Dear Fellow Shareholders:
As I reflect on the past year, I am reminded of what it means to be of service. Our entire industry is built on an
unwavering commitment to serving others. Indeed, at Darden, we say that being of service is at the heart of our
business.
Fiscal 2021 was a challenging year for our company and the industry overall as we continued to deal with the effects of
the pandemic. And our passion for serving others — our team members, our guests, our communities and our valued
shareholders — is what enabled us to emerge even stronger.
Serving Our Team Members
Our founder, Bill Darden, said, “The greatest competitive edge our company has is the quality of our employees,
evidenced by the excellent job they do every day.” Our team members are what make the difference at Darden, which is
why they are at the heart of everything we do.
Over the past year, we strengthened how we serve our team members by investing in their success, providing pathways
for growth and ensuring an inclusive and diverse culture.
Investing in Their Success
As we continue to grow and welcome guests back to our restaurants, retaining and attracting the best talent in the
industry is critical to our success. That is why we continued to invest in our team members throughout the year.
Today, across all our brands, our hourly team members earn,
on average, more than $18 per hour, which includes tip
income. In March, we announced that every hourly
restaurant team member will earn at least $10 per hour,
inclusive of tip income. We also committed to raising the
amount to $11 per hour in January 2022 and to $12 per hour
in January 2023.
These investments also included several programs to help
support our team members throughout the pandemic.
Among them:
All Darden Brands
Job Title
Bartender
Server
Culinary
Kitchen Utility
Busser
Host
Average Hourly Rate*
$27.75
$22.47
$15.96
$14.00
$13.25
$12.78
* As of May 30, 2021, inclusive of tips
Permanent paid sick leave program so team
members can stay home if they do not feel well;
COVID-19 emergency pay and covering insurance payments and benefits deductions for team members who
were furloughed when our dining rooms were closed;
Paid time off to get the COVID-19 vaccine;
And a one-time bonus for nearly 90,000 of our hourly restaurant team members to thank them for their hard
work.
These are just the latest investments we have made in our people, totaling more than $275 million since fiscal 2018. As
we move forward, these investments further strengthen our industry-leading position as the employer of choice.
Providing Pathways for Growth
Every year, we teach thousands of people a lifelong skill:
how to succeed in the workplace. With more than 1,800
locations and 8,000 leadership positions across our
restaurants, we provide a pathway for thousands of
individuals across the country to transform an entry-
level position into a lifelong career. Helping others
realize their potential and achieve their dreams is one of
the things that makes our industry special, and that’s
why a central tenet of our approach to team member
development is a commitment to promoting from
within.
Ensuring an Inclusive and Diverse Culture
At Darden, we believe everyone is welcome to a seat at
our table, and this belief has been the bedrock of our
culture since Bill Darden opened his first restaurant, The
Green Frog, in 1938.
Promoting From Within
of all Restaurant
Managers are
promoted from
hourly ranks
of all General
Managers/Managing
Partners are
promoted from
within
of all Directors of
Operations are
promoted from
within
In the wake of the pandemic and its disproportionate impact on communities of color, we pivoted our giving efforts to
help those who needed it most. Our partners at Feeding America quickly saw demand for food drastically increase, and
mobile food pantries became an important tool to help their food banks provide access to nutritious food among
vulnerable populations. Through a $500,000 grant from the Darden Foundation and additional support from our
partners, Penske Truck Leasing and Lineage Logistics, we helped Feeding America provide 26-foot refrigerated box trucks
to serve as mobile food pantries for five member food banks in communities with the greatest need.
Darden is a place that includes everyone, supports everyone and protects everyone. We prioritize our inclusion and
diversity efforts not just because it is the right thing to do — more importantly, it makes us all better. It leads to
innovation of thought, helps fuel our growth as a company and creates great places to work for our team members. That
is why our strategy to uphold our founder’s legacy is rooted in advancing workplace diversity, creating an inclusive
environment and building on our commitment to make a positive impact. I invite you to learn more about our strategy
by visiting Darden.com/Our-Impact.
Serving Our Guests
We value the trust that our guests place in us to provide exceptional dining experiences for their family and friends. We
take this seriously, and during the year, we focused on four key priorities to ensure that we were living up to our
promise to our guests.
First, we created a safe, welcoming environment in our restaurants. As the year began, we welcomed guests back into
our dining rooms — all while practicing our enhanced safety protocols and complying with a wide range of restrictions
and local requirements that varied by market. We also configured our dining rooms for social distancing and installed
booth partitions to maximize allowable capacity.
Second, we remained laser-focused on our Back-to-Basics Operating Philosophy. Operating in this environment added
another layer of complexity to our restaurant operations, and this focus drove strong restaurant-level execution that
created exceptional guest experiences — whether that was in our dining rooms, outdoors on our patios or in their
homes.
Third, to support our philosophy, we continued to streamline our menus and improve our processes and procedures.
Removing complexity from our operations has allowed our restaurant teams to execute more consistently. Our
operators continue to deliver great guest experiences by displaying a high level of flexibility, creativity and passion every
day, and I am thrilled to see that reflected in our guest satisfaction metrics.
Finally, we continued to invest in and implement technology to help meet our guests’ growing need for convenience
and desire for off-premise experiences. This included providing multiple ways for our guests to order and settle their
check inside our restaurants and across our digital storefronts. Additionally, we deployed mobile solutions to make it
easier for our guests to let us know when they arrive to dine in or pick up a Curbside To Go order.
I am proud of how our restaurant teams continue to welcome more guests back into our restaurants and create
memorable experiences.
Serving Our Communities
For us, being of service also means making a difference in the communities we serve by tackling issues that we are best
equipped to help address. As a restaurant company, we are uniquely positioned to help fight hunger. We also recognize
that operating more than 1,800 restaurants requires abundant natural resources. That is why we view sourcing food
with care and protecting our planet as another way we can make a difference in our communities.
Fighting Hunger
Food insecurity impacts individuals within every community in the United States, and the pandemic made the ongoing
hunger crisis even worse. Feeding America estimates that as many as one in eight people may face hunger, amounting
to more than 42 million people.
Fighting Hunger in Fiscal 2021
$2.5 million donated to Feeding
America through the Darden
Foundation
5 mobile food trucks provided to
local food banks with exceptionally
high need
5.6 million pounds of food
contributed through our Harvest
program – amounting to 4.7 million
meals
This reinforces the importance of our 10-year partnership with
Feeding America. In fiscal 2021, the Darden Restaurants, Inc.
Foundation provided $2.5 million to support Feeding America's
network of nearly 200 food banks across all 50 states, helping
provide meals to people in need. This support also helped Feeding
America enhance mobile food pantry programs for five local food
banks, increasing access to nutritious food in communities of color.
These efforts all go hand-in-hand with our Harvest program. Each
day, our restaurants collect surplus, wholesome food that is not
served to guests and prepare it for donation to local nonprofit
partners.
Sourcing Food with Care
grown are integral to preparing great food for our guests. Darden’s Food Principles continue to be our foundation for
sourcing food for our guests sustainably. They include commitments around food safety, sustainability, animal welfare
and nutritional transparency, and we continually engage with our suppliers to review these values. You can learn more
about these commitments and our Food Principles at Darden.com/Our-Impact.
We know that where our ingredients come from and how they are
In 2019, we established an Animal Welfare Council, comprised of a cross-functional group of academics and thought
leaders in the care of animals in food supply chains. This group guides our efforts to improve animal welfare outcomes
and helped us develop a process for working with chicken suppliers on key welfare issues. As a result, we have
committed to purchasing chicken raised without the use of medically important antibiotics by 2023.
Protecting Our Planet
With more than 1,800 locations, we view conservation efforts at our restaurants as the first line of action in managing
climate risks and resource volatility.
Since 2008, we have steadily decreased Greenhouse Gas (GHG) emissions every year. Over the last decade, we have
reduced GHGs by an average of 33% per restaurant and continue to proactively manage climate risks in our operations.
We also operate some of the most efficient full-service restaurants in the industry and continue to focus on managing
energy and water conservation efforts. In fiscal 2020, our restaurants experienced an 8% reduction in energy use and a
7% reduction in water use year-over-year.
Finally, we continue to make advancements in
minimizing food and plastic waste in our restaurants.
Our waste diversion rates have more than doubled
since 2008, and we regularly analyze and optimize our
efforts in our restaurants. While we are dependent on
available recycling infrastructure in the communities
where we operate, more than 80% of our restaurants
currently have recycling programs in place.
The single largest component of our waste stream is
food waste. In addition to improving our forecasting
efforts to minimize food loss, we reduce the amount
of waste we send to landfills thanks to our Harvest
food donation program. During the year, more than
5.6 million pounds of unserved food was diverted
and donated to local nonprofits.
While a single company cannot completely change the
broad forces at play, we recognize and understand the
impact that a company our size can, and must, make.
Serving Our Shareholders
Our mission is to be financially successful through
great people consistently delivering outstanding food,
drinks and service in an inviting atmosphere, making
every guest loyal. And the strategy we developed six
years ago enables our success.
As I look back, it is clear to me that our strategy
provided a strong foundation to help us navigate a
year filled with change and uncertainty.
Taking Action Against Climate Risks
Climate change is a significant global challenge. Given
our size, and the fact that we own and operate our
restaurants, we know that we can do more to make
an impact. That is why we are working to take action
against climate risks.
To help us manage climate risks, we commit to:
Measuring and reporting our Scope 3
emissions by the end of fiscal 2022. This is in
addition to Scope 1 & 2, which are already
publicly reported.
Aligning our climate approach to the Task
Force on Climate-related Financial
Disclosures (TCFD) by creating a framework
that covers Governance, Strategy, Risk
Management, and Metrics & Targets.
To help us tackle the climate impacts of our
business, we commit to:
Creating a strategy to address Scope 1 & 2
GHG emissions with the goal of achieving
100% renewable energy for our restaurants
by 2030
Developing and publicly reporting a Science-
based target for both direct operations
(Scope 1 & 2) and broader value chain
impacts (Scope 3)
Our portfolio of iconic brands remained focused on executing our Back-to-Basics Operating Philosophy, anchored in
providing great food, with outstanding service, in an enjoyable atmosphere, for all of our guests. At the Darden level, we
concentrated on leveraging our Four Competitive Advantages of Significant Scale, Extensive Data and Insights, Rigorous
Strategic Planning, and Our Results-Oriented Culture.
Significant Scale
Our Significant Scale enabled us to quickly react to the turbulent operating environment. The depth and breadth of our
supply chain relationships ensured that we could adjust our product supply as needed without experiencing any major
interruptions.
Our scale also enabled us to drastically accelerate the development of online ordering and several other digital
initiatives and cascade them across our brands quickly and effectively. The robust expansion of our digital platform over
the past year has also provided us with a richer set of first-party data on new and existing guests.
Extensive Data & Insights
The role of data and insights has never been more relevant than it is today. By leveraging our Extensive Data and
Insights, we were able to ensure that we constantly met our guests’ expectations and identified pockets of opportunity
to improve the guest experience and drive incremental sales. We are also increasing accessibility to our data across the
organization — so our leaders can use our rich data as effectively as possible to make the best decisions for our
business.
Rigorous Strategic Planning
Our Rigorous Strategic Planning ensures that our brands have the right strategy in place to compete effectively and grow
market share. During this unique time, we seized the rare opportunity to transform our business model. First, we
focused on adjusting our cost structure in order to generate strong cash flows while making the appropriate investments
in our businesses. This provided a stronger foundation for us to build on as sales trends improved throughout the year.
Next, we re-imagined our offerings. This resulted in simplified menus across our portfolio driving high levels of execution
and strengthening margins — further positioning our brands for long-term success.
As we streamlined our offerings, we made numerous strategic investments to ensure we were better positioned to grow
market share. At the restaurant level, we invested in food quality and portion size to help strengthen long-term value
perceptions for each brand. We also invested in technology — particularly within our To Go capabilities — and we
further optimized our support structure, which drove G&A efficiencies.
Results-Oriented Culture
Our people are our greatest competitive advantage. As I said, this was a challenging year, and our culture was put to the
ultimate test as our team members dealt with the personal and emotional impacts of everything that transpired. That is
why we continued to invest in them as we navigated the unprecedented time together. Through it all, our team
members demonstrated tremendous passion, innovation and resiliency in caring for our guests and each other. As a
result, our culture grew stronger, and with it, so did our company.
The strength of our Four Competitive Advantages and the power of our Back-to-Basics Operating Philosophy allowed us
to successfully manage through this past year and emerge even stronger – proving our strategy remains the right one for
Darden.
Our Results
Despite the significant challenges we faced, including operating our restaurants with limited dining room capacity
throughout the year, we achieved total sales of $7.2 billion. We also opened 36 new restaurants and closed six, resulting
in 30 additional restaurants for the year. Adjusted diluted net earnings per share were $4.31.1
The actions we took to transform our business model helped build a solid foundation for recovery and resulted in more
than $1 billion in Adjusted EBITDA1 and more than $920 million of free cash flow.1 As a result, we repaid our term loan,
reinstated our dividend and quickly built up our cash position.
These results helped us deliver value-creating returns for our shareholders. Our long-term framework calls for 10% to
15% total shareholder return (TSR), and we achieved an annualized TSR of 15.7% over the 10-year fiscal period that
ended May 30, 2021, exceeding the high end of our target. Additionally, we recently declared a quarterly dividend of
$1.10 per share, exceeding our pre-COVID dividend levels.
Confidently Looking Ahead
Darden is well-positioned for future growth. Consumer demand has returned at strong levels, proving the resiliency of
the full-service dining segment. Given guest demand and the financial health of the consumer, we believe that our
industry can return to pre-pandemic levels — or greater.
As we begin our new fiscal year, our business model is much stronger than before the pandemic thanks to our business
transformation work, and we remain focused on driving profitable sales growth. Our restaurants will continue to deliver
great food and outstanding service in a welcoming atmosphere, and we will continue to make the right investments in
our business to stay competitive in the marketplace.
On behalf of our Board of Directors and all of our team members, thank you for your ongoing support over the past
year. We value the trust you have placed in us by investing in our company, and we will work hard to continue earning it.
Eugene I. Lee, Jr.
Chairman & Chief Executive Officer
1 Represents a Non-GAAP measure. A reconciliation of GAAP to Non-GAAP numbers can be found at the end of this letter.
Forward-Looking Statements
This letter contains forward-looking statements. By their nature, forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-
looking statements. Additional cautionary and other information with respect to these forward-looking statements is set
forth in Item 1A of the Company’s Annual Report on Form 10-K under the heading “Risk Factors” which accompanies this
letter.
Non-GAAP Information
The information in this letter includes financial information determined by methods other than in accordance with U.S.
generally accepted accounting principles (“GAAP”), such as adjusted diluted net earnings per share from continuing
operations. The Company’s management uses these non-GAAP measures in its analysis of the Company’s performance.
The Company believes that the presentation of certain non-GAAP measures provides useful supplemental information
that is essential to a proper understanding of the operating results of the Company’s businesses. These non-GAAP
disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they
necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Fiscal 2021 Reported to Adjusted Earnings Reconciliation
$ in millions, except per share amounts
Earnings
Before
Income Tax
Income Tax
Expense
(Benefit)
Net Earnings
Diluted Net
Earnings Per
Share
$576.5
$632.4
$(55.9)
Reported Earnings from Continuing Operations
Adjustments:
Corporate restructuring1
Income tax benefit2
Adjusted Earnings from Continuing Operations
Interest
Adjusted Income Tax Expense
Depreciation and Amortization
Adjusted EBITDA
1 Includes cash expenses of approximately $38 million, primarily related to severance and benefits, which will be paid over an
18-month period, and non-cash expenses of approximately $10 million related to acceleration of equity-settled awards and expense
associated with the postretirement benefit plan.
35.8
(99.7)
$568.5
63.5
55.8
350.9
$1,038.7
0.27
(0.76)
$4.31
12.0
99.7
$55.8
$624.3
$4.80
47.8
2 Primarily relates to our estimated federal net operating loss (NOL) for fiscal year 2021, which we expect to carryback to the
preceding five years. A non-recurring income tax benefit is generated due to the difference in the federal tax rates between fiscal year
2021 and the years to which the NOL will be carried back.
Fiscal 2021 Free Cash Flow
$ in millions
Net cash provided by operating activities of continuing operations
Less: Purchases of land, buildings and equipment
Less: Purchases of capitalized software and other assets
Free Cash Flow
$1,193.5
(254.9)
(15.4)
$923.2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 30, 2021
OR
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
(State or other jurisdiction of
incorporation or organization)
59-3305930
(IRS Employer Identification No.)
1000 Darden Center Drive, Orlando, Florida
(Address of principal executive offices)
32837
(Zip Code)
Registrant’s telephone number, including area code: (407) 245-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Common Stock, without par value
DRI
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark if 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 ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit
and post such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Non-accelerated filer
☒
☐ (Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of Common Stock held by non-affiliates of the Registrant based on the closing price of $109.95 per share as reported on the New York
Stock Exchange on November 27, 2020, was approximately: $14,279,051,000.
