EXHIBIT 13
PORTIONS OF 2000 ANNUAL REPORT TO STOCKHOLDERS
(incorporated by reference herein)
<PAGE>
EXHIBIT 13
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 22
MANAGEMENT'S DISCUSSION OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Darden Restaurants, Inc. (Darden or the Company) operates 1,139 Red Lobster,
Olive Garden, Bahama Breeze and Smokey Bones restaurants in the U.S. and Canada
and licenses 35 restaurants in Japan. All of the restaurants in the U.S. and
Canada 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. Darden's fiscal year ends on the last Sunday in May.
REVENUES
Total revenues in 2000 (52 weeks) were $3.70 billion, a seven percent increase
from 1999 (52 weeks). Total revenues in 1999 were $3.46 billion, a five percent
increase from 1998 (53 weeks).
COSTS AND EXPENSES
Food and beverage costs for 2000 were 32.4 percent of sales, a decrease of 0.4
percentage points from 1999 and a decrease of 0.6 percentage points from 1998.
The lower level of food and beverage costs for 2000, as a percentage of sales,
is primarily attributable to pricing, margin improving initiatives such as waste
reduction, and a lower- margin promotion run by Red Lobster during the first
quarter last year.
Restaurant labor decreased in 2000 to 31.9 percent of sales compared to
32.3 percent of sales in 1999 and 1998 primarily due to efficiencies resulting
from higher sales volumes.
Restaurant expenses (primarily lease expenses, property taxes, utilities
and workers' compensation costs) decreased in 2000 to 14.1 percent of sales
compared to 14.3 percent in 1999 and 14.7 percent in 1998 primarily as a result
of higher sales volumes and the fixed component of these expenses which are not
impacted by higher sales volumes.
Selling, general and administrative expenses decreased in 2000 to 10.3
percent of sales compared to 10.4 percent in 1999 and 10.9 percent in 1998. The
decreases in 2000 and 1999 in comparison to 1998 are principally a result of
reduced marketing expenses as a percent of sales offset by additional labor
costs associated with new concept expansion and development.
Depreciation and amortization expense of 3.5 percent of sales in 2000
decreased from 3.6 percent in 1999 and 3.8 percent in 1998 primarily as a result
of increased sales levels. Interest expense was comparable from year to year at
0.6 percent of sales.
INCOME FROM OPERATIONS
Pre-tax earnings before net restructuring and asset impairment credit increased
by 29.2 percent in 2000 to $268.0 million, compared to $207.4 million in 1999
and $153.7 million in 1998. The increase in 2000 was mainly attributable to
annual same-restaurant sales increases in the U.S. for both Red Lobster and
Olive Garden totaling 7.6 percent and 7.2 percent, respectively. The increase in
1999 was mainly attributable to annual same-restaurant sales increases in the
U.S. for both Red Lobster and Olive Garden totaling 7.4 percent and 9.0 percent,
respectively. Red Lobster and Olive Garden have enjoyed ten and 23 consecutive
quarters of U.S. same-restaurant sales increases, respectively.
PROVISION FOR INCOME TAXES
The effective tax rate for 2000 before net restructuring and asset impairment
credit was 35.4 percent compared to 34.8 percent in 1999 and 33.8 percent in
1998. The increase in the effective tax rates each year is a result of higher
annual pre-tax earnings.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 23
NET EARNINGS AND NET EARNINGS PER SHARE BEFORE RESTRUCTURING AND ASSET
IMPAIRMENT CREDIT, NET
Net earnings before net restructuring and asset impairment credit for 2000 of
$173.1 million, or $1.31 per diluted share, increased 27.9 percent, compared to
1999 net earnings before restructuring credit of $135.3 million or 96 cents per
diluted share. 1999 net earnings before restructuring credit increased 33
percent, compared to net earnings for 1998 of $101.7 million or 67 cents per
diluted share.
NET EARNINGS AND NET EARNINGS PER SHARE
Net earnings after net restructuring and asset impairment credit for 2000 of
$176.7 million ($1.34 per diluted share) compared with 1999's net earnings after
restructuring credit of $140.5 million (99 cents per diluted share) and 1998's
net earnings of $101.7 million (67 cents per diluted share).
During 1997, an after-tax restructuring and asset impairment charge of
$145.4 million (93 cents per diluted share) was taken related to low-performing
restaurant properties in the U.S. and Canada and other long-lived assets
including those restaurants that have been closed. The pre-tax charge included
approximately $160.7 million of non-cash charges primarily related to the
write-down of buildings and equipment to net realizable value and approximately
$69.2 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 these activities
is being provided by operations and the sale of closed properties.
After-tax restructuring credits of $5.2 million and $5.2 million were taken
in the fourth quarter of 2000 and 1999, respectively, as the Company reversed
portions of its 1997 restructuring liability. The reversals primarily resulted
from favorable lease terminations in 2000 and due to the Company's decision to
close fewer restaurants than identified for closure as part of the initial
restructuring action in 1999. The credits had no effect on the Company's cash
flow.
During 2000, an after-tax asset impairment charge of $1.6 million was taken
in the fourth quarter related to additional write-downs of the value of
properties held for disposition.
FINANCIAL CONDITION
Short-term debt totaled $115.0 million as of May 28, 2000, up from $23.5 million
at May 30, 1999. The increase resulted primarily from increased share repurchase
activity due to favorable Company stock prices during 2000 as well as increased
spending on land, buildings and equipment.
LIQUIDITY AND CAPITAL RESOURCES
The Company intends to manage its business and its financial ratios 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 "Baa1"
(Moody's Investor Services, Inc.), "BBB+" (Standard & Poor's Corporation) and
"BBB+" (Fitch) ratings. The Company's commercial paper has ratings of "P-2"
(Moody's), "A-2" (Standard & Poor's) and "F-2" (Fitch).
Darden's long-term debt includes $150 million of 6.375 percent notes due in
February 2006 and $100 million of unsecured 7.125 percent debentures due in
February 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 interest-rate swap termination costs.
Darden's long-term debt also includes a $66.9 million commercial bank loan
with an outstanding principal balance of $52.6 million as of May 28, 2000, that
is used to support two loans from the Company to the Employee Stock Ownership
Plan portion of the Darden Savings Plan.
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. Available fee-paid credit lines, all of which are unused at May 28, 2000,
total $300 million.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 24
The Company's adjusted debt-to-total capital ratio (which includes 6.25
times the total annual restaurant minimum rent and 3.00 times the total annual
restaurant equipment minimum rent as a component of debt and total capital) was
42 percent and 39 percent at May 28, 2000, and May 30, 1999, respectively. 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 7.1
times at May 28, 2000, and 6.2 times at May 30, 1999. Based on these ratios, the
Company believes its financial condition remains strong. The composition of the
Company's capital structure is shown in the following table.
<TABLE>
<CAPTION>
$ In millions May 28, 2000 May 30, 1999
--------------------------------------------------------------------------------------------------------------------
CAPITAL STRUCTURE
<S> <C> <C>
Short-term debt $ 115.0 $ 23.5
Long-term debt 306.6 316.5
--------------------------------------------------------------------------------------------------------------------
Total debt 421.6 340.0
Stockholders' equity 960.5 964.0
--------------------------------------------------------------------------------------------------------------------
Total capital $ 1,382.1 $ 1,304.0
====================================================================================================================
====================================================================================================================
ADJUSTMENTS TO CAPITAL
Leases-debt equivalent 264.8 266.0
Adjusted total debt 686.4 606.0
Adjusted total capital $ 1,646.9 $ 1,570.0
Debt-to-total capital ratio 31% 26%
Adjusted debt-to-adjusted total capital ratio 42% 39%
====================================================================================================================
</TABLE>
On July 13, 2000, the Company filed a registration statement with the
Securities and Exchange Commission. The purpose of the filing was to register
$500 million of debt securities using a shelf registration process. Under this
process, the Company may offer, from time to time, up to $500 million of debt
securities.
