11-K 1 form11k_1002.txt FORM 11-K, 10/02 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------------------------------------------------------- FORM 11-K -------------------------------------------------------------------------------- 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, 2002. 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, 2002 and 2001, 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, 2002, and 2001, 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, 2002. Schedule 2 - Schedule of reportable transactions, year ended April 30, 2002. 2 DARDEN SAVINGS PLAN Financial Statements and Supplemental Schedules April 30, 2002 and 2001 (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, 2002 and 2001, and the related statement of changes in net assets available for benefits with fund information for the years ended April 30, 2002 and 2001. 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 2001, 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. 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 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. September 27, 2002 4 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 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 Trust Mid Cap Value 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. 5
Non-participant Participant directed directed ------------------------------------------------------------------------------- -------------- Harbor Davis MSIF Capital New York Company Participant Mid Cap Appreciation Venture Common Loan ESOP Value 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 ================ ================= ============= ============== =============== ===============
6 DARDEN SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information April 30, 2001
Participant directed ------------------------------------------------------------------ American Express American Express Trust Stable Capital Pimco Total Trust Equity Index Fund II Return Fund Fund I ------------------ --------------------- ------------------------- Assets Investments, at fair value: Short-term investments, at cost which approximates fair value $ -- -- -- American Express Trust Stable Capital Fund II 37,609,731 -- -- Pimco Total Return Fund -- 4,010,250 -- American Express Trust Equity Index Fund I -- -- 42,250,231 T. Rowe Price Small Cap Stock Fund -- -- -- EuroPacific Growth Fund -- -- -- Common stock of Darden Restaurants, Inc. -- -- -- Participant loans -- -- -- ------------ --------------------- ---------------------- Total investments 37,609,731 4,010,250 42,250,231 ------------ --------------------- ---------------------- Receivables: Participant contributions 71,560 17,332 100,291 Employer contribution -- -- -- Accrued dividend and interest -- -- -- ----------- --------------------- ---------------------- Total receivables 71,560 17,332 100,291 ----------- --------------------- ---------------------- Total assets 37,681,291 4,027,582 42,350,522 ----------- --------------------- ---------------------- Liabilities ESOP Loan -- -- -- Interest payable -- -- -- ----------- --------------------- ---------------------- Total liabilities -- -- -- ----------- --------------------- ---------------------- Net assets available for benefits $ 37,681,291 4,027,582 42,350,522 =========== ===================== ====================== Number of participants (unaudited) 7,241 2,968 8,945 =========== ===================== ======================
See accompanying notes to financial statements. 7
Non-participant Participant directed directed ----------------------------------------------------------------------------- ---------------- T. Rowe Price Company Participant Small Cap EuroPacific Common Loan ESOP Stock Fund Growth Fund Stock Fund Fund Fund Total ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ -- -- 329,205 -- 506,315 835,520 -- -- -- -- -- 37,609,731 -- -- -- -- -- 4,010,250 -- -- -- -- -- 42,250,231 17,241,604 -- -- -- -- 17,241,604 -- 11,551,582 -- -- -- 11,551,582 -- -- 12,969,779 -- 268,567,237 281,537,016 -- -- -- 5,783,158 -- 5,783,158 ----------- ------------------- ------------------ ------------------ ------------------- ------------------ 17,241,604 11,551,582 13,298,984 5,783,158 269,073,552 400,819,092 ----------- ------------------- ------------------ ------------------ ------------------- ------------------ 42,823 34,956 31,697 -- -- 298,659 -- -- -- -- 206,424 206,424 -- -- -- -- 399,431 399,431 ----------- ------------------- ------------------ ------------------ ------------------- ------------------ 42,823 34,956 31,697 -- 605,855 904,514 ----------- ------------------- ------------------ ------------------ ------------------- ------------------ 17,284,427 11,586,538 13,330,681 5,783,158 