 Thereafter 81.4 128.0 1,434.0 Total future lease commitments $ 125.6 $ 191.0 $ 3,051.1 Less imputed interest (at 6.5%), (various) (41.6 ) (99.7 ) Present value of future lease commitments $ 84.0 $ 91.3 Less current maturities (4.1 ) (2.7 ) Obligations under capital and financing leases, net of current maturities $ 79.9 $ 88.6 |
Leases | Leases The majority of our restaurant locations, as well as our restaurant support center, are subject to a lease. We evaluate our leases at the commencement of the lease to determine the classification as an operating or finance lease. For operating leases, upon adoption of ASC 842, we recognized operating lease liabilities based on the present value of minimum lease payments over the remaining expected lease term and corresponding right-of-use assets. We recognize lease expense related to operating leases on a straight-line basis. For finance leases, we record finance lease liabilities at an amount equal to the present value of the minimum lease payments over the remaining expected lease term and corresponding right-of-use assets. Amortization expense and interest expense related to finance leases are included in depreciation and amortization and interest, net, respectively, in our consolidated statements of earnings. Sale-leasebacks are transactions through which we sell assets (such as restaurant properties) at fair value and subsequently lease them back. The resulting leases generally qualify and are accounted for as operating leases. Failed sale-leaseback transactions are generally classified as finance leases and result in retention of the “sold” assets within land, buildings and equipment with a finance lease liability equal to the amount of proceeds received recorded as a component of other liabilities on our consolidated balance sheets. Within the provisions of certain of our leases, there are rent holidays and escalations in payments over the base lease term, as well as renewal periods. The effects of the holidays and escalations have been reflected in lease expense on a straight-line basis for operating leases over the expected lease term. The lease term commences on the date when we have the right to control the use of the leased property, which is typically before lease payments are due under the terms of the lease. Many of our leases have renewal periods totaling 5 to 20 years , exercisable at our option, and require payment of property taxes, insurance and maintenance costs in addition to the lease payments. At lease inception, we include option periods that we are reasonably assured to exercise as failure to renew the lease would impose an economic penalty. The consolidated financial statements reflect the same lease term for amortizing leasehold improvements as we use to determine finance versus operating lease classifications. Variable lease expense is generally based on sales levels and is accrued at the point in time we determine that it is probable that such sales levels will be achieved. Landlord allowances are recorded as an adjustment to the right-of-use assets. Gains and losses on sale-leaseback transactions are recognized immediately. The components of lease expense in the consolidated statement of earnings are as follows: Three Months Ended (in millions) August 25, 2019 Operating lease expense $ 96.4 Finance lease expense Amortization of leased assets 1.5 Interest on lease liabilities 3.3 Variable lease expense 1.4 Total lease expense $ 102.6 The components of lease assets and liabilities on the consolidated balance sheet are as follows: (in millions) Balance Sheet Classification August 25, 2019 Operating lease right-of-use assets Operating lease right-of-use assets $ 3,996.7 Finance lease right-of-use assets Land, buildings and equipment, net 130.9 Total lease assets, net $ 4,127.6 Operating lease liabilities - current Other current liabilities $ 148.4 Finance lease liabilities - current Other current liabilities 6.1 Operating lease liabilities - non-current Operating lease liabilities - non-current 4,265.5 Finance lease liabilities - non-current Other liabilities 262.7 Total lease liabilities $ 4,682.7 Supplemental cash flow information related to leases: Three Months Ended (in millions) August 25, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 88.9 Operating cash flows from finance leases 3.3 Financing cash flows from finance leases 1.3 Right-of-use assets obtained in exchange for new operating lease liabilities 14.4 Right-of-use assets obtained in exchange for new finance lease liabilities 78.5 The weighted-average remaining lease terms and discount rates as of August 25, 2019 are as follows: August 25, 2019 (in millions) Weighted-Average Remaining Lease Term (Years) Weighted-Average Discount Rate (1) Operating leases 17.3 4.2 % Finance leases 18.4 5.3 % (1) We cannot determine the interest rate implicit in our leases. Therefore, the discount rate represents our incremental borrowing rate and is determined based on the risk-free rate, adjusted for the risk premium attributed to our corporate credit rating for a secured or collateralized instrument. The annual maturities of our lease liabilities as of August 25, 2019 are as follows: (in millions) Fiscal Year Operating Leases Finance Leases Nine months ended May 31, 2020 $ 278.0 $ 15.2 2021 374.4 21.8 2022 375.1 22.0 2023 378.8 22.3 2024 380.7 22.5 2025 385.3 22.6 Thereafter 4,331.6 311.5 Total future lease commitments (1) $ 6,503.9 $ 437.9 Less imputed interest (2,090.0 ) (169.1 ) Present value of lease liabilities (2) $ 4,413.9 $ 268.8 (1) Of the $6.50 billion of total future operating lease commitments and $437.9 million of total future finance lease commitments, $3.01 billion and $280.4 million , respectively, are noncancelable. (2) Excludes approximately $127.0 million of net present value of lease payments related to 27 real estate leases signed, but not yet commenced. The annual future lease commitments under capital lease and financing lease obligations and noncancelable operating leases, including those related to restaurants reported as discontinued operations, for each of the five fiscal years subsequent to May 26, 2019 and thereafter is as follows: (in millions) Fiscal Year Capital Financing Operating 2020 $ 8.9 $ 12.2 $ 372.9 2021 8.9 12.4 355.0 2022 8.8 12.6 326.7 2023 8.9 12.8 299.8 2024 8.7 13.0 262.7 Thereafter 81.4 128.0 1,434.0 Total future lease commitments $ 125.6 $ 191.0 $ 3,051.1 Less imputed interest (at 6.5%), (various) (41.6 ) (99.7 ) Present value of future lease commitments $ 84.0 $ 91.3 Less current maturities (4.1 ) (2.7 ) Obligations under capital and financing leases, net of current maturities $ 79.9 $ 88.6 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Aug. 25, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On September 18, 2019 , the Board of Directors declared a cash dividend of $0.88 per share to be paid November 1, 2019 to all shareholders of record as of the close of business on October 10, 2019 . |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Aug. 25, 2019 | |
