Red Lobster 2014 Annual Report Download - page 38

Notes to Consolidated Financial Statements
Darden
36 Darden Restaurants, Inc.
NOTE 8
OTHER CURRENT LIABILITIES
The components of other current liabilities are as follows:
(in millions) May 25, 2014 May 26, 2013
Non-qualified deferred compensation plan $228.8 $224.3
Sales and other taxes 70.4 74.3
Insurance-related 35.8 40.8
Employee benefits 47.4 44.7
Derivative liabilities 1.7 2.2
Accrued interest 19.9 17.7
Miscellaneous 53.4 46.3
Total other current liabilities $457.4 $450.3
NOTE 9
LONG-TERM DEBT
The components of long-term debt are as follows:
May 25, May 26,
(in millions) 2014 2013
7.125% debentures due February 2016 $ 100.0 $ 100.0
Variable-rate term loan (1.65% at May 25,
2014) due August 2017 300.0 300.0
6.200% senior notes due October 2017 500.0 500.0
3.790% senior notes due August 2019 80.0 80.0
4.500% senior notes due October 2021 400.0 400.0
3.350% senior notes due November 2022 450.0 450.0
4.520% senior notes due August 2024 220.0 220.0
6.000% senior notes due August 2035 150.0 150.0
6.800% senior notes due October 2037 300.0 300.0
Total long-term debt $2,500.0 $2,500.0
Fair value hedge 1.6 1.9
Less issuance discount (5.2) (5.7)
Total long-term debt less issuance discount $2,496.4 $2,496.2
Less current portion (15.0) –
Long-term debt, excluding current portion $2,481.4 $2,496.2
We maintain a $750.0 million revolving Credit Agreement (Revolving
Credit Agreement), with Bank of America, N.A. (BOA) as administrative agent,
and the lenders and other agents party thereto. The Revolving Credit
Agreement is a senior unsecured credit commitment to the Company and
contains customary representations and affirmative and negative covenants
(including limitations on liens and subsidiary debt and a maximum consolidated
lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and
events of default customary for credit facilities of this type. As of May 25,
2014, we were in compliance with the covenants under the Revolving
Credit Agreement.
On October 24, 2013, we entered into an amendment (First Amendment)
to the Revolving Credit Agreement, which extended the maturity date from
October 3, 2016 to October 24, 2018, and gives us the option to request
a further extension of the maturity date for up to two additional one-year
periods. Additionally, interest rates on borrowings and fees under the
Revolving Credit Agreement are determined by reference to a ratings-based
pricing grid, which was amended by the First Amendment.
The Revolving Credit Agreement proceeds may be used for commercial
paper back-up, working capital and capital expenditures, the refinancing of
certain indebtedness, certain acquisitions and general corporate purposes.
Loans under the Revolving Credit Agreement bear interest at a rate of LIBOR
plus a margin determined by reference to a ratings-based pricing grid
(Applicable Margin), or the base rate (which is defined as the highest of the
BOA prime rate, the Federal Funds rate plus 0.500 percent, and the
Eurocurrency Rate plus 1.00 percent) plus the Applicable Margin. Assuming
a “BBB-” equivalent credit rating level, the Applicable Margin under the
Revolving Credit Agreement will be 1.300 percent for LIBOR loans and
0.300 percent for base rate loans.
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.
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 as follows:
(in millions)
Fiscal Year Amount
2015 $ 15.0
2016 115.0
2017 15.0
2018 755.0
2019 –
Thereafter 1,600.0
Long-term debt $2,500.0
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. Additionally, 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.