SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
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(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended May 28, 2000
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 (IRS Employer Identification Number)
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 $17.00 per share as reported on the
New York Stock Exchange on July 24, 2000: $1,993 million.
Number of shares of Common Stock outstanding as of July 24, 2000:
121,897,247 (excluding 44,292,590 shares held in the Company's treasury).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement dated August 8, 2000 are
incorporated by reference into Part III, and portions of Registrant's 2000
Annual Report to Stockholders are incorporated by reference into Parts I, II and
IV.
<PAGE>
PART I
ITEM 1. BUSINESS OF DARDEN RESTAURANTS, INC.
INTRODUCTION
Darden Restaurants, Inc. and its subsidiaries (the "Company" or "Darden")
is the world's largest casual dining restaurant organization.* As of May 28,
2000, it operated 1,102 restaurants in 49 states (the exception being Alaska),
including 622 Red Lobster(R), 464 Olive Garden(R), 14 Bahama Breeze(R), and two
Smokey Bones BBQ Sports Bar(SM) restaurants. In addition, the Company operated
37 restaurants in Canada, including 32 Red Lobster and five Olive Garden
restaurants. The Company also operated one Olive Garden Cafe(R) in the United
States as of May 28, 2000. The Company operates all of its North American
restaurants. In Japan, as of May 28, 2000, Red Lobster Japan Partners, a
Japanese retailer unaffiliated with Darden, operated 35 Red Lobster restaurants
pursuant to an Area Development and Franchise Agreement.
The Company, a Florida corporation incorporated in March of 1995, is the
parent company of GMRI, Inc., a Florida corporation ("GMRI"). GMRI and other
Darden subsidiaries own the operating assets of the restaurants. GMRI was
originally incorporated on March 27, 1968, as Red Lobster Inns of America, Inc.
The Company's principal executive offices and restaurant support center are
located at 5900 Lake Ellenor Drive, Orlando, Florida 32809 (telephone number
(407) 245-4000). Unless the context indicates otherwise, all references to
Darden or the Company include Darden, GMRI and their respective subsidiaries.
BACKGROUND
The Company opened its first restaurant, a Red Lobster, in Lakeland,
Florida in January of 1968. Red Lobster was founded by William B. Darden, for
whom the Company is named. The Company was acquired by General Mills, Inc.
("General Mills") in 1970. In May of 1995, the Company became a separate
publicly held company when General Mills distributed all outstanding Darden
stock to General Mills stockholders (the "Distribution").
While the expansion of the Company's two largest restaurant chains has
historically been steady, the number of restaurants for both Red Lobster and
Olive Garden has declined in recent years due to an increased focus on market
optimization and the closing of under-performing units. Red Lobster has grown
from three restaurants in operation in 1970 to 654 units in North America by the
end of fiscal 2000. Olive Garden, an internally developed concept, opened its
first restaurant in December of 1982, and, by the end of fiscal 2000, had
expanded to 469 restaurants and one food court cafe in North America.
Bahama Breeze is an internally developed concept with a Caribbean theme. In
1996, Bahama Breeze opened its first restaurant in Orlando, Florida. At the end
of fiscal 2000, there were 14 Bahama Breeze restaurants.
The Company's newest restaurant concept is Smokey Bones BBQ Sports Bar
("Smokey Bones"), an internally developed concept. At the end of fiscal 2000,
there were two Smokey Bones restaurants. They are both located in the Orlando,
Florida area.
STRATEGY
The Company is a leader in the casual dining segment of the restaurant
industry and is committed to the following four strategic building blocks:
o day-to-day operating excellence in its restaurants;
o continuous leadership development throughout the Company;
-------------------
[FN]
* Source: NATION'S RESTAURANT NEWS, "Top 100," June 26, 2000 (based on number of
company-owned restaurants).
</FN>
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o providing service and hospitality that redefines casual dining; and
o a continuing commitment to culinary excellence.
The Company's continuing focus on each of these four building blocks
provides a strong foundation for future growth. The Company plans to grow by
increasing the number of restaurants in each of its existing concepts and by
developing or acquiring additional concepts that can be expanded profitably.
The following table lists the number of restaurants operated by Red
Lobster, Olive Garden, Bahama Breeze and Smokey Bones as of the end of each
fiscal year. The final column in the table lists the Company's total sales for
these years, including sales generated by all concepts then owned and operated
by the Company.
COMPANY-OPERATED RESTAURANTS OPEN AT FISCAL YEAR-END
<TABLE>
<CAPTION>
Fiscal Red Olive Bahama Total Total Company Sales
Year Lobster Garden(a) Breeze Smokey Bones Restaurants(a)(b) (In Millions)
---- ------- --------- ------ ------------ ----------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
1970 6 6 $3.5
1971 24 24 9.1
1972 47 47 27.1
1973 70 70 48.0
1974 97 97 72.6
1975 137 137 108.5
1976 174 174 174.1
1977 210 210 229.2
1978 236 236 291.4
1979 244 244 337.5
1980 260 260 397.6
1981 291 291 528.4
1982 328 328 614.3
1983 360 1 361 718.5
1984 368 2 370 782.3
1985 372 4 376 842.2
1986 401 14 415 917.3
1987 433 52 485 1,097.7
1988 443 92 535 1,300.8
1989 490 145 635 1,621.5
1990 521 208 729 1,927.7
1991 568 272 840 2,212.3
1992 619 341 960 2,542.0
1993 638 400 1,038 2,737.0
1994 675 458 1,133 2,963.0
1995 715 477 1,192 3,163.3
1996 729 487 1 1,217 3,191.8
1997 703 477 2 1,182 3,171.8
1998 682 466 3 1,151 3,287.0
1999 669 464 6 1,139 3,458.1
2000 654 469 14 2 1,139 3,701.3
</TABLE>
-------------------
[FN]
(a) These numbers do not include Olive Garden Cafe restaurants.
(b) These numbers include total restaurants for the four concepts operating on
May 28, 2000.
</FN>
2
<PAGE>
INDUSTRY OVERVIEW
In the United States, the restaurant industry generates approximately $257
billion in annual sales, or roughly 35 percent of total consumer food
expenditures.* Expenditures for restaurant dining and other meals prepared away
from home have increased from 25 percent of the food dollar in 1955 to 45
percent in 2000.* Over the past 20 years, restaurant sales have grown at an
annual rate that is one to two percentage points faster than the growth of
food-at-home sales.*
The restaurant industry is comprised of four segments: quick service,
mid-scale, casual dining and fine dining. The industry is highly fragmented and
is characterized by the presence of thousands of independent operators and small
chains. While chain restaurants dominate the quick service segment of the
restaurant industry with a combined market share of 61 percent, chains account
for just 22 percent in the other three segments combined, which together
comprise the full-service category.* The Company believes that capable operators
of strong multi-unit concepts will continue to increase their share of the
casual dining segment.
