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 27, 2001
/ / 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
and Preferred Stock Purchase Rights
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. [ ]
Aggregate market value of Common Stock held by non-affiliates of the
Registrant, based on the closing price of $31.84 per share as reported on the
New York Stock Exchange on July 23, 2001: $3,746,044,583.
Number of shares of Common Stock outstanding as of July 23, 2001:
117,652,154 (excluding 52,459,185 shares held in the Company's treasury).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement dated August 15, 2001 are
incorporated by reference into Part III, and portions of the Registrant's 2001
Annual Report to Shareholders are incorporated by reference into Parts I, II and
IV of this Report.
PART I
Item 1. BUSINESS
Introduction
Darden Restaurants, Inc. and its subsidiaries (the "Company" or "Darden")
is the largest publicly held Casual Dining restaurant company in the United
States.* As of May 27, 2001, the Company operated 1,131 restaurants in 49 states
(the exception being Alaska), including 629 Red Lobster(R), 472 Olive Garden(R),
21 Bahama Breeze(R), and nine Smokey Bones(R) BBQ Sports Bar 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 27, 2001. The Company operates all
of its North American restaurants. In Japan, as of May 27, 2001, Red Lobster
Japan Partners, a Japanese retailer unaffiliated with Darden, operated 34 Red
Lobster restaurants pursuant to an Area Development and Franchise Agreement.
The Company, a Florida corporation incorporated in March 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 (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 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 1995, the Company became a separate publicly held
company when General Mills distributed all outstanding Darden stock to General
Mills's stockholders (the "Distribution").
Following a period during which the Company focused on market optimization
and the closing of under-performing units, the Company's two largest restaurant
chains have recently resumed growth in the number of restaurants. The number of
Red Lobster and Olive Garden restaurants open at fiscal year end 2001 increased
by seven and eight, respectively, as compared to fiscal year end 2000. Red
Lobster has grown from six restaurants in operation in 1970 to 661 units in
North America by the end of fiscal 2001. Olive Garden, an internally developed
concept, opened its first restaurant in 1982, and by the end of fiscal 2001 had
expanded to 477 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 2001, there were 21 Bahama Breeze restaurants.
The Company's newest restaurant concept is Smokey Bones BBQ Sports Bar
("Smokey Bones"), an internally developed concept. The first restaurant was
opened in 1999 in Orlando, Florida. At the end of fiscal 2001, there were nine
Smokey Bones restaurants. In June 2001, the Company announced that it will begin
national expansion of Smokey Bones.
The table on the following page shows the Company's growth and lists the
number of restaurants operated by Red Lobster, Olive Garden, Bahama Breeze and
Smokey Bones as of the end of each fiscal year since 1970. The final column in
the table lists the Company's total sales for the years indicated.
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*Source: Nations's Restaurant News, "Top 100 Companies Ranked by U.S.
Foodservice Revenues," June 25, 2001 (based on revenues from company owned
restaurants).
1
Company-Operated Restaurants Open at Fiscal Year End
Fiscal Red Olive Bahama Smokey Total Total Company Sales
Year Lobster Garden (1) Breeze Bones Restaurants (2) (In Millions) (3)
---- ------- ---------- ------ ----- --------------- -----------------
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
2001 661 477 21 9 1,168 4,021.2
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(1) Does not include Olive Garden Cafe restaurants.
(2) Includes only Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones
restaurants. Does not include other restaurant concepts operated by the
Company in the years reported that are no longer in operation.
(3) Includes total sales from all company operations, including sales from
restaurant concepts besides Red Lobster, Olive Garden, Bahama Breeze and
Smokey Bones that are no longer in operation.
Strategy
The restaurant industry is generally considered to be comprised of four
segments: Quick Service, Midscale, Casual Dining and Fine Dining. The industry
is highly fragmented and includes many independent operators and small chains.
The Company believes that capable operators of strong multi-unit concepts will
have the opportunity to increase their share of the Casual Dining segment.
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The Company is a leader in the Casual Dining segment and is committed to
the following three strategic building blocks:
o leadership development as a core competency;
o service and hospitality excellence; and
o culinary and beverage excellence.
The Company supports these three strategic imperatives with its continuing
commitment to diversity literacy and technology literacy. The Company believes
that its continuing focus on these three building blocks, supported by its
commitment to diversity and technology, 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.