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 August 25, 2019 , 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 32 franchised restaurants. We also have 33 franchised restaurants in operation located in Latin America and the Middle East. 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 31, 2020 will contain 53 weeks of operation, with the 53rd week occurring in our fiscal fourth quarter. 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 26, 2019 . 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. On June 26, 2019, we completed the acquisition of five Cheddar's Scratch Kitchen restaurants ( four operating and one closed) and certain assets and liabilities from WOW Food Concepts, LLC, an existing franchisee. The acquisition was funded with cash on hand for $37.8 million in total consideration, of which $19.0 million was allocated to land, buildings and equipment. The results of operations of these restaurants are included in our consolidated financial statements from the date of acquisition. Pro-forma financial information of the combined entities for periods prior to the acquisition is not presented due to the immaterial impact of the financial results of the acquired restaurants on our consolidated financial statements. |
Application of New Accounting Standards | Recently Adopted Accounting Standards As of May 27, 2019, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) (ASC 842) which replaced existing lease guidance with comprehensive lease measurement and recognition guidance and expanded disclosure requirements. This new guidance requires lessees to recognize on the balance sheet a liability based on the present value of minimum lease payments and a corresponding right-of-use asset. We adopted this guidance using the modified retrospective transition method which means we did not adjust the balance sheet for comparative periods but recorded a $3.8 million cumulative-effect adjustment to retained earnings as of May 27, 2019. We elected the package of practical expedients which allowed us to not reassess previous accounting conclusions regarding lease identification, lease classification and initial direct costs. We elected the land easement practical expedient which allowed us to not evaluate our existing land easements for lease accounting treatment. We elected the short-term lease recognition exemption which provided the option to not recognize right-of-use assets and related liabilities that arise from certain leases with terms of 12 months or less. We also elected the accounting policy election to not separate lease and non-lease components for real estate leases entered into after adoption. See Note 14. As of May 27, 2019, we adopted FASB ASU 2017-12, Derivatives and Hedging (Topic 815). The amendments in this update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The adoption of this guidance did not have a material impact on our consolidated financial statements. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Contract with Customer | Deferred revenue liabilities from contracts with customers included on our accompanying consolidated balance sheets is comprised of the following: (in millions) August 25, 2019 May 26, 2019 Unearned revenues Deferred gift card revenue $ 410.2 $ 453.6 Deferred gift card discounts (22.7 ) (26.4 ) Other 1.3 1.3 Total $ 388.8 $ 428.5 Other liabilities Deferred franchise fees - non-current $ 3.4 $ 3.9 The following table presents a rollforward of deferred gift card revenue: Three Months Ended (in millions) August 25, 2019 August 26, 2018 Beginning balance $ 453.6 $ 443.1 Activations 116.4 117.9 Redemptions and breakage (159.8 ) (156.7 ) Ending balance $ 410.2 $ 404.3 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | Cash paid for interest and income taxes are as follows: Three Months Ended (in millions) August 25, 2019 August 26, 2018 Interest, net of amounts capitalized $ 12.4 $ 11.8 Income taxes, net of refunds (39.6 ) (0.1 ) Non-cash investing activities are as follows: Three Months Ended (in millions) August 25, 2019 August 26, 2018 Increase in land, buildings and equipment through accrued purchases $ 45.9 $ 50.6 |
Net Earnings per Share (Tables)
Net Earnings per Share (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
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: Three Months Ended (in millions) August 25, August 26, Anti-dilutive stock-based compensation awards 0.1 0.1 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
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: (in millions) Olive Garden LongHorn Steakhouse Fine Dining Other Business Corporate Consolidated For the three months ended August 25, 2019 Sales $ 1,090.2 $ 450.2 $ 136.1 $ 457.4 $ — $ 2,133.9 Restaurant and marketing expenses 861.3 375.7 115.8 393.0 2.4 1,748.2 Segment profit $ 228.9 $ 74.5 $ 20.3 $ 64.4 $ (2.4 ) $ 385.7 Depreciation and amortization $ 36.1 $ 16.8 $ 7.8 $ 24.0 $ 1.5 $ 86.2 Impairments and disposal of assets, net 1.4 — — — (1.4 ) — Purchases of land, buildings and equipment 50.8 16.1 18.1 30.0 2.1 117.1 (in millions) Olive Garden LongHorn Steakhouse Fine Dining Other Business Corporate Consolidated For the three months ended August 26, 2018 Sales $ 1,052.0 $ 430.4 $ 129.9 $ 449.1 $ — $ 2,061.4 Restaurant and marketing expenses 835.0 358.8 109.7 381.2 2.3 1,687.0 Segment profit $ 217.0 $ 71.6 $ 20.2 $ 67.9 $ (2.3 ) $ 374.4 Depreciation and amortization $ 33.6 $ 16.7 $ 7.2 $ 21.8 $ 1.4 $ 80.7 Impairments and disposal of assets, net — 0.1 — — — 0.1 Purchases of land, buildings and equipment 41.4 19.1 8.3 35.7 1.9 106.4 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | Reconciliation of segment profit to earnings from continuing operations before income taxes: Three Months Ended (in millions) August 25, 2019 August 26, 2018 Segment profit $ 385.7 $ 374.4 Less general and administrative expenses (98.0 ) (104.5 ) Less depreciation and amortization (86.2 ) (80.7 ) Less impairments and disposal of assets, net — (0.1 ) Less interest, net (11.1 ) (13.1 ) Earnings before income taxes $ 190.4 $ 176.0 |
