UNITED STATES
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, 2004
/ / 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
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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. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes X No
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Aggregate market value of Common Stock held by non-affiliates of the
Registrant, based on the closing price of $19.84 per share as reported on the
New York Stock Exchange on November 23, 2003: $3,270,109,251.
Number of shares of Common Stock outstanding as of July 26, 2004:
157,795,459 (excluding 108,273,571 shares held in the Company's treasury).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for its Annual Meeting of
Shareholders on September 29, 2004, to be filed with the Securities and Exchange
Commission no later than 120 days after May 30, 2004, are incorporated by
reference into Part III, and portions of the Registrant's Annual Report to
Shareholders for the fiscal year ended May 30, 2004 are incorporated by
reference into Parts I and II of this Report.
PART I
Item 1. BUSINESS
Introduction
Darden Restaurants, Inc. is the largest publicly held casual dining
restaurant company in the world,1 and served over 300 million meals during
fiscal 2004. As of May 30, 2004, we operated 1,325 restaurants in the United
States and Canada. In the United States, we operated 1,288 restaurants in 49
states (the exception being Alaska), including 649 Red Lobster(R), 537 Olive
Garden(R), 32 Bahama Breeze(R), 69 Smokey Bones Barbeque & Grill SM and one
Seasons 52SM restaurants. In Canada, we operated 37 restaurants, including 31
Red Lobster and six Olive Garden restaurants. We own and operate all of our
restaurants in the United States and Canada, with no franchising. Of our 1,325
restaurants open on May 30, 2004, 816 were located on owned sites and 509 were
located on leased sites. In Japan, we licensed 38 Red Lobster restaurants to an
unaffiliated Japanese corporation that operates the restaurants under an Area
Development and Franchise Agreement.
Darden Restaurants, Inc. is a Florida corporation incorporated in March
1995, and is the parent company of GMRI, Inc., also a Florida corporation. GMRI
and our other subsidiaries own the operating assets of the restaurants. GMRI was
originally incorporated in March 1968 as Red Lobster Inns of America, Inc. Our
principal executive offices and restaurant support center are located at 5900
Lake Ellenor Drive, Orlando, Florida 32809, telephone (407) 245-4000. Our
corporate website address is www.darden.com. We make our reports on Forms 10-K,
10-Q and 8-K, and Section 16 reports on Forms 3, 4 and 5, and all amendments to
those reports available free of charge on our website the same day as the
reports are filed with or furnished to the Securities and Exchange Commission.
Information on our website is not deemed to be incorporated by reference into
this Form 10-K. Unless the context indicates otherwise, all references to
Darden, "we", "our" or "us" include Darden, GMRI and our respective
subsidiaries.
We have a 52/53 week fiscal year ending on the last Sunday in May. Our 2004
fiscal year ended on May 30, 2004 and had 53 weeks. Our 2003 fiscal year ended
on May 25, 2003, and our 2002 fiscal year ended on May 26, 2002, and each had 52
weeks.
The following description of our business should be read in conjunction
with the information in our Management's Discussion and Analysis of Financial
Condition and Results of Operations incorporated by reference in Item 7 of this
Form 10-K and our consolidated financial statements incorporated by reference in
Item 8 of this Form 10-K.
Background
We opened our first restaurant, a Red Lobster, in Lakeland, Florida in
1968. Red Lobster was founded by William B. Darden, for whom we are named. We
were acquired by General Mills, Inc. in 1970. In May 1995, we became a separate
publicly held company when General Mills distributed all outstanding Darden
stock to General Mills' stockholders.
The number of Red Lobster and Olive Garden restaurants open at the end of
fiscal 2004 increased by seven and 19, respectively, as compared to the end of
fiscal 2003. Red Lobster has grown from six restaurants in operation at the end
of fiscal 1970 to 680 units in North America by the end of fiscal 2004. Olive
Garden, an internally developed concept, opened its first restaurant in Orlando,
Florida in fiscal 1983, and by the end of fiscal 2004 had expanded to 543
restaurants in North America.
Bahama Breeze is an internally developed concept with a Caribbean theme. In
fiscal 1996, Bahama Breeze opened its first restaurant in Orlando, Florida. At
the end of fiscal 2004, there were 32 Bahama Breeze restaurants.
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1 Source: Nation's Restaurant News, "Special Report: Top 100," June 28, 2004
(based on revenues from company-owned restaurants).
2
Smokey Bones is also an internally developed concept featuring barbeque and
other grilled favorites served in an inviting mountain-lodge setting that
features televised sports. The first restaurant was opened in fiscal 2000 in
Orlando, Florida. At the end of fiscal 2004, there were 69 Smokey Bones
restaurants.
In February 2003, we opened a new test restaurant in Orlando, Florida
called Seasons 52. It is a casually sophisticated fresh grill and wine bar with
seasonally inspired menus offering fresh ingredients to create great tasting,
nutritionally balanced meals that are lower in calories than comparable
restaurant meals.
The table below shows our growth and lists the number of restaurants
operated by Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones and Seasons
52 as of the end of each fiscal year since 1970. The final column in the table
lists our total sales for the years indicated.
Company-Operated Restaurants Open at Fiscal Year End
Fiscal Red Olive Bahama Smokey Seasons Total Total Company Sales
Year Lobster Garden Breeze Bones 52 Restaurants (1) ($ in Millions) (2)(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 3,261.6
1999 669 464 6 1,139 3,432.4
2000 654 469 14 2 1,139 3,675.5
2001 661 477 21 9 1,168 3,992.4
2002 667 496 29 19 1,211 4,366.9
2003 673 524 34 39 1 1,271 4,655.0
2004 680 543 32 69 1 1,325 5,003.4
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<FN>
(1) Includes only Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones and
Seasons 52 restaurants. Does not include other restaurant concepts operated
by us in these years that are no longer owned or operated by us.
3
(2) Includes total sales from all of our operations, including sales from
restaurant concepts besides Red Lobster, Olive Garden, Bahama Breeze,
Smokey Bones and Seasons 52 that are no longer owned or operated by us.
(3) Emerging Issues Task Force Issue 00-14 "Accounting for Certain Sales
Incentives" requires sales incentives to be classified as a reduction of
sales. We adopted Issue 00-14 in the fourth quarter of fiscal 2002. For
purposes of this presentation, sales incentives have been reclassified as a
reduction of sales for fiscal 1998 through 2004. Sales incentives for
fiscal years prior to 1998 have not been reclassified.
</FN>
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.
We believe that capable operators of strong multi-unit concepts have the
opportunity to increase their share of the casual dining segment. We plan to
grow by increasing the number of restaurants in each of our existing concepts
and by developing or acquiring additional concepts that can be expanded
profitably.
While we are a leader in the casual dining segment, we know we cannot be
successful without a clear sense of who we are. Our core purpose is "To nourish
and delight everyone we serve." This core purpose is supported by our core
values:
o Integrity and fairness;
o Respect and caring;
o Diversity;
o Always learning/always teaching;
o Being "of service";
o Teamwork; and
o Excellence.
Our mission is to be "The best in casual dining, now and for generations."
Four strategic imperatives support our mission:
o Leadership excellence at all levels;
o Brand building excellence;
o Service and hospitality excellence; and
o Culinary and beverage excellence.
We also have two strategic enablers we believe can help us accelerate
progress in each strategic imperative. These enablers are:
o Diversity excellence that embraces and builds upon our
differences; and
o Process and technology excellence that maximize organizational
effectiveness and drive both discipline and nimbleness.
New to our strategic framework is the explicit statement of two points that
have been implicit in our approach to the business for many years now, and that
we believe separate us from our competition. We are committed to:
o Being a multi-brand restaurant company that is bound together by
common operating practices and a unifying culture which serves to
make us stronger than the sum of our parts; and
o Listening to our guests and employees for insights we need to
create powerful, broadly appealing brands and to develop
successful people.
