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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
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ANNUAL REPORT
PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934. [NO FEE REQUIRED].
For the fiscal year ended April 30, 2003.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934. [NO FEE REQUIRED].
For the transition period from ................... to ...................
Commission File Number 1-13666
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Darden Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
DARDEN RESTAURANTS, INC.
5900 Lake Ellenor Drive
Orlando, Florida 32809
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
REQUIRED INFORMATION
The following financial statements for the plan are being furnished herewith:
Independent Auditors' Report.
Audited Statement of Net Assets Available for Benefits with Fund Information as
of April 30, 2003 and 2002, prepared in accordance with the financial reporting
requirements of ERISA.
Audited Statement of Changes in Net Assets Available for Benefits with Fund
Information for the years ended April 30, 2003, and 2002, prepared in accordance
with the financial reporting requirements of ERISA.
Notes to Financial Statements.
Schedule 1 - Schedule of Assets Held at End of Year April 30, 2003.
Schedule 2 - Schedule of Reportable Transactions, Year Ended April 30, 2003.
2
DARDEN SAVINGS PLAN
Financial Statements and Supplemental Schedules
April 30, 2003 and 2002
(With Independent Auditors' Report Thereon)
3
Independent Auditors' Report
Financial Fiduciary Committee
Darden Restaurants, Inc.
We have audited the accompanying statements of net assets available for benefits
with fund information of the Darden Savings Plan (the Plan) as of April 30, 2003
and 2002, and the related statements of changes in net assets available for
benefits with fund information for the years ended April 30, 2003 and 2002.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
April 30, 2002 and 2003, and the changes in net assets available for benefits
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules - Schedule H,
line 4i - Schedule of Assets (Held at End of Year) and Schedule H, line 4j -
Schedule of Reportable Transactions are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These schedules are the responsibility of the Plan's
management. The fund information in the statements of net assets available for
benefits and the statement of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the net
assets available for plan benefits and changes in net assets available for plan
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
KPMG LLP
September 13, 2003
4
DARDEN SAVINGS PLAN
Statement of Net Assets Available for Benefits with Fund Information
April 30, 2003
Participant directed
---------------------------------------------------------------------------
American American
Express Pimco Express T. Rowe Euro
Trust Stable Total Trust Equity Price Pacific
Capital Return Index Small Cap Growth
Fund II Fund Fund I Fund Fund
---------------- ------------- -------------- ----------- ----------------
Assets
Investments, at fair value:
Short-term investments, at cost
which approximates fair value $ -- -- -- -- --
American Express Trust Stable Capital Fund II 46,184,063 -- -- -- --
Pimco Total Return Fund -- 9,275,788 -- -- --
American Express Trust Equity Index Fund I -- -- 33,079,502 -- --
T. Rowe Price Small Cap Stock Fund -- -- -- 17,588,346 --
EuroPacific Growth Fund -- -- -- -- 9,827,490
MSIF U.S. Mid Cap Core Portfolio Fund -- -- -- -- --
Harbor Capital Appreciation Fund -- -- -- -- --
Davis New York Venture Fund -- -- -- -- --
Common stock of Darden Restaurants, Inc. -- -- -- -- --
Participant loans -- -- -- -- --
-------------- ------------- -------------- ------------ ----------------
Total investments 46,184,063 9,275,788 33,079,502 17,588,346 9,827,490
-------------- ------------- -------------- ------------ ----------------
Receivables:
Employer contribution -- -- -- -- --
Accrued dividend and interest -- -- -- -- --
-------------- ------------- -------------- ------------ ----------------
Total receivables -- -- -- -- --
-------------- ------------- -------------- ------------ ----------------
Total assets 46,184,063 9,275,788 33,079,502 17,588,346 9,827,490
-------------- ------------- -------------- ------------ ----------------
Liabilities
ESOP Loan -- -- -- -- --
Interest payable -- -- -- -- --
-------------- ------------- -------------- ------------ ----------------
Total liabilities -- -- -- -- --
-------------- ------------- -------------- ------------ ----------------
Net assets available for benefits $ 46,184,063 9,275,788 33,079,502 17,588,346 9,827,490
============== ============= ============== ============ ================
Number of participants (unaudited) 7,453 4,002 8,731 8,418 5,481
============== ============= =========================== ================
See accompanying notes to financial statements.
