SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
FORM 10-K/A
(Mark One)
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended May 26, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to _________
Commission File Number 1-13666
DARDEN RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
Florida 59-3305930
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5900 Lake Ellenor Drive 32809
Orlando, Florida (Zip Code)
(Address of principal executive offices)
(407) 245-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, without par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by Reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Aggregate market value of Common Stock held by non-affiliates of the
Registrant, based on the closing price of $8.750 per share as reported on the
New York Stock Exchange on July 22, 1996: $1,371 million.
Number of shares of Common Stock outstanding as of July 22,
1996:157,723,887 (excluding 2,065,213 shares held in the treasury).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement dated August 2, 1996
are incorporated by reference into Part III, and portions of Registrant's
Annual Report to Stockholders
are incorporated by reference into Parts I, II and IV
<PAGE>
This Amendment is being submitted for the purpose of adjusting the
document count, tags and headers for the exhibits contained in the electronic
filing of the registrant's annual report on Form 10-K for the fiscal year ended
May 26, 1996, in accordance with the requirements of the Electronic Data
Gathering and Retrieval (EDGAR) System. In all other respects, the
exhibits submitted with this Amendment are identical to those previously filed
with the registrant's Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: October 29, 1996 DARDEN RESTAURANTS, INC.
By: /s/ C.L. Whitehill
C.L. Whitehill
Senior Vice President,
General Counsel and Secretary
EXHIBIT 10(a)
DARDEN RESTAURANTS, INC.
STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1995
(as amended May 23, 1996)
1. PURPOSE OF THE PLAN
The purpose of the Darden Restaurants, Inc. Stock Option and Long-Term
Incentive Plan of 1995 (the "Plan") is to attract and retain able
employees by rewarding employees of Darden Restaurants, Inc., its
subsidiaries and affiliates (defined as entities in which Darden
Restaurants, Inc. owns an equity interest of 25% or more) (collectively,
the "Company") who are responsible for the growth and sound development of
the business of the Company, and to align the interests of all employees
with those of the stockholders of the Company and to compensate certain
management employees of the Company by granting stock options in lieu of
salary increases or other compensation or employee benefits.
2. EFFECTIVE DATE, DURATION AND SUMMARY OF PLAN
A. Effective Date and Duration
This Plan shall become effective as of the effective date of the
distribution of Darden Restaurants, Inc. Common Stock to the holders
of General Mills, Inc. common stock. Awards may be made under the
Plan until September 30, 2000.
B. Summary of Option Provisions for Participants
The stock option that will be awarded to employees under this Plan
gives a right to an employee to purchase at a future date shares of
Darden Restaurants, Inc. Common Stock at a fixed price. As an employee,
you will receive an "option agreement" in your own name, which will
contain the term and other conditions of the option grant. In general,
each option agreement will state the number of shares of Darden
Restaurants, Inc. Common Stock that you can purchase from the Company,
the price at which you can purchase the shares, and the last date you
can make your purchase. You will not have any taxable income when you
receive the option agreement.
The price at which you may buy the Darden Restaurants, Inc. shares will
be equal to the market price of the Company shares on the New York
Stock Exchange as of the day the option was awarded to you. If after
the period that you must hold the option (at least three years), the
price of Darden Restaurants, Inc. Common Stock has risen, you will be
able to make a gain on exercising the option equal to the difference
between the exercise price of the option and the market price of Darden
Restaurants, Inc. shares on the date you use your option to buy shares
under the terms of the option certificate. This gain will be taxable to
you.
You will never be obligated to buy shares of the Company if you do not
wish to do so. After the required holding period before you can
exercise the option, you can continue to hold the option certificate as
an employee for up to seven years before making the decision whether or
not to buy shares of the Company. Thereafter, the rights under the
option will lapse and cannot then be used by the employee.
You cannot sell or assign the option to any other person, and the
specific provisions which cover your rights in the option are covered
in the full text of the Plan.
<PAGE>
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee (the
"Committee"). The Committee shall be comprised solely of non-employee,
independent members of the Board of Directors (the "Board") appointed
in accordance with the Company's Articles of Incorporation. Subject to
the provisions of Section 14, the Committee shall have authority to
adopt rules and regulations for carrying out the purpose of the Plan,
select the employees to whom Awards will be made ("Participants"),
determine the number of shares to be awarded and the other terms and
conditions of Awards in accordance with the Plan provisions and
interpret, construe and implement the provisions of the Plan; provided
that if at any time Rule 16b-3 or any successor rule ("Rule 16b-3")
under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
so permits, without adversely affecting the ability of the Plan to
comply with the conditions for exemption from Section 16 of the 1934
Act (or any successor provisions) provided by Rule 16b-3, the Committee
may delegate its duties under the Plan in whole or in part, on such
terms and conditions, to the Chief Executive Officer and to other
senior officers of the Company; provided further, that only the
Committee may select and make other decisions as to Awards to
Participants who are subject to Section 16 of the 1934 Act and to other
executives of the Company. The Committee (or its permitted delegate)
may correct any defect or supply any omission or reconcile any
inconsistency in any agreement relating to any Award under the Plan in
the manner and to the extent it deems necessary. Decisions of the
Committee (or its permitted delegate) shall be final, conclusive and
binding upon all parties, including the Company, stockholders and
Participants.
4. COMMON STOCK SUBJECT TO THE PLAN
The shares of common stock of the Company (without par value) ("Common
Stock") to be issued upon exercise of a Stock Option, awarded as
Restricted Stock, or issued upon expiration of the restricted period
for Restricted Stock Units, may be made available from the authorized
but unissued Common Stock, shares of Common Stock held in the Company's
treasury, or Common Stock purchased by the Company on the open market
or otherwise. Approval of the Plan by the sole shareholder of the
Company shall constitute authorization to use such shares for the Plan.
The Committee, in its discretion, may require as a condition to the
grant of Stock Options, Restricted Stock or Restricted Stock Units
(collectively, "Awards"), the deposit of Common Stock owned by the
Participant receiving such grant, and the forfeiture of such Awards, if
such deposit is not made or maintained during the required holding
period or the applicable restricted period. Such shares of deposited
Common Stock may not be otherwise sold, pledged or disposed of during
the applicable holding period or restricted period. The Committee may
also determine whether any shares issued upon exercise of a Stock
Option shall be restricted in any manner.
The maximum aggregate number of shares of Common Stock authorized under
the Plan for which Awards may be granted under the Plan is 15,000,000.
Upon the expiration, forfeiture, termination or cancellation, in whole
or in part, of unexercised Stock Options, or forfeiture of Restricted
Stock or Restricted Stock Units on which no dividends or dividend
equivalents have been paid, the shares of Common Stock subject thereto
shall again be available for Awards under the Plan.
The number of shares subject to the Plan, the outstanding Awards and
the exercise price per share of outstanding Stock Options may be
appropriately adjusted by the Committee in the event that:
(i) the number of outstanding shares of Common Stock shall
be changed by reason of split-ups, spin-offs, combinations
or reclassifications of shares;
(ii) any stock dividends are distributed to the holders of
Common Stock;
<PAGE>
(iii)the Common Stock is converted into or exchanged for other
shares as a result of any merger or consolidation (including a
sale of assets) or other recapitalization, or other similar
events occur which affect the value of the Common Stock; or
(iv) whenever the Committee determines such adjustments are
appropriate to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under the
Plan.
5. ELIGIBLE PERSONS
Only persons who are employees of the Company shall be eligible to
receive Awards under the Plan ("Participants"). No Award shall be made
to any member of the Committee or any other non-employee director of
the Company.
6. PURCHASE PRICE OF STOCK OPTIONS
The purchase price for each share of Common Stock issuable under a
Stock Option shall not be less than 100% of the Fair Market Value of
the shares of Common Stock on the date of grant. "Fair Market Value" as
used in the Plan shall equal the mean of the high and low price of the
Common Stock on the New York Stock Exchange on the applicable date.
7. STOCK OPTION TERM AND TYPE
The term of any Stock Option as determined by the Committee shall not
exceed 10 years from the date of grant and shall expire as of the close
of business on the last day of the designated term, unless terminated
earlier under the provisions of the Plan. All Stock Option grants under
the Plan shall be non-qualified stock options governed by Section 83 of
the Internal Revenue Code of 1986, as amended (the "Code").
8. EXERCISE OF STOCK OPTIONS
A. Of the 15,000,000 shares of Common Stock authorized for issuance
hereunder, not less than 3,000,000 shall be issued only as salary
replacement Stock Options ("SRO's") in lieu of salary increases,
compensation or other employee benefits. Except as provided in Sections
12 and 13, each Stock Option issued as an SRO may be exercised as
determined by the Committee in its discretion.
B. Except as provided in Sections 12 and 13 (Change of Control and
Termination of Employment), each Stock Option, other than an SRO, may
be exercised no sooner than three years from the date of grant and
subject to the Participant's continued employment with the Company and
in accordance with the terms prescribed by the Committee.
C. The number of shares of Common Stock subject to Stock Options granted
under the Plan to any single Participant shall not exceed 10% of the
total number of shares of Common Stock which may be issued under this
Plan.
D. A Participant exercising a Stock Option shall give notice to the
Company of such exercise and of the number of shares elected to be
purchased prior to 5:00 P.M. EST/EDT on the day of exercise, which must
be a business day at the executive offices of the Company. At the time
of purchase, the Participant shall tender the full purchase price of
the shares purchased. Until such payment has been made and a
certificate or certificates for the shares purchased has been issued in
the Participant's name, the Participant shall possess no stockholder
rights with respect to such shares. Payment of such purchase price
shall be made to the Company, subject to any applicable rule or
regulation adopted by the Committee:
(i) in cash (including check, draft, money order or wire
transfer made payable to the order of the Company);
<PAGE>
(ii) through the delivery of shares of Common Stock owned by the
Participant; or
(iii) by a combination of (i) and (ii) above.
For determining the amount of the payment, Common Stock delivered pursuant to
(ii) or (iii) shall have a value equal to the Fair Market Value of the Common
Stock on the date of exercise.
9. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
With respect to Awards of Restricted Stock and Restricted Stock Units,
the Committee shall:
(i) select Participants to whom Awards will be made, provided that
Restricted Stock Units may only be awarded to those employees
of the Company who are employed in a country other than the
United States;
(ii) determine the number of shares of Restricted Stock or the
number of Restricted Stock Units to be awarded;
(iii)determine the length of the restricted period, which shall be
no less than one year;
(iv) determine the purchase price, if any, to be paid by the
Participant for Restricted Stock or Restricted Stock Units; and
(v) determine any restrictions other than those set forth in this
Section 9.
Any shares of Restricted Stock granted under the Plan may be evidenced
in such manner as the Committee deems appropriate, including, without
limitation, book-entry registration or issuance of stock certificates,
and may be held in escrow.
Subject to the restrictions set forth in this Section 9, each
Participant who receives Restricted Stock shall have all rights as a
stockholder with respect to such shares, including the right to vote
the shares and receive dividends and other distributions.
Each Participant who receives Restricted Stock Units shall be eligible
to receive, at the expiration of the applicable restricted period, one
share of Common Stock for each Restricted Stock Unit awarded, and the
Company shall issue to and register in the name of each such
Participant a certificate for that number of shares of Common Stock.
Participants who receive Restricted Stock Units shall have no rights as
stockholders with respect to such Restricted Stock Units until such
time as share certificates for Common Stock are issued to the
Participants; provided, however, that quarterly during the applicable
restricted period for all Restricted Stock Units awarded hereunder, the
Company shall pay to each such Participant an amount equal to the sum
of all dividends and other distributions paid by the Company during the
prior quarter on that equivalent number of shares of Common Stock.
Subject to the provisions of Section 12, for awards of Restricted Stock
or Restricted Stock Units which have a deposit requirement, a
Participant will be eligible to vest only in those shares of Restricted
Stock or Restricted Stock Units for which personally-owned shares are
on deposit with the Company as of the date the Participant's employment
with the Company terminates.
The total number of shares of Common Stock issued upon vesting of
Restricted Stock or Restricted Stock Units granted under the Plan shall
not exceed 10% of the total number of shares of Common Stock which may
be issued under this Plan, and no single Participant shall receive
under the Plan Restricted Stock or Restricted Stock Units which, upon
vesting, would exceed 2% of the total number of shares of Common Stock
which may be issued under the Plan.
<PAGE>
10. NON-TRANSFERABILITY
Except as otherwise provided in Section 9, no shares of Restricted
Stock and no Restricted Stock Units shall be sold, exchanged,
transferred, pledged, or otherwise disposed of during the restricted
period. No Stock Options granted under this Plan shall be transferable
by a Participant otherwise than (i) by the Participant's last will and
testament or (ii) by the applicable laws of descent and distribution,
and such Stock Options shall be exercised during the Participant's
lifetime only by the Participant or his or her guardian or legal
representative. Other than as set forth herein, no Award under the Plan
shall be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to do so
shall be void.
11. WITHHOLDING TAXES
It shall be a condition to the obligation of the Company to deliver
shares upon the exercise of a Stock Option, the vesting of Restricted
Stock or Restricted Stock Units and the corresponding issuance of
shares of unrestricted Common Stock, that the Participant pay to the
Company cash in an amount equal to all federal, state, local and
foreign withholding taxes required to be collected in respect thereof.
Notwithstanding the foregoing, to the extent permitted by law and
pursuant to such rules as the Committee may adopt, a Participant may
authorize the Company to satisfy any such withholding requirement by
directing the Company to withhold from any shares of Common Stock to be
issued, all or a portion of such number of shares as shall be
sufficient to satisfy the withholding obligation, provided that in the
case of the vesting of Restricted Stock or Restricted Stock Units, the
number of shares of Common Stock to be issued equals or exceeds 500.
12. CHANGE OF CONTROL
Each outstanding Stock Option shall become immediately and fully
exercisable for a period of 6 months following the date of the
following occurrences, each constituting a "Change of Control":
(i) if any person (including a group as defined in Section 13(d)(3)
of the 1934 Act) becomes, directly or indirectly, the
beneficial owner of 20% or more of the shares of the Company
entitled to vote for the election of directors;
(ii) as a result of or in connection with any cash tender offer,
exchange offer, merger or other business combination, sale of
assets or contested election, or combination of the foregoing,
the persons who were directors of the Company just prior to
such event cease to constitute a majority of the Company's
Board of Directors; or
(iii)the stockholders of the Company approve an agreement providing
for a transaction in which the Company will cease to be an
independent publicly-owned corporation or a sale or other
disposition of all or substantially all of the assets of the
Company occurs.
