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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 30, 1999
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _________________
Commission File Number 1-13666
DARDEN RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
Florida 59-3305930
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
5900 Lake Ellenor Drive 32809
Orlando, Florida (Zip Code)
(Address of principal executive offices)
(407) 245-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class On which registered
Common stock, without par value New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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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 $21.125 per share as reported on the
New York Stock Exchange on July 26, 1999: $2,708 million.
Number of shares of Common Stock outstanding as of July 26, 1999:
132,717,134 (excluding 32,625,961 shares held in the treasury).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement dated August 10, 1999 are
incorporated by reference into Part III, and portions of Registrant's 1999
Annual Report to Stockholders are incorporated by reference into Parts I, II and
IV.
PART I
Item 1. BUSINESS OF DARDEN RESTAURANTS, INC.
Introduction
Darden Restaurants, Inc. and its subsidiaries (the "Company" or "Darden")
is the world's largest full-service restaurant organization.* In the United
States, as of May 30, 1999, it operated 1,106 restaurants in 49 states (the
exception being Alaska), including 635 Red Lobster(R), 459 Olive Garden(R), six
Olive Garden Cafe(R) and six Bahama Breeze(R) restaurants. In addition, the
Company operated 39 restaurants in Canada, including 34 Red Lobster units and
five Olive Garden units. All of its restaurants in North America are
Company-operated. In Japan, as of May 30, 1999, Red Lobster Japan Partners, a
Japanese retailer unaffiliated with Darden, operated 38 Red Lobster restaurants
pursuant to an Area Development and Franchise Agreement.
The Company, a Florida corporation incorporated in March of 1995, is the
parent company of GMRI, Inc., a Florida corporation ("GMRI"). GMRI and other
Darden subsidiaries own the operating assets of the restaurants. GMRI was
originally incorporated on March 27, 1968, as Red Lobster Inns of America, Inc.
The Company's principal executive offices and restaurant support center are
located at 5900 Lake Ellenor Drive, Orlando, Florida 32809 (telephone number
(407) 245-4000). Unless the context indicates otherwise, all references to
Darden or the Company include Darden, GMRI and their respective subsidiaries.
Background
The Company opened its first restaurant, a Red Lobster, in Lakeland,
Florida in January of 1968. Red Lobster was founded by William B. Darden, for
whom the Company is named. The Company was acquired by General Mills, Inc.
("General Mills") in 1970. In May of 1995, the Company became an independent
publicly held company when General Mills distributed all outstanding Darden
stock to General Mills stockholders (the "Distribution").
While the expansion of the Company's two largest restaurant chains has
historically been steady, the number of restaurants for both Red Lobster and
Olive Garden has declined in recent years due to an increased focus on market
optimization and the closing of under-performing units. Red Lobster has grown
from three restaurants in operation in 1970 to 669 units in North America by the
end of fiscal year 1999. Olive Garden, an internally developed concept, opened
its first restaurant in December of 1982, and expanded to 459 restaurants in the
United States and five restaurants in Canada by the end of fiscal year 1999.
Additionally, at the end of fiscal year 1999, Olive Garden operated six cafes in
food courts located in regional shopping malls within the United States.
The Company's newest restaurant concept is Bahama Breeze, an internally
developed concept with a Caribbean theme. At the end of fiscal year 1999, there
were six Bahama Breeze restaurants. They are located in Orlando, Florida;
Altamonte Springs, Florida; Memphis, Tennessee; Tampa, Florida; Raleigh, North
Carolina; and Atlanta, Georgia.
Strategy
The Company is a leader in the casual-dining segment of the restaurant
industry and is committed to the following key strategies.
o Developing and operating distinctive restaurant concepts, each with its
own culture, operating practices, physical environment, menu and marketing
approach.
o Expanding its current portfolio of restaurant concepts, and internally
developing or acquiring additional concepts which can be expanded profitably.
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* Source: Nation's Restaurant News, "Top 100," June 28, 1999 (based on
numbers of company-owned restaurants).
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o Attracting, developing and retaining experienced management and personnel
committed to providing customer satisfaction and business results.
o Achieving operating efficiencies by sharing support services and
infrastructure among its restaurant concepts.
o Maintaining consumer awareness through advertising and consumer
promotions.
The following table lists the number of restaurants and total sales by year
of the Red Lobster, Olive Garden and Bahama Breeze concepts. The table also
includes information about the now closed China Coast concept, as its operations
are reflected in the Company's Five Year Financial Summary (see Part II, Item
6).
Company-Operated Restaurants Open at Fiscal Year-End
Fiscal Red Olive China Bahama Total Total Sales
Year Lobster Garden(a) Coast(b) Breeze Restaurants(a) (In Millions)
- ------ ------- --------- -------- ------ -------------- -------------
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 1 730 1,927.7
1991 568 272 1 841 2,212.3
1992 619 341 1 961 2,542.0
1993 638 400 5 1,043 2,737.0
1994 675 458 25 1,158 2,963.0
1995 715 477 51 1,243 3,163.3
1996 729 487 0 1 1,217 3,191.8
1997 703 477 0 2 1,182 3,171.8
1998 682 466 0 3 1,151 3,287.0
1999 669 464 0 6 1,139 3,458.1
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(a) These numbers do not include the six Olive Garden Cafes in operation as of
May 30, 1999.
(b) In August 1995, the Company approved the closing of all China Coast
restaurants.
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Industry Overview
In the United States, the restaurant industry generates approximately $242
billion in annual sales, or roughly 36% of total consumer food expenditures.*
Expenditures for restaurant dining and other meals prepared away from home have
increased from 25% of the food dollar in 1955 to 44% in 1999.* Over the past 20
years, restaurant sales have grown at an annual rate that is one to two
percentage points faster than the growth of food-at-home sales.* The restaurant
industry is highly fragmented and is characterized by the presence of thousands
of independent operators and small chains. While chain restaurants dominate the
fast-food segment with a combined market share of 61%, chains account for just
22% in the full-service segment.* The Company believes that capable operators of
strong multi-unit concepts will continue to increase their share of the
full-service restaurant market.