Casual dining is the fastest growing segment of the restaurant industry,
with sales increasing at a 6.9 percent annual compound growth rate in the
1990s.* Casual dining represents about 17 percent of total restaurant sales, and
37 percent of full service restaurant sales, or approximately $44 billion.*
Darden is a leader in the casual dining segment, with approximately an eight
percent market share.* Management believes that casual dining concepts will
benefit from favorable demographic trends, most notably the maturing population.
Forty to sixty year olds are the most frequent users of casual dining
restaurants and, through this decade, the population aged fifty or older is
projected to increase by approximately 21 million, or 28 percent. In addition,
baby-boomers, or those people who are thirty-five to fifty-three years old, tend
to eat out more than generations before them, so, as they age, their casual
dining frequency may become even higher. Finally, this group includes a high
proportion of two-income families, which the Company believes could increase the
demand for food-away-from-home due to a combination of more discretionary income
and less discretionary time.
Restaurants face growing competition from the supermarket industry, which
is offering improved entrees and side dishes from the deli section.
Supermarkets' renewed emphasis on these convenient meals may have the most
impact on segments of the restaurant industry in which the meals fulfill a
primarily physiological objective, such as in the quick service and mid-scale
segments. Casual dining offers a more significant social component with the
meal, a feature that the supermarkets' "convenient meals" do not readily
provide.
RESTAURANT CONCEPTS
Red Lobster
Red Lobster is the largest casual dining, seafood-specialty restaurant
operator in the United States, with approximately 46% of that group's sales in
1999.* It offers an extensive menu featuring fresh fish, shrimp, crab, lobster,
scallops, and other seafood in a casual atmosphere. The menu includes a variety
of specialty seafood and non-seafood appetizers and desserts. For the twelfth
consecutive year, Red Lobster was named Best Seafood Chain in America in the
2000 America's Choice In Chains national consumer survey published in the March
1, 2000 issue of Restaurants & Institutions magazine.
Dinner entree prices range from $6.99 to $22.50, with fresh fish and
certain lobster items available at market price. Lunch entree prices range from
$4.99 to $8.76. During fiscal 2000, the average check per person was between
$14.00 and $15.00, with alcoholic beverages accounting for slightly more than
eight percent of Red Lobster's sales. The Company maintains approximately 138
different menus to reflect geographic differences in consumer preferences,
prices and selections in its trade areas, as well as a lower-priced children's
menu.
-------------------
[FN]
* Sources: UNITED STATES DEPARTMENT OF COMMERCE CENSUS OF RETAIL TRADE (1999);
NATIONAL RESTAURANT ASSOCIATION ANNUAL FOODSERVICE FORECAST (2000); and CREST
ANNUAL HOUSEHOLD SUMMARY (1999).
</FN>
3
<PAGE>
Fiscal 2000 was a year of consistent profitable sales growth for Red
Lobster. As of the end of fiscal 2000, Red Lobster had enjoyed ten consecutive
quarters of same-restaurant sales increases. For the year, same-restaurant sales
at Red Lobster increased 7.6 percent.
Olive Garden
Olive Garden is the market share leader among casual dining Italian
restaurants in North America with approximately 34 percent of that group's sales
in 1999.* Olive Garden's menu includes a variety of authentic Italian foods
featuring fresh ingredients, and an expanded wine list that includes a broad
selection of wines imported from Italy. The menu includes antipasti
(appetizers); soups, salad and garlic breadsticks; baked pastas; sauteed
specialties with chicken, seafood and fresh vegetables; grilled meats; and a
variety of desserts. Olive Garden also uses coffee imported from Italy for its
espresso and cappuccino.
Dinner entree prices range from $6.95 to $16.95, and most lunch entree
prices range from $4.95 to $8.95. The price of each entree also includes as much
fresh salad or soup as a guest desires. During fiscal 2000, the average check
per person was $11.50 to $12.75, with alcoholic beverages accounting for
slightly more than eight percent of Olive Garden's sales.
Fiscal 2000 yielded the highest profits and returns in Olive Garden's
history. Same-restaurant sales at Olive Garden increased 7.2 percent during
fiscal 2000. Olive Garden has had 23 consecutive quarters of same-restaurant
sales increases as of the end of fiscal 2000.
Bahama Breeze
Bahama Breeze is a Caribbean-themed restaurant which offers guests a
distinctive island dining experience. The first Bahama Breeze was opened in 1996
and met with strong positive consumer response. The Company continued to test
the concept by opening a limited number of additional restaurants in each of the
following years. In fiscal 2000, the Company opened eight Bahama Breeze
restaurants in six new markets, bringing the total to 14 restaurants in 11
markets. The concept continues to be well received by guests, with strong sales
volumes and earnings. The Company plans to open at least ten new Bahama Breeze
restaurants in fiscal 2001, including the first restaurants in northern United
States markets.
Smokey Bones BBQ Sports Bar
The Company's newest casual dining restaurant concept, Smokey Bones,
combines barbeque with a relaxed sports bar atmosphere. The Company opened the
first Smokey Bones in September 1999. There are currently two Smokey Bones
restaurants, both located in Orlando, Florida. Initial results from the first
two restaurants are encouraging. The Company plans to extend the test concept
with the opening of a third restaurant in Columbus, Ohio, in fiscal 2001, and
may open more if test results continue to be favorable.
-------------------
[FN]
* Sources: UNITED STATES DEPARTMENT OF COMMERCE CENSUS OF RETAIL TRADE (1999);
NATIONAL RESTAURANT ASSOCIATION ANNUAL FOODSERVICE FORECAST (2000); and CREST
ANNUAL HOUSEHOLD SUMMARY (1999).
</FN>
4
<PAGE>
RECENT AND PLANNED GROWTH
During fiscal 2000, the Company opened 22 restaurants (excluding the
relocation of existing restaurants to new sites). It plans to open approximately
34 to 36 new Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones
restaurants during fiscal 2001 (excluding relocations). The Company's actual and
projected new openings by concept are shown below.
<TABLE>
<CAPTION>
Actual Projected
Fiscal 2000 Fiscal 2001
----------- -----------
<S> <C> <C>
Red Lobster................................ 6 8
Olive Garden............................... 6 15
Bahama Breeze.............................. 8 10-12
Smokey Bones............................... 2 1
---- -------
Totals............................... 22 34-36
==== =======
</TABLE>
The Company's objective is to continue to expand its current portfolio of
restaurant concepts, and to develop or acquire additional concepts which can be
expanded profitably. It is currently testing new ideas and concepts, as well as
expanding its testing of Smokey Bones in light of favorable consumer response.
