Red Lobster 2013 Annual Report Download - page 65

Notes to Consolidated Financial Statements
Darden
Darden Restaurants, Inc. 2013 Annual Report 61
The following benefit payments are expected to be paid between fiscal 2014 and fiscal 2023:
(in millions) Defined Benefit Plans Postretirement Benefit Plan
2014 $11.1 $0.7
2015 11.3 0.8
2016 11.8 0.9
2017 12.6 0.9
2018 13.5 1.0
2019-2023 79.4 6.5
POSTEMPLOYMENT SEVERANCE PLAN
We accrue for postemployment severance costs in our consolidated financial
statements and recognize actuarial gains and losses related to our postemploy-
ment severance accrual as a component of accumulated other comprehensive
income (loss). As of May 26, 2013 and May 27, 2012, $6.1 million and $4.8 million,
respectively, of unrecognized actuarial losses related to our postemployment
severance plan were included in accumulated other comprehensive income
(loss) on a net of tax basis.
DEFINED CONTRIBUTION PLAN
We have a defined contribution (401(k)) plan covering most employees age 21 and
older. We match contributions for participants with at least one year of service
up to 6 percent of compensation, based on our performance. The match ranges
from a minimum of $0.25 to $1.20 for each dollar contributed by the participant.
The plan had net assets of $719.0 million at May 26, 2013 and $664.9 million at
May 27, 2012. Expense recognized in fiscal 2013, 2012 and 2011 was $0.9 million,
$0.9 million and $0.7 million, respectively. Employees classified as “highly com-
pensated” under the IRC are not eligible to participate in this plan. Instead, highly
compensated employees are eligible to participate in a separate non-qualified
deferred compensation (FlexComp) plan. This plan allows eligible employees to
defer the payment of part of their annual salary and all or part of their annual
bonus and provides for awards that approximate the matching contributions
and other amounts that participants would have received had they been eligible
to participate in our defined contribution and defined benefit plans. Amounts
payable to highly compensated employees under the FlexComp plan totaled
$224.3 million and $201.4 million at May 26, 2013 and May 27, 2012, respectively.
These amounts are included in other current liabilities.
The defined contribution plan includes an Employee Stock Ownership Plan
(ESOP). The ESOP borrowed $16.9 million from us at a variable rate of interest
in July 1996. At May 26, 2013, the ESOP’s original debt to us had a balance of
$4.9 million with a variable rate of interest of 0.55 percent and is due to be repaid
no later than December 2014. At the end of fiscal 2005, the ESOP borrowed an
additional $1.6 million (Additional Loan) from us at a variable interest rate and
acquired an additional 0.05 million shares of our common stock, which were held
in suspense within the ESOP at that time. At May 26, 2013, the Additional Loan
had a balance of $1.3 million with a variable interest rate of 0.55 percent and is due
to be repaid no later than December 2018. Compensation expense is recognized
as contributions are accrued. Fluctuations in our stock price impact the amount of
expense to be recognized. Contributions to the plan, plus the dividends accumu-
lated on unallocated shares held by the ESOP, are used to pay principal, interest
and expenses of the plan. As loan payments are made, common stock is allocated
to ESOP participants. In each of the fiscal years 2013, 2012 and 2011, the ESOP
incurred interest expense of $0.0 million, $0.0 million and $0.1 million, respectively,
and used dividends received of $1.0 million, $1.9 million and $1.4 million,
respectively, and contributions received from us of $0.1 million, $0.5 million and
$0.1 million, respectively, to pay principal and interest on our debt.
ESOP shares are included in weighted-average common shares outstanding
for purposes of calculating net earnings per share with the exception of those
shares acquired under the Additional Loan which are accounted for in accordance
with FASB ASC Subtopic 718-40, Employee Stock Ownership Plans. Fluctuations
in our stock price are recognized as adjustments to common stock and surplus
when the shares are committed to be released. The ESOP shares acquired under
the additional loan are not considered outstanding until they are committed to
be released and, therefore, unreleased shares have been excluded for purposes
of calculating basic and diluted net earnings per share. As of May 26, 2013, the
ESOP shares included in the basic and diluted net earnings per share calculation
totaled 4.4 million shares, representing 3.5 million allocated shares and 0.9 million
suspense shares.