4
Restaurant Concepts
Red Lobster
Red Lobster is the largest casual dining, seafood-specialty restaurant
operator 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 entrees, appetizers
and desserts.
Dinner entree prices range from $8.50 to $27.50, with certain lobster items
available at market price. Lunch entree prices range from $5.99 to $11.25. The
price of each entree includes side items and our signature Cheddar Bay biscuits.
During fiscal 2004, the average check per person was between $16.50 and $17.50,
with alcoholic beverages accounting for about 8.4 percent of Red Lobster's
sales. Red Lobster maintains approximately 105 different menus across its trade
areas to reflect geographic differences in consumer preferences, prices and
selections, as well as a lower-priced children's menu. Red Lobster is testing a
number of new menu items to expand its current offerings.
Olive Garden
Olive Garden is the market share leader among casual dining Italian
restaurants in the United States. 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.
Most dinner entree prices range from $7.95 to $17.95, and most lunch entree
prices range from $5.95 to $9.50. The price of each entree also includes as much
fresh salad or soup and breadsticks as a guest desires. During fiscal 2004, the
average check per person was $13.50 to $14.50, with alcoholic beverages
accounting for about 8.7 percent of Olive Garden's sales. Olive Garden maintains
approximately 40 different dinner menus and 30 lunch menus across its trade
areas to reflect geographic differences in consumer preferences, prices and
selections, as well as two lower-priced children's menus.
Bahama Breeze
Bahama Breeze is a Caribbean-themed restaurant that offers guests a
distinctive island dining experience. The first Bahama Breeze opened in 1996 and
met with strong positive consumer response. We 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. The concept
continues to be well received by guests, although its financial performance has
not met our overall expectations. Bahama Breeze closed six restaurants and wrote
down the carrying value of four others during the fourth quarter of fiscal 2004,
reducing to 32 the total number of restaurants in operation. In addition to
closing the underperforming restaurants, we have made recent changes that have
improved the sales, financial performance and long-term potential of Bahama
Breeze. These changes include implementing lunch operations, creating a new
dinner menu and slowing new restaurant development. We also are reducing the
size of a typical Bahama Breeze building and the related capital investment. A
new reduced-investment prototype building opened in Pittsburgh, PA during the
fourth quarter of fiscal 2004 and the early results are encouraging. We have
postponed any new restaurant expansion at Bahama Breeze while we evaluate the
new prototype. In the meantime, the closure of some underperforming restaurants
during fiscal 2004 allows Bahama Breeze to focus on its most profitable
restaurants as it builds its business.
Smokey Bones
Smokey Bones features barbequed pork, beef and chicken, as well as other
grilled favorites, all served in a lively yet comfortable mountain-lodge setting
that features televised sports. We opened the first Smokey Bones in September
1999, and began national expansion of the concept in fiscal 2002. Smokey Bones
has been well received by consumers and continues to expand rapidly. We opened
30 new Smokey Bones restaurants during fiscal 2004, and had 69 restaurants in
operation at the end of the fiscal year. We plan to open 30 to 40 new Smokey
Bones
5
restaurants in fiscal 2005. We believe that Smokey Bones has strong expansion
potential and is capable of achieving future annual sales of $500 million or
more.
Recent and Planned Growth
During fiscal 2004, we opened 66 new restaurants (excluding the relocation
of existing restaurants to new sites and the rebuilding of restaurants at
existing sites) and closed eight restaurants. In addition, we had four
restaurants closed temporarily at the end of fiscal 2004 that we expect to
reopen during fiscal 2005. This resulted in a net increase of 54 restaurants in
fiscal 2004. We plan to open approximately 49-65 new Red Lobster, Olive Garden,
Smokey Bones and Seasons 52 restaurants during fiscal 2005 (excluding
relocations and rebuilds). Our actual and projected new openings by concept
(excluding relocations and rebuilds) are shown below.
Actual New Projected New
Restaurant Openings Restaurant Openings
Fiscal 2004 Fiscal 2005
----------- -----------
Red Lobster.................. 9 2
Olive Garden................. 23 15-20
Bahama Breeze................ 4 0
Smokey Bones................. 30 30-40
Seasons 52................... 0 2-3
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Totals................. 66 49-65
Our objective is to continue to expand our current portfolio of restaurant
concepts, and to develop or acquire additional concepts that can be expanded
profitably. We have continued to test new ideas and concepts, and also to
evaluate potential acquisition candidates to assess whether they would satisfy
our strategic and financial objectives. At present, we have not identified any
specific acquisitions.
In fiscal 2005, we will limit new restaurant expansion at Red Lobster while
we continue to focus on improving operational returns for that concept. At Olive
Garden, we will continue to focus on maintaining operational returns and
expanding that concept to high potential sites that we believe can generate
significant returns on our investments. Olive Garden's expansion will include
its recently developed "Tuscan Farmhouse" design, an outgrowth of our
collaboration with Rocca delle Macie, a family-owned winery in Tuscany, Italy.
We have postponed any new restaurant openings at Bahama Breeze while we evaluate
the new reduced-investment prototype restaurant opened in Pittsburgh, PA during
the fourth quarter of fiscal 2004. We plan to continue to expand Smokey Bones in
fiscal 2005 at a pace that we believe will enable each new restaurant to capture
the concept's full potential. We plan to open two to three additional Seasons 52
restaurants in fiscal 2005 to further explore the concept's viability. The
actual number of openings for each of our concepts will depend on many factors,
including our 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.
We consider location to be a critical factor in determining a restaurant's
long-term success, and we devote significant effort to the site selection
process. Prior to entering a market, we conduct a thorough study to determine
the optimal number and placement of restaurants. Our 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 permits are obtained and the site is acquired.
The following table illustrates the approximate average capital investment,
size and dining capacity of the nine Red Lobster, 23 Olive Garden and 30 Smokey
Bones restaurants that were opened during fiscal 2004 (excluding relocations,
rebuilds and conversions of existing restaurants).
6
Capital Square Dining Dining
Investment(1) Feet(2) Seats(3) Tables(4)
------------ ------ ------- ---------
Red Lobster (5).............. $3,475,000 6,954 221 59
Olive Garden (6)............. $3,963,000 7,445 214 60
Smokey Bones................. $3,490,000 7,025 205 47
(1) Includes net present value of leases, but excludes working capital.
(2) Includes all space under the roof, including the coolers and freezers, but
excludes gazebos, pavilions and porte cocheres.
(3) Includes bar dining seats and patio seating, but excludes bar stools.
(4) Includes patio dining tables.
(5) Excludes one center city urban Red Lobster restaurant whose size is larger
and cost is significantly higher than the average and therefore is not
representative of the typical restaurant.
(6) Excludes one center city urban Olive Garden restaurant whose size is larger
and cost is significantly higher than the average and therefore is not
representative of the typical restaurant.
We systematically review the performance of our restaurants to ensure that
each one meets our standards. When a restaurant falls below minimum standards,
we conduct a thorough analysis to determine the causes, and implement marketing
and operational plans to improve that restaurant's performance. If performance
does not improve to acceptable levels, the restaurant is evaluated for
relocation, closing or conversion to one of our other concepts.
During fiscal 2004, we permanently closed two and relocated ten Red Lobster
restaurants. During the same period, we relocated one Olive Garden restaurant
and permanently closed our one remaining Olive Garden Cafe. In addition, during
the fourth quarter of fiscal 2004, we closed six Bahama Breeze restaurants and
wrote down the carrying value of four other Bahama Breeze restaurants, one Olive
Garden restaurant, and one Red Lobster restaurant, which continued to operate.