5
Non-participant
Participant directed directed
------------------------------------------------------------------------------------------------
MSIF Trust Harbor Davis
U.S. Mid Cap Capital New York Company Participant
Core Portfolio Appreciation Venture Common Loan ESOP
Fund Fund Fund Stock Fund Fund Fund Total
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
-- -- -- 368,095 -- 197,825 565,920
-- -- -- -- -- -- 46,184,063
-- -- -- -- -- -- 9,275,788
-- -- -- -- -- -- 33,079,502
-- -- -- -- -- -- 17,588,346
-- -- -- -- -- -- 9,827,490
1,038,422 -- -- -- -- -- 1,038,422
-- 867,010 -- -- -- -- 867,010
-- -- 1,257,505 -- -- -- 1,257,505
-- -- -- 14,819,996 -- 213,650,467 228,470,463
-- -- -- -- 7,927,586 -- 7,927,586
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
1,038,422 867,010 1,257,505 15,188,091 7,927,586 213,848,292 356,082,095
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
-- -- -- -- -- 110,374 110,374
-- -- -- -- -- 495,872 495,872
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
-- -- -- -- -- 606,246 606,246
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
1,038,422 867,010 1,257,505 15,188,091 7,927,586 214,454,538 356,688,341
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
-- -- -- -- -- 34,450,000 34,450,000
-- -- -- -- -- 25,034 25,034
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
-- -- -- -- -- 34,475,034 34,475,034
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
1,038,422 867,010 1,257,505 15,188,091 7,927,586 179,979,504 322,213,307
================ ================= ============= ============== =============== =============== ======================
1,516 1,549 1,598 4,207 2,128 11,516
================ ================= ============= ============== =============== ===============
6
DARDEN SAVINGS PLAN
Statement of Net Assets Available for Benefits with Fund Information
April 30, 2002
Participant directed
--------------------------------------------------------------------------
American American
Express Pimco Express T. Rowe Euro
Trust Stable Total Trust Equity Price Pacific
Capital Return Index Small Cap Growth
Fund II Fund Fund I Stock Fund Fund
----------------- ------------ -------------- ------------ ------------------
Assets
Investments, at fair value:
Short-term investments, at cost
which approximates fair value $ -- -- -- -- --
American Express Trust Stable Capital Fund II 40,217,045 -- -- -- --
Pimco Total Return Fund -- 5,367,246 -- -- --
American Express Trust Equity Index Fund I -- -- 36,773,595 -- --
T. Rowe Price Small Cap Stock Fund -- -- -- 20,866,248 --
EuroPacific Growth Fund -- -- -- -- 10,599,185
MSIF U.S. Mid Cap Core Portfolio Fund -- -- -- -- --
Harbor Capital Appreciation Fund -- -- -- -- --
Davis New York Venture Fund -- -- -- -- --
Common stock of Darden Restaurants, Inc. -- -- -- -- --
Participant loans -- -- -- -- --
--------------- ------------ -------------- ------------ ------------------
Total investments 40,217,045 5,367,246 36,773,595 20,866,248 10,599,185
--------------- ------------ -------------- ------------ ------------------
Receivables:
Employer contribution -- -- -- -- --
Accrued dividend and interest -- -- -- -- --
--------------- ------------ -------------- ------------ ------------------
Total receivables -- -- -- -- --
--------------- ------------ -------------- ------------ ------------------
Total assets 40,217,045 5,367,246 36,773,595 20,866,248 10,599,185
--------------- ------------ -------------- ------------ ------------------
Liabilities
ESOP Loan -- -- -- -- --
Interest payable -- -- -- -- --
--------------- ------------ -------------- ------------ ------------------
Total liabilities -- -- -- -- --
--------------- ------------ -------------- ------------ ------------------
Net assets available for benefits $ 40,217,045 5,367,246 36,773,595 20,866,248 10,599,185
=============== ============ ============== ============ ==================
Number of participants (unaudited) 7,379 3,553 8,974 8,615 5,499
=============== ============ ============== ============ ==================
See accompanying notes to financial statements.