Restaurant Concepts
Red Lobster
Red Lobster is the largest Casual Dining, seafood-specialty restaurant
operator it the United States. 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 thirteenth consecutive year, Red Lobster was named Best
Seafood Chain in America in the annual "Choice In Chains" national consumer
survey published in the March 2001 issue of Restaurants & Institutions magazine.
It is also the recent winner of Restaurant Business Magazine's 2001 Menu
Strategist Award for innovative menu offerings.
Dinner entree prices range from $7.25 to $23.00, with fresh fish and
certain lobster items available at market price. Lunch entree prices range from
$4.99 to $10.99. During fiscal 2001, the average check per person was between
$15.00 and $16.00, with alcoholic beverages accounting for about 9 percent of
Red Lobster's sales. Red Lobster maintains approximately 142 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.
Fiscal 2001 was a record year in both sales and profits for Red Lobster.
For the year, same-restaurant sales at Red Lobster increased 5.9 percent. As of
the end of fiscal 2001, Red Lobster had enjoyed fourteen consecutive quarters of
same-restaurant sales increases.
Olive Garden
Olive Garden is the market share leader among Casual Dining Italian
restaurants in North America. 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 $7.50 to $15.95, and most lunch entree
prices range from $5.75 to $8.95. The price of each entree also includes as much
fresh salad or soup as a guest desires. During fiscal 2001, the average check
per person was $12.50 to $13.50, with alcoholic beverages accounting for about 9
percent of Olive Garden's sales. Olive Garden maintains approximately 24
different dinner menus and 18 lunch menus to reflect geographic differences in
consumer preferences, prices and selections in its trade areas, as well as four
different lower-priced children's' menus.
Fiscal 2001 was a record year for profits at Olive Garden. Same-restaurant
sales at Olive Garden increased 7.2 percent during fiscal 2001. Olive Garden has
had 27 consecutive quarters of same-restaurant sales increases as of the end of
fiscal 2001.
3
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, and began national expansion of the concept in 1998. In fiscal
2001, the Company opened seven Bahama Breeze restaurants in four new markets,
bringing the total to 21 restaurants in 15 markets. The concept continues to be
well received by guests, with strong sales volumes and earnings. The Company
plans to open eight to ten new Bahama Breeze restaurants in fiscal 2002.
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 nine Smokey Bones
restaurants, and the Company plans to open eight to ten new Smokey Bones
restaurants in fiscal 2002. In June 2001, the Company announced that it will
begin national expansion of Smokey Bones.
Recent and Planned Growth
During fiscal 2001, the Company opened 31 new restaurants (excluding the
relocation of existing restaurants to new sites and rebuilding at existing
sites) and closed four restaurants. This resulted in a net increase of 27
restaurants in operation (or 29 including the relocation of existing restaurants
to new sites and rebuilding at existing sites). The Company plans to open
approximately 40 to 49 new Red Lobster, Olive Garden, Bahama Breeze and Smokey
Bones restaurants during fiscal 2002 (excluding relocations). The Company's
actual and projected new openings by concept (excluding the relocation of
existing restaurants to new sites and rebuilding at existing sites) are shown
below.
Actual Projected
Restaurant Openings Restaurant Openings
Fiscal 2001 Fiscal 2002
----------- -----------
Red Lobster................................ 8 10-12
Olive Garden............................... 9 14-17
Bahama Breeze.............................. 7 8-10
Smokey Bones............................... 7 8-10
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Totals............................... 31 40-49
==== =====
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, and
expanding Bahama Breeze and Smokey Bones nationally 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 and Smokey Bones at a pace
that will enable each new restaurant to capture the concept's full potential.
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. Other factors
that may affect the ability of the Company to meet its projected restaurant
openings are set forth on Exhibit 99, which is incorporated herein by reference.
The Company 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
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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 eight Red Lobster and nine Olive Garden openings
(excluding relocations of existing restaurants) that occurred during fiscal
2001.
Capital Square Dining Dining
Investment Feet Seats Tables
Red Lobster........................ $3,413,000 7,060 177 51
Olive Garden....................... $3,711,000 7,857 215 51
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 2001, the Company permanently closed two and relocated or
rebuilt seven Red Lobster restaurants in the United States, and closed or
relocated no restaurants in Canada. During the same period, the Company
permanently closed two and relocated or rebuilt three Olive Garden restaurants
in the United States, and none in Canada.