Number of shares of Common Stock outstanding as of May 30, 2021: 130,762,723.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for its Annual Meeting of Shareholders on September 22, 2021, to be filed with the Securities and Exchange
Commission no later than 120 days after May 30, 2021, are incorporated by reference into Part III of this Report.
DARDEN RESTAURANTS, INC.
FORM 10-K
FISCAL YEAR ENDED MAY 30, 2021
TABLE OF CONTENTS
PART I
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Properties
Item 3.
Item 4.
PART II
Item 5.
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6.
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Signatures
Page
1
14
24
24
24
24
25
27
27
37
38
80
80
80
80
80
81
81
81
81
82
Cautionary Statement Regarding Forward-Looking Statements
Statements set forth in or incorporated into this report regarding the expected increase in sales from continuing operations,
same-restaurant sales, the number of our restaurants, our annual effective tax rate and capital expenditures in fiscal 2022, and all
other statements that are not historical facts, including without limitation statements with respect to the financial condition, results
of operations, plans, objectives, future performance and business of Darden Restaurants, Inc. and its subsidiaries that are preceded
by, followed by or that include words such as “may,” “will,” “expect,” “intend,” “anticipate,” “continue,” “estimate,” “project,”
“believe,” “plan,” “outlook” or similar expressions, are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and are included, along with this statement, for purposes of complying with the safe harbor
provisions of that Act. Any forward-looking statements speak only as of the date on which such statements are made, and we
undertake no obligation to update such statements for any reason to reflect events or circumstances arising after such date. By
their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from
those set forth in or implied by such forward-looking statements. In addition to the risks and uncertainties of ordinary business
obligations, and those described in information incorporated into this report, the forward-looking statements contained in this
report are subject to the risks and uncertainties described in Item 1A below under the heading “Risk Factors.”
Item 1. BUSINESS
Introduction
PART I
Darden Restaurants, Inc. is a full-service restaurant company, and as of May 30, 2021, we owned and operated 1,834
restaurants through subsidiaries in the United States and Canada under the Olive Garden®, LongHorn Steakhouse®, Cheddar’s
Scratch Kitchen®, Yard House®, The Capital Grille®, Seasons 52®, Bahama Breeze® and Eddie V’s Prime Seafood® trademarks.
As of May 30, 2021, we also had 57 restaurants operated by independent third parties pursuant to area development and franchise
agreements. The following table details the number of company-owned and operated restaurants, as well as those operated under
franchise agreements, as of May 30, 2021:
Number of restaurants
Owned and operated:
United States
Canada
Total
Franchised:
United States (3)
Latin America
Total
Olive
Garden
LongHorn
Steakhouse
Cheddar’s
Scratch
Kitchen
Yard
House
(1)
The Capital
Grille (2)
Seasons
52
Bahama
Breeze
Eddie
V’s
867
8
875
9
23
32
533
—
533
18
—
18
170
—
170
5
—
5
81
—
81
—
—
—
63
—
63
—
1
1
44
—
44
—
—
—
42
—
42
1
—
1
26
—
26
—
—
—
Total
1,826
8
1,834
33
24
57
(1) Includes two restaurants that are owned jointly by us and third parties, and managed by us.
(2) Includes three company-owned The Capital Burger restaurants.
(3) Includes Puerto Rico and Guam.
Darden Restaurants, Inc. is a Florida corporation incorporated in March 1995, and is the parent company of GMRI, Inc.,
also a Florida corporation. GMRI, Inc. and certain other of our subsidiaries own and operate our restaurants. GMRI, Inc. was
originally incorporated in March 1968 as Red Lobster Inns of America, Inc. We were acquired by General Mills, Inc. in 1970 and
became a separate publicly held company in 1995 when General Mills distributed all of our outstanding stock to the stockholders
of General Mills. Our principal executive offices and restaurant support center are located at 1000 Darden Center Drive, Orlando,
Florida 32837, 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, 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,” “the Company,” “we,” “our” or “us” include Darden Restaurants, Inc., GMRI, Inc. and our respective subsidiaries.
We have a 52/53 week fiscal year ending the last Sunday in May. Our fiscal year 2021 ended May 30, 2021 and consisted of
52 weeks, fiscal 2020 ended May 31, 2020 and consisted of 53 weeks, and fiscal 2019 ended May 26, 2019 and consisted of 52
weeks.
The following description of our business should be read in conjunction with the information in Part II of this report under
the caption “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8 -
Financial Statements and Supplementary Data.”
COVID-19 Pandemic
For much of fiscal 2021, the COVID-19 pandemic resulted in a significant reduction in guest traffic at our restaurants due
to changes in consumer behavior as public health officials encouraged social distancing and required personal protective
equipment and state and local governments mandated restrictions including suspension of dine-in operations, reduced restaurant
seating capacity, table spacing requirements, bar closures and additional physical barriers. Beginning in late March 2020, we
operated with all of our dining rooms closed and served our guests in a To Go only or To Go and delivery format. In late April
2020, state and local governments began to allow us to open dining rooms at limited capacities, along with other operating
restrictions.
1
As a result, we began fiscal 2021 with significant limitations on our operations, which over the course of the fiscal year
varied widely from time to time, state to state and city to city. During November 2020, rising case rates resulted in certain
jurisdictions implementing restrictions that again reduced dining room capacity or mandated the re-closure of dining rooms.
Once COVID-19 vaccines were approved and moved into wider distribution in the United States in early 2021, public health
conditions improved and almost all of the COVID-19 restrictions on businesses have eased. As of the date of this report, all of our
restaurants were able to open their dining rooms to some extent and few capacity restrictions or other COVID-19 restrictions
remained in place in the United States. However, it is possible additional outbreaks could require us to again reduce our capacity
or limit or suspend our in-restaurant dining operations.
As we navigated through the pandemic, we took significant steps to adapt our business model to allow us to continue to
serve guests and support our team members, including investing in our team members through enhanced pay and benefits,
streamlining our restaurant processes, simplifying our menus, and accelerating the rollout of technology to all of our brands to
enhance the off-premise and in-restaurant guest experience. As our dining rooms have returned to full or close-to-full capacity, we
are focused on continuing to provide a safe environment for our team members and guests, and maintaining many of the operating
efficiencies established during fiscal 2021.
Segment Information
We manage our restaurant brands in North America as operating segments. The brands operate principally in the U.S. within
full-service dining. We aggregate our operating segments into reportable segments based on a combination of the size, economic
characteristics and sub-segment of full-service dining within which each brand operates. We have four reportable segments: 1)
Olive Garden, 2) LongHorn Steakhouse, 3) Fine Dining (which includes The Capital Grille and Eddie V’s) and 4) Other Business
(which includes Cheddar’s Scratch Kitchen, Yard House, Bahama Breeze, Seasons 52 and results from our franchise operations).
External sales are derived principally from food and beverage sales, we do not rely on any major customers as a source of sales
and the customers and long-lived assets of our reportable segments are predominantly in the U.S. There were no material
transactions among reportable segments.
Restaurant Brands
Olive Garden
Olive Garden is an internally-developed brand and is the largest full-service dining Italian restaurant operator in the United
States. Olive Garden offers a variety of Italian foods featuring fresh ingredients presented simply with a focus on flavor and
quality, and a broad selection of imported Italian wines. In 1982, Olive Garden opened its first restaurant in Orlando, Florida.
Most dinner menu entrée prices range from $10.00 to $20.00, and most lunch menu entrée prices range from $8.00 to
$10.00. The price of each entrée includes as much fresh salad or soup and breadsticks as a guest desires. During fiscal 2021, the
average check per person (defined as total sales divided by number of entrées sold) was approximately $20.00, with alcoholic
beverages accounting for 4.7 percent of Olive Garden’s sales. Olive Garden maintains different menus across its trade areas to
reflect geographic differences in consumer preferences, prices and selections, as well as a smaller portioned, lower-priced
children’s menu.
LongHorn Steakhouse
LongHorn Steakhouse is a full-service steakhouse restaurant with locations primarily in the eastern United States, operating
in an atmosphere inspired by the American West. LongHorn Steakhouse opened its first restaurant in 1981 and we acquired
LongHorn Steakhouse in October 2007 as part of the RARE Hospitality International, Inc. (RARE) acquisition. LongHorn
Steakhouse restaurants feature a variety of menu items including signature fresh steaks and chicken, as well as salmon, shrimp,
ribs, pork chops and burgers.
Most dinner menu entrée prices range from $11.50 to $31.50, and most lunch menu entrée prices range from $8.00 to
$12.00. The price of most entrées includes a side and/or salad and as much freshly baked bread as a guest desires. During fiscal
2021, the average check per person was approximately $23.00, with alcoholic beverages accounting for 7.9 percent of LongHorn
Steakhouse’s sales. LongHorn Steakhouse maintains different menus for dinner and lunch and different menus across its trade
areas to reflect geographic differences in consumer preferences, prices and selections, as well as a smaller portioned, lower-priced
children’s menu.
Cheddar’s Scratch Kitchen
Cheddar’s Scratch Kitchen is a full-service restaurant operating primarily in Texas and throughout the southern, midwestern
and mid-Atlantic regions of the United States. The casual dining menu features modern classics and American favorites cooked
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from scratch. Cheddar’s Scratch Kitchen opened its first restaurant in 1979 and we acquired Cheddar’s Scratch Kitchen in April
2017.
Most lunch and dinner menu entrée prices range from $8.00 to $19.00. During fiscal 2021, the average check per person
was approximately $16.00, with alcoholic beverages accounting for 8.1 percent of Cheddar’s Scratch Kitchen’s sales. Cheddar’s
Scratch Kitchen features different menus across its trade areas to reflect geographic differences in consumer preferences, prices
and selections, as well as a smaller portioned, lower-priced children’s menu.
Yard House
Yard House is a full-service restaurant operating in metropolitan areas across the United States and is known for great food,
classic rock and over 100 draft beer offerings. The American menu includes more than 100 chef driven items with a wide range of
appetizers, snacks, burgers and steaks, street tacos, salads, sandwiches and a generous selection of vegetarian dishes. Yard House
opened its first restaurant in 1996 and we acquired Yard House in August 2012.
Yard House design elements create a contemporary, yet casual, “come as you are” environment. Most lunch and dinner
menu entrée prices range from $9.50 to $43.00. During fiscal 2021, the average check per person was approximately $32.00, with
alcoholic beverages accounting for 33.8 percent of Yard House’s sales. Yard House maintains different menus and selections of
craft beers across its trade areas to reflect geographic differences in consumer preferences, prices and selections, as well as a
smaller portioned, lower-priced children’s menu.
The Capital Grille
The Capital Grille is a fine dining restaurant with locations in major metropolitan cities in the United States featuring
relaxed elegance and style. The Capital Grille opened its first restaurant in 1990 and we acquired The Capital Grille in October
2007 as part of the RARE acquisition. Nationally acclaimed for dry aging steaks on the premises, the restaurants feature an
award-winning wine list offering over 350 selections, personalized service, a comfortable club-like atmosphere, and premiere
private dining rooms.
Most dinner menu entrée prices range from $31.00 to $95.00 and most lunch menu entrée prices range from $18.00 to
$48.00. During fiscal 2021, the average check per person was approximately $85.50, with alcoholic beverages accounting for 26.7
percent of The Capital Grille’s sales. The Capital Grille offers different menus for dinner and lunch and varies its wine list to
reflect geographic differences in consumer preferences, prices and selections.
Seasons 52
Seasons 52 is an internally-developed full-service restaurant brand with a casually sophisticated, fresh grill and wine bar that
offers a seasonally changing menu. The menu includes an international collection of wines, featuring 52 wines available by the
glass, along with exceptional signature handcrafted cocktails. In 2003, Seasons 52 opened its first restaurant in Orlando, Florida.
Most dinner menu entrée prices range from $15.00 to $41.50, and most lunch entrée prices range from $11.50 to $41.50.
During fiscal 2021, the average check per person was approximately $46.50, with alcoholic beverages accounting for 25.1 percent
of Seasons 52’s sales. Seasons 52 maintains an all-day menu in addition to different seasonal offerings, a pared-down lunch menu
and a happy-hour menu.
Bahama Breeze
Bahama Breeze is an internally-developed full-service restaurant brand operating primarily in the eastern United States, that
offers guests the feeling of a Caribbean escape, with food, drinks and atmosphere found in the islands. The menu features
distinctive, Caribbean-inspired fresh seafood, chicken and steaks as well as handcrafted tropical cocktails. In 1996, Bahama
Breeze opened its first restaurant in Orlando, Florida.
Most lunch and dinner menu entrée prices range from $8.00 to $24.00. During fiscal 2021, the average check per person was
approximately $31.00, with alcoholic beverages accounting for 23.3 percent of Bahama Breeze’s sales. Bahama Breeze maintains
different menus across its trade areas to reflect geographic differences in consumer preferences, prices and selections, as well as a
smaller portioned, lower-priced children’s menu.
Eddie V’s
Eddie V’s is a fine dining restaurant with locations in major metropolitan cities in the United States, with a sophisticated and
contemporary ambiance, featuring live nightly music in the V Lounge. The menu is inspired by the great classic restaurants of
New Orleans, San Francisco and Boston, with an emphasis on prime seafood creations, USDA prime beef and chops, and fresh
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oyster bar selections. The atmosphere provides a comfortable dining experience reminiscent of a modern day Gatsby “where your
pleasure is our sole intention.” Eddie V’s opened its first restaurant in 2000 and we acquired Eddie V’s in November 2011.
Most dinner menu entrée prices range from $35.00 to $102.00. During fiscal 2021, the average check per person was
approximately $101.00, with alcoholic beverages accounting for 28.3 percent of Eddie V’s sales. Eddie V’s maintains different
menus for dinner and varies its wine list to reflect geographic differences in consumer preferences, prices and selections.
The following table shows our growth over the last five years and lists the number of restaurants owned and operated by
each of our brands as of the end of the fiscal years indicated. The table excludes our restaurants operated by independent third
parties pursuant to area development and franchise agreements. The final column in the table lists our total sales from continuing
operations for the fiscal years indicated.
Fiscal
Year
2017
Olive
Garden
846
LongHorn
Steakhouse
490
Cheddar’s
Scratch
Kitchen
140
Yard
House
67
The Capital
Grille (1)
56
Seasons
52
41
Bahama
Breeze
37
Eddie
V’s
18
Total
Restaurants
1,695
2018
2019
2020
2021
856
866
868
875
504
514
522
533
156
161
165
170
72
79
81
81
58
58
60
63
42
44
44
44
39
42
41
42
19
21
23
26
1,746
1,785
1,804
1,834
Total
Sales
(in millions)
$7,170.2
$8,080.1
$8,510.4
$7,806.9
$7,196.1
(1) Includes The Capital Burger restaurants as follows: one in fiscal 2018, one in fiscal 2019, two in fiscal 2020, and three in
fiscal 2021.
Strategy
We believe that capable operators of strong multi-unit brands have the opportunity to increase their share of the restaurant
industry’s full-service segment. Generally, the restaurant industry is considered to be comprised of three segments: quick service,
fast casual, and full-service. All of our restaurants fall within the full-service segment, which is highly fragmented and includes
many independent operators and small chains. We believe we have strong brands, and that the breadth and depth of our
experience and expertise sets us apart in the full-service restaurant industry. This collective capability is the product of
investments over many years in areas that are critical to success in our business, including restaurant operations excellence, brand
management excellence, supply chain, talent management and information technology, among other things.
Although throughout fiscal 2021 we continued to adapt our business model to the impacts of the COVID-19 pandemic, our
operating philosophy remains focused on strengthening the core operational fundamentals of the business by providing an
outstanding guest experience rooted in culinary innovation, attentive service, engaging atmosphere, and integrated marketing.
Darden enables each brand to reach its full potential by leveraging its scale, insights, and experience in a way that protects
uniqueness and competitive advantages. Additionally, our brands can capitalize on data driven insights to deliver customized one-
to-one customer relationship marketing. We hold ourselves accountable for operating our restaurants with a sense of urgency to
achieve our commitments to all of our stakeholders.
4
Recent and Planned Restaurant Growth
During fiscal 2021, we added 30 net new company-owned restaurants in the United States. Our fiscal 2021 actual restaurant
openings and closings, fiscal 2022 projected openings, and approximate capital investment, square footage and dining capacity,
by brand, are shown below:
Actual - Fiscal 2021
Projected -
Fiscal 2022
Pro-Forma New Restaurants
Olive Garden
LongHorn Steakhouse
Cheddar’s Scratch Kitchen
Yard House
The Capital Grille (4)
Seasons 52
Bahama Breeze
Eddie V’s
Totals
Restaurant
Openings
8
12
6
2
3
1
1
3
36
Restaurant
Closings
1
1
1
2
—
1
—
—
6
New Restaurant
Openings
11-13
12-14
3-5
3-4
2-3
0-1
0-1
1-2
35 - 40
Capital Investment
Range (1)
(in millions)
-
-
-
-
-
-
-
-
$3.5
$2.6
$3.5
$6.5
$7.5
$5.0
$4.5
$7.5
$4.5
$4.0
$4.7
$8.0
$8.5
$6.0
$5.5
$8.5
Square
Feet
(2)
7,700
5,660
8,000
11,000
10,000
9,000
9,000
10,000
Dining
Seats
(3)
250
184
260
360
320
250
350
320
(1) Includes cash investments for building, equipment, furniture and other construction costs; excludes internal capitalized
overhead, pre-opening expenses, tenant allowance and future lease obligations. Olive Garden, LongHorn Steakhouse and
Cheddar’s Scratch Kitchen capital investments are based on costs associated with land-only leases; Yard House, The Capital
Grille, Seasons 52, Bahama Breeze and Eddie V’s capital investments are based on ground and building leases. Actual costs
can vary significantly depending on the specific location.