In 2000, 1999, and 1998, the Company declared eight cents per share in
annual dividends paid in two installments. In March 2000, the Company's Board
approved an additional authorization for the ongoing stock buy-back plan whereby
the Company may purchase on the open market up to 20.0 million additional shares
of Darden common stock. This buy-back authorization is in addition to previously
approved authorizations by the Board covering open market purchases of up to
44.6 million shares of Darden common stock. In 2000, 1999, and 1998, the Company
purchased treasury stock totaling $202 million, $228 million, and $171 million,
respectively. As of May 28, 2000, 44.1 million shares have been purchased under
the stock buy-back plan.
The Company generated $337 million, $348 million and $236 million in funds
from operating activities during 2000, 1999, and 1998, respectively. The Company
requires capital principally for building new restaurants, replacing equipment
and remodeling existing restaurants. Capital expenditures were $269 million in
2000, compared to $124 million in 1999, and $112 million in 1998. The increased
expenditures in 2000 resulted primarily from new restaurant growth as well as
remodeling activity at Olive Garden and Red Lobster restaurants. The 2000, 1999,
and 1998 capital expenditures, treasury stock purchases and dividend
requirements were financed primarily through the issuance of commercial paper
and internally generated funds. This has resulted in the Company carrying
current liabilities in excess of current assets.
YEAR 2000
During 2000 and 1999, the Company addressed a matter commonly referred to as the
"Year 2000" issue. The Company implemented extensive testing of its own
date-sensitive systems and also assessed the year 2000 compliance status of
third parties such as suppliers, banks, vendors and others with whom it does
significant business. As of the end of 2000, the Company had spent approximately
$3.4 million on the Year 2000 issue. The Company has not experienced any
material Year 2000
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 25
problems nor does it believe there will be any future material adverse impact to
the Company's business, operations or financial position as a result of the Year
2000 issue.
FORWARD-LOOKING STATEMENTS
Certain information included in this report and other materials filed or to be
filed by the Company with the Securities and Exchange 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. Such statements include
information relating to current expansion plans, business development
activities, and Year 2000 compliance. Such forward-looking information is based
on assumptions concerning important risks and uncertainties that could
significantly affect anticipated results in the future and, accordingly, such
results may differ from those expressed in any forward-looking statements made
by or on behalf of the Company. These risks and uncertainties include, but are
not limited to, those relating to real estate development and construction
activities, the issuance and renewal of licenses and permits for restaurant
development and operation, economic conditions, changes in federal or state laws
or the administration of such laws, and the Year 2000 readiness of suppliers,
banks, vendors and others having a direct or indirect business relationship with
the Company.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 26
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 28, 2000, and May 30, 1999, and the
related consolidated statements of earnings, changes in stockholders' equity,
and cash flows for each of the years in the three-year period ended May 28,
2000. 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 auditing standards generally
accepted in the United States of America. 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 28, 2000, and May 30, 1999, and the
results of their operations and their cash flows for each of the years in the
three-year period ended May 28, 2000, in conformity with accounting principles
generally accepted in the United States of America.
/s/ KPMG LLP
Orlando, Florida
June 20, 2000,
except as to Note 18, which is as of July 13, 2000
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 27
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data) May 28, 2000 May 30, 1999 May 31, 1998
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 3,701,256 $ 3,458,107 $ 3,287,017
Costs and Expenses:
Cost of sales:
Food and beverage 1,199,709 1,133,705 1,083,629
Restaurant labor 1,180,090 1,117,401 1,062,490
Restaurant expenses 521,159 493,811 482,311
--------------------------------------------------------------------------------------------------------------------
Total Cost of Sales $ 2,900,958 $ 2,744,917 $ 2,628,430
Selling, general and administrative 379,470 360,909 358,542
Depreciation and amortization 130,464 125,327 126,289
Interest, net 22,388 19,540 20,084
Restructuring and asset impairment credit, net (5,931) (8,461)
--------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses $ 3,427,349 $ 3,242,232 $ 3,133,345
--------------------------------------------------------------------------------------------------------------------
Earnings before Income Taxes 273,907 215,875 153,672
Income Taxes 97,202 75,337 51,958
--------------------------------------------------------------------------------------------------------------------
Net Earnings $ 176,705 $ 140,538 $ 101,714
====================================================================================================================
Net Earnings per Share:
Basic $ 1.38 $ 1.02 $ 0.69
Diluted $ 1.34 $ 0.99 $ 0.67
====================================================================================================================
Average Number of Common Shares Outstanding:
Basic 128,500 137,300 148,300
Diluted 131,900 141,400 151,400
====================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 28
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
(In thousands) May 28, 2000 May 30, 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 26,102 $ 40,960
Receivables 27,962 20,256
Inventories 142,187 140,702
Net assets held for disposal 19,614 35,269
Prepaid expenses and other current assets 26,525 21,475
Deferred income taxes 48,070 65,662
--------------------------------------------------------------------------------------------------------------------
Total Current Assets $ 290,460 $ 324,324
Land, Buildings and Equipment 1,578,541 1,461,535
Other Assets 102,422 104,388
--------------------------------------------------------------------------------------------------------------------
Total Assets $ 1,971,423 $ 1,890,247
====================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 140,487 $ 144,725
Short-term debt 115,000 23,500
Current portion of long-term debt 2,513 2,386
Accrued payroll 77,805 74,265
Accrued income taxes 33,256 16,544
Other accrued taxes 25,524 25,965
Other current liabilities 212,302 231,417
--------------------------------------------------------------------------------------------------------------------
Total Current Liabilities $ 606,887 $ 518,802
Long-term Debt 304,073 314,065
Deferred Income Taxes 79,102 72,086
Other Liabilities 20,891 21,258
--------------------------------------------------------------------------------------------------------------------
Total Liabilities $ 1,010,953 $ 926,211
--------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Common stock and surplus, no par value.