The decision to close or write down the carrying value of the restaurants was
the result of our on-going analysis that examines restaurants not meeting our
minimum return on investment thresholds and certain other operating performance
criteria. The decision to close and write-down the carrying value of the Bahama
Breeze restaurants also reflected an analysis of each restaurant's ability to
successfully implement the changes effected over the past year to improve sales,
financial performance, and overall long-term potential of the concept, including
the addition of lunch and adoption of a new dinner menu. The write-down of the
carrying value of the one Olive Garden restaurant and one Red Lobster restaurant
was a result of less-than-optimal locations. We continue to evaluate our site
locations in order to minimize the risk of future asset impairment charges.
Restaurant Operations
We believe that high-quality restaurant management is critical to our
long-term success. We also believe that our leadership position, strong
success-oriented culture and various short-term and long-term incentive
programs, including stock options, restricted stock or stock units, help attract
and retain highly motivated restaurant managers.
Our restaurant management structure varies by concept and restaurant size.
Each restaurant is led by a general manager and three to five 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. We issue detailed operations manuals
covering all aspects of restaurant operations, as well as food and beverage
manuals which detail the preparation procedures of our formulated recipes. The
restaurant management teams are responsible for the day-to-day operation of each
restaurant and for ensuring compliance with our operating standards. At our two
largest concepts, Red Lobster and Olive Garden, restaurant general managers
report to directors. Each director was responsible for five to 11 restaurants at
the end of fiscal 2004, compared to our target range of seven to 12 restaurants
for each director. Restaurants are visited regularly by all levels of
supervision to help ensure strict adherence to all aspects of our standards.
Each concept's vice president or director of training, together with senior
operations executives, is responsible for developing and maintaining that
concept's operations training programs. These efforts include a 12
7
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. We also use a highly
structured training program to open new restaurants, including deploying
training teams experienced in all aspects of restaurant operations. The opening
training teams typically begin work one week prior to opening and remain at the
new restaurant one week following the opening. They are re-deployed as
appropriate to enable a smooth transition to the restaurant's operating staff.
Quality Assurance
Our Total Quality Department helps ensure that all restaurants provide
safe, high-quality food in a clean and safe environment. Through rigorous
physical evaluation and testing at our North American laboratories and through
"point source inspection" by our international team of Quality Specialists in
several foreign countries, we purchase only seafood that meets or exceeds our
specifications. We use independent third parties to inspect and evaluate
commodity vendors. In addition, any commodity supplier that produces a "high
risk" product is subject to a minimum annual food safety evaluation by Darden
personnel. We require our suppliers to maintain sound manufacturing practices
and operate with the comprehensive HACCP food safety programs in place.
Since 1976, we have maintained a microbiological laboratory to routinely
test seafood and other commodities for quality and microbiological safety. In
addition, Darden Total Quality Managers and third party auditors visit each
restaurant periodically throughout the year to review food handling and to
provide education and training in food safety and sanitation. The Total Quality
managers also serve as a liaison to regulatory agencies on issues relating to
food safety.
Purchasing and Distribution
Our ability to ensure a consistent supply of high-quality food and supplies
at competitive prices to all of our restaurant concepts depends upon procurement
from reliable sources. Our purchasing staff sources, negotiates and purchases
food and supplies from more than 2,000 suppliers in 45 countries. Suppliers must
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.
We believe that our seafood purchasing capabilities are a significant
competitive advantage. Our purchasing staff travels routinely within the United
States and internationally to source more than 100 varieties of top-quality
seafood at competitive prices. We believe that we have established excellent
long-term relationships with key seafood vendors, and usually source our product
directly from producers (not brokers or middlemen). We operate a procurement
office in Singapore, our only purchasing office outside of Orlando, to source
products directly from Asia. While the supply of certain seafood species is
volatile, we believe that we have the ability to identify alternative seafood
products and to adjust our menus as necessary. 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 sales. Controlled inventories of specified products are distributed
to all restaurants through independent national distribution companies.
Our supplier diversity program is an integral part of our purchasing
efforts. Through it, we identify minority and women-owned vendors and assist
them in establishing supplier relationships with us. We are committed to the
development and growth of minority and women-owned enterprises, and in fiscal
2004 we spent more than five percent and one percent, respectively, of our
purchasing dollars with those firms.
Advertising and Marketing
We believe that we have developed significant marketing and advertising
capabilities. Our size enables us to be a leading advertiser in the casual
dining segment of the restaurant industry. Red Lobster and Olive Garden leverage
the efficiency of national network television advertising and supplement it with
local television advertising. Bahama Breeze and Smokey Bones do not use national
television advertising. Our restaurants appeal to a broad spectrum of consumers
and we use advertising and product promotions to attract customers. We implement
periodic
8
promotions as appropriate to maintain and increase our sales and profits. We
also rely on radio and newspaper advertising, as well as newspaper and direct
mail couponing programs, as appropriate, to attract customers. We have developed
and consistently use sophisticated consumer marketing research techniques to
monitor customer satisfaction and evolving expectations.
Employees
At the end of fiscal 2004, we employed approximately 141,300 persons. Of
these employees, approximately 1,300 were corporate or restaurant concept
personnel located in our restaurant support center in Orlando, Florida,
approximately 5,820 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 60 percent were management
personnel and the balance were administrative or office employees. Our operating
executives have an average of more than 14 years of experience with us. The
restaurant general managers average 12 years with us. We believe that we provide
working conditions and compensation that compare favorably with those of our
competitors. Most employees, other than restaurant management and corporate
management, are paid on an hourly basis. None of our employees are covered by a
collective bargaining agreement. We consider our employee relations to be good.
Information Technology
We strive for leadership in the restaurant business by using technology as
a competitive advantage and as an enabler for our strategic building blocks.
Since 1975, computers located in the restaurants have been used to assist in the
management of the restaurants. We have 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
restaurant concept. In the past three years, we have implemented a suite of
web-enabled and fully integrated financial and human resource (including payroll
and benefits) systems. We also implemented a high-speed data network connecting
all restaurants to all current and anticipated future applications.
Restaurant hardware and software support is provided or coordinated 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 throughout the day and night, providing timely and
extensive information on business activity in every location. The restaurant
support center houses our data center, which contains sufficient computing power
to process information from all restaurants quickly and efficiently. Our
information is processed in a secured environment to protect both the actual
data and the physical assets. We guard against business interruption by
maintaining a disaster recovery plan, which includes storing critical business
information off-site, testing the disaster recovery plan at a hot-site facility
and providing on-site power backup via a large diesel generator. We use
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 our restaurants.
Our management believes that our current systems and practice of
implementing regular updates will position us well to support current needs and
future growth. We are committed to maintaining an industry leadership position
in information systems and computing technology. We use a strategic information
systems planning process that involves senior management and is integrated into
our overall business planning. 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 the type
and quality of food, price, service, restaurant location, personnel, concept,
attractiveness of facilities, and effectiveness of advertising and marketing.
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. We compete within each market with national and
regional chains and locally-owned restaurants for customers, management and
hourly personnel and suitable real estate sites. We also face growing
competition from the supermarket industry, which offers "convenient meals" in
the form of improved entrees and side dishes from the deli section. We expect
intense competition to continue in all of these areas.
9
Other factors pertaining to our competitive position in the industry are
addressed under the sections entitled "Purchasing and Distribution,"
"Advertising and Marketing," "Information Technology" and "Forward-Looking
Statements" elsewhere in this report.
Trademarks and Related Agreements
We regard our Darden Restaurants(R), Red Lobster(R), Olive Garden(R),
Bahama Breeze(R), Smokey Bones Barbeque & GrillSM and Seasons 52SM service
marks, and other variations of these service marks, as having significant value
and as being important in marketing the restaurants. Our policy is to pursue
registration of our important service marks and trademarks and to oppose
vigorously any infringement of them. Generally, with appropriate renewal and
use, the registration of our service marks will continue indefinitely.