Casual dining is the fastest growing segment of the full-service restaurant
market, with sales increasing at a 6.5% annual compound growth rate since 1992.*
Today, casual dining represents 37% of full-service restaurant sales, or $41
billion.* Darden is a leader in the casual-dining segment, with approximately an
eight percent market share.* Management believes that casual-dining concepts
will benefit from favorable demographic trends, most notably the maturing
population. Forty to sixty year olds are the most frequent users of
casual-dining restaurants, and through this decade and the next, the population
aged forty-five or older is projected to increase by approximately 34 million.
In addition, "baby-boomers" (i.e., thirty-four to fifty-two year olds) tend to
eat out more than generations before them, so, as they age, their casual dining
frequency may become even higher. Finally, this group includes a high proportion
of two-income families, which the Company believes could increase the demand for
food-away-from-home due to a combination of more discretionary income and less
discretionary time.
Restaurants face growing competition from the supermarket industry which is
offering improved entrees and side dishes from the deli section. Supermarkets'
renewed emphasis on such "convenient meals" may have the most impact on segments
of the restaurant industry in which the meals fulfill a primarily physiological
objective, such as in the "quick serve" and "midscale" segments. Casual dining
offers a more significant social component with the meal, a feature that the
supermarkets' "convenient meals" do not readily confer.
Restaurant Concepts
Red Lobster
Red Lobster is the largest full-service, seafood-specialty restaurant group
in 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 eleventh consecutive year, Red Lobster was named Best Seafood Chain in
America in the 1999 America's Choice In Chains national consumer survey
published in the March 1, 1999 issue of Restaurants & Institutions magazine.
Dinner entree prices range from $6.99 to $18.99, with fresh fish and
certain lobster items available at market price. Lunch entree prices range from
$4.99 to $7.99. During fiscal year 1999, the average check per person was
between $14.00 and $15.00, with alcoholic beverages accounting for approximately
eight percent of sales. Red Lobster also offers a lower-priced children's menu.
The Company maintains approximately 100 different menus to reflect geographic
differences in consumer preferences, prices and selections in its trade areas.
Fiscal 1999 was a year of consistent profitable sales growth for Red
Lobster. As of the close of fiscal 1999, Red Lobster had enjoyed six consecutive
quarters of same-restaurant sales increases. For the year, same-restaurant sales
at Red Lobster increased 7.4 percent.
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* Sources: United States Department of Commerce Census of Retail Trade
(1997); National Restaurant Association Annual Foodservice Forecast (1998);
and CREST Annual Household Summary (1998).
3
Olive Garden
Olive Garden is the market share leader in the Italian casual, full-service
dining segment in North America with 18% of the full-service Italian category
and 35% of total casual dining Italian sales at the end of fiscal year 1998.*
Olive Garden's focus on Hospitaliano!, which the Company defines as "Our Passion
for 100% Guest Delight", has contributed to its best-ever guest satisfaction
feedback and 19 consecutive quarters of same-restaurant sales growth as of the
close of fiscal year 1999.
Olive Garden's menu includes a variety of authentic Italian foods,
featuring fresh ingredients, and an expanded wine list with imported wines 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
imported coffee from Italy for its espresso and cappuccino.
Dinner entree prices range from $6.95 to $16.95, and most lunch entree
prices range from $4.75 to $7.95. The price of each entree also includes as much
fresh salad or soup as a guest desires. During fiscal year 1999, the average
check per person was $11.50 to $12.50, with alcoholic beverages accounting for
slightly more than eight percent of sales.
Olive Garden considers itself a family of local restaurants focused on
delighting every guest with an authentic Italian dining experience. Olive Garden
places importance on high standards, mutual respect, training and brand
building. Its annual investment in front-line training has increased five-fold
in the past four years. Olive Garden strives to apply the spirit of its
advertising campaign, "When You're Here, You're Family," to both its guests and
employees. RevItalia(TM), a major revitalization of each Olive Garden
restaurant, is expected to take place over the next several years and is
designed to provide the environment for an authentic Italian dining experience
for both guests and employees. The Company believes that investments such as
these have contributed to Olive Garden's success and continued profitable sales
growth.
Same-restaurant sales at Olive Garden increased 9.0 percent during fiscal
year 1999. As previously noted, Olive Garden has had 19 consecutive quarters of
same-restaurant sales increases.
Expansion Strategy
During fiscal year 1999, the Company opened five restaurants (excluding
pre-existing restaurants relocated to other sites). It plans to open
approximately 16 new Red Lobster, Olive Garden and Bahama Breeze restaurants
during fiscal year 2000 (excluding relocations). The Company's new store
openings by concept are shown below.
Actual Projected
Fiscal 1999 Fiscal 2000
----------- -----------
Red Lobster....................... 2 5
Olive Garden...................... 0 5
Bahama Breeze..................... 3 6
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Totals....................... 5 16
=== ===
The Company's objective is to continue to expand its current portfolio of
restaurant concepts, and to develop internally or acquire additional concepts
which can be expanded. It is currently testing new ideas and concepts, as well
as expanding its testing of Bahama Breeze 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 to the
highest-potential sites. In addition, the Company plans to expand Bahama Breeze
at a pace that will enable each new restaurant to capture the concept's full
potential. The specific number of openings will also depend upon a number of
factors, including the Company's ability to locate appropriate sites,
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* Sources: United States Department of Commerce Census of Retail Trade (Dec.
1997 - Nov. 1998); Nation's Restaurant News (June 22, 1998); and CREST
Annual Household Summary (1998).
4
negotiate acceptable purchase or lease terms, obtain necessary local
governmental permits, complete construction, and recruit and train restaurant
management and hourly personnel.