Impairments and Disposal of A_2
Impairments and Disposal of Assets, Net (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
Asset Impairment Charges [Abstract] | |
Impairments and Disposal of Assets | Impairments and disposal of assets, net, in our accompanying consolidated statements of earnings are comprised of the following: Three Months Ended (in millions) August 25, 2019 August 26, 2018 Restaurant impairments $ 1.4 $ 0.1 Disposal gains (1.4 ) — Impairments and disposal of assets, net $ — $ 0.1 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
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 ended August 25, 2019 are as follows: (in millions) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Derivatives Benefit Plan Funding Position Accumulated Other Comprehensive Income (Loss) Balance at May 26, 2019 $ (1.0 ) $ 9.0 $ (106.2 ) $ (98.2 ) Gain (loss) — (2.2 ) — (2.2 ) Reclassification realized in net earnings — (0.7 ) 0.1 (0.6 ) Balance at August 25, 2019 $ (1.0 ) $ 6.1 $ (106.1 ) $ (101.0 ) The components of accumulated other comprehensive income (loss), net of tax, for the quarter ended August 26, 2018 are as follows: (in millions) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Derivatives Benefit Plan Funding Position Accumulated Other Comprehensive Income (Loss) Balance at May 27, 2018 $ (1.6 ) $ 3.4 $ (87.0 ) $ (85.2 ) Gain (loss) 0.4 13.7 — 14.1 Reclassification realized in net earnings — (5.1 ) (0.2 ) (5.3 ) Balance at August 26, 2018 $ (1.2 ) $ 12.0 $ (87.2 ) $ (76.4 ) |
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: Amount Reclassified from AOCI into Net Earnings Three Months Ended (in millions) AOCI Components Location of Gain (Loss) Recognized in Earnings August 25, August 26, Derivatives Commodity contracts (1) $ (0.4 ) $ 0.2 Equity contracts (2) 1.0 4.9 Total before tax $ 0.6 $ 5.1 Tax (expense) benefit 0.1 — Net of tax $ 0.7 $ 5.1 Benefit plan funding position Recognized net actuarial loss - pension/postretirement plans (3) $ (0.9 ) $ (0.6 ) Recognized net actuarial gain - other plans (4) 0.8 0.8 Total before tax $ (0.1 ) $ 0.2 Tax (expense) benefit — — Net of tax $ (0.1 ) $ 0.2 (1) Primarily included in food and beverage costs and restaurant expenses. See Note 11 for additional details. (2) For fiscal 2020, included in general and administrative expenses. For fiscal 2019, included in restaurant labor costs and general and administrative expenses. See Note 11 for additional details. (3) Included in the computation of net periodic benefit costs - pension and postretirement plans, which is a component of restaurant labor expenses and general and administrative expenses. See Note 9 for additional details. (4) |
Retirement Plans (Tables)
Retirement Plans (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Cost | Components of net periodic benefit cost are as follows: Defined Benefit Plans Three Months Ended (in millions) August 25, August 26, Interest cost $ 1.6 $ 2.4 Expected return on plan assets (2.0 ) (2.8 ) Recognized net actuarial loss 0.9 0.6 Net periodic benefit cost $ 0.5 $ 0.2 Postretirement Benefit Plan Three Months Ended (in millions) August 25, August 26, Interest cost $ 0.2 $ 0.2 Amortization of unrecognized prior service credit (1.2 ) (1.2 ) Recognized net actuarial loss 0.4 0.4 Net periodic benefit credit $ (0.6 ) $ (0.6 ) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
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 three months ended August 25, 2019 : (in millions) Stock Options Restricted Stock/ Restricted Stock Units Equity-Settled Cash-Settled Darden Stock Units Outstanding beginning of period 2.60 0.28 0.60 1.20 Awards granted 0.31 0.05 0.18 0.18 Awards exercised/vested (0.21 ) (0.03 ) (0.21 ) (0.26 ) Awards forfeited — (0.01 ) (0.01 ) (0.03 ) Outstanding end of period 2.70 0.29 0.56 1.09 |
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: Three Months Ended (in millions) August 25, August 26, Stock options $ 1.3 $ 1.2 Restricted stock/restricted stock units 1.8 1.3 Equity-settled performance stock units 3.8 2.5 Cash-settled Darden stock units 6.6 12.3 Employee stock purchase plan 0.4 0.3 Director compensation program/other 0.3 0.3 Total stock-based compensation expense $ 14.2 $ 17.9 |
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 were as follows. Stock Options Granted Three Months Ended August 25, 2019 August 26, 2018 Weighted-average fair value $ 19.94 $ 18.78 Dividend yield 3.0 % 3.2 % Expected volatility of stock 22.5 % 22.6 % Risk-free interest rate 1.9 % 2.9 % Expected option life (in years) 6.3 6.4 Weighted-average exercise price per share $ 124.24 $ 107.05 |
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 are as follows: Granted in Fiscal Year Ended Three Months Ended August 25, 2019 August 26, 2018 Dividend yield (1) 0.0 % 0.0 % Expected volatility of stock 23.1 % 23.4 % Risk-free interest rate 1.8 % 2.7 % Expected option life (in years) 2.9 2.9 Weighted-average grant date fair value per unit $ 124.41 $ 115.07 (1) Assumes a reinvestment of dividends. |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
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: 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) August 25, 2019 August 25, May 26, August 25, May 26, Equity forwards: Designated 0.4 $100.51 $ 38.6 $ 2.2 $ — $ — $ 0.3 Not designated 0.5 $81.76 $ 38.6 2.6 — — 0.5 Total equity forwards $ 4.8 $ — $ — $ 0.8 Commodity contracts N/A N/A $ 9.6 $ — $ 0.1 $ 1.0 $ 0.1 Total derivative contracts $ 4.8 $ 0.1 $ 1.0 $ 0.9 (1) Derivative assets and liabilities are included in receivables, net and other current liabilities, as applicable, on our consolidated balance sheets. |