The Company also regularly evaluates potential acquisition candidates to assess
whether they would satisfy the Company's strategic and financial objectives. At
present, the Company has not identified any specific acquisitions.
The Company will continue to focus on improving operational returns at
Olive Garden and Red Lobster, and limit new restaurant expansion of those
concepts to the highest-potential sites. Olive Garden's expansion will include
its recently developed "Tuscan Farmhouse" design, an outgrowth of the Company's
collaboration with Rocca del Macie, a family-owned winery in Tuscany. In
addition, the Company plans to expand Bahama Breeze at a pace that will enable
each new restaurant to capture the concept's full potential, and to expand
Smokey Bones if test results continue to be favorable. The specific number of
openings will depend upon other factors, such as the Company's ability to locate
appropriate sites, negotiate acceptable purchase or lease terms, obtain
necessary local governmental permits, complete construction and recruit and
train restaurant management and hourly personnel.
Darden considers location to be a critical factor in determining a
restaurant's long-term success, and the Company devotes significant effort to
the site selection process for new locations. Prior to entering a market, a
thorough study is conducted to determine the optimal number and placement of
restaurants. The Company's site selection process incorporates a variety of
analytical techniques to evaluate key factors. These factors include trade area
demographics, such as target population density and household income levels;
competitive influences in the trade area; the site's visibility, accessibility,
and traffic volume; and proximity to activity centers such as shopping malls,
hotel/motel complexes, offices and universities. Members of senior management
evaluate, inspect and approve each restaurant site prior to its acquisition.
Constructing and opening a new restaurant typically takes 120 to 180 days after
the site is acquired and permits are obtained.
The following table illustrates the approximate average capital investment,
size and dining capacity of the six Red Lobster and six Olive Garden openings
(excluding relocations of existing restaurants) that occurred during fiscal
2000.
<TABLE>
<CAPTION>
Capital Square Dining Dining
Investment Feet Seats Tables
----------- ------ ------ ------
<S> <C> <C> <C> <C>
Red Lobster........................ $ 3,295,000 6,868 199 63
Olive Garden....................... $ 3,463,000 8,024 213 65
</TABLE>
The Company systematically reviews the performance of its restaurant sites
to ensure that each restaurant meets its standards. When a restaurant falls
below minimum standards, a thorough analysis is completed to determine the
causes, and marketing and operational plans are implemented to improve that
restaurant's performance. If performance does not improve to acceptable levels,
the site is evaluated for relocation, closing or conversion to one of the
Company's other concepts.
During fiscal 2000, the Company permanently closed 18 Red Lobster
restaurants in the United States and two in Canada. During the same period, the
Company permanently closed five Olive Garden Cafes in shopping
5
<PAGE>
mall food courts in the United States. During fiscal 2000, the Company relocated
or rebuilt seven Red Lobster restaurants in the United States.
For a discussion of restructuring and asset impairment expense or credit
related to restaurant closings, see Management's Discussion of Results of
Operations and Financial Condition and Note 3 of Notes to Consolidated Financial
Statements on pages 23 and 34, respectively, of the Company's 2000 Annual Report
to Stockholders.
RESTAURANT OPERATIONS
The Company believes that high-quality restaurant management is critical to
its long-term success. It also believes that its leadership position, strong
success-oriented culture and various short-term and long-term incentive
programs, including stock options, help attract and retain highly-motivated
restaurant managers.
The Company's restaurant management structure varies by concept and
restaurant size. Each restaurant is led by a general manager and one to four
additional managers, depending on the operating complexity and sales volume of
the restaurant. Each restaurant also employs approximately 65 to 140 hourly
employees, most of whom work part-time. The Company issues detailed operations
manuals covering all aspects of restaurant operations as well as food and
beverage manuals which detail the preparation procedures of the Company's
formulated recipes. The restaurant management teams are responsible for the
day-to-day operation of each restaurant and for ensuring compliance with the
Company's operating standards. At the Company's two largest concepts, Red
Lobster and Olive Garden, restaurant general managers report to directors, and
each director is responsible for seven to 14 restaurants. Restaurants are
visited regularly by all levels of supervision to ensure strict adherence to all
aspects of the Company's standards.
Each concept's vice president or director of training, together with senior
operations executives, is responsible for developing and maintaining that
concept's operational training programs. These efforts include a 12-to-15 week
training program for management trainees, and continuing development programs
for managers, supervisors and directors. The emphasis of the training and
development programs varies by restaurant concept, but includes leadership,
restaurant business management and culinary skills. The Company also uses a
highly structured training program to open new restaurants, including training
teams consisting of groups of employees experienced in all aspects of restaurant
operations. The opening training teams typically begin on-site training one week
prior to opening and remain on location one week following the opening. They are
phased out when appropriate to enable a smooth transition to the restaurant's
operating staff.
QUALITY ASSURANCE
The Company's Quality Assurance Department helps ensure that all
restaurants provide high-quality food products in a clean and safe environment.
Through rigorous physical evaluation and testing at the Company's North American
laboratories and through "Point Source Inspection" in southeastern Asia, the
Company ensures that all seafood purchased meets or exceeds its specifications.
Since 1976, the Company has maintained a microbiological laboratory to routinely
test seafood and commodity products for quality and microbiological safety. In
addition, quality assurance managers visit each restaurant periodically
throughout the year to ensure that food is properly handled, and to provide
education and training in food safety and sanitation. The quality assurance
managers also serve as a liaison to regulatory agencies on issues relating to
food safety. The Company uses independent third party auditors to inspect and
evaluate vendors of commodity food products. In this manner, the Company
attempts to ensure that its suppliers are maintaining good manufacturing
practices and are operating with the comprehensive industry standard Hazard
Analysis Critical Control Points programs in place.
PURCHASING AND DISTRIBUTION
The Company's ability to ensure a consistent supply of high-quality food
and supplies at competitive prices to all of its restaurant concepts depends
upon procurement from reliable sources. The Company's purchasing staff sources,
negotiates and purchases food and supplies from more than 1,850 suppliers in 45
countries. Suppliers are required to meet strict quality control standards in
the development, harvest, catch and production of food products. Competitive
bids, long-term contracts and long-term vendor relationships are routinely used
to manage availability and cost of products.
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<PAGE>
The Company believes that its seafood purchasing capabilities are a
significant competitive advantage. The Company's purchasing staff routinely
travels within the United States and internationally to source over 100
varieties of top-quality seafood at competitive prices. The Company believes
that it has established excellent long-term relationships with key seafood
vendors, and sources product directly from the vendors when possible. The
Company operates a procurement office in Singapore to source products directly
from Asia. While the supply of certain seafood species is volatile, the Company
believes that it has demonstrated the ability to identify alternative seafood
products and to adjust its menus as required. All other essential food products
are available, or can be made available upon short notice, from alternative
qualified suppliers. Because of the relatively rapid turnover of perishable food
products, inventories in the restaurants have a modest aggregate dollar value in
relation to revenues. Controlled inventories of specified products are
distributed to all restaurants through national distribution companies.