Darden considers location to be a critical factor in determining a
restaurant's long-term success, and the Company devotes significant effort to
the site selection process for new locations. Prior to entering a market, a
thorough study is conducted to determine the optimal number and placement of
restaurants. The Company's site selection process utilizes a variety of
analytical techniques to evaluate a number of important 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. After site acquisition and receipt of permits, it typically
takes 120 to 180 days to construct and open a new restaurant.
The following table illustrates the approximate capital investment, size
and dining capacity of the two Red Lobster openings (excluding relocations of
existing restaurants) that occurred during fiscal year 1999.
Capital Square Dining Dining
Investment Feet Seats Tables
---------- ------ ------ ------
Red Lobster............. $2,722,000 6,370 194 50
Red Lobster plans to open five new restaurants during fiscal year 2000, but the
actual number of openings may vary due to factors previously discussed.
Olive Garden did not open new restaurants during fiscal 1999. The Company
has developed a new "Tuscan Farmhouse" design with a building size of
approximately 8,100 square feet and seating for approximately 250 people. Olive
Garden plans to open up to five new restaurants during fiscal year 2000, but the
actual number of openings may vary.
Bahama Breeze opened three restaurants in fiscal 1999. The Company plans to
open at least six additional Bahama Breeze restaurants during fiscal year 2000,
but the actual number of openings may vary due to the factors previously
discussed.
The Company systematically reviews the performance of its restaurant sites
to ensure that each unit meets its standards. When a unit falls below minimum
standards, a thorough analysis is completed to determine the causes, and
marketing and operational plans are implemented to improve that unit'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.
In fiscal year 1999, the Company permanently closed 15 Red Lobster
restaurants in the United States. One additional Red Lobster restaurant was
closed in the United States during fiscal 1999, but is scheduled to relocate and
re-open in fiscal year 2000. During the same period, Olive Garden permanently
closed two restaurants in the United States. No restaurants were closed in
Canada during fiscal 1999.
During fiscal 1999, Red Lobster relocated three restaurants and rebuilt
another restaurant that had been temporarily closed in fiscal 1998. These
actions repositioned older Red Lobster restaurants to better locations and more
contemporary buildings. These restaurants are not included in the numbers of new
restaurant openings or permanent closings described above.
For a discussion of restructuring and asset impairment expense or credit
related to restaurant closings, see Management's Discussion of Results of
Operations and Financial Condition and Note 3 of Notes to Consolidated Financial
Statements on pages 22 and 34, respectively, of the Company's 1999 Annual Report
to Stockholders.
5
Restaurant Operations
The Company believes that high-quality restaurant management is critical to
its long-term success. It also believes that its leadership position, strong
success-oriented culture and various short-term and long-term incentive
programs, including stock options, help attract and retain highly-motivated
restaurant managers committed to providing superior customer satisfaction and
outstanding business results.
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. Restaurant general managers report to directors
at Red Lobster and Olive Garden, 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 utilizes 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 ensure a smooth transition to the restaurant's
operating staff.
Quality Assurance
The Company's Quality Assurance Department helps ensure that all
restaurants provide high-quality food products in a clean and safe environment.
Through rigorous physical evaluation and testing, the Company ensures that all
seafood purchased meets or exceeds its specifications. Since 1976, the Company
has maintained a microbiological laboratory to routinely test seafood and
commodity products for quality. In addition, quality assurance managers visit
each restaurant periodically throughout the year to ensure that food is properly
handled, and to provide education and training in food safety and sanitation.
The quality assurance managers also serve as a liaison to regulatory agencies on
issues relating to food safety. The Company uses independent third party
auditors to inspect and evaluate vendors of commodity food products. In this
manner, the Company can 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 buys food and supplies from more than 1,400 suppliers in 44
countries. To ensure the quality of all food products, 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 ensure availability of products and
stability of costs.
The Company believes that its seafood purchasing capabilities are a
significant competitive advantage. The Company's purchasing staff routinely
travels within the United States and internationally to source over 100
varieties of top-quality seafood at competitive prices. The Company believes
that it has established excellent long-term relationships with key seafood
vendors, and sources product directly from the vendors when possible. The
Company operates a procurement office in Singapore to source products directly
from Asia. While the supply of certain seafood species is volatile, the Company
believes that it has demonstrated the ability to identify alternative seafood
products and to adjust its menus as required. All other essential food products
are available, or can be made available upon short notice, from alternative
qualified suppliers. Because of the relatively rapid turnover of perishable food
products, inventories in the restaurants have a modest aggregate dollar value in
relation to revenues.
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Controlled inventories of specified products are distributed to all restaurants
through a national distribution company. See Note 2 of Notes to Consolidated
Financial Statements on page 33 of the Company's 1999 Annual Report to
Stockholders.
Advertising and Marketing
The Company believes that it has developed significant marketing and
advertising capabilities. The Company's size enables it to be the dominant
advertiser in the full-service 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 to attract customers. The Company has developed and
consistently utilizes sophisticated consumer marketing research techniques to
monitor customer satisfaction and customers' evolving expectations.
Employees
At the end of fiscal year 1999, the Company employed approximately 116,700
persons. Of these employees, 1,054 were corporate personnel, 5,058 were
restaurant management personnel, and the remainder were hourly restaurant
personnel. Of the 1,054 corporate employees, 584 were in management and 470 were
administrative or office employees. The operating executives of the Company have
an average of more than 16 years of experience with the Company. The restaurant
general managers average more than ten years with the Company. The Company
believes that it provides working conditions and compensation that compare
favorably with those of its competition. Most employees, other than restaurant
management and corporate management, are paid on an hourly basis. None of the
Company's employees are covered by a collective bargaining agreement. The
Company considers its employee relations to be good.
Management Information Systems
The Company strives for leadership in the restaurant business by utilizing
technology as a competitive advantage. Since 1975, computers located in the
restaurants have been used to assist in the management of the restaurants. The
Company has implemented systems targeted at improved financial control, cost
management, enhanced guest service and improved employee effectiveness.