(2) Includes all space under the roof, including the coolers and freezers.
(3) Includes bar dining seats and patio seating, but excludes bar stools.
(4) Fiscal 2021 restaurant openings include one The Capital Burger restaurant. Pro-forma new restaurant data excludes The
Capital Burger.
While our objective is to continue to expand all of our restaurant brands, the actual number of openings for each of our
brands for fiscal 2022 will depend on many factors, including our ability to recruit and train restaurant management and hourly
personnel, locate appropriate sites, negotiate acceptable purchase or lease terms, obtain necessary local governmental permits, and
complete construction.
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 approximately 180 days on average after the site is
acquired and permits are obtained.
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 operational and
marketing 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 brands. Permanent closures are typically due to economic
changes in trade areas, the expiration of lease agreements, or site concerns. Accordingly, we continue to evaluate our site
locations in order to minimize the risk of future closures or asset impairment charges.
5
Restaurant Operations
We believe that high-quality restaurant management is critical to our long-term success. Our restaurant management
structure varies by brand and restaurant size. 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 recipes. The restaurant management teams
are responsible for the day-to-day operation of each restaurant and for ensuring compliance with our operating standards.
The management structures below describe our restaurant operations during the normal and fully operational conditions that
were in place at the end of fiscal 2021. Over the course of fiscal 2021, as the COVID-19 pandemic impacted our business, the
staffing levels of each our restaurants changed frequently, as our dining rooms operated under a range of capacity limitations that
also varied from time to time, from state to state and city to city. As our restaurant operations continued to evolve in response to
the pandemic, we have evolved our operational structure and made adjustments to restaurant staffing where appropriate. As a
result, the descriptions below may not reflect the current or future structure of our restaurant operations.
Each Olive Garden restaurant is led by a general manager, and each LongHorn Steakhouse and Cheddar’s Scratch Kitchen
restaurant is led by a managing partner. Each also has three to six additional managers, depending on the operating complexity
and sales volume of the restaurant. In addition, each restaurant typically employs between 35 to 200 hourly team members, most
of whom work part-time. Restaurant general managers or managing partners report to a director of operations who is responsible
for approximately five to eleven restaurants. Each director of operations reports to a Senior Vice President of Operations who is
responsible for between 80 and 120 restaurants. Restaurants are visited regularly by operations management, including officer
level executives, to help ensure strict adherence to all aspects of our standards and to solicit feedback on opportunities for
improvement.
Each Yard House and Bahama Breeze restaurant is led by a general manager, and each The Capital Grille, Seasons 52 and
Eddie V’s restaurant is led by a managing partner. Each has four to ten managers. Each Yard House, The Capital Grille, Seasons
52 and Eddie V’s restaurant has one executive chef, and one to two sous chefs, and each Bahama Breeze restaurant has one to
three culinary managers. In addition, each restaurant typically employs between 65 to 200 hourly team members, most of whom
work part-time. The general manager or managing partner of each restaurant reports directly to a director of operations, who has
operational responsibility for approximately three to eleven restaurants. Restaurants are visited regularly by operations
management, including officer level executives, to help ensure strict adherence to all aspects of our standards and to solicit
feedback on opportunities for improvement.
Our Learning and Employee Development team in partnership with each brand’s training leader, together with senior
operations executives, is responsible for developing and maintaining our operations training programs. These efforts include an
eight to twelve-week training program for management trainees and continuing development programs for all levels of leadership.
The emphasis of the training and development programs varies by restaurant brand, 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 and a half
weeks prior to opening and remain at the new restaurant for up to three weeks after the opening. They are re-deployed as
appropriate to enable a smooth transition to the restaurant’s operating staff.
We maintain performance measurement and incentive compensation programs for our management-level team members.
We believe that our leadership position, strong results-oriented culture and various short-term and long-term incentive programs,
including stock-based compensation, enhances our ability to attract and retain highly motivated restaurant managers.
Quality Assurance
Our Total Quality Department helps ensure that all restaurants provide safe, high-quality food in a clean and safe
environment.
Food Safety and our Total Quality Program
Through rigorous supplier and risk-based product evaluations, we purchase only products that meet or exceed our product
specifications. We rely on independent third parties to inspect and evaluate our suppliers and distributors. Suppliers that produce
“high-risk” products are subject to a food safety evaluation by Darden personnel at least annually. We require our suppliers to
maintain sound manufacturing practices and operate with the comprehensive Hazard Analysis and Critical Control Point
(HACCP) food safety programs and risk-based preventative controls adopted by the U.S. Food and Drug Administration. These
programs focus on preventing hazards that could cause food-borne illnesses by applying scientifically-based controls to analyze
hazards, identify and monitor critical control points, and establish corrective actions when monitoring shows that a critical limit
has not been met.
6
Third party auditors inspect each restaurant regularly throughout the year to assess food safety and sanitation practices. Our
total quality team verifies the application of preventative controls through on-site support visits ensuring an effective and robust
food safety system. Total quality managers provide support to operations staff with education and training in food safety and
sanitation. The team also serves as a liaison to regulatory agencies on issues relating to food safety.
Restaurant, Guest and Team Member Safety in Response to COVID-19
In response to the COVID-19 pandemic, throughout fiscal 2021, we have enhanced restaurant safety practices and made
other enhancements to our operations to comply with state and local government regulations and health recommendations to
ensure guest and team member wellness, maintain clean restaurants, practice social distancing and wear protective equipment. As
the pandemic recedes in the United States, many of the additional COVID-19 protocols have been relaxed or removed as of the
date of this report. Nevertheless, we are remaining vigilant and may reinstate any of the additional safety or health and wellness
precautions if public health conditions worsen in any of our service areas or future government regulations require us to do so.
Purchasing and Distribution
Our ability to ensure a consistent supply of safe, high-quality food and supplies at competitive prices to all of our restaurant
brands depends on reliable sources of procurement. Our purchasing staff sources, negotiates and purchases food and supplies
from more than 1,500 suppliers whose products originate in more than 35 countries. Suppliers must meet our requirements and
strict quality control standards in the development, harvest, catch and production of food products. Competitive bids, long-term
contracts and strategic supplier relationships are routinely used to manage availability and cost of products.
In response to the COVID-19 pandemic, throughout fiscal 2021, we took several steps to enhance the safety and reliability
of our supply chain.
• Safety: The Company’s cross functional COVID-19 task force implemented CDC-based guidelines for
restaurants. We also implemented and communicated guidelines for our distributors and other suppliers providing
services inside our restaurants, including required use of personal protective equipment (PPE). To support these
enhanced safety protocols, we secured a supply of the necessary volumes of PPE and cleaning products for our
restaurants and team members.
• Sourcing: As we transitioned to increased To Go business during the temporary closure of our dining rooms,
we secured supplies of new and additional packaging products to better support food and beverage transport. We also
sourced alternate formats of alcohol beverages for To Go in order to comply with state laws that permitted To Go sales
of alcohol. To mitigate the potential risk of geographic trade disruptions, we created contingency plans in anticipation of
supply chain obstacles. The purchasing team also mitigated obsolete/expiring inventory exposure by selling products to
retail outlets for slow-moving items during capacity and dining room restrictions.
• Distribution: We increased inventory levels for brand-critical items, restaurant cleaning products, and PPE
supplies to ensure sufficient supply of necessary products. An internal cross-functional team was created specifically to
ensure successful restaurant ramp-down and quick reopening support.
We believe that our significant scale is a competitive advantage and our purchasing team leverages this purchasing
capability. Our purchasing staff travels routinely within the United States and internationally to source top-quality food products
at competitive prices. During the COVID-19 pandemic, we are monitoring our suppliers remotely, hosting virtual visits with
potential new suppliers and conducting virtual request for proposal processes. We believe that we have established excellent long-
term relationships with key suppliers and usually source our product directly from producers (not brokers or middlemen). We
actively support several national minority supplier organizations to ensure that we incorporate women- and minority-owned
businesses in our purchasing decisions.
We have entered into long-term agreements with multiple third-party national distribution companies to deliver food and
supplies to our restaurants. Under these arrangements we maintain ownership of the food and supplies inventory through our
subsidiary Darden Direct Distribution, Inc. (Darden Direct). This inventory is stored in distribution company warehouses that are
wholly or primarily dedicated to Darden where practical to do so. Because of the relatively rapid turnover of perishable food
products, inventories in the restaurants have a modest aggregate dollar value in relation to sales.
We continue to drive automation of our supply chain by collaborating with our suppliers, logistics partners and distributors
to improve optimization with information visibility and other technological advances. These and other terms of Darden Direct’s
long-term supply agreements further enable our purchasing staff to integrate demand forecasts into our purchasing operations,
driving efficiencies in our operations.
7
Advertising and Marketing
Integrated marketing is a key element of our strategy, and our scale enables us to be a leading advertiser in the full-service
dining segment of the restaurant industry. Olive Garden leverages the efficiency of national advertising, on both traditional and
streaming television, supplemented with additional targeted digital media investments. LongHorn Steakhouse uses local
television and digital advertising to build engagement and loyalty by market. Cheddar’s Scratch Kitchen, Yard House, The
Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s do not use television advertising, but rely on local and digital
marketing. In response to the COVID-19 pandemic, we significantly reduced our television advertising spending and directed our
marketing efforts towards growing and promoting our To Go options and off-premise dining business for much of fiscal 2021.
Our restaurants appeal to a broad spectrum of consumers and we use advertising to build awareness and strengthen our brands’
relevance. We implement periodic promotions, as appropriate, to increase frequency of guest visits while maintaining overall
profitability. We also rely on outdoor billboard, direct mail and email advertising, as well as radio, newspapers, digital coupons,
search engine marketing and social media such as Facebook® and Instagram®, as appropriate, to attract, engage and retain our
guests. We have developed and consistently use sophisticated consumer marketing research techniques to monitor guest
satisfaction and evolving food service trends and marketplace dynamics.
In fiscal 2021, we continued a multi-year effort to implement new technology platforms that allow us to digitally engage
with our guests and team members and strengthen our marketing and analytics capabilities in an increasingly connected society.
We also continued making improvements to our online and mobile ordering system for Olive Garden and LongHorn Steakhouse
and accelerated rollout of online and mobile ordering and payment systems across all of our other brands. In addition, we
continued working on developing sophisticated customer relationship management programs, data analytics, and data-driven
marketing approaches to effectively and efficiently target our existing and potential guests across our portfolio of brands. This
enables us to tailor our messaging and offerings depending on guest visit history, preferences and brand loyalty.
Human Capital
Darden prioritizes our team members through our People Strategy that includes four strategic imperatives:
• Hire - Attract and select diverse team members that reflect our values and are committed to our results-oriented culture;
•
Train - Teach our team members to perform in today’s environment and develop the skills to meet tomorrow’s needs;
•
Reward - Invest in compelling programs that recognize team members when goals are achieved and further motivate our
culture of winning; and
Retain - We keep our team members engaged and motivated, ready to deliver results and grow their careers.
•
We closely track and assess a variety of metrics that help us to evaluate our performance of each of these imperatives.
Hire. We are committed to attracting, retaining, engaging and developing a workforce that mirrors the diversity of our
guests. We track a variety of workforce statistics to help us understand the gender, racial and ethnic diversity of our team
members, including the following:
Key Team Member Statistics as of the end of fiscal 2021
Total team members (hourly and salaried)
Total number of hourly team members
Percent of hourly team members – female
Percent of hourly team members – members of racial or ethnic minority
groups
Total number of new hires of hourly team members during fiscal 2021
Percent of hourly new hires – female
Percent of hourly new hires – members of racial or ethnic minority
groups
156,883
147,426
58%
52%
120,962
57%
52%
In addition to the gender, racial and ethnic diversity of our workforce, our team members are also very diverse in age; we
employ members of five generations of the United States population: Traditionalists, Baby Boomers, Generation X, Millennials
and Centennials. We provide our EEO-1 report and additional details about our inclusion and diversity programs on our website
at www.darden.com.
Train. We succeed because of our people, and with our success come rewards, recognition and great opportunities for our
team members. We invest in our team members’ careers every step of the way by providing the tools they need to succeed in
8
their current roles, to grow personally and professionally, and to deliver exceptional experiences to our guests each day. With
thousands of leadership positions across our restaurants, we provide a pathway and training for thousands of individuals across
the country to advance from entry-level jobs into management roles. 65% of the participants in our restaurant Manager In
Training program in fiscal 2021 were internal promotions and 100% of the new General Managers or Managing Partners during
fiscal 2021 were internal promotions.
Reward. We believe that we provide working conditions and pay and benefits that compare favorably with those of our
competitors. Most team members, other than restaurant management and corporate management, are paid on an hourly basis. We
offer our team members flexible work schedules and competitive pay and benefits, including paid sick leave and access to free
counseling through our Work Life Assistance program for team members and their family. In March of 2021, we announced that
every hourly restaurant team member company-wide would earn a minimum hourly wage of at least $10 per hour, inclusive of tip
income, starting immediately, and we committed to increase that minimum wage to $11 per hour in January 2022 and $12 per
hour in January 2023. We also announced approximately $17 million in one-time bonuses that were paid to our hourly restaurant
team members to reward them for their hard work and dedication to serving our guests throughout the COVID-19 pandemic.
During fiscal 2021, we provided nearly $24 million in supplemental pay programs to provide support to hourly team members
impacted by closures of dining rooms due to the COVID-19 pandemic and paid time off to receive their COVID-19 vaccines. In
addition, to reward our restaurant management teams, during fiscal 2021, we paid quarterly bonuses at above-target levels
regardless of performance during those quarters. For our restaurant management teams other than general managers or managing
partners, we also announced $6.5 million in one-time bonuses to reward their contributions to our success in navigating the
pandemic. None of our team members are covered by a collective bargaining agreement. We consider our team member relations
to be good.
Consistent with our core values of respect, caring and teamwork, in fiscal 1999 we established a program called Darden
Dimes to help fellow Darden team members in need. Darden Dimes provides short-term financial grants to team members
experiencing financial need caused by unexpected emergencies or catastrophic natural disasters. Participating team members
donate as little as 10 cents from each paycheck to the Darden Dimes fund, which raises and grants approximately $1.4 million
annually.
Retain. As a full-service restaurant company, food is always top of mind, but our team members make the difference: they
are at the heart of everything we do. We believe the guest experience can never exceed the team member experience, so we hire
the best and retain them by fostering an environment of respect, where diversity of thought and background is valued and
everyone has the opportunity to develop and grow their careers. In addition, our geographic footprint often puts us in a position to
offer our restaurant team members jobs in their current roles when personal circumstances require relocation.
Despite impacts of COVID-19 on our business and our workforce, Darden’s consolidated turnover rate for hourly team
members during fiscal 2021, was 95.4%, one of the lowest rates in the restaurant industry. Each of our brands experienced a
turnover rate during fiscal 2021 that was lower than the most recent relevant casual dining or fine dining turnover rate for their
industry as reported in The People ReportTM by Black Box IntelligenceTM. Darden’s consolidated restaurant management
turnover rate of 18.8% was also significantly lower than the industry benchmark and an improvement over fiscal 2020. Our
executive leadership (vice president and above) has an average of over 16 years of experience with Darden. The restaurant
general managers and managing partners average 13 years with us.
Information Technology and Cybersecurity
We strive for leadership in the restaurant business by using technology as a competitive advantage and as an enabler of our
strategy. We have implemented technology-enabled business solutions to improve financial control, cost management, guest
service and employee effectiveness, as well as enable e-commerce. These solutions are designed to be used across restaurant
brands, yet are flexible enough to meet the unique needs of each restaurant brand. Our strategy is to fully integrate systems to
drive operational efficiencies and enable restaurant teams to focus on restaurant operations excellence. Restaurant hardware and
software support for all of our restaurant brands is provided or coordinated from the restaurant support center facility in Orlando,
Florida. Our data center contains sufficient computing power to process information from all restaurants quickly and efficiently.
Our information is processed in a secure environment to protect both our data and the physical computing 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 host-site facility and providing on-site power backup. We periodically perform third-party
cybersecurity audits following the standard set by the National Institute of Standards and Technology. We also conduct third-
party security reviews of our network, processes and systems on a regular basis. We use internally developed proprietary
software, cloud-based software as a service (SaaS) as well as purchased software, with proven, non-proprietary hardware.
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All Darden brands share a secure, robust digital platform with online ordering and other guest-facing capabilities. We also
have deployed mobile applications with online ordering and other features for all of our casual dining brands and for most of our
specialty restaurant brands. We successfully leveraged these digital capabilities over the last year to address changing guest
needs. We will continue to invest in these platforms and applications to enhance the guest experience.