ADVERTISING AND MARKETING
The Company believes that it has developed significant marketing and
advertising capabilities. The Company's size enables it to be a dominant
advertiser in the casual dining segment of the restaurant industry. The Company
leverages the efficiency of national network television advertising and
supplements it with local market television advertising. The Company's
restaurants appeal to a broad spectrum of consumers and it uses advertising and
product promotions to attract customers. The Company implements periodic
promotions as appropriate to maintain and increase its sales and profits. It
also relies on radio and newspaper advertising, as well as newspaper and direct
mail couponing programs, as appropriate, to attract customers. The Company has
developed and consistently uses sophisticated consumer marketing research
techniques to monitor customer satisfaction and customers' evolving
expectations.
EMPLOYEES
At the end of fiscal 2000, the Company employed approximately 122,300
persons. Of these employees, approximately 1,200 were corporate or concept
personnel located in the Company's restaurant support center in Orlando,
Florida, approximately 5,100 were restaurant management personnel in the
restaurants or in field offices, and the remainder were hourly restaurant
personnel. Of the restaurant support center employees, approximately 55 percent
were in management and the balance were administrative or office employees. The
operating executives of the Company have an average of more than 16 years of
experience with the Company. The restaurant general managers average 11 years
with the Company. The Company believes that it provides working conditions and
compensation that compare favorably with those of its competition. Most
employees, other than restaurant management and corporate management, are paid
on an hourly basis. None of the Company's employees are covered by a collective
bargaining agreement. The Company considers its employee relations to be good.
MANAGEMENT INFORMATION SYSTEMS
The Company strives for leadership in the restaurant business by using
technology as a competitive advantage. Since 1975, computers located in the
restaurants have been used to assist in the management of the restaurants. The
Company has implemented systems targeted at improved financial control, cost
management, enhanced guest service and improved employee effectiveness.
Management information systems are designed to be used across restaurant
concepts, yet are flexible enough to meet the unique needs of each specific
restaurant concept.
Restaurant support is provided from the restaurant support center in
Orlando, Florida, seven days a week, 24 hours a day. A communications network
sends and receives critical business data to and from the restaurants each
night, providing timely and extensive information each morning on business
activity in every location. The restaurant support center houses the Company's
data center, which contains sufficient computing power to process information
from all restaurants quickly and efficiently. The Company's information is
processed in a secured environment to protect both the actual data and the
physical assets. The Company guards against business interruption by maintaining
a disaster recovery plan, which includes storing critical business information
off-site and testing the disaster recovery plan at a hot-site facility. The
Company uses internally developed proprietary software, as well as purchased
software, with proven, non-proprietary hardware. This allows processing power in
terms of hardware and software to be distributed effectively to each of the
Company's restaurant locations.
7
<PAGE>
The Company's management believes these systems have well positioned the
Company to support current needs as well as future growth. The Company is
committed to maintaining an industry leadership position in information systems
and computing technology. The Company uses a strategic information systems plan
that is prepared internally and reviewed with senior management. The plan is a
result of projects approved by the Executive Information Systems Steering
Committee. This plan prioritizes information systems projects based upon
strategic, financial, regulatory and other business advantage criteria.
COMPETITION
The restaurant industry is intensely competitive with respect to food
quality, price, service, restaurant location, concept, attractiveness of
facilities, and effectiveness of advertising and marketing programs. The
restaurant business is often affected by changes in consumer tastes; national,
regional or local economic conditions; demographic trends; traffic patterns; the
type, number and location of competing restaurants; and consumers' discretionary
purchasing power. The Company competes within each market with national and
regional chains as well as locally-owned restaurants, not only for customers but
also for management and hourly personnel and suitable real estate sites.
Restaurants face growing competition from the supermarket industry, which is
offering "convenient meals" in the form of improved entrees and side dishes from
the deli section. The Company expects intense competition to continue in all of
these areas.
Other factors pertaining to the Company's competitive position in the
industry are addressed under the sections entitled "Purchasing and
Distribution," "Advertising and Marketing," and "Management Information
Systems," and elsewhere in this report.
TRADEMARKS AND RELATED AGREEMENTS
The Company regards its Red Lobster(R), Olive Garden(R), Bahama Breeze(R)
and Smokey Bones(SM) servicemarks as having significant value and as being
important in marketing the restaurants. The Company's policy is to pursue
registration of its important servicemarks and trademarks whenever possible and
to oppose vigorously any infringement of them.
The only restaurant operations outside of North America historically have
been conducted through Red Lobster Japan Partners, a partnership venture with
the Japanese retailer JUSCO that was established in 1982. The historical
financial results of Darden exclude the results of such operations. On April 26,
1995, the Darden subsidiary, GMRI, Inc., entered into an Area Development and
Franchise Agreement with Red Lobster Japan Partners, which operated 35 Red
Lobster restaurants in Japan as of May 28, 2000. Darden does not have an
ownership interest in Red Lobster Japan Partners. Royalty income is not material
to the Company's consolidated financial statements.
SEASONALITY
The Company's sales volumes fluctuate seasonally, and are generally higher
in the spring and summer months, and lower in the fall and winter months. Severe
weather, storms and similar conditions may impact sales volumes seasonally in
some operating regions.
GOVERNMENT REGULATION
The Company is subject to various federal, state and local laws affecting
its business. Each of the Company's restaurants must comply with licensing
requirements and regulations by a number of governmental authorities, which
include health, safety and fire agencies in the state or municipality in which
the restaurant is located. The development and operation of restaurants depend
on selecting and acquiring suitable sites, which are subject to zoning, land
use, environmental, traffic and other regulations. To date, the Company has not
been significantly affected by any difficulty, delay or failure to obtain
required licenses or approvals.
Presently about nine percent of total restaurant revenues are attributable
to the sale of alcoholic beverages. Regulations governing their sale require
licensure by each site (in most cases, on an annual basis) and licenses may be
revoked or suspended for cause at any time. These regulations relate to many
aspects of restaurant operation, including the minimum age of patrons and
employees, hours of operation, advertising, wholesale purchasing, inventory
control and handling, storage and dispensing of alcoholic beverages. The failure
of a restaurant to obtain
8
<PAGE>
or retain these licenses would adversely affect the restaurant's operations. The
Company is also subject in certain states to "dram-shop" statutes, which
generally provide an injured party with recourse against an establishment that
wrongfully serves alcoholic beverages to an intoxicated person, causing the
injury. The Company carries liquor liability coverage as part of its
comprehensive general liability insurance.