Management information systems are designed to be used across restaurant
concepts, yet are flexible enough to meet the unique needs of each specific
restaurant concept.
Restaurant support is provided from the restaurant support center in
Orlando, Florida, seven days a week, 24 hours a day. A communications network
sends and receives critical business data to and from the restaurants each
night, providing timely and extensive information each morning on business
activity in every location. The restaurant support center houses the Company's
data center, which contains sufficient computing power to process information
from all restaurants quickly and efficiently. The Company's information is
processed in a secured environment to protect both the actual data and the
physical assets. The Company guards against business interruption by maintaining
a disaster recovery plan, which includes storing critical business information
off-site and testing the disaster recovery plan at a hot-site facility. The
Company uses internally developed proprietary software, as well as purchased
software, with proven, non-proprietary hardware. This allows processing power in
terms of hardware and software to be distributed effectively to each of the
Company's restaurant locations.
The Company's management believes these systems have well positioned the
Company to support current needs as well as future growth. The Company is
committed to maintaining an industry leadership position in information systems
and computing technology. The Company utilizes a strategic information systems
plan that is prepared internally and reviewed with senior management. The plan
is a result of projects approved by the Executive Information Systems Steering
Committee. This plan prioritizes information systems projects based upon
strategic, financial, regulatory and other business advantage criteria.
The Company has committed the resources necessary to ensure that its
critical information systems and technology are "Year 2000 compliant" in advance
of the next millennium. "Year 2000 compliant" refers to information systems and
technology that accurately process date/time data (including calculating,
comparing and
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sequencing) from, into and between the twentieth and twenty-first centuries and,
in particular, the years 1999 and 2000. As of May 30, 1999, virtually all of the
Company's systems either have been modified to be Year 2000 compliant or have
been eliminated due to changes in business requirements. The total cost to the
Company of achieving Year 2000 compliant systems is not expected to have a
material impact on the Company's financial condition or results of operations.
For additional discussion of the Year 2000 issue, see the subsection entitled
"Impact of Year 2000" in Management's Discussion of Results of Operations and
Financial Condition on page 24 of the 1999 Annual Report to Stockholders.
Competition
The restaurant industry is intensely competitive with respect to food
quality, price, service, restaurant location, concept, the attractiveness of
facilities, and the effectiveness of advertising and marketing programs. The
restaurant business is often affected by changes in consumer tastes; national,
regional or local economic conditions; demographic trends; traffic patterns; the
type, number and location of competing restaurants; and consumers' discretionary
purchasing power. The Company competes within each market with national and
regional chains as well as locally-owned restaurants, not only for customers but
also for management and hourly personnel and suitable real estate sites.
Restaurants face growing competition from the supermarket industry, which is
offering "convenient meals" in the form of improved entrees and side dishes from
the deli section. The Company expects intense competition to continue in all of
these areas.
Other factors pertaining to the Company's competitive position in the
industry are addressed under the sections entitled "Purchasing and
Distribution," "Advertising and Marketing," and "Management Information
Systems," and elsewhere in this report.
Trademarks and Related Agreements
The Company regards its Red Lobster(R), Olive Garden(R) and Bahama
Breeze(R) servicemarks as having significant value and as being important in
marketing the restaurants. The Company's policy is to pursue registration of its
important servicemarks and trademarks whenever possible and to oppose vigorously
any infringement of them.
The only restaurant operations outside of North America historically have
been conducted through Red Lobster Japan Partners, a partnership venture with
the Japanese retailer JUSCO that was established in 1982. The historical
financial results of Darden exclude the results of such operations. On April 26,
1995, the Darden subsidiary, GMRI, Inc., entered into an Area Development and
Franchise Agreement with Red Lobster Japan Partners, which operated 38 Red
Lobster restaurants in Japan as of May 30, 1999. Darden does not have an
ownership interest in Red Lobster Japan Partners. Royalty income is not expected
to be material.
Seasonality
The Company's sales volumes fluctuate seasonally, and are generally higher
in the spring and summer months, and lower in the fall and winter months. Severe
weather, storms and similar conditions may impact sales volumes seasonally in
some operating regions.
Government Regulation
The Company is subject to various federal, state and local laws affecting
its business. Each of the Company's restaurants must comply with licensing
requirements and regulations by a number of governmental authorities, which
include health, safety and fire agencies in the state or municipality in which
the restaurant is located. The development and operation of restaurants depend
on selecting and acquiring suitable sites, which are subject to zoning, land
use, environmental, traffic and other regulations. To date, the Company has not
been significantly affected by any difficulty, delay or failure to obtain
required licenses or approvals.
Presently about 8.2% of total restaurant revenues are attributable to the
sale of alcoholic beverages. Regulations governing their sale require licensure
by each site (in most cases, on an annual basis) and licenses may be revoked or
suspended for cause at any time. These regulations relate to many aspects of
restaurant operation, including the minimum age of patrons and employees, hours
of operation, advertising, wholesale purchasing, inventory control and handling,
storage and dispensing of alcoholic beverages. The failure of a restaurant to
obtain
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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 the fiscal year ended May 30, 1999, have not had a material effect on the
Company's operations.
The Company is currently operating under a Tip Rate Alternative Commitment
("TRAC") agreement with the Internal Revenue Service. Through increased
educational and other efforts in the restaurants, the TRAC agreement reduces the
likelihood of potential chain-wide employer-only FICA assessments for unreported
tips.
The Company is subject to federal and state environmental regulations, but
these rules have not had a material effect on the Company's operations.
The Company continues to monitor its facilities for compliance with the
Federal Americans With Disabilities Act ("ADA") and related state statutes in
order to conform to their requirements. Under the ADA and related state laws,
the Company could be required to expend funds to modify its restaurants to make
them more readily accessible to disabled persons, to better provide service to
disabled persons, or to make reasonable accommodation for the employment of
disabled persons.
