Red Lobster 2015 Annual Report Download - page 48

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44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DARDEN
The effects of derivative instruments in fair value hedging relationships in the consolidated statements of earnings are as follows:
Amount of Gain (Loss) Location of Gain (Loss) Hedged Item Amount of Gain (Loss) Location of Gain (Loss)
Recognized in Earnings Recognized in Earnings in Fair Value Recognized in Earnings on Recognized in Earnings on
(in millions) on Derivatives on Derivatives Hedge Relationship Related Hedged Item Related Hedged Item
Fiscal Year Fiscal Year
2015 2014 2013 2015 2014 2013
Interest rate $2.0 $(0.3) $(1.3) Interest, net Debt $(2.0) $0.3 $1.3 Interest, net
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
Location of Gain (Loss) Fiscal Year
(in millions)
Recognized in Earnings 2015 2014 2013
Commodity contracts Food and beverage costs and restaurant expenses $ — $ — $(0.1)
Equity forwards Restaurant labor expenses 4.0 (0.5) 1.6
Equity forwards General and administrative expenses 9.2 (1.3) 1.4
$13.2 $(1.8) $ 2.9
Based on the fair value of our derivative instruments designated as cash flow hedges as of May 31, 2015, we expect to reclassify $4.9 million of net losses
on derivative instruments from accumulated other comprehensive income (loss) to earnings during the next 12 months based on the maturity of equity forwards
and the amortization of deferred losses on settled interest-rate related instruments. However, the amounts ultimately realized in earnings will be dependent on
the fair value of the contracts on the settlement dates.
NOTE 11
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 at May 31, 2015 and May 25, 2014:
Items Measured at Fair Value at May 31, 2015
Quoted Prices in Active Market Significant Other Significant
Fair Value of Assets for Identical Assets (Liabilities) Observable Inputs Unobservable Inputs
(in millions) (Liabilities) (Level 1) (Level 2) (Level 3)
Fixed-income securities:
Corporate bonds (1) $ 2.2 $ — $2.2 $ —
U.S. Treasury securities (2) 5.0 5.0 — —
Mortgage-backed securities (1) 1.6 — 1.6 —
Derivatives:
Equity forwards (3) 1.7 — 1.7 —
Interest rate swaps (4) 3.6 — 3.6 —
Total $14.1 $5.0 $9.1 $ —