DARDEN RESTAURANTS, INC. The discussion and analysis below for the Company, which contains
forward-looking statements, should be read in conjunction with the unaudited
financial statements, the notes to such financial statements and the
"Forward-Looking Statements" included elsewhere in this Form 10-Q.
To facilitate review of our discussion and analysis, the following table sets
forth our financial results for the periods indicated. All information is
derived from the unaudited consolidated statements of earnings for the quarters
ended
Three Months Ended
August 30, August 25,
(in millions) 2020 2019 % Chg
Sales $ 1,527.4 $ 2,133.9 (28.4 )%
Costs and expenses:
Food and beverage 434.5 603.3 (28.0 )
Restaurant labor 500.7 703.8 (28.9 )
Restaurant expenses 290.9 372.4 (21.9 )
Marketing expenses 28.8 68.7 (58.1 )
General and administrative expenses 128.3 98.0 30.9
Depreciation and amortization 87.6 86.2 1.6
Total costs and expenses $ 1,470.8 $ 1,932.4 (23.9 )
Operating income 56.6 201.5 (71.9 )
Interest, net 16.6 11.1 49.5
Other (income) expense, net 7.5 - NM
Earnings before income taxes 32.5 190.4 (82.9 )
Income tax expense (benefit) (1) (4.8 ) 18.6 NM
Earnings from continuing operations $ 37.3 $ 171.8 (78.3 )
Losses from discontinued operations, net of tax (1.2 ) (1.2 ) NM Net earnings
$ 36.1 $ 170.6 (78.8 )% Diluted net earnings per share: Earnings from continuing operations$ 0.28 $ 1.38 (79.7 )% Losses from discontinued operations - (0.01 ) NM Net earnings$ 0.28 $ 1.37 (79.6 )% (1) Effective tax rate (14.8 )% 9.8 %
NM- Percentage change not considered meaningful.
The following table details the number of company-owned restaurants currently reported in continuing operations that were open at the end of the first quarter of fiscal 2021, compared with the number open at the end of fiscal 2020 and the end of the first quarter of fiscal 2020.
August 30, May 31, August 25,
2020 2020 2019
Olive Garden 871 868 867
LongHorn Steakhouse 524 522 514
Cheddar's Scratch Kitchen 165 165 165
Yard House 80 81 79
The Capital Grille (1) 60 60 59
Seasons 52 43 44 45
Bahama Breeze 41 41 42
Eddie V's 23 23 22
Total 1,807 1,804 1,793
(1) Includes two The Capital Burger restaurants in fiscal 2021 and at the end
of fiscal 2020 and one at the end of the first quarter of fiscal 2020.
21--------------------------------------------------------------------------------
Table of Contents
OVERVIEW OF OPERATIONS COVID-19 Pandemic The COVID-19 pandemic has resulted in a significant reduction in guest traffic at our restaurants due to changes in consumer behavior as public health officials encouraged social distancing and state and local governments mandated restrictions including suspension of dine-in operations, reduced restaurant seating capacity, table spacing requirements, bar closures and additional physical barriers. Beginning in lateMarch 2020 , we operated with all of our dining rooms closed and served our guests in a To Go only or To Go and delivery format. In lateApril 2020 , state and local governments began to allow us to open dining rooms at limited capacities, along with other operating restrictions, and as of the date of this filing, 97.0 percent of our restaurants were able to open their dining rooms to some extent. While increasing our in-restaurant dining capacity is subject to the ordinances in the jurisdictions we operate, we are focused on increasing capacity where possible, while continuing to provide a safe environment for our team members and guests, and maintaining many of the operating efficiencies established during this time. As we navigate through the pandemic, we have taken significant steps to adapt our business to allow us to continue to serve guests, support our team members and secure our liquidity position to provide financial flexibility. During the first quarter of fiscal 2021, we undertook a strategic restructuring of our corporate organization and workforce in order to reduce costs and better align corporate expenses to our sales levels in the current environment. The corporate restructuring included a voluntary early retirement incentive program and other involuntary strategic workforce reductions and we incurred employee termination benefits costs and other costs of$47.8 million . Although we expect our restaurants' dining room capacity to increase as public health conditions improve and restrictions are eased, it is possible additional outbreaks