Our only restaurant operations outside of North America historically have
been conducted through an Area Development and Franchise Agreement with Red
Lobster Japan Co., Ltd. ("Red Lobster Japan"), an unaffiliated Japanese
corporation. Red Lobster Japan operated 38 Red Lobster restaurants in Japan as
of May 30, 2004. We do not have an ownership interest in Red Lobster Japan, but
receive royalty income under the Franchise Agreement. The amount of this income
is not material to our consolidated financial statements.
Seasonality
Our sales volumes fluctuate seasonally. During fiscal years 2004, 2003 and
2002, our sales were highest in the spring, lowest in the fall, and comparable
during winter and summer. Holidays, severe weather and similar conditions may
impact sales volumes seasonally in some operating regions.
Government Regulation
We are subject to various federal, state and local laws affecting our
business. Each of our 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, we have not been significantly affected
by any difficulty, delay or failure to obtain required licenses or approvals.
Presently about 9.3 percent of our 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,
and storage and dispensing of alcoholic beverages. The failure of a restaurant
to obtain or retain these licenses would adversely affect the restaurant's
operations. We also are subject in certain states to "dram-shop" statutes, which
generally provide an injured party with recourse against an establishment that
serves alcoholic beverages to an intoxicated person, who then causes injury to
himself or a third party. We carry liquor liability coverage as part of our
comprehensive general liability insurance.
We also are 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 2004 have not had a material effect on our operations.
We currently are 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.
We are subject to federal and state environmental regulations, but these
rules have not had a material effect on our operations. During fiscal 2004,
there were no material capital expenditures for environmental control facilities
and no material expenditures for this purpose are anticipated.
10
Our facilities must comply with the applicable requirements of the
Americans With Disabilities Act of 1990 ("ADA") and related state accessibility
statutes. Under the ADA and related state laws, we must provide equivalent
service to disabled persons, and make reasonable accommodation for their
employment, and when constructing or undertaking significant remodeling of our
restaurants, we must make those facilities accessible.
Executive Officers of the Registrant
Our executive officers as of August 12, 2004 are listed below. On August
11, 2004, we announced that after 37 years with our company, Joe R. Lee will
retire as our Chief Executive Officer effective November 29, 2004. Mr. Lee will
remain as Chairman of our Board, assuming his reelection as a director by our
shareholders at the 2004 Annual Meeting of Shareholders and reelection as
Chairman by our Board at that time. We also announced that, effective upon Mr.
Lee's retirement, Clarence Otis, Jr., our Executive Vice President and President
of Smokey Bones, will become Chief Executive Officer; Andrew H. (Drew) Madsen,
our Senior Vice President and President of Olive Garden, will become President
and Chief Operating Officer; and David Pickens, the Executive Vice
President-Operations of Olive Garden, will become Senior Vice President and
President of Olive Garden.
Joe R. Lee, age 63, has been our Chief Executive Officer since December
1994 and Chairman of the Board since April 1995. Mr. Lee will retire as our
Chief Executive Officer effective November 29, 2004, but is expected to remain
as Chairman of our Board, assuming his reelection to the Board by our
shareholders at the 2004 Annual Meeting of Shareholders and reelection as
Chairman by our Board at that time. 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 our former parent company, including
Vice Chairman, with responsibility for various consumer foods businesses and
corporate staff functions, Chief Financial Officer and Executive Vice President,
Finance and International Restaurants.
Clarence Otis, Jr., age 48, has been our Executive Vice President since
March 2002 and President of Smokey Bones Barbeque & Grill since December 2002.
He will become our Chief Executive Officer upon the retirement of our current
Chief Executive Officer, Joe R. Lee, on November 29, 2004. Mr. Otis was our
Senior Vice President from December 1999 until April 2002, and our Chief
Financial Officer from December 1999 until December 2002. He joined us in 1995
as Vice President and Treasurer. He served as our Senior Vice President,
Investor Relations and Treasurer from July 1997 to August 1998, and as Senior
Vice President, Finance and Treasurer from August 1998 until December 1999.
Prior to joining us, he was employed by Chemical Securities, Inc. (now J.P.
Morgan Securities, Inc.), an investment banking firm, where he had been Managing
Director and Manager of Public Finance since 1991.
Andrew H. (Drew) Madsen, age 48, has been Senior Vice President and
President of Olive Garden since April 2002. He will become President and Chief
Operating Officer on November 29, 2004. Mr. Madsen joined us in December 1998 as
Executive Vice President of Marketing for Olive Garden. From 1997 until joining
us, he was President of International Master Publishers, Inc., a company that
developed and marketed consumer information products such as magazines and
compact discs. From 1993 until 1997, he worked at James River (now part of
Georgia-Pacific Corporation, a diversified paper and building products
manufacturer), where he held various positions, including Vice President and
General Manager for the Dixie consumer products unit. From 1980 to 1992, he held
progressively more responsible positions in consumer products marketing,
including Vice President of Marketing, at General Mills, Inc., a manufacturer
and marketer of consumer food products and our former parent company.
Blaine Sweatt, III, age 56, has been our President, New Business
Development since February 1996 and Executive Vice President since April 1995,
and a Director since 1995. He led teams that developed the Olive Garden, Bahama
Breeze, Smokey Bones and Seasons 52 concepts, among others. He joined Red
Lobster in 1976 and was named Director of New Restaurant Concept Development in
1981. From 1986 to 1989, he held various positions with General Mills, Inc., a
manufacturer and marketer of consumer food products and our former parent
company.
Laurie B. Burns, age 42, has been our Senior Vice President and President
of Bahama Breeze since March 2003. She joined us in April 1999 as Vice President
of Development for Red Lobster, and served as our Senior Vice resident,
Development from September 2000 until March 2003. She was a private real estate
consultant from
11
October 1998 until joining us 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 53, has been our Senior Vice President and Chief
Financial Officer since December 2002. She joined us in 1982, and served as
Senior Vice President, Financial Operations of Red Lobster from 1993 to July
1998, as our Senior Vice President, Corporate Controller and Business
Information Systems from July 1998 to December 1999, and as our Senior Vice
President, Chief Information Officer from December 1999 until assuming her
current position in December 2002.
Stephen E. Helsel, age 59, has been our Senior Vice President, Corporate
Controller since December 1999. He joined us in 1973 as an accountant with Red
Lobster, and was named Vice President, Controller of Red Lobster in 1989. He
served as our Vice President, Controller, Accounting Services from 1991 to 1996,
and as Senior Vice President, Information Services from 1996 until December
1999.
Kim Lopdrup, age 46, has been our Senior Vice President and President of
Red Lobster since May 2004. He joined us in November 2003 as Executive Vice
President of Marketing for Red Lobster. From 2001 until 2002, he served as
Executive Vice President and Chief Operating Officer for North American
operations of Burger King Corporation, an operator and franchiser of fast food
restaurants. From 1985 until 2001, he worked for Allied Domecq Quick Service
Restaurants ("ADQSR"), a distiller and operator and franchiser of quick service
restaurants including Dunkin' Donuts, Baskin-Robbins and Togo's Eateries, where
he held progressively more responsible positions in marketing, strategic and
general management roles, eventually serving as Chief Executive Officer of ADQSR
International.
Daniel M. Lyons, age 51, has been our Senior Vice President, Human
Resources since January 1997. He joined us 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.
Barry Moullet, age 46, has been our Senior Vice President, Supply Chain &
Development since August 2003. He served as our Senior Vice President
Purchasing, Distribution and Food Safety from June 1999 until assuming his
current position in August 2003. He joined us in July 1996 as Senior Vice
President, Purchasing and Distribution. Prior to joining us, he spent 15 years
in the purchasing field in various positions with Restaurant Services, Inc., a
Burger King purchasing co-operative, KFC Corporation and the Pillsbury Company.