Executive Officers
The executive officers of the Company as of the date of this report are as
follows.
Joe R. Lee, age 58, is Chief Executive Officer and Chairman of the Board of
Darden. Mr. Lee joined Red Lobster in 1967 as a member of its opening management
team, and was named its President in 1975. He was elected a Vice President of
General Mills in 1976, a Group Vice President in 1979, and an Executive Vice
President in 1981, was named Executive Vice President, Finance and International
Restaurants in 1991, and was elected a Vice Chairman of General Mills in 1992
with responsibility for various consumer foods businesses and corporate staff
functions. Mr. Lee was elected a director of General Mills in 1985. He was named
Chief Executive Officer of Darden in December of 1994.
Blaine Sweatt, III, age 51, is President, New Business Development and an
Executive Vice President of Darden. He joined General Mills in 1976 in the Red
Lobster organization and was named Director of New Restaurant Concept
Development in 1981. Mr. Sweatt led the teams that developed the Olive Garden
and Bahama Breeze concepts, among others. He was named Vice President in 1985
and Senior Vice President in 1994. Mr. Sweatt has been Executive Vice President
and a director of Darden since 1995.
Bradley D. Blum, age 45, is President of Olive Garden and an Executive Vice
President of Darden. Mr. Blum joined General Mills in 1978. He was named
Director of Marketing in 1984, responsible for Big G Cereals, and he became Vice
President of Big G New Enterprises in 1989. In 1990, he was named Vice President
of Marketing for Cereal Partners Worldwide, General Mills' joint venture with
Nestle, headquartered in Switzerland. He joined the Company in 1994 as Senior
Vice President of Marketing for Olive Garden and was named President of Olive
Garden in December of 1994. He was named Senior Vice President of Darden in
September of 1995 and has been Executive Vice President and a director of Darden
since September of 1997.
Richard E. Rivera, age 52, was named President of Red Lobster and Executive
Vice President of Darden in December of 1997. Mr. Rivera began his career with
Steak and Ale Restaurants of America and has held many management positions
within the industry over the past 25 years. Prior to joining Red Lobster, from
1994 to 1996, Mr. Rivera served as President and Chief Executive Officer of RARE
Hospitality International, Inc., owner of LongHorn Steakhouse restaurants. Mr.
Rivera has been a director of Darden since joining the Company in December of
1997.
Linda J. Dimopoulos, age 48, is Senior Vice President, Corporate Controller
and Business Information Systems of Darden with overall responsibility for
corporate reporting, accounting, information services and internal
9
audit. Ms. Dimopoulos joined the Company in 1982. She was named Director,
Corporate Analysis in 1985. In 1986, she was named Vice President, Controller
for Red Lobster, and then Vice President, Information System Services. She was
named Senior Vice President, Financial Operations in August 1993, and assumed
her present position in July 1998.
Gary Heckel, age 46, is President of Bahama Breeze and Senior Vice
President of Darden. Mr. Heckel's career in the restaurant industry includes
employment with several major quick-service and casual dining restaurant
companies, such as Burger King Corporation, Taco Bell Corp., and TGI Friday's,
Inc. Mr. Heckel joined Darden in 1995 as Vice President, Operations in the
Company's New Business Development division. He was named Senior Vice President,
Operations for Bahama Breeze in August of 1997. Mr. Heckel was named President
of Bahama Breeze in July of 1998 and was elected Senior Vice President of Darden
in June of 1999.
Daniel M. Lyons, age 46, is Senior Vice President, Human Resources of the
Company with overall responsibility for human resources, including compensation,
benefits, management development, staffing, corporate security, diversity
management and aviation. Mr. Lyons joined the Company in 1993 as Senior Vice
President of Personnel for Olive Garden. He was elected to his present position
in January of 1997. Prior to joining Olive Garden, Mr. Lyons spent 18 years with
the Quaker Oats Company.
Robert W. Mock, age 47, is Executive Vice President, Operations of Olive
Garden and Senior Vice President of Darden. Mr. Mock joined the Company in 1969
and, through the years, held management positions in various areas of the
Company. In 1992, Mr. Mock was named Executive Vice President and General
Manager of Red Lobster Canada. In 1994, Mr. Mock was named Executive Vice
President, Operations for Olive Garden. He was named to the additional position
of Senior Vice President of Darden in July 1998.
Barry Moullet, age 41, is Senior Vice President, Purchasing, Distribution
and Food Safety for the Company. He joined Darden in July of 1996. Prior to
joining Darden, Mr. Moullet spent 15 years in the purchasing field, most
recently with Restaurant Services, Inc., a Burger King purchasing co-operative.
Prior to Burger King, he gained experience with Kentucky Fried Chicken and the
Pillsbury Company. Mr. Moullet became an executive officer of Darden in June
1999.
Clarence Otis, Jr., age 43, is Senior Vice President, Finance and Treasurer
of the Company. Mr. Otis joined the Company in 1995 as Vice President and
Treasurer. In July of 1997, he assumed responsibility for investor relations and
was named Senior Vice President, Investor Relations and Treasurer. In July 1998,
Mr. Otis assumed additional responsibilities in the area of finance and was
named to his present position. Prior to joining the Company, Mr. Otis was
employed by Chemical Securities, Inc. in New York where he had been Managing
Director and Manager of Public Finance since 1991. Prior to his work at Chemical
Securities, Mr. Otis was employed by Siebert Municipal Capital Group as Managing
Director and Principal.
Paula J. Shives, age 48, was elected Senior Vice President, General Counsel
and Secretary of Darden in June of 1999. In that capacity, Ms. Shives succeeds
Clifford L. Whitehill, who is retiring. Ms. Shives began her legal career in
1979 as Corporate Counsel for Jerrico, Inc., the predecessor to Long John
Silver's Restaurants, Inc. After spending several additional years in private
practice with the law firm of Greenebaum, Doll & McDonald in Lexington,
Kentucky, Ms. Shives rejoined Long John Silver's Restaurants, Inc. in 1985 as
Associate General Counsel, and became its Senior Vice President, General Counsel
and Secretary in 1995. Ms. Shives joined Darden in May of 1999.