After such 6-month period the normal option exercise provisions of the
Plan shall govern. In the event a Participant is terminated as an
employee of the Company within 2 years after any of the events
specified in (i), (ii) or (iii), his or her outstanding Stock Options
at that date of termination shall become immediately exercisable for a
period of 3 months.
With respect to Stock Option grants outstanding as of the date of any
such Change of Control which require the deposit of owned Common Stock
as a condition to obtaining rights: (a) said deposit requirement shall
be terminated as of the date of the Change of Control and any such
deposited stock shall be promptly returned to the Participant; and (b)
any restrictions on the sale of shares issued in respect of any such
Stock Option shall lapse.
<PAGE>
In the event of a Change of Control, a Participant shall vest in all
shares of Restricted Stock and Restricted Stock Units, effective as of
the date of such Change of Control, and any deposited shares of Common
Stock shall be promptly returned to the Participant.
13. TERMINATION OF EMPLOYMENT
A. Termination of Employment
If the Participant's employment by the Company terminates for any
reason other than as specified herein or in subsections B, C or D, the
Participant's Stock Options shall terminate 3 months after such
termination and all shares of Restricted Stock and all Restricted Stock
Units which are subject to restriction as of said termination date
shall be forfeited by the Participant to the Company. In the event a
Participant's employment with the Company is terminated for the
convenience of the Company, as determined by the Committee, the
Committee, in its sole discretion, may vest such Participant in all or
any portion of outstanding Stock Options (which shall become
exercisable) and/or shares of Restricted Stock or Restricted Stock
Units awarded to such Participant, effective as of the date of such
termination.
B. Death
If a Participant should die while employed by the Company, any Stock
Option previously granted under this Plan may be exercised by the
person designated in such Participant's last will and testament or, in
the absence of such designation, by the Participant's estate, to the
full extent that such Stock Option could have been exercised by such
Participant immediately prior to death. Further, with respect to
outstanding Stock Option grants which, as of the date of death, are not
yet exercisable, any such option grant shall vest and become
exercisable in a pro-rata amount, based on the full months of
employment completed during the full vesting period of the Stock Option
from the date of grant to the date of death.
With respect to Stock Option grants which require the deposit of owned
Common Stock as a condition to obtaining exercise rights, in the event
a Participant should die while employed by the Company, said Stock
Options may be exercised as provided in the first paragraph of this
Section 13B, subject to the following special conditions:
(i) any restrictions on the sale of shares issued in respect of
any such Stock Option shall cease; and
(ii) any owned Common Stock deposited by the Participant pursuant to
said grant shall be promptly returned to the person designated
in such Participant's last will and testament or, in the
absence of such designation, to the Participant's estate, and
all requirements regarding deposit by the Participant shall be
terminated.
A Participant who dies during any applicable restricted period shall
vest in a proportionate number of shares of Restricted Stock or
Restricted Stock Units, effective as of the date of death. Such
proportionate vesting shall be pro-rata, based on the number of full
months of employment completed during the restricted period prior to
the date of death, as a percentage of the applicable restricted period.
C. Retirement
The Committee shall determine, at the time of grant, the treatment of
the Stock Option upon the retirement of the Participant. Unless other
terms are specified in the original Stock Option grant, if the
termination of employment is due to a Participant's retirement on or
after age 55 with 10 years of service with the Company, the Participant
may exercise a Stock Option, subject to the original terms and
conditions of the Stock Option. With respect to Stock Option grants
which require the deposit of owned Common Stock as a condition to
obtaining rights, any restrictions on the sale of shares issued in
respect of any such Stock Option shall lapse at the date of any such
retirement.
<PAGE>
A Participant who retires on or after the date he or she attains age 65
shall fully vest in all shares of Restricted Stock or Restricted Stock
Units, effective as of the date of retirement (unless any such award
specifically provides otherwise).
A Participant who takes early retirement (after age 55, but prior to
age 65) during any applicable restricted period may elect either of the
following alternatives with respect to Restricted Stock or Restricted
Stock Units (unless any such award specifically provides otherwise):
(a) Leave owned shares on deposit with the Company and vest in all
shares of Restricted Stock or Restricted Stock Units, effective
as of the earlier of the date the Participant attains age 65 or
the termination date of the applicable restricted period; or
(b) Withdraw owned shares and vest in a proportionate number of
shares of Restricted Stock or Restricted Stock Units, effective
as of the date the shares on deposit are withdrawn. Such
proportionate vesting shall be pro-rata, based on the number of
full months of employment completed during the restricted
period prior to the date of early retirement, as a percentage
of the applicable restricted period.
D. Spin-offs
If the termination of employment is due to the cessation, transfer, or
spin-off of a complete line of business of the Company, the Committee,
in its sole discretion, shall determine the treatment of all
outstanding Awards under the Plan.
14. AMENDMENTS OF THE PLAN
The Plan may be terminated, modified, or amended by the Board of
Directors of the Company. The Committee may from time to time
prescribe, amend and rescind rules and regulations relating to the
Plan. Subject to the approval of the Board of Directors, the Committee
may at any time terminate, modify, or suspend the operation of the
Plan, provided that no action shall be taken by the Board of Directors
or the Committee without the approval of the stockholders of the
Company which would:
(i) materially increase the number of shares which may be
issued under the Plan;
(ii) materially increase the benefits accruing to
Participants under the Plan; or
(iii) materially modify the requirements as to eligibility
for participating in the Plan.
The Board of Directors shall have authority to cause the Company to
take any action related to the Plan which may be required to comply
with the provisions of the Securities Act of 1933, as amended, the 1934
Act, and the rules and regulations prescribed by the Securities and
Exchange Commission. Any such action shall be at the expense of the
Company.
No termination, modification, suspension, or amendment of the Plan
shall alter or impair the rights of any Participant pursuant to a prior
Award without the consent of the Participant. There is no obligation
for uniformity of treatment of Participants under the Plan.
15. FOREIGN JURISDICTIONS
The Committee may adopt, amend, and terminate such arrangements, not
inconsistent with the intent of the Plan, as it may deem necessary or
desirable to make available tax or other benefits of the laws of any
foreign jurisdiction, to employees of the Company who are subject to
such laws and who receive Awards under the Plan.
<PAGE>
16. NOTICE
All notices to the Company regarding the Plan shall be in writing,
effective as of actual receipt by the Company, and shall be sent to:
Darden Restaurants, Inc.
5900 Lake Ellenor Dr.
Orlando, FL 32809
Attn: General Counsel
Effective May 28, 1995
EXHIBIT 10(c)
DARDEN RESTAURANTS, INC.
STOCK OPTION AND LONG-TERM INCENTIVE CONVERSION PLAN
(as amended May 23, 1996)
1. PURPOSE OF THE PLAN
The purpose of the GM Restaurants, Inc. Stock Option and Long-Term
Incentive Conversion Plan (the "Plan") is to provide for the issuance
and administration of certain awards relating to Common Stock of Darden
Restaurants, Inc. (the "Company") issued to employees and officers of
General Mills, Inc. ("GMI"), the Company, and other GMI Subsidiaries,
in connection with the Distribution by GMI to its stockholders of all
of the Common Stock of the Company.
2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set
forth below:
"Adjusted GMI Stock Option" shall mean a GMI Stock Option which, as a
result of the Distribution, has been adjusted by the GMI Compensation
Committee as to its exercise price and/or the number of shares of GMI
Common Stock it covers, such adjustment to each GMI Stock Option being
dependent on the number of corresponding Company Stock Options granted
by the Company, if any.
"Award" shall mean any Stock Option, Restricted Stock, Restricted Stock
Unit or Performance Unit Account granted under this Plan.
"Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award, which may, but need not,
be executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Bridge Grant" shall mean a GMI Stock Option granted on June 1, 1994
under the General Mills, Inc. 1990 Salary Replacement Stock Option Plan
in the award known as "90-S10" in GMI's internal stock option
management system.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" shall mean a committee of the Board designated by the Board
to administer the Plan and composed of not fewer than two directors,
each of which directors, to the extent necessary to comply with Rule
16b-3 only, is a "disinterested person" within the meaning of Rule
16b-3. Until otherwise determined by the Board, the Committee shall be
the Compensation Committee of the Board.
"Common Stock" shall mean the common stock of the Company
(without par value).
"Company" shall mean Darden Restaurants, Inc., a Florida
corporation.
"Company Conversion Ratio" shall mean the factor where the numerator is
the Per Share Company Stock Price and the denominator is the Per Share
Pre-Split GMI Stock Price.
"Distribution" shall mean the transfer by GMI of all the then
outstanding Shares owned by GMI to the distribution agent for the
benefit of, and ultimate distribution to, the holders of GMI common
stock as of the Record Date, as described in the Information Statement.
"Distribution Date" shall mean the effective date of the
Distribution.
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Fair Market Value" shall mean the mean of the high and low price of
the Common Stock on the New York Stock Exchange on the applicable date.
"Food Retirees" shall mean persons retiring from GMI on or prior to the
Distribution Date who are not Restaurant Retirees.
"GMI" shall mean General Mills, Inc., a Delaware corporation.
"GMI Award" shall mean any of the GMI Stock Options, GMI Restricted
Stock or Restricted Stock Units or GMI Performance Units.
"GMI Compensation Committee" shall mean the Compensation Committee of
the Board of Directors of GMI.
"GMI Performance Unit" shall mean a performance unit granted by GMI and
outstanding on the Record Date.
"GMI Restricted Stock or Restricted Stock Unit" shall mean a share of
GMI common stock or the right to receive a share of GMI common stock
which is subject to certain restrictions on the last trading day on the
New York Stock Exchange immediately prior to the Record Date.
"GMI Stock Option" shall mean an option to purchase GMI common stock
granted by GMI to a present or former officer or employee of GMI that
is outstanding and unexercised on the Record Date.
"Information Statement" shall mean the information statement dated May
5, 1995 distributed to GMI stockholders in connection with the
transactions relating to the Distribution.
"Participant" shall mean an individual eligible to receive a Company
Award who is granted an Award under the Plan.
"Per Share Company Stock Price" shall mean the composite volume
weighted average price of the Company's Common Stock as published by
Bloomberg L.P. for the period beginning on the later of (i) the second
trading day on which "when issued" trading in Company Common Stock
takes place on the New York Stock Exchange and (ii) the twentieth
trading day prior to the Distribution Date and ending on the
Distribution Date.
"Per Share Post-Split GMI Stock Price" shall mean the composite volume
weighted average price of GMI common stock trading without due bills as
published by Bloomberg L.P. for the period beginning on the later of
(i) the second trading day on which "when issued" trading in Company
Common Stock takes place on the New York Stock Exchange and (ii) the
twentieth trading day prior to the Distribution Date and ending on the
Distribution Date.
"Per Share Pre-Split GMI Stock Price" shall mean the composite volume
weighted average price as of GMI common stock trading with due bills
published by Bloomberg L.P. for the period beginning on the later of
(i) the second trading day on which "when issued" trading in Company
Common Stock takes place on the New York Stock Exchange and (ii) the
twentieth trading day prior to the Distribution Date and ending on the
Distribution Date.
"PUP Account" shall mean any account established by GMI in connection
with the granting of a GMI Performance Unit.
<PAGE>
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.
"Record Date" shall mean May 5, 1995.
"Restaurant Retirees" shall mean persons retiring from the Company on
or prior to the Distribution Date.
"Restricted Stock and Restricted Stock Unit" shall mean any award of
restricted stock or restricted stock units granted under Section 9 of
the Plan.
"Retiree Split Option Grant" shall have the meaning set forth in
Section 7(a)(iii) of the Plan.
"Retiree Split Stock Grant" shall have the meaning set forth in Section
9(b) of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect
from time to time.
"SEC" shall mean the Securities and Exchange Commission, including the
staff thereof, or any successor thereto.
"Shares" shall mean the shares of Common Stock (without par value) of
the Company and such other securities of the Company or a Subsidiary as
the Committee may from time to time designate.
"Special Grant" shall mean a GMI Stock Option granted on September 20,
1993 and September 19, 1994 under the General Mills, Inc. Stock Option
and Long-Term Incentive Plan of 1993.
"Split Grant Conversion Ratio" shall mean the factor where the
numerator is the Per Share Pre-Split GMI Stock Price and the
denominator is the sum of the Per Share Post-Split GMI Stock Price and
the Per Share Company Stock Price.
"Stock Option" shall mean a stock option granted under Section 7 of the
Plan.
"Subsidiary" shall mean any corporation or other entity in which the
Company possesses directly or indirectly equity interests representing
at least 25% of the total ordinary voting power or at least 25% of the
total value of all classes of equity interests of such corporation or
other entity.
3. EFFECTIVE DATE AND DURATION
Effective Date
This Plan shall become effective as of the Distribution Date. Subject
to paragraph 6(b), no Award shall be granted under the Plan except the
Awards provided for in Sections 7, 9 and 10. Awards granted hereunder
shall continue until their respective expiration dates.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. Subject to the terms
of the Plan and applicable law, and in addition to other express powers
and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to interpret and
administer the Plan and any instrument or agreement relating to, or
Award made under, the Plan; establish, amend, suspend or waive such
rules and regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; and make any
other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan. The
<PAGE>
Committee shall have no discretion relating to the timing, price and
size of Awards granted under the Plan, which shall be determined in
accordance with the provisions of Sections 7, 9 and 10. Unless
otherwise expressly provided in the Plan, all designations,
determination, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of
the Committee, may be made at any time and shall be final, conclusive
and binding upon all Persons, including the Company, any Subsidiary,
any Participant, any holder or beneficiary of any Award, any
stockholder of the Company and any Participant. The authority of the
Committee to administer, interpret, amend, alter, adjust, suspend,
discontinue, or terminate, in accordance with the provisions of the
Plan, any Award or to waive any conditions or rights under any Award
shall extend until the expiration date of such Award.
5. ELIGIBLE PERSONS
Only persons employed by the Company or a Subsidiary on the
Distribution Date and Food Retirees and Restaurant Retirees who, on the
Distribution Date, hold an outstanding GMI Stock Option or on the
Record Date have issued and outstanding in their name GMI Restricted
Stock or Restricted Stock Units shall be eligible to receive Awards
under the Plan. Each Participant shall be granted an Award in
accordance with the provisions of the Plan.