Paula J. Shives, age 53, has been our Senior Vice President, General
Counsel and Secretary since June 1999. Prior to joining us, she served as Senior
Vice President, General Counsel and Secretary from 1995 to 1999, and Associate
General Counsel from 1985 to 1995, of Long John Silver's Restaurants, Inc.
Richard J. Walsh, age 52, has been our Senior Vice President, Corporate
Relations since 1994. He joined General Mills, Inc., a manufacturer and marketer
of consumer food products and our former parent company, 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 in December 1994.
Forward-Looking Statements
Certain information included in this report and other materials filed or to
be filed by us with the Securities and Exchange Commission (as well as
information included in oral or written statements made by us or on our behalf),
may contain forward-looking statements about our future performance, plans and
objectives, long-term goals, forecasts of market trends and other matters. These
statements may be contained in our filings with the Securities and Exchange
Commission, in our press releases, in other written communications, and in oral
statements made by or with the approval of one of our authorized officers. Words
or phrases such as "believe," "plan," "will likely result," "expect," "intend,"
"will continue," "is anticipated," "estimate," "project" and similar expressions
are intended to identify forward-looking statements. These statements, and any
other statements that are not historical facts, are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, as
codified in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended from time to time (the "Act"). These
forward-looking statements include, but are not limited to,
12
projections regarding: our growth plans and the number and type of expected new
restaurant openings; same-restaurant sales growth for Red Lobster and Olive
Garden; diluted net earnings per share growth in fiscal 2005; and expectations
regarding when Bahama Breeze and Smokey Bones will become accretive to earnings.
In connection with the "safe harbor" provisions of the Act, we are filing
the following cautionary statements to identify important factors, risks and
uncertainties that could cause our actual results to differ materially from
those projected in forward-looking statements made by us, or on our behalf.
These cautionary statements are to be used as a reference in connection with any
forward-looking statements. The factors, risks and uncertainties identified in
these cautionary statements are in addition to those contained in any other
cautionary statements, written or oral, which may be made or otherwise addressed
in connection with a forward-looking statement or contained in any of our
subsequent filings with the Securities and Exchange Commission. Because of these
factors, risks and uncertainties, we caution against placing undue reliance on
forward-looking statements. Although we believe that the assumptions underlying
our forward-looking statements are reasonable, any of the assumptions could be
incorrect, and there can be no assurance that the forward-looking statements
will prove to be accurate. Forward-looking statements speak only as of the date
on which they are made. We do not undertake any obligation to modify or revise
any forward-looking statement to take into account or otherwise reflect
subsequent events, or circumstances arising after the date that the
forward-looking statement was made.
The following factors, risks and uncertainties, have affected, and may
continue to affect, our operating results and the environment within which we
conduct our business. If our projections and estimates regarding these key
factors differ materially from what actually occurs, our actual results could
vary significantly from the performance projected in our forward-looking
statements.
Competition. The casual dining sector of the restaurant industry is
intensely competitive in pricing, service, location, personnel, and type and
quality of food. We compete with national, regional and local organizations
primarily through the quality, variety and value perception of menu items. The
number and location of restaurants, type of concept, quality and efficiency of
service, attractiveness of facilities and effectiveness of advertising and
marketing programs are also important factors. We anticipate that intense
competition will continue in all of these areas.
Economic, Market and Other Conditions. Certain risks are endemic to the
restaurant and retail industry in general. A protracted economic slowdown or
worsening economy, industry-wide cost pressures, or public safety conditions,
including ongoing concerns about terrorism threats or the continuing armed
conflict in Iraq, could affect consumer behavior and spending for restaurant
dining occasions and lead to same-restaurant sales declines and lower profits.
The casual dining sector of the restaurant industry is affected by changes in
national, regional and local economic conditions; the seasonality of our
business; consumer preferences, including changes in consumer tastes and the
level of consumer acceptance of our restaurant concepts; consumer spending
patterns; demographic trends; weather; traffic patterns; and the type, number
and location of competing restaurants. Our ability to undertake new restaurant
development, as well as improvements and additions to existing restaurants, is
affected by economic conditions, including interest rates, and government
policies impacting land and construction costs and the cost and availability of
borrowed funds.
Price and Availability of Food, Labor, Utilities, Insurance and Media;
Other Costs. Our profitability depends significantly on our ability to
anticipate and react to changes in the price and availability of food; labor;
utilities; insurance (including workers' compensation, general liability,
health, and directors and officers' liability insurance); advertising, media and
marketing; employee benefits; and other costs over which we may have little
control. The price and availability of commodities, including, among other
things, shrimp, lobster, crab and other seafood, are subject to fluctuation and
could increase or decrease more than we expect. Tariffs on imported shrimp or
other commodities could increase our costs and possibly impact the supply of
those goods. We are subject to the general risk of inflation and possible
shortages or interruptions in supply caused by inclement weather or other
conditions that could adversely affect the availability and cost of the items we
buy. Restaurant pre-opening expenses could be more than expected, and labor
shortages, increased employee turnover and higher minimum wage rates all could
raise our cost of doing business. Our business also is subject to the risk of
litigation by employees, consumers, suppliers, shareholders or others that may
result in additional costs. There can be no assurance that management will be
able to anticipate and react to these cost issues without a material adverse
effect on our profitability and results of operations.
13
Unfavorable Publicity Relating to Food Safety or Other Concerns. Multi-unit
restaurant businesses can be adversely affected by publicity resulting from
complaints or litigation alleging poor food quality, food-borne illness,
personal injury, adverse health effects including obesity, or other operational
concerns. Negative publicity may also result from actual or alleged violations
of dram shop laws that may impose liability on sellers of liquors when a third
party is injured as a result of intoxication. Regardless of whether the
allegations are valid, unfavorable publicity relating to just one or a limited
number of restaurants could taint public perception of the entire brand. Such
unfavorable publicity and overall consumer perceptions of food safety could have
a material adverse effect on our business.
Importance of Locations. The success of our restaurants depends in large
part on location. There can be no assurance that current locations will continue
to be attractive, as demographic patterns change. Possible declines in
neighborhoods where restaurants are located, or economic conditions surrounding
those neighborhoods, could result in reduced sales in those locations.
Government Regulation and Litigation. We are subject to various federal,
state and local laws affecting our business. The development and operation of
restaurants depend to a significant extent on the selection and acquisition of
suitable sites, which are subject to zoning, land use, environmental, traffic
and other regulations. Restaurant operations are also subject to licensing and
regulation by state and local departments relating to health, liquor licenses,
sanitation and safety standards, federal and state labor laws (including the
Fair Labor Standards Act and applicable minimum wage requirements, overtime,
working and safety conditions, and citizenship requirements), federal and state
laws which prohibit discrimination and other laws regulating the design and
operation of facilities, such as the Americans With Disabilities Act of 1990. We
cannot predict the effect on our operations of these laws and regulations, the
future enactment of additional legislation regulating these and other areas, or
actual or potential litigation in connection with current and future laws and
regulations.
Growth Plans. There can be no assurance that we will be able to achieve our
growth objectives or that new restaurants opened or acquired will be profitable.
There are inherent risks involved with expanding new concepts (such as Bahama
Breeze and Smokey Bones) that have not yet proved their long-term viability. The
opening and success of restaurants depends on various factors, including the
identification and availability of suitable and economically viable locations;
sales levels at existing restaurants; the negotiation of acceptable lease or
purchase terms for new locations; obtaining all required governmental permits,
including zoning approvals and liquor licenses, on a timely basis; other
regulatory compliance; the availability of necessary contracts and
subcontractors and the ability to meet construction schedules; our ability to
manage union activities such as picketing, which could delay construction; the
availability of capital at affordable cost to finance growth; changes in the
weather or other acts of God that could result in construction delays and
adversely affect the results of one or more restaurants for an indeterminate
amount of time; our ability to hire and train qualified management personnel;
and general economic and business conditions.