James D. Smith, age 56, is Senior Vice President, Real Estate, Design and
Construction of the Company. Mr. Smith joined General Mills in 1982 and was
named Senior Vice President and Controller of the restaurant operations in 1988.
In December 1994, Mr. Smith was named Senior Vice President, Finance.
Subsequently, he assumed increasing responsibilities in connection with the
Company's real estate development activities and was named to his present
position in July of 1998.
Richard J. Walsh, age 47, is Senior Vice President, Corporate Relations,
with responsibility for all corporate communications, environmental relations,
creative and print services, media and government, public and community
relations, including the Darden Restaurants, Inc. Foundation. Mr. Walsh joined
General Mills in 1984 as Manager of Government Affairs for Red Lobster. He was
named Vice President of Government Relations in 1987 and was promoted to his
present position in December of 1994.
10
Clifford L. Whitehill, age 68, was named Senior Vice President, General
Counsel and Secretary of the Company in December of 1994. Mr. Whitehill joined
General Mills in 1962 as an attorney in the Law Department. He was appointed
Assistant General Counsel in 1968, elected Vice President in 1971, named General
Counsel in 1975, elected Senior Vice President in 1981 and elected Secretary of
General Mills in 1983. In April of 1999, Mr. Whitehill announced his retirement
from Darden, effective June 21, 1999, but continues to serve the Company to
facilitate his successor's transition.
Available Information
Darden is a reporting company under the Securities Exchange Act of 1934, as
amended, and files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The public may read and
copy any Company filings at the Commission's Public Reference Room at 450 Fifth
Street NW, Washington, DC 20549. Information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-800-SEC-0330.
Because the Company makes filings to the Commission electronically, this
information may be accessed through the Commission's Internet site
(http://www.sec.gov). The site contains reports, proxies, information statements
and other information regarding issuers that file electronically with the
Commission.
Forward-Looking Statements
Certain information included in this report and other materials filed or to
be filed by the Company with the Commission (as well as information included in
oral statements or written statements made or to be made by the Company) may
contain statements that are forward-looking within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such statements include information relating
to current expansion plans 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 restaurant development and
the Year 2000 readiness of suppliers, banks, vendors and others having a direct
or indirect business relationship with the Company.
11
Item 2. PROPERTIES
As of May 30, 1999, the Company operated 1,145 restaurants, including 669
Red Lobster, 464 Olive Garden, six Olive Garden Cafe and six Bahama Breeze
restaurants in the following locations:
Alabama (18) Arizona (24) Arkansas (10) California (92)
Colorado (21) Connecticut (11) Delaware (4) Florida (113)
Georgia (38) Hawaii (1) Idaho (5) Illinois (48)
Indiana (34) Iowa (15) Kansas (10) Kentucky (13)
Louisiana (8) Maine (3) Maryland (18) Massachusetts (7)
Michigan (42) Minnesota (18) Mississippi (8) Missouri (25)
Montana (2) Nebraska (7) Nevada (9) New Hampshire (3)
New Jersey (27) New Mexico (8) New York (47) North Carolina (25)
North Dakota (4) Ohio (67) Oklahoma (17) Oregon (10)
Pennsylvania (53) Rhode Island (2) South Carolina (17) South Dakota (3)
Tennessee (25) Texas (98) Utah (9) Vermont (2)
Virginia (37) Washington (20) West Virginia (5) Wisconsin (21)
Wyoming (2) Canada (39)
Of the Company's 1,145 restaurants open on May 30, 1999, 730 were on owned
sites and 415 were on leased sites. The 415 leases are classified as follows:
Land-Only Leases (Darden owns buildings and equipment)........... 283
Ground and Building Leases....................................... 75
Space/In-Line/Other Leases....................................... 57
----
Total....................................................... 415
====
During fiscal year 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 35 and 37, respectively, of the 1999 Annual Report to Stockholders.
Item 3. LEGAL PROCEEDINGS
The Company is from time to time made a party to legal proceedings arising
in the ordinary course of business. The Company does not believe that the
results of such legal proceedings, even if unfavorable to the Company, will have
a materially adverse impact on its financial condition or the results of its
operations. See the section entitled "Government Regulation" for a discussion of
various federal, state and local regulatory matters.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
12
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock (no par value) has been registered and is traded
on the New York Stock Exchange. As of July 26, 1999, the number of record
holders of common stock was 36,168. Trading of the Company's common stock began
on a "when issued" basis on May 9, 1995, at a price per share of $9.375. The
following table sets forth the high and low sales prices for the Company's
common stock for each full quarterly period from the Distribution to the end of
fiscal year 1999.
Per Share Sales Price of Common Stock
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Fiscal Year
1996 First Quarter Second Quarter Third Quarter Fourth Quarter
High $11.50 $12.00 $13.25 $14.00
Low $9.75 $10.00 $10.625 $11.50
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Fiscal Year
1997 First Quarter Second Quarter Third Quarter Fourth Quarter
High $12.125 $9.25 $9.375 $8.50
Low $7.50 $7.75 $6.75 $6.875
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Fiscal Year
1998 First Quarter Second Quarter Third Quarter Fourth Quarter
High $10.5625 $12.00 $13.4375 $18.125
Low $8.125 $9.00 $10.50 $13.00
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Fiscal Year
1999 First Quarter Second Quarter Third Quarter Fourth Quarter
High $18.00 $17.5625 $23.25 $23.375
Low $15.125 $14.1875 $15.75 $19.8125
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
During fiscal year 1999, the Company declared two semi-annual dividends of
four cents per share each. The first semi-annual dividend (four cents per share)
was paid on November 1, 1998, to stockholders of record on October 10, 1998. The
second semi-annual dividend (four cents per share) was paid on May 1, 1999, to
stockholders of record on April 10, 1999.