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 and restricted stock, 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.
5
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 seeks to ensure 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 review food handling, 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 2,500 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.
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 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 2001, the Company employed approximately 128,900
persons. Of these employees, approximately 1,200 were corporate or concept
personnel located in the Company's restaurant support center in Orlando,
Florida, approximately 5,300 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 56 percent
were in management and the balance were administrative or office employees. The
operating executives of the Company have an average of more than 13 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
6
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. The Company is currently upgrading both its financial and
human resource (including payroll and benefits) systems using web enabled and
fully integrated application suites. The implementation of a high-speed data
network connecting all restaurants to all current and future applications is
also currently underway. Implementation of these projects is expected to take
place during fiscal 2002.
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 to
be distributed effectively to each of the Company's restaurant locations.
The Company's management believes its current systems and the upgrades
expected to be implemented during fiscal 2002 will well position 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 planning process
that is integrated into the Company's overall business planning and approved by
senior management. Information systems projects are prioritized 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 "Forward-Looking Statements,"
"Purchasing and Distribution," "Advertising and Marketing," and "Management
Information Systems," and elsewhere in this report.
Trademarks and Related Agreements
The Company regards its Darden Restaurants(R), Red Lobster(R), Olive
Garden(R), Bahama Breeze(R) and Smokey Bones(R) BBQ Sports Bar service marks,
and other variations of these service marks, as having significant value and as
being important in marketing the restaurants. The Company's policy is to pursue
registration of its important service marks and trademarks whenever possible and
to oppose vigorously any infringement of them.
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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, entered into an Area Development and
Franchise Agreement with Red Lobster Japan Partners, which operated 34 Red
Lobster restaurants in Japan as of May 27, 2001. 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. During fiscal years 2000
and 2001, the Company's sales were highest in the spring, lowest in the fall,
and comparable during winter and summer. 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 9 percent of sales 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 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 2001 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. During
fiscal 2001, there were no material capital expenditures for environmental
control facilities and no such expenditures are anticipated.
The Company continues to monitor its facilities for compliance with the
Americans With Disabilities Act of 1990 ("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.
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Executive Officers
The executive officers of the Company as of the date of this report are:
Joe R. Lee, age 60, has been Chief Executive Officer of the Company since
December 1994 and Chairman of the Board of the Company since April 1995. Mr. Lee
joined Red Lobster in 1967 as a member of its opening management team, and was
named its President in 1975. From 1970 to 1995, he held various positions with
General Mills, Inc., a manufacturer and marketer of consumer food products and
the Company's former parent, including Vice Chairman, with responsibility for
various consumer foods businesses and corporate staff functions, and Executive
Vice President, Finance and International Restaurants.
Blaine Sweatt, III, age 53, has been Executive Vice President of the
Company since April 1995, President, New Business Development of the Company
since September 1996, and a Director of the Company since 1995. He joined Red
Lobster in 1976 and was named Director of New Restaurant Concept Development in
1981. From 1976 to 1995, he held various positions with General Mills, Inc., a
manufacturer and marketer of consumer food products and the Company's former
parent. He led the teams that developed the Olive Garden, Bahama Breeze and
Smokey Bones concepts, among others.
Bradley D. Blum, age 47, has been Executive Vice President of the Company
since September 1997, President of Olive Garden since December 1994 and a
Director of the Company since 1997. He joined the Company in 1994 as Senior Vice
President of Marketing for Olive Garden and served as Senior Vice President of
the Company from 1995 until 1997. Prior to that time, he held various positions
during a 16 year career with General Mills, Inc., a manufacturer and marketer of
consumer food products and the Company's former parent.
Richard E. Rivera, age 54, has been Executive Vice President of the
Company, President of Red Lobster Restaurants and a Director of the Company
since December 1997. He served as President and Chief Executive Officer of Chart
House Restaurants, Inc. from July until December 1997, as President and Chief
Executive Officer of RARE Hospitality International, Inc., the owner of LongHorn
Steakhouse restaurants, from 1994 to 1997, and as President and Chief Executive
Officer of TGI Friday's, Inc. from 1988 to 1994. He began his career with Steak
& Ale Restaurants of America and has held various leadership positions in the
industry over the last 25 years, including as a Director of the National
Restaurant Association.