7
Non-participant
Participant directed directed
------------------------------------------------------------------------------------------------
MSIF Trust Harbor Davis
U.S. Mid Cap Capital New York Company Participant
Core Portfolio Appreciation Venture Common Loan ESOP
Fund Fund Fund Stock Fund Fund Fund Total
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
-- -- -- 865,520 -- 717,896 1,583,416
-- -- -- -- -- -- 40,217,045
-- -- -- -- -- -- 5,367,246
-- -- -- -- -- -- 36,773,595
-- -- -- -- -- -- 20,866,248
-- -- -- -- -- -- 10,599,185
819,692 -- -- -- -- -- 819,692
-- 576,069 -- -- -- -- 576,069
-- -- 785,412 -- -- -- 785,412
-- -- -- 20,959,450 -- 358,975,093 379,934,543
-- -- -- -- 6,578,720 -- 6,578,720
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
819,692 576,069 785,412 21,824,970 6,578,720 359,692,989 504,101,171
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
-- -- -- -- -- 274,136 274,136
-- -- -- -- -- 366,810 366,810
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
-- -- -- -- -- 640,946 640,946
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
819,692 576,069 785,412 21,824,970 6,578,720 360,333,935 504,742,117
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
-- -- -- -- -- 39,140,000 39,140,000
-- -- -- -- -- 38,009 38,009
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
-- -- -- -- -- 39,178,009 39,178,009
---------------- ----------------- ------------- -------------- --------------- --------------- ----------------------
819,692 576,069 785,412 21,824,970 6,578,720 321,155,926 465,564,108
================ ================= ============= ============== =============== =============== ======================
962 994 1,014 4,195 1,994 11,695
================ ================= ============= ============== =============== ===============
8
DARDEN SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits with Fund Information
Year ended April 30, 2003
Participant directed
----------------------------------------------------------------------------------
American Pimco American T. Rowe Euro
Express Total Express Price Pacific
Trust Stable Return Trust Equity Small Cap Growth
Capital Fund II Fund Index Fund I Stock Fund Fund
----------------- ------------ ---------------- -------------- -------------------
Additions to net assets attributed to:
Investment income (loss):
Net appreciation (depreciation) in
fair value of investments $ 2,114,042 192,987 (4,867,336) (3,751,420) (1,756,757)
Dividends and interest 617 545,101 -- 186,033 97,774
----------------- ------------ ---------------- -------------- -------------------
Net investment income (loss) 2,114,659 738,088 (4,867,336) (3,565,387) (1,658,983)
----------------- ------------ ---------------- -------------- -------------------
Participant loan activity during the year:
Withdrawals (1,266,233) (397,904) (1,222,024) (741,286) (435,500)
Repayments (including interest) 868,875 205,051 1,059,239 517,794 362,160
----------------- ------------ ---------------- -------------- -------------------
Total loan activity (397,358) (192,853) (162,785) (223,492) (73,340)
----------------- ------------ ---------------- -------------- -------------------
Contributions:
Participants 4,150,045 1,361,373 5,099,814 2,343,994 1,796,587
Employer -- -- -- -- --
----------------- ------------ ---------------- -------------- -------------------
Total contributions 4,150,045 1,361,373 5,099,814 2,343,994 1,796,587
----------------- ------------ ---------------- -------------- -------------------
Total additions, net 5,867,346 1,906,608 69,693 (1,444,885) 64,264
----------------- ------------ ---------------- -------------- -------------------
Deductions from net assets attributed to:
Benefits paid to participants (4,547,727) (641,565) (2,490,221) (1,176,561) (753,821)
Interest expense -- -- -- -- --
Administrative expenses (44,221) (4,372) (9,336) (3,574) (2,084)
Transfers between funds 4,691,620 2,647,871 (1,264,229) (652,882) (80,054)
----------------- ------------ ---------------- -------------- -------------------
Total deductions, net 99,672 2,001,934 (3,763,786) (1,833,017) (835,959)
----------------- ------------ ---------------- -------------- -------------------
Net assets available for benefits:
Beginning of year 40,217,045 5,367,246 36,773,595 20,866,248 10,599,185
----------------- ------------ ---------------- -------------- -------------------
End of year $ 46,184,063 9,275,788 33,079,502 17,588,346 9,827,490
================= ============ ================ ============== ===================
See accompanying notes to financial statements.