Item 6. SELECTED FINANCIAL INFORMATION
The information for fiscal years 1995 through 1999, contained in the Five
Year Financial Summary on page 43 of the Company's 1999 Annual Report to
Stockholders, is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth in the section entitled "Management's Discussion
of Results of Operations and Financial Condition" on pages 22 through 25 of the
Company's 1999 Annual Report to Stockholders is incorporated herein by
reference.
Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to a variety of market risks, including fluctuations
in interest rates, foreign currency exchange rates and commodity prices. To
manage this exposure, Darden periodically enters into interest rate, foreign
currency exchange and commodity instruments for other than trading purposes.
13
The Company uses the variance/covariance method to measure value at risk,
over time horizons ranging from one week to one year, at the 99% confidence
level. As of May 30, 1999, the Company's potential losses in future net earnings
resulting from changes in foreign currency exchange rates, commodity prices and
floating rate debt interest rate exposures were individually not more than $1
million over a period of one year. The value at risk from an increase in the
fair value of long-term fixed rate debt, over a period of one year, was
approximately $48 million. The Company's interest rate risk management objective
is to limit the impact of interest rate changes on earnings and cash flows by
targeting an appropriate mix of variable and fixed rate debt approved by senior
management.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Independent Auditors' Report, Consolidated Statements of Earnings
(Loss), Consolidated Balance Sheets, Consolidated Statements of Changes in
Stockholders' Equity, Consolidated Statements of Cash Flows, and Notes to
Consolidated Financial Statements on pages 26 through 43 of the Company's 1999
Annual Report to Stockholders are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained in the sections entitled "Information Concerning
Nominees" on pages 4 through 6, "Committees of the Board" on pages 7 through 8,
and "Section 16(a) Beneficial Ownership Reporting Compliance" on page 24 of the
Company's definitive proxy materials dated August 10, 1999, is incorporated
herein by reference. Certain information regarding executive officers is
contained in Part I above.
Item 11. EXECUTIVE COMPENSATION
The information contained in the sections entitled "Board Compensation and
Benefits" on page 7, "Summary Compensation Table" on pages 16 through 17, and
"Option Grants in Last Fiscal Year" on page 18 of the Company's definitive proxy
materials dated August 10, 1999, is incorporated by reference. The information
appearing in such proxy materials under the heading "Report of Compensation
Committee on Executive Compensation" is not incorporated herein.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in the sections entitled "Certain Owners of
Common Stock" on page 3 and "Share Ownership of Directors and Officers" on page
9 of the Company's definitive proxy materials dated August 10, 1999, is
incorporated herein by reference.
Item 13. CERTAIN RELATIONS AND RELATED TRANSACTIONS
The information contained in the section entitled "Certain Relationships
and Related Transactions" on page 10 of the Company's definitive proxy materials
dated August 10, 1999, is incorporated herein by reference.
14
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
Consolidated Statements of Earnings (Loss) for the fiscal years ended May
30, 1999, May 31, 1998 and May 25, 1997 (incorporated by reference to page 27 of
the Company's 1999 Annual Report to Stockholders)
Consolidated Balance Sheets at May 30, 1999 and May 31, 1998 (incorporated
by reference to page 28 of the Company's 1999 Annual Report to Stockholders)
Consolidated Statements of Changes in Stockholders' Equity for the fiscal
years ended May 30, 1999, May 31, 1998 and May 25, 1997 (incorporated by
reference to page 29 of the Company's 1999 Annual Report to Stockholders)
Consolidated Statements of Cash Flows for the fiscal years ended May 30,
1999, May 31, 1998 and May 25, 1997 (incorporated by reference to page 30 of the
Company's 1999 Annual Report to Stockholders)
Notes to Consolidated Financial Statements (incorporated by reference to
pages 31 through 43 of the Company's 1999 Annual Report to Stockholders)
2. Financial Statements Schedules:
Not applicable.
3. Exhibits:
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain
instruments defining the rights of holders of certain long-term debt of the
Company are not filed, and in lieu thereof, the Company agrees to furnish copies
thereof to the Securities and Exchange Commission upon request.
Exhibit Number Title
3(a) Articles of Incorporation (incorporated herein by reference
to Exhibit 3(a) to the Company's Registration Statement on
Form 10 effective May 5, 1995)
3(b) Bylaws (incorporated herein by reference to Exhibit 3(b) to
the Company's Registration Statement on Form 10 effective
May 5, 1995)
4(a) Rights Agreement dated as of May 28, 1995 between the
Company and 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 Norwest Bank Minnesota, National Association, 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. Stock Option and Long-Term
Incentive Plan of 1995, as amended May 23, 1996, June 17,
1997, June 26, 1998, and May 24, 1999
- ------------------------
* 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.
15
*10(b) Darden Restaurants, Inc. FlexComp Plan (incorporated herein
by reference to Exhibit 10(b) to the Company's Registration
Statement on Form 10 effective May 5, 1995)
*10(c) Darden Restaurants, Inc. Stock Option and Long-Term
Incentive Conversion Plan, as amended (incorporated herein
by reference to Exhibit 10(c) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 26, 1996)
*10(d) Supplemental Pension Plan of Darden Restaurants, Inc.
(incorporated herein by reference to Exhibit 10(d) to the
Company's Registration Statement on Form 10 effective May 5,
1995)
*10(e) Executive Health Plan of Darden Restaurants, Inc.