The Company is also subject to federal and state minimum wage laws and
other laws governing such matters as overtime, tip credits, working conditions,
safety standards, and hiring and employment practices. Changes in these laws
during fiscal 2000 have not had a material effect on the Company's operations.
The Company is currently operating under a Tip Rate Alternative Commitment
("TRAC") agreement with the Internal Revenue Service. Through increased
educational and other efforts in the restaurants, the TRAC agreement reduces the
likelihood of potential chain-wide employer-only FICA assessments for unreported
tips.
The Company is subject to federal and state environmental regulations, but
these rules have not had a material effect on the Company's operations.
The Company continues to monitor its facilities for compliance with the
Federal Americans With Disabilities Act ("ADA") and related state statutes in
order to conform to their requirements. Under the ADA and related state laws,
the Company could be required to expend funds to modify its restaurants to make
them more readily accessible to disabled persons, to better provide service to
disabled persons, or to make reasonable accommodation for the employment of
disabled persons.
EXECUTIVE OFFICERS
The executive officers of the Company as of the date of this report are as
follows.
Joe R. Lee, age 59, is Chief Executive Officer and Chairman of the Board of
Darden. Mr. Lee joined Red Lobster in 1967 as a member of its opening management
team, and was named its President in 1975. He was elected a Vice President of
General Mills in 1976, a Group Vice President in 1979, and an Executive Vice
President in 1981. He was named Executive Vice President, Finance and
International Restaurants in 1991, and was elected a Vice Chairman of General
Mills in 1992 with responsibility for various consumer foods businesses and
corporate staff functions. Mr. Lee was elected a director of General Mills in
1985. He was named Chief Executive Officer of Darden in December of 1994.
Blaine Sweatt, III, age 52, is President, New Business Development and an
Executive Vice President of Darden. He joined General Mills in 1976 in the Red
Lobster organization and was named Director of New Restaurant Concept
Development in 1981. He was named Vice President of General Mills in 1985 and
Senior Vice President in 1994. Mr. Sweatt has been Executive Vice President and
a director of Darden since 1995. Mr. Sweatt led the teams that developed the
Olive Garden, Bahama Breeze and Smokey Bones concepts, among others.
Bradley D. Blum, age 46, is President of Olive Garden and an Executive Vice
President of Darden. Mr. Blum joined General Mills in 1978. He was named
Director of Marketing in 1984, responsible for Big G Cereals, and he became Vice
President of Big G New Enterprises in 1989. In 1990, he was named Vice President
of Marketing for Cereal Partners Worldwide, General Mills' joint venture with
Nestle, headquartered in Switzerland. He joined the Company in 1994 as Senior
Vice President of Marketing for Olive Garden and was named President of Olive
Garden in December of 1994. He was named Senior Vice President of Darden in
September of 1995 and has been Executive Vice President and a director of Darden
since September of 1997.
Richard E. Rivera, age 53, was named President of Red Lobster and Executive
Vice President of Darden in December of 1997. Mr. Rivera began his career with
Steak and Ale Restaurants of America. He has held many management positions
within the industry during a career of more than 25 years. Prior to joining Red
Lobster, from 1994 to 1996, Mr. Rivera served as President and Chief Executive
Officer of RARE Hospitality International, Inc., owner of LongHorn Steakhouse
restaurants. Mr. Rivera has been a director of Darden since joining the Company
in December of 1997.
Linda J. Dimopoulos, age 49, is Senior Vice President, Chief Information
Officer of Darden with overall responsibility for information services and
systems. Ms. Dimopoulos joined the Company in 1982. She was named Director,
Corporate Analysis in 1985. In 1986, she was named Vice President, Controller
for Red Lobster, and then
9
<PAGE>
Vice President, Information System Services. She was named Senior Vice
President, Financial Operations in August 1993, and Senior Vice President,
Corporate Controller and Business Information Systems in July 1998. She assumed
her present position in December of 1999.
Gary Heckel, age 47, is President of Bahama Breeze and Senior Vice
President of Darden. Mr. Heckel's career in the restaurant industry includes
employment with several major quick service and casual dining restaurant
companies, such as Burger King Corporation, Taco Bell Corp., and TGI Friday's,
Inc. Mr. Heckel joined Darden in 1995 as Vice President, Operations in the
Company's New Business Development division. He was named Senior Vice President,
Operations for Bahama Breeze in August of 1997. Mr. Heckel was named President
of Bahama Breeze in July of 1998 and was elected Senior Vice President of Darden
in June of 1999.
Stephen Helsel, age 55, is Senior Vice President, Corporate Controller of
Darden. He joined the Company in 1973 as an accountant with Red Lobster, and has
been promoted to increasingly responsible positions throughout the Company
during his career. In 1989, he was named Vice President, Controller of Red
Lobster. He was named Vice President, Controller, Accounting Services of the
Company in 1991. In 1996, he was promoted to Senior Vice President, Information
Services of Darden. Mr. Helsel assumed his present position in December of 1999.
Daniel M. Lyons, age 47, is Senior Vice President, Human Resources of the
Company with overall responsibility for human resources, including compensation,
benefits, management development, staffing, corporate security, diversity
management and aviation. Mr. Lyons joined the Company in 1993 as Senior Vice
President of Personnel for Olive Garden. He was elected to his present position
in January of 1997. Prior to joining Olive Garden, Mr. Lyons spent 18 years with
the Quaker Oats Company.
Robert W. Mock, age 48, was named President of Smokey Bones in September of
1999. Mr. Mock joined the Company in 1969 and, through the years, held
management positions in various areas of the Company. In 1992, Mr. Mock was
named Executive Vice President and General Manager of Red Lobster Canada. In
1994, Mr. Mock was named Executive Vice President, Operations for Olive Garden.
In July 1998, he was named Senior Vice President of Darden, a position he
continues to hold.
Barry Moullet, age 42, is Senior Vice President, Purchasing, Distribution
and Food Safety for the Company. He joined Darden in July of 1996. Prior to
joining Darden, Mr. Moullet spent 15 years in the purchasing field, most
recently with Restaurant Services, Inc., a Burger King purchasing co-operative.
Prior to Burger King, he gained experience with Kentucky Fried Chicken and the
Pillsbury Company. Mr. Moullet became an executive officer of Darden in June
1999.
Clarence Otis, Jr., age 44, is Senior Vice President, Chief Financial
Officer of the Company. Mr. Otis joined the Company in 1995 as Vice President
and Treasurer. In July of 1997, he assumed responsibility for investor relations
and was named Senior Vice President, Investor Relations and Treasurer. In July
1998, Mr. Otis assumed additional responsibilities in the area of finance and
was named Senior Vice President, Finance and Treasurer. He assumed his present
position in December 1999. Prior to joining the Company, Mr. Otis was employed
by Chemical Securities, Inc. in New York where he had been Managing Director and
Manager of Public Finance since 1991. Prior to his work at Chemical Securities,
Mr. Otis was employed by Siebert Municipal Capital Group as Managing Director
and Principal.