9
Non-participant
Participant directed directed
--------------------------------------------------------------------------------------------------
MSIF Trust Davis New
U.S. Mid Cap Harbor Capital York Company Participant
Core Portfolio Appreciation Venture Common Loan ESOP
Fund Fund Fund Stock Fund Fund Fund Total
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
(194,741) (130,675) (94,029) (7,188,326) -- (116,271,567) (131,947,822)
-- 1,279 6,201 53,382 -- 1,019,378 1,909,765
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
(194,741) (129,396) (87,828) (7,134,944) -- (115,252,189) (130,038,057)
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
(26,632) (44,923) (55,620) (1,200,985) 5,391,107 -- --
19,844 29,058 33,990 750,400 (3,337,996) -- 508,415
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
(6,788) (15,865) (21,630) (450,585) 2,053,111 -- 508,415
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
308,978 355,294 364,534 2,413,070 -- -- 18,193,689
-- -- -- -- -- 4,530,363 4,530,363
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
308,978 355,294 364,534 2,413,070 -- 4,530,363 22,724,052
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
107,449 210,033 255,076 (5,172,459) 2,053,111 (110,721,826) (106,805,590)
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
(40,026) (38,001) (39,326) (1,674,269) (704,245) (23,085,364) (35,191,126)
-- -- -- -- -- (719,696) (719,696)
(59) (81) (175) (6,443) -- (564,044) (634,389)
151,366 118,990 256,518 216,292 -- (6,085,492) --
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
111,281 80,908 217,017 (1,464,420) (704,245) (30,454,596) (36,545,211)
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
819,692 576,069 785,412 21,824,970 6,578,720 321,155,926 465,564,108
--------------- ------------------- ------------ --------------- -------------- ----------------------- -----------------
1,038,422 867,010 1,257,505 15,188,091 7,927,586 179,979,504 322,213,307
=============== =================== ============ =============== ============== ======================= =================
10
DARDEN SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits with Fund Information
Year ended April 30, 2002
Participant directed
-------------------------------------------------------------- ------------------
American Pimco American T. Rowe Euro
Express Total Express Price Pacific
Trust Stable Return Trust Equity Small Cap Growth
Capital Fund II Fund Index Fund I Stock Fund Fund
---------------- ------------- ---------------- -------------- ------------------
Additions to net assets attributed to:
Investment income (loss):
Net appreciation (depreciation) in
fair value of investments $ 2,152,233 77,646 (5,346,901) 2,532,720 (1,108,419)
Dividends and interest 8 366,104 1 112,179 244,713
----------------- ------------ ---------------- -------------- ------------------
Net investment income (loss) 2,152,241 443,750 (5,346,900) 2,644,899 (863,706)
----------------- ------------ ---------------- -------------- ------------------
Participant loan activity during the year:
Withdrawals (1,068,192) (232,354) (1,144,390) (662,159) (427,694)
Repayments (including interest) 819,795 164,876 1,112,627 516,773 379,053
----------------- ------------ ---------------- -------------- ------------------
Total loan activity (248,397) (67,478) (31,763) (145,386) (48,641)
----------------- ------------ ---------------- -------------- ------------------
Contributions:
Participants 4,165,224 1,111,390 5,484,855 2,415,137 1,880,386
Employer -- -- -- -- --
----------------- ------------ ---------------- -------------- ------------------
Total contributions 4,165,224 1,111,390 5,484,855 2,415,137 1,880,386
----------------- ------------ ---------------- -------------- ------------------
Total additions, net 6,069,068 1,487,662 106,192 4,914,650 968,039
----------------- ------------ ---------------- -------------- ------------------
Deductions from net assets attributed to:
Benefits paid to participants (3,778,174) (473,027) (3,392,178) (1,413,267) (893,693)
Interest expense -- -- -- -- --
Administrative expenses 1,833 (465) (4,414) (1,812) (1,230)
Transfers between funds 243,027 325,494 (2,286,527) 82,250 (1,060,469)
----------------- ------------ ---------------- -------------- ------------------
Total deductions, net (3,533,314) (147,998) (5,683,119) (1,332,829) (1,955,392)
----------------- ------------ ---------------- -------------- ------------------
Net assets available for benefits:
Beginning of year 37,681,291 4,027,582 42,350,522 17,284,427 11,586,538
----------------- ------------ ---------------- -------------- ------------------
End of year $ 40,217,045 5,367,246 36,773,595 20,866,248 10,599,185
================= ============ ================ ============== ==================
See accompanying notes to financial statements.