6. SHARES SUBJECT TO THE PLAN
(a) Shares Available for Awards. Subject to adjustment as
provided in Section 6(b):
(i) Calculation of Number of Shares Available. The number of
Shares with respect to which Awards may be granted under
the Plan shall be such number of Shares as results from the
application of the award formulas set forth in Sections 7,
9 and 10. If, after the effective date of the Plan, an
Award granted under the Plan expires or is exercised,
forfeited, cancelled or terminated without the delivery of
Shares, then the Shares covered by such Award or to which
such Award relates, or the number of Shares otherwise to
which Awards may be granted, to the extent of any such
expiration, exercise, forfeiture, cancellation or
termination, shall not thereafter be available for grants
or Awards under the Plan.
(ii)Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist of authorized
and unissued Shares, Shares held in the Company's treasury
and Shares acquired in the open market or otherwise
obtained by the Company or a Subsidiary.
(b) Adjustments. In the event that the Committee determines that
any dividend or other distribution (whether in the form of
cash, Shares, Subsidiary securities, other securities or other
property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company,
or other similar corporate transaction or event affects the
Shares such that an adjustment is determined by the Committee
to be appropriate to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan, then the Committee may, in its sole discretion
and in such manner as it may deem equitable, adjust any or all
of (i) the number and type of Shares subject to outstanding
Awards, and (ii) the grantor exercise price with respect to
any Award and, if deemed appropriate, make provision for a
cash payment to the holder of an outstanding Award; provided,
that the number of Shares subject to any Award denominated in
Shares shall always be a whole number.
<PAGE>
7. STOCK OPTIONS
(a) Number of Stock Options. Each holder of a GMI Stock Option who
is a Company employee, a Food Retiree or a Restaurant Retiree
on the Distribution Date shall receive either a Company Stock
Option, an Adjusted GMI Stock Option or an election to receive
either a Company Stock Option or a Company Stock Option and an
Adjusted GMI Stock Option in accordance with the following:
(i) Active employees of the Company on the Distribution Date
who hold GMI Stock Options, except Bridge Grants or Special
Grants shall receive, in addition to an Adjusted GMI Stock
Option, a Company Stock Option with an exercise price for
the shares of Common Stock equal to the exercise price of
the GMI Stock Option prior to the Distribution multiplied
by the Company Conversion Ratio and for a number of shares
of Common Stock equal to the number of shares subject to
the GMI Stock Option prior to the Distribution multiplied
by .33 divided by the Company Conversion Ratio.
(ii)Active employees of the Company on the Distribution Date
holding Bridge Grants or Special Grants and Restaurant
Retirees holding Bridge Grants shall, as to such options,
receive a Company Stock Option with an exercise price for
the shares of Common Stock equal to the exercise price of
the GMI Stock Option prior to the Distribution multiplied
by the Company Conversion Ratio and for a number of shares
of Common Stock equal to the number of shares subject to
the GMI Stock Option prior to the Distribution divided by
the Company Conversion Ratio.
(iii)Restaurant Retirees holding GMI Stock Options, other than
Bridge Grants, shall be given, as to such GMI Stock
Options, an election, prior to the Record Date, to receive
either (a) a Company Stock Option as described in (ii)
above or (b) a Retiree Split Option Grant. The Retiree
Split Option Grant shall mean an Adjusted GMI Stock Option,
as determined by the GMI Compensation Committee, plus a
Company Stock Option with an exercise price for the shares
of Common Stock equal to the exercise price of the GMI
Stock Option prior to the Distribution multiplied by the
Company Conversion Ratio and for a number of shares of
Common Stock equal to the number of shares subject to the
GMI Stock Option prior to the Distribution multiplied by
the Split Grant Conversion Ratio.
(iv)Food Retirees holding GMI Stock Options shall be given an
election, prior to the Record Date, either to receive a
Retiree Split Option Grant as described in (iii) above or
receive an Adjusted GMI Stock Option, as determined by the
GMI Compensation Committee.
(v) Each Company Stock Option shall have the same remaining
term and other terms and conditions (whether such terms and
conditions are contained in the related GMI Stock Option
agreement or in the plan under which such GMI Stock Option
was granted, subject that a "Change of Control" as defined
in such related agreement or plan shall be amended to
provide that a "beneficial owner" is an owner of 20% or
more of the shares of the Company entitled to vote for the
election of directors) and shall be exercisable to the same
extent as the GMI Stock Option from which it was derived,
with such changes and modifications as necessary to
substitute the Company for GMI, as the issuer of the Stock
Option.
8. EXERCISE OF STOCK OPTIONS
A Participant exercising a Company Stock Option shall give notice to
the Company of such exercise and of the number of shares elected to be
<PAGE>
purchased prior to 5:00 P.M. EST/EDT on the day of exercise, which must
be a business day at the executive offices of the Company. At the time
of purchase, the Participant shall tender the full purchase price of
the shares purchased. Until such payment has been made and a
certificate or certificates for the shares purchased has been issued in
the Participant's name, the Participant shall possess no stockholder
rights with respect to such shares. Payment of such purchase price
shall be made to the Company, subject to any applicable rule or
regulation adopted by the Committee:
(i) in cash (including check, draft, money order or wire transfer
made payable to the order of the Company);
(ii) through the delivery of shares of Common Stock owned by
the Participant; or
(iii) by a combination of (i) and (ii) above.
For determining the amount of the payment, Common Stock delivered
pursuant to (ii) or (iii) shall have a value equal to the Fair Market
Value of the Common Stock on the date of exercise.
9. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
(a) Holders of unvested GMI Restricted Stock or Restricted Stock
Units who are employees of the Company on the Distribution
Date shall have issued in their name, or in book entry form as
reflected on the master stockholder record of the Company
immediately following the Distribution Date, a number of
shares of Company Restricted Stock or Restricted Stock Units
equal to the number of shares of GMI Restricted Stock or
Restricted Stock Units issued and outstanding in their name on
the last trading day on the New York Stock Exchange prior to
the Record Date divided by the Company Stock Conversion Ratio.
(b) Holders of unvested GMI Restricted Stock or Restricted Stock
Units and who are Restaurant Retirees shall be given a choice,
prior to the Record Date, to elect to have issued in their
name, or in book entry form as reflected on the master
stockholder record of the Company immediately following the
Distribution Date either (i) a Retiree Split Stock Grant or
(ii) the number of shares of Company Restricted Stock or
Restricted Stock Units described in (a) above. The Retiree
Split Stock Grant shall consist of GMI Restricted Stock or
Restricted Stock Units, as determined by the GMI Compensation
Committee, and Company Restricted Stock or Restricted Stock
Units covering the number of shares which were subject to the
GMI Restricted Stock or Restricted Stock Units on the last
trading day on the New York Stock Exchange prior to the Record
Date.
(c) Holders of unvested GMI Restricted Stock or Restricted Stock
Units who are Food Retirees shall be given a choice, prior to
the Record Date, to elect to have issued in their name, or in
book entry form as reflected on the master stockholder record
of the Company, either (i) a Retiree Split Stock Grant
described in (b) above or (ii) a modified grant of GMI
Restricted Stock or Restricted Stock Units as determined by
the GMI Compensation Committee.
(d) Each share of Restricted Stock or Rstricted Stock Unit shall
have the same remaining vesting period and other terms and
conditions (whether such terms and conditions are contained in
the related GMI Restricted Stock or Restricted Stock Unit
agreement or in the plan under which such GMI Restricted Stock
or Restricted Stock Unit was granted) and shall vest to the
same extent and at the rate as the share of GMI Restricted
Stock or Restricted Stock Unit from which it was derived, with
such changes and modifications as necessary to substitute the
Company for GMI as the issuer of the Restricted Stock or
Restricted Stock Unit; provided, however, that as to Stock
Options, Restricted Stock or Restricted Stock Units which
require a deposit of Participant-owned shares as a condition
to vesting, the Committee may, in its discretion, make such
adjustments to the deposit requirements as it deems
appropriate.
<PAGE>
10. PERFORMANCE UNITS
The value on the Distribution Date of PUP Accounts shall be transferred
to the Company in the proportion that the Company Stock Options, having
a related PUP Account, bear to the corresponding Adjusted GMI Stock
Options, if any. If no corresponding Adjusted GMI Stock Options are
issued, the entire value of the PUP Account shall be transferred to the
Company. Withdrawals of PUP Account amounts transferred to the Company
shall reduce the outstanding Company Stock Options held by a
Participant; exercises of Company Stock Options shall reduce the amount
of the corresponding transferred PUP Account to the same extent as
provided in the grant of the GMI Performance Unit.
11. AMENDMENTS TO PLAN AND AWARDS
(a) Amendments to the Plan. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time,
provided that no amendment shall be made without stockholder
approval if such approval is necessary to comply with any tax
or regulatory requirement, including for these purposes any
approval requirement that is a prerequisite for exemptive
relief from Section 16(b) of the Exchange Act or any successor
provision thereto. Notwithstanding anything to the contrary
contained herein, i) the Committee may amend the Plan in such
manner as may be necessary for the Plan to conform with local
rules and regulations in any jurisdiction outside the United
States, and (ii) any amendment, suspension or termination made
in accordance with this paragraph 11(a) that would adversely
affect a Participant's rights under an Award made under the
Plan may not be made without such Participant's consent and
(iii) no amendment to the provisions of Sections 7, 9 and 10
of the Plan relating to the amount, price and timing of Awards
under the Plan may be made more often than once every six
months, except to comport with the provisions of the Code or
the regulations thereunder.
(b) Amendments to Awards. The Committee may amend, modify or
terminate any outstanding Award with the Participant's consent
at any time prior to payment or exercise in any manner not
inconsistent with the terms of the Plan, including without
limitation to change the date or dates as of which an Award
becomes exercisable.
(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized
to make adjustments in the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events
described in paragraph 6(b) hereof) affecting the Company, or
the financial statements of the Company or any Subsidiary, or
of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such
adjustments are appropriate to prevent dilution or enlargement
of the benefits or potential benefits intended to be made
available under the Plan.
(d) Cancellation. Any provision of this Plan or any Award Agreement
to the contrary notwithstanding, the Committee may cause any
Award granted hereunder to be cancelled in consideration of a
cash payment or alternative Award made to the holder of such
cancelled Award. The determinations of value under this
subparagraph shall be made by the Committee in its sole
discretion.
12. MISCELLANEOUS
(a) Award Agreements. Awards hereunder may be evidenced by a
writing delivered to the Participant that shall specify the
terms and conditions thereof and any rules applicable thereto
and that shall, in accordance with the provisions of the Plan,
replicate as closely as possible the terms, conditions and
other contractual attributes of the GMI Award from which the
Award is derived, as in effect on the Distribution Date.
<PAGE>
(b) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other
requirements of the SEC, any stock exchange upon which such
Shares or other securities are then listed, and any applicable
federal or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions.
(c) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting
or continuing in effect other compensation arrangements, which
may, but need not, provide for the grant of options, stock
appreciation rights and other types of Awards provided for
hereunder (subject to stockholder approval of any such
arrangement if approval is required), and such arrangements
may be either generally applicable or applicable only in
specific cases.
(d) No Right to Employment. The grant of any Award shall not be
construed as giving a Participant the right to be engaged or
employed by or retained in the employ of the Company or any
Subsidiary. The Company or any Subsidiary may at any time
dismiss a Participant from engagement or employment, free from
any liability or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement or
any agreement relating to the engagement or employment of the
Participant by the Company or any Subsidiary.
(e) Governing Law. The validity, construction, and effect of the
Plan, any rules and regulations relating to the Plan and any
Award Agreement shall, to the extent not governed by federal
law, be determined in accordance with the laws of the State of
Florida.
(f) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable
in any jurisdiction or as to any Person or Award, or would
disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed
or deemed amended to conform to applicable laws, or if it
cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent
of the Plan or the Award, such provision shall be stricken as
to such jurisdiction, Person or Award and the remainder of the
Plan and any such Award shall remain in full force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the
Company and a Participant or any other Person. To the extent
that any Person acquires a right to receive payments from the
Company pursuant to an Award, such right shall be no greater
than the right of any unsecured general creditor of the
Company.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee
shall determine, in accordance with the terms of the Plan, as
applicable, whether cash, other securities or other property
shall be paid or transferred in lieu of any fractional Shares
or whether such fractional Shares or any rights thereto shall
be cancelled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the subsections of the Plan
solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision
thereof.
<PAGE>
13. NON-TRANSFERABILITY
No shares of Restricted Stock and no Restricted Stock Units shall be
sold, exchanged, transferred, pledged, or otherwise disposed of during
the restricted period. No Stock Options granted under this Plan shall
be transferable by a Participant otherwise than (i) by the
Participant's last will and testament or (ii) by the applicable laws of
descent and distribution, and such Stock Options shall be exercised
during the Participant's lifetime only by the Participant or his or her
guardian or legal representative. Other than as set forth herein, no
Award under the Plan shall be subject to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge, and any
attempt to do so shall be void.
14. WITHHOLDING TAXES
It shall be a condition to the obligation of the Company to deliver
shares upon the exercise of a Stock Option, the vesting of Restricted
Stock or Restricted Stock Units and the corresponding issuance of
shares of unrestricted Common Stock, that the Participant pay to the
Company cash in an amount equal to all federal, state, local and
foreign withholding taxes required to be collected in respect thereof.
Notwithstanding the foregoing, to the extent permitted by law and
pursuant to such rules as the Committee may adopt, a Participant may
authorize the Company to satisfy any such withholding requirement by
directing the Company to withhold from any shares of Common Stock to be
issued, all or a portion of such number of shares as shall be
sufficient to satisfy the withholding obligation, provided that in the
case of the vesting of Restricted Stock or Restricted Stock Units, the
number of shares of Common Stock to be issued equals or exceeds 500.
15. FOREIGN JURISDICTIONS
The Committee may adopt, amend, and terminate such arrangements, not
inconsistent with the intent of the Plan, as it may deem necessary or
desirable to make available tax or other benefits of the laws of any
foreign jurisdiction, to employees of the Company who are subject to
such laws and who receive Awards under the Plan.
16. NOTICE
All notices to the Company regarding the Plan shall be in writing,
effective as of actual receipt by the Company, and shall be sent to:
GM Restaurants, Inc.
5900 Lake Ellenor Dr.
Orlando, FL 32809
Attn: General Counsel
Effective May 28, 1995
EXHIBIT 10(h)
DARDEN RESTAURANTS, INC.