could require us to reduce our capacity or further suspend our in-restaurant dining operations. Financial Highlights - Consolidated Our sales from continuing operations were$1.53 billion for the first quarter of fiscal 2021, compared to$2.13 billion for the first quarter of fiscal 2020. The 28.4 percent decrease in sales for the first quarter of fiscal 2021 was driven by combined Darden same-restaurant sales decrease of 29.0 percent for the first quarter of fiscal 2021 partially offset by revenue from the addition of 14 net new company-owned restaurants since the first quarter of fiscal 2020. For the first quarter of fiscal 2021, our net earnings from continuing operations were$37.3 million compared to$171.8 million for the first quarter of fiscal 2020, and our diluted net earnings per share from continuing operations were$0.28 for the first quarter of fiscal 2021 compared to$1.38 for the first quarter of fiscal 2020. Our diluted per share results from continuing operations for the first quarter of fiscal 2021 were adversely impacted by approximately$0.28 due to charges associated with our corporate restructuring plan. Outlook We expect sales for the second quarter of fiscal 2021 to be approximately 82 percent of sales for the second quarter of fiscal 2020. Additionally, for the full year we expect to open 35-40 net new restaurants and we expect capital expenditures incurred to build new restaurants, remodel and maintain existing restaurants and technology initiatives to be between$250.0 million and$300.0 million . SALES The following table presents our sales by segment for the periods indicated. Three Months Ended (in millions) August 30, 2020 August 25, 2019 % Chg SRS (1) Olive Garden $ 788.2 $ 1,090.2 (27.7 )% (28.2 )% LongHorn Steakhouse $ 376.8 $ 450.2 (16.3 )% (18.1 )% Fine Dining $ 83.1 $ 136.1 (38.9 )% (39.1 )% Other Business $ 279.3 $ 457.4 (38.9 )% (39.0 )% (1) Same-restaurant sales is a year-over-year comparison of each period's sales volumes for a 52-week year and is limited to restaurants open at least 16 months.
Olive Garden's sales decrease for the first quarter of fiscal 2021 was primarily
driven by a
22
--------------------------------------------------------------------------------
Table of Contents
LongHorn Steakhouse's sales decrease for the first quarter of fiscal 2021 was primarily driven by a same-restaurant sales decrease driven by the impact of COVID-19, partially offset by revenue from new restaurants. The decrease in same-restaurant sales for the first quarter of fiscal 2021 resulted from an 18.7 percent decrease in same-restaurant guest counts, partially offset by a 0.6 percent increase in average check. Fine Dining's sales decrease for the first quarter of fiscal 2020 was primarily driven by a same-restaurant sales decrease driven by the impact of COVID-19, partially offset by revenue from new restaurants. The decrease in same-restaurant sales for the first quarter of fiscal 2021 resulted from a 40.8 percent decrease in same-restaurant guest counts, partially offset by a 1.7 percent increase in average check. Other Business' sales decrease for the first quarter of fiscal 2020 was primarily driven by a same-restaurant sales decrease driven by the impact of COVID-19. The decrease in same-restaurant sales for the first quarter of fiscal 2021 resulted from a 40.4 percent decrease in same-restaurant guest counts, partially offset by a 1.4 percent increase in average check. COSTS AND EXPENSES The following table sets forth selected operating data as a percent of sales for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the quarters endedAugust 30, 2020 andAugust 25, 2019 . Three Months Ended August 30, 2020 August 25, 2019 Sales 100.0 % 100.0 % Costs and expenses: Food and beverage 28.4 28.3 Restaurant labor 32.8 33.0 Restaurant expenses 19.0 17.5 Marketing expenses 1.9 3.2 General and administrative expenses 8.4 4.6 Depreciation and amortization 5.7 4.0 Total operating costs and expenses 96.3 % 90.6 % Operating income 3.7 9.4 Interest, net 1.1 0.5 Other (income) expense, net 0.5 - Earnings before income taxes 2.1 8.9 Income tax expense (benefit) (0.3 ) 0.9 Earnings from continuing operations 2.4 % 8.1 %
Quarter Ended
• Food and beverage costs increased as a percent of sales primarily due to a
1.5% impact from unfavorable menu mix and inflation, partially offset by a
1.3% impact from pricing and cost savings initiatives.