We maintain a robust system of data protection and cybersecurity resources, technology and processes. We regularly
evaluate new and emerging risks and ever-changing legal and compliance requirements. We make strategic investments to
address these risks and compliance requirements to keep Company, guest and team member data secure. We monitor risks of
sensitive information compromise at our business partners where relevant and reevaluate the risks at these partners periodically.
We also perform annual and ongoing cybersecurity awareness training for our management and restaurant support center team
members. In addition, we provide annual credit card handling training following Payment Card Industry (PCI) guidelines to all
team members that handle guest credit cards.
Our management believes that our current systems and practice of implementing regular updates positions us well to support
current needs and future growth. We use a strategic information systems multi-year planning process that involves senior
management and is integrated into our overall business planning. We provide data protection and cybersecurity reports to the
Audit Committee of the Company’s Board of Directors on a quarterly basis and periodically to the full Board of Directors.
Information systems projects are prioritized based upon strategic, financial, regulatory, risk 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, brand, attractiveness of facilities, availability of carryout and home delivery, internet and mobile ordering
capabilities 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 guests, 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 entrées, side
dishes or meal preparation kits from the deli or prepared foods sections. In addition, improving product offerings at fast casual
restaurants and quick-service restaurants and expansion of home delivery services, together with negative economic conditions,
could cause consumers to choose less expensive alternatives. We expect intense competition to continue in all of these areas.
Other factors pertaining to our competitive position in the industry are addressed under the sections entitled “Purchasing and
Distribution,” “Advertising and Marketing” and “Information Technology and Cybersecurity” in this Item 1 and in our Risk
Factors in Item 1A of this Form 10-K.
Trademarks and Service Marks
We regard our Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capital Grille®, The
Capital Burger ®, Seasons 52®, Bahama Breeze®, Eddie V’s Prime Seafood®, Darden® and Darden Restaurants® service marks,
and other service marks and trademarks related to our restaurant businesses, as having significant value and as being important to
our marketing efforts. Our policy is to pursue registration of our important service marks and trademarks and to vigorously
oppose any infringement of them. Generally, with appropriate renewal and use, the registration of our service marks and
trademarks will continue indefinitely.
Franchises, Joint Ventures and New Business Development
As of May 30, 2021, we operated 1,834 restaurants through subsidiaries in the United States and Canada. We own all of
those locations, except for 2 restaurants managed by us and owned by joint ventures in which we hold a majority ownership. We
control the joint ventures’ use of our service marks and the joint ventures pay management fees to us, which are not material to
our consolidated financial statements.
As of May 30, 2021, franchisees operated 33 franchised restaurants in the United States and 24 franchised restaurants
outside of the United States. We have area development, franchise and/or license agreements in place with unaffiliated operators
to develop and operate Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, The Capital Grille and Bahama Breeze
restaurants in the following regions:
United States,
•
• Mexico,
•
•
Central and South America (Brazil, Chile, Costa Rica, Ecuador, El Salvador and Panama), and
Philippines
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The open and operating franchised restaurants are all reflected in the table under the “Introduction” section of this Item 1.
We do not have an ownership interest in any of these franchisees, but we receive fees under the area development and franchise
agreements and royalty income under the franchise or license agreements. The amount of income we derive from our franchise
arrangements is not material to our consolidated financial statements.
We license the sales and distribution of several items including Olive Garden salad dressings, salad croutons, LongHorn
Steakhouse seasoning and Olive Garden seasoning through various channels including wholesale distribution chains and major
grocery chains. The amount of income we derive from these licensing arrangements is not material to our consolidated financial
statements.
Seasonality
Our sales volumes have historically fluctuated seasonally. Typically, our average sales per restaurant are highest in the
winter and spring, followed by the summer, and lowest in the fall. However, throughout fiscal 2021, a variety of factors,
including the impacts of COVID-19 on our business, government actions taken to respond to COVID-19 and to stimulate the
United States’ recovery from COVID-19, and changing consumer preferences caused fluctuations in our sales volumes that were
different than our typical seasonality. Additionally, holidays, changes in the economy, severe weather and similar conditions may
impact sales volumes seasonally in some operating regions. Because of the historical seasonality of our business and these other
factors, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.
Government Regulation
We are subject to various federal, state, local and international 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.
The COVID-19 pandemic caused a panoply of federal, state and local government regulations affecting our business to be
issued and frequently revised on a daily and/or weekly basis beginning in March 2020 and continuing through most of fiscal
2021. Regulations relating to paid sick leave, opening and closing of bars, restaurants and dining rooms, business hours,
sanitation practices, To Go alcohol sales, guest spacing within dining rooms and other social distancing practices and PPE usage
by both team members and guests have materially affected the way we operate our business and serve our guests. By the end of
fiscal 2021, very few COVID-19-specific operating restrictions remained in place in the United States, but we continue to monitor
the COVID-19 pandemic and it is possible certain regulations could be reimposed in the future if the United States or portions
thereof experience additional outbreaks.
During fiscal 2021, 9.8 percent of our sales were 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. As a result of the impact of COVID-19 pandemic on restaurants, many states have modified their regulations to permit
To Go sales of alcoholic beverages, and in some locations we now offer a variety of alcoholic beverages, including in bottles,
from draft and mixed drinks To Go. The failure of a restaurant to obtain or retain these alcoholic beverage licenses or to comply
with regulations governing the sale of alcoholic beverages 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, paid leave, safety standards, and hiring and employment practices.
Since 1995, Darden has had a Tip Rate Alternative Commitment (TRAC) agreement with the Internal Revenue Service.
TRAC requirements, which include increased educational and other efforts in each restaurant to increase the reporting compliance
of employees with respect to cash tips, are applied across all of our brands. Compliance with TRAC requirements reduces the
likelihood of potential employer-only FICA tax assessments related to cash tips that are unreported by employees at Darden’s
covered units. Consistent with our long-standing agreement with the IRS, we work proactively with IRS personnel responsible
for tip compliance to ensure that we are taking the appropriate steps to continue to meet our TRAC obligations.
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We are subject to federal and state environmental regulations, but these rules have not had a material effect on our
operations. During fiscal 2021, there were no material capital expenditures for environmental control facilities and no material
expenditures for this purpose are anticipated.
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.
We are subject to federal and state regulations relating to employer-provided health insurance, but these rules have not had a
material effect on our operations. We continue to monitor the status of the health care reform discussions at the federal and state
levels.
We are subject to laws and regulations relating to the preparation and sale of food, including regulations regarding product
safety, nutritional content and menu labeling. We are subject to laws and regulations requiring disclosure of calorie, fat, trans fat,
salt and allergen content.
We are subject to laws relating to information security, privacy, cashless payments and consumer credit, protection and
fraud. An increasing number of governments and industry groups worldwide have established data privacy laws and standards for
the protection of personal information, including social security numbers, financial information (including credit card numbers),
and health information. As a merchant and service provider of point-of-sale services, we are also subject to the Payment Card
Industry Data Security Standard issued by the Payment Card Industry Council (PCI DSS).
We are subject to anti-corruption laws in the United States and in the international jurisdictions where we do business,
including the Foreign Corrupt Practices Act. We are also subject to a variety of international laws relating to franchising and
licensing of intellectual property in the various countries across the world where we are engaged in franchising our restaurant
brands.
See Item 1A “Risk Factors” below for a discussion of risks relating to federal, state and local regulation of our business,
including in the areas of health care reform, data privacy and environmental matters.
Sustainability
The sustainability of our food sources and restaurant operations is a key component of providing great service and food to
our guests. As business interruptions from the COVID-19 pandemic have receded during fiscal 2021, we enhanced our focus on
our climate strategy, restaurant sustainability metrics and Darden’s Animal Welfare Council. We will continue to adapt our
sustainability approach in the current economic environment with development or enhancement of integrated and strategic
priorities in the near term across the enterprise, from the food we source to the operation of our restaurants.
We are proud to operate some of the most efficient restaurants in the United States. Darden manages energy and water
conservation within our restaurant operations and over the last decade we have realized a 20 percent reduction in energy use per
restaurant and a 25 percent reduction in water usage on average per restaurant. In fiscal 2020, we experienced reductions in
energy and water usage directly related to COVID-19 impacts to the business, and we do not expect these results to continue year-
over-year. In addition to our energy and water footprint at the restaurants, we have also seen a continuous reduction in our carbon
footprint. Since 2008, we have reduced our average greenhouse gas emissions per restaurant by 32 percent, as measured in
accordance with the Corporate Accounting and Reporting Standard of the Greenhouse Gas Protocol.
Greenhouse Gas (GHG) Emissions
(in metric tons CO2e)
Average Per Restaurant (1) (2)
Total - Scope 1 and 2 (2)
Fiscal Year Ended
May 31, 2020 May 26, 2019 May 27, 2018(2)
460
444
424
774,200
783,940
766,302
(1) Per restaurant Intensity Ratio includes only Scope 1 and 2 totals (as defined in the Corporate Accounting and Reporting
Standard of the GHG Protocol) divided by the total number of restaurants.
(2) FY 2018 excludes Cheddar's Scratch Kitchen due to lack of verified GHG data prior to acquisition.
We shared Darden’s Food Principles in 2016 to outline our commitment to guests in areas of sustainable sourcing,
nutritional disclosure, food safety and animal welfare. Darden’s Food Principles connect each of these strategic business efforts in
a guest-centered platform, including sourcing and ingredient commitments to our guests. We have set commitments related to the
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following food attributes: animal welfare, chickens raised without medically-important antibiotics, cage-free eggs and gestation
crate-free pork. We are on track to meet our Food Principles commitments and we continue to monitor progress with our
suppliers.
Building on our Food Principles, Darden established an Animal Welfare Policy that adopts an outcomes-based approach to
continue to ensure high level of care for farm animals in the food supply chain. To implement this Policy, we established an
Animal Welfare Council consisting of leading academics and thought leaders with expertise in the care of animals in food supply
chains. The Council advises and supports the Company on our efforts to advance strategy and implementation of an outcomes-
based approach to animal welfare, from supplier collaborations to reporting improvements. During COVID-19 interruptions, it
was necessary to temporarily suspend Council meetings, but we virtually reconvened the Council in early 2021 to resume this
important work.
More information about our sustainability strategy, our commitment to our guests on Food Principles and our progress to
date is available at www.darden.com.
Darden Foundation and Community Affairs
We are recognized for a culture that rewards caring for and responding to people. That defines service for Darden. The
Darden Restaurants, Inc. Foundation (the Foundation) works to bring this spirit of service to life through its philanthropic support
of charitable organizations across the country and support for the volunteer involvement of our team members. The Foundation
does this by focusing its philanthropic efforts on programs that enhance the communities where our team members and guests live
and work. In addition, team members at the Darden Restaurant Support Center are eligible for 16 hours per calendar year of paid
time for approved community service activities during scheduled work hours.
In fiscal 2021, the Foundation awarded approximately $4.1 million in grants to national organizations as well as local
nonprofits including Second Harvest Food Bank of Central Florida and the Heart of Florida United Way. These organizations
provide service to the public through hunger relief, community engagement, disaster preparedness and the promotion of career
opportunities in the culinary industry.
The unprecedented events of the year 2020 reinforced the importance of our long-term partnership with Feeding America.
The need for food has increased due to the COVID-19 pandemic and food insecurity in communities of color is disproportionately
high. In fiscal 2021, the Darden Foundation awarded two grants totaling $2.5 million to help fund 15 refrigerated box trucks to
increase access to nutritious food and address transportation needs at food banks that are under-resourced and serve a high
percentage of people of color. In addition to enhancing mobile food pantry programs, the Foundation’s contributions support 191
food banks across the country and help provide meals for people facing hunger. The most recent donation marks a total of $12.3
million that the Foundation and Darden have contributed to the Feeding America network since 2010.
Our support of Feeding America and the fight against hunger goes hand-in-hand with our Darden Harvest program, which
began in 2003 as a mechanism for delivering fresh and healthy food to people who need it. Each day, across every one of our
restaurants, we collect surplus, wholesome food that is not served to guests and, rather than discarding the food, we prepare it for
donation to local nonprofit feeding partners. In fiscal 2021, Darden contributed approximately 5.7 million pounds of food, the
equivalent of more than 4.7 million meals provided to people in need across the communities served by our restaurants. As an
added benefit of the Darden Harvest program, we are able to divert millions of pounds of surplus food from waste streams every
year, making the Darden Harvest program a key part of our goal to one day send zero waste to landfills.
In fiscal 2021, as part of Darden’s commitment to inclusion and diversity, the Foundation donated $500,000 to Boys & Girls
of America to support the creation, development, and implementation of programming that will help youth better understand
diversity and combat racial discrimination. The new Youth for Unity curriculum will provide meaningful, action-oriented
solutions to address social injustice and racial inequity and help foster the next generation of leaders, problem-solvers and
advocates for change.
The Foundation’s funding helps support the National Restaurant Association Educational Foundation’s ProStart program, a
national high school program that introduces students to the restaurant industry and provides them with an industry-driven
curriculum on topics ranging from culinary techniques to management skills. The Foundation’s fiscal 2021 contribution of
$200,000 also supports the Opportunity Youth-Restaurant Ready program to engage and encourage disconnected young people to
pursue a path to employment and improve their quality of life.
We are also a proud member of the American Red Cross’ Disaster Responder Program, which enables the Red Cross to
respond to the needs of individuals and families impacted by disasters anywhere in the United States. In fiscal 2021, the
Foundation provided $250,000 to the American Red Cross for the program. In addition to financial support, our restaurants
regularly donate meals to feed first responders and victims of natural disasters.
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More information about the Foundation and its efforts to enhance the quality of life in the communities where we do
business is available on our website at www.darden.com.
Item 1A. RISK FACTORS
Various risks and uncertainties could affect our business. Any of the risks described below or elsewhere in this report or our
other filings with the Securities and Exchange Commission could have a material impact on our business, financial condition or
results of operations. It is not possible to predict or identify all risk factors. Additional risks and uncertainties not presently
known to us or that we currently believe to be immaterial may also impair our business operations.
Risks Relating to the COVID-19 Pandemic
The COVID-19 pandemic has disrupted and may continue to disrupt our business, which has affected and could continue to
materially affect our operations, financial condition and results of operations.
The COVID-19 pandemic, federal, state and local government responses to COVID-19 and our Company’s responses to the
outbreak have all disrupted and may continue to disrupt our business. In the United States over the course of fiscal 2021, state and
local governments imposed a variety of restrictions on people and businesses and public health authorities offered regular
guidance on health and safety. In response to the COVID-19 pandemic and these changing conditions, during the fourth quarter of
fiscal 2020, we closed the dining rooms in all of our restaurants for some portion of the quarter and operated in a To Go or To Go
plus delivery format only. As a result, we began fiscal 2021 with significant limitations on our operations, which over the course
of the fiscal year varied widely from time to time, state to state and city to city. During November 2020, rising case rates resulted
in certain jurisdictions implementing restrictions that again reduced dining room capacity or mandated the re-closure of dining
rooms. Once COVID-19 vaccines were approved and moved into wider distribution in the United States in early 2021, public
health conditions improved and almost all of the COVID-19 restrictions on businesses have eased. As of the date of this report, all
of our restaurants were able to open their dining rooms and few capacity restrictions or other COVID-19 restrictions remained in
place in the United States. However, it is possible that future increases in cases or further localized or widespread outbreaks of
COVID-19 in the United States could require us to again reduce our capacity or suspend our in-restaurant dining operations.
The COVID-19 pandemic and these responses have affected and may continue to adversely affect our guest traffic, sales and
operating costs and we cannot predict whether an increase in cases or localized or widespread outbreaks will occur and whether
future government responses thereto may impact us. In addition, future increases in cases or further localized or widespread
outbreaks of COVID-19 in the United States or elsewhere could negatively impact our suppliers, and we could face shortages of
food items or other supplies at our restaurants and our operations and sales could be adversely impacted by such supply
interruptions.
Risks Relating to Health and Safety
Health concerns arising from food-related pandemics, outbreaks of flu, viruses or other diseases may have an adverse effect
on our business.
In addition to the novel coronavirus that causes COVID-19, the United States and other countries have experienced, or may
experience in the future, outbreaks of other viruses, such as norovirus, avian flu or “SARS,” “MERS,” H1N1 or “swine flu,” or
other diseases. To the extent that a virus or disease is food-borne, or perceived to be food-borne, future outbreaks may adversely
affect the price and availability of certain food products and cause our guests to eat less of a product, or could reduce public
confidence in food handling and/or public assembly. For example, public concern over avian flu may cause fear about the
consumption of chicken, eggs and other products derived from poultry. The inability to serve poultry-based products would
restrict our ability to provide a variety of menu items to our guests. If we change a restaurant menu in response to such concerns,
we may lose guests who do not prefer the new menu, and we may not be able to attract a sufficient new guest base to produce the
sales needed to make the restaurant profitable. We also may have different or additional competitors for our intended guests as a
result of such a change and may not be able to successfully compete against such competitors. If a virus is transmitted by human
contact or respiratory transmission, our employees or guests could become infected, or could choose, or be advised, to avoid
gathering in public places, any of which could adversely affect our restaurant guest traffic and our ability to adequately staff our
restaurants, receive deliveries on a timely basis or perform functions at the corporate level. We also could be adversely affected if
the World Health Organization and/or the CDC were to restrict travel to affected geographic areas where we source our products,
thus possibly impacting the continuity of supply. Additionally, jurisdictions in which we have restaurants may impose mandatory
closures, seek voluntary closures or impose restrictions on operations. Even if such measures are not implemented and a virus or
other disease does not spread significantly, the perceived risk of infection or significant health risk may cause guests to choose
other alternatives to dining out in our restaurants which may adversely affect our business.