14
Item 2. PROPERTIES
As of May 30, 2004, we operated 1,325 restaurants (including 680 Red
Lobster, 543 Olive Garden, 32 Bahama Breeze, 69 Smokey Bones and one Seasons 52
restaurants) in the following locations:
Alabama (21) Iowa (14) Nevada (12) South Dakota (3)
Arizona (29) Kansas (11) New Hampshire (3) Tennessee (31)
Arkansas (10) Kentucky (16) New Jersey (27) Texas (108)
California (95) Louisiana (9) New Mexico (11) Utah (13)
Colorado (25) Maine (3) New York (50) Vermont (1)
Connecticut (9) Maryland (22) North Carolina (31) Virginia (41)
Delaware (4) Massachusetts (9) North Dakota (4) Washington (25)
Florida (138) Michigan (52) Ohio (80) West Virginia (6)
Georgia (58) Minnesota (24) Oklahoma (17) Wisconsin (20)
Hawaii (1) Mississippi (7) Oregon (12) Wyoming (2)
Idaho (6) Missouri (29) Pennsylvania (66) Canada (37)
Illinois (56) Montana (2) Rhode Island (2)
Indiana (45) Nebraska (8) South Carolina (20)
Of our 1,325 restaurants open on May 30, 2004, 816 were located on owned
sites and 509 were located on leased sites. The 509 leases are classified as
follows:
Land-Only Leases (we own buildings and equipment)............ 391
Ground and Building Leases................................... 61
Space/In-Line/Other Leases................................... 57
--
Total............................................... 509
===
During fiscal 1999, we 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 of both corporations to holding certain real estate assets. The
formation of these two REITs is designed primarily to assist us in managing our
real estate portfolio and possibly to provide a vehicle to access capital
markets in the future.
Both REITs are non-public REITs. Through our subsidiary companies, we
indirectly own 100 percent of all voting stock and greater than 99.5 percent of
the total value of each REIT. For financial reporting purposes, both REITs are
included in our consolidated financial statements.
We own or lease our executive offices, culinary center and training
facilities in Orlando, Florida. Except in limited instances, our restaurant
sites and other facilities are not subject to mortgages or encumbrances securing
money borrowed by us from outside sources. In our opinion, our buildings and
equipment generally are in good condition, suitable for their purposes and
adequate for our current and foreseeable needs. See also Note 4 "Land,
Buildings, and Equipment" and Note 11 "Leases" under Notes to Consolidated
Financial Statements in our 2004 Annual Report to Shareholders, incorporated
herein by reference.
Item 3. LEGAL PROCEEDINGS
In March 2003 and March 2002, three of our current and former hourly
restaurant employees filed two purported class action lawsuits against us in
California Superior Court of Orange County alleging violations of California
labor laws with respect to providing meal and rest breaks. The lawsuits seek
penalties under Department of Labor rules providing a $100 penalty per violation
per employee, plus attorney's fees on behalf of the plaintiffs and other
purported class members. Discovery is currently underway in these matters. One
of the cases was removed to our mandatory arbitration program, although the
Court retained the authority to permit a sample of class-wide discovery. We are
prosecuting an appeal to cause the other case to be similarly removed to
arbitration. In September 2003, three former employees in Washington State filed
a similar purported class action in Washington State Superior Court in Spokane
County alleging violations of Washington labor laws with respect to providing
rest breaks. The Court stayed the action, and ordered the plaintiffs into our
mandatory arbitration program; the plaintiffs
15
have filed a motion for reconsideration. We intend to vigorously defend our
position in all of these cases. Although the outcome of the cases cannot be
ascertained at this time, we do not believe that the disposition of these cases,
either individually or in the aggregate, would have a material adverse effect on
our financial position, results of operations or liquidity.
We are subject to other private lawsuits, administrative proceedings and
claims that arise in the ordinary course of our business. These matters
typically involve claims from guests, employees and others related to
operational issues common to the restaurant industry. A number of these
lawsuits, proceedings and claims may exist at any given time. We could be
affected by adverse publicity resulting from the allegations comprising a claim,
regardless of whether the allegations are valid or whether we are ultimately
found liable. From time to time, we also are involved in lawsuits related to
infringement of, or challenges to, our trademarks. We do not believe that the
final disposition of the lawsuits and claims in which we are currently involved
will have a material adverse effect on our financial position, results of
operations or liquidity.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The principal United States market on which our common shares are traded is
the New York Stock Exchange. As of July 26, 2004, there were approximately
37,501 record holders of our common shares. The information concerning the
dividends and high and low intraday sales prices for our common shares on the
New York Stock Exchange for each full quarterly period during fiscal 2003 and
2004 contained in Note 18, "Quarterly Data (unaudited)" in our 2004 Annual
Report to Shareholders is incorporated herein by reference. We have not sold any
securities during the last three years that were not registered under the
Securities Act of 1933.
The table below provides information concerning our repurchase of shares of
our common stock during the fourth quarter of fiscal 2004. Since commencing our
repurchase program in December 1995, we have repurchased a total of 109,211,684
shares under authorizations from our Board of Directors to repurchase an
aggregate of 115,400,000 shares.
- -------------------------------------------------------------------------------------------------------------------
Total Number of Maximum Number of
Shares Purchased as Shares that
Total Number Average Part of Publicly May Yet be Purchased
of Shares Purchased Price Paid Announced Plans or Under the Program (2)
Period (1) per Share Programs.
- -------------------------------------------------------------------------------------------------------------------
February 23, 2004 through
March 28, 2004 1,166,697 $24.83 1,166,697 9,410,327
- -------------------------------------------------------------------------------------------------------------------
March 29, 2004 through
April 25, 2004 1,802,011 $23.76 1,802,011 7,608,316
- -------------------------------------------------------------------------------------------------------------------
April 26, 2004 through
May 30, 2004 1,450,000 $21.91 1,450,000 6,158,316
- -------------------------------------------------------------------------------------------------------------------
Total 4,418,708 $23.44 4,418,708 6,158,316
- -------------------------------------------------------------------------------------------------------------------
<FN>
(1) All of the shares purchased during the fourth quarter of fiscal 2004 were
purchased as part of our repurchase program, the authority for which was
most recently increased to an aggregate of 115.4 million shares by our
Board of Directors on September 18, 2002, and announced publicly in a press
release issued that same day. There is no expiration date for our program.
The number of shares purchased includes shares withheld for taxes on
vesting of restricted stock, and shares delivered or deemed to be delivered
to us on tender of stock in payment for the exercise price of options.
These shares are included as part of our repurchase program and
16
deplete the repurchase authority granted by our Board. The number of shares
purchased excludes shares we reacquired pursuant to tax withholding on
option exercises or forfeiture of restricted stock.
(2) Repurchases are subject to prevailing market prices, may be made in open
market or private transactions, and may occur or be discontinued at any
time. There can be no assurance that we will repurchase any shares.
</FN>
Item 6. SELECTED FINANCIAL DATA
The information for fiscal 2000 through 2004 contained in the Five-Year
Financial Summary in our 2004 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" in our 2004
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" in our 2004 Annual Report to Shareholders
is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Report of Independent Registered Public Accounting Firm, Consolidated
Statements of Earnings, Consolidated Balance Sheets, Consolidated Statements of
Changes in Stockholders' Equity and Accumulated Other Comprehensive Income,
Consolidated Statements of Cash Flows, and Notes to Consolidated Financial
Statements in our 2004 Annual Report to Shareholders are incorporated herein by
reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
Item 9A. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management,
including our Chief Executive Officer and our Chief Financial Officer, we
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934 (the "Exchange Act")) as of May 30, 2004, the end of the
period covered by this report. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of May 30, 2004.