Notional Values of Derivative Contracts Designated and Not Designated as Hedging Instruments | The notional and fair values of our derivative contracts are as follows: 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) August 25, 2019 August 25, May 26, August 25, May 26, Equity forwards: Designated 0.4 $100.51 $ 38.6 $ 2.2 $ — $ — $ 0.3 Not designated 0.5 $81.76 $ 38.6 2.6 — — 0.5 Total equity forwards $ 4.8 $ — $ — $ 0.8 Commodity contracts N/A N/A $ 9.6 $ — $ 0.1 $ 1.0 $ 0.1 Total derivative contracts $ 4.8 $ 0.1 $ 1.0 $ 0.9 (1) Derivative assets and liabilities are included in receivables, net and other current liabilities, as applicable, on our consolidated balance sheets. |
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: Amount of Gain (Loss) Recognized in AOCI (effective portion) Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) Amount of Gain (Loss) Recognized in Earnings (ineffective portion) Three Months Ended Three Months Ended Three Months Ended (in millions) August 25, August 26, August 25, August 26, August 25, August 26, Equity (1)(2) $ (1.0 ) $ 13.8 $ 1.0 $ 4.9 $ (0.2 ) $ — Commodity (3) (1.4 ) (0.1 ) (0.4 ) 0.2 — — Total $ (2.4 ) $ 13.7 $ 0.6 $ 5.1 $ (0.2 ) $ — (1) In fiscal 2020, location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is general and administrative expenses. (2) In fiscal 2019, location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is restaurant labor expenses and general and administrative expenses. (3) Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is food and beverage costs and restaurant expenses. |
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: Amount of Gain (Loss) Recognized in Earnings (in millions) Three Months Ended Location of Gain (Loss) Recognized in Earnings on Derivatives August 25, 2019 August 26, 2018 Food and beverage costs and restaurant expenses $ 0.3 $ — Restaurant labor expenses — 7.0 General and administrative expenses 0.6 10.4 Total $ 0.9 $ 17.4 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
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 August 25, 2019 and May 26, 2019 : Items Measured at Fair Value at August 25, 2019 (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) $ (1.0 ) $ — $ (1.0 ) $ — Equity forwards (2) $ 4.8 $ — $ 4.8 $ — Total $ 3.8 $ — $ 3.8 $ — Items Measured at Fair Value at May 26, 2019 (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: Equity forwards (2) (0.8 ) — (0.8 ) — Total $ (0.8 ) $ — $ (0.8 ) $ — (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. |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Aug. 25, 2019 | |
Leases [Abstract] | |
Components of Lease Expenses | Supplemental cash flow information related to leases: Three Months Ended (in millions) August 25, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 88.9 Operating cash flows from finance leases 3.3 Financing cash flows from finance leases 1.3 Right-of-use assets obtained in exchange for new operating lease liabilities 14.4 Right-of-use assets obtained in exchange for new finance lease liabilities 78.5 The components of lease expense in the consolidated statement of earnings are as follows: Three Months Ended (in millions) August 25, 2019 Operating lease expense $ 96.4 Finance lease expense Amortization of leased assets 1.5 Interest on lease liabilities 3.3 Variable lease expense 1.4 Total lease expense $ 102.6 |
Components of Lease Assets and Liabilities | The components of lease assets and liabilities on the consolidated balance sheet are as follows: (in millions) Balance Sheet Classification August 25, 2019 Operating lease right-of-use assets Operating lease right-of-use assets $ 3,996.7 Finance lease right-of-use assets Land, buildings and equipment, net 130.9 Total lease assets, net $ 4,127.6 Operating lease liabilities - current Other current liabilities $ 148.4 Finance lease liabilities - current Other current liabilities 6.1 Operating lease liabilities - non-current Operating lease liabilities - non-current 4,265.5 Finance lease liabilities - non-current Other liabilities 262.7 Total lease liabilities $ 4,682.7 |
Maturities of Operating Lease Liabilities | The weighted-average remaining lease terms and discount rates as of August 25, 2019 are as follows: August 25, 2019 (in millions) Weighted-Average Remaining Lease Term (Years) Weighted-Average Discount Rate (1) Operating leases 17.3 4.2 % Finance leases 18.4 5.3 % (1) We cannot determine the interest rate implicit in our leases. Therefore, the discount rate represents our incremental borrowing rate and is determined based on the risk-free rate, adjusted for the risk premium attributed to our corporate credit rating for a secured or collateralized instrument. The annual maturities of our lease liabilities as of August 25, 2019 are as follows: (in millions) Fiscal Year Operating Leases Finance Leases Nine months ended May 31, 2020 $ 278.0 $ 15.2 2021 374.4 21.8 2022 375.1 22.0 2023 378.8 22.3 2024 380.7 22.5 2025 385.3 22.6 Thereafter 4,331.6 311.5 Total future lease commitments (1) $ 6,503.9 $ 437.9 Less imputed interest (2,090.0 ) (169.1 ) Present value of lease liabilities (2) $ 4,413.9 $ 268.8 (1) Of the $6.50 billion of total future operating lease commitments and $437.9 million of total future finance lease commitments, $3.01 billion and $280.4 million , respectively, are noncancelable. (2) Excludes approximately $127.0 million of net present value of lease payments related to 27 real estate leases signed, but not yet commenced. |
Maturities of Financing Lease Liabilities | The weighted-average remaining lease terms and discount rates as of August 25, 2019 are as follows: August 25, 2019 (in millions) Weighted-Average Remaining Lease Term (Years) Weighted-Average Discount Rate (1) Operating leases 17.3 4.2 % Finance leases 18.4 5.3 % (1) We cannot determine the interest rate implicit in our leases. Therefore, the discount rate represents our incremental borrowing rate and is determined based on the risk-free rate, adjusted for the risk premium attributed to our corporate credit rating for a secured or collateralized instrument. The annual maturities of our lease liabilities as of August 25, 2019 are as follows: (in millions) Fiscal Year Operating Leases Finance Leases Nine months ended May 31, 2020 $ 278.0 $ 15.2 2021 374.4 21.8 2022 375.1 22.0 2023 378.8 22.3 2024 380.7 22.5 2025 385.3 22.6 Thereafter 4,331.6 311.5 Total future lease commitments (1) $ 6,503.9 $ 437.9 Less imputed interest (2,090.0 ) (169.1 ) Present value of lease liabilities (2) $ 4,413.9 $ 268.8 (1) Of the $6.50 billion of total future operating lease commitments and $437.9 million of total future finance lease commitments, $3.01 billion and $280.4 million , respectively, are noncancelable. (2) Excludes approximately $127.0 million of net present value of lease payments related to 27 real estate leases signed, but not yet commenced. |
