Red Lobster 2014 Annual Report Download - page 16

Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Darden
14 Darden Restaurants, Inc.
As of May 25, 2014, we had no outstanding balances under the Revolving
Credit Agreement. As of May 25, 2014, $207.6 million of commercial paper
was outstanding, which was backed by this facility. After consideration of
commercial paper backed by the Revolving Credit Agreement, as of May 25,
2014, we had $542.4 million of credit available under the Revolving
Credit Agreement.
At May 25, 2014, our long-term debt consisted principally of:
• $100.0 million of unsecured 7.125 percent debentures due in
February 2016;
• $285.0 million unsecured, variable-rate amortizing term loan
maturing in August 2017;
• $500.0 million of unsecured 6.200 percent senior notes due in
October 2017;
• $80.0 million of unsecured 3.790 percent senior notes due in
August 2019;
• $400.0 million of unsecured 4.500 percent senior notes due in
October 2021;
• $450.0 million of unsecured 3.350 percent senior notes due in
November 2022;
• $220.0 million of unsecured 4.520 percent senior notes due in
August 2024;
• $150.0 million of unsecured 6.000 percent senior notes due in
August 2035; and
• $300.0 million of unsecured 6.800 percent senior notes due in
October 2037.
We also have $15.0 million included in current liabilities as current
portion of long-term debt associated with the term loan, which reflects the
annual principal amortization payment due in August 2014.
The interest rates on our $500.0 million 6.200 percent senior notes
due October 2017 and $300.0 million 6.800 percent senior notes due
October 2037 are subject to adjustment from time to time if the debt rating
assigned to such series of notes is downgraded below a certain rating level
(or subsequently upgraded). The maximum adjustment is 2.000 percent
above the initial interest rate and the interest rate cannot be reduced below
the initial interest rate. As of May 25, 2014, no adjustments to these interest
rates had been made.
The aggregate contractual maturities of long-term debt for each of the
five fiscal years subsequent to May 25, 2014 and thereafter are $15.0 million
in fiscal 2015, $115.0 million in fiscal 2016, $15.0 million in fiscal 2017,
$755.0 million in fiscal 2018, $0.0 million in fiscal 2019 and $1.60 billion
thereafter. However, as mentioned above, we expect to use approximately
$1.00 billion of the cash proceeds from the anticipated sale of Red Lobster
to retire outstanding long-term debt. On June 30, 2014, we commenced
cash tender offers for up to $600.0 million (which subsequently increased to
$610.0 million) aggregate principal amount of our outstanding 4.500 percent
senior notes due 2021, 3.350 percent senior notes due 2022, 6.000 percent
senior notes due 2035 and 6.200 percent senior notes due 2017. Addi-
tionally, we have agreed to repurchase $80.0 million and $210.0 million
aggregate principal amount of our 3.790 percent senior notes due 2019 and
our 4.520 percent senior notes due 2024, respectively. We also intend to call
for redemption approximately $100.0 million aggregate principal amount of
our outstanding 7.125 percent debentures due 2016. Our ability to retire the
long-term debt is dependent upon the acceptance of our tender offer, in
addition to the closing of the Red Lobster sale.
From time to time, we enter into interest rate derivative instruments
to manage interest rate risk inherent in our operations. See Note 10 to our
consolidated financial statements in Part II, Item 8 of this report, incorporated
herein by reference.
Through our shelf registration statement on file with the SEC, depending
on conditions prevailing in the public capital markets, we may issue unsecured
debt securities from time to time in one or more series, which may consist of
notes, debentures or other evidences of indebtedness in one or more offerings.
From time to time, we may repurchase our outstanding debt in privately
negotiated transactions. Such repurchases, if any, will depend on prevailing
market conditions, our liquidity requirements and other factors.