Paula J. Shives, age 49, was elected Senior Vice President, General Counsel
and Secretary of Darden in June of 1999. Ms. Shives began her legal career in
1979 as Corporate Counsel for Jerrico, Inc., the predecessor to Long John
Silver's Restaurants, Inc. After spending several additional years in private
practice with the law firm of Greenebaum, Doll & McDonald in Lexington,
Kentucky, Ms. Shives rejoined Long John Silver's Restaurants, Inc. in 1985 as
Associate General Counsel, and became its Senior Vice President, General Counsel
and Secretary in 1995. Ms. Shives joined Darden in May of 1999.
James D. Smith, age 57, is Senior Vice President, Real Estate, Design and
Construction of the Company. Mr. Smith joined General Mills in 1982 and was
named Senior Vice President and Controller of the restaurant operations in 1988.
In December 1994, Mr. Smith was named Senior Vice President, Finance.
Subsequently, he assumed increasing responsibilities in connection with the
Company's real estate development activities and was named to his present
position in July of 1998.
10
<PAGE>
Richard J. Walsh, age 48, is Senior Vice President, Corporate Relations,
with responsibility for all corporate communications, environmental relations,
creative and print services, media and government, public and community
relations, including the Darden Restaurants, Inc. Foundation. Mr. Walsh joined
General Mills in 1984 as Manager of Government Affairs for Red Lobster. He was
named Vice President of Government Relations in 1987 and was promoted to his
present position in December of 1994.
FORWARD-LOOKING STATEMENTS
Certain information included in this report and other materials filed or to
be filed by the Company with the Commission (as well as information included in
oral statements or written statements made or to be made by the Company) may
contain statements that are forward-looking within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. This forward-looking information is based on
assumptions concerning important risks and uncertainties that could
significantly affect anticipated results in the future and, accordingly, could
cause the actual results to materially differ from those expressed in the
forward-looking statements. These risks and uncertainties include competition,
economic and market conditions, changes in food and other costs, importance of
locations, effects of government regulations and the Company's ability to
achieve its growth objectives, each of which is more specifically discussed in
Exhibit 99 filed with and incorporated into this report.
ITEM 2. PROPERTIES
As of May 28, 2000, the Company operated 1,139 restaurants (including 654
Red Lobster, 469 Olive Garden, 14 Bahama Breeze and two Smokey Bones
restaurants) and one Olive Garden Cafe in the following locations:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Alabama (19) Arizona (26) Arkansas (10) California (88)
Colorado (22) Connecticut (9) Delaware (4) Florida (117)
Georgia (45) Hawaii (1) Idaho (5) Illinois (46)
Indiana (34) Iowa (13) Kansas (10) Kentucky (14)
Louisiana (7) Maine (3) Maryland (19) Massachusetts (6)
Michigan (42) Minnesota (19) Mississippi (7) Missouri (26)
Montana (2) Nebraska (7) Nevada (8) New Hampshire (3)
New Jersey (26) New Mexico (8) New York (46) North Carolina (25)
North Dakota (4) Ohio (67) Oklahoma (16) Oregon (10)
Pennsylvania (53) Rhode Island (2) South Carolina (17) South Dakota (3)
Tennessee (25) Texas (95) Utah (9) Vermont (1)
Virginia (37) Washington (20) West Virginia (5) Wisconsin (20)
Wyoming (2) Canada (37)
</TABLE>
Of the Company's 1,139 restaurants and the Olive Garden Cafe open on May
28, 2000, 733 were on owned sites and 407 were on leased sites. The 407 leases
are classified as follows:
Land-Only Leases (Darden owns buildings and equipment)........... 287
Ground and Building Leases....................................... 71
Space/In-Line/Other Leases....................................... 49
----
Total....................................................... 407
====
During fiscal 1999, the Company formed two subsidiary corporations, each of
which elected to be taxed as a Real Estate Investment Trust ("REIT") under
Sections 856 through 860 of the Internal Revenue Code. These elections limit the
activities for both corporations to holding certain real estate assets. The
formation of these two REITs is designed primarily to assist the Company in
managing its real estate portfolio and possibly to provide a vehicle to access
future capital markets.
Both REITs are non-public REITs. Through its subsidiary companies, Darden
indirectly owns 100% of all voting stock and greater than 99.5% of the total
value of each REIT. For financial reporting purposes, both REITs are included in
Darden's consolidated group.
11
<PAGE>
The Company owns its executive offices, culinary center and training
facilities in Orlando, Florida. Except in limited instances, the Company's
restaurant sites and other facilities are not subject to mortgages or
encumbrances securing money borrowed by the Company from outside sources.
See also Notes 5 and 13 of Notes to Consolidated Financial Statements on
pages 36 and 38, respectively, of the Company's 2000 Annual Report to
Stockholders.
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is made a party to legal proceedings arising
in the ordinary course of business. The Company does not believe that the
results of such legal proceedings, even if unfavorable to the Company, will have
a materially adverse impact on its financial position, results of operations or
cash flows. See the section entitled "Government Regulation" for a discussion of
various federal, state and local regulatory matters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
12
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock (no par value) has been registered and is traded
on the New York Stock Exchange. As of July 24, 2000, the number of record
holders of common stock was 31,896. Trading of the Company's common stock began
on a "when issued" basis on May 9, 1995, at a price per share of $9.375. The
following table sets forth the high and low intraday sales prices for the
Company's common stock for each full quarterly period during fiscal 1999 and
2000.
PER SHARE SALES PRICE OF COMMON STOCK
<TABLE>
<CAPTION>
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Fiscal 1999 First Quarter Second Quarter Third Quarter Fourth Quarter
<S> <C> <C> <C> <C>
High $18.000 $17.563 $23.250 $23.375
Low $15.125 $14.188 $15.750 $19.813
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<CAPTION>
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Fiscal 2000 First Quarter Second Quarter Third Quarter Fourth Quarter
<S> <C> <C> <C> <C>
High $23.063 $20.625 $19.000 $19.438
Low $17.625 $15.625 $13.500 $12.438
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>
During fiscal 2000, the Company declared two semi-annual dividends of four
cents per share each. The first semi-annual dividend (four cents per share) was
paid on November 1, 1999, to stockholders of record on October 11, 1999. The
second semi-annual dividend (four cents per share) was paid on May 1, 2000, to
stockholders of record on April 10, 2000.