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A failure to maintain food safety throughout the supply chain and food-borne illness concerns may have an adverse effect on
our business.
Food safety is a top priority, and we dedicate substantial resources to ensuring that our guests enjoy safe, quality food
products. Even with strong preventative interventions and controls, food safety issues could be caused at the source or by food
suppliers or distributors and, as a result, be out of our control and require prompt action to mitigate impact. In addition, regardless
of the source or cause, any report of food-borne illnesses such as E. coli, hepatitis A, norovirus or salmonella, or other food safety
issues including food tampering or contamination at one of our restaurants could adversely affect the reputation of our brands and
have a negative impact on our sales. Even instances of food-borne illness, food tampering or food contamination occurring solely
at restaurants of our competitors could result in negative publicity about the food service industry generally and adversely impact
our sales. The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of
affected ingredients, resulting in higher costs and lower margins.
Risks Related to Human Capital
The inability to hire, train, reward and retain restaurant team members and determine and maintain adequate staffing may
impact our ability to achieve our operating, growth and financial objectives.
Our long-term growth depends substantially on our ability to recruit and retain high-quality team members to work in and
manage our restaurants. Adequate staffing and retention of qualified restaurant team members is a critical factor impacting our
guests’ experience in our restaurants. Maintaining adequate staffing in our existing restaurants and hiring and training staff for
our new restaurants requires precise workforce planning which has been complicated by the impacts of the COVID-19 pandemic
on our business, the relevant labor market and on consumer preferences. The market for the most qualified talent continues to be
competitive and we must provide competitive wages, benefits and workplace conditions to maintain our most qualified team
members. Personal or public health concerns related to COVID-19 may continue to make some existing team members or
potential candidates reluctant to work in enclosed restaurant environments. We have experienced and may continue to experience
challenges in recruiting and retaining team members in various locations. A shortage of quality candidates who meet all legal
citizenship or work authorization requirements, failure to recruit and retain new team members in a timely manner or higher than
expected turnover levels all could affect our ability to open new restaurants, grow sales at existing restaurants or meet our labor
cost objectives. An inability to adequately monitor and proactively respond to team member dissatisfaction could lead to poor
guest satisfaction, higher turnover, litigation and unionization which could jeopardize our ability to meet our growth targets.
A failure to recruit, develop and retain effective leaders or the loss or shortage of personnel with key capacities and skills could
impact our strategic direction and jeopardize our ability to meet our business performance expectations and growth targets.
Our future growth depends substantially on the contributions and abilities of key executives and other leadership team
members. We must continue to recruit, retain and motivate management team members in order to achieve our current business
objectives and support our projected growth. Changes in senior management could expose us to significant changes in strategic
direction and initiatives. A failure to maintain appropriate organizational capacity and capability to support leadership excellence
(adequate resources, innovative skill sets and expectations) and build adequate bench strength required for growth or a loss of key
skill sets could jeopardize our ability to meet our business performance expectations and growth targets.
We may be subject to increased labor and insurance costs.
Our restaurant operations are subject to United States and Canadian federal, state and local laws governing such matters as
minimum wages, working conditions, overtime and tip credits. As federal, state and local minimum wage rates increase, we may
need to increase not only the wages of our minimum wage employees, but also the wages paid to employees at wage rates that are
above minimum wage. Labor shortages, increased employee turnover and health care and other benefit mandates also have
increased and may continue to increase our labor costs. This in turn could lead us to increase prices which could impact our sales.
Conversely, if competitive pressures or other factors prevent us from offsetting increased labor costs by increases in prices, our
profitability may decline. In addition, the current premiums that we pay for our insurance (including workers’ compensation,
general liability, property, health, and directors’ and officers’ liability) may increase at any time, thereby further increasing our
costs. The dollar amount of claims that we actually experience under our workers’ compensation and general liability insurance,
for which we carry high per-claim deductibles, may also increase at any time, thereby further increasing our costs. Further, the
decreased availability of property and liability insurance has the potential to negatively impact the cost of premiums and the
magnitude of uninsured losses.
Risks Relating to Information Technology and Privacy
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We rely heavily on information technology in our operations, and insufficient guest or employee facing technology or a failure
to maintain a continuous and secure cyber network, free from material failure, interruption or security breach, could harm
our ability to effectively operate our business and/or result in the loss of respected relationships with our guests or employees.
We rely heavily on information systems across our operations, including for e-commerce, marketing programs, employee
engagement, management of our supply chain, the point-of-sale processing system in our restaurants, and various other processes
and transactions. Our ability to effectively manage our business and coordinate the production, distribution and sale of our
products depends significantly on the reliability, security and capacity of these systems. In addition, we must effectively respond
to changing guest expectations and new technological developments. Disruptions, failures or other performance issues with guest
facing technology systems could impair the benefits that they provide to our business and negatively affect our relationship with
our guests. The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, a
material network breach in the security of these systems as a result of a cyber attack, phishing attack, ransomware attack or any
other failure to maintain a continuous and secure cyber network could result in substantial harm or inconvenience to the
Company, our team members or guests. This could include the theft of our intellectual property, trade secrets or sensitive
financial information. Some of these essential business processes that are dependent on technology are outsourced to third
parties. While we make efforts to ensure that our providers are observing proper standards and controls, we cannot guarantee that
breaches or failures caused by these outsourced providers will not occur.
Any such failures or disruptions may cause delays in guest service, reduce efficiency in our operations, require significant
capital investments to remediate the problem, result in customer, employee or advertiser dissatisfaction or otherwise result in
negative publicity that could harm our reputation. We could also be subjected to litigation, regulatory investigations or the
imposition of penalties. As information security laws and regulations change and cyber risks evolve, we may incur additional
costs to ensure we remain in compliance and protect guest, employee and Company information.
We may incur increased costs to comply with privacy and data protection laws and, if we fail to comply or our systems are
compromised, we could be subject to government enforcement actions, private litigation and adverse publicity.
We receive and maintain certain personal, financial and other information about our customers, employees, vendors and
suppliers. In addition, certain of our vendors receive and maintain certain personal, financial and other information about our
employees and customers. The use and handling, including security, of this information is regulated by evolving and increasingly
demanding data privacy laws and regulations in various jurisdictions, as well as by certain third-party contracts and industry
standards. Complying with newly developed laws and regulations, which are subject to change and uncertain interpretations and
may be inconsistent from jurisdiction to jurisdiction, may lead to a decline in guest engagement or cause us to incur substantial
costs or modifications to our operations or business practices to comply. In addition, if our security and information systems are
compromised as a result of data corruption or loss, cyber attack or a network security incident, or if our employees or vendors fail
to comply with these laws and regulations or fail to meet industry standards and this information is obtained by unauthorized
persons or used inappropriately, it could result in liabilities and penalties and could damage our reputation, cause interruption of
normal business performance, cause us to incur substantial costs and result in a loss of customer confidence, which could
adversely affect our results of operations and financial condition. Additionally, we could be subject to litigation and government
enforcement actions as a result of any such failure.
Risks Related to the Restaurant Industry
We are subject to a number of risks relating to public policy changes and federal, state and local regulation of our business,
including in the areas of health care reform, environmental matters, minimum wage, unionization, menu labeling,
immigration requirements and taxes, and an insufficient or ineffective response to legislation or government regulation may
impact our cost structure, operational efficiencies and talent availability.
The restaurant industry is subject to extensive federal, state, local and international laws and regulations. The development
and operation of restaurants depend to a significant extent on the selection and acquisition of suitable sites, which are subject to
building, zoning, land use, environmental, traffic and other regulations and requirements. We are subject to licensing and
regulation by state and local authorities relating to health, sanitation, safety and fire standards and the sale of alcoholic beverages.
We are subject to laws and regulations relating to the preparation and sale of food, including regulations regarding product safety,
nutritional content and menu labeling. We are subject to federal, state, and local laws governing employment practices and
working conditions. These laws cover minimum wage rates, wage and hour practices, labor relations, paid and family leave,
workplace safety, and immigration, among others. The myriad of laws and regulations being passed at the state and local level
creates unique challenges for a multi-state employer as different standards apply to different locations, sometimes with conflicting
requirements. We must continue to monitor and adapt our employment practices to comply with these various laws and
regulations.
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We also are subject to federal and state laws which prohibit discrimination and other laws regulating the design and
operation of facilities, such as the ADA. Compliance with these laws and regulations can be costly and increase our exposure to
litigation and governmental proceedings, and a failure or perceived failure to comply with these laws could result in negative
publicity that could harm our reputation. New or changing laws and regulations relating to union organizing rights and activities
may impact our operations at the restaurant level and increase our labor costs.
We are subject to a variety of federal, state and local laws and regulations relating to the use, storage, discharge, emission
and disposal of hazardous materials. There also has been increasing focus by United States and overseas governmental authorities
on other environmental matters, such as climate change, the reduction of greenhouse gases and water consumption. This increased
focus may lead to new initiatives directed at regulating a yet to be specified array of environmental matters. Legislative,
regulatory or other efforts to combat climate change or other environmental concerns could result in future increases in the cost of
raw materials, taxes, transportation and utilities, which could decrease our operating profits and necessitate future investments in
facilities and equipment.
We are subject to laws relating to information security, cashless payments and consumer credit, protection and fraud.
Compliance with these laws and regulations can be costly, and any failure or perceived failure to comply with these laws or any
breach of our systems could harm our reputation or lead to litigation, which could adversely affect our financial condition.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional
requirements and the consequences of litigation relating to current or future laws and regulations, or an insufficient or ineffective
response to significant regulatory or public policy issues, could negatively impact our cost structure, operational efficiencies and
talent availability, and therefore have an adverse effect on our results of operations. Failure to comply with the laws and
regulatory requirements of federal, state and local authorities could result in, among other things, revocation of required licenses,
administrative enforcement actions, fines and civil and criminal liability. Compliance with these laws and regulations can be
costly and can increase our exposure to litigation or governmental investigations or proceedings.
We face intense competition, and if we have an insufficient focus on competition and the consumer landscape, our business,
financial condition and results of operations could be adversely affected.
The full-service dining sector of the restaurant industry is intensely competitive with respect to pricing, service, location,
personnel, take-out and delivery options and type and quality of food, and there are many well-established competitors. We
compete within each market with national and regional restaurant chains and locally-owned restaurants. We also face growing
competition as a result of the trend toward convergence in grocery, deli and restaurant services, particularly in the supermarket
industry which offers “convenient meals” in the form of improved entrées, side dishes or meal preparation kits from the deli or
prepared foods sections. We compete primarily on the quality, variety and value perception of menu items. The number and
location of restaurants, type of brand, 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 with respect to all of
these factors. If we are unable to continue to compete effectively, our business, financial condition and results of operations could
be adversely affected.
We are subject to changes in consumer preferences that may adversely affect demand for food at our restaurants.
Consumers have continually changing health and dietary preferences. As a result, our diverse portfolio of restaurant brands
are continually challenged to evolve our menu offerings to appeal to these changing customer preferences, while maintaining our
brand character and retaining popular menu items. In response to the COVID-19 pandemic, during periods of high public health
risk, many consumers chose to order food To Go or for delivery rather than dining in at full-service restaurants. If COVID-19
cases increase or other future public health issues cause these preferences to increase, we may need to further adapt our offerings
to respond to these additional changes. New information or changes in dietary, nutritional, allergen or health guidelines or
environmental or sustainability concerns, whether issued by government agencies, academic studies, advocacy organizations or
similar groups, may cause some groups of consumers to select foods other than those that are offered by our restaurants. If we fail
to anticipate changing trends or other consumer preferences, our business, financial condition and results of operations could be
adversely affected.
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Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could have a
material adverse impact on our business.
There has been a marked increase in the use of social media platforms and similar devices which allow individuals access to
a broad audience of consumers and other interested persons. Many social media platforms immediately publish the content their
subscribers and participants post, often without filters or checks on accuracy of the content posted. Information posted on such
platforms at any time may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects,
or business. The harm may be immediate without affording us an opportunity for redress or correction. The dissemination of
information online could harm our business, prospects, financial condition, and results of operations, regardless of the
information’s accuracy.
Many of our competitors are expanding their use of social media and new social media platforms are rapidly being
developed, potentially making more traditional social media platforms obsolete. As a result, we need to continuously innovate
and develop our social media strategies in order to maintain broad appeal with guests and brand relevance. As part of our
marketing efforts, we rely on social media platforms and search engine marketing to attract and retain guests. We also continue to
invest in other digital marketing initiatives that allow us to reach our guests across multiple digital channels and build their
awareness of, engagement with, and loyalty to our brands. These initiatives may not be successful, resulting in expenses incurred
without the benefit of higher revenues, increased employee engagement or brand recognition. In addition, a variety of risks are
associated with the use of social media, including the improper disclosure of proprietary information, negative comments about
us, exposure of personally identifiable information, fraud, or out-of-date information. The inappropriate use of social media
vehicles by our guests or employees could increase our costs, lead to litigation or result in negative publicity that could damage
our reputation.
A failure to identify and execute innovative marketing and guest relationship tactics, ineffective or improper use of other
marketing initiatives, and increased advertising and marketing costs could adversely affect our results of operations.
If our competitors increase their spending on advertising and promotions, if our advertising, media or marketing expenses
increase, if our advertising and promotions become less effective than those of our competitors, or if we do not adequately
leverage technology and data analytic capabilities needed to generate concise competitive insight, we could experience a material
adverse effect on our results of operations. A failure to sufficiently innovate, develop guest relationship initiatives, or maintain
adequate and effective advertising could inhibit our ability to maintain brand relevance and drive increased sales.
As part of our marketing efforts, we rely on social media platforms and search engine marketing to attract and retain guests.
These initiatives may not be successful, and pose a variety of other risks, as discussed above under the heading: “Our inability or
failure to recognize, respond to and effectively manage the accelerated impact of social media could have a material adverse
impact on our business.”
A failure to address cost pressures, including rising costs for commodities, labor, health care and utilities used by our
restaurants, and a failure to effectively deliver cost management activities and achieve economies of scale in purchasing could
compress our margins and adversely affect our sales and results of operations.
Our results of operations depend significantly on our ability to anticipate and react to changes in the price and availability of
food, ingredients, labor, health care, utilities and other related costs over which we may have little control. Operating margins for
our restaurants are subject to changes in the price and availability of food commodities, including beef, pork, chicken, seafood,
cheese, butter and produce. The introduction of or changes to tariffs on imported food products, such as produce and seafood,
could increase our costs and possibly impact the supply of those products. We cannot predict whether we will be able to
anticipate and react to changing food costs by adjusting our purchasing practices, menu offerings, and menu prices, and a failure
to do so could adversely affect our operating results. We attempt to leverage our size to achieve economies of scale in
purchasing, but there can be no assurances that we can always do so effectively. We are also subject to the general risks of
inflation.
Increases in minimum wage, health care and other benefit costs may have a material adverse effect on our labor costs. We
operate in many states and localities where the minimum wage is significantly higher than the federal minimum wage. Increases
in minimum wage may also result in increases in the wage rates paid for non-minimum wage positions. Many states and localities
are also passing laws regulating employment practices and working conditions which could have a material adverse effect on our
labor costs in those areas.
Our restaurants’ operating margins are also affected by fluctuations in the price of utilities such as electricity and natural
gas, whether as a result of inflation or otherwise, on which the restaurants depend for their energy supply. In addition,
interruptions to the availability of gas, electric, water or other utilities, whether due to aging infrastructure, weather conditions,
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fire, animal damage, trees, digging accidents or other reasons largely out of our control, may adversely affect our operations. Our
inability to anticipate and respond effectively to an adverse change in any of these factors could have a significant adverse effect
on our sales and results of operations.
Certain economic and business factors specific to the restaurant industry and other general macroeconomic factors including
unemployment, energy prices and interest rates that are largely beyond our control may adversely affect consumer behavior
and our results of operations.
Our business results depend on a number of industry-specific and general economic factors, many of which are beyond our
control. The full-service dining sector of the restaurant industry is affected by changes in international, national, regional and
local economic conditions, seasonal fluctuation of sales volumes, consumer spending patterns and consumer preferences,
including changes in consumer tastes and dietary habits, and the level of consumer acceptance of our restaurant brands. The
performance of individual restaurants may also be adversely affected by factors such as demographic trends, severe weather
including hurricanes, traffic patterns and the type, number and location of competing restaurants.
General economic conditions, including economic downturns related to the COVID-19 pandemic and uncertainty about the
strength or pace of economic recovery, have also adversely affected our results of operations and may continue to do so.