Laurie B. Burns, age 39, has been Senior Vice President, Development for
Darden since September 2000. She joined the Company in April 1999 as Vice
President of Development Red Lobster, and has over 15 years of experience in all
phases of development. She was a private real estate consultant from October
1998 until joining the Company in April 1999, and was Regional Vice President
for Development for the Eastern United States at Homestead Village, an
extended-stay hotel company, from 1995 to 1998.
Linda J. Dimopoulos, age 50, has been Senior Vice President, Chief
Information Officer of the Company with overall responsibility for information
services and systems since December 1999. She joined the Company in 1982, and
was named Director, Corporate Analysis in 1985. In 1986, she was named Vice
President, Controller for Red Lobster, and then Vice President, Information
Services. She served as Senior Vice President, Financial Operations of Red
Lobster from 1993 to July 1998, and as Senior Vice President, Corporate
Controller and Business Information Systems of the Company from July 1998 until
assuming her current position.
Gary Heckel, age 48, has been Senior Vice President of the Company since
June 1999 and President of Bahama Breeze since July 1998. He joined the Company
in 1995 as Vice President, Operations in the Company's New Business Development
division. He served as Senior Vice President, Operations for Bahama Breeze from
August 1997 until assuming his current position. His 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.
9
Stephen E. Helsel, age 56, has been Senior Vice President, Corporate
Controller of the Company since December 1999. He joined the Company in 1973 as
an accountant with Red Lobster, and was named Vice President, Controller of Red
Lobster in 1989. He served as Vice President, Controller, Accounting Services of
the Company from 1991 to 1996, and as Senior Vice President, Information
Services of the Company from 1996 until December 1999.
Daniel M. Lyons, age 48, has been Senior Vice President, Human Resources of
the Company since January 1997. He joined the Company in 1993 as Senior Vice
President of Personnel for Olive Garden. Prior to joining Olive Garden, he spent
18 years with the Quaker Oats Company.
Robert W. Mock, age 49, has been Senior Vice President of the Company since
July 1998 and President of Smokey Bones since September 1999. He joined the
Company in 1969. He served as Executive Vice President and General Manager of
Red Lobster Canada from 1992 to 1994, and as Executive Vice President,
Operations for Olive Garden from 1994 until July 1998.
Barry Moullet, age 43, has been Senior Vice President, Purchasing,
Distribution and Food Safety for the Company since June 1999. He joined the
Company in July 1996 as Senior Vice President, Purchasing and Distribution.
Prior to joining the Company, he spent 15 years in the purchasing field in
various positions with Restaurant Services, Inc., a Burger King purchasing
co-operative, Kentucky Fried Chicken and the Pillsbury Company.
Clarence Otis, Jr., age 45, has been Senior Vice President, Chief Financial
Officer of the Company since December 1999. He joined the Company in 1995 as
Vice President and Treasurer. He served as Senior Vice President, Investor
Relations and Treasurer of the Company from July 1997 to July 1998, and as
Senior Vice President, Finance and Treasurer from July 1998 until assuming his
current position in December 1999. Prior to joining the Company, he was employed
by Chemical Securities, Inc., an investment banking firm, where he had been
Managing Director and Manager of Public Finance since 1991.
Paula J. Shives, age 50, has been Senior Vice President, General Counsel
and Secretary of the Company since June 1999. She served as Associate General
Counsel (1985-1995) and Senior Vice President, General Counsel and Secretary
(1995-1999) of Long John Silver's Restaurants, Inc., until joining the Company
in May 1999.
Richard J. Walsh, age 49, has been Senior Vice President, Corporate
Relations of the Company since 1994. He joined General Mills, Inc., a
manufacturer and marketer of consumer food products and the Company's former
parent, in 1984 as Manager of Government Affairs for Red Lobster. He served as
Vice President of Government and Community Relations for General Mills
Restaurants, Inc. from 1987 until assuming his current position with the Company
in December 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 or written statements made or to be made by, or on behalf of, 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 differ materially from those expressed in the
forward-looking statements. These risks and uncertainties include competition,
economic and market conditions, changes in food and other costs, the importance
of locations, 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.