• Restaurant labor costs decreased as a percent of sales primarily due to a
3.3% impact from productivity improvement driven by operational
simplification and a 0.8% impact from pricing leverage, partially offset
by a 3.4% impact from sales deleverage and a 0.5% impact from inflation.
• Restaurant expenses increased as a percent of sales primarily due to a
6.0% impact from sales deleverage, partially offset by a 1.6% impact from
lower repairs and maintenance expenses, a 0.8% impact from lower utility
costs and a 0.7% impact from business interruption insurance proceeds.
• Marketing expenses decreased as a percent of sales primarily due to a 2.6%
impact from lower media spending at Olive Garden and LongHorn Steakhouse ,
partially offset by a 1.3% impact from sales deleverage.
• General and administrative expenses increased as a percent of sales
primarily due to a 2.7% impact from costs associated with our corporate
restructuring in the first quarter of fiscal 2021 and a 1.8% impact from
sales deleverage.
• Depreciation and amortization expenses increased as a percent of sales
primarily due to sales deleverage.
INTEREST EXPENSE
Net interest expense increased as a percent of sales for the first quarter of
fiscal 2021 primarily due to interest incurred on our
23
--------------------------------------------------------------------------------
Table of Contents
OTHER (INCOME) EXPENSE, NET Other (income) expense, net was$7.5 million for the first quarter of fiscal 2021 primarily due to a postretirement benefit plan valuation adjustment resulting from our corporate restructuring in the first quarter of fiscal 2021. INCOME TAXES The effective income tax rate for continuing operations for the quarter endedAugust 30, 2020 was (14.8) percent, reflecting an income tax benefit of$4.8 million compared to an effective income tax rate for the quarter endedAugust 25, 2019 of 9.8 percent, reflecting income tax expense of$18.6 million . The change was driven primarily by lower net earnings from continuing operations in the quarter endedAugust 30, 2020 , compared to the quarter endedAugust 25, 2019 and the impact of certain tax credits on our lower earnings before income taxes. LOSSES FROM DISCONTINUED OPERATIONS On an after-tax basis, losses from discontinued operations for the first quarter of fiscal 2021 were$1.2 million ($0.00 per diluted share) compared with losses from discontinued operations for the first quarter of fiscal 2020 of$1.2 million ($0.01 per diluted share). SEGMENT RESULTS We manage our restaurant brands, Olive Garden,LongHorn Steakhouse ,Cheddar's Scratch Kitchen , Yard House,The Capital Grille , Seasons 52,Bahama Breeze and Eddie V's inNorth America as operating segments. We aggregate our operating segments into reportable segments based on a combination of the size, economic characteristics and sub-segment of full-service dining within which each brand operates. Our four reportable segments are: (1) Olive Garden, (2)LongHorn Steakhouse , (3) Fine Dining and (4) Other Business (see Note 6 to our unaudited consolidated financial statements in Part I, Item 1 of this report). Our management uses segment profit as the measure for assessing performance of our segments. The following table presents segment profit margin for the periods indicated. Three Months Ended Segment August 30, 2020 August 25, 2019 Change Olive Garden 22.1% 21.0% 110 BPS LongHorn Steakhouse 15.1% 16.5% (140) BPS Fine Dining 11.9% 14.9% (300) BPS Other Business 12.8% 14.1% (130) BPS The increase in Olive Garden's segment profit margin for the first quarter of fiscal 2021 was driven primarily by decreased marketing expense, related to television and digital media, as well as decreased food and beverage and restaurant labor costs, only partially offset by negative same restaurant sales resulting from the economic impact of COVID-19. The decrease inLongHorn Steakhouse , Fine Dining and Other Business' segment profit margins for the first quarter of fiscal 2021 was driven primarily by negative same-restaurant sales resulting from the economic impact of COVID-19, partially offset by decreased marketing expense and labor costs. SEASONALITY Our sales volumes fluctuate seasonally. Typically, our average sales per restaurant are highest in the winter and spring, followed by the summer, and lowest in the fall. Holidays, changes in the economy, severe weather and similar conditions may impact sales volumes seasonally in some operating regions. Because of the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year. We are not able to predict the impact that the COVID-19 pandemic may have on the seasonality of our business. LIQUIDITY AND CAPITAL RESOURCES Typically, cash flows generated from operating activities are our principal source of liquidity, which we use to finance capital expenditures for new restaurants and to remodel and maintain existing restaurants, to pay dividends to our shareholders and to repurchase shares of our common stock. Since substantially all of our sales are for cash and cash equivalents, and accounts payable are generally paid in 5 to 90 days, we are typically able to carry current liabilities in excess of current assets. As previously noted, inMarch 2020 , all of our restaurants began operating at reduced capacities due to the COVID-19 outbreak and initially were not able to generate sufficient cash from operations to cover all of our projected expenditures while operating at those reduced capacities. Accordingly, we took significant steps to adapt our business, which allowed us to continue to serve 24