MANAGEMENT INCENTIVE PLAN
(as amended May 23, 1996)
PART I
GENERAL PROVISIONS
A. OBJECTIVE OF THE PLAN
It is the intent of Darden Restaurants, Inc. (the "Company") to provide
financial rewards to key executives in recognition of individual
contributions to the success of the Company under the provisions of
this Management Incentive Plan (the "Plan").
Participant awards shall be based on the comparative impact of the
position to the overall corporate results as measured by the position
level, salary of the Participant, and the degree to which the
individual is able to affect division/subsidiary, group and corporate
results.
B. ELIGIBILITY
Any active key management employee of the Company or any of its
subsidiaries, including such members of the Board and the Chairman as
are actively employed by the Company or its subsidiaries, shall be
eligible to participate in the Plan. Eligibility shall not carry any
rights to participation nor to any fixed awards under the Plan.
Employees on a commission basis, those who are members of any other
company incentive compensation plan, except the Stock Option and
Long-Term Incentive Plans of the Company, and persons acting in a
consulting capacity shall not be eligible.
C. PARTICIPATION
As early as possible in each fiscal year (the "Plan Year"), management
shall recommend from those eligible a list of proposed Participants in
the Plan, and the Compensation Committee of the Board of Directors (the
"Committee") thereupon shall determine and cause to be notified those
who have been selected as Participants for the current Plan Year.
Participants shall be those persons holding positions which most
significantly affect operating results and provide the greatest
opportunity to contribute to current earnings and the future success of
the Company. During the year, other Participants may be added because
of promotion or for other reasons warranting their inclusion, or
Participants may be excluded from active participation because of
demotion or other reasons warranting their exclusion.
PART II
BASE CASH AWARDS
The size of a Participant's base cash incentive award ("Base Cash
Award") under this Plan shall be preliminarily determined by the
following formula:
(Eligible Base Salary Earnings) x (Target Incentive Percent) x
(Individual Performance Rating) x (Corporate/Unit Composite Rating) =
(Base Cash Award)
<PAGE>
A. ELIGIBLE BASE SALARY EARNINGS
The Eligible Base Salary Earnings is the total amount of regular base
pay actually paid to a Plan Participant during the portion of the year
the Participant is covered by the Plan.
B. TARGET INCENTIVE PERCENT
The Target Incentive Percent shall be determined by the Senior Vice
President-Personnel using the following guidelines:
The Target Incentive Percent will be determined based on job level at
the time participation in the Plan commences. Persons transferred to a
higher or lower job level during a Plan Year will have their Target
Incentive Percent revised as of the effective date of the change in
position.
C. INDIVIDUAL PERFORMANCE RATING
Individual performance for the Plan Year will be determined as follows:
1. At the beginning of each Plan Year, each Participant will
develop written objectives for the year which are directly
related to specific job accountabilities.
2. The individual objectives will be reviewed with each
Participant's supervisor for acceptance and will become the
primary basis for establishing the Individual Performance
Rating for the year. For the Chief Executive Officer, such
objectives will be reviewed and approved by the Committee.
3. Near the end of each Plan Year, each Participant will submit to
his or her supervisor, a Summary of Accomplishments related to
individual performance during the year. Based on this
information and other information related to individual
performance or job accountabilities, the supervisor will assign
an individual rating from the following range:
0.00 - .50 Unsatisfactory Performance
.50 - .90 Objectives Partially Met
.90 - 1.20 Objectives Met
1.20 - 1.40 Superior Performance
1.40 - 1.80 Outstanding & Exceptional Performance
D. UNIT/CORPORATE PERFORMANCE RATING
1. Unit Rating
Near the end of the Plan Year, each Participant will submit to his or
her supervisor, a Unit Achievement Summary, which outlines the
performance of his or her respective unit during the Plan Year and
relates directly to annual program, the Company's long-range plans and
other key operating objectives. This Unit Achievement Summary will be
used, along with other information related to unit performance, in
establishing a unit rating with a range of .0 (Unsatisfactory) to 1.8
(Outstanding and Exceptional Performance) in the same manner or ratings
for Individual Performance Ratings.
2. Corporate Rating
At the beginning of each Plan Year, the Committee shall establish a
rating schedule based upon the Company's growth in Earnings Per Share
(Pre-LIFO) and the Company's Return on Capital for the Plan Year. Based
on this schedule, the Committee will, at the end of each Plan Year,
establish a corporate rating for the year. Individual and unit ratings
will be recommended by the Participant's manager and reviewed by one
<PAGE>
additional level of management. All individual and unit ratings for
Plan Participants will be submitted to the Company's Incentive
Committee for review and approval.
3. Unit/Corporate Weightings
The ratings established in 1. and 2. above shall be weighted based on
job level according to the following schedule:
<TABLE>
<CAPTION>
Corporate Unit
Portion Portion
<S> <C> <C>
Senior Corporate Officers 100% 0%
Vice Chairman 40% 60%
Restaurant Concept Presidents 25% 75%
Restaurant Concept Officers 0% 100%
Corporate Staff Officers 100% 0%
</TABLE>
E. REVIEW AND APPROVAL OF RATINGS
All individual and unit ratings will be determined by the Participant's
manager and reviewed and approved by one additional level of
management. In addition, the Incentive Committee shall review and
approve all ratings prior to their submissions to the Committee.
The final ratings and incentive award amounts shall be reviewed and
approved by the Committee which shall have full authority and
discretion to set all final Base Cash Awards.
PART III
STOCK MATCHING PROVISIONS
A. ALTERNATIVES FOR PARTICIPATION IN STOCK MATCHING
Subject to the provisions set forth below (the "Stock Matching
Provisions"), Participants under age 55 are eligible to receive
additional incentive compensation in the form of common stock of the
Company ("Common Stock") contributed by the Company ("Stock Matching")
under the terms of the Company's Stock Option and Long-Term Incentive
Plans, and Participants age 55 or over may elect to receive all or a
portion of their additional incentive compensation in the form of Stock
Matching and/or an "Additional Cash Award."
1. Participants under age 55 as of the last day of the Plan Year are
eligible to participate in the Stock Matching Provisions of the
Plan by depositing shares of Common Stock with a Fair Market
Value equal to either 15% or 25% of their Base Cash Award,
depending on job level.
2. Participants age 55 or over as of the last day of the Plan Year
may elect full, partial, or no participation in the Stock
Matching Provisions according to the following schedule:
<PAGE>
<TABLE>
<CAPTION>
25% Match 15% Match
------------------------------ -----------------------------
Fair Market Fair Market
Level of Value of Value of
Stock Shares to be Additional Shares to be Additional
Matching Deposited as % Cash Award Deposited as % Cash Award
Participation of Base Cash of Base Cash
Award Award
<S> <C> <C> <C> <C>
Full 25% 0% 15% 0%
Participation 15% 6% 9% 3%
Partial 10% 9% 6% 5%
Participation 5% 12% 3% 7%
No 0% 15% 0% 9%
Participation
in Stock
Matching
</TABLE>
3. On or before the December 31 immediately preceding the end of the
Plan Year, Participants must notify the Company in writing of the
applicable participation alternatives elected under the Stock
Matching Provisions. Elections regarding Stock Matching
participation are effective for the current Plan Year.
B. PARTICIPATION IN STOCK MATCHING
1. The Company shall notify each Participant who participates in the
Stock Matching Provisions of the maximum number of shares of
Common Stock which they are permitted to deposit under the Plan,
and Participants may choose to deposit all or any portion of the
number of shares so permitted to be deposited (the "Original
Deposit"). Participants can make their Original Deposit at any
time after they receive their Base Cash Award, but Participants
must deposit such shares with the Company (the "Agent") no later
than the December 1 immediately following the end of the Plan
Year.
2. Any Participant who dies, retires on or after age 65, elects
early retirement after age 55, or is permanently disabled and
unable to work as determined by the Committee, either during a
Plan Year or prior to the final date for depositing the Original
Deposit shares for such Plan Year (December 1), shall not be
eligible to participate in the Stock Matching Provisions, but
instead, such Participant, or the Participant's legal
representative, shall receive an Additional Cash Award for the
Plan Year in an amount equal to fifteen percent (15%) or
twenty-five percent (25%) of any Base Cash Award paid or payable
for that Plan Year.
C. DISTRIBUTIONS AND WITHDRAWALS
1. Restricted Stock
As soon as practical following the Original Deposit by a Participant,
the Company shall, under the terms of the Company's Stock Option and
Long Term Incentive Plans, match these shares and either deposit with
the Agent for the Participant's account one share of Common Stock for
each share of the Original Deposit or evidence issuance of one share of
Common Stock for each share of the Original Deposit in book entry form
as reflected on the master stockholder records of the Company. The
Company matching shares (the "Restricted Stock") shall vest and be
delivered to the Participant in accordance with the terms of the plan
under which they are issued and as determined by the Committee.
2. Temporary Withdrawal for Option Exercise
A Participant may temporarily withdraw all or a portion of the shares
on deposit for all Plan Years (other than Restricted Stock) in order to
exercise Company stock options, subject to an equal number of shares of
Common Stock being promptly redeposited with the Agent after such
exercise.
D. DEFINITION OF PLAN YEAR
For stock matching purposes, the Plan Year shall be defined as the
Company's fiscal year.
PART IV
DEFERRAL OF PAYMENT OF CASH INCENTIVE AWARDS
Subject to rules adopted by the Committee, a Participant may elect to defer all
or a portion of a Base Cash Award and any additional cash award received
(collectively "Cash Award") during each calendar year in accordance with the
terms and conditions of the Company's FlexComp Plan.
In order to defer all or a portion of the Cash Award for a particular calendar
year, a Participant must make a valid election by executing and filing a
Deferral Election Form with the Company on or before the December 31 immediately
preceding the end of the Plan Year.
PART V
PLAN ADMINISTRATION
This Plan shall be effective in each fiscal year of the Company and shall be
administered by the Committee and the Committee shall have full authority to
interpret the Plan. Such interpretations of the Committee shall be final and
binding on all parties, including the Participants, survivors of the
Participant, and the Company.
The Committee shall have the authority to delegate the duties and
responsibilities of administering the Plan, maintaining records, issuing such
rules and regulations as it deems appropriate, and making the payments hereunder
to such employees or agents of the Company as it deems proper.
The Board, or if specifically delegated, its delegate, may amend, modify or
terminate the Plan at any time, provided, however, that no such amendment,
modification or termination shall adversely affect any accrued benefit under the
Plan to which a Participant, or the Participant's beneficiary, is entitled prior
to the date of such amendment or termination, unless the Participant, or the
Participant's beneficiary, becomes entitled to an amount equal to the value of
such benefit under another plan, program or practice adopted by the Company.
Notwithstanding the above, no amendment, modification, or termination which
would affect benefits accrued under this Plan prior to such amendment,
modification or termination may occur after a Change of Control without the
written consent of a majority of the Participants determined as of the day
before such Change of Control.
A Change of Control shall mean the occurrence of any of the following events:
(a) any person (including a group as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934) becoming, directly or
indirectly, the beneficial owner of twenty percent (20%) or
more of the shares of stock of the Company entitled to vote for
the election of directors;
(b) as a result of or in connection with any cash tender offer,
exchange offer, merger or other business combination, sale of
<PAGE>
assets or contested election, or combination of the foregoing,
the persons who were directors of the Company just prior to
such event shall cease to constitute a majority of the
Company's Board of Directors; or
(c) the stockholders of the Company approve an agreement providing
for a transaction in which the Company will cease to be an
independent publicly-owned corporation or a sale or other
disposition of all or substantially all of the assets of the
Company occurs.
In the event the Company shall effect one or more changes, split-ups or
combinations of shares of Common Stock or one or more other like transactions,
the Board or the Committee may make such adjustment, upward or downward, in the
number of shares of Common Stock to be deposited by the Participants as shall
appropriately reflect the effect of such transactions.
In the event the Company shall distribute shares of a subsidiary of the Company
to its stockholders in a spin-off transaction, the shares of stock of the
subsidiary distributed to Participants which are attributable to Restricted
Stock shall be vested and delivered to the Participants subject to any specific
instructions of the Committee.
Neither any benefit payable hereunder nor the right to receive any future
benefit under the Plan may be anticipated, alienated, sold, transferred,
assigned, pledged, encumbered, or subjected to any charge or legal process, and
if any attempt is made to do so, or a person eligible for any benefits becomes
bankrupt, the interest under the Plan of the person affected may be terminated
by the Committee which, in its sole discretion, may cause the same to be held or
applied for the benefit of one or more of the dependents of such person or make
any other disposition of such benefits that it deems appropriate.
All questions pertaining to the construction, validity and effect of the Plan
shall be determined in accordance with the laws of the United States and the
laws of the State of Florida.
Effective as of May 28, 1995
EXHIBIT 11
<TABLE>
DARDEN RESTAURANTS, INC.
DETERMINATION OF COMMON SHARES AND COMMON SHARE EQUIVALENTS
(In Thousands)
<CAPTION>
Fiscal Year Ended
- ------------------------------------------------------------------------------
May 26, 1996 May 28, 1995 May 29, 1994
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Computation of Shares:
Weighted average number of shares
outstanding...................... 158,700 158,000 159,100
Net shares resulting from the
assumed exercise of certain
stock options (a)................ 2,600(b) ______ _______
------
Total common shares and common
share equivalents................ 161,300 158,000(c) 159,100(c)
======= ======= =======
<FN>
- -------------------------------------------------------------------------------
Notes to Exhibit:
(a)Common share equivalents for the fiscal year ended May 26, 1996, are
computed by the "treasury stock" method. This method first determines the
number of shares issuable under stock options that had an option price below
the average market price for the period, and then deducts the number of
shares that could have been repurchased with the proceeds of options
exercised.
(b)Common share equivalents for the fiscal year ended May 26, 1996 are not
material. As a result, earnings per share have been computed using the
weighted average number of shares outstanding of 158,700 for the year.
(c)During the fiscal years ended May 28, 1995 and May 29, 1994, the Company was
not a separate, independent company, but a wholly-owned subsidiary of General
Mills. As such, the numbers of shares used to compute earnings per share for
the fiscal years ended May 28, 1995 and May 29, 1994 are based on the average
number of General Mills' common shares outstanding during these periods and a
distribution of one share of the Company's common stock for each share of
General Mills' common stock outstanding.
</FN>
</TABLE>
EXHIBIT 12
<TABLE>
DARDEN RESTAURANTS, INC.