Economic recession, a protracted economic slowdown, a worsening economy, increased unemployment, increased energy prices,
rising interest rates, a downgrade of the U.S. government’s long-term credit rating, imposition of retaliatory tariffs on important
U.S. imports and exports or other industry-wide cost pressures have affected and can continue to affect consumer behavior and
spending for restaurant dining occasions and lead to a decline in sales and earnings. Job losses, foreclosures, bankruptcies and
falling home prices have caused and may continue to cause guests to make fewer discretionary purchases, and any significant
decrease in our guest traffic or average profit per transaction will negatively impact our financial performance. In addition, if
gasoline, natural gas, electricity and other energy costs increase, and credit card, home mortgage and other borrowing costs
increase with rising interest rates, our guests may have lower disposable income and reduce the frequency of their dining
occasions, may spend less on each dining occasion or may choose more inexpensive restaurants.
Furthermore, we cannot predict the effects that actual or threatened armed conflicts, terrorist attacks, efforts to combat
terrorism, heightened security requirements, or a failure to protect information systems for critical infrastructure, such as the
electrical grid and telecommunications systems, could have on our operations, the economy or consumer confidence generally.
Any of these events could affect consumer spending patterns or result in increased costs for us due to security measures.
Unfavorable changes in the above factors or in other business and economic conditions affecting our guests could increase
our costs, reduce traffic in some or all of our restaurants or impose practical limits on pricing, any of which could lower our profit
margins and have a material adverse effect on our sales, financial condition and results of operations.
Climate change, adverse weather conditions and natural disasters could adversely affect our restaurant sales or results of
operations.
Climatologists predict that the long-term effects of climate change and global warming will result in more severe, volatile
weather or extended droughts, which could increase the frequency and duration of weather impacts on our operations. Adverse
weather conditions have in the past and may continue to impact guest traffic at our restaurants, cause the temporary
underutilization of outdoor patio seating and, in more severe cases such as hurricanes, tornadoes, wildfires or other natural
disasters, cause temporary closures, sometimes for prolonged periods, which negatively impact our restaurant sales. Climate
change and government regulation relating to climate change could result in construction delays and increased costs, interruptions
to the availability or increases in the cost of utilities, and shortages or interruptions in the supply or increases to the costs of food
items and other supplies.
Risks Relating to Our Business Model and Strategy
A majority of our restaurants are operated in leased properties and as a result, we are committed to long-term lease obligations
that we may not be able to cancel if we want to close a restaurant location and we may be unable to renew the leases that we
may want to extend at the end of their terms.
As of May 30, 2021, 1,761 of our 1,834 restaurants operating in the United States and Canada operate in leased locations
and the leases are generally non-cancellable for some period of time. If we close a restaurant in a leased location, we may remain
committed to perform our obligations under the applicable lease, which would include, among other things, payment of the base
rent for the balance of the lease term. Additionally, the potential losses associated with our inability to cancel leases may result in
our keeping open restaurant locations that are performing significantly below targeted levels. As a result, ongoing lease
obligations at closed or underperforming restaurant locations could impair our results of operations. In addition, at the end of the
lease term and expiration of all renewal periods, we may be unable to renew the lease without substantial additional cost, if at all.
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As a result, we may be required to close or relocate a restaurant, which could subject us to construction and other costs and risks,
and may have an adverse effect on our operating performance.
Our inability or failure to execute on a comprehensive business continuity plan following a major natural disaster such as a
hurricane or manmade disaster, at our corporate facility could have a materially adverse impact on our business.
Many of our corporate systems and processes and corporate support for our restaurant operations are centralized at one
Florida location. We have disaster recovery procedures and business continuity plans in place to address most events of a crisis
nature, including hurricanes and other natural or manmade disasters, and back up and off-site locations for recovery of electronic
and other forms of data and information. However, if we are unable to fully implement our disaster recovery plans, we may
experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and
compliance, failures to adequately support field operations and other breakdowns in normal communication and operating
procedures that could have a material adverse effect on our financial condition, results of operation and exposure to administrative
and other legal claims.
We may lose sales or incur increased costs if our restaurants experience shortages, delays or interruptions in the delivery of
food and other products from our third party vendors and suppliers.
We have a limited number of suppliers and distributors for certain of our products and services. Shortages, delays or
interruptions in the supply of food items and other supplies to our restaurants may be caused by severe weather; natural disasters
such as hurricanes, tornadoes, floods, droughts, wildfires and earthquakes; labor issues or other operational disruptions at our
suppliers, vendors or other service providers; the inability of our vendors or service providers to manage adverse business
conditions, obtain credit or remain solvent; or other conditions beyond our control. Such shortages, delays or interruptions could
adversely affect the availability, quality and cost of the items we buy and the operations of our restaurants. Supply chain risk
could increase our costs and limit the availability of products that are critical to our restaurant operations. If we raise prices as a
result of increased food costs or shortages, it may negatively impact our sales. If we temporarily close a restaurant or remove
popular items from a restaurant’s menu, that restaurant may experience a significant reduction in sales during the time affected by
the shortage or thereafter as a result of our guests changing their dining habits
Our failure to drive both short-term and long-term profitable sales growth through brand relevance, operating excellence,
opening new restaurants of existing brands, and acquiring new restaurant brands could result in poor financial performance.
As part of our business strategy, we intend to drive profitable sales growth by increasing same-restaurant sales at existing
restaurants, continuing to expand our current portfolio of restaurant brands, and acquiring additional brands that can be expanded
profitably. This strategy involves numerous risks, and we may not be able to achieve our growth objectives.
At existing brands, we may not be able to maintain brand relevance and restaurant operating excellence to achieve
sustainable same-restaurant sales growth and warrant new unit growth. Existing brand short-term sales growth could be impacted
if we are unable to drive near term guest count and sales growth, and long-term sales growth could be impacted if we fail to
extend our existing brands in ways that are relevant to our guests. A failure to innovate and extend our existing brands in ways
that are relevant to guests and occasions in order to generate sustainable same-restaurant traffic growth and produce non-
traditional sales and earnings growth opportunities, insufficient focus on our competition, or failure to adequately address declines
in the casual dining industry, could have an adverse effect on our results of operations. In addition, we may not be able to support
sustained new unit growth or open all of our planned new restaurants, and the new restaurants that we open may not be profitable
or as profitable as our existing restaurants. New restaurants typically experience an adjustment period before sales levels and
operating margins normalize, and even sales at successful newly-opened restaurants generally do not make a significant
contribution to profitability in their initial months of operation. The opening of new restaurants can also have an adverse effect on
guest counts and sales levels at existing restaurants.
The ability to open and profitably operate restaurants is subject to various risks, such as the identification and availability of
suitable and economically viable locations, the negotiation of acceptable lease or purchase terms for new locations, the need to
obtain all required governmental permits (including zoning approvals and liquor licenses) on a timely basis, the need to comply
with other regulatory requirements, the availability of necessary contractors and subcontractors, the ability to meet construction
schedules and budgets, the ability to manage union activities such as picketing or hand billing which could delay construction,
increases in labor and building material costs, supply chain disruptions, the availability of financing at acceptable rates and terms,
changes in patterns or severity of 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. At each potential location, we compete with other restaurants and retail
businesses for desirable development sites, construction contractors, management personnel, hourly employees and other
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resources. If we are unable to successfully manage these risks, we could face increased costs and lower than anticipated sales and
earnings in future periods.
We also may not be able to identify and successfully acquire and integrate additional brands that are as profitable as our
existing restaurants or that provide potential for further growth.
A lack of availability of suitable locations for new restaurants or a decline in the quality of the locations of our current
restaurants may adversely affect our sales and results of operations.
The success of our restaurants depends in large part on their locations. As demographic and economic patterns change,
current locations may not continue to be attractive or profitable. Possible declines in neighborhoods where our restaurants are
located or adverse economic conditions in areas surrounding those neighborhoods could result in reduced sales in those locations.
In addition, desirable locations for new restaurant openings or for the relocation of existing restaurants may not be available at an
acceptable cost when we identify a particular opportunity for a new restaurant or relocation. The occurrence of one or more of
these events could have a significant adverse effect on our sales and results of operations.
We may experience higher-than-anticipated costs associated with the opening of new restaurants or with the closing,
relocating and remodeling of existing restaurants, which may adversely affect our results of operations.
Our sales and expenses can be impacted significantly by the number and timing of the opening of new restaurants and the
closing, relocating and remodeling of existing restaurants. We incur substantial pre-opening expenses each time we open a new
restaurant and other expenses when we close, relocate or remodel existing restaurants. The expenses of opening, closing,
relocating or remodeling any of our restaurants may be higher than anticipated. An increase in such expenses could have an
adverse effect on our results of operations.
We face a variety of risks associated with doing business with franchisees and licensees.
Certain of our domestic and all of our international locations other than in Canada are operated by franchisees or licensees.
We believe that we have selected high-caliber operating partners and franchisees with significant experience in restaurant
operations, and are providing them with training and support. However, the probability of opening, ultimate success and quality
of any franchise or licensed restaurant rests principally with the franchisee or licensee. If the franchisee or licensee does not
successfully open and operate its restaurants in a manner consistent with our standards, or guests have negative experiences due to
issues with food quality or operational execution, our brand values could suffer, which could have an adverse effect on our
business.
We face a variety of risks associated with doing business with business partners and vendors in foreign markets.
We are making efforts to expand our brands overseas through licensing and franchising relationships. There is no assurance
that international operations will be profitable or that international growth will continue. Our international operations are subject
to all of the same risks associated with our domestic operations, as well as a number of additional risks. These include, among
other things, international economic and political conditions, foreign currency fluctuations, and differing cultures and consumer
preferences. In addition, expansion into international markets could create risks to our brands and reputation.
We also are subject to governmental regulations throughout the world that impact the way we do business with our
international franchisees and vendors. These include antitrust and tax requirements, anti-boycott regulations, import/export/
customs regulations and other international trade regulations, the USA Patriot Act, the Foreign Corrupt Practices Act, and
applicable local law. Failure to comply with any such legal requirements could subject us to monetary liabilities and other
sanctions, which could harm our business, results of operations and financial condition.
Volatility in the market value of derivatives we may use to hedge exposures to fluctuations in commodity and broader market
prices may cause volatility in our gross margins and net earnings.
We use or may use derivatives to hedge price risk for some of our principal ingredient, labor and energy costs, including but
not limited to coffee, butter, wheat, soybean oil, pork, beef, diesel fuel, gasoline and natural gas. Changes in the values of these
derivatives may be recorded in earnings currently, resulting in volatility in both gross margin and net earnings. These gains and
losses are reported as a component of cost of sales in our Consolidated Statements of Earnings included in our consolidated
financial statements.
Volatility in the United States equity markets affects our ability to efficiently hedge exposures to our market risk related to
equity-based compensation awards.
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The equity markets in the U.S. were extremely volatile due to the COVID-19 pandemic and due to the unpredictability of
the recovery of the United States economy as a result of the pandemic and due to government and other responses thereto.
Market volatility has contributed to and may continue to contribute to fluctuations in the Company’s stock price. We have equity
hedges in place to protect the Company from exposure to market risk related to future payout of equity-based compensation
awards. However, because these hedges also net settle on a cash basis quarterly, we have been and may in the future be required
to make cash payments at those quarterly settlement dates and the amounts of those payments are difficult to during periods of
extreme volatility in the equity markets. These cash payments may ultimately be offset by payments to us from the hedge
counterparties or reductions in expected payouts to employees when those equity hedges finally fully settle and the related equity
awards pay out.
Failure to protect our service marks or other intellectual property could harm our business.
We regard our Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capital Grille®, The
Capital Burger ®, Seasons 52®, Bahama Breeze®, Eddie V’s Prime Seafood®, Darden® and Darden Restaurants® service marks,
and other service marks and trademarks related to our restaurant businesses, as having significant value and being important to
our marketing efforts. We rely on a combination of protections provided by contracts, copyrights, patents, trademarks, service
marks and other common law rights, such as trade secret and unfair competition laws, to protect our restaurants and services from
infringement. We have registered certain trademarks and service marks in the United States and foreign jurisdictions. However,
we are aware of names and marks identical or similar to our service marks being used from time to time by other persons.
Although our policy is to oppose any such infringement, further or unknown unauthorized uses or other misappropriation of our
trademarks or service marks could diminish the value of our brands and adversely affect our business. In addition, effective
intellectual property protection may not be available in every country in which we have or intend to open or franchise a restaurant.
Although we believe we have taken appropriate measures to protect our intellectual property, there can be no assurance that these
protections will be adequate, and defending or enforcing our service marks and other intellectual property could result in the
expenditure of significant resources.
General Risks
Litigation, including allegations of illegal, unfair or inconsistent employment practices, may adversely affect our business,
financial condition and results of operations.
Our business is subject to the risk of litigation by employees, guests, suppliers, business partners, shareholders, government
agencies or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. These
actions and proceedings may involve allegations of illegal, unfair or inconsistent employment practices, including wage and hour
violations and employment discrimination; guest discrimination; food safety issues including poor food quality, food-borne
illness, food tampering, food contamination, and adverse health effects from consumption of various food products or high-calorie
foods (including obesity); other personal injury, including claims related to COVID-19; violation of “dram shop” laws (providing
an injured party with recourse against an establishment that serves alcoholic beverages to an intoxicated party who then causes
injury to himself or a third party); trademark infringement; violation of the federal securities laws; or other concerns. The
outcome of litigation, particularly class action lawsuits and regulatory actions, is difficult to assess or quantify. Plaintiffs in these
types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to
such lawsuits may remain unknown for substantial periods of time. The cost to defend litigation may be significant. There may
also be adverse publicity associated with litigation that could decrease guest acceptance of our brands, regardless of whether the
allegations are valid or we ultimately are found liable. Litigation could impact our operations in other ways as well. Allegations
of illegal, unfair or inconsistent employment practices, for example, could adversely affect employee acquisition and retention.
As a result, litigation may adversely affect our business, financial condition and results of operations.
Unfavorable publicity, or a failure to respond effectively to adverse publicity, could harm our reputation and adversely impact
our guest counts and sales.
The good reputation of our restaurant brands is a key factor in the success of our business. Actual or alleged incidents at any
of our restaurants could result in negative publicity that could harm our brands. Even incidents occurring at restaurants operated
by our competitors or in the supply chain generally could result in negative publicity that could harm the restaurant industry
overall and, indirectly, our own brands. Negative publicity may result from allegations of illegal, unfair or inconsistent
employment practices, employee dissatisfaction, guest discrimination, illness, injury, or any of the other matters discussed above
that could give rise to litigation. Regardless of whether the allegations or complaints are valid, unfavorable publicity relating to a
limited number of our restaurants, or to only a single restaurant, could adversely affect public perception of the entire brand.
Negative publicity also may result from health concerns including food safety and flu or virus outbreaks, publication of
government or industry findings concerning food products, environmental disasters, crime incidents, data security breaches,
scandals involving our employees, or operational problems at our restaurants, all of which could make our brands and menu
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offerings less appealing to our guests and negatively impact our guest counts and sales. Adverse publicity and its effect on overall
consumer perceptions of our brands, or our failure to respond effectively to adverse publicity, could have a material adverse effect
on our business.
Disruptions in the financial and credit markets may adversely impact consumer spending patterns and affect the availability
and cost of credit.
Our ability to make scheduled payments or to refinance our debt and to obtain financing for acquisitions or other general
corporate and commercial purposes will depend on our operating and financial performance, which in turn is subject to prevailing
economic conditions and to financial, business and other factors beyond our control. Turmoil in global credit markets could
adversely impact the availability of credit already arranged, and the availability and cost of credit in the future. There can be no
assurances that we will be able to arrange credit on terms we believe are acceptable or that permit us to finance our business with
historical margins. A lack of credit could have an adverse impact on certain of our suppliers, landlords and other tenants in retail
centers in which we are located. If these issues occur, they could negatively affect our financial results. Any new disruptions in
the financial markets may also adversely affect the U.S. and world economy, which could negatively impact consumer spending
patterns.
Impairment of the carrying value of our goodwill or other intangible assets could adversely affect our financial condition and
results of operations.
Goodwill represents the difference between the purchase price of acquired companies and the related fair values of net assets
acquired. A significant amount of judgment is involved in determining if an indication of impairment of goodwill exists. Factors
may include, among others: a significant decline in our expected future cash flows; a sustained, significant decline in our stock
price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition;
the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse change in
these factors could have a significant impact on the recoverability of these assets and negatively affect our financial condition and
results of operations. We compute the amount of impairment by comparing the fair value of the reporting unit with the carrying
amount of that reporting unit. We are required to record a non-cash impairment charge if the testing performed indicates that
goodwill has been impaired.
We evaluate the useful lives of our other intangible assets, primarily the LongHorn Steakhouse®, Cheddar’s Scratch
Kitchen®, The Capital Grille®, Yard House® and Eddie V’s Prime Seafood® trademarks, to determine if they are definite or
indefinite-lived. Reaching a determination on useful life requires significant judgments and assumptions regarding the future
effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that
results in an uncertain or changing regulatory environment, and expected changes in distribution channels), the level of required
maintenance expenditures, and the expected lives of other related groups of assets.