Authorized 500,000 shares; issued
165,977 and 164,661 shares, respectively;
outstanding 122,192 and 132,120
shares, respectively $ 1,351,707 $ 1,328,796
Preferred stock, no par value. Authorized 25,000 shares;
None issued and outstanding
Retained earnings 344,579 178,008
Treasury stock, 43,785 and 32,541 shares, at cost (666,837) (466,902)
Accumulated other comprehensive income (12,457) (12,115)
Unearned compensation (56,522) (63,751)
--------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity $ 960,470 $ 964,036
--------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 1,971,423 $ 1,890,247
====================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 29
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Common Retained Accumulated
Stock Earnings Other Total
and (Accumulated Treasury Comprehensive Unearned Stockholders'
(In thousands, except per share data) Surplus Deficit) Stock Income Compensation Equity
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at May 25, 1997 $1,268,656 $(41,706) $ (69,184) $(10,037) $(66,516) $1,081,213
Comprehensive income:
Net earnings 101,714 101,714
Other comprehensive income, foreign
currency adjustment (1,712) (1,712)
----------
Total comprehensive income 100,002
Cash dividends declared ($0.08 per share) (11,681) (11,681)
Stock option exercises (1,464 shares) 10,606 10,606
Issuance of restricted stock (238
shares), net of forfeiture adjustments 1,384 (1,404) (20)
Earned compensation 2,172 2,172
ESOP note receivable repayments 2,700 2,700
Income tax benefit credited to equity 3,808 3,808
Proceeds from issuance of equity put
options 1,737 1,737
Purchases of common stock for treasury
(13,483 shares) (170,692) (170,692)
-------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1998 1,286,191 48,327 (239,876) (11,749) (63,048) 1,019,845
-------------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net earnings 140,538 140,538
Other comprehensive income, foreign
currency adjustment (366) (366)
----------
Total comprehensive income 140,172
Cash dividends declared ($0.08 per share) (10,857) (10,857)
Stock option exercises (2,789 shares) 25,437 25,437
Issuance of restricted stock (370
shares), net of forfeiture adjustments 4,873 (4,844) 29
Earned compensation 2,341 2,341
ESOP note receivable repayments 1,800 1,800
Income tax benefit credited to equity 9,722 9,722
Proceeds from issuance of equity put
options 2,184 2,184
Purchases of common stock for treasury
(12,162 shares) (227,510) (227,510)
Issuance of treasury stock under Employee
Stock Purchase Plan (55 shares) 389 484 873
-------------------------------------------------------------------------------------------------------------------------
Balance at May 30, 1999 1,328,796 178,008 (466,902) (12,115) (63,751) 964,036
-------------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net earnings 176,705 176,705
Other comprehensive income, foreign
currency adjustment (342) (342)
----------
Total comprehensive income 176,363
Cash dividends declared ($0.08 per share) (10,134) (10,134)
Stock option exercises (1,153 shares) 10,212 10,212
Issuance of restricted stock (163
shares), net of forfeiture adjustments 3,638 (3,685) (47)
Earned compensation 3,314 3,314
ESOP note receivable repayments 7,600 7,600
Income tax benefit credited to equity 5,506 5,506
Proceeds from issuance of equity put
options 1,814 1,814
Purchases of common stock for treasury
(11,487 shares) (202,105) (202,105)
Issuance of treasury stock under Employee
Stock Purchase Plan (243 shares) 1,741 2,170 3,911
-------------------------------------------------------------------------------------------------------------------------
Balance at May 28, 2000 $1,351,707 $344,579 $(666,837) $(12,457) $(56,522) $ 960,470
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 30
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------------------------------------------------------------------
(In thousands) May 28, 2000 May 30, 1999 May 31, 1998
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows - Operating Activities
Net Earnings $ 176,705 $ 140,538 $ 101,714
Adjustments to reconcile net earnings to cash flow:
Depreciation and amortization 130,464 125,327 126,289
Amortization of unearned compensation and loan costs 5,895 4,879 4,682
Change in current assets and liabilities 2,472 70,924 (6,791)
Change in other liabilities (371) 2,682 (48)
(Gain) loss on disposal of land, buildings and equipment 2,683 (1,798) 3,132
Deferred income taxes 24,609 13,967 6,496
Non-cash restructuring and asset impairment credit, net (5,931) (8,461)
Other, net 594 162 651
--------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities $ 337,120 $ 348,220 $ 236,125
--------------------------------------------------------------------------------------------------------------------
Cash Flows - Investing Activities
Purchases of land, buildings and equipment (268,946) (123,673) (112,168)
Purchases of intangibles (2,431) (2,203) (1,798)
(Increase) decrease in other assets 611 (8,794) (4,112)
Proceeds from disposal of land, buildings and equipment
(including net assets held for disposal) 20,998 38,134 24,494
--------------------------------------------------------------------------------------------------------------------
Net Cash Used by Investing Activities $ (249,768) $ (96,536) $ (93,584)
--------------------------------------------------------------------------------------------------------------------
Cash Flows - Financing Activities
Proceeds from issuance of common stock 13,944 26,310 10,606
Income tax benefit credited to equity 5,506 9,722 3,808
Dividends paid (10,134) (10,857) (11,681)
Purchases of treasury stock (202,105) (227,510) (170,692)
ESOP note receivable repayments 7,600 1,800 2,700
Increase (decrease) in short-term debt 91,500 (51,600) 31,700
Proceeds from issuance of long-term debt 9,848
Repayment of long-term debt (9,986) (4,126) (2,704)
Payment of loan costs (349)
Proceeds from issuance of equity put options 1,814 2,184 1,737
--------------------------------------------------------------------------------------------------------------------
Net Cash Used by Financing Activities $ (102,210) $ (244,229) $ (134,526)
--------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents (14,858) 7,455 8,015
Cash and Cash Equivalents - Beginning of Year 40,960 33,505 25,490
--------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents - End of Year $ 26,102 $ 40,960 $ 33,505
====================================================================================================================
Cash Flow from Changes in Current Assets and Liabilities
Receivables (7,706) 7,056 (10,979)
Refundable income taxes, net 16,968
Inventories (1,485) 41,697 (50,158)
Prepaid expenses and other current assets (4,184) (1,310) 1,236
Accounts payable (4,238) 11,787 19,851
Accrued payroll 3,540 1,025 14,928
Accrued income taxes 16,712 15,477 1,067
Other accrued taxes (441) 1,793 1,992
Other current liabilities 274 (6,601) (1,696)
--------------------------------------------------------------------------------------------------------------------
Change in Current Assets and Liabilities $ 2,472 $ 70,924 $ (6,791)
====================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Dollar amounts in thousands, except per share data)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying 2000, 1999 and 1998 consolidated financial statements include
the operations of Darden Restaurants, Inc. and its wholly owned subsidiaries
(Darden or the Company). All significant intercompany balances and transactions
have been eliminated in consolidation.
FISCAL YEAR
Darden's fiscal year ends on the last Sunday in May. Fiscal years 2000 and 1999
each consisted of 52 weeks. Fiscal year 1998 consisted of 53 weeks.
INVENTORIES
Inventories are valued at the lower of weighted average cost or market.
LAND, BUILDINGS AND EQUIPMENT
All land, buildings and equipment are recorded at cost. Building components are
depreciated over estimated useful lives ranging from seven to 40 years using the
straight-line method. Equipment is depreciated over estimated useful lives
ranging from three to ten years also using the straight-line method. Accelerated
depreciation methods are generally used for income tax purposes.
INTANGIBLE ASSETS
The cost of intangible assets at May 28, 2000 and May 30, 1999 amounted to
$16,412 and $14,851, respectively. Intangibles are being amortized using the
straight-line method over their estimated useful lives ranging from five to 40
years. Costs capitalized principally represent software development costs and
the purchase costs of leases with favorable rent terms. Accumulated amortization
on intangible assets as of May 28, 2000 and May 30, 1999 amounted to $5,201 and
$4,347, respectively.
IMPAIRMENT OF LONG-LIVED ASSETS
Restaurant sites and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds their fair value.
Restaurant sites and certain identifiable intangibles to be disposed of are
reported at the lower of their carrying amount or fair value, less estimated
costs to sell.
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.
FOREIGN CURRENCY TRANSLATION
The Canadian dollar is the functional currency for Darden's Canadian restaurant
operations. Assets and liabilities denominated in Canadian dollars are
translated into U.S. dollars 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
reported as a separate component of accumulated other comprehensive income in
stockholders' equity. Gains and losses from foreign currency transactions are
included in the consolidated statements of earnings for each period.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 32
PRE-OPENING COSTS
Non-capital expenditures associated with opening new restaurants are expensed as
incurred.
ADVERTISING
Production costs of commercials and programming are charged to operations in the
year the advertising is first aired. The costs of other advertising, promotion
and marketing programs are charged to operations in the year incurred.