COMPUTATION OF RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES
(Historical and Pro Forma)
<CAPTION>
Computation of Ratio of Historical Consolidated Earnings to Fixed Charges
Fiscal Year Ended
------------------------------------------
May 26, May 28, May 29, May 30, May 31,
1996 1995 1994 1993 1992
($ Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Consolidated Earnings from
Operations before Restructuring
Charges, Cumulative Effect of
Accounting Changes and Income
Taxes........................... $188,718 $164,446 $193,695 $191,706 $176,953
Plus Fixed Charges................ 40,822 42,685 38,304 33,597 28,066
Less Capitalized Interest......... (2,007) (4,327) (4,087) (3,002) (4,470)
------- ------- ------- ------- -------
Consolidated Earnings from
Operations before Restructuring
Charges, Cumulative Effect of
Accounting Changes and Income
Taxes Available to Cover Fixed
Charges........................ $227,533 $202,804 $227,912 $222,301 $200,549
======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges. 5.57 4.75 5.95 6.62 7.15
======= ======= ======= ======= =======
</TABLE>
<TABLE>
Computation of Ratio of Pro Forma Consolidated Earnings to Fixed Charges
<CAPTION>
Fiscal Year Ended
------------------------------------------
May 26, May 28, May 29, May 30, May 31,
1996 1995 1994 1993 1992
($ Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Pro Forma Consolidated Earnings
from Operations before
Restructuring Charges,
Cumulative Effect of Accounting
Changes and Income Taxes....... $188,718 $159,076 $188,325 $186,336 $171,583
Plus Fixed Charges.............. 40,822 42,685 38,304 33,597 28,066
Less Capitalized Interest........ (2,007) (4,327) (4,087) (3,002) (4,470)
-------- ------------------------ -------
Pro Forma Consolidated Earnings
from Operations before
Restructuring Charges,
Cumulative Effect of
Accounting Changes and
Income Taxes Available to
Cover Fixed Charges........... $227,533 $197,434 $222,542 $216,931 $195,179
======== ======== ======== ======== ========
Ratio of Earnings to
Fixed Charges.................. 5.57 4.63 5.81 6.46 6.95
======== ======== ======== ======== ========
<FN>
For purposes of computing the ratio of consolidated earnings to fixed charges,
earnings represent consolidated pretax earnings from continuing operations plus
fixed charges (net of capitalized interest). Fixed charges represent interest
(whether expensed or capitalized) and 40 percent (the percent deemed
representative of the interest factor) of minimum restaurant lease payments for
continuing operations.
The pro forma adjustments to the historical consolidated statements of earnings
for each of the four fiscal years ended May 28, 1995 consist of (a) additional
annual general and administrative expenses of $5,370 which would have been
incurred by Darden as a separate publicly-held company, based on estimates by
the management of Darden and General Mills, and (b) the estimated income tax
benefit associated with the pro forma adjustment described in clause (a) above
at an assumed combined state and federal income tax rate of 39.8%.
</FN>
</TABLE>
EXHIBIT 13
MANAGEMENT'S DISCUSSION
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Darden Restaurants was created as an independent publicly held company in May
1995 through the spin-off of all of General Mills' restaurant operations to its
shareholders. Darden operates 1,217 Red Lobster, The Olive Garden and Bahama
Breeze restaurants in the U.S. and Canada. All the restaurants are operated by
the Company with no franchising.
This discussion should be read in conjunction with the business information and
the Consolidated Financial Statements and related notes found elsewhere in this
report. For comparison in this discussion, fiscal years prior to 1996 include a
pro forma annual pretax cost adjustment of $5.37 million to reflect the
estimated additional general and administrative expenses which would have been
incurred by Darden as a separate publicly held company.
REVENUES
Total revenues in fiscal 1996 were $3.2 billion, a 1 percent increase from
fiscal 1995 which included $71.1 million of sales from the discontinued China
Coast. Total revenues increased 7 percent between fiscal 1995 and fiscal 1994.
The increases in sales were attributable to the opening of new units and
increases in same-store sales. Same-store sales gains were primarily due to
increased sales of appetizers, beverages and desserts, and modest price
increases.
COSTS AND EXPENSES
Food and beverage costs for fiscal 1996 were 33.3 percent of sales, a decline of
1.3 percentage points from fiscal 1995 and 0.9 percentage points from 1994.
These favorable declines were caused by reduced food waste at The Olive Garden,
modest price increases at both Red Lobster and The Olive Garden, and an improved
menu mix.
Restaurant labor was slightly higher for fiscal 1996 at 29.9 percent of sales
against 29.5 percent for fiscal 1995 and 29.3 percent in fiscal 1994. These
increases were due to wage rate inflation, reduced same-store sales at Red
Lobster and higher training costs to implement cost-saving systems at The Olive
Garden.
Restaurant expenses (primarily lease expenses, new unit opening expenses,
utilities and workers' compensation costs) declined in fiscal 1996 to 14.3
percent of sales compared to 14.8 percent in fiscal 1995 and 14.9 percent in
fiscal 1994. These favorable decreases were due primarily to the closing of
China Coast, a reduced number of new restaurant openings and an increased focus
on store-level costs at The Olive Garden.
Selling, general and administrative expenses for the fiscal year increased to
11.7 percent of sales compared to a pro forma 11.1 percent in fiscal 1995 and
10.3 percent of sales in fiscal 1994. The increases were caused by higher
marketing expense.
Depreciation and amortization expense of 4.2 percent of sales in fiscal 1996 was
down slightly from the 4.3 percent in fiscal 1995 and was flat compared to
fiscal 1994. Interest expense of 0.7 percent of sales in fiscal 1996 was flat
compared to fiscal 1995 and 0.1 percentage points higher than fiscal 1994.
<PAGE>
INCOME FROM OPERATIONS
Pretax earnings before restructuring rose by almost 19 percent in fiscal 1996 to
$188.7 million, compared to the pro forma $159.1 million in fiscal 1995, and
were approximately the same as the pro forma $188.3 million in fiscal 1994. The
increase in fiscal 1996 was primarily a result of the decline in food and
beverage costs and restaurant expenses as mentioned above.
PROVISION FOR INCOME TAXES
The effective tax rate after restructuring charges increased to 34.6 percent in
fiscal 1996 compared to the pro forma 17.7 percent in fiscal 1995 and 36.4
percent in fiscal 1994. The higher effective rate in 1996, compared to 1995, was
primarily attributable to higher operating earnings and a lower amount of
federal income tax credits.
EARNINGS AFTER TAX AND EARNINGS PER SHARE BEFORE RESTRUCTURING Earnings after
tax before restructuring charges for fiscal 1996 increased 10 percent to $119.2
million or 75 cents per share, compared with the pro forma $108.3 million or 68
cents per share earned in fiscal 1995. Pro forma net income before accounting
changes was $119.9 million or 75 cents per share in fiscal 1994.
NET INCOME AND EARNINGS PER SHARE
During fiscal 1996, an after-tax restructuring charge of $44.8 million (28 cents
per share) was taken in the first quarter to close all China Coast operations.
The pretax restructuring charge includes approximately $60.4 million of non-cash
charges primarily related to the write-down of buildings and equipment to net
realizable value and approximately $14.6 million of charges to be settled in
cash related to carrying costs of buildings and equipment prior to their
disposal, lease buy-out provisions, employee severance and other costs. Cash
required to carry out the restructuring activities will be provided by
operations. (See Note 3 of Notes to Consolidated Financial Statements.) Net
earnings after restructuring expenses were $74.4 million (47 cents per share)
compared with the pro forma $49.2 million (31 cents per share) in fiscal 1995.
In fiscal 1995, an after-tax restructuring charge of $59.1 million (37 cents per
share) was taken to position the Company for its spin-off from General Mills and
to close low-performing restaurants. The pretax 1995 restructuring charge
included approximately $65.4 million of non-cash asset write-downs and
approximately $33.9 million of charges to be settled in cash. No restructuring
charges were incurred in fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company intends to manage its business and its financial ratios so as to
maintain an investment grade bond rating, which allows access to financing at
reasonable costs. Currently, the Company's publicly issued long-term debt
carries "A3" (Moody's Investor Services, Inc.), "BBB+" (Standard & Poor's
Corporation) and "A-" (Duff & Phelps Corporation) ratings. Our commercial paper
has ratings of "P-2" (Moody's), "A-2" (Standard & Poor's) and "D-1" (Duff &
Phelps).
Darden completed its long-term capital structure in January 1996 with the
issuance of $150 million of 6.375 percent notes due in 2006 and $100 million of
7.125 percent debentures due in 2016. The effective annual interest rate is 7.57
percent for the notes and 7.82 percent for the debentures, after consideration
of loan costs, issuance discounts and cost to terminate an interest-rate swap
that was established prior to the distribution from General Mills. The Company
is also the guarantor under a $50 million variable rate loan agreement for the
benefit of the Employee Stock Ownership Plan (ESOP). The ESOP loan, which is due
during 2007, is included as a component of long-term debt with a related offset
in stockholders' equity. Also, Darden's shelf registration statement permits
issuance of an additional $250 million of unsecured debt securities.
<PAGE>
Commercial paper is the primary source of short-term financing. Bank credit
lines are maintained to ensure availability of short-term funds on an as-needed
basis. In May 1996, the fee-paid credit lines were reduced from $500 million to
$350 million.
The Company's adjusted debt-to-total capital ratio (which includes 6.25 times
the total annual restaurant minimum rent as a component of debt and total
capital) was 34 percent at May 26, 1996. The Company's fixed-charge coverage
ratio, which measures the number of times each year that the Company earns
enough to cover its fixed charges, amounted to 5.6 times. Based on these ratios,
the Company's financial condition remains strong. The composition of the
Company's capital structure is shown in the following table.
<TABLE>
<CAPTION>
CAPITAL STRUCTURE
- -------------------------------------------------------------------------
May 26, 1996
In Millions
- -------------------------------------------------------------------------
<S> <C>
Short-term debt $ 72.6
Long-term debt 301.2
- -------------------------------------------------------------------------
Total debt 373.8
Stockholders' equity 1,222.6
- -------------------------------------------------------------------------
Total capital $1,596.4
- -------------------------------------------------------------------------
ADJUSTMENTS TO CAPITAL
Leases-debt equivalent 249.2
- -------------------------------------------------------------------------
Adjusted total debt 623.0
- -------------------------------------------------------------------------
Adjusted total capital $1,845.6
Debt-to-total capital ratio 23%
Adjusted debt-to-total capital ratio 34%
- -------------------------------------------------------------------------
</TABLE>
In September 1995, the Company declared an 8 cents per share annual dividend to
be paid in two installments. In December 1995, the Company's Board approved a
stock repurchase plan whereby the Company may purchase on the open market up to
6.5 million common shares to offset shares issued through employee stock option
and restricted stock programs. In fiscal 1996, 1.9 million shares were purchased
under this program.
The Company typically carries current liabilities in excess of current assets,
because the restaurant business receives substantially immediate payment for
sales, (nominal receivables), while inventories and other current liabilities
normally carry longer payment terms, (usually 15 to 30 days). The seasonal
variation in net working capital is typically in the $30 to $50 million range.
The Company requires capital principally for building new restaurants, replacing
equipment and remodeling existing units. Capital expenditures were $214 million
in fiscal 1996, down from $358 million in fiscal 1995 and $335 million in fiscal
1994 because of decisions to slow the growth in new Olive Garden units and
discontinue China Coast operations. Fiscal 1996 capital expenditure and dividend
requirements were financed primarily through internally generated funds. The
Company generated $294 million, $274 million and $262 million in funds from
operating activities during fiscal years 1996, 1995 and 1994, respectively.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Darden Restaurants, Inc.
We have audited the accompanying consolidated balance sheets of Darden
Restaurants, Inc. and subsidiaries as of May 26, 1996, and May 28, 1995, and the
related consolidated statements of earnings and cash flows for each of the
fiscal years in the three-year period ended May 26, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Darden Restaurants,
Inc. and subsidiaries as of May 26, 1996, and May 28, 1995, and the results of
their operations and their cash flows for each of the fiscal years in the
three-year period ended May 26, 1996, in conformity with generally accepted
accounting principles.
Orlando, Florida KPMG Peat Marwick LLP
June 18, 1996
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
- --------------------------------------------------------------------------------
Fiscal Year Ended
-----------------------------------------
(In Thousands, Except per Share Data) May 26, 1996 May 28, 1995* May 29, 1994*
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $3,191,779 $3,163,289 $2,962,980
Costs and Expenses:
Cost of sales:
Food and beverages 1,062,624 1,093,896 1,014,066
Restaurant labor 954,886 931,553 868,178
Restaurant expenses 455,626 470,194 442,769
- --------------------------------------------------------------------------------
Total Cost of Sales $2,473,136 $2,495,643 $2,325,013
Selling, General and Administive 373,920 345,827 301,146
Depreciation and Amortizat 134,599 135,472 124,732
Interest, Net 21,406 21,901 18,394
Restructuring 75,000 99,302
- --------------------------------------------------------------------------------
Total Costs and Expenses $3,078,061 $3,098,145 $2,769,285
- --------------------------------------------------------------------------------
Earnings from Operations before Income 113,718 65,144 193,695
Taxes
Income Taxes 39,363 12,738 70,589
- --------------------------------------------------------------------------------
Earnings from Operations $74,355 $52,406 $123,106
Cumulative Effect to May 31, 1993 of
Accounting Changes 3,661
- --------------------------------------------------------------------------------
Net Earnings $74,355 $52,406 $126,767
- --------------------------------------------------------------------------------
Earnings per Share:
Earnings from operations $ 0.47 $ 0.33 $ 0.77
Cumulative effect of accounting changes 0.03
- --------------------------------------------------------------------------------
Net Earnings per Share $ 0.47 $ 0.33 $ 0.80
- --------------------------------------------------------------------------------
Average Number of Common Shares 158,700 158,000 159,100
Outstanding
- --------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
* The historical consolidated statements of earnings for fiscal years 1995 and
1994 reflect periods during which the Company did not operate as a separate,
independent company. The table below reflects the impact of pro forma
adjustments of $5,370 to record the estimated additional general and
administrative expenses which would have been incurred by Darden as a separate
publicly held company, and $2,138 of associated income tax benefit at an
assumed effective tax rate of 39.8%.