Annual Future Lease Commitments | The annual future lease commitments under capital lease and financing lease obligations and noncancelable operating leases, including those related to restaurants reported as discontinued operations, for each of the five fiscal years subsequent to May 26, 2019 and thereafter is as follows: (in millions) Fiscal Year Capital Financing Operating 2020 $ 8.9 $ 12.2 $ 372.9 2021 8.9 12.4 355.0 2022 8.8 12.6 326.7 2023 8.9 12.8 299.8 2024 8.7 13.0 262.7 Thereafter 81.4 128.0 1,434.0 Total future lease commitments $ 125.6 $ 191.0 $ 3,051.1 Less imputed interest (at 6.5%), (various) (41.6 ) (99.7 ) Present value of future lease commitments $ 84.0 $ 91.3 Less current maturities (4.1 ) (2.7 ) Obligations under capital and financing leases, net of current maturities $ 79.9 $ 88.6 |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Millions | Aug. 25, 2019restaurant | Jun. 26, 2019USD ($)restaurant | May 27, 2019USD ($) |
Summary Of Significant Accounting Policies [Line Items] | |||
Number of restaurants | 5 | ||
Business acquisition costs | $ | $ 37.8 | ||
Land, Buildings and Equipment | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Business acquisition costs | $ | $ 19 | ||
Operating Segments | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of restaurants | 4 | ||
Closed Segments | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of restaurants | 1 | ||
Accounting Standards Update 2016-02 | Retained Earnings | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Cumulative increase effect of new accounting principle | $ | $ 3.8 | ||
Latin America and the Middle East | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of restaurants | 33 | ||
Entity Operated Units | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of restaurants | 3 | ||
Franchised Units | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of restaurants | 32 |
Revenue Recognition (Deferred R
Revenue Recognition (Deferred Revenue from Contract with Customer) (Details) - USD ($) $ in Millions | Aug. 25, 2019 | May 26, 2019 | Aug. 26, 2018 | May 27, 2018 |
Unearned revenues | ||||
Unearned revenues | $ 388.8 | $ 428.5 | ||
Other liabilities | ||||
Deferred franchise fees - non-current | 3.4 | 3.9 | ||
Gift Card | ||||
Unearned revenues | ||||
Unearned revenues | 410.2 | 453.6 | $ 404.3 | $ 443.1 |
Unearned revenues - discounts | (22.7) | (26.4) | ||
Other | ||||
Unearned revenues | ||||
Unearned revenues | $ 1.3 | $ 1.3 |
Revenue Recognition (Deferred G
Revenue Recognition (Deferred Gift Card Revenue) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Change in Contract with Customer, Liability [Roll Forward] | ||
Beginning balance | $ 428.5 | |
Ending balance | 388.8 | |
Gift Card | ||
Change in Contract with Customer, Liability [Roll Forward] | ||
Beginning balance | 453.6 | $ 443.1 |
Activations | 116.4 | 117.9 |
Redemptions and breakage | (159.8) | (156.7) |
Ending balance | $ 410.2 | $ 404.3 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Supplemental Cash Flow Elements [Abstract] | ||
Interest, net of amounts capitalized | $ 12.4 | $ 11.8 |
Income taxes, net of refunds | (39.6) | (0.1) |
Increase in land, buildings and equipment through accrued purchases | $ 45.9 | $ 50.6 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Income Tax Contingency [Line Items] | ||
Tax position, change is reasonably possible in the next twelve months | $ 11.7 | |
Continuing Operations | ||
Income Tax Contingency [Line Items] | ||
Effective income tax rate (percentage) | 9.80% | 4.00% |
Net Earnings per Share (Details
Net Earnings per Share (Details) - shares shares in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive stock-based compensation awards (in shares) | 0.1 | 0.1 |
Segment Information (Narrative)
Segment Information (Narrative) (Details) | 3 Months Ended |
Aug. 25, 2019segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Segment Information (Schedule o
Segment Information (Schedule of Segment Reporting) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Segment Reporting Information [Line Items] | ||
Sales | $ 2,133.9 | $ 2,061.4 |
Restaurant and marketing expenses | 1,748.2 | 1,687 |
Segment profit | 385.7 | 374.4 |
Depreciation and amortization | 86.2 | 80.7 |
Impairments and disposal of assets, net | 0 | 0.1 |
Purchases of land, buildings and equipment | 117.1 | 106.4 |
Operating Segments | Olive Garden | ||
Segment Reporting Information [Line Items] | ||
Sales | 1,090.2 | 1,052 |
Restaurant and marketing expenses | 861.3 | 835 |
Segment profit | 228.9 | 217 |
Depreciation and amortization | 36.1 | 33.6 |
Impairments and disposal of assets, net | 1.4 | 0 |
Purchases of land, buildings and equipment | 50.8 | 41.4 |
Operating Segments | LongHorn Steakhouse | ||
Segment Reporting Information [Line Items] | ||
Sales | 450.2 | 430.4 |
Restaurant and marketing expenses | 375.7 | 358.8 |
Segment profit | 74.5 | 71.6 |
Depreciation and amortization | 16.8 | 16.7 |
Impairments and disposal of assets, net | 0 | 0.1 |
Purchases of land, buildings and equipment | 16.1 | 19.1 |
Operating Segments | Fine Dining | ||
Segment Reporting Information [Line Items] | ||
Sales | 136.1 | 129.9 |
Restaurant and marketing expenses | 115.8 | 109.7 |
Segment profit | 20.3 | 20.2 |
Depreciation and amortization | 7.8 | 7.2 |
Impairments and disposal of assets, net | 0 | 0 |
Purchases of land, buildings and equipment | 18.1 | 8.3 |
Operating Segments | Other Business | ||
Segment Reporting Information [Line Items] | ||
Sales | 457.4 | 449.1 |
Restaurant and marketing expenses | 393 | 381.2 |
Segment profit | 64.4 | 67.9 |
Depreciation and amortization | 24 | 21.8 |
Impairments and disposal of assets, net | 0 | 0 |
Purchases of land, buildings and equipment | 30 | 35.7 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Sales | 0 | 0 |
Restaurant and marketing expenses | 2.4 | 2.3 |
Segment profit | (2.4) | (2.3) |
Depreciation and amortization | 1.5 | 1.4 |
Impairments and disposal of assets, net | (1.4) | 0 |
Purchases of land, buildings and equipment | $ 2.1 | $ 1.9 |
Segment Information (Reconcilia