Advertising expense was $181,959, $180,563, and $186,261, in 2000, 1999, and
1998, respectively.
INCOME TAXES
The Company provides for federal and state income taxes currently payable as
well as for those deferred because of temporary differences between reporting
income and expenses for financial statement purposes versus tax purposes.
Federal income tax credits are recorded as a reduction of income taxes. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
STATEMENTS OF CASH FLOWS
For purposes 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.
NET EARNINGS PER SHARE
Basic earnings per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
reporting period. Diluted earnings per share reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. Outstanding stock options issued by
the Company represent the only dilutive effect reflected in diluted weighted
average shares.
Options to purchase 3,586,200, 120,200 and 868,300 shares of common
stock were excluded from the calculation of diluted earnings per share for the
years ended May 28, 2000, May 30, 1999, and May 31, 1998, respectively, because
their exercise prices exceeded the average market price of common shares for the
period.
DERIVATIVE FINANCIAL AND COMMODITY INSTRUMENTS
The Company may, from time to time, use financial and commodities derivatives in
the management of interest rate and commodities pricing risks that are inherent
in its business operations. The Company may also use financial derivatives as
part of its stock repurchase program as described in Note 10. Such instruments
are not held or issued for trading or speculative purposes. The Company may,
from time to time, use interest rate swap and cap agreements in the management
of interest rate exposure. The interest rate differential to be paid or received
is normally accrued as interest rates change, and is recognized as a component
of interest expense over the life of the agreements. If an agreement is
terminated prior to the maturity date and is characterized as a hedge, any
accrued rate differential would be deferred and recognized as interest expense
over the life of the hedged item. The Company uses commodities hedging
instruments, including forwards, futures and options, to reduce the risk of
price fluctuations related to future raw materials requirements for commodities
such as coffee, soybean oil, and shrimp. The terms of such instruments generally
do not exceed 12 months, and depend on the commodity and other market factors.
Deferred gains and losses are subsequently recorded as cost of products sold in
the consolidated statements of earnings when the inventory is sold. If the
inventory is not acquired and the hedge is disposed of, the deferred gain or
loss is recognized immediately in
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 33
cost of products sold. The Company believes that it does not have material risk
from any of the above financial instruments, and the Company does not anticipate
any material losses from the use of such instruments.
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 estimates.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for
Stock-Based Compensation," encourages the use of a fair-value method of
accounting for stock-based awards under which the fair value of stock options is
determined on the date of grant and expensed over the vesting period. As allowed
by SFAS 123, the Company has elected to account for its stock-based compensation
plans under the intrinsic value-based method of accounting prescribed by
Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for Stock
Issued to Employees." Under APB 25, compensation expense is recorded on the date
of grant if the current market price of the underlying stock exceeds the
exercise price. The Company has adopted the disclosure requirements of SFAS 123.
COMPREHENSIVE INCOME
Comprehensive income includes net earnings and other comprehensive income items
that are excluded from net earnings under generally accepted accounting
principles such as foreign currency translation adjustments and unrealized gains
and losses on investments. The Company's only item of other comprehensive income
is foreign currency translation adjustments which have been reported separately
within stockholders' equity.
OPERATING SEGMENT
As of May 28, 2000, the Company operated 1,139 Red Lobster, Olive Garden, Bahama
Breeze and Smokey Bones restaurants in North America as part of a single
operating segment. The restaurants operate principally in the United States
within the casual dining industry, providing similar products to similar
customers. The restaurants also possess similar pricing structures resulting in
similar long-term expected financial performance characteristics. Revenues from
external customers are derived principally from food and beverage sales. The
Company does not rely on any major customers as a source of revenue.
RECLASSIFICATIONS
Certain reclassifications have been made to prior year amounts to conform with
current year presentation.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133
requires that all derivative instruments be recorded on the balance sheet at
fair value. Gains or losses resulting from changes in the fair values of those
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and the type of hedge transaction. The ineffective portion of all
hedges will be recognized in earnings. In June 1999, the FASB issued SFAS 137,
which deferred the effective date of adoption of SFAS 133 for one year. The
Company will adopt SFAS 133 in the first quarter of fiscal 2002. Adoption of
SFAS 133 is not expected to materially impact the Company's consolidated
financial position, results of operations or cash flows.
NOTE 2
ACCOUNTS RECEIVABLE
Darden contracts with national storage and distribution companies to provide
services that are billed to Darden on a per-case basis. In connection with these
services,
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 34
certain Darden inventory items are sold to these companies at a predetermined
price when they are shipped to their storage facilities. These items are
repurchased at the same price by Darden when the inventory is subsequently
delivered to Company restaurants. These transactions do not impact the
consolidated statements of earnings. Receivables from national distribution
companies amounted to $24,692 and $12,022 at May 28, 2000, and May 30, 1999,
respectively.
NOTE 3
RESTRUCTURING AND ASSET IMPAIRMENT CREDIT, NET
Darden recorded asset impairment charges of $2,629 and $158,987 in 2000 and
1997, respectively, representing the difference between fair value and carrying
value of impaired assets. The asset impairment charges relate to low-performing
restaurant properties and other long-lived assets including restaurants that
have been closed. Fair value is generally determined based on appraisals or
sales prices of comparable properties. In connection with the closing of certain
restaurant properties, the Company recorded other restructuring expenses of
$70,900 in 1997. The related liabilities are included in other current
liabilities in the accompanying consolidated balance sheets and were established
to accrue for estimated carrying costs of buildings and equipment prior to
disposal, employee severance costs, lease buy-out provisions and other costs
associated with the restructuring action. All restaurant closings under this
restructuring action have been completed. The remaining restructuring actions,
including disposal of the closed owned properties and the lease buy-outs related
to the closed leased properties, are expected to be substantially completed
during 2001.
During 2000 and 1999, the Company reversed portions of its 1997
restructuring liability totaling $8,560 and $8,461, respectively. The reversals
primarily resulted from favorable lease terminations in 2000 and the Company's
decision in 1999 to close fewer restaurants than identified for closure as part
of the restructuring action. No restructuring or asset impairment expense or
credit was charged to operating results during 1998.
The components of the restructuring and asset impairment credit, net
and the after-tax and earnings per share effects of these items for 2000 and
1999 are as follows:
<TABLE>
<CAPTION>
Fiscal Year
--------------------------------------------------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Carrying costs of buildings and equipment prior to disposal and
employee severance costs $ $ (3,907)
Lease buy-out provisions (8,560) (4,554)
--------------------------------------------------------------------------------------------------------------------
Subtotal (8,560) (8,461)
Impairment of restaurant properties 2,629
--------------------------------------------------------------------------------------------------------------------
Total restructuring and asset impairment credit, net (5,931) (8,461)
Less related income tax effect 2,308 3,236
--------------------------------------------------------------------------------------------------------------------
Restructuring and asset impairment credit, net, net of
income taxes $ (3,623) $ (5,225)
====================================================================================================================
Earnings per share effect - basic and diluted $ (0.03) $ (0.04)
====================================================================================================================
</TABLE>
As of May 28, 2000, approximately $39,800 of carrying, employee
severance and lease buy-out costs associated with the 1997 restructuring had
been paid and charged against the restructuring liability. A summary of
restructuring liability activity for 2000 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Balance at May 30, 1999 $ 37,139
Non-cash Adjustments:
Restructuring credit (8,560)
Reclassification of asset impairment (described below) (12,000)
Cash Payments:
Carrying costs and employee severance payments (2,744)
Lease payments including lease buy-outs (5,271)
--------
Balance at May 28, 2000 $ 8,564
========
</TABLE>
Asset impairment charges of $12,000 included in the May 30, 1999
restructuring liability have been reclassified to reduce the carrying value of
land for all periods presented. This reclassification related to asset
impairment charges recorded in 1997 for long-lived assets associated with
Canadian restaurants.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 35
NOTE 4
INCOME TAXES
The components of earnings before income taxes and the provision for income
taxes thereon are as follows:
<TABLE>
<CAPTION>
Fiscal Year
--------------------------------------------------------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings before income taxes:
U.S. $ 269,802 $ 212,585 $ 149,096
Canada 4,105 3,290 4,576
--------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 273,907 $ 215,875 $ 153,672
--------------------------------------------------------------------------------------------------------------------
Income taxes:
Current:
Federal $ 61,528 $ 53,621 $ 38,730
State and local 10,861 7,577 6,349
Canada 204 172 383
--------------------------------------------------------------------------------------------------------------------
Total current 72,593 61,370 45,462
--------------------------------------------------------------------------------------------------------------------
Deferred (principally U.S.) 24,609 13,967 6,496
--------------------------------------------------------------------------------------------------------------------
Total income taxes $ 97,202 $ 75,337 $ 51,958
====================================================================================================================
</TABLE>
During 2000, 1999, and 1998, Darden paid income taxes of $53,688, $34,790, and
$24,630, respectively.