269,679,407 401,723,606 ----------- ------------------- ------------------ ------------------ ------------------- ------------------ -- -- -- -- 44,455,000 44,455,000 -- -- -- -- 92,729 92,729 ----------- ------------------- ------------------ ------------------ ------------------- ------------------ -- -- -- -- 44,547,729 44,547,729 ----------- ------------------- ------------------ ------------------ ------------------- ------------------ 17,284,427 11,586,538 13,330,681 5,783,158 225,131,678 357,175,877 =========== =================== ================== ================== =================== ================== 8,452 5,366 3,829 1,861 11,582 =========== =================== ================== ================== ===================
8 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 Express Total Express Price Euro Trust Stable Return Trust Equity Small Cap Pacific Growth Capital Fund II Fund Index Fund I Stock Fund Fund ---------------- ------------- --------------- -------------- ----------------- Additions to net assets attributed to: Net 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 -- -- -- -- -- Forfeitures 9,362 -- -- -- -- ----------------- ------------ ---------------- -------------- ---------------- Total contributions 4,174,586 1,111,390 5,484,855 2,415,137 1,880,386 ----------------- ------------ ---------------- -------------- ---------------- Total additions, net 6,078,430 1,487,662 106,192 4,914,650 968,039 ----------------- ------------ ---------------- -------------- ---------------- Deductions from net assets attributed to: Interest expenses -- -- -- -- -- Administrative expenses (7,529) (465) (4,414) (1,812) (1,230) Payments due to resignations, retirements, withdrawals and deaths (3,778,174) (473,027) (3,392,178) (1,413,267) (893,693) Transfers between funds 243,027 325,494 (2,286,527) 82,250 (1,060,469) ----------------- ------------ ---------------- -------------- ---------------- Total deductions, net (3,542,676) (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. 9
Non-participant Participant directed directed ------------------------------------------------------------------------------- ----------------- Davis New MSIF Trust Harbor Capital York Company Participant Mid Cap Appreciation Venture Common Loan ESOP Value 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 -- -- -- -- -- -- 9,362 --------------- ------------------- ------------ --------------- -------------- ----------------- ----------------- 138,047 139,268 150,853 2,206,282 -- 6,054,010 23,754,814 --------------- ------------------- ------------ --------------- -------------- ----------------- ----------------- 111,020 78,133 130,763 8,117,121 1,348,010 122,975,974 146,315,994 --------------- ------------------- ------------ --------------- -------------- ----------------- ----------------- -- -- -- -- -- (1,366,929) (1,366,929) (23) (20) (14) (2,518) -- (350,969) (368,994) (5,015) (11,356) (27,360) (1,671,343) (552,448) (23,973,979) (36,191,840) 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) (37,927,763) --------------- ------------------- ------------ --------------- -------------- ----------------- ----------------- -- -- -- 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 =============== =================== ============ =============== ============== ================= =================
10 DARDEN SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information Year ended April 30, 2001
Participant directed ------------------------------------------------------------------------ American Express American Express Trust Stable Capital Pimco Total Trust Equity Index Fund II Return Fund Fund I --------------------- ------------------------ ------------------------ Additions to net assets attributed to: Net investment income (loss): Net appreciation (depreciation) in fair value of investments $ 2,140,346 89,427 (6,446,695) Dividends and interest -- 163,921 -- ------------ ------------------------ ----------------------- Net investment income (loss) 2,140,346 253,348 (6,446,695) ------------ ------------------------ ----------------------- Participant loan activity during the year: Withdrawals (818,085) (96,437) (1,344,570) Repayments (including interest) 706,405 99,656 1,120,818 ------------ ------------------------ ---------------------- Total loan activity (111,680) 3,219 (223,752) ------------ ------------------------ ---------------------- Contributions: Participants 3,841,550 746,483 5,730,695 Employer -- -- -- Forfeitures (20,826) -- (120) ------------ ------------------------ ---------------------- Total contributions 3,820,724 746,483 5,730,575 ------------ ------------------------ ---------------------- Total additions, net 5,849,390 1,003,050 (939,872) ------------ ------------------------ ---------------------- Deductions from net assets attributed to: Interest expense -- -- -- Administrative expenses (8,253) (386) (5,483) Payments due to resignations, retirements, withdrawals and deaths (4,715,999) (440,565) (4,684,869) Transfers between funds 681,211 1,673,389 (1,469,968) ----------- ------------------------ ---------------------- Total deductions, net (4,043,041) 1,232,438 (6,160,320) ----------- ------------------------ ---------------------- Net assets available for benefits: Beginning of year 35,874,942 1,792,094 49,450,714 ----------- ------------------------ ---------------------- End of year $ 37,681,291 4,027,582 42,350,522 =========== ======================== ======================
See accompanying notes to financial statements. 11
Non-participant Participant directed directed -------------------------------------------------------------------------- ------------------- T. Rowe Price Company Participant Small Cap EuroPacific Common Loan ESOP Stock Fund Growth Fund Stock Fund Fund Fund Total ------------------- ---------------- ------------------ ------------------ ------------------- ------------------ (467,636) (4,169,359) 4,258,177 -- 89,199,138 84,603,398 1,736,828 1,374,818 38,999 -- 836,843 4,151,409 ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ 1,269,192 (2,794,541) 4,297,176 -- 90,035,981 88,754,807 ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ (467,392) (482,473) (603,335) 3,812,292 -- -- 445,423 412,417 424,496 (2,688,586) -- 520,629 ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ (21,969) (70,056) (178,839) 1,123,706 -- 520,629 ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ 2,348,790 2,095,577 1,600,145 -- -- 16,363,240 -- -- -- -- 10,422,917 10,422,917 (22) (7) -- -- -- (20,975) ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ 2,348,768 2,095,570 1,600,145 -- 10,422,917 26,765,182 ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ 3,595,991 (769,027) 5,718,482 1,123,706 100,458,898 116,040,618 ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ -- -- -- -- (3,188,715) (3,188,715) (1,988) (1,590) (2,320) -- (411,413) (431,433) (1,768,736) (1,589,188) (1,337,897) (695,710) (20,820,868) (36,053,832) 1,916,282 (1,085,421) (530,007) -- (1,185,486) -- ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ 145,558 (2,676,199) (1,870,224) (695,710) (25,606,482) (39,673,980) ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ 13,542,878 15,031,764 9,482,423 5,355,162 150,279,262 280,809,239 ---------------- ------------------- ------------------ ------------------ ------------------- ------------------ 17,284,427 11,586,538 13,330,681 5,783,158 225,131,678 357,175,877 ================ =================== ================== ================== =================== ==================
12 DARDEN SAVINGS PLAN Notes to Financial Statements April 30, 2002 and 2001 (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. 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 100% 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. 13 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. (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 Mid Cap Value 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. 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 14 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. (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. (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 2002 and 2001 Plan years, $332,190 and $380,648, 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 Mid Cap Value Fund, 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. 15 (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, 2002 and 2001:
2002 2001 ------------------ ----------------- Investments at fair value: American Express Trust Stable Capital Fund II, 2,496,093 and 2,465,565 shares at April 30, 2002 and 2001, respectively $ 40,217,045 $ 37,609,731 American Express Trust Equity Index Fund I, 1,158,041 and 1,160,848 shares at April 30, 2002 and 2001, respectively 36,773,595 42,250,231 Common stock of Darden Restaurants, Inc. (including $358,975,093 and $268,567,237 of non-participant directed funds at April 30, 2002 and 2001, respectively), 9,522,170 and 10,308,936 shares at April 30, 2002 and 2001, respectively 379,934,543 281,537,016