11
Non-participant
Participant directed directed
--------------------------------------------------------------------------------------------------
MSIF Trust Davis New
U.S. Mid Cap Harbor Capital York Company Participant
Core Portfolio Appreciation Venture Common Loan ESOP
Fund Fund Fund Stock Fund Fund Fund Total
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
(24,946) (58,317) (23,134) 6,133,970 -- 116,166,189 120,501,041
-- 635 703 38,723 -- 755,775 1,518,841
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
(24,946) (57,682) (22,431) 6,172,693 -- 116,921,964 122,019,882
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
(10,306) (18,165) (14,816) (876,010) 4,454,086 -- --
8,225 14,712 17,157 614,156 (3,106,076) -- 541,298
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
(2,081) (3,453) 2,341 (261,854) 1,348,010 -- 541,298
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
138,047 139,268 150,853 2,206,282 -- -- 17,691,442
-- -- -- -- -- 6,054,010 6,054,010
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
138,047 139,268 150,853 2,206,282 -- 6,054,010 23,745,452
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
111,020 78,133 130,763 8,117,121 1,348,010 122,975,974 146,306,632
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
(5,015) (11,356) (27,360) (1,671,343) (552,448) (23,973,979) (36,191,840)
-- -- -- -- -- (1,366,929) (1,366,929)
(23) (20) (14) (2,518) -- (350,969) (359,632)
713,710 509,312 682,023 2,051,029 -- (1,259,849) --
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
708,672 497,936 654,649 377,168 (552,448) (26,951,726) (37,918,401)
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
-- -- -- 13,330,681 5,783,158 225,131,678 357,175,877
--------------- ------------------- ------------ --------------- -------------- ----------------- -----------------------
819,692 576,069 785,412 21,824,970 6,578,720 321,155,926 465,564,108
=============== =================== ============ =============== ============== ================= =======================
12
DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2003 and 2002
(1) Description of the Plan
The following description of the Darden Savings Plan (the Plan) provides
only general information. Participants should refer to the Plan document
for a more complete description of the Plan's provisions.
The Plan, as amended, was originally established in June 1973. The Plan
covers certain employees of Darden Restaurants, Inc.'s operating and
administrative subsidiaries, and their divisions and affiliates
(collectively, the Company) who are 21 or over, regardless of their length
of service. Effective May 1999, the Plan was amended to allow allocation of
Company shares in the ESOP Fund (an employee stock ownership plan which is
a component of the Plan) for payment of quarterly incentive bonuses earned
by certain restaurant management employees that have five years of service
with the Company. Effective January 2000, the Plan was also amended to
allow allocation of Company shares in the ESOP Fund for payment of annual
incentive bonuses earned by certain Restaurant Support Center
administrative employees that have five years of service with the Company.
Effective June 2002, the Plan was amended to allow participants to
immediately transfer ESOP funds credited to their accounts to any of the
Plan's other investment funds. The Plan was also amended to change the
maximum Company variable contribution from 100% to 120% effective July
2002.
Under the Plan, eligible employees may elect to make primary contributions
to the Plan ranging from 1% to 6% of their eligible compensation for each
year on an after-tax or before-tax basis. Participants electing to
contribute 6% may also elect to make unmatched contributions equal to
between 1% and 9% of their eligible compensation for the year. The Company
makes quarterly variable contributions to the Plan ranging from 25% to 120%
of the primary contribution percentages made by the participants. The
Company contribution varies depending on the Company's operating results.
Plan matching provisions become effective for participants upon completion
of 12 months of service and accumulation of 1,000 hours of service in an
anniversary year. Income earned by the Plan is allocated to participants'
accounts based on their relative account balances.
Participants may borrow from their vested account as follows: a minimum of
$1,000 up to a maximum equal to the lesser of $50,000, minus the highest
outstanding loan balance in the preceding 12 months, 50% of their vested
account balance, an amount which would result in loan repayments not to
exceed 50% of the participant's 13 week average net take-home pay, or the
vested balance in the participant's account excluding amounts in the ESOP
Fund. Loan transactions are accounted for as a transfer to (from) the
investment fund from (to) the Participant Loan Fund. Loan repayment terms
generally may not exceed 5 years. The loans are secured by the balance in
the participant's account and bear market rates of interest. Principal and
interest is paid through payroll deductions and may be repaid in full at
any time without penalty.