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
--------------------------------------------------------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. statutory rate 35.0% 35.0% 35.0%
State and local income taxes, net of federal tax benefits 3.3 3.3 3.3
Benefit of federal income tax credits (3.9) (4.5) (5.8)
Other, net 1.1 1.1 1.3
--------------------------------------------------------------------------------------------------------------------
Effective income tax rate 35.5% 34.9% 33.8%
====================================================================================================================
</TABLE>
The tax effects of temporary differences that give rise to deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
May 28, 2000 May 30, 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accrued liabilities $ 16,010 $ 14,042
Compensation and employee benefits 48,310 43,784
Asset disposition and restructuring liabilities 7,616 24,701
Operating loss and tax credit carryforwards 1,900
Net assets held for disposal 1,837 1,339
Other 2,036 1,989
--------------------------------------------------------------------------------------------------------------------
Gross deferred tax assets 75,809 87,755
--------------------------------------------------------------------------------------------------------------------
Buildings and equipment (64,071) (58,026)
Prepaid pension asset (16,406) (15,779)
Prepaid interest (4,161) (4,379)
Deferred rent and interest income (14,560) (10,194)
Intangibles (4,497) (2,989)
Other (3,146) (2,812)
--------------------------------------------------------------------------------------------------------------------
Gross deferred tax liabilities (106,841) (94,179)
--------------------------------------------------------------------------------------------------------------------
Net deferred tax liabilities $ (31,032) $ (6,424)
====================================================================================================================
</TABLE>
A valuation allowance for deferred tax assets is provided when it is
more likely than not that some portion or all of the deferred tax assets will
not be realized. Realization is dependent upon the generation of future taxable
income or the reversal of deferred tax liabilities during the periods in which
those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income
and tax planning strategies in making this assessment. As of May 28, 2000 and
May 30, 1999, no valuation allowance has been recognized in the accompanying
consolidated financial statements for the deferred tax assets because the
Company believes that sufficient projected future taxable income will be
generated to fully utilize the benefits of these deductible amounts.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 36
NOTE 5
LAND, BUILDINGS AND EQUIPMENT
The components of land, buildings and equipment are as follows:
<TABLE>
<CAPTION>
May 28, 2000 May 30, 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 409,069 $ 387,050
Buildings 1,425,557 1,344,625
Equipment 680,178 647,687
Construction in progress 75,027 38,859
--------------------------------------------------------------------------------------------------------------------
Total land, buildings and equipment 2,589,831 2,418,221
Less accumulated depreciation (1,011,290) (956,686)
--------------------------------------------------------------------------------------------------------------------
Net land, buildings and equipment $ 1,578,541 $ 1,461,535
====================================================================================================================
</TABLE>
NOTE 6
OTHER ASSETS
The components of other assets are as follows:
<TABLE>
<CAPTION>
May 28, 2000 May 30, 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Prepaid pension $ 42,893 $ 41,253
Prepaid interest and loan costs 20,312 22,391
Liquor licenses 17,599 17,657
Intangible assets 11,211 10,504
Prepaid equipment maintenance 4,103 6,565
Miscellaneous 6,304 6,018
--------------------------------------------------------------------------------------------------------------------
Total other assets $ 102,422 $ 104,388
====================================================================================================================
</TABLE>
NOTE 7
SHORT-TERM DEBT
Short-term debt at May 28, 2000 and May 30, 1999, consisted of $115,000 and
$23,500 of unsecured commercial paper borrowings with original maturities of one
month or less, and interest rates ranging from 6.36 percent to 6.75 percent and
5.05 percent to 5.80 percent, respectively.
NOTE 8
LONG-TERM DEBT
The components of long-term debt are as follows:
<TABLE>
<CAPTION>
May 28, 2000 May 30, 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10-year notes and 20-year debentures as described below $ 250,000 $ 250,000
ESOP loan with variable rate of interest (6.87 percent at May 28,
2000), due December 31, 2018 52,600 60,200
Other 5,160 7,546
--------------------------------------------------------------------------------------------------------------------
Total long-term debt 307,760 317,746
Less issuance discount (1,174) (1,295)
--------------------------------------------------------------------------------------------------------------------
Total long-term debt less issuance discount 306,586 316,451
Less current portion (2,513) (2,386)
--------------------------------------------------------------------------------------------------------------------
Long-term debt, excluding current portion $ 304,073 $ 314,065
====================================================================================================================
</TABLE>
In January 1996, the Company issued $150,000 of unsecured 6.375 percent
notes due in February 2006 and $100,000 of unsecured 7.125 percent debentures
due in February 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 percent for the notes and 7.82 percent for the debentures, after
consideration of loan costs, issuance discounts, and interest-rate swap
termination costs.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 37
The Company also maintains a revolving loan agreement expiring October
29, 2004, with a consortium of banks under which the Company can borrow up to
$300,000. The loan agreement allows the Company to borrow at interest rates that
vary based on the prime rate, LIBOR or a competitively bid rate among the
members of the lender consortium, at the option of the Company. The loan
agreement is available to support our commercial paper borrowing arrangements,
if necessary. The Company is required to pay a facility fee of 15 basis points
per annum on the average daily amount of loan commitments by the consortium. The
amount of interest and the annual facility fee are 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 28, 2000, and May 30, 1999, no
borrowings were outstanding under this agreement.
The aggregate maturities of long-term debt for each of the five years
subsequent to May 28, 2000 and thereafter are $2,513 in 2001, $2,647 in 2002, $0
in 2003 through 2005, and $302,600 thereafter.
NOTE 9
FINANCIAL INSTRUMENTS
The Company has participated in the financial derivatives markets to manage its
exposure to interest rate fluctuations. 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 percent to 7.89 percent. The interest rate swaps were settled during
January 1996 at a cost to the Company of $27,670. This cost is being 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 and short-term debt
approximate their carrying amount due to the short duration of those items.
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. The carrying amounts and fair values of
the Company's significant financial instruments are as follows:
<TABLE>
<CAPTION>
May 28, 2000 May 30, 1999
--------------------------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 26,102 $ 26,102 $ 40,960 $ 40,960
Short-term debt 115,000 115,000 23,500 23,500
Total long-term debt 306,586 284,835 316,451 306,806
--------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 10
EQUITY PUT OPTIONS
As a part of its stock repurchase program, the Company issued equity put options
that entitle the holder to sell shares of Company common stock to the Company,
at a specified price, if the holder exercises the option. In 2000 the Company
issued put options for 1,750,000 shares for $1,814 in premiums. At May 28, 2000,
put options for 250,000 shares were outstanding.