</FN>
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Fiscal Year Ended (Unaudited)
-----------------------------
Pro Forma Pro Forma
(In Thousands, Except per Share Data) May 28, 1995 May 29, 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Earnings from Operations before Income Taxes $ 59,774 $ 188,325
Income Taxes 10,600 68,451
=========================================================-----------------------
Earnings from Operations $ 49,174 $ 119,874
=========================================================-----------------------
Earnings per Share from Operations $ 0.31 $ .75
=========================================================-----------------------
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
- --------------------------------------------------------------------------------
(In Thousands) May 26, 1996 May 28, 1995
- --------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 30,343 $ 20,134
Receivables 24,772 25,330
Inventories 120,725 162,968
Net assets held for dispo 31,762 11,448
Prepaid expenses and other current assets 17,298 27,322
Deferred income taxes 63,080 60,437
- --------------------------------------------------------------------------------
Total Current Assets $ 287,980 $ 307,639
Land, Buildings and Equipment 1,702,861 1,737,982
Other Assets 97,663 67,760
================================================================================
Total Assets $2,088,504 $2,113,381
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 28,196 $ 166,699
Short-term debt 72,600 98,000
Current portion of long-term debt 54 108
Accrued payroll 53,677 55,398
Accrued income taxes 12,522 11,950
Other accrued taxes 18,921 19,596
Other current liabilities 159,336 165,497
- --------------------------------------------------------------------------------
Total Current Liabilities $ 445,306 $ 517,248
Long-term Debt 301,151 303,752
Deferred Income Taxes 101,109 101,979
Other Liabilities 18,301 16,440
- --------------------------------------------------------------------------------
Total Liabilities $ 865,867 $ 939,419
- --------------------------------------------------------------------------------
Stockholders' Equity:
Common stock and surplus, no par value. Authorized
500,000 shares; issued and outstanding 159,619
and 158,178 shares, respectively $1,266,212 $1,253,415
Preferred stock, no par value. Authorized 25,000
shares; none issued and outstanding
Retained earnings 61,708
Treasury stock, 1,908 shares at cost (25,037)
Cumulative foreign currency adjustment (10,351) (10,281)
Unearned compensation (69,895) (69,172)
- --------------------------------------------------------------------------------
Total Stockholders' Equity $1,222,637 $1,173,962
================================================================================
Total Liabilities and Stockholders' Equity $2,088,504 $2,113,381
================================================================================
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
- --------------------------------------------------------------------------------
Fiscal Year Ended
----------------------------------------
(In Thousands) May 26, 1996 May 28, 1995 May 29, 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows-Operating Activities
Earnings from operations $ 74,355 $ 52,406 $ 123,106
Adjustments to reconcile earnings to
cash flow:
Depreciation and amortization 134,599 135,472 124,732
Amortization of unearned
compensation and loan costs 1,929
Change in current assets and
liabilities 9,722 (8,718) 2,801
Change in other liabilities 1,861 (2,086) 5,476
Loss on disposal of land, buildings
and equipment 6,076 2,572 5,615
Deferred income taxes (3,513) 2,000 535
Non-cash restructuring expenses 69,073 92,356
Other, net (70) (24) (247)
- --------------------------------------------------------------------------------
Net Cash Provided by Operating $ 294,032 $ 273,978 $ 262,018
Activities
- --------------------------------------------------------------------------------
Cash Flows-Investment Activities
Purchases of land, buildings
and equipment (213,905) (357,904) (335,031)
Purchases of intangibles (1,200) (1,623) (124)
Increase in other assets (733) (21,790) (3,818)
Proceeds from sales of land, buildings
and equipment (including net
assets held for disposal) 16,338 6,604 8,505
- --------------------------------------------------------------------------------
Net Cash Used by
Investment Activities $ (199,500) $ (374,713) $ (330,468)
- --------------------------------------------------------------------------------
Cash Flows - Financing Activities
Proceeds from issuance of common stock 7,318
Income tax benefit credited to equity 2,570
Dividends paid (12,647)
Purchases of treasury stock (25,037)
ESOP note receivable repayments 1,100
Increase (decrease) in short-term debt (25,400) 98,000
Proceeds from issuance of
long-term debt 248,303 250,000
Repayment of long-term debt (251,010) (111) (99)
Payment of interest-rate swap
settlement and loan costs (29,520)
Increase (decrease) in advances from
former parent company (244,719) 69,434
- --------------------------------------------------------------------------------
Net Cash Provided by (Used by)
Financing Activities $ (84,323) $ 103,170 $ 69,335
- --------------------------------------------------------------------------------
Increase in Cash and Cash Equivalents 10,209 2,435 885
Cash and Cash Equivalents -
Beginning of Year 20,134 17,699 16,814
- --------------------------------------------------------------------------------
Cash and Cash Equivalents -
End of Year $ 30,343 $ 20,134 $ 17,699
- --------------------------------------------------------------------------------
Cash Flow from Changes in Current Assets
and Liabilities
Receivables 558 820 (8,992)
Inventories 42,243 (27,436) (33,107)
Net assets held for disposal (3,088) 1,566 10,111
Prepaid expenses and other current
assets 10,024 (3,067) (1,753)
Accounts payable (38,503) 6,461 30,586
Accrued payroll (1,721) 6,008 7,402
Accrued income taxes 572 11,950
Other accrued taxes (675) (1,297) 2,629
Other current liabilities 312 (3,723) (4,075)
- --------------------------------------------------------------------------------
Change in Current Assets and Liabilities $ 9,722 $ (8,718) $ 2,801
- --------------------------------------------------------------------------------
Transfer of long-term debt from former
parent company $ 50,000
company
- --------------------------------------------------------------------------------
Transfer of unearned compensation from former $ (69,172)
parent company
- --------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share data.)
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Principles of Consolidation
The accompanying fiscal year 1996 consolidated financial statements include the
operations of Darden Restaurants, Inc. and its wholly owned subsidiaries
("Darden" or "the Company"). The consolidated financial statements prior to
fiscal year 1996 represent the former combined restaurant operations of General
Mills, Inc. ("General Mills" or "former parent") in the United States and Canada
that now comprise Darden. The common shares of Darden were distributed by
General Mills to its stockholders as of May 28, 1995.
The consolidated financial statements prior to fiscal year 1996 include an
allocation of certain general corporate expenses of General Mills which are not
directly related to Darden, as well as an allocation of interest expense and
income taxes that approximate the amounts Darden would have incurred on a
stand-alone basis. Management believes the allocation methods used are
reasonable.
Darden's fiscal year ends on the last Sunday in May. Fiscal years 1996, 1995 and
1994 each consisted of 52 weeks.
B. Land, Buildings and Equipment
All land, buildings and equipment are recorded at cost. Building components are
depreciated over estimated useful lives ranging from 7 to 40 years using the
straight-line method. Equipment is depreciated over estimated useful lives
ranging from 3 to 10 years also using the straight-line method. Accelerated
depreciation methods are generally used for income tax purposes.
In fiscal year 1996, the Company adopted Statement of Financial Accounting
Standards No. 121 (SFAS 121), "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." The effect of adopting SFAS
121 on the Company's financial position and results of operations was
insignificant. In accordance with SFAS 121, the Company periodically reviews
restaurant sites and certain identifiable intangibles for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Measurement of an impairment loss for such assets is
based on the fair value of the asset. Restaurant sites and certain identifiable
intangibles to be disposed of are reported at the lower of the carrying amount
or fair value, less estimated cost to sell.
C. Inventories
Inventories are valued at the lower of cost or market value, using the
"first-in, first-out" method.
D. Intangible Assets
The cost of intangible assets is amortized evenly over their estimated useful
lives. Most of these costs were incurred through the purchase of leases with
favorable rent terms. The Audit Committee of the Board of Directors annually
reviews intangible assets. At its meeting on May 23, 1996, the Board of
Directors affirmed that the remaining amounts of these assets have continuing
value.
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Liquor
Licenses The costs of obtaining non-transferable liquor licenses that are
directly issued by local government agencies for nominal fees are expensed in
the year incurred. The costs of purchasing transferable liquor licenses through
open markets in jurisdictions with a limited number of authorized liquor
licenses for fees in excess of nominal amounts are capitalized. If there is
permanent impairment in the value of a liquor license due to market changes, the
asset is written down to its net realizable value. Annual liquor license renewal
fees are expensed.
F. Foreign Currency Translation
The Canadian dollar is the functional currency for the Canadian restaurant
operations. Assets and liabilities are translated using the exchange rates in
effect at the balance sheet date. Results of operations are translated using the
average exchange rates prevailing throughout the period. Translation gains and
losses are accumulated in a cumulative foreign currency adjustment account
included as a separate component of stockholders' equity. Gains and losses from
foreign currency transactions are generally included in the consolidated
statements of earnings for each period.
G. Pre-Opening Costs
Capitalized pre-opening costs include the direct and incremental costs
associated with the opening of a new restaurant and are amortized over a
one-year period from the restaurant opening date.
H. Advertising
Production costs of commercials and programming are charged to operations in the
year first aired. The costs of other advertising, promotion and marketing
programs are charged to operations in the year incurred. Advertising expense was
$239,526, $211,904 and $173,053 in fiscal years 1996, 1995 and 1994,
respectively.
I. Statements of Cash Flows
For purpose of the consolidated statements of cash flows, amounts receivable
from credit card companies and investments purchased with a maturity of three
months or less are considered cash equivalents.
J. Earnings Per Share
Earnings per share for 1996 has been determined by dividing net earnings by the
weighted average number of common shares outstanding during the year, net of
common shares held in treasury. Earnings per share for 1995 and 1994 has been
determined by dividing the appropriate net earnings by the weighted average
number of common shares outstanding during the year, based on the average number
of General Mills' common shares presumed to be outstanding during the applicable
fiscal year. Common share equivalents were not material.
K. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management 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 revenues and expenses during the reporting period.
Actual results could differ from those estimated.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUTING POLICIES (CONTINUED) L. Accounting for
Stock Options Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation," is effective for fiscal years beginning after
December 15, 1995. The Company will adopt this statement in fiscal 1997 by
providing pro forma equivalent footnote disclosure information, and will elect
to continue applying APB Opinion No. 25 to account for stock options granted to
employees. Adoption of this new standard will not affect the Company's financial
position, results of operations or cash flows.
M. Reclassifications
Certain reclassifications have been made in the prior years' consolidated
statements of earnings and cash flows to conform with the fiscal year 1996
presentation.
NOTE 2 - ACCOUNTS RECEIVABLE
Darden contracts with a national storage and distribution company to provide
services which are billed to Darden on a per-case basis. In connection with
these services, certain Darden inventory items are sold to the distribution
company at a predetermined price when they are shipped to the distribution
company's storage facilities. These items are repurchased at the same price by
Darden when the inventory is delivered to Company restaurants by the
distribution company. The receivable from the distribution company was $20,083
and $23,119 at May 26, 1996, and May 28, 1995, respectively.
NOTE 3 - RESTRUCTURING EXPENSE
Darden recorded restructuring expense in 1996 related to the closing of all
China Coast restaurants and in 1995 primarily related to restaurant closings in
the U.S. and Canada. These expenses resulted in a reduction in net earnings of
$44,849 ($0.28 per share) in 1996 and $59,085 ($0.37 per share) in 1995. All
restructuring actions are expected to be substantially completed in 1997. As of
May 26, 1996, approximately $5,927 and $19,185 of costs associated with the 1996
and 1995 restructurings, respectively, had been paid and charged against the
restructuring liability. The restructuring liability included in other current
liabilities was $37,773 and $61,213 as of May 26, 1996, and May 28, 1995,
respectively.
The components of the restructuring expense are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Fiscal Year
-------------------------------------
1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Write-down of land, buildings
and equipment to net realizable $56,600 $65,399
value
Carrying costs of buildings and
equipment prior to disposal 7,431 2,225
Lease buy-out provisions 1,600 27,880
Employee severance costs 1,169 1,687
Other 8,200 2,111
- --------------------------------------------------------------------------
$75,000 $99,302
Less related income tax effect (30,151) (40,217)
- --------------------------------------------------------------------------
Restructuring expense,
net of income taxes $44,849 $59,085
- --------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTE 4 - INCOME TAXES
Darden adopted Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS 109) as of May 31, 1993. The adoption of SFAS 109
changed the method of accounting for income taxes from the deferred method to
the asset and liability method. Deferred income taxes reflect the differences
between assets and liabilities recognized for financial reporting purposes and
amounts recognized for tax purposes measured using the current enacted tax
rates. The cumulative effect of adoption was an increase in net earnings of
approximately $6,300 ($.04 per share).
The components of earnings (loss) from operations before income taxes and the
provision for income taxes thereon are as follows on the next page:
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fiscal Year
-------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings (loss) from operations
before income taxes:
U.S. $118,506 $82,450 $205,769
Canada (4,788) (17,306) (12,074)
- -----------------------------------------------------------------------------
Net earnings from operations
before income taxes $113,718 $65,144 $193,695
- -----------------------------------------------------------------------------
Income taxes:
Current:
Federal $33,935 $11,848 $59,297
State and local 8,608 5,812 14,815
Canada 333 (6,922) (4,058)
- -----------------------------------------------------------------------------
Total current 42,876 10,738 70,054
Deferred (principally U.S.) (3,513) 2,000 535
- -----------------------------------------------------------------------------
Total income taxes $39,363 $12,738 $70,589
- -----------------------------------------------------------------------------
</TABLE>
During 1996, 1995 and 1994, Darden paid income taxes of $25,777, $31,469 and
$74,270, respectively. 1995 and 1994 income taxes were paid as part of the
General Mills consolidated tax returns.