Segment Information (Reconciliation of Segment Profit to Earnings from Continuing Operations Before Income Taxes) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Segment Reporting [Abstract] | ||
Segment profit | $ 385.7 | $ 374.4 |
Less general and administrative expenses | (98) | (104.5) |
Less depreciation and amortization | (86.2) | (80.7) |
Less impairments and disposal of assets, net | 0 | (0.1) |
Less interest, net | (11.1) | (13.1) |
Earnings before income taxes | $ 190.4 | $ 176 |
Impairments and Disposal of A_3
Impairments and Disposal of Assets, Net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Asset Impairment Charges [Abstract] | ||
Restaurant impairments | $ 1.4 | $ 0.1 |
Disposal gains | (1.4) | 0 |
Impairments and disposal of assets, net | $ 0 | $ 0.1 |
Stockholders' Equity (Schedule
Stockholders' Equity (Schedule of Components of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | $ 2,392.6 | $ 2,194.8 |
Gain (loss) | (2.2) | 14.1 |
Reclassification realized in net earnings | (0.6) | (5.3) |
Ending balance | 2,381.3 | 2,275.2 |
Foreign Currency Translation Adjustment | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (1) | (1.6) |
Gain (loss) | 0 | 0.4 |
Reclassification realized in net earnings | 0 | 0 |
Ending balance | (1) | (1.2) |
Unrealized Gains (Losses) on Derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 9 | 3.4 |
Gain (loss) | (2.2) | 13.7 |
Reclassification realized in net earnings | (0.7) | (5.1) |
Ending balance | 6.1 | 12 |
Benefit Plan Funding Position | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (106.2) | (87) |
Gain (loss) | 0 | 0 |
Reclassification realized in net earnings | 0.1 | (0.2) |
Ending balance | (106.1) | (87.2) |
Accumulated Other Comprehensive Income (Loss) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (98.2) | (85.2) |
Ending balance | $ (101) | $ (76.4) |
Stockholders' Equity (Schedul_2
Stockholders' Equity (Schedule of Reclassification Adjustments out of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Less general and administrative expenses | $ (98) | $ (104.5) |
Earnings before income taxes | 190.4 | 176 |
Tax benefit (expense) | (18.6) | (7.1) |
Net earnings | 170.6 | 166.2 |
Amount Reclassified from AOCI into Net Earnings | Derivatives | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Earnings before income taxes | 0.6 | 5.1 |
Tax benefit (expense) | 0.1 | 0 |
Net earnings | 0.7 | 5.1 |
Amount Reclassified from AOCI into Net Earnings | Derivatives | Commodity contracts | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Food and beverage costs and restaurant expenses | (0.4) | 0.2 |
Amount Reclassified from AOCI into Net Earnings | Derivatives | Equity contracts | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Restaurant labor costs and general and administrative expenses | 1 | 4.9 |
Amount Reclassified from AOCI into Net Earnings | Benefit plan funding position | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Earnings before income taxes | (0.1) | 0.2 |
Tax benefit (expense) | 0 | 0 |
Net earnings | (0.1) | 0.2 |
Amount Reclassified from AOCI into Net Earnings | Benefit plan funding position | Pension and postretirement plan | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Restaurant labor costs and general and administrative expenses | (0.9) | (0.6) |
Amount Reclassified from AOCI into Net Earnings | Benefit plan funding position | Other plans | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Less general and administrative expenses | $ 0.8 | $ 0.8 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Defined Benefit Plans | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Interest cost | $ 1.6 | $ 2.4 |
Expected return on plan assets | (2) | (2.8) |
Recognized net actuarial loss | 0.9 | 0.6 |
Net periodic benefit cost | 0.5 | 0.2 |
Postretirement Benefit Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Interest cost | 0.2 | 0.2 |
Amortization of unrecognized prior service credit | (1.2) | (1.2) |
Recognized net actuarial loss | 0.4 | 0.4 |
Net periodic benefit cost | $ (0.6) | $ (0.6) |
Stock-Based Compensation (Optio
Stock-Based Compensation (Option Pricing Assumptions) (Details) - $ / shares | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Non-qualified Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted-average fair value (in dollars per share) | $ 19.94 | $ 18.78 |
Dividend yield (percentage) | 3.00% | 3.20% |
Expected volatility of stock (percentage) | 22.50% | 22.60% |
Risk-free interest rate (percentage) | 1.90% | 2.90% |
Expected option life (in years) | 6 years 3 months 18 days | 6 years 4 months 24 days |
Weighted-average exercise price per share (in dollars per share) | $ 124.24 | $ 107.05 |
Equity-Settled Performance Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yield (percentage) | 0.00% | 0.00% |
Expected volatility of stock (percentage) | 23.10% | 23.40% |
Risk-free interest rate (percentage) | 1.80% | 2.70% |
Expected option life (in years) | 2 years 10 months 24 days | 2 years 10 months 24 days |
Weighted-average exercise price per share (in dollars per share) | $ 124.41 | $ 115.07 |
Stock-Based Compensation (Share
Stock-Based Compensation (Share Activity) (Details) - shares shares in Thousands | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Awards exercised/vested (in shares) | (200) | (700) |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding shares beginning of period (in shares) | 2,600 | |
Awards granted (in shares) | 310 | |
Awards exercised/vested (in shares) | (210) | |
Awards forfeited (in shares) | 0 | |
Outstanding shares end of period (in shares) | 2,700 | |
Restricted Stock/ Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding shares beginning of period | 280 | |
Awards granted (in shares) | 50 | |
Awards exercised/vested (in shares) | (30) | |
Awards forfeited (in shares) | (10) | |
Outstanding shares end of period | 290 | |
Equity-Settled Performance Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding shares beginning of period | 600 | |
Awards granted (in shares) | 180 | |
Awards exercised/vested (in shares) | (210) | |
Awards forfeited (in shares) | (10) | |
Outstanding shares end of period | 560 | |
Cash-Settled Darden Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding shares beginning of period | 1,200 | |
Awards granted (in shares) | 180 | |
Awards exercised/vested (in shares) | (260) | |
Awards forfeited (in shares) | (30) | |