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 percent or more, or makes a tender offer for 20 percent 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
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 38
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
The components of interest, net are as follows:
<TABLE>
<CAPTION>
Fiscal Year
--------------------------------------------------------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest expense $ 24,999 $ 21,015 $ 21,527
Capitalized interest (1,910) (593) (1,018)
Interest income (701) (882) (425)
--------------------------------------------------------------------------------------------------------------------
Interest, net $ 22,388 $ 19,540 $ 20,084
====================================================================================================================
</TABLE>
Capitalized interest was computed using the Company's borrowing rate.
The Company paid $19,834, $16,356 and $17,235 for interest (net of amount
capitalized) in 2000, 1999, and 1998, respectively.
NOTE 13
LEASES
An analysis of rent expense incurred under operating leases is as follows:
<TABLE>
<CAPTION>
Fiscal Year
--------------------------------------------------------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Restaurant minimum rent $ 38,818 $ 38,866 $ 39,140
Restaurant percentage rent 2,183 1,853 1,707
Restaurant equipment minimum rent 8,267 8,511 3,465
Restaurant rent averaging expense (473) 13 (121)
Transportation equipment 1,946 1,856 2,169
Office equipment 1,090 1,012 990
Office space 597 505 436
Warehouse space 227 215 217
--------------------------------------------------------------------------------------------------------------------
Total rent expense $ 52,655 $ 52,831 $ 48,003
====================================================================================================================
</TABLE>
Minimum rental obligations are accounted for on a straight-line basis over the
term of the lease. Percentage rent expense is generally based on sales levels or
changes in the Consumer Price Index. Most leases require payment of property
taxes, insurance and maintenance costs in addition to the rent payments. The
annual non-cancelable future lease commitments for each of the five years
subsequent to May 28, 2000 and thereafter are: $49,460 in 2001; $45,948 in 2002;
$38,795 in 2003; $27,519 in 2004; $22,215 in 2005; and $71,828 thereafter, for a
cumulative total of $255,765.
NOTE 14
RETIREMENT PLANS
Substantially all of the Company's employees are eligible to participate in a
retirement plan. The Company's salaried employees are eligible to participate in
a post-retirement benefit plan.
DEFINED BENEFIT PLANS AND POST-RETIREMENT BENEFIT PLAN
The Company sponsors defined benefit pension plans for salaried employees with
various benefit formulas and a group of hourly employees with a frozen level of
benefits. The Company also sponsors a contributory plan that provides
health-care benefits to its salaried retirees.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 39
The following provides a reconciliation of the changes in the plan
benefit obligation, fair value of plan assets, and the funded status of the
plans as of February 29, 2000 and February 28, 1999:
<TABLE>
<CAPTION>
Defined Benefit Plans (1) Post-retirement Benefit Plan
---------------------------------------------------- --------------- --------------- --------------- ---------------
2000 1999 2000 1999
---------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at the beginning of period $ 83,205 $ 75,398 $ 5,718 $ 5,823
Service cost 3,091 3,251 260 267
Interest cost 5,683 5,430 396 408
Participant contributions 89
Benefits paid (4,204) (5,000) (206) (22)
Actuarial (gain) loss (5,141) 4,126 (594) (758)
---------------------------------------------------- --------------- --------------- --------------- ---------------
Benefit obligation at the end of period $ 82,634 $ 83,205 $ 5,663 $ 5,718
==================================================== =============== =============== =============== ===============
CHANGE IN PLAN ASSETS:
Fair value of plan assets at the
beginning of period $ 102,550 $ 105,010 $ $
Actual return on plan assets 17,495 2,489
Employer contributions 31 51 117 22
Participant contributions 89
Benefits paid (4,204) (5,000) (206) (22)
---------------------------------------------------- --------------- --------------- --------------- ---------------
Fair value of plan assets at the end of period $ 115,872 $ 102,550 $ $
==================================================== =============== =============== =============== ===============
RECONCILIATION OF FUNDED STATUS OF THE PLAN:
Funded status at end of year $ 33,238 $ 19,345 $ (5,663) $ (5,718)
Unrecognized transition asset (1,284) (1,926)
Unrecognized prior service cost (2,305) (2,761) 83 100
Unrecognized actuarial (gain) loss 10,843 24,509 (835) (235)
Contributions for March to May 10 38
---------------------------------------------------- --------------- --------------- --------------- ---------------
Prepaid (accrued) benefit costs $ 40,502 $ 39,167 $ (6,377) $ (5,853)
==================================================== =============== =============== =============== ===============
COMPONENTS OF THE CONSOLIDATED BALANCE SHEETS:
Prepaid benefit costs $ 42,893 $ 41,253 $ $
Accrued benefit costs (2,391) (2,086) (6,377) (5,853)
---------------------------------------------------- --------------- --------------- --------------- ---------------
Net asset (liability) recognized $ 40,502 $ 39,167 $ (6,377) $ (5,853)
==================================================== =============== =============== =============== ===============
</TABLE>
(1) For plans with accumulated benefit obligations in excess of plan assets, the
accumulated benefit obligation and plan assets were $2,460 and zero,
respectively, as of February 29, 2000, and $2,086 and zero, respectively, as of
February 28, 1999.
The following presents the weighted-average assumptions used to
determine the actuarial present value of the defined benefit plans and the
post-retirement benefit plan obligations:
<TABLE>
<CAPTION>
Defined Benefit Plans Post-retirement Benefit Plan
---------------------------------------------------- --------------- --------------- --------------- ---------------
2000 1999 2000 1999
---------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Discount rate 8.0% 7.0% 8.0% 7.0%
Expected long-term rate of return on plan assets 10.4% 10.4% N/A N/A
Rate of future compensation increases 4.5% 4.5% N/A N/A
---------------------------------------------------- --------------- --------------- --------------- ---------------
</TABLE>
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 40
The assumed health care cost trend rate increase in the per-capita
charges for benefits ranged from 5.0 to 6.5 percent for 2001, depending on the
medical service category. The rates gradually decrease to a range of 4.6 to 5.5
percent for 2007 and remain at that level thereafter.
The assumed health care cost trend rate has a significant effect on
amounts reported for retiree health care plans. A one-percentage-point increase
in the assumed health care cost trend rate would increase or decrease the total
of the service and interest cost components of net periodic post-retirement
benefit cost by $140 and $110 respectively, and would increase or decrease the
accumulated post-retirement benefit obligation by $1,091 and $ 870,
respectively.