During the fiscal quarter ended May 30, 2004, there was no change in our
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
17
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained in the sections entitled "Who Are This Year's
Nominees?", "What Board Committees Do You Have?" and "Section 16(a) Beneficial
Ownership Reporting Compliance" in our definitive Proxy Statement for our 2004
Annual Meeting of Shareholders is incorporated herein by reference. Information
regarding executive officers is contained in Part I above under the heading
"Executive Officers of the Registrant."
All of our employees are subject to our Code of Business Conduct and
Ethics. Appendix A to the Code provides a special Code of Ethics with additional
provisions that apply to our principal executive officer, principal financial
officer, principal accounting officer or controller, and persons performing
similar functions (the "Senior Financial Officers"). Appendix B to the Code
provides a Code of Business Conduct and Ethics for members of our Board of
Directors. These documents are posted on our internet website at www.darden.com
and are available in print free of charge to any shareholder who requests them.
We will disclose any amendments to or waivers of these Codes for directors,
executive officers or Senior Financial Officers on our website.
We also have adopted a set of Corporate Governance Guidelines and charters
for all of our Board Committees, including the Audit, Compensation, and
Nominating and Governance Committees. The Corporate Governance Guidelines and
committee charters are available on our website at www.darden.com and in print
free of charge to any shareholder who requests them. Written requests for our
Code of Business Conduct and Ethics, Corporate Governance Guidelines and
committee charters should be addressed to Darden Restaurants, Inc., 5900 Lake
Ellenor Drive, Orlando, FL 32809, Attention: Corporate Secretary.
Item 11. EXECUTIVE COMPENSATION
The information contained in the sections entitled "How Are Directors
Compensated?"; "Summary Compensation Table"; "Option Grants in Last Fiscal
Year"; "Stock Option Exercises and Holdings"; "Long-Term Incentive Plans -
Awards in Last Fiscal Year"; "Do Executive Officers Currently Participate in a
Defined Benefit Retirement Plan?"; "Do Executive Officers Currently Participate
in Any Non-Qualified Deferred Compensation Plan?"; "Do Executive Officers Have
Any Change-in-Control Arrangements?"; "Do any of the Executive Officers Have
Employment Agreements?"; and "Compensation Committee Interlocks and Insider
Participation" in our definitive Proxy Statement for our 2004 Annual Meeting of
Shareholders, is incorporated herein by reference. The information appearing in
the 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 AND
RELATED STOCKHOLDER MATTERS
The information contained in the sections entitled "Security Ownership of
Principal Shareholders", "Equity Compensation Plan Information" and "Security
Ownership of Management" in our definitive Proxy Statement for our 2004 Annual
Meeting of Shareholders, is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the sections entitled "Do You Provide Loans
for Executive Officers to Meet Their Share Ownership Guidelines?" and "Are There
Any Other Relationships or Related Transactions Between Us and Our Management?"
in our definitive Proxy Statement for our 2004 Annual Meeting of Shareholders,
is incorporated herein by reference.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information contained in the section entitled "Independent Registered
Public Accounting Firm Fees and Services" in our definitive Proxy Statement for
our 2004 Annual Meeting of Shareholders, is incorporated herein by reference.
18
PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
Consolidated Statements of Earnings for the fiscal years ended May 30,
2004, May 25, 2003 and May 26, 2002.
Consolidated Balance Sheets at May 30, 2004 and May 25, 2003.
Consolidated Statements of Changes in Stockholders' Equity and Accumulated
Other Comprehensive Income for the fiscal years ended May 30, 2004, May 25, 2003
and May 26, 2002.
Consolidated Statements of Cash Flows for the fiscal years ended May 30,
2004, May 25, 2003 and May 26, 2002.
Notes to Consolidated Financial Statements.
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 of our long-term debt are
not filed, and in lieu thereof, we agree 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 our Registration Statement
on Form 10 effective May 5, 1995).
3(b) Bylaws as amended July 21, 2003 (incorporated by
reference to Exhibit 3(b) to our Annual Report on Form
10-K for the fiscal year ended May 25, 2003).
4(a) Rights Agreement dated as of May 28, 1995 between us
and Wells Fargo Bank Minnesota, National Association
(formerly known as Norwest Bank Minnesota, N.A.), as
amended May 23, 1996, assigned to Wachovia Bank,
National Association (formerly known as First Union
National Bank), as Rights Agent, as of September 29,
1997 (incorporated by reference to Exhibit 4(a) to our
Annual Report on Form 10-K for the fiscal year ended
May 31, 1998).
4(b) Indenture dated as of January 1, 1996, between us and
Wells Fargo Bank Minnesota, National Association
(formerly known as Norwest Bank Minnesota, N.A.), as
Trustee (incorporated herein by reference to our
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 March 19, 2003
(incorporated herein by reference to Exhibit 10(b) to
our Quarterly Report on Form 10-Q for the quarter ended
February 23, 2003).
*10(b) Darden Restaurants, Inc. FlexComp Plan, as amended
March 19, 2003 (incorporated herein by reference to
Exhibit 10(f) to our Quarterly Report on Form 10-Q for
the quarter ended February 23, 2003).
19
*10(c) Darden Restaurants, Inc. Stock Option and Long-Term
Incentive Conversion Plan, as amended (incorporated
herein by reference to Exhibit 10(c) to our 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
our 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
our Registration Statement on Form 10 effective May 5,
1995).
*10(f) Darden Restaurants, Inc. Stock Plan for Directors, as
amended June 19, 2003 (incorporated by reference to
Exhibit 10(f) to our Annual Report on Form 10-K for the
fiscal year ended May 25, 2003).
*10(g) Darden Restaurants, Inc. Compensation Plan for
Non-Employee Directors, as amended March 19, 2003
(incorporated herein by reference to Exhibit 10(d) to
our Quarterly Report on Form 10-Q for the quarter ended
February 23, 2003).
*10(h) Darden Restaurants, Inc. Management and Professional
Incentive Plan, as amended June 19, 2003 (incorporated
by reference to Exhibit 10(h) to our Annual Report on
Form 10-K for the fiscal year ended May 25, 2003).
*10(i) Benefits Trust Agreement dated as of October 3, 1995,
between us 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 our Annual Report on Form 10-K for the
fiscal year ended May 25, 1997).
*10(j) Form of Management Continuity Agreement, as amended,
between us and certain of our executive officers
(incorporated herein by reference to Exhibit 10(j) to
our Annual Report on Form 10-K for the fiscal year
ended May 25, 1997).
*10(k) Form of documents for our Fiscal 1998 Stock
Purchase/Option Award Program, including a
Non-Negotiable Promissory Note and a Stock Pledge
Agreement (incorporated herein by reference to Exhibit
10(k) to our Annual Report on Form 10-K for the fiscal
year ended May 27, 2001).
*10(l) Darden Restaurants, Inc. Restaurant Management and
Employee Stock Plan of 2000, as amended June 19, 2003
(incorporated by reference to Exhibit 10(l) to our
Annual Report on Form 10-K for the fiscal year ended
May 25, 2003).
*10(m) Darden Restaurants, Inc. 2002 Stock Incentive Plan,
as amended March 19, 2003 (incorporated herein by
reference to Exhibit 10(a) to our Quarterly Report on
Form 10-Q for the quarter ended February 23, 2003).
10(n) Credit Agreement dated as of October 17, 2003, among
Darden Restaurants, Inc. and the banks named therein
(incorporated herein by reference to Exhibit 10 to our
Quarterly Report on Form 10-Q for the quarter ended
November 30, 2003).
10(o) First Amendment dated as of February 4, 2004, to
Credit Agreement dated as of October 17, 2003, among
Darden Restaurants, Inc. and the banks listed therein
(incorporated herein by reference to Exhibit 10(a) to
our Quarterly Report on Form 10-Q for the quarter ended
February 22, 2004).