The following table is a reconciliation of the U.S. statutory income tax rate to
the effective income tax rate included in the accompanying consolidated
statements of earnings:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Fiscal Year
-------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. statutory rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal tax benefits 4.6 4.6 4.8
Benefit of U.S. federal income (6.8) (21.2) (4.5)
tax credits
Other, net 1.8 1.2 1.1
- -----------------------------------------------------------------------------
Effective income tax rate 34.6% 19.6% 36.4%
- -----------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTE 4 - INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to deferred tax assets
and liabilities are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
May 26, 1996 May 28, 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Accrued liabilities $14,750 $15,807
Compensation and employee benefits 29,766 24,979
Asset disposition liabilities 27,248 23,475
Other 1,667 3,008
- --------------------------------------------------------------------------
Gross deferred tax assets 73,431 67,269
- --------------------------------------------------------------------------
Buildings and equipment (89,368) (90,182)
Prepaid pension asset (15,055) (14,504)
Prepaid interest (5,424)
Other (1,613) (4,125)
- --------------------------------------------------------------------------
Gross deferred tax liabilities (111,460) (108,811)
- --------------------------------------------------------------------------
Net deferred tax liability $(38,029) $(41,542)
- --------------------------------------------------------------------------
</TABLE>
NOTE 5 - LAND, BUILDINGS AND EQUIPMENT
The components of land, buildings and equipment are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
May 26, 1996 May 28, 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Land $402,056 $395,198
Buildings 1,300,025 1,279,658
Equipment 642,287 622,785
Construction in progress 65,107 56,468
- --------------------------------------------------------------------------
Total land, buildings and equipment 2,409,475 2,354,109
Less accumulated depreciation (706,614) (616,127)
- --------------------------------------------------------------------------
Net land, buildings and equipment $1,702,861 $1,737,982
- --------------------------------------------------------------------------
</TABLE>
NOTE 6 - OTHER ASSETS
The components of other assets are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
May 26, 1996 May 28, 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Prepaid pension $38,702 $37,285
Prepaid interest and loan costs 29,337
Liquor licenses 17,744 17,271
Intangible assets 9,894 9,453
Miscellaneous 1,986 3,751
- --------------------------------------------------------------------------
Total other assets $97,663 $67,760
- --------------------------------------------------------------------------
</TABLE>
NOTE 7 - SHORT-TERM DEBT
Short-term debt at May 26, 1996, consisted of $72,600 of unsecured commercial
paper borrowings with original maturities of one month or less and interest
rates ranging from 5.30% to 5.53%. The Company also maintains a 364-day
revolving loan agreement under which the Company can borrow up to $100,000. The
loan agreement allows the Company to borrow at
<PAGE>
NOTE 7 - SHORT-TERM DEBT (CONTINUED)
interest rates which vary based on the federal funds rate, the prime rate, LIBOR
or acompetitively bid rate among the members of the lender consortium, at the
option of the Company. The Company is required to pay a facility fee of seven
basis points per annum on the average daily amount of loan commitments by the
consortium. The amount of interest and the annual facility fee is subject to
change based on the Company's achievement of certain financial ratios and debt
ratings. Advances under the loan agreement are unsecured. At May 26, 1996, no
borrowings were outstanding under this agreement. At May 28, 1995, $98,000 in
borrowings were outstanding under this agreement at interest rates which ranged
from 6.16% to 6.24%.
NOTE 8 - LONG-TERM DEBT
The components of long-term debt are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
May 26, 1996 May 28, 1995
- --------------------------------------------------------------------------
<S> <C> <C>
10-year notes and 20-year debentures
as described below $250,000
Revolving loan agreement as $250,000
described below
ESOP loan guarantee with variable
rate of interest (4.51% at May 26,
1996), due December 31, 2007 50,000 50,000
Other 2,882 3,892
- --------------------------------------------------------------------------
Total long-term debt 302,882 303,892
Less issuance discount (1,677) (32)
- --------------------------------------------------------------------------
Total long term debt less issuance 301,205 303,860
discount
Less current portion (54) (108)
- --------------------------------------------------------------------------
Long term debt, excluding current $301,151 $303,752
portion
- --------------------------------------------------------------------------
</TABLE>
In January 1996, the Company issued $150,000 of 6.375% notes due in 2006 and
$100,000 of 7.125% debentures due in 2016. The proceeds from the issuance were
used to refinance commercial paper borrowings. Concurrent with the issuance of
the notes and debentures, the Company terminated, and settled for cash,
interest-rate swap agreements with notional amounts totaling $200,000 which
hedged the movement of interest rates prior to the issuance of the notes and
debentures. The cash paid in terminating the interest-rate swap agreements is
being amortized to interest expense over the life of the notes and debentures.
The effective annual interest rate is 7.57% for the notes and 7.82% for the
debentures, after consideration of loan costs, issuance discounts, and interest
rate swap termination costs.
The Company also maintains a revolving loan agreement expiring May 19, 2000,
with a consortium of banks under which the Company can borrow up to $250,000.
The terms and conditions of this loan agreement are similar to the Company's
364-day revolving loan agreement which is discussed in Note 7, except that the
required facility fee is nine basis points per annum. At May 26, 1996, no
borrowings were outstanding under this agreement. At May 28, 1995, $250,000 in
borrowings were outstanding at interest rates which ranged from 6.16% to 6.22%.
The aggregate maturities of long-term debt for each of the five years subsequent
to May 26, 1996, and thereafter are $54 in 1997, 1998 and 1999, $155 in 2000,
$206 in 2001 and $302,359 thereafter.
NOTE 9 - FINANCIAL INSTRUMENTS
The Company has participated in the financial derivatives markets to manage its
exposure to interest rate fluctuations. At May 28, 1995, the Company had
interest rate swaps with a notional amount of $200,000 which it used to convert
variable rates on its long-term debt to fixed rates effective May 30, 1995. The
Company received the one-month commercial paper interest rate and paid
fixed-rate interest ranging from 7.51% to 7.89%. The interest rate swaps were
settled during January 1996 at a cost to the Company of $27,670. This cost will
be recognized as an adjustment to interest expense over the term of the
Company's 10-year notes and 20-year debentures (see Note 8). The following
methods were used in estimating fair value disclosures for significant financial
instruments: Cash equivalents approximate their carrying amount due to the short
duration of those items. Short-term debt approximates its carrying amount.
Long-term debt is based on quoted market prices or, if market prices are not
available, the present value of the underlying cash flows discounted at the
Company's incremental borrowing rates. Interest rate swaps are based on the
difference in the present value of variable-rate future receipts and fixed-rate
future payments. The carrying amounts and fair values of the Company's
significant financial instruments are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
May 26, 1996 May 28, 1995
-------------------------------------------------
-------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 30,343 $ 30,343 $ 20,134 $ 20,134
Short-term debt 72,600 72,600 98,000 98,000
Total long-term debt 301,205 282,810 303,860 304,235
Interest rate swaps (14,313)
==========================================================================
</TABLE>
<PAGE>
NOTE 10 - STOCKHOLDERS' EQUITY
The following table summarizes the changes in the components of stockholder's
equity:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Common Cumulative
Stock Foreign Total
and Retained Treasury Currency Unearned Stockholders'
(in Thousands) Surplus Earnings Stock Adjustment Compensation Equity
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Balance at
May 30, 1993 $1,221,392 $ $ $(10,027) $ $1,211,365
Net earnings 126,767 126,767
Net advances
from General
Mills 69,434 69,434
Foreign currency
adjustment, net
of income taxes
of $5,399 (247) (247)
- --------------------------------------------------------------------------------
Balance at
May 29, 1994 1,417,593 (10,274) 1,407,319
Net earnings 52,406 52,406
Net advances to
General Mills (216,584) (216,584)
Foreign currency
adjustment (7) (7)
Transfer of
unearned
compensation
from General
Mills (69,172) (69,172)
- --------------------------------------------------------------------------------
Balance at
May 28, 1995 $1,253,415 $(10,281) $(69,172) $1,173,962
Net earnings 74,355 74,355
Cash dividends
declared ($0.08
per share) (12,647) (12,647)
Stock option
exercises (1,137
shares) 7,318 7,318
Issuance of
restricted stock
(304 shares) 2,909 (2,909)
Earned
compensation 1,086 1,086
ESOP note
receivable
repayments 1,100 1,100
Income tax
benefit credited
to equity 2,570 2,570
Purchases of
common stock
for treasury
(1,908 shares) (25,037) 25,037
Foreign currency
adjustment (70) (70)
- --------------------------------------------------------------------------------
Balance at
May 26, 1996 $1,266,212 $61,708 $(25,037) $(10,351)$(69,895) $1,222,637
- --------------------------------------------------------------------------------
</TABLE>
NOTE 11 - STOCKHOLDERS' RIGHTS PLAN
The Company has a stockholders' rights plan that entitles each holder of Company
common stock to purchase one-hundredth of one share of Darden preferred stock
for each common share owned at a purchase price of $62.50 per share, subject to
adjustment to prevent dilution. The rights are exercisable when, and are not
transferable apart from the Company's common stock until, a person or group has
acquired 20% or more, or makes a tender offer for 20% or more, of the Company's
common stock. If the specified percentage of the Company's common stock is then
acquired, each right will entitle the holder (other than the acquiring company)
to receive, upon exercise, common stock of either the Company or the acquiring
company having a value equal to two times the exercise price of the right. The
rights are redeemable by the Company's Board in certain circumstances and expire
on May 24, 2005.
NOTE 12 - INTEREST, NET
As explained in Note 1-A, the interest expense appearing in the 1995 and 1994
consolidated statements of earnings includes an allocation of a portion of
General Mills' consolidated interest expense assuming a debt-to-capital ratio of
approximately 25% for Darden. Long-term rates of 8.56% and 8.5% were used to
calculate interest expense on non-ESOP debt averaging $307,500
<PAGE>
NOTE 12 - INTEREST, NET (CONTINUED)
and $265,800 in fiscal years 1995 and 1994, respectively. These long-term rates
approximate the prevailing cost of long-term debt for companies with financial
characteristics similar to those of Darden during the fiscal periods presented.
Interest expense on average ESOP debt of $67,075, $69,570 and $72,300 in fiscal
years 1996, 1995 and 1994, respectively, was included in compensation expense.
Capitalized interest was computed using the Company's borrowing rate for 1996
and General Mills' borrowing rate for 1995 and 1994. The Company paid $14,657
for interest in fiscal 1996.
The components of interest, net are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Fiscal Year
-------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Interest expense $24,875 $26,331 $22,593
Capitalized interest (2,007) (4,327) (4,087)
Interest income (1,462) (103) (112)
- -----------------------------------------------------------------------------
Interest, net $21,406 $21,901 $18,394
- -----------------------------------------------------------------------------
</TABLE>
NOTE 13 - LEASES
An analysis of rent by property leased (all of which are accounted for as
operating leases) is as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Fiscal Year
-------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Restaurant minimum rent $39,867 $41,489 $39,277
Restaurant percentage rent 1,713 1,911 1,916
Restaurant rent averaging expense (275) 1,567 1,771
Transportation equipment 2,103 1,505 1,389
Office equipment 956 730 713
Office space 331 260 251
Warehouse space 207 180 171
- -----------------------------------------------------------------------------
Total rent expense $44,902 $47,642 $45,488
- -----------------------------------------------------------------------------
</TABLE>
Minimum rental obligations are accounted for on a straight-line basis over the
term of the lease. Some leases require payment of property taxes, insurance and
maintenance costs in addition to the rent payments. The annual non-cancellable
future lease commitments for each of the five years subsequent to May 26, 1996
and thereafter are $44,640 in 1997, $44,079 in 1998, $42,192 in 1999, $39,041 in
2000, $35,323 in 2001 and $174,785 thereafter, for a cumulative total of
$380,060.
NOTE 14 - RETIREMENT PLANS
The Company has a defined benefit plan covering most salaried employees and a
group of hourly employees with a frozen level of benefits. Benefits for salaried
employees are based on length of service and final average compensation. The
hourly plan provides a monthly amount for each year of credited service. The
Company's funding policy is consistent with the funding
<PAGE>
NOTE 14 - RETIREMENT PLANS (CONTINUED)
requirements of federal law and regulations. Plan assets consist
principally of listed equity securities, corporate obligations and U.S.
government securities.
Components of net pension expense (income) are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Fiscal Year
-------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Service cost-benefits earned $2,427 $2,725 $4,298
Interest cost on projected
benefit obligation 3,806 3,924 4,005
Actual return on plan assets (16,965) (8,564) (1,834)
Net amortization and deferral 9,316 981 (2,305)
- -----------------------------------------------------------------------------
Net pension expense (income) $(1,416) $(934) $4,164
- -----------------------------------------------------------------------------
</TABLE>
The weighted-average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the benefit
obligations were 7.75% and 6.0% in 1996, 8.0% and 5.9% in 1995, and 8.8% and
6.4% in 1994, respectively. The expected long-term rate of return on plan assets
was 10.4%.
The funded status of the plan and the amount recognized on the consolidated
balance sheets is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
May 26, 1996 May 28, 1995
- --------------------------------------------------------------------------
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Actuarial present value
of benefit obligations:
Vested benefits $49,053 $ 1,856 $41,826 $ 1,770
Non-vested benefits 4,571 4,277
- --------------------------------------------------------------------------
Accumulated benefit
obligations 53,624 1,856 46,103 1,770
- --------------------------------------------------------------------------
Projected benefit
obligation 60,964 1,856 52,128 1,770
Plan assets at fair
value 81,786 73,629
- --------------------------------------------------------------------------
Plan assets in excess
of (less than) the
projected benefit
obligation 20,822 (1,856) 21,501 (1,770)
Unrecognized net loss 21,730 20,278
Unrecognized transition (3,850) (4,494)
asset
- --------------------------------------------------------------------------
Prepaid (accrued)
pension cost $38,702 $ (1,856) $37,285 $ (1,770)
- --------------------------------------------------------------------------
</TABLE>
The Company has a defined contribution plan covering most employees age 21 and
older with at least one year of service. Employees classified as "highly
compensated" under the Internal Revenue Code are ineligible to participate. The
Company matches participant contributions up to 6% of compensation on the basis
of $0.50 for each dollar contributed by the participant. The plan had net assets
of $160,291 at May 26, 1996, and $142,916 at May 28, 1995. Expense recognized in
1996, 1995 and 1994 was $2,505, $1,562, and $1,290, respectively.
<PAGE>
NOTE 14 - RETIREMENT PLANS (CONTINUED)
The defined contribution plan includes an Employee Stock Ownership Plan (ESOP).
This ESOP borrowed $50,000 from third parties guaranteed by the Company and
borrowed $25,000 from the Company at a variable interest rate. Compensation
expense is recognized as contributions are accrued. Contributions to the plan,
plus the dividends accumulated on the common stock held by the ESOP, are used to
pay principal, interest and expenses of the plan. As loan payments are made,
common stock is allocated to ESOP participants. In 1996, 1995, and 1994, the
ESOP incurred interest expense of $3,431, $3,318, and $2,244 respectively, and
used dividends received of $1,735, $2,884, and $3,477 and contributions received
from the Company of $2,397, $2,098, and $2,580, respectively, to pay principal
and interest on its debt.
Company shares owned by the ESOP are included in average common shares
outstanding for purposes of calculating earnings per share. The ESOP's third
party debt is described in Note 8. At May 26, 1996, the ESOP's debt to the
Company had a balance of $16,900 with a variable rate of interest of 5.61%. The
principal balance is due to be repaid in December 2014. The number of Company
common shares within the ESOP at May 26, 1996, approximates 10,621,000
representing 8,675,000 unreleased shares, 9,000 shares committed to be released
and 1,937,000 shares allocated to participants.