--------------------------------------------------------------------------------
guests, support our team members and secure our liquidity position to provide
financial flexibility. As state and local governments allowed us to open dining
rooms at limited capacities our cash flows have improved, and during the first
quarter of fiscal 2021 we generated positive operating cash flows and fully
repaid our
•
• Fitch "BBB-".
Our commercial paper has ratings of: • Moody's Investors Service "P-3";
•
• Fitch "F-3".
These ratings are as of the date of the filing of this Form 10-Q and have been obtained with the understanding that Moody's Investors Service,Standard & Poor's and Fitch will continue to monitor our credit and make future adjustments to these ratings to the extent warranted. The ratings are not a recommendation to buy, sell or hold our securities, may be changed, superseded or withdrawn at any time and should be evaluated independently of any other rating. We maintain a$750.0 million Revolving Credit Agreement withBank 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 usual for credit facilities of this type. As ofAugust 30, 2020 , we were in compliance with all covenants under the Revolving Credit Agreement. The Revolving Credit Agreement matures onOctober 27, 2022 , and the proceeds may be used for 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 plus 0.075 percent, the Federal Funds rate plus 0.500 percent, and the Eurocurrency Rate plus 1.075 percent) plus the Applicable Margin. Assuming a "BBB-" equivalent credit rating level, the Applicable Margin under the Revolving Credit Agreement will be 1.075 percent for LIBOR loans and 0.075 percent for base rate loans. As ofAugust 30, 2020 , we had no outstanding balances under the Revolving Credit Agreement. As ofAugust 30, 2020 , our outstanding long-term debt consisted principally of: •$500.0 million of unsecured 3.850 percent senior notes due inMay 2027 ;
•
•
•
The interest rate on our
25
--------------------------------------------------------------------------------
activities include net earnings from continuing operations of$36.1 million and$170.6 million in the first three months of fiscal 2021 and 2020, respectively. The decrease in net earnings is primarily driven by the impact of COVID-19. Net cash flows used in investing activities of continuing operations were$44.0 million for the first three months of fiscal 2021, compared to$166.9 million for the first three months of fiscal 2020. Capital expenditures decreased to$42.2 million for the first three months of fiscal 2021 from$117.1 million for the first three months of fiscal 2020 reflecting a decrease in new restaurant construction and remodel activity during fiscal 2021. Net cash flows used in investing activities for fiscal 2020 also reflect net cash used of$37.0 million in the acquisition ofCheddar's Scratch Kitchen restaurants from existing franchisees. Net cash flows used in financing activities of continuing operations were$273.6 million for the first three months of fiscal 2021, compared to$192.7 million for the first three months of fiscal 2020. Net cash flows used in financing activities for the first three months of fiscal 2021 included repayment of a 364-day term loan of$270.0 million prior to maturity. Net cash flows used in financing activities for the first three months of fiscal 2020 reflected dividends paid of$108.1 million and share repurchases of$94.8 million partially offset by proceeds from the exercise of employee stock options. Dividends declared by our Board of Directors totaled$0.88 per share for the first three months of fiscal 2020. OnSeptember 18, 2019 , our Board of Directors authorized a new share repurchase program under which we may repurchase up to$500.0 million of our outstanding common stock. This repurchase program does not have an expiration and replaces all other outstanding share repurchase authorizations. During the quarter endedAugust 30, 2020 , we repurchased 0.1 million shares of our common stock compared to 0.8 million shares of our common stock during the quarter endedAugust 25, 2019 . All shares repurchased during the quarter endedAugust 30, 2020 were solely shares withheld for taxes on vesting of restricted stock, shares delivered or deemed to be delivered to us on tender of stock in payment for the exercise price of options, or shares reacquired pursuant to tax withholding on option exercises. We are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, sales, costs