Outstanding shares end of period | 1,090 |
Stock-Based Compensation (Recog
Stock-Based Compensation (Recognized Stock-Based Compensation Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 14.2 | $ 17.9 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 1.3 | 1.2 |
Restricted stock/restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 1.8 | 1.3 |
Equity-settled performance stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 3.8 | 2.5 |
Cash-settled Darden stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 6.6 | 12.3 |
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 0.4 | 0.3 |
Director compensation program/other | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 0.3 | $ 0.3 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities (Narrative) (Details) $ in Millions | 3 Months Ended |
Aug. 25, 2019USD ($) | |
Derivative [Line Items] | |
Amount of gain reclassified from AOCI to earnings (effective portion) | $ 0.8 |
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 He_4
Derivative Instruments and Hedging Activities (Notional and Fair Values of Derivative Contracts Designated and Not Designated as Hedging Instruments) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | May 26, 2019 | |
Derivatives, Fair Value [Line Items] | ||
Derivative contracts, derivative assets, fair value | $ 4.8 | $ 0.1 |
Derivative contracts, derivative liabilities, fair value | 1 | 0.9 |
Equity forwards | ||
Derivatives, Fair Value [Line Items] | ||
Derivative contracts, derivative assets, fair value | 4.8 | 0 |
Derivative contracts, derivative liabilities, fair value | $ 0 | 0.8 |
Equity forwards | Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative contracts, number of shares outstanding | 0.4 | |
Derivative contracts, weighted-average forward rates (in dollars per share) | $ 100.51 | |
Derivative contracts, notional | $ 38.6 | |
Derivative contracts, derivative assets, fair value | 2.2 | 0 |
Derivative contracts, derivative liabilities, fair value | $ 0 | 0.3 |
Equity forwards | Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative contracts, number of shares outstanding | 0.5 | |
Derivative contracts, weighted-average forward rates (in dollars per share) | $ 81.76 | |
Derivative contracts, notional | $ 38.6 | |
Derivative contracts, derivative assets, fair value | 2.6 | 0 |
Derivative contracts, derivative liabilities, fair value | 0 | 0.5 |
Commodity contracts | ||
Derivatives, Fair Value [Line Items] | ||
Derivative contracts, notional | 9.6 | |
Derivative contracts, derivative assets, fair value | 0 | 0.1 |
Derivative contracts, derivative liabilities, fair value | $ 1 | $ 0.1 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities (Effects of Derivative Instruments in Cash Flow Hedging Relationships) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in AOCI (effective portion) | $ (2.4) | |
Amount of Gain (Loss) Recognized in AOCI (effective portion) | $ 13.7 | |
Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) | 0.6 | |
Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) | 5.1 | |
Amount of Gain (Loss) Recognized in Earnings (ineffective portion) | (0.2) | |
Amount of Gain (Loss) Recognized in Earnings (ineffective portion) | 0 | |
Equity forwards | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in AOCI (effective portion) | (1) | |
Amount of Gain (Loss) Recognized in AOCI (effective portion) | 13.8 | |
Equity forwards | Cost of sales and selling general and administrative expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) | 1 | |
Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) | 4.9 | |
Amount of Gain (Loss) Recognized in Earnings (ineffective portion) | (0.2) | |
Amount of Gain (Loss) Recognized in Earnings (ineffective portion) | 0 | |
Commodity contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in AOCI (effective portion) | (1.4) | |
Amount of Gain (Loss) Recognized in AOCI (effective portion) | (0.1) | |
Commodity contracts | Food and beverage costs and restaurant expenses | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) | (0.4) | |
Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion) | 0.2 | |
Amount of Gain (Loss) Recognized in Earnings (ineffective portion) | $ 0 | |
Amount of Gain (Loss) Recognized in Earnings (ineffective portion) | $ 0 |
Derivative Instruments and He_6
Derivative Instruments and Hedging Activities (Effects of Derivatives Not Designated as Hedging Instruments) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 25, 2019 | Aug. 26, 2018 | |
Derivative [Line Items] | ||
Amount of Gain (Loss) Recognized in Earnings | $ 0.9 | $ 17.4 |
Food and beverage costs and restaurant expenses | ||
Derivative [Line Items] | ||
Amount of Gain (Loss) Recognized in Earnings | 0.3 | 0 |
Restaurant labor expenses | ||
Derivative [Line Items] | ||
Amount of Gain (Loss) Recognized in Earnings | 0 | 7 |
General and administrative expenses | ||
Derivative [Line Items] | ||
Amount of Gain (Loss) Recognized in Earnings | $ 0.6 | $ 10.4 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Values of Financial Instruments Measured at Fair Value on Recurring Basis) (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Aug. 25, 2019 | May 26, 2019 |
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Total | $ 3.8 | $ (0.8) |
Commodity contracts | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | (1) | |
Equity forwards | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 4.8 | (0.8) |
Quoted prices in active market for identical assets (liabilities) (Level 1) | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Total | 0 | 0 |
Quoted prices in active market for identical assets (liabilities) (Level 1) | Commodity contracts | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 0 | |
Quoted prices in active market for identical assets (liabilities) (Level 1) | Equity forwards | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Significant other observable inputs (Level 2) | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Total | 3.8 | (0.8) |
Significant other observable inputs (Level 2) | Commodity contracts | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | (1) | |
Significant other observable inputs (Level 2) | Equity forwards | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 4.8 | (0.8) |
Significant unobservable inputs (Level 3) | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Total | 0 | 0 |