On termination of service due to death, disability, retirement, induction
into the Armed Forces of, or service with, the United States Government, or
involuntary separation or elimination of position due to a sale,
destruction, shut-down, or closing out of an activity or facility, a
participant shall be entitled to a distribution of the total value of his
or her account. If that participant had a vested account balance as of June
1, 1990, he or she may elect monthly installments not to exceed 120 months.
All other terminating participants, including those who terminate service
due to other reasons, will receive a lump sum distribution of their vested
account balance if such balance is $5,000 or less. Terminating participants
having vested account balances greater than $5,000 may elect either a lump
sum distribution or to leave their accounts in the Plan until attainment of
age 65. All benefits are recorded when paid.
Trustee and administrative duties of the Plan are being performed by
American Express Trust Company.
13 (Continued)
DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2003 and 2002
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The financial statements of the Plan are prepared under the accrual
method of accounting.
The Plan accounts for certain changes in net assets as follows:
o Dividends and interest, net realized and unrealized gains or
losses and administrative expenses of the American Express Trust
Stable Capital Fund II, Pimco Total Return Fund, American Express
Trust Equity Index Fund I, T. Rowe Price Small Cap Stock Fund,
EuroPacific Growth Fund, MSIF Trust U.S. Mid Cap Core Portfolio
Fund, Harbor Capital Appreciation Fund, and the Davis New York
Venture Fund are recognized by the Plan only as they are
reflected in the Plan's proportionate share of net increases
(decreases) in the fair value of the respective funds; and
o Net realized gains or losses are recognized by the Plan upon the
sale of investment securities on the basis of weighted average
cost.
(b) Investments
Plan investments are recorded at fair value. Fair value is determined
by quoted market prices. Short-term investments are stated at cost,
which approximates fair value. Participant loans are valued at
amortized cost which approximates fair value.
Purchases and sales of securities are recorded on a trade date basis.
Dividend income is recorded on the ex-dividend date. Interest income
is recorded on the accrual basis.
The Plan's investments include funds which invest in various types of
investment securities and in various companies within various markets.
Investment securities are exposed to several risks, such as interest
rate, market and credit risks. Due to the level of risk associated
with certain investment securities, it is at least reasonably possible
that changes in the values of investment securities will occur in the
near term and that such changes could materially affect the amounts
reported in the Plan's financial statements and schedules.
On March 21, 2002, the Company's Board of Directors declared a
three-for-two stock split of the Company's common stock. The stock
split was accomplished through a 50% stock dividend, which was
distributed on May 1, 2002, to stockholders of record as of the close
of business on April 10, 2002. All applicable references to number of
Company shares of common stock have been adjusted to reflect the stock
split.
(c) Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits at the date of the
financial statements and the reported amounts of additions to and
deductions from those net assets during the reporting period. Actual
results could differ from those estimates.
14 (Continued)
DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2003 and 2002
(3) Forfeitures and Vesting
Vested rights to Company contribution amounts accrue at a rate of 5% per
quarter beginning with the participant's fifth quarter of service.
Forfeitures of nonvested Company contributions to the Plan can be used to
cover future Company contributions, reinstate previously forfeited amounts
to rehired employees, and cover administrative expenses incurred by the
Plan. During the 2003 and 2002 Plan years, $419,458 and $332,190,
respectively, of forfeitures were used to cover administrative expenses of
the Plan. No forfeited funds were used to cover Company contributions.
(4) Choice of Investments
Participant contributions to the Plan may be directed to nine basic
investment alternatives: American Express Trust Stable Capital Fund II,
Pimco Total Return Fund, American Express Trust Equity Index Fund I, T.
Rowe Price Small Cap Stock Fund, EuroPacific Growth Fund, MSIF Trust U.S.
Mid Cap Core Portfolio, Harbor Capital Appreciation Fund, Davis New York
Venture Fund, and Company Common Stock Fund. Company contributions to the
Plan are invested in the ESOP Fund.
(5) Investments
The following table presents the fair value of investments that represent
5% or more of the Plan's net assets at April 30, 2003 and 2002:
2003 2002
------------ -------------
Investments at fair value:
American Express Trust Stable Capital
Fund II, 2,728,909 and 2,496,093 shares
at April 30, 2003 and 2002, respectively $ 46,184,063 40,217,045
American Express Trust Equity Index Fund
I, 1,202,803 and 1,158,041 shares at
April 30, 2003 and 2002, respectively 33,079,502 36,773,595
T. Rowe Price Small Cap Stock Fund,
800,927 and 780,338 shares at April 30,
2003 and 2002, respectively 17,588,346 20,866,248
Common stock of Darden Restaurants, Inc.