or expenses, results of operations, liquidity, capital expenditures or capital resources. Impairment of our assets, including goodwill or trademarks, adversely affects our financial position and results of operations, and our leverage ratio for purposes of our Revolving Credit Agreement. A leverage ratio exceeding the maximum permitted under our Revolving Credit Agreement would be a default under our Revolving Credit Agreement. AtAugust 30, 2020 , write-downs of goodwill, other indefinite-lived intangible assets, or any other assets in excess of approximately$1.24 billion would have been required to cause our leverage ratio to exceed the permitted maximum. As our leverage ratio is determined on a quarterly basis, and due to the seasonal nature of our business, a lesser amount of impairment in future quarters could cause our leverage ratio to exceed the permitted maximum. FINANCIAL CONDITION Our current assets totaled$971.0 million as ofAugust 30, 2020 , compared to$1.10 billion as ofMay 31, 2020 . The decrease was primarily due to a decrease in cash and cash equivalents primarily driven by repayment of short-term debt. Our current liabilities totaled$1.54 billion as ofAugust 30, 2020 , compared to$1.79 billion as ofMay 31, 2020 . The decrease was primarily driven by repayment of short-term debt, partially offset by an increase in other current liabilities. CRITICAL ACCOUNTING ESTIMATES We prepare our consolidated financial statements in conformity withU.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales, costs and expenses during the reporting period. Actual results could differ from those estimates. We have discussed the development, selection and disclosure of those estimates with the Audit Committee. Our critical accounting estimates have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year endedMay 31, 2020 . APPLICATION OF NEW ACCOUNTING STANDARDS Information regarding application of new accounting standards is incorporated by reference from Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this report. 26
--------------------------------------------------------------------------------
Table of Contents
FORWARD-LOOKING STATEMENTS Statements set forth in or incorporated into this report regarding the expected increase in the number of our restaurants and capital expenditures in fiscal 2021, projections for sales and all other statements that are not historical facts, including without limitation statements with respect to the financial condition, results of operations, plans, objectives, future performance and business ofDarden Restaurants, Inc. and its subsidiaries that are preceded by, followed by or that include words such as "may," "will," "expect," "intend," "anticipate," "continue," "estimate," "project," "believe," "plan," "outlook" or similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are included, along with this statement, for purposes of complying with the safe harbor provisions of that Act. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements for any reason to reflect events or circumstances arising after such date. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. In addition to the risks and uncertainties of ordinary business obligations, and those described in information incorporated into this report, the forward-looking statements contained in this report are subject to the risks and uncertainties described in Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year endedMay 31, 2020 and in our Forms 10-Q (including this report), which are summarized as follows: • The impacts of the novel coronavirus (COVID-19) pandemic on our business and the response of governments and of our company to the outbreak; • Health concerns arising from food-related pandemics, outbreaks of flu viruses or other diseases; • Insufficient guest or employee facing technology, or a failure to maintain a continuous and secure cyber network, free from material failure, interruption or security breach;
• Food safety and food-borne illness concerns throughout the supply chain;
• The inability to hire, train, reward and retain restaurant team members;
• A failure to recruit, develop and retain effective leaders or the loss or
shortage of key personnel;
• Insufficient or ineffective response to legislation or government
regulation may impact our cost structure, operational efficiencies and
talent availability;
• Litigation, including allegations of illegal, unfair or inconsistent
employment practices;
• Unfavorable publicity, or a failure to respond effectively to adverse
publicity;
• An inability or failure to recognize, respond to and effectively manage
the accelerated impact of social media;
• The inability to cancel long-term, non-cancelable leases that we may want
to cancel or the inability to renew the leases that we may want to extend
at the end of their terms;
• Labor and insurance costs;
• Our inability or failure to execute a comprehensive business continuity
plan following a major natural disaster such as a hurricane or manmade