Components of net periodic benefit cost (income) are as follows:
<TABLE>
<CAPTION>
Defined Benefit Plans Post-retirement Benefit Plan
2000 1999 1998 2000 1999 1998
----------------------------------------------------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 3,091 $ 3,251 $ 2,576 $ 260 $ 267 $ 225
Interest cost 5,509 5,243 4,699 396 408 375
Expected return on plan assets (10,652) (10,247) (8,865)
Amortization of unrecognized transition asset (642) (642) (642)
Amortization of unrecognized prior service cost (456) (456) (456) 18 18 18
Recognized net actuarial loss 1,405 1,088 1,164
----------------------------------------------------- --------- ---------- --------- ---------- --------- ----------
Net periodic benefit cost (income) $(1,745) $ (1,763) $(1,524) $ 674 $ 693 $ 618
===================================================== ========= ========== ========= ========== ========= ==========
</TABLE>
DEFINED CONTRIBUTION PLAN
The Company has a defined contribution plan covering most employees age 21 and
older with at least one year of service. The Company matches participant
contributions up to six percent of compensation on the basis of Company
performance with the match ranging from a minimum of $0.25 up to $1.00 for each
dollar contributed by the participant. The plan had net assets of $264,127 at
May 28, 2000 and $316,846 at May 30, 1999. Expense recognized in 2000, 1999, and
1998 was $3,729, $5,054, and $3,038, respectively. Employees classified as
"highly compensated" under the Internal Revenue Code are ineligible to
participate in this plan. Amounts due to highly compensated employees under a
separate, nonqualified deferred compensation plan totaled $44,150 and $32,471 as
of May 28, 2000 and May 30, 1999, respectively.
The defined contribution plan includes an Employee Stock Ownership Plan
(ESOP). This ESOP originally borrowed $50,000 from third parties guaranteed by
the Company, and borrowed $25,000 from the Company at a variable interest rate.
The $50,000 third party loan was refinanced in 1997 by a commercial bank's loan
to the Company and a corresponding loan from the Company to the ESOP.
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 2000,
1999, and 1998, the ESOP incurred interest expense of $3,436, $3,203, and
$3,882, respectively, and used dividends received of $941, $647, and $1,339 and
contributions received from the Company of $9,385, $4,368, and $4,538,
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 net earnings per share. At May 28, 2000,
the ESOP's debt to the Company had a balance of $52,600 with a variable rate of
interest of 6.87 percent; $35,700 of the principal balance is due to be repaid
no later than December 2007, with the remaining $16,900 due to be repaid no
later than December 2014. The number of Company common shares within the ESOP at
May 28, 2000, approximates 10,916, representing 7,989 unreleased shares and
2,927 shares allocated to participants.
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 41
NOTE 15
STOCK PLANS
The Darden Restaurants, Inc. Amended and Restated 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 ten years. The plan has 22,200,000
shares of common stock authorized for issuance; 3,000,000 of these shares are
authorized 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 1,500,000 shares under the plan.
No individual may receive in excess of two percent 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 exceeding 300,000 shares in each of
the last four fiscal years of the plan determined on a prospective and
retroactive cumulative basis.
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 and an additional option to purchase 3,000 shares
of common stock upon election or re-election 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, as well
as additional options to purchase shares of common stock in lieu of retainer and
meeting fees. The terms of these grants do not exceed ten years. Up to 250,000
shares of common stock may be issued under this plan and all options have an
exercise price equal to the fair market value of the shares at the date of
grant. 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. Fifty thousand shares of common
stock are authorized for issuance under the plan.
The per share weighted average fair value of stock options granted
during 2000, 1999, and 1998 was $6.47, $10.21, and $8.03, respectively. These
amounts were determined using the Black Scholes option-pricing model which
values options based on the stock price at the grant date, the expected life of
the option, the estimated volatility of the stock, expected dividend payments,
and the risk-free interest rate over the expected life of the option. The
dividend yield was calculated by dividing the current annualized dividend by the
option price for each grant. The expected volatility was determined considering
stock prices for the fiscal year the grant occurred and prior fiscal years, as
well as considering industry volatility data. The risk-free interest rate was
the rate available on zero coupon U.S. government issues with a term equal to
the remaining term for each grant. The expected life of the option was estimated
based on the exercise history from previous grants.
The weighted-average assumptions used in the Black Scholes model were
as follows:
<TABLE>
<CAPTION>
Stock Options
Granted in Fiscal Year
--------------------------------------------------------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Risk-free interest rate 6.50% 5.60% 6.25%
Expected volatility of stock 30.0% 30.0% 25.0%
Dividend yield 0.1% 0.1% 0.1%
Expected option life 6.0 years 6.0 years 5.0 years
====================================================================================================================
</TABLE>
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 42
The Company applies APB 25 in accounting for its stock option plans
and, accordingly, no compensation cost has been recognized in the Company's
consolidated financial statements for stock options granted under any of its
stock plans. Had the Company determined compensation cost based on the fair
value at the grant date for its stock options as prescribed under SFAS 123, the
Company's net earnings and net earnings per share would have been reduced to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
Fiscal Year
--------------------------------------------------------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings
As reported $ 176,705 $ 140,538 $ 101,714
Pro forma $ 168,171 $ 134,527 $ 98,047
--------------------------------------------------------------------------------------------------------------------
Basic net earnings per share
As reported $ 1.38 $ 1.02 $ 0.69
Pro forma $ 1.31 $ 0.98 $ 0.66
--------------------------------------------------------------------------------------------------------------------
Diluted net earnings per share
As reported $ 1.34 $ 0.99 $ 0.67
Pro forma $ 1.27 $ 0.95 $ 0.65
====================================================================================================================
</TABLE>
Under SFAS 123, stock options granted prior to 1996 are not required to
be included as compensation in determining pro forma net earnings. To determine
pro forma net earnings, reported net earnings have been adjusted for
compensation costs associated with stock options granted from 1996 forward that
are expected to eventually vest.
Stock option activity during the periods indicated was as follows:
<TABLE>
<CAPTION>
Weighted Average Weighted Average
Options Exercise Price Options Exercise Price
Exercisable Per Share Outstanding Per Share
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at May 25, 1997 6,832,479 $ 8.81 16,061,293 $ 10.00
--------------------------------------------------------------------------------------------------------------------
Options granted 3,335,711 $ 9.83
Options exercised (1,463,788) $ 7.26
Options cancelled (1,570,316) $ 10.48
--------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1998 6,286,678 $ 9.55 16,362,900 $ 10.16
--------------------------------------------------------------------------------------------------------------------
Options granted 2,888,554 $ 15.37
Options exercised (2,789,237) $ 9.12
Options cancelled (962,666) $ 9.36
--------------------------------------------------------------------------------------------------------------------
Balance at May 30, 1999 5,883,774 $ 10.53 15,499,551 $ 11.35
--------------------------------------------------------------------------------------------------------------------
Options granted 3,727,496 $ 20.91
Options exercised (1,152,922) $ 9.18
Options cancelled (505,618) $ 13.07
--------------------------------------------------------------------------------------------------------------------
Balance at May 28, 2000 6,712,259 $ 10.68 17,568,507 $ 13.47
====================================================================================================================
</TABLE>
The following table provides information regarding exercisable and
outstanding options as of May 28, 2000:
<TABLE>
<CAPTION>
Weighted
Weighted Weighted Average
Range of Average Average Remaining
Exercise Options Exercise Options Exercise Contractual
Price Per Share Exercisable Price Per Share Outstanding Price Per Share Life (Years)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$5.00 - $10.00 2,941,642 $ 9.23 4,650,065 $ 9.14 4.86
$10.01 - $15.00 3,512,600 $ 11.42 6,520,456 $ 11.30 4.49
$15.01 - $20.00 190,684 $ 15.75 3,833,759 $ 16.78 8.54
Over $20.00 67,333 $ 21.21 2,564,227 $ 21.91 9.07
--------------------------------------------------------------------------------------------------------------------
6,712,259 $ 10.68 17,568,507 $ 13.47 6.14
====================================================================================================================
</TABLE>
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 43
NOTE 16
EMPLOYEE STOCK PURCHASE PLAN
Effective January 1, 1999, the Company adopted the Darden Restaurants Employee
Stock Purchase Plan to provide eligible employees who have completed one year of
service an opportunity to purchase shares of its common stock, subject to
certain limitations. Under the plan, employees may elect to purchase shares at
the lower of 85 percent of the fair market value of the Company's common stock
as of the first or last trading days of each quarterly participation period.