As with goodwill, we test our indefinite-lived intangible assets (primarily trademarks) for impairment annually and
whenever events or changes in circumstances indicate that their carrying value may not be recoverable. We cannot accurately
predict the amount and timing of any impairments of these or other assets. Should the value of goodwill or other intangible assets
become impaired, there could be an adverse effect on our financial condition and results of operations.
Changes in tax laws and unanticipated tax liabilities could adversely affect our financial results.
We are primarily subject to income and other taxes in the United States. Our effective income tax rate and other taxes in the
future could be adversely affected by a number of factors, including changes in the valuation of deferred tax assets and liabilities,
changes in tax laws or other legislative changes and the outcome of income tax audits. Although we believe our tax estimates are
reasonable, the final determination of tax audits could be materially different from our historical income tax provisions and
accruals. The results of a tax audit could have a material effect on our results of operations or cash flows in the period or periods
for which that determination is made. In addition, our effective income tax rate and our results may be impacted by our ability to
realize deferred tax benefits and by any increases or decreases of our valuation allowances applied to our existing deferred tax
assets.
Failure of our internal controls over financial reporting and future changes in accounting standards may cause adverse
unexpected operating results, affect our reported results of operations or otherwise harm our business and financial results.
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal
control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for
external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent
limitations, internal control over financial reporting is not intended to provide absolute assurance that we would prevent or detect
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a misstatement of our financial statements or fraud. Our growth and acquisition of other restaurant companies with procedures
not identical to our own could place significant additional pressure on our system of internal control over financial reporting. Any
failure to maintain an effective system of internal control over financial reporting could limit our ability to report our financial
results accurately and timely or to detect and prevent fraud. A significant financial reporting failure or material weakness in
internal control over financial reporting could cause a loss of investor confidence and decline in the market price of our common
stock, increase our costs, lead to litigation or result in negative publicity that could damage our reputation.
A change in accounting standards can have a significant effect on our reported results and may affect our reporting of
transactions before the change is effective. New pronouncements and varying interpretations of pronouncements have occurred
and may occur in the future. Changes to existing accounting rules or the application of current accounting practices may
adversely affect our reported financial results. Additionally, our assumptions, estimates and judgments related to complex
accounting matters could significantly affect our financial results. Generally accepted accounting principles and related
accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are
relevant to our business, including but not limited to, revenue recognition, fair value of investments, impairment of long-lived
assets, leases and related economic transactions, derivatives, pension and post-retirement benefits, intangibles, self-insurance,
income taxes, property and equipment, unclaimed property laws and litigation, and stock-based compensation are highly complex
and involve many subjective assumptions, estimates and judgments by us. Changes in these rules or their interpretation or
changes in underlying assumptions, estimates or judgments by us could significantly change our reported or expected financial
performance.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 2. PROPERTIES
Restaurant Properties – Continuing Operations
As of May 30, 2021, we operated 1,834 restaurants. Our company-owned restaurants are located in all 50 of the United
States, Washington D.C. and Canada. Of these 1,834 company-owned restaurants, 73 were located on owned sites and 1,761
were located on leased sites. The leases are classified as follows:
Land-Only Leases (we own buildings and equipment)
Ground and Building Leases
Space/In-Line/Other Leases
Total
893
659
209
1,761
We also lease our restaurant support center which is located in Orlando, Florida.
Item 3. LEGAL PROCEEDINGS
See the discussion of legal proceedings contained in the third paragraph of Note 15 of the Notes to Consolidated Financial
Statements (Part II, Item 8 of this report).
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
24
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, where our
shares are traded under the symbol DRI. As of June 30, 2021, there were approximately 8,918 holders of record of our common
shares. The number of registered holders does not include holders who are beneficial owners, but whose shares are held in street
name by brokers and other nominees.
We have not sold any equity securities during the last fiscal year that were not registered under the Securities Act of 1933,
as amended.
Since commencing our common share repurchase program in December 1995, we have repurchased a total of 196.6
million shares through May 30, 2021 under authorizations from our Board of Directors. The table below provides information
concerning our repurchase of shares of our common stock during the quarter ended May 30, 2021:
(Dollars in millions, except per share data)
March 1, 2021 through April 4, 2021
April 5, 2021 through May 2, 2021
May 3, 2021 through May 30, 2021
Total
Total Number
of Shares
Purchased
(1) (2)
Average
Price Paid
per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Maximum Dollar
Value of Shares That
May Yet Be
Purchased Under the
Plans or Programs (3)
40,975
69,288
160,191
270,454
$
$
$
$
142.17
40,975
144.32
69,288
139.19
160,191
140.95
270,454
$
$
$
$
495.8
485.8
463.5
463.5
(1) All of the shares purchased during the quarter ended May 30, 2021 were purchased as part of our repurchase program. On
March 23, 2021, our Board of Directors authorized a share repurchase program under which the Company may repurchase up
to $500.0 million of its outstanding common stock. This repurchase program, which was announced publicly in a press
release issued on March 25, 2021, does not have an expiration and replaced the previously existing share repurchase
authorization.
(2) The number of shares purchased includes shares withheld for taxes on vesting of restricted stock, shares delivered or deemed
to be delivered to us on tender of stock in payment for the exercise price of options, and shares reacquired pursuant to tax
withholding on option exercises. These shares are included as part of our repurchase program and deplete the repurchase
authority granted by our Board. The number of shares repurchased excludes shares we reacquired pursuant to forfeiture of
restricted stock.
(3) 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 additional shares.
25
Comparison of Five-Year Total Return
Company/Index
Darden Restaurants, Inc.
S&P 500 Stock Index
May 2016 May 2017 May 2018 May 2019 May 2020 May 2021
$ 100.00 $ 134.64 $ 138.42 $ 194.43 $ 127.24 $ 239.95
$ 100.00 $ 117.52 $ 134.98 $ 143.01 $ 157.20 $ 220.58
S&P Composite 1500 Restaurant Sub-Index
$ 100.00 $ 123.31 $ 128.75 $ 162.53 $ 162.35 $ 227.43
Indexed Returns
The annual changes for the five-year period shown in the graph on this page are based on the assumption that $100 had been
invested in Darden Restaurants, Inc. common stock, the S&P 500 Stock Index and the S&P Composite 1500 Restaurant Sub-
Index on May 27, 2016, and that all dividends were reinvested. The cumulative dollar returns shown on the graph represent the
value that such investments would have had for each period indicated.
26
Darden Restaurants, Inc.S&P 500 Stock IndexS&P Composite 1500 Restaurant Sub-IndexMay - 16May - 17May - 18May - 19May - 20May - 21$75$100$125$150$175$200$225$250$275 Item 6. SELECTED FINANCIAL DATA
Not applicable.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This discussion and analysis below for Darden Restaurants, Inc. (Darden, the Company, we, us or our) should be read in
conjunction with our consolidated financial statements and related financial statement notes included in Part II of this report under
the caption “Item 8 - Financial Statements and Supplementary Data.” We operate on a 52/53-week fiscal year, which ends on the
last Sunday in May. Fiscal 2021, which ended May 30, 2021, consisted of 52 weeks and fiscal 2020, which ended May 31, 2020,
consisted of 53 weeks.
OVERVIEW OF OPERATIONS
Our business operates in the full-service dining segment of the restaurant industry. At May 30, 2021, we operated 1,834
restaurants through subsidiaries in the United States and Canada under the Olive Garden®, LongHorn Steakhouse®, Cheddar’s
Scratch Kitchen®, Yard House®, The Capital Grille®, Seasons 52®, Bahama Breeze® and Eddie V’s Prime Seafood® trademarks.
We own and operate all of our restaurants in the United States and Canada, except for 2 joint venture restaurants managed by us
and 33 franchised restaurants. We also have 24 franchised restaurants in operation located in Latin America. All intercompany
balances and transactions have been eliminated in consolidation.
COVID-19 Pandemic
For much of fiscal 2021, the COVID-19 pandemic resulted in a significant reduction in guest traffic at our restaurants due
to changes in consumer behavior as public health officials encouraged social distancing and required personal protective
equipment and state and local governments mandated restrictions including suspension of dine-in operations, reduced restaurant
seating capacity, table spacing requirements, bar closures and additional physical barriers. Beginning in late March 2020, we
operated with all of our dining rooms closed and served our guests in a To Go only or To Go and delivery format. In late April
2020, state and local governments began to allow us to open dining rooms at limited capacities, along with other operating
restrictions.
As a result, we began fiscal 2021 with significant limitations on our operations, which over the course of the fiscal year
varied widely from time to time, state to state and city to city. During November 2020, rising case rates resulted in certain
jurisdictions implementing restrictions that again reduced dining room capacity or mandated the re-closure of dining rooms.
Once COVID-19 vaccines were approved and moved into wider distribution in the United States in early 2021, public health
conditions improved and almost all of the COVID-19 restrictions on businesses have eased. As of the date of this report, all of our
restaurants were able to open their dining rooms to some extent and few capacity restrictions or other COVID-19 restrictions
remained in place in the United States. However, it is possible additional outbreaks could require us to again reduce our capacity
or limit or suspend our in-restaurant dining operations.
As we navigated through the pandemic, we took significant steps to adapt our business model to allow us to continue to
serve guests and support our team members, including investing in our team members through enhanced pay and benefits,
streamlining our restaurant processes, simplifying our menus, and accelerating the rollout of technology to all of our brands to
enhance the off-premise and in-restaurant guest experience. As our dining rooms have returned to full or close-to-full capacity, we
are focused on continuing to provide a safe environment for our team members and guests, and maintaining many of the operating
efficiencies established during fiscal 2021.
Fiscal 2021 Financial Highlights
Our sales from continuing operations were $7.20 billion in fiscal 2021 compared to $7.81 billion in fiscal 2020. The 7.8
percent decrease in sales from continuing operations was primarily driven by negative combined Darden same-restaurant sales of
7.8 percent and one less week of operations in fiscal 2021, partially offset by revenue from the addition of 30 net new company-
owned restaurants. The decrease in same-restaurant sales was driven by the impact of COVID-19.
Net earnings from continuing operations for fiscal 2021 was $632.4 million ($4.80 per diluted share) compared with a net
loss from continuing operations for fiscal 2020 of $49.2 million ($0.40 per diluted share). Our results from continuing operations
for fiscal 2021 increased compared to fiscal 2020 primarily due to the economic impacts of COVID-19 which had a material
adverse effect specifically on the fourth quarter of fiscal 2020, including $390.0 million of impairments.
Our net loss from discontinued operations was $3.1 million ($0.03 per diluted share) for fiscal 2021, compared with a net
loss from discontinued operations of $3.2 million ($0.03 per diluted share) for fiscal 2020. When combined with results from
27
continuing operations, our diluted net earnings per share was $4.77 for fiscal 2021 and diluted net loss per share was $0.43 for
fiscal 2020.
Outlook
We expect fiscal 2022 sales from continuing operations to increase between 28 percent and 32 percent, driven by Darden
same-restaurant sales growth of 25 percent to 29 percent and approximately 35-40 new restaurants. In fiscal 2022, we expect our
annual effective tax rate to be between 13.0 percent and 14.0 percent and we expect capital expenditures incurred to build new
restaurants, remodel and maintain existing restaurants and technology initiatives to be between $375.0 million and $425.0 million.
RESULTS OF OPERATIONS FOR FISCAL 2021 AND 2020
To facilitate review of our results of operations, the following table sets forth our financial results for the periods indicated.
All information is derived from the consolidated statements of earnings for the fiscal years ended May 30, 2021 and May 31,
2020:
Fiscal Year Ended
Percent
Change
May 30, 2021 May 31, 2020
2021 vs 2020
$
7,196.1
$
7,806.9
(7.8) %
2,072.1
2,286.3
1,344.2
91.1
396.2
350.9
6.6
—
2,240.8
2,682.6
1,475.1
238.0
376.4
355.9
221.0
169.2
(7.5) %
(14.8) %
(8.9) %
(61.7) %
5.3 %
(1.4) %
(97.0) %
(100.0) %
(15.6) %
NM
10.8 %
(94.3) %
NM
(50.0) %
NM
(3.1) %
NM
(in millions)
Sales
Costs and expenses:
Food and beverage
Restaurant labor
Restaurant expenses
Marketing expenses
General and administrative expenses
Depreciation and amortization
Impairments and disposal of assets, net
Goodwill impairment
Total operating costs and expenses
$
6,547.4
$
7,759.0
Operating income
Interest, net
Other (income) expense, net
Earnings (loss) before income taxes
Income tax expense (benefit) (1)
Earnings (loss) from continuing operations
Losses from discontinued operations, net of tax
Net earnings (loss)
(1) Effective tax rate
NM- Percentage change not considered meaningful.
648.7
63.5
8.7
576.5
(55.9)
632.4
(3.1)
629.3
$
$
47.9
57.3
151.6
(161.0)
(111.8)
(49.2)
(3.2)
(52.4)
(9.7) %
69.4 %
$
$
28
The following table details the number of company-owned restaurants currently reported in continuing operations, compared
with the number open at the end of fiscal 2020:
Olive Garden
LongHorn Steakhouse
Cheddar’s Scratch Kitchen
Yard House
The Capital Grille (1)
Seasons 52
Bahama Breeze
Eddie V’s
Total
May 30, 2021 May 31, 2020
868
522
165
81
60
44
41
23
1,804
875
533
170
81
63
44
42
26
1,834
(1) Includes three The Capital Burger restaurants in fiscal 2021 and two in fiscal 2020.
SALES
The following table presents our company-owned restaurant sales, U.S. same-restaurant sales (SRS) and average annual
sales per restaurant by segment for the periods indicated:
Sales
Fiscal Year Ended
(in millions)
Olive Garden
LongHorn Steakhouse
Fine Dining
Other Business
May 30, 2021 May 31, 2020
4,013.8
$
1,701.1
$
$
541.1
1,550.9
$
7,806.9
$
3,593.4 $
1,810.4 $
446.9 $
1,345.4 $
7,196.1 $
Average Annual Sales per
Restaurant (2)
Fiscal Year Ended
Percent
Change
(10.5) %
6.4 %
(17.4) %
(13.3) %
SRS (1)
(9.9) %
5.5 %
(19.2) %
(13.5) %
May 30, 2021 May 31, 2020
4.5
4.1 $
$
3.2
3.4 $
$
6.5
5.3 $
$
4.5
4.0 $
$
(1) Same-restaurant sales is a year-over-year comparison of each period’s sales volumes for a 52-week year and is limited to
restaurants open at least 16 months.
(2) Average annual sales are calculated as sales divided by total restaurant operating weeks multiplied by 52 weeks; excludes
franchise locations.
Olive Garden’s sales decrease for fiscal 2021 was primarily driven by a U.S. same-restaurant sales decrease and one less
week of operations, partially offset by revenue from new restaurants. The decrease in U.S. same-restaurant sales in fiscal 2021
was driven by the impact of COVID-19 and resulted from a 12.8 percent decrease in same-restaurant guest counts offset by a 2.9
percent increase in average check.
LongHorn Steakhouse’s sales increase for fiscal 2021 was driven by a same-restaurant sales increase combined with revenue
from new restaurants, partially offset by one less week of operations. The increase in same-restaurant sales in fiscal 2021 resulted
from a 3.3 percent increase in same-restaurant guest counts combined with a 2.2 percent increase in average check.
Fine Dining’s sales decrease for fiscal 2021 was driven by a same-restaurant sales decrease and one less week of operations,
partially offset by revenue from new restaurants. The decrease in same-restaurant sales in fiscal 2021 was driven by the impact of
COVID-19 and resulted from a 20.7 percent decrease in same-restaurant guest counts offset by a 1.5 percent increase in average
check.
Other Business’s sales decrease for fiscal 2021 was driven by a same-restaurant sales decrease and one less week of
operations, partially offset by revenue from new restaurants. The decrease in same-restaurant sales in fiscal 2021 was driven by
the impact of COVID-19 and resulted from a 15.5 percent decrease in same-restaurant guest counts offset by a 2.0 percent
increase in average check.
29
COSTS AND EXPENSES
The following table sets forth selected operating data as a percent of sales from continuing operations for the periods
indicated. This information is derived from the consolidated statements of earnings for the fiscal years ended May 30, 2021
and May 31, 2020.
Sales
Costs and expenses:
Food and beverage
Restaurant labor
Restaurant expenses
Marketing expenses
General and administrative expenses
Depreciation and amortization
Impairments and disposal of assets, net
Goodwill impairment
Total operating costs and expenses
Operating income
Interest, net
Other (income) expense, net
Earnings (loss) before income taxes
Income tax expense (benefit)
Earnings (loss) from continuing operations
Fiscal Year Ended
May 30, 2021 May 31, 2020
100.0 %
100.0 %
28.8
31.8
18.7
1.3
5.5
4.9
0.1
—
91.0 %
9.0 %
0.9
0.1
8.0 %
(0.8)
8.8 %
28.7
34.4
18.9
3.0
4.8
4.6
2.8
2.2
99.4 %
0.6 %
0.7
1.9
(2.1) %
(1.4)
(0.6) %
Total operating costs and expenses from continuing operations were $6.55 billion in fiscal 2021 and $7.76 billion in fiscal
2020.