disaster, including terrorism;
• Intense competition, or an insufficient focus on competition and the
consumer landscape;
• Changes in consumer preferences that may adversely affect demand for food
at our restaurants;
• Our failure to drive both short-term and long-term profitable sales growth
through brand relevance, operating excellence, opening new restaurants of
existing brands and developing or acquiring new dining brands;
• A lack of suitable new restaurant locations or a decline in the quality of
the locations of our current restaurants;
• Higher-than-anticipated costs to open, close, relocate or remodel restaurants;
• A failure to identify and execute innovative marketing and guest
relationship tactics and ineffective or improper use of other marketing
initiatives and increased advertising and marketing costs;
• A failure to address cost pressures, including rising costs for
commodities, labor, health care and utilities used by our restaurants, and
a failure to effectively deliver cost management activities and achieve
economies of scale in purchasing;
• The impact of shortages or interruptions in the delivery of food and other
products from third-party vendors and suppliers;
• Adverse weather conditions and natural disasters;
• Volatility in the market value of derivatives we may use to hedge
commodity and broader market prices;
• Volatility in the United States equity markets that may affect our ability
to efficiently hedge exposures to our market risk related to equity-based
compensation awards;
• Economic and business factors specific to the restaurant industry and
other general macroeconomic factors including energy prices and interest
rates that are largely out of our control;
27--------------------------------------------------------------------------------
Table of Contents
• Disruptions in the financial markets that may impact consumer spending
patterns, affect the availability and cost of credit;
• Risks associated with doing business with franchisees and licensees;
• Risks associated with doing business with business partners and vendors in
foreign markets;
• Failure to protect our service marks or other intellectual property;
• Impairment of the carrying value of our goodwill or other intangible assets;
• Changes in tax laws or treaties and unanticipated tax liabilities; and
• A failure of our internal controls over financial reporting and future
changes in accounting standards.
Any of the risks described above or elsewhere in this report or our other
filings with the SEC could have a material impact on our business, financial
condition or results of operations. It is not possible to predict or identify
all risk factors. Additional risks and uncertainties not presently known to us
or that we currently believe to be immaterial may also impair our business
operations. Therefore, the above is not intended to be a complete discussion of
all potential risks or uncertainties.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
We are exposed to a variety of market risks, including fluctuations in interest
rates, foreign currency exchange rates, compensation and commodity prices. To
manage this exposure, we periodically enter into interest rate, foreign currency
exchange rate, equity forward and commodity derivative instruments for other
than trading purposes (see Note 9 to our unaudited consolidated financial
statements in Part I, Item 1 of this report).
We use the variance/covariance method to measure value at risk, over time
horizons ranging from one week to one year, at the 95 percent confidence level.
As of August 30, 2020 , our potential losses in future net earnings resulting
from changes in equity forwards, commodity instruments and floating rate debt
interest rate exposures were approximately $21.2 million over a period of one
year. The value at risk from an increase in the fair value of all of our
long-term fixed-rate debt, over a period of one year, was approximately $86.3
million . The fair value of our long-term fixed-rate debt outstanding as of
August 30, 2020 , averaged $952.7 million , with a high of $974.8 million and a
low of $917.3 million during the first three months of fiscal 2021. Our interest
rate risk management objective is to limit the impact of interest rate changes
on earnings and cash flows by targeting an appropriate mix of variable and
fixed-rate debt.
Item 4.Controls and Procedures
Under the supervision and with the participation of our management, including
our Chief Executive Officer and our Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934, as amended (the Exchange Act)) as of August 30, 2020 , the end of the
period covered by this report. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of August 30, 2020 .
During the fiscal quarter ended August 30, 2020 , there was no change in our
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
28
--------------------------------------------------------------------------------
Table of Contents
© Edgar Online, source