ITEM 6. SELECTED FINANCIAL INFORMATION
The information for fiscal 1996 through 2000, contained in the Five Year
Financial Summary on page 44 of the Company's 2000 Annual Report to
Stockholders, is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information set forth in the section entitled "Management's Discussion
of Results of Operations and Financial Condition" on pages 22 through 25 of the
Company's 2000 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to a variety of market risks, including fluctuations
in interest rates, foreign currency exchange rates and commodity prices. To
manage this exposure, Darden periodically enters into interest rate, foreign
currency exchange and commodity instruments for other than trading purposes.
The Company uses the variance/covariance method to measure value at risk,
over time horizons ranging from one week to one year, at the 95 percent
confidence level. As of May 28, 2000, the Company's potential losses in future
net earnings resulting from changes in foreign currency exchange rates,
commodity prices and floating rate debt interest rate exposures were
approximately $1.5 million over a period of one year. The value at risk from an
increase in the fair value of the Company's long-term fixed rate debt, over a
period of one year, was approximately $20 million. The fair value of the
Company's long-term fixed rate debt during fiscal 2000 averaged $234 million,
with a high of $243 million and a low of $225 million. The Company's interest
rate risk management objective is to limit the impact of interest rate changes
on earnings and cash flows by targeting an appropriate mix of variable and fixed
rate debt.
13
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Independent Auditors' Report, Consolidated Statements of Earnings,
Consolidated Balance Sheets, Consolidated Statements of Changes in Stockholders'
Equity, Consolidated Statements of Cash Flows, and Notes to Consolidated
Financial Statements on pages 26 through 43 of the Company's 2000 Annual Report
to Stockholders are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained in the sections entitled "Information Concerning
Nominees" on pages 4 through 7, "Committees of the Board" on pages 7 through 9,
and "Section 16(a) Beneficial Ownership Reporting Compliance" on page 22 of the
Company's definitive proxy materials dated August 8, 2000, is incorporated
herein by reference. Certain information regarding executive officers is
contained in Part I above.
ITEM 11. EXECUTIVE COMPENSATION
The information contained in the sections entitled "Board Compensation and
Benefits" on page 7, "Summary Compensation Table" on page 14, "Option Grants in
Last Fiscal Year" on page 15 and "Stock Options" on pages 16 and 17 of the
Company's definitive proxy materials dated August 8, 2000, is incorporated by
reference. The information appearing in such proxy materials under the heading
"Report of Compensation Committee on Executive Compensation" is not incorporated
herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in the sections entitled "Certain Owners of
Common Stock" on page 3 and "Share Ownership of Directors and Officers" on page
10 of the Company's definitive proxy materials dated August 8, 2000, is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONS AND RELATED TRANSACTIONS
The information contained in the sections entitled "Certain Relationships
and Related Transactions" on pages 10 through 11 and "Loans to Executive
Officers" on page 20 of the Company's definitive proxy materials dated August 8,
2000, is incorporated herein by reference.
14
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
Consolidated Statements of Earnings for the fiscal years ended May 28,
2000, May 30, 1999, and May 31, 1998 (incorporated by reference to page 27 of
the Company's 2000 Annual Report to Stockholders)
Consolidated Balance Sheets at May 28, 2000 and May 30, 1999 (incorporated
by reference to page 28 of the Company's 2000 Annual Report to Stockholders)
Consolidated Statements of Changes in Stockholders' Equity for the fiscal
years ended May 28, 2000, May 30, 1999, and May 31, 1998 (incorporated by
reference to page 29 of the Company's 2000 Annual Report to Stockholders)
Consolidated Statements of Cash Flows for the fiscal years ended May 28,
2000, May 30, 1999, and May 31, 1998 (incorporated by reference to page 30 of
the Company's 2000 Annual Report to Stockholders)
Notes to Consolidated Financial Statements (incorporated by reference to
pages 31 through 43 of the Company's 2000 Annual Report to Stockholders)
2. Financial Statements Schedules:
Not applicable.
3. Exhibits:
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain
instruments defining the rights of holders of certain long-term debt of the
Company are not filed, and in lieu thereof, the Company agrees to furnish copies
thereof to the Securities and Exchange Commission upon request.
Exhibit Number Title
3(a) Articles of Incorporation (incorporated herein by
reference to Exhibit 3(a) to the Company's Registration
Statement on Form 10 effective May 5, 1995)
3(b) Bylaws (incorporated herein by reference to Exhibit 3(b)
to the Company's Registration Statement on Form 10
effective May 5, 1995)
4(a) Rights Agreement dated as of May 28, 1995 between
the Company and Wells Fargo Bank Minnesota, National
Association, formerly known as Norwest Bank
Minnesota, N.A., as amended May 23, 1996, assigned
to First Union National Bank, as Rights Agent, as of
September 29, 1997 (incorporated by reference to
Exhibit 4(a) to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1998)
4(b) Indenture dated as of January 1, 1996, between the
Company and Wells Fargo Bank Minnesota, National
Association, formerly known as Norwest Bank
Minnesota, N.A., as Trustee (incorporated herein by
reference to the Company's Current Report on Form
8-K filed February 9, 1996)
* 10(a) Darden Restaurants, Inc. Amended and Restated Stock
Option and Long-Term Incentive Plan of 1995, as
amended and approved at the Annual Meeting of Stockholders
on September 23, 1999
-------------------
[FN]
* Items that are management contracts or compensatory plans or arrangements
required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
</FN>
15
<PAGE>
* 10(b) Darden Restaurants, Inc. FlexComp Plan (incorporated
herein by reference to Exhibit 10(b) to the Company's
Registration Statement on Form 10 effective May 5, 1995)
* 10(c) Darden Restaurants, Inc. Stock Option and Long-Term
Incentive Conversion Plan, as amended (incorporated
herein by reference to Exhibit 10(c) to the Company's
Annual Report on Form 10-K for the fiscal year ended
May 26, 1996)
* 10(d) Supplemental Pension Plan of Darden Restaurants, Inc.
(incorporated herein by reference to Exhibit 10(d)
to the Company's Registration Statement on Form 10
effective May 5, 1995)
* 10(e) Executive Health Plan of Darden Restaurants, Inc.
