Red Lobster 2014 Annual Report Download - page 40

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Notes to Consolidated Financial Statements
Darden
38 Darden Restaurants, Inc.
The fair value of our derivative contracts designated as hedging instruments and derivative contracts that are not designated as hedging instruments
are as follows:
Balance Derivative Assets Derivative Liabilities
Sheet
(in millions)
Location May 25, 2014 May 26, 2013 May 25, 2014 May 26, 2013
Derivative contracts designated as hedging instruments
Commodity contracts (1) $ – $0.1 $ – $(0.3)
Equity forwards (1) – – (0.5) (0.6)
Interest rate related (1) 1.6 1.9 – –
Foreign currency forwards (1) 0.1 0.6 – –
$1.7 $2.6 $(0.5) $(0.9)
Derivative contracts not designated as hedging instruments
Commodity contracts (1) $ – $ – $ – $ –
Equity forwards (1) – – (1.2) (1.3)
$ – $ – $(1.2) $(1.3)
Total derivative contracts $1.7 $2.6 $(1.7) $(2.2)
(1) Derivative assets and liabilities are included in receivables, net, prepaid expenses and other current assets, and other current liabilities, as applicable, on our consolidated balance sheets.
The effects of derivative instruments in cash flow hedging relationships in the consolidated statements of earnings are as follows:
Amount of Gain (Loss) Location of Gain (Loss) Amount of Gain (Loss) Location of Gain (Loss) Amount of Gain (Loss)
Recognized in AOCI Reclassified from AOCI Reclassified from AOCI Recognized in Earnings Recognized in Earnings
(in millions)
(Effective Portion) to Earnings to Earnings (Effective Portion) (Ineffective Portion) (Ineffective Portion) (1)
Fiscal Year Fiscal Year Fiscal Year
2014 2013 2012 2014 2013 2012 2014 2013 2012
Commodity $ 0.6 $ 0.7 $ (2.2) (2) $ 0.4 $ 0.4 $(1.7) (2) $ – $ – $ –
Equity (3.5) (2.8) (0.7) (3) (0.8) 0.2 – (3) 1.4 1.1 0.6
Interest rate – (10.1) (75.2) Interest, net (10.3) (8.3) (2.9) Interest, net – – (0.7)
Foreign currency 0.5 (0.5) 0.9 (4) 1.0 – 0.8 (4) – – –
$(2.4) $(12.7) $(77.2) $ (9.7) $(7.7) $(3.8) $1.4 $1.1 $(0.1)
(1) Generally, all of our derivative instruments designated as cash flow hedges have some level of ineffectiveness, which is recognized currently in earnings. However, as these amounts are
generally nominal and our consolidated financial statements are presented “in millions,” these amounts may appear as zero in this tabular presentation.
(2) 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, which are components of cost of sales.
(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 restaurant labor expenses, which is a
component of cost of sales, and selling, general and administrative expenses.
(4) 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, which is a
component of cost of sales, and selling, general and administrative expenses.