Notes to Consolidated Financial Statements<strong>Darden</strong>Items Measured at Fair Value at May 27, 2012Quoted Prices in Active Market Significant Other SignificantFair 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) $ 14.5 $ – $ 14.5 $ –U.S. Treasury securities (2) 13.3 13.3 – –Mortgage-backed securities (1) 9.9 – 9.9 –Derivatives:Commodities futures, swaps & options (3) (0.1) – (0.1) –Equity forwards (4) 2.8 – 2.8 –Interest rate locks & swaps (5) (41.7) – (41.7) –Foreign currency forwards (6) 0.5 – 0.5 –Total $ (0.8) $13.3 $(14.1) $ –(1) The fair value of these securities is based on closing market prices of the investments, when applicable, or, alternatively, valuations utilizing market data and other observable inputs, inclusive of the risk of nonperformance.(2) The fair value of our U.S. Treasury securities is based on closing market prices.(3) The fair value of our commodities futures, swaps and options is based on closing market prices of the contracts, inclusive of the risk of nonperformance.(4) The fair value of our equity forwards is based on the closing market value of <strong>Darden</strong> stock, inclusive of the risk of nonperformance.(5) The fair value of our interest rate lock and swap agreements is based on current and expected market interest rates, inclusive of the risk of nonperformance.(6) The fair value of our foreign currency forward contracts is based on closing forward exchange market prices, inclusive of the risk of nonperformance.The carrying value and fair value of long-term debt as of May 26, <strong>2013</strong>, was $2.50 billion and $2.40 billion, respectively. The carrying value and fair value of long-termdebt, including the amounts included in current liabilities, as of May 27, 2012, was $1.80 billion and $1.99 billion, respectively. The fair value of long-term debt is determinedbased on market prices or, if market prices are not available, the present value of the underlying cash flows discounted at our incremental borrowing rates.Adjustments to the fair values of non-financial assets measured at fair value on a non-recurring basis as of May 26, <strong>2013</strong> and May 27, 2012 were generally relatedto impairments of property to be disposed of and were not material.NOTE 12FINANCIAL INSTRUMENTSMarketable securities are carried at fair value and consist of available-for-salesecurities related to insurance funding requirements for our workers’ compensationand general liability claims. The following table summarizes cost and marketvalue for our securities that qualify as available-for-sale as of May 26, <strong>2013</strong>:Gross GrossUnrealized Unrealized Market(in millions) Cost Gains Losses ValueAvailable-for-sale securities $24.1 $0.2 $ – $24.3Earnings include insignificant realized gains and loss from sales of availablefor-salesecurities. At May 26, <strong>2013</strong>, the scheduled maturities of our available-for-salesecurities are as follows:Market(in millions) Cost ValueLess than 1 year $ 2.0 $ 2.01 to 3 years 13.9 14.13 to 5 years 8.2 8.2Total $24.1 $24.3NOTE 13STOCKHOLDERS’ EQUITYTreasury StockRepurchased common stock has historically been reflected as a reduction ofstockholders’ equity. On December 17, 2010, our Board of Directors authorizedan additional share repurchase authorization totaling 25.0 million shares inaddition to the previous authorization of 162.4 million shares. Share repurchaseauthorizations and cumulative share repurchases under these authorizations,are as follows:(in millions) May 26, <strong>2013</strong>Share repurchase authorizations 187.4Cumulative shares repurchased 171.9The total shares and related cost of our common stock we repurchased wasas follows:Fiscal Year(in millions) <strong>2013</strong> 2012 2011Shares Cost Shares Cost Shares CostRepurchases of common stock 1.0 $52.4 8.2 $375.1 8.6 $385.552 <strong>Darden</strong> <strong>Restaurants</strong>, Inc. <strong>2013</strong> <strong>Annual</strong> <strong>Report</strong>
Notes to Consolidated Financial Statements<strong>Darden</strong>In the second quarter of fiscal <strong>2013</strong>, we retired a portion of our treasury stock totaling 159.3 million shares and restored them to authorized but unissued shares ofcommon stock. The retired treasury stock had a carrying amount of approximately $3.74 billion. Upon formal retirement and in accordance with FASB ASC Topic 505,Equity, we reduced our common stock and surplus account based on the estimated weighted-average cost of the common shares and reduced our treasury stockaccount based on the repurchase price. The difference between the repurchase price and the estimated average cost was recorded as a reduction to retained earnings.The remaining shares will be utilized to satisfy future issuances under certain of our employee stock compensation programs. We expect that all shares of common stockacquired in the future will be restored to authorized but unissued shares of common stock.Stockholders’ Rights PlanUnder our Rights Agreement dated May 16, 2005, each share of our common stock has associated with it one right to purchase one thousandth of a share of our Series AParticipating Cumulative Preferred Stock at a purchase price of $120 per share, subject to adjustment under certain circumstances to prevent dilution. The rights areexercisable when, and are not transferable apart from our common stock until, a person or group has acquired 15 percent or more, or makes a tender offer for 15 percentor more, of our common stock. If the specified percentage of our common stock is then acquired, each right will entitle the holder (other than the acquiring company) toreceive, upon exercise, common stock of either us or the acquiring company having a value equal to two times the exercise price of the right. The rights are redeemableby our Board of Directors under certain circumstances and expire on May 25, 2015.Accumulated Other Comprehensive Income (Loss)The components of accumulated other comprehensive income (loss), net of tax, are as follows:Foreign Currency Unrealized Gains (Losses) Unrealized Gains (Losses) Benefit Plan Accumulated Other(in millions) Translation Adjustment on Marketable Securities on Derivatives Funding Position Comprehensive Income (Loss)Balances at May 29, 2011 $(0.4) $ 0.5 $ (4.1) $(55.8) $ (59.8)Gain (loss) (1.2) (0.1) (47.9) (45.6) (94.8)Reclassification realized in net earnings – – 2.3 5.7 8.0Balances at May 27, 2012 $(1.6) $ 0.4 $(49.7) $(95.7) $(146.6)Gain (loss) (0.2) (0.2) (8.8) 11.4 2.2Reclassification realized in net earnings – – 4.7 6.9 11.6Balances at May 26, <strong>2013</strong> $(1.8) $ 0.2 $(53.8) $(77.4) $(132.8)<strong>Darden</strong> <strong>Restaurants</strong>, Inc. <strong>2013</strong> <strong>Annual</strong> <strong>Report</strong> 53