(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, 2002 and 2001, the fair value of the shares held in participant directed accounts was $20,959,450 (525,300 shares) and $12,969,779 (474,910 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. (7) ESOP Fund The ESOP Fund consists of common stock of the Company and cash received from dividends and fractional shares which is held in short-term investments. All amounts credited to participants' ESOP accounts will be invested in the ESOP Fund and may not be transferred from the ESOP Fund to any of the Plan's other investment funds except as required by applicable Internal Revenue Service regulations or to the extent permitted by the terms of the Plan. Likewise, no amounts may be transferred from any of the other investment funds into the ESOP Fund. At April 30, 2002, the ESOP Fund consists of 8,996,870 shares of Company common stock. Of the total shares held by the ESOP Fund, 3,142,027 shares of Company common stock have been allocated to individual participant accounts. The remaining 5,854,843 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, 2002, the fair value of the 5,854,843 unallocated Company shares was $233,608,225 and the fair value of the 3,142,027 allocated shares was $125,366,868. At April 30, 2001, the fair value 16 of the 6,758,517 unallocated Company shares was $184,575,085 and the fair value of the 3,075,509 allocated shares was $83,992,152. The ESOP Fund has two promissory notes payable to Darden Restaurants, Inc., with outstanding principal balances of $22,240,000 and $16,900,000 as of April 30, 2002 and $27,555,000 and $16,900,000 as of April 30, 2001. 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) 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:
2002 2001 ------------------- ------------------- Net assets available for benefits per accompanying financial statements $ 465,564,108 357,175,877 Due to plan participants (463,490) (158,622) ------------------- ------------------- Net assets available for benefits per Form 5500 $ 465,100,618 357,017,255 =================== ===================
The following is a reconciliation of benefits paid to participants per the accompanying financial statements to the Form 5500:
2002 2001 ------------------- ------------------- Benefits paid to participants per the financial statements $ 36,191,840 36,053,832 Add: Amounts allocated to withdrawing participants at end of year 463,490 158,622 Less: Amounts allocated to withdrawing participants at beginning of year (158,622) (138,614) -------------------- ------------------- Benefits paid to participants per the Form 5500 $ 36,496,708 36,073,840 ==================== ===================
(9) 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 that, therefore, the Plan qualifies under Section 401(a) and 4975(e)(7) and the related trust is tax exempt as of April 30, 2002. Therefore, no provision for income taxes has been included in the Plan's financial statements. 17 (10) 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 ERISA. In the event of Plan termination, 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 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 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. (11) Subsequent Events 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. 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 effected in the form of a 50% stock dividend which was distributed to stockholders on May 1, 2002, for all 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 not been adjusted to reflect the stock split. 18 Schedule 1 DARDEN SAVINGS PLAN Schedule H, line 4i - Schedule of Assets (Held at End of Year) April 30, 2002
Face amount or number Current Issuer of units Cost value ------------------------------------------ ------------------- ------------------- ------------------- Common stock of Darden Restaurants, Inc.* 9,522,170 $ 60,872,326 $ 379,934,543 American Express Trust Stable Capital Fund II* 2,496,093 34,573,186 40,217,045 Pimco Total Return Fund 506,344 5,311,652 5,367,246 American Express Trust Equity Index Fund I* 1,158,041 36,698,543 36,773,595 T. Rowe Price Small Cap Stock Fund 780,338 17,608,318 20,866,248 EuroPacific Growth Fund 388,249 12,786,727 10,599,185 MSIF Trust Mid Cap Value Fund 41,715 822,925 819,692 Harbor Capital Appreciation Fund 21,714 605,977 576,069 Davis New York Venture Fund 31,747 786,445 785,412 Participant Loans - interest rates ranging from 5.75% - 10.5% with varying maturities 6,578,720 -- 6,578,720 American Express Trust Company Short-term Investment Fund* 1,583,416 1,583,416 1,583,416
*Party-in-interest See accompanying independent auditors' report. 19 Schedule 2 DARDEN SAVINGS PLAN Schedule H, line 4j - Schedule of Reportable Transactions Year ended April 30, 2002 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* 286 $ 18,838,405 380 $ 18,133,814 $ -- Common stock of Darden Restaurants, Inc.* 97 3,896,098 129 27,237,281 516,528 *Party-in-interest
See accompanying independent auditors' report. 20 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 23, 2002 By: /s/ Clarence Otis, Jr. Clarence Otis, Jr., Chairman Financial Fiduciary Committee Darden Restaurants, Inc. 21