20
*10(p) Letter Agreement dated February 3, 2004, between
Richard E. Rivera and Darden Restaurants, Inc.
(incorporated herein by reference to Exhibit 10(b) to
our Quarterly Report on Form 10-Q for the quarter ended
February 22, 2004).
12 Computation of Ratio of Consolidated Earnings to Fixed
Charges.
13 Portions of 2004 Annual Report to Shareholders.
21 Subsidiaries of Darden Restaurants, Inc.
23 Consent of Independent Registered Public Accounting
Firm.
24 Powers of Attorney.
31(a) Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31(b) Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32(a) Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32(b) Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
- -----------------
* 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.
We will furnish copies of any exhibit listed above upon request upon the
payment of a reasonable fee to cover our expenses in furnishing such exhibits.
(b) Reports on Form 8-K.
During the fourth quarter covered by this report, we filed or furnished the
following current reports on Form 8-K:
(i) Current report on Form 8-K dated February 25, 2004, reporting expected
fiscal 2004 third quarter net earnings per diluted share.
(ii) Current report on Form 8-K dated March 17, 2004, reporting fiscal 2004
third quarter net earnings per diluted share.
(iii)Current report on Form 8-K dated May 11, 2004, announcing asset
impairment and restructuring charges.
(iv) Current report on Form 8-K dated May 20, 2004, announcing new Red
Lobster leadership.
In addition, we furnished the following reports on Form 8-K subsequent to
the close of the fourth quarter of fiscal 2004:
(i) Current report on Form 8-K dated June 22, 2004, reporting fiscal 2004
annual and fourth quarter net earnings per diluted share.
(ii) Current report on Form 8-K dated August 11, 2004, reporting the
retirement of Chief Executive Officer Joe R. Lee and other management
changes.
21
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 12, 2004 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 dates indicated.
Signature Title Date
/s/ Joe R. Lee Director, Chairman of the August 12, 2004
- ------------------------------- Board and Chief Executive
Joe R. Lee Officer (Principal
executive officer)
/s/ Linda J. Dimopoulos Senior Vice President August 12, 2004
- ------------------------------- and Chief Financial Officer
Linda J. Dimopoulos (Principal financial
and accounting officer)
/s/ Leonard L. Berry* Director
- -------------------------------
Leonard L. Berry
/s/ Odie C. Donald* Director
- -------------------------------
Odie C. Donald
/s/ David H. Hughes* Director
- -------------------------------
David H. Hughes
/s/ Cornelius McGillicuddy, III* ** Director
- ------------------------------------
Cornelius McGillicuddy, III
/s/ Michael D. Rose* Director
- -------------------------------
Michael D. Rose
/s/ Maria A. Sastre* Director
- -------------------------------
Maria A. Sastre
/s/ Jack A. Smith* Director
- -------------------------------
Jack A. Smith
/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 12, 2004
** 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.
22
EXHIBIT INDEX
Exhibit
Number Title
3(a) Articles of Incorporation (incorporated herein by reference
to Exhibit 3(a) to our Registration Statement on Form 10
effective May 5, 1995).
3(b) Bylaws as amended July 21, 2003 (incorporated by reference
to Exhibit 3(b) to our Annual Report on Form 10-K for the
fiscal year ended May 25, 2003).
4(a) Rights Agreement dated as of May 28, 1995 between us and
Wells Fargo Bank Minnesota, National Association (formerly
known as Norwest Bank Minnesota, N.A.), as amended May 23,
1996, assigned to Wachovia Bank, National Association
(formerly known as First Union National Bank), as Rights
Agent, as of September 29, 1997 (incorporated by reference
to Exhibit 4(a) to our Annual Report on Form 10-K for the
fiscal year ended May 31, 1998).
4(b) Indenture dated as of January 1, 1996, between us and Wells
Fargo Bank Minnesota, National Association (formerly known
as Norwest Bank Minnesota, N.A.), as Trustee (incorporated
herein by reference to our 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 March 19, 2003
(incorporated herein by reference to Exhibit 10(b) to our
Quarterly Report on Form 10-Q for the quarter ended February
23, 2003).
*10(b) Darden Restaurants, Inc. FlexComp Plan as amended March
19, 2003 (incorporated herein by reference to Exhibit 10(f)
to our Quarterly Report on Form 10-Q for the quarter ended
February 23, 2003).
*10(c) Darden Restaurants, Inc. Stock Option and Long-Term
Incentive Conversion Plan, as amended (incorporated herein
by reference to Exhibit 10(c) to our 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 our
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 our
Registration Statement on Form 10 effective May 5, 1995).
*10(f) Darden Restaurants, Inc. Stock Plan for Directors, as
amended June 19, 2003 (incorporated by reference to Exhibit
10(f) to our Annual Report on Form 10-K for the fiscal year
ended May 25, 2003).
*10(g) Darden Restaurants, Inc. Compensation Plan for
Non-Employee Directors, as amended March 19, 2003
(incorporated herein by reference to Exhibit 10(d) to our
Quarterly Report on Form 10-Q for the quarter ended February
23, 2003).
*10(h) Darden Restaurants, Inc. Management and Professional
Incentive Plan, as amended June 19, 2003 (incorporated by
reference to Exhibit 10(h) to our Annual Report on Form 10-K
for the fiscal year ended May 25, 2003).
*10(i) Benefits Trust Agreement dated as of October 3, 1995,
between us and Wells Fargo Bank Minnesota, National
Association (formerly known as Norwest Bank Minnesota,
N.A.), as
23
Trustee (incorporated herein by reference to Exhibit 10(i)
to our Annual Report on Form 10-K for the fiscal year ended
May 25, 1997).
*10(j) Form of Management Continuity Agreement, as amended,
between us and certain of our executive officers
(incorporated herein by reference to Exhibit 10(j) to our
Annual Report on Form 10-K for the fiscal year ended May 25,
1997).
*10(k) Form of documents for our Fiscal 1998 Stock
Purchase/Option Award Program, including a Non-Negotiable
Promissory Note and a Stock Pledge Agreement (incorporated
herein by reference to Exhibit 10(k) to our Annual Report on
Form 10-K for the fiscal year ended May 27, 2001).
*10(l) Darden Restaurants, Inc. Restaurant Management and
Employee Stock Plan of 2000, as amended June 19, 2003
(incorporated by reference to Exhibit 10(l) to our Annual
Report on Form 10-K for the fiscal year ended May 25, 2003).
*10(m) Darden Restaurants, Inc. 2002 Stock Incentive Plan, as
amended March 19, 2003 (incorporated herein by reference to
Exhibit 10(a) to our Quarterly Report on Form 10-Q for the
quarter ended February 23, 2003).
10(n) Credit Agreement dated as of October 17, 2003, among Darden
Restaurants, Inc. and the banks named therein (incorporated
herein by reference to Exhibit 10 to our Quarterly Report on
Form 10-Q for the quarter ended November 30, 2003).
10(o) First Amendment dated as of February 4, 2004, to Credit
Agreement dated as of October 17, 2003, among Darden
Restaurants, Inc. and the banks listed therein (incorporated
herein by reference to Exhibit 10(a) to our Quarterly Report
on Form 10-Q for the quarter ended February 22, 2004).
*10(p) Letter Agreement dated February 3, 2004, between Richard
E. Rivera and Darden Restaurants, Inc. (incorporated herein
by reference to Exhibit 10(b) to our Quarterly Report on
Form 10-Q for the quarter ended February 22, 2004).
12 Computation of Ratio of Consolidated Earnings to Fixed
Charges.
13 Portions of 2004 Annual Report to Shareholders.
21 Subsidiaries of Darden Restaurants, Inc.
23 Consent of Independent Registered Public Accounting Firm.
24 Powers of Attorney.
31(a) Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31(b) Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32(a) Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32(b) Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
24
- ---------------------
* 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.
25