10
Item 2. PROPERTIES
As of May 27, 2001, the Company operated 1,168 restaurants (including 661
Red Lobster, 477 Olive Garden, 21 Bahama Breeze and nine Smokey Bones
restaurants) and one Olive Garden Cafe in the following locations:
Alabama (19) Iowa (13) Nevada (10) South Dakota (3)
Arizona (26) Kansas (11) New Hampshire (3) Tennessee (25)
Arkansas (10) Kentucky (14) New Jersey (27) Texas (97)
California (88) Louisiana (7) New Mexico (8) Utah (10)
Colorado (22) Maine (3) New York (46) Vermont (1)
Connecticut (9) Maryland (19) North Carolina (25) Virginia (39)
Delaware (4) Massachusetts (8) North Dakota (4) Washington (21)
Florida (120) Michigan (45) Ohio (69) West Virginia (5)
Georgia (46) Minnesota (21) Oklahoma (17) Wisconsin (20)
Hawaii (1) Mississippi (7) Oregon (10) Wyoming (2)
Idaho (6) Missouri (26) Pennsylvania (55) Canada (37)
Illinois (48) Montana (2) Rhode Island (2)
Indiana (34) Nebraska (7) South Carolina (17)
Of the Company's 1,168 restaurants and the Olive Garden Cafe open on May
27, 2001, 752 were on owned sites and 417 were on leased sites. The 417 leases
are classified as follows:
Land-Only Leases (Darden owns buildings and equipment)........ 301
Ground and Building Leases.................................... 61
Space/In-Line/Other Leases.................................... 55
----
Total.................................................... 417
===
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.
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 31 and 34, respectively, of the Company's 2001 Annual Report to
Shareholders, incorporated herein by reference.
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 these 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.
11
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information concerning the dividends and high and low intraday sales
prices for the Company's common shares on the New York Stock Exchange for each
full quarterly period during fiscal 2000 and 2001 contained in Note 18 Quarterly
Data on page 39 of the Company's 2001 Annual Report to Shareholders is
incorporated herein by reference. As of July 23, 2001, there were 34,442 record
holders of the Company's common shares.
Item 6. SELECTED FINANCIAL INFORMATION
The information for fiscal 1997 through 2001, contained in the Five Year
Financial Summary on page 40 of the Company's 2001 Annual Report to
Shareholders, 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
and Analysis of Financial Condition and Results of Operations" on pages 18
through 21 of the Company's 2001 Annual Report to Shareholders is incorporated
herein by reference.
Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The text under the heading "Quantitative and Qualitative Disclosures About
Market Risk" contained within "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on page 21 of the Company's 2001 Annual
Report to Shareholders is incorporated herein by reference.
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 22 through 39 of the Company's 2001 Annual Report
to Shareholders 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 "Who are This Year's
Nominees?" on pages 6 through 8, "What are the Committees of the Board?" on
pages 9 through 10, and "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 29 of the Company's definitive Proxy Statement dated August
15, 2001, is incorporated herein by reference. Information regarding executive
officers is contained in Part I above under the heading "Executive Officers."
12
Item 11. EXECUTIVE COMPENSATION
The information contained in the sections entitled "How are Directors
Compensated?" on pages 10-11, "Summary Compensation Table" on pages 16-17,
"Option Grants in Last Fiscal Year" on page 18, "Stock Option Exercises and
Holdings" on page 19, "Do Executive Officers Currently Participate in a Defined
Benefit Retirement Plan?" on page 20, "Does the Company Have Any
Change-in-Control Agreements?" on page 20, and "Compensation Committee
Interlocks and Insider Participation" on page 25 of the Company's definitive
Proxy Statement dated August 15, 2001, is incorporated herein by reference. The
information appearing in such Proxy Statement under the heading "Compensation
Committee Report" (except under the heading "Compensation Committee Interlocks
and Insider Participation") is not incorporated herein.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in the section entitled "Security Ownership of
Principal Shareholders" on pages 12-13 and "Security Ownership of Management" on
pages 14-15 of the Company's definitive Proxy Statement dated August 15, 2001,
is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the sections entitled "Does the Company
Provide Incentives for Executives to Meet Their Share Ownership Guidelines?" on
page 21, and "Are There Any Other Relationships or Related Transactions Between
the Company and its Management?" on page 21 of the Company's definitive Proxy
Statement dated August 15, 2001, is incorporated herein by reference.
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
27, 2001, May 28, 2000, and May 30, 1999 (incorporated by reference to page 23
of the Company's 2001 Annual Report to Shareholders).
Consolidated Balance Sheets at May 27, 2001 and May 28, 2000
(incorporated by reference to page 24 of the Company's 2001 Annual Report to
Shareholders).