During 2000 and 1999, employees purchased shares of common stock under the plan
totaling 243,000 and 55,000, respectively. An additional 1,157,000 shares are
available for issuance as of May 28, 2000.
As the Company applies APB 25 in accounting for its Employee Stock
Purchase Plan, no compensation cost has been recognized for shares issued under
the plan. The impact of recognizing compensation expense for purchases made
under the plan in 2000 in accordance with the fair value method specified in
SFAS 123 is not significant to the Company's financial statement disclosures.
NOTE 17
COMMITMENTS AND CONTINGENCIES
The Company makes trade commitments in the course of its normal operations. As
of May 28, 2000, the Company was contingently liable for approximately $17,175
under outstanding letters of credit issued in connection with purchase
commitments. As of May 28, 2000, the Company also has guaranteed approximately
$8,558 of third-party sub-lease obligations.
The Company is involved in litigation arising from the normal course of
business. In the opinion of management, this litigation is not expected to
materially impact the Company's consolidated financial position, results of
operations or cash flows.
NOTE 18
SUBSEQUENT EVENT
On July 13, 2000, the Company filed a registration statement with the Securities
and Exchange Commission. The purpose of the filing was to register $500 million
of debt securities using a shelf registration process. Under this process, the
Company may offer, from time to time, up to $500 million of debt securities.
NOTE 19
QUARTERLY DATA (UNAUDITED)
Summarized quarterly data for 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
Fiscal 2000 - Quarters Ended
--------------------------------------------------------------------------------------------------------------------
Aug. 29 Nov. 28 Feb. 27 May 28 Total
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $ 929,391 $ 848,231 $ 917,505 $ 1,006,129 $ 3,701,256
Gross Profit 203,323 169,209 203,285 224,481 800,298
Earnings before Interest and Taxes 77,803 43,230 79,361 95,901 296,295
Earnings before Taxes 73,227 37,965 72,715 90,000 273,907
Net Earnings 47,313 24,454 46,892 58,046 176,705
Net Earnings per Share:
Basic $ 0.36 $ 0.19 $ 0.37 $ 0.47 $ 1.38
Diluted $ 0.35 $ 0.18 $ 0.36 $ 0.46 $ 1.34
====================================================================================================================
<CAPTION>
Fiscal 1999 - Quarters Ended
--------------------------------------------------------------------------------------------------------------------
Aug. 30 Nov. 29 Feb. 28 May 30 Total
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $ 886,057 $ 791,168 $ 866,907 $ 913,975 $ 3,458,107
Gross Profit 175,105 147,111 182,510 208,464 713,190
Earnings before Interest and Taxes 59,306 29,443 62,939 83,727 235,415
Earnings before Taxes 53,871 24,657 58,517 78,830 215,875
Net Earnings 35,179 15,919 38,353 51,087 140,538
Net Earnings per Share:
Basic $ 0.25 $ 0.11 $ 0.28 $ 0.38 $ 1.02
Diluted $ 0.24 $ 0.11 $ 0.27 $ 0.37 $ 0.99
====================================================================================================================
</TABLE>
<PAGE>
DARDEN RESTAURANTS, INC.
2000 Annual Report to Stockholders
PAGE 44
FIVE YEAR FINANCIAL SUMMARY
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------------------------------------------------------------------
Operating Results May 28, 2000 May 30, 1999 May 31, 1998 May 25, 1997 May 26, 1996
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $ 3,701,256 $ 3,458,107 $ 3,287,017 $ 3,171,810 $ 3,191,779
--------------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of Sales:
Food and beverage 1,199,709 1,133,705 1,083,629 1,077,316 1,062,624
Restaurant labor 1,180,090 1,117,401 1,062,490 1,017,315 954,886
Restaurant expenses 521,159 493,811 482,311 481,348 455,626
--------------------------------------------------------------------------------------------------------------------
Total Cost of Sales $ 2,900,958 $ 2,744,917 $ 2,628,430 $ 2,575,979 $ 2,473,136
--------------------------------------------------------------------------------------------------------------------
Restaurant Operating Profit 800,298 713,190 658,587 595,831 718,643
--------------------------------------------------------------------------------------------------------------------
Selling, General and Administrative 379,470 360,909 358,542 361,263 373,920
Depreciation and Amortization 130,464 125,327 126,289 136,876 134,599
Interest, Net 22,388 19,540 20,084 22,291 21,406
Restructuring and asset impairment
expense or (credit), net (5,931) (8,461) 229,887 75,000
--------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses $ 3,427,349 $ 3,242,232 $ 3,133,345 $ 3,326,296 $ 3,078,061
--------------------------------------------------------------------------------------------------------------------
Earnings (Loss) before Income Taxes 273,907 215,875 153,672 (154,486) 113,718
Income Taxes 97,202 75,337 51,958 (63,457) 39,363
--------------------------------------------------------------------------------------------------------------------
Net Earnings (Loss) $ 176,705 $ 140,538 $ 101,714 $ (91,029) $ 74,355
--------------------------------------------------------------------------------------------------------------------
Net Earnings (Loss) per Share:
Basic $ 1.38 $ 1.02 $ 0.69 $ (0.59) $ 0.47
Diluted $ 1.34 $ 0.99 $ 0.67 $ (0.59) $ 0.46
--------------------------------------------------------------------------------------------------------------------
Average Number of Common Shares
Outstanding, Net of Shares Held in
Treasury (in 000's):
Basic 128,500 137,300 148,300 155,600 158,700
Diluted 131,900 141,400 151,400 155,600 161,300
====================================================================================================================
Excluding Restructuring and Asset
Impairment Expense or (Credit),
Net
Earnings $ 173,082 $ 135,313 $ 101,714 $ 54,330 $ 119,204
Earnings per Share:
Basic $ 1.35 $ 0.99 $ 0.69 $ 0.35 $ 0.75
Diluted $ 1.31 $ 0.96 $ 0.67 $ 0.35 $ 0.74
====================================================================================================================
Financial Position
Total Assets $ 1,971,423 $ 1,890,247 $ 1,984,742 $ 1,963,722 $ 2,088,504
Land, Buildings and Equipment 1,578,541 1,461,535 1,490,348 1,533,272 1,702,861
Working Capital (Deficit) (316,427) (194,478) (161,123) (143,211) (157,326)
Long-term Debt 306,586 316,451 310,608 313,192 301,205
Stockholders' Equity 960,470 964,036 1,019,845 1,081,213 1,222,637
Stockholders' Equity per Share 7.86 7.30 7.23 7.07 7.70
====================================================================================================================
Other Statistics
Cash Flow from Operations $ 337,120 $ 348,220 $ 236,125 $ 189,203 $ 294,032
Capital Expenditures 268,946 123,673 112,168 159,688 213,905
Dividends Paid 10,134 10,857 11,681 12,385 12,647
Dividends Paid per Share 0.08 0.08 0.08 0.08 0.08
Advertising Expense $ 181,959 $ 180,563 $ 186,261 $ 204,321 $ 239,526
Number of Employees 122,300 116,700 114,800 114,600 119,100
Number of Restaurants 1,139 1,139 1,151 1,182 1,217
Stock Price:
High $ 22.813 $ 23.375 $ 18.125 $ 12.125 $ 14.000
Low 12.563 14.188 8.125 6.750 9.750
Close 18.875 21.313 15.438 8.250 11.750
====================================================================================================================
</TABLE>