(including $213,650,467 and $358,975,093
of non-participant directed funds at
April 30, 2003 and 2002, respectively),
13,047,999 and 14,283,255 shares at April
30, 2003 and 2002, respectively 228,470,463 379,934,573
(6) Company Common Stock Fund
Amounts in the Company Common Stock Fund are invested in the common stock
of Darden Restaurants, Inc. At April 30, 2003 and 2002, the fair value of
the shares held in participant directed accounts was $14,819,996 (846,373
shares) and $20,959,450 (787,950 shares), respectively. Participants should
refer to the consolidated financial statements of Darden Restaurants, Inc.
included in the Company's Annual Report on Form 10K filed with the
Securities and Exchange Commission.
15 (Continued)
DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2003 and 2002
(7) ESOP Fund
The ESOP Fund consists of common stock of the Company and cash which is
held in short-term investments. All amounts credited to participants' ESOP
accounts will be invested in the ESOP Fund. Effective June 2002, the Plan
was amended to allow participants to immediately transfer ESOP funds
credited to their accounts to any of the Plan's other investment funds.
However, amounts may not be transferred from any of the other investment
funds into the ESOP Fund.
At April 30, 2003, the ESOP Fund consists of 12,201,626 shares of the
Company's common stock. Of the total shares held by the ESOP Fund,
4,567,586 shares of Company common stock have been allocated to individual
participant accounts. The remaining 7,634,040 shares of Company common
stock are reserved for future Company matching contributions and quarterly
and annual incentive bonuses. The shares become available for allocation to
participants' accounts as ESOP loan principal and interest is paid. At
April 30, 2003, the fair value of the 7,634,040 unallocated Company shares
was $133,672,034 and the fair value of the 4,567,586 allocated shares was
$79,978,433. At April 30, 2002, the fair value of the 8,782,264 unallocated
Company shares was $233,608,225 and the fair value of the 4,713,041
allocated shares was $125,366,868.
The ESOP Fund has two promissory notes payable to Darden Restaurants, Inc.,
with outstanding principal balances of $17,550,000 and $16,900,000 as of
April 30, 2003 and $22,240,000 and $16,900,000 as of April 30, 2002. The
notes bear interest at variable rates payable on a monthly or bi-monthly
basis at the discretion of the Company. No principal payments on the notes
are required until the due dates, December 31, 2007 and December 15, 2014,
respectively. Any or all of the principal may be prepaid at any time.
(8) Related Party Transactions
Certain plan investments are units of participation in common trust funds
and shares of mutual funds managed by American Express Trust Company. As
mentioned in Note 1, American Express Trust Company is the trustee as
defined by the Plan and, therefore, these transactions qualify as
party-in-interest transactions. The Company pays the American Express Trust
Company's administrative and trustee fees. Such fees, net of plan
forfeitures used to cover plan expenses, were $273,520 and $295,396 for the
years ended April 30, 2003 and 2002, respectively.
Certain plan investments are loans to participants who are employees of the
Company and, therefore, these transactions qualify as party-in-interest
transactions.
16 (Continued)
DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2003 and 2002
(9) Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for plan benefits
per the accompanying financial statements to the Form 5500:
2003 2002
------------- -------------
Net assets available for benefits per
accompanying financial statements $322,213,307 465,564,108
Due to plan participants (75,637) (463,490)
------------- -------------
Net assets available for benefit
per Form 5500 $322,137,670 465,100,618
============= =============
The following is a reconciliation of benefits paid to participants per the
accompanying financial statements to the Form 5500:
2003 2002
------------- -------------
Benefits paid to participants per the
financial statements $ 35,191,126 36,191,840
Add: Amounts allocated to withdrawing
participants at end of year 75,637 463,490
Less: Amounts allocated to withdrawing
participants at beginning of year (463,490) (158,622)
------------- -------------
Benefits paid to participants
per the Form 5500 $ 34,803,273 36,496,708
============= =============
(10) Tax Status
The Plan obtained its latest determination letter on July 15, 2002, in
which the Internal Revenue Service stated that the Plan, as designed
through November 13, 2001, was in compliance with the applicable
requirements of the Internal Revenue Code. The Company believes that the
Plan currently is designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code and, therefore, the
Plan qualifies under Section 401(a) and 4975(e)(7) and the related trust is
tax exempt as of April 30, 2003. Therefore, no provision for income taxes
has been included in the Plan's financial statements.