(incorporated herein by reference to Exhibit 10(e) to
the Company's Registration Statement on Form 10 effective
May 5, 1995)
* 10(f) Stock Plan for Directors of Darden Restaurants, Inc.,
as amended December 10, 1996, and June 26, 1998
(incorporated by reference to Exhibit 10(f) to the
Company's Annual Report on Form 10-K for the fiscal
year ended May 31, 1998)
* 10(g) Compensation Plan for Non-Employee Directors of Darden
Restaurants, Inc., as amended June 17, 1997
(incorporated by reference to Exhibit 10(g) to the
Company's Annual Report on Form 10-K for the fiscal
year ended May 31, 1998)
* 10(h) Darden Restaurants, Inc. Management and Professional
Incentive Plan, as amended and restated on June 21, 2000
* 10(i) Benefits Trust Agreement dated as of October 3, 1995,
between the Company and Wells Fargo Bank Minnesota,
National Association, formerly known as Norwest Bank
Minnesota, N.A., as Trustee (incorporated herein by
reference to Exhibit 10(i) to the Company's Annual
Report on Form 10-K for the fiscal year ended May 25,
1997)
* 10(j) Form of Management Continuity Agreement, as
amended, between the Company and certain of its
executive officers (incorporated herein by reference
to Exhibit 10(j) to the Company's Annual Report on
Form 10-K for the fiscal year ended May 25, 1997)
12 Computation of Ratio of Consolidated Earnings to Fixed
Charges
13 Portions of 2000 Annual Report to Stockholders
(incorporated by reference herein)
21 Subsidiaries of Darden Restaurants, Inc.
23 Independent Accountants' Consent
24 Powers of Attorney
27 Financial Data Schedule
99 Cautionary Statements Under the Private Securities
Litigation Reform Act of 1995
-------------------
[FN]
* Items that are management contracts or compensatory plans or arrangements
required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
</FN>
16
<PAGE>
(b) Reports on Form 8-K. During the last quarter covered by this report, the
Company filed the following current report on Form 8-K:
(i) Current report on Form 8-K dated March 23, 2000, reporting certain
financial results for the third quarter of fiscal 2000 and announcing
the election of Rita P. Wilson to the Board of Directors.
17
<PAGE>
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: August 18, 2000 DARDEN RESTAURANTS, INC.
By: /s/ Paula J. Shives
Paula J. Shives
Senior Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Daniel B. Burke Director
Daniel B. Burke*
/s/Odie C. Donald Director
Odie C. Donald*
/s/ Julius Erving, II Director
Julius Erving, II*
/s/ Michael D. Rose Director
Michael D. Rose*
/s/ Hector de J. Ruiz Director
Hector de J. Ruiz*
/s/ Maria A. Sastre Director
Maria A. Sastre*
/s/ Jack A. Smith Director
Jack A. Smith*
/s/ Rita P. Wilson Director
Rita P. Wilson*
/s/ Bradley D. Blum Director and President, Olive Garden
Bradley D. Blum*
/s/ Joe R. Lee Director, Chairman of the Board and Chief August 18, 2000
Joe R. Lee Executive Officer (principal executive officer)
/s/ Richard E. Rivera Director and President, Red Lobster
Richard E. Rivera*
/s/ Blaine Sweatt, III Director and President, New Business Development
Blaine Sweatt, III*
/s/ Clarence Otis, Jr. Senior Vice President - Chief Financial Officer August 18, 2000
Clarence Otis, Jr. (principal financial and principal accounting officer)
</TABLE>
*BY: Paula J. Shives, Attorney-In-Fact
August 18, 2000
18
<PAGE>
EXHIBIT INDEX
<PAGE>
EXHIBITS
Exhibit
Number Title
-------- -----
3(a) Articles of Incorporation (incorporated herein by reference
to Exhibit 3(a) to the Company's Registration Statement on
Form 10 effective May 5, 1995)
3(b) Bylaws (incorporated herein by reference to Exhibit 3(b)
to the Company's Registration Statement on Form 10
effective May 5, 1995)
4(a) Rights Agreement dated as of May 28, 1995 between the
Company and Wells Fargo Bank Minnesota, National
Association, formerly known as Norwest Bank Minnesota,
N.A., as amended May 23, 1996, assigned to First Union
National Bank, as Rights Agent, as of September 29, 1997
(incorporated by reference to Exhibit 4(a) to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998)
4(b) Indenture dated as of January 1, 1996, between the Company
and Wells Fargo Bank Minnesota, National Association,
formerly known as Norwest Bank Minnesota, N.A., as Trustee
(incorporated herein by reference to the Company's Current
Report on Form 8-K filed February 9, 1996)
* 10(a) Darden Restaurants, Inc. Amended and Restated Stock
Option and Long-Term Incentive Plan of 1995, as amended
and approved at the Annual Meeting of Stockholders on
September 23, 1999
* 10(b) Darden Restaurants, Inc. FlexComp Plan (incorporated
herein by reference to Exhibit 10(b) to the Company's
Registration Statement on Form 10 effective May 5, 1995)
* 10(c) Darden Restaurants, Inc. Stock Option and Long-Term
Incentive Conversion Plan, as amended (incorporated
herein by reference to Exhibit 10(c) to the Company's
Annual Report on Form 10-K for the fiscal year ended
May 26, 1996)
* 10(d) Supplemental Pension Plan of Darden Restaurants, Inc.
(incorporated herein by reference to Exhibit 10(d) to
the Company's Registration Statement on Form 10 effective
May 5, 1995)
* 10(e) Executive Health Plan of Darden Restaurants, Inc.
(incorporated herein by reference to Exhibit 10(e) to
the Company's Registration Statement on Form 10 effective
May 5, 1995)
* 10(f) Stock Plan for Directors of Darden Restaurants, Inc., as
amended December 10, 1996, and June 26, 1998 (incorporated
by reference to Exhibit 10(f) to the Company's Annual
Report on Form 10-K for the fiscal year ended May 31, 1998)
-------------------
[FN]
* Items that are management contracts or compensatory plans or arrangements
required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
</FN>
1
<PAGE>
EXHIBITS
Exhibit
Number Title
-------- -----
* 10(g) Compensation Plan for Non-Employee Directors of Darden
Restaurants, Inc., as amended June 17, 1997 (incorporated
by reference to Exhibit 10(g) to the Company's Annual
Report on Form 10-K for the fiscal year ended May 31,
1998)
* 10(h) Darden Restaurants, Inc. Management and Professional
Incentive Plan, as amended and restated on June 21, 2000
* 10(i) Benefits Trust Agreement dated as of October 3, 1995,
between the Company and Wells Fargo Bank Minnesota,
National Association, formerly known as Norwest Bank
Minnesota, N.A., as Trustee (incorporated herein by
reference to Exhibit 10(i) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 25, 1997)
* 10(j) Form of Management Continuity Agreement, as amended,
between the Company and certain of its executive officers
(incorporated herein by reference to Exhibit 10(j) to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 25, 1997)
12 Computation of Ratio of Consolidated Earnings to Fixed
Charges
13 Portions of 2000 Annual Report to Stockholders (incorporated
by reference herein)
21 Subsidiaries of Darden Restaurants, Inc.
23 Independent Accountants' Consent
24 Powers of Attorney
27 Financial Data Schedule
99 Cautionary Statements Under the Private Securities
Litigation Reform Act of 1995
-------------------
[FN]
* Items that are management contracts or compensatory plans or arrangements
required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
</FN>
2