(incorporated herein by reference to Exhibit 10(e) to the
Company's Registration Statement on Form 10 effective May 5,
1995)
*10(f) Stock Plan for Directors of Darden Restaurants, Inc., as
amended December 10, 1996, and June 26, 1998 (incorporated
by reference to Exhibit 10(f) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 31, 1998)
*10(g) Compensation Plan for Non-Employee Directors of Darden
Restaurants, Inc., as amended June 17, 1997 (incorporated by
reference to Exhibit 10(g) to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1998)
*10(h) Darden Restaurants, Inc. Management Incentive Plan, as
amended to June 21, 1999
*10(i) Benefits Trust Agreement dated as of October 3, 1995,
between the Company and Norwest Bank Minnesota, N.A., as
Trustee (incorporated herein by reference to Exhibit 10(i)
to the Company's Annual Report on Form 10-K for the fiscal
year ended May 25, 1997)
*10(j) Form of Management Continuity Agreement, as amended, between
the Company and certain of its executive officers
(incorporated herein by reference to Exhibit 10(j) to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 25, 1997)
12 Computation of Ratio of Consolidated Earnings to Fixed
Charges
13 Portions of 1999 Annual Report to Stockholders (incorporated
by reference herein)
21 Subsidiaries of Darden Restaurants, Inc.
23 Independent Accountants' Consent
24 Powers of Attorney
27 Financial Data Schedule
- ------------------------
* 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.
16
(b) Reports on Form 8-K. During the last quarter covered by this report, the
Company filed the following three current reports on Form 8-K:
(i) Current report on Form 8-K dated March 25, 1999, reporting certain
financial results for the third quarter of fiscal 1999;
(ii) Current report on Form 8-K dated April 20, 1999, announcing the hiring
of Paula J. Shives and the retirement of Clifford L. Whitehill-Yarza;
and
(iii)Current report on Form 8-K dated May 4, 1999, announcing the
appointment of Gary Heckel to Senior Vice President.
17
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 19, 1999 DARDEN RESTAURANTS, INC.
By: /s/ Paula J. Shives
Paula J. Shives
Senior Vice President, General Counsel and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ H.B. Atwater, Jr. Director
H.B. Atwater, Jr.*
/s/ Daniel B. Burke Director
Daniel B. Burke*
/s/ Odie C. Donald Director
Odie C. Donald*
/s/ Julius Erving, II Director
Julius Erving, II*
/s/ Michael D. Rose Director
Michael D. Rose*
/s/ Hector de J. Ruiz Director
Hector de J. Ruiz*
/s/ Maria A. Sastre Director
Maria A. Sastre*
/s/ Jack A. Smith Director
Jack A. Smith*
/s/ Bradley D. Blum Director and President,
Bradley D. Blum* Olive Garden
/s/ Joe R. Lee Director, Chairman of the August 23, 1999
Joe R. Lee Board and Chief Executive
Officer (principal executive
officer)
/s/ Richard E. Rivera Director and President,
Richard E. Rivera* Red Lobster
/s/ Blaine Sweatt, III Director and President,
Blaine Sweatt, III* New Business Development
/s/ Linda J. Dimopoulos Senior Vice President - Corporate August 19, 1999
Linda J. Dimopoulos Controller and Business Information
Systems (controller and principal
accounting officer)
/s/ Clarence Otis, Jr. Senior Vice President-Finance and August 19, 1999
Clarence Otis, Jr. Treasurer (principal financial officer)
*BY: Paula J. Shives, Attorney-In-Fact
August 19, 1999
18
EXHIBIT INDEX
EXHIBITS
Exhibit
Number Title
------- -----
3(a) Articles of Incorporation (incorporated herein by reference
to Exhibit 3(a) to the Company's Registration Statement on
Form 10 effective May 5, 1995)
3(b) Bylaws (incorporated herein by reference to Exhibit 3(b) to
the Company's Registration Statement on Form 10 effective
May 5, 1995)
4(a) Rights Agreement dated as of May 28, 1995 between the
Company and 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 Norwest Bank Minnesota, National Association, 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. Stock Option and Long-Term
Incentive Plan of 1995, as amended May 23, 1996, June 17,
1997, June 26, 1998, and May 24, 1999
*10(b) Darden Restaurants, Inc. FlexComp Plan (incorporated herein
by reference to Exhibit 10(b) to the Company's Registration
Statement on Form 10 effective May 5, 1995)
*10(c) Darden Restaurants, Inc. Stock Option and Long-Term
Incentive Conversion Plan, as amended (incorporated herein
by reference to Exhibit 10(c) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 26, 1996)
*10(d) Supplemental Pension Plan of Darden Restaurants, Inc.
(incorporated herein by reference to Exhibit 10(d) to the
Company's Registration Statement on Form 10 effective May 5,
1995)
*10(e) Executive Health Plan of Darden Restaurants, Inc.
(incorporated herein by reference to Exhibit 10(e) to the
Company's Registration Statement on Form 10 effective May 5,
1995)
*10(f) Stock Plan for Directors of Darden Restaurants, Inc., as
amended December 10, 1996, and June 26, 1998 (incorporated
by reference to Exhibit 10(f) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 31, 1998)
- ------------------------
* 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.
1
EXHIBITS
Exhibit
Number Title
------- -----
*10(g) Compensation Plan for Non-Employee Directors of Darden
Restaurants, Inc., as amended June 17, 1997 (incorporated by
reference to Exhibit 10(g) to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1998)
*10(h) Darden Restaurants, Inc. Management Incentive Plan, as
amended to June 21, 1999
*10(i) Benefits Trust Agreement dated as of October 3, 1995,
between the Company and Norwest Bank Minnesota, N.A., as
Trustee (incorporated herein by reference to Exhibit 10(i)
to the Company's Annual Report on Form 10-K for the fiscal
year ended May 25, 1997)
*10(j) Form of Management Continuity Agreement, as amended, between
the Company and certain of its executive officers
(incorporated herein by reference to Exhibit 10(j) to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 25, 1997)
12 Computation of Ratio of Consolidated Earnings to Fixed
Charges
13 Portions of 1999 Annual Report to Stockholders (incorporated
by reference herein)
21 Subsidiaries of Darden Restaurants, Inc.
23 Independent Accountants' Consent
24 Powers of Attorney
27 Financial Data Schedule
- ------------------------
* 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.
2