Significant unobservable inputs (Level 3) | Commodity contracts | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 0 | |
Significant unobservable inputs (Level 3) | Equity forwards | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | $ 0 | $ 0 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) $ in Millions | 3 Months Ended | 12 Months Ended |
Aug. 25, 2019USD ($)restaurant | May 26, 2019USD ($)restaurant | |
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Carrying value of long-term debt | $ 928 | $ 927.7 |
Fair value of long-term debt | 1,020 | 955.7 |
Long-lived assets | 2,611 | 2,552.6 |
One underperforming restaurant | Significant unobservable inputs (Level 3) | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment of long-lived assets | 1.4 | |
One underperforming restaurant | Significant unobservable inputs (Level 3) | Carrying Value | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Long-lived assets | $ 1.4 | |
Number of underperforming restaurants | restaurant | 1 | |
Seven underperforming restaurants | Significant unobservable inputs (Level 3) | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment of long-lived assets | 19.2 | |
Seven underperforming restaurants | Significant unobservable inputs (Level 3) | Carrying Value | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Long-lived assets | $ 21.7 | |
Number of underperforming restaurants | restaurant | 7 | |
Seven underperforming restaurants | Significant unobservable inputs (Level 3) | Fair Value | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Assets held-for-sale, long-lived, fair value | $ 2.5 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Aug. 25, 2019 | May 26, 2019 |
Workers Compensation and General Liabilities Accrued | ||
Loss Contingencies [Line Items] | ||
Standby letters of credit | $ 67.4 | $ 75.9 |
Surety Bonds and Other Payments | ||
Loss Contingencies [Line Items] | ||
Standby letters of credit | 24.8 | 21.6 |
Property Lease Guarantee | ||
Loss Contingencies [Line Items] | ||
Fair value of potential payments discounted at pre-tax cost of capital related to guarantee obligations | 115.7 | 123.2 |
Property Lease Guarantee | Maximum | ||
Loss Contingencies [Line Items] | ||
Loss contingency, estimate of possible loss | $ 141.5 | $ 151.6 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) | Aug. 25, 2019 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease renewal term (in years) | 5 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease renewal term (in years) | 20 years |
Leases (Components of Lease Exp
Leases (Components of Lease Expenses) (Details) $ in Millions | 3 Months Ended |
Aug. 25, 2019USD ($) | |
Operating Leases | |
Operating lease expense | $ 96.4 |
Finance Leases | |
Amortization of leased assets | 1.5 |
Interest on lease liabilities | 3.3 |
Variable lease expense | 1.4 |
Total lease expense | 102.6 |
Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash flows from operating leases | 88.9 |
Operating cash flows from finance leases | 3.3 |
Financing cash flows from finance leases | 1.3 |
Right-of-use assets obtained in exchange for lease liabilities | |
Right-of-use assets obtained in exchange for new operating lease liabilities | 14.4 |
Right-of-use assets obtained in exchange for new finance lease liabilities | $ 78.5 |
Leases (Components of Lease Ass
Leases (Components of Lease Assets and Liabilities) (Details) - USD ($) $ in Millions | Aug. 25, 2019 | May 26, 2019 |
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 3,996.7 | $ 0 |
Finance lease right-of-use assets | 130.9 | |
Total lease assets, net | 4,127.6 | |
Operating lease liabilities - current | 148.4 | |
Finance lease liabilities - current | 6.1 | |
Operating lease liabilities - non-current | 4,265.5 | $ 0 |
Finance Lease, Liability, Noncurrent | 262.7 | |
Total lease liabilities | $ 4,682.7 |
Leases (Maturities of Lease Lia
Leases (Maturities of Lease Liabilities) (Details) $ in Millions | Aug. 25, 2019USD ($)lease |
Operating Leases | |
Weighted-Average Remaining Lease Term (Years) | 17 years 3 months 18 days |
Weighted-Average Discount Rate (Percent) | 4.20% |
Nine months ended May 31, 2020 | $ 278 |
2021 | 374.4 |
2022 | 375.1 |
2023 | 378.8 |
2024 | 380.7 |
2025 | 385.3 |
Thereafter | 4,331.6 |
Total future lease commitments | 6,503.9 |
Less imputed interest | (2,090) |
Present value of lease liabilities | 4,413.9 |
Noncancelable lease commitments | 3,010 |
Lease payments, not yet commenced | $ 127 |
Lease payments, not yet commenced, real estate leases | lease | 27 |
Finance Leases | |
Weighted-Average Remaining Lease Term (Years) | 18 years 4 months 24 days |
Weighted-Average Discount Rate (Percent) | 5.30% |
Nine months ended May 31, 2020 | $ 15.2 |
2021 | 21.8 |
2022 | 22 |
2023 | 22.3 |
2024 | 22.5 |
2025 | 22.6 |
Thereafter | 311.5 |
Total future lease commitments | 437.9 |
Less imputed interest | (169.1) |
Present value of lease liabilities | 268.8 |
Noncancelable lease commitments | $ 280.4 |
Leases (Annual Future Lease Com
Leases (Annual Future Lease Commitments) (Details) - USD ($) $ in Millions | Aug. 25, 2019 | May 26, 2019 |
Capital | ||
2020 | $ 8.9 | |
2021 | 8.9 | |
2022 | 8.8 | |
2023 | 8.9 | |
2024 | 8.7 | |
Thereafter | 81.4 | |
Total future lease commitments | 125.6 | |
Less imputed interest (at 6.5%), (various) | (41.6) | |
Present value of future lease commitments | 84 | |
Less current maturities | (4.1) | |
Obligations under capital and financing leases, net of current maturities | 79.9 | |
Imputed interest rate | 6.50% | |
Financing | ||
2020 | 12.2 | |
2021 | 12.4 | |
2022 | 12.6 | |
2023 | 12.8 | |
2024 | 13 | |
Thereafter | 128 | |
Total future lease commitments | 191 | |
Less imputed interest (at 6.5%), (various) | (99.7) | |
Present value of future lease commitments | 91.3 | |
Less current maturities | (2.7) | |
Obligations under capital and financing leases, net of current maturities | 88.6 | |
Operating | ||
2020 | 372.9 | |
2021 | 355 | |
2022 | 326.7 | |
2023 | 299.8 | |
2024 | 262.7 | |
Thereafter | 1,434 | |
Total future lease commitments | $ 3,051.1 |
Subsequent Events (Details)
Subsequent Events (Details) | Sep. 18, 2019$ / shares |
Subsequent Event | Dividend Declared | |
Subsequent Event [Line Items] | |
Cash dividend declared, per share (in dollars per share) | $ 0.88 |