Consolidated Statements of Changes in Stockholders' Equity for the
fiscal years ended May 27, 2001, May 28, 2000, and May 30, 1999 (incorporated by
reference to page 25 of the Company's 2001 Annual Report to Shareholders).
Consolidated Statements of Cash Flows for the fiscal years ended May
27, 2001, May 28, 2000, and May 30, 1999 (incorporated by reference to page
26 of the Company's 2001 Annual Report to Shareholders).
Notes to Consolidated Financial Statements (incorporated by reference
to pages 27 through 39 of the Company's 2001 Annual Report to Shareholders).
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.
13
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.
*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
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) Darden Restaurants, Inc. Stock Plan for Directors,
as amended (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) Darden Restaurants, Inc. Compensation Plan for Non-
Employee Directors, as amended (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
(incorporated by reference to Exhibit 10(h) to the
Company's Annual Report on Form 10-K for the fiscal
year ended May 28, 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).
14
*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).
*10(k) Form of documents for Fiscal 1998 Stock Purchase/
Option Award program of Darden Restaurants, Inc.:
Non-Negotiable Promissory Note and Stock Pledge
Agreement.
12 Computation of Ratio of Consolidated Earnings to
Fixed Charges.
13 Portions of 2001 Annual Report to Shareholders.
21 Subsidiaries of Darden Restaurants, Inc.
23 Independent Accountants' Consent.
24 Powers of Attorney.
99 Cautionary Statements Under the Private Securities
Litigation Reform Act of 1995.
* 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 and
Item 601(b)(10)(iii)(A) of Regulation S-K.
The Company will furnish copies of any exhibit listed above upon request upon
the payment of a reasonable fee to cover the Company's expenses in furnishing
such exhibit.
(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 21, 2001, reporting certain
financial results for the third quarter of fiscal 2001, reporting
February same-restaurant sales results, and announcing the
election of former Senator Connie Mack, III to the Board of
Directors.
15
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 15, 2001 DARDEN RESTAURANTS, INC.
By: /s/ Joe R. Lee
--------------
Joe R. Lee
Chairman of the Board and
Chief Executive Officer
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.
Signature Title Date
/s/ Joe R. Lee Director, Chairman of the Board and Chief August 15, 2001
- ------------------------------
Joe R. Lee Executive Officer (Principal executive officer)
/s/ Clarence Otis, Jr. Senior Vice President and Chief Financial Officer August 15, 2001
- -------------------------------
Clarence Otis, Jr. (Principal financial and accounting officer)
/s/ Bradley D. Blum* Director
- -------------------------------
Bradley D. Blum
/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/ Cornelius McGillicuddy, III* ** Director
- ------------------------------------
Cornelius McGillicuddy, III
/s/ Richard E. Rivera* Director
- -------------------------------
Richard E. Rivera
/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
16
/s/ Blaine Sweatt, III* Director
- -------------------------------
Blaine Sweatt, III
/s/ Rita P. Wilson* Director
- -------------------------------
Rita P. Wilson
*BY: /s/ Paula J. Shives
-------------------
Paula J. Shives, Attorney-In-Fact
August 15, 2001
** Popularly known as Senator Connie Mack, III. Senator Mack signs legal
documents, including this Form 10-K, under his legal name of Cornelius
McGillicuddy, III.
17
EXHIBIT INDEX
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 U nion
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.
* 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) Darden Restaurants, Inc. Stock Plan for Directors, as
amended (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) Darden Restaurants, Inc. Compensation Plan for Non-
Employee Directors, as amended (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 (incorporated by
reference to Exhibit 10(h) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 28, 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).
*10(k) Form of documents for Fiscal 1998 Stock Purchase/Option
Award program of Darden Restaurants, Inc.: Non-Negotiable
Promissory Note and Stock Pledge Agreement.
12 Computation of Ratio of Consolidated Earnings to Fixed
Charges.
13 Portions of 2001 Annual Report to Shareholders.
21 Subsidiaries of Darden Restaurants, Inc.
23 Independent Accountants' Consent.
24 Powers of Attorney.
99 Cautionary Statements Under the Private Securities
Litigation Reform Act of 1995.
* Items marked with an asterisk are management contracts or compensatory plans
or arrangements required to be filed as an exhibit pursuant to Item 14 of Form
10-K and Item 601(b)(10)(iii)(A) of Regulation S-K.