(11) Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of the Employee Retirement
Income Security Act of 1974. In the event of Plan termination, no further
contributions shall be made to the Trust Fund by either the Company or the
participants, participants would become fully vested in their employer
contributions and the related Plan trust would be used exclusively for the
benefit of participants and beneficiaries after the payment of liquidation
expenses. Any unallocated leveraged shares in the ESOP Fund would be sold
to the Company or on the open market. The proceeds of such sale would be
used to satisfy any outstanding acquisition loans and the balance of any
amounts remaining would be allocated to each participant in proportion to
each participant's ESOP account balance to the total of all ESOP account
balances.
17
Schedule 1
DARDEN SAVINGS PLAN
Schedule H, line 4i - Schedule of Assets (Held at End of Year)
April 30, 2003
Face amount
or number Current
Issuer of units Cost value
-------------------------------------------------------- ------------------- ------------------- -------------------
Common stock of Darden
Restaurants, Inc.* 13,047,999 $ 59,420,763 $ 228,470,463
American Express Trust Stable Capital
Fund II* 2,728,909 40,216,653 46,184,063
Pimco Total Return Fund 852,554 9,067,948 9,275,788
American Express Trust Equity
Index Fund I* 1,202,803 38,521,989 33,079,502
T. Rowe Price Small Cap Stock Fund* 800,927 18,291,981 17,588,346
EuroPacific Growth Fund 431,978 13,471,413 9,827,490
MSIF U.S. Mid Cap Core Portfolio Fund 68,952 1,166,911 1,038,422
Harbor Capital Appreciation Fund 40,514 828,498 867,010
Davis New York Venture Fund 58,434 1,277,522 1,257,505
Participant Loans outstanding - interest
rates ranging from 5.75% - 10.5%
with varying maturities* 2,128 7,927,586 7,927,586
American Express Trust Company
Short-term Investment Fund* 565,920 565,920 565,920
*Party-in-interest
See accompanying independent auditors' report.
18
Schedule 2
DARDEN SAVINGS PLAN
Schedule H, line 4j - Schedule of Reportable Transactions
Year ended April 30, 2003
5% series of transactions by security issue described in 29 CFR 2520
[(103-6(c)(i)(iii)]:
Purchases Sales Net gain
---------------------------- -------------------------------
Issuer/Description Number Amount Number Amount (loss)
---------------------------------------- ------------ --------------- ------------ ------------------ --------------
American Express Trust Company
Short-term Investment Fund* 308 $ 22,073,453 410 $ 23,026,285 $ --
Common stock of Darden
Restaurants, Inc.* 116 4,674,344 129 31,272,128 (2,695,399)
*Party-in-interest
See accompanying independent auditors' report.
19
EXHIBITS
23 Consent of KPMG LLP, Independent Auditors.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Darden Savings Plan has duly caused this Annual Report to be signed on its
behalf by the Financial Fiduciary Committee (as the person who administers the
financial aspects of the Darden Savings Plan), by the undersigned hereunto duly
authorized.
DARDEN SAVINGS PLAN
By: Financial Fiduciary Committee,
as financial administrator of
the Darden Savings Plan
Dated: October 16, 2003 By: /s/ Linda J. Dimopoulos
----------------------------------
Linda J. Dimopoulos, Chairman
Financial Fiduciary Committee
Darden Restaurants, Inc.
20
EXHIBIT INDEX
Exhibit
Number Title
23 Consent of KPMG, as Independent Auditors.
21
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Darden Restaurants, Inc.
We consent to the incorporation by reference in the Registration Statement
on Form S-8 (No. 33-92702) of Darden Restaurants, Inc. of our report dated
September 13, 2003, relating to the financial statements of the Darden Savings
Plan for the year ended April 30, 2003, which appears in this Form 11-K of
Darden Restaurants, Inc.
/s/KPMG LLP
Orlando, Florida
October 15, 2003
22