At May 26, 1996, 384,958 unreleased common shares of General Mills remained in
the ESOP. It is the ESOP's intention to sell the General Mills shares in the
open market, with the proceeds to be used to acquire Company common shares.
NOTE 15 - OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company sponsors a plan that provides health care benefits to its salaried
retirees. The plan is contributory with retiree contributions based on years
of service.
Components of the postretirement health-care expense are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Fiscal Year
-------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Service cost-benefits earned $227 $317 $ 469
Interest cost on accumulated
benefit obligation 364 422 361
Net amortization and deferral 76 85 186
- -----------------------------------------------------------------------------
Net postretirement expense $667 $824 $1,016
- -----------------------------------------------------------------------------
</TABLE>
The plan is not funded. The amounts included in the consolidated balance sheets
are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
May 26, 1996 May 28, 1995
<S> <C> <C>
- --------------------------------------------------------------------------
Accumulated benefit obligations:
Retirees $ 662 $ 359
Fully eligible active employees 255 36
Other active employees 3,843 5,905
- --------------------------------------------------------------------------
Accumulated benefit obligations 4,760 6,300
Plan assets at fair value 0 0
- --------------------------------------------------------------------------
Accumulated benefit obligations
in excess of plan assets 4,760 6,300
Unrecognized prior service cost (533) (895)
Unrecognized net loss (271) (1,981)
- --------------------------------------------------------------------------
Accrued postretirement benefits $3,956 $3,424
- --------------------------------------------------------------------------
</TABLE>
<PAGE>
- ------------------------------------------------------------------------
NOTE 15 - OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS (CONTINUED)
- ------------------------------------------------------------------------
The discount rates used in determining the actuarial present value of the
benefit obligations were 8.75% in 1996 and 8.0% in 1995.
The health-care cost trend rate increase in the per capita charges for benefits
ranged from 7.1% to 7.8% for 1997, depending on the medical service category.
The rates gradually decrease from 4.6% to 5.5% for 2007 and remain at that level
thereafter. If the health-care cost trend rate increased by one percentage point
in each future year, the aggregate of the service and interest cost components
of postretirement expense would increase for 1996 by $119, and the accumulated
benefit obligation at May 26, 1996, would increase by $921.
In fiscal 1994, Darden adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." The cumulative effect as of May 31, 1993, of changing
to the accrual basis for severance and disability costs was a decrease in net
earnings of approximately $2,600 ($.01 per share).
NOTE 16 - STOCK PLANS
The Darden Restaurants Stock Option and Long-Term Incentive Plan of 1995
provides for the granting of stock options to key employees at a price equal to
the fair market value of the shares at the date of the grant and are for terms
not exceeding 10 years. 15,000,000 shares of common stock are authorized for
issuance under the plan; 3,000,000 of these shares are available solely for
issuance in connection with the granting of stock options in lieu of merit
salary increases or other compensation or employee benefits. Such options vest
at the discretion of the Compensation Committee. The plan also allows for grants
of restricted stock and restricted stock units (RSUs) for up to 10% of the
shares under the plan.
No individual may receive in excess of 2% of the total number of shares
authorized under the plan in restricted stock or RSUs. Restricted stock and RSUs
granted under the plan vest no sooner than one year from the date of grant. No
individual may receive awards covering in excess of 10 percent of the total
number of shares authorized for issuance under the plan.
The Darden Restaurants Stock Plan for Non-Employee Directors provides for a
one-time grant to each non-employee director of an option to purchase 12,500
shares of common stock at a price equal to the fair market value of the shares
at the date of grant. The plan also provides for an annual grant of 3,000 shares
of restricted stock to each non-employee director. Up to 250,000 shares of
common stock may be issued under this plan. The Darden Restaurants Compensation
Plan for Non-Employee Directors provides that non-employee directors may elect
to receive their annual retainer and meeting fees in cash, deferred cash or
shares of common stock. The common stock issuable under the plan shall have a
fair market value equivalent to the value of the foregone retainer and meeting
fees. 50,000 shares of common stock are available for issuance under the plan.
<PAGE>
NOTE 16 - STOCK PLANS (CONTINUED)
Option transactions, commencing as of the distribution date, are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Per Share Option
Number of Shares Price Range
<S> <C> <C>
- --------------------------------------------------------------------------
Balance at May 28, 1995 15,199,136 $2.37 to $12.49
Options granted 5,599,308 $10.56 to $13.00
Options exercised (1,136,998) $2.37 to $11.11
Options cancelled (1,855,253) $3.88 to $12.49
- --------------------------------------------------------------------------
Balance at May 26, 1996 17,806,193 $3.88 to $13.00
- --------------------------------------------------------------------------
Options exercisable at May 26, 1996 6,177,151 $3.88 to $12.49
- --------------------------------------------------------===========-------
</TABLE>
NOTE 17 - COMMITMENTS AND CONTINGENCIES
Darden makes normal trade commitments in the course of regular operations and is
subject to litigation incident to the conduct of its ongoing business. In the
opinion of management, there are no unusual commitments or contingencies at May
26, 1996, that would materially affect the financial position or operating
results of Darden.
NOTE 18 - QUARTERLY DATA (UNAUDITED)
Summarized quarterly data for 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Fiscal 1996
Quarters Ended
- --------------------------------------------------------------------------
Aug. 27 Nov. 26 Feb. 25 May 26 Total
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $836,021 $731,184 $795,111 $829,463 $3,191,779
Gross Profit 188,279 153,868 188,832 187,664 718,643
Earnings (Loss) before
Interest and Taxes (17,630) 31,448 62,029 59,277 135,124
Earnings (Loss) before
Taxes (22,996) 26,000 56,497 54,217 113,718
Net Earnings (Loss) (12,063) 16,328 35,608 34,482 74,355
Net Earnings (Loss)
Per Share $ (0.08) $ 0.10 $ 0.22 $ 0.22 $ 0.47
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Fiscal 1995
Quarters Ended
- --------------------------------------------------------------------------
Aug. 28 Nov. 27 Feb. 26 May 28 Total
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $788,239 $733,355 $803,408 $838,287 $3,163,289
Gross Profit 170,771 143,144 173,729 180,002 667,646
Earnings (Loss) before
Interest and Taxes 57,387 26,097 (22,745) 26,306 87,045
Earnings (Loss) before
Taxes 52,130 20,373 (28,597) 21,238 65,144
Net Earnings (Loss) 32,228 12,551 (11,340) 18,967 52,406
Net Earnings (Loss)
Per Share $ 0.20 $ 0.08 $ 0.06 $ 0.11 $ 0.33
- --------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
FIVE YEAR FINANCIAL SUMMARY
- ------------------------------------------------------------------------
(Dollar amounts in thousands, except per share data)
- ------------------------------------------------------------------------
Fiscal Year Ended
Pro Forma
- --------------------------------------------------------------------------------
May 26, May 28, May 29, May 30, May 31,
1996 1995 1994 1993 1992
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Sales $3,191,779 $3,163,289 $2,962,980 $2,737,044 $2,542,018
Costs and Expenses:
Cost of Sales:
Food and beverages 1,062,624 1,093,896 1,014,066 928,711 870,699
Restaurant labor 954,886 931,553 868,178 812,118 724,032
Restaurant expenses 455,626 470,194 442,769 406,524 388,655
- --------------------------------------------------------------------------------
Total Cost of Sales 2,473,136 2,495,643 2,325,013 2,147,353 1,983,386
- --------------------------------------------------------------------------------
Restaurant Operating
Profit 718,643 667,646 637,967 589,691 558,632
- --------------------------------------------------------------------------------
Selling, General and
Administrative 373,920 351,197 306,516 272,082 276,742
Depreciation and
Amortization 134,599 135,472 124,732 115,684 99,454
Interest, Net 21,406 21,901 18,394 15,589 10,853
- --------------------------------------------------------------------------------
Total Costs and
Expenses 3,003,061 3,004,213 2,774,655 2,550,708 2,370,435
Expenses
- --------------------------------------------------------------------------------
Earnings before
Restructuring
Expenses and Income
Taxes 188,718 159,076 188,325 186,336 171,583
Income Taxes before
Restructuring Expense 69,514 50,817 68,451 71,050 63,262
- --------------------------------------------------------------------------------
Earnings from
Operations before
Restructuring
Expenses and
Accounting Changes 119,204 108,259 119,874 115,286 108,321
Cumulative Effect of
Accounting Changes 3,661
Restructuring
Expenses, Net of
Income Taxes 44,849 59,085 26,900
- --------------------------------------------------------------------------------
Net Earnings $ 74,355 $ 49,174 $ 123,535 $ 88,386 $ 108,321
- --------------------------------------------------------------------------------
Earnings per Share
from Operations
before Restructuring
Expenses and
Accounting Charges $ 0.75 $ 0.68 $ 0.75 $ 0.71 $ 0.65
Earnings per Share
from Operations
after Restructuring
Expenses $ 0.47 $ 0.31 $ 0.78 $ 0.54 $ 0.65
Average Number of
Common Shares
Outstanding, Net of
Shares Held in
Treasury (in 000's) 158,700 158,000 159,100 163,100 165,700
- --------------------------------------------------------------------------------
FINANCIAL POSITION
Total Assets $2,088,504 $2,113,381 $1,859,124 $1,611,956 $1,433,019
Land, Buildings and
and Equipment 1,702,861 1,737,982 1,564,245 1,370,087 1,244,855
Working Capital
(deficit) (157,326) (209,609) (152,926) (105,339) (102,133)
Long-term Debt 301,205 303,860 303,971
Stockholders' Equity 1,222,637 1,173,962 1,057,319
Stockholders' Equity
per share 7.70 7.43 6.65
- --------------------------------------------------------------------------------
OTHER STATISTICS
Cash Flow from
Operations $ 294,032 $ 273,978 $ 262,018 $ 237,663 $ 266,441
Capital Expenditures 213,905 357,904 335,031 294,408 290,013
Dividends Paid 12,647
Dividends Paid per
Share 0.08
Advertising Expense $ 239,526 $ 211,904 $ 173,053 $ 154,052 $ 157,242
Number of Employees 119,100 124,700 115,200 102,600 90,100
Number of Restaurants 1,217 1,243 1,158 1,043 961
Stock Price:
High $ 14.00 $ 10.875
Low 9.875 9.375
Close 11.75 10.875
- --------------------------------------------------------------------------------
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF DARDEN RESTAURANTS, INC.
As of May 26, 1996, the Registrant had one "significant subsidiary", as defined
in Regulation S-X, Rule 1-02(w), identified as follows:
GMRI, Inc., a Florida corporation, doing business as Red Lobster, The
Olive Garden and Bahama Breeze.
In order to comply with certain state laws, the Registrant, either directly or
indirectly through GMRI, Inc., had 58 other subsidiaries as of May 26, 1996. If
considered in the aggregate as a single subsidiary as of May 26, 1996, the 58
other subsidiaries would not constitute a "significant subsidiary" as defined in
Regulation S-X, Rule 1-02(w).
EXHIBIT 23
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
Darden Restaurants, Inc.:
We consent to incorporation by reference in the Registration Statement
(No. 33-93854) on Form S-3 and Registration Statements (Nos. 33-92702 and
33-92704) on Form S-8 of Darden Restaurants, Inc. of our report dated June 18,
1996, relating to the consolidated balance sheets of Darden Restaurants, Inc.
and subsidiaries as of May 26, 1996 and May 28, 1995 and the related
consolidated statements of earnings and cash flows for each of the fiscal years
in the three-year period ended May 26, 1996, which report is incorporated by
reference to page 15 of the Registrant's 1996 Annual Report to Stockholders in
the May 26, 1996 annual report on Form 10-K of Darden Restaurants, Inc.
KPMG Peat Marwick LLP
Orlando, Florida
August 13, 1996
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned constitutes and appoints
C.L. Whitehill, Joe R. Lee and James D. Smith, and each of them, his or her true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for and in his or her name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K for the fiscal year ended May
26, 1996, and any and all amendments thereto and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
/s/ Betty Southard Murphy
Betty Southard Murphy
Date: August 8, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned constitutes and appoints
C.L. Whitehill, Joe R. Lee and James D. Smith, and each of them, his or her true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for and in his or her name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K for the fiscal year ended May
26, 1996, and any and all amendments thereto and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
/s/ Michael D. Rose
Michael D. Rose
Date: August 9, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned constitutes and appoints
C.L. Whitehill, Joe R. Lee and James D. Smith, and each of them, his or her true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for and in his or her name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K for the fiscal year ended May
26, 1996, and any and all amendments thereto and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
/s/ Jack A. Smith
Jack A. Smith
Date: August 8, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned constitutes and appoints
C.L. Whitehill, Joe R. Lee and James D. Smith, and each of them, his or her true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for and in his or her name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K for the fiscal year ended May
26, 1996, and any and all amendments thereto and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
/s/ Blaine Sweatt
Blaine Sweatt
Date: August 8, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned constitutes and appoints
C.L. Whitehill, Joe R. Lee and James D. Smith, and each of them, his or her true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for and in his or her name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K for the fiscal year ended May
26, 1996, and any and all amendments thereto and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
/s/ Daniel B. Burke
Daniel B. Burke
Date: August 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Darden Restaurants, Inc. and
subsidiaries and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-26-1996
<PERIOD-START> MAY-29-1995
<PERIOD-END> MAY-26-1996
<CASH> 30,343
<SECURITIES> 0
<RECEIVABLES> 24,772
<ALLOWANCES> 0
<INVENTORY> 120,725
<CURRENT-ASSETS> 287,980
<PP&E> 2,409,475
<DEPRECIATION> 706,614
<TOTAL-ASSETS> 2,088,504
<CURRENT-LIABILITIES> 445,306
<BONDS> 301,205
0
0
<COMMON> 1,266,212
<OTHER-SE> (43,575)
<TOTAL-LIABILITY-AND-EQUITY> 2,088,504
<SALES> 3,191,779
<TOTAL-REVENUES> 3,191,779
<CGS> 1,062,624
<TOTAL-COSTS> 2,473,136
<OTHER-EXPENSES> 604,925
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,406
<INCOME-PRETAX> 113,718
<INCOME-TAX> 39,363
<INCOME-CONTINUING> 74,355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74,355
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
</TABLE>