Fiscal 2021 Compared to Fiscal 2020:
•
•
•
Food and beverage costs increased as a percent of sales primarily due to a 0.7% impact from inflation and 0.4% impact
from investments in food quality, partially offset by a 0.6% impact from pricing leverage and 0.4% impact from menu
mix.
Restaurant labor costs decreased as a percent of sales primarily due to a 4.0% impact from productivity improvement
driven by operational simplification and a 0.7% impact from pricing, partially offset by a 1.7% impact from sales
deleverage and a 0.5% impact from inflation.
Restaurant expenses decreased as a percent of sales primarily due to a 1.4% impact from lower repairs and maintenance
expenses, utility costs, and rent expense, and a 0.4% impact from pricing, partially offset by a 1.6% impact from sales
deleverage.
• Marketing expenses decreased as a percent of sales primarily due to a 2.0% impact from lower media spending at Olive
•
•
•
•
Garden and LongHorn Steakhouse, partially offset by a 0.3% impact from sales deleverage.
General and administrative expenses increased as a percent of sales primarily due to a 0.6% impact related to our
corporate restructuring actions during the first quarter of fiscal 2021, a 0.4% impact from the mark to market of our
deferred compensation plans, and a 0.4% impact due to sales deleverage, partially offset by a 0.6% impact from cost
savings initiatives and a 0.2% impact from a legal recovery.
Depreciation and amortization expenses increased as a percent of sales primarily due to sales deleverage.
Impairments and disposal of assets, net decreased as a percent of sales due to the economic impact of the COVID-19
pandemic on fiscal 2020. During the fourth quarter of fiscal 2020, we recorded non-cash impairment charges of $220.8
million related to a portion of our other indefinite-lived intangible assets, restaurant-level and other assets.
Goodwill impairment decreased as a percent of sales due to the economic impact of COVID-19 on fiscal 2020. During
the fourth quarter of fiscal 2020, we recorded a non-cash impairment charge of $169.2 million related to a portion of our
goodwill.
30
INCOME TAXES
During fiscal 2021, we had an income tax benefit of $55.9 million ((9.7) percent effective tax rate) compared to an income
tax benefit of $111.8 million (69.4 percent effective tax rate) in fiscal 2020. The significant change was driven primarily by the
fact that we had $576.5 million in earnings before taxes in fiscal 2021, compared to a net loss before taxes $161.0 million in fiscal
2020. For fiscal 2021, our effective tax rate was also impacted by the generation of a net operating loss for tax purposes that will
be carried back to the previous five tax years. We generated a net operating loss for tax purposes due to several factors, including
the impact of COVID-19, accelerated tax depreciation, increased tax deductions for equity vestings and exercises, tax accounting
method changes and various other tax planning initiatives. An income tax benefit is generated due to the difference in federal tax
rates between fiscal year 2021 and the years to which the federal net operating loss will be carried back.
NET EARNINGS AND NET EARNINGS PER SHARE FROM CONTINUING OPERATIONS
Net earnings from continuing operations for fiscal 2021 were $632.4 million ($4.80 per diluted share) compared with net
loss from continuing operations for fiscal 2020 of $49.2 million ($0.40 per diluted share).
Our results from continuing operations for fiscal 2021 increased compared with fiscal 2020 primarily due to the economic
impacts of COVID-19 which had a material adverse effect on the fourth quarter of fiscal 2020 including $390.0 million of asset
impairments during the fourth quarter. In fiscal 2021, our diluted per share results from continuing operations were positively
impacted by $0.76 due to a non-recurring income tax benefit, partially offset by $0.27 due to our corporate restructuring in the
first quarter of fiscal 2021. In fiscal 2020, our diluted per share results from continuing operations were negatively impacted by
approximately $2.19 due to non-cash goodwill and trademark impairments, approximately $0.29 due to non-cash restaurant-level
impairments and approximately $0.18 due to inventory and note receivable write-downs. Additionally, our diluted per share
results from continuing operations for fiscal 2020 were adversely impacted by approximately $0.89 due to a pension settlement
charge and approximately $0.02 due to an international structure simplification from the second quarter of fiscal 2020.
LOSS FROM DISCONTINUED OPERATIONS
On an after-tax basis, results from discontinued operations for fiscal 2021 were a net loss of $3.1 million ($0.03 per diluted
share) compared with a net loss for fiscal 2020 of $3.2 million ($0.03 per diluted share).
SEGMENT RESULTS
We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The
Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s in the U.S. and Canada as operating segments. We aggregate our
operating segments into reportable segments based on a combination of the size, economic characteristics and sub-segment of
full-service dining within which each brand operates. Our four reportable segments are: (1) Olive Garden, (2) LongHorn
Steakhouse, (3) Fine Dining and (4) Other Business. See Note 5 of the Notes to Consolidated Financial Statements (Part II, Item
8 of this report) for further details.
Our management uses segment profit as the measure for assessing performance of our segments. The following table
presents segment profit margin for the periods indicated:
Segment
Olive Garden
LongHorn Steakhouse
Fine Dining
Other Business
Fiscal Year Ended
Change
May 30, 2021 May 31, 2020
23.2%
17.9%
17.7%
14.4%
18.3%
15.4%
16.3%
8.9%
2021 vs 2020
490 BP
250 BP
140 BP
550 BP
The increase in the Olive Garden segment profit margin for fiscal 2021 was driven primarily by lower restaurant labor as
well as lower marketing expenses. The increase in the LongHorn Steakhouse segment profit margin for fiscal 2021 was driven by
leveraging positive same-restaurant sales as well as lower marketing expenses. The increase in in the Fine Dining segment profit
margin for 2021 was driven by lower marketing expenses and lower food and beverage costs. The increase in the Other Business
segment profit margin for 2021 was driven by lower restaurant labor and lower marketing expenses.
RESULTS OF OPERATIONS FOR FISCAL 2020 COMPARED TO 2019
31
For a comparison of our results of operations for the fiscal years ended May 31, 2020 and May 26, 2019, see “Part II, Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K
for the fiscal year ended May 31, 2020, filed with the SEC on July 24, 2020.
SEASONALITY
Our sales volumes have historically fluctuated seasonally. Typically, our average sales per restaurant are highest in the
winter and spring, followed by the summer, and lowest in the fall. However, throughout fiscal 2021, a variety of factors,
including the impacts of COVID-19 on our business, government actions taken to respond to COVID-19 and to stimulate the
United States’ recovery from COVID-19, and changing consumer preferences caused fluctuations in our sales volumes that were
different than our typical seasonality. Additionally, holidays, changes in the economy, severe weather and similar conditions may
impact sales volumes seasonally in some operating regions. Because of the historical seasonality of our business and these other
factors, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.
IMPACT OF INFLATION
We attempt to minimize the annual effects of inflation through appropriate planning, operating practices and menu price
increases. We do not believe inflation had a significant overall effect on our annual results of operations during fiscal 2021 or
2020.
CRITICAL ACCOUNTING ESTIMATES
We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles. The
preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
sales and expenses during the reporting period. Actual results could differ from those estimates.
Our significant accounting policies are more fully described in Note 1 of the Notes to Consolidated Financial Statements
(Part II, Item 8 of this report). Judgments and uncertainties affecting the application of those policies may result in materially
different amounts being reported under different conditions or using different assumptions. We consider the following estimates
to be most critical in understanding the judgments that are involved in preparing our consolidated financial statements.
Leases
We evaluate our leases at their inception to estimate their expected term, which commences on the date when we have the
right to control the use of the leased property and includes the non-cancelable base term plus all option periods we are reasonably
certain to exercise. Our judgment in determining the appropriate expected term and discount rate for each lease affects our
evaluation of:
•
•
•
The classification and accounting for leases as operating versus finance;
The rent holidays and escalation in payments that are included in the calculation of the lease liability and related right-of-
use asset; and
The term over which leasehold improvements for each restaurant facility are amortized.
These judgments may produce materially different amounts of lease liabilities and right-of-use assets recognized on our
consolidated balance sheets, as well as depreciation, amortization, interest and rent expense recognized in our consolidated
statements of earnings if different discount rates and expected lease terms were used.
Valuation of Long-Lived Assets
Land, buildings and equipment, operating lease right-of-use assets and certain other assets, including definite-lived
intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. A significant amount of judgment is involved in determining if an indicator of impairment has
occurred. Such indicators may include, among others: a significant decline in our expected future cash flows; changes in expected
useful life; unanticipated competition; slower growth rates, ongoing maintenance and improvements of the assets, or changes in
the usage or operating performance. Any adverse change in these factors could have a significant impact on the recoverability of
these assets and could have a material impact on our consolidated financial statements. Based on a review of operating results for
each of our restaurants, the amount of net book value associated with lower performing restaurants that would be deemed at risk
for impairment is not material to our consolidated financial statements.
Valuation and Recoverability of Goodwill and Trademarks
32
We have eight reporting units, six of which had goodwill and seven of which had trademarks. Goodwill and trademarks are
not subject to amortization and goodwill has been assigned to reporting units for purposes of impairment testing. The reporting
units are our restaurant brands. A significant amount of judgment is involved in determining if an indicator of impairment has
occurred. Such indicators may include, among others: a significant decline in our expected future cash flows; a sustained,
significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business
climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower
growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could
have a material impact on our consolidated financial statements. We review our goodwill and trademarks for impairment
annually, as of the first day of our fourth fiscal quarter, or more frequently if indicators of impairment exist.
During fiscal 2021, we elected to perform a qualitative assessment for our annual impairment review of goodwill and
trademarks to determine whether or not indicators of impairment exist. In considering the qualitative approach related to goodwill,
we evaluated factors including, but not limited to, COVID-19, macro-economic conditions, market and industry conditions,
commodity cost fluctuations, competitive environment, share price performance, results of prior impairment tests, operational
stability, the overall financial performance of the reporting units and the impacts of discount rates. As it relates to trademarks, we
evaluate similar factors from the goodwill assessment, in addition to impacts of royalty rates. Based on the results of the
qualitative assessment which considered the improvements of each of our brands’ financial performance, as well as the improved
overall operating environment, no indicators of impairment were identified. Changes in circumstances existing at the
measurement date or at other times in the future, or in the numerous estimates associated with management’s judgments and
assumptions made in assessing the fair value of our goodwill and trademarks, could result in an impairment loss of a portion or all
of our goodwill or trademarks.
Impairment of our assets, including goodwill or trademarks, adversely affects our financial position and results of
operations, and our leverage ratio for purposes of our revolving credit agreement (Revolving Credit Agreement) increases. A
leverage ratio exceeding the maximum permitted under our Revolving Credit Agreement would be a default under our Revolving
Credit Agreement. At May 30, 2021, additional write-downs of goodwill, other indefinite-lived intangible assets, or any other
assets in excess of approximately $1.69 billion would have been required to cause our leverage ratio to exceed the permitted
maximum. As our leverage ratio is determined on a quarterly basis, and due to the seasonal nature of our business, a lesser amount
of impairment in future quarters could cause our leverage ratio to exceed the permitted maximum.
Unearned Revenues
Unearned revenues primarily represent our liability for gift cards that have been sold but not yet redeemed. The estimated
value of gift cards expected to remain unused is recognized over the expected period of redemption as the remaining gift card
values are redeemed, generally over a period of 12 years. Utilizing this method, we estimate both the amount of breakage and the
time period of redemption. If actual redemption patterns vary from our estimates, actual gift card breakage income may differ
from the amounts recorded. We update our estimates of our redemption period and our breakage rate periodically and apply that
rate to gift card redemptions on a prospective basis. Changing our breakage-rate estimates by 50 basis points would have resulted
in an adjustment in our breakage income of approximately $2.4 million for fiscal 2021.
Income Taxes
We estimate certain components of our provision for income taxes. These estimates include, among other items,
depreciation and amortization expense allowable for tax purposes, allowable tax credits for items such as taxes paid on reported
employee tip income, effective rates for state and local income taxes and the tax deductibility of certain other items. We adjust our
annual effective income tax rate as additional information on outcomes or events becomes available.
Assessment of uncertain tax positions requires judgments relating to the amounts, timing and likelihood of resolution. As
described in Note 12 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report), the $51.8 million balance
of unrecognized tax benefits at May 30, 2021, includes $35.9 million related to tax positions for which it is reasonably possible
that the total amounts could change during the next 12 months based on the outcome of examinations. Of the $35.9 million,
$18.0 million relates to items that would impact our effective income tax rate.
LIQUIDITY AND CAPITAL RESOURCES
Typically, cash flows generated from operating activities are our principal source of liquidity, which we use to finance
capital expenditures for new restaurants and to remodel and maintain existing restaurants, to pay dividends to our shareholders
and to repurchase shares of our common stock. Since substantially all of our sales are for cash and cash equivalents, and accounts
payable are generally paid in 5 to 90 days, we are typically able to carry current liabilities in excess of current assets. As
previously noted, during the fourth quarter of fiscal 2020, all of our restaurants began operating at reduced capacities due to
COVID-19 and initially were not able to generate sufficient cash from operations to cover all of our projected expenditures while
33
operating at those reduced capacities. Accordingly, we took significant steps to adapt our business, which allowed us to continue
to serve guests, support our team members and secure our liquidity position to provide financial flexibility. As state and local
governments allowed us to open dining rooms at limited capacities our cash flows improved, and during fiscal 2021 we generated
positive operating cash flows and fully repaid our $270.0 million 364-day term loan prior to maturity. Additionally, our Board of
Directors declared a cash dividend of $1.10 per share to be paid on August 2, 2021 to all shareholders of record as of the close of
business on July 9, 2021.
We currently manage our business and financial ratios to target an investment-grade bond rating, which has historically
allowed flexible access to financing at reasonable costs. Our publicly issued long-term debt currently carries the following ratings:
• Moody’s Investors Service “Baa3”;
Standard & Poor’s “BBB-”; and
•
Fitch “BBB-”.
•
Our commercial paper has ratings of:
• Moody’s Investors Service “P-3”;
Standard & Poor’s “A-3”; and
•
Fitch “F-3”.
•
These ratings are as of the date of the filing of this report and have been obtained with the understanding that Moody’s
Investors Service, Standard & Poor’s and Fitch will continue to monitor our credit and make future adjustments to these ratings to
the extent warranted. The ratings are not a recommendation to buy, sell or hold our securities, may be changed, superseded or
withdrawn at any time and should be evaluated independently of any other rating.
We maintain a $750.0 million Revolving Credit Agreement with Bank of America, N.A. (BOA), as administrative agent,
and the lenders and other agents party thereto. The Revolving Credit Agreement is a senior unsecured credit commitment to the
Company and contains customary representations and affirmative and negative covenants (including limitations on liens and
subsidiary debt and a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of
default usual for credit facilities of this type. As of May 30, 2021, we were in compliance with all covenants under the Revolving
Credit Agreement.
The Revolving Credit Agreement matures on October 27, 2022, and the proceeds may be used for working capital and
capital expenditures, the refinancing of certain indebtedness, certain acquisitions and general corporate purposes. Loans under the
Revolving Credit Agreement bear interest at a rate of LIBOR plus a margin determined by reference to a ratings-based pricing
grid (Applicable Margin), or the base rate (which is defined as the highest of the BOA prime rate plus 0.075 percent, the Federal
Funds rate plus 0.500 percent, and the Eurocurrency Rate plus 1.075 percent) plus the Applicable Margin. Assuming a “BBB-”
equivalent credit rating level, the Applicable Margin under the Revolving Credit Agreement will be 1.075 percent for LIBOR
loans and 0.075 percent for base rate loans. As of May 30, 2021, we had no outstanding balances under the Revolving Credit
Agreement.
At May 30, 2021, our long-term debt consisted principally of:
•
•
•
•
$500.0 million of unsecured 3.850 percent senior notes due in May 2027;
$96.3 million of unsecured 6.000 percent senior notes due in August 2035;
$42.8 million of unsecured 6.800 percent senior notes due in October 2037; and
$300.0 million of unsecured 4.550 percent senior notes due in February 2048.
The interest rate on our $42.8 million 6.800 percent senior notes due October 2037 is subject to adjustment from time to
time if the debt rating assigned to such series of notes is downgraded below a certain rating level (or subsequently upgraded). The
maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial
interest rate. As of May 30, 2021, no such adjustments are made to this rate.
Through our shelf registration statement on file with the SEC, depending on conditions prevailing in the public capital
markets, we may issue equity securities or unsecured debt securities from time to time in one or more series, which may consist of
notes, debentures or other evidences of indebtedness in one or more offerings.
From time to time, we may repurchase our outstanding debt in privately negotiated transactions. Such repurchases, if any,
will depend on prevailing market conditions, our liquidity requirements and other factors.
From time to time, we enter into interest rate derivative instruments to manage interest rate risk inherent in our operations.
See Note 7 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report).
34
A summary of our contractual obligations and commercial commitments at May 30, 2021, is as follows:
(in millions)
Contractual Obligations
Long-term debt (1)
Leases (2)
Purchase obligations (3)
Benefit obligations (4)
Unrecognized income tax benefits (5)
Total contractual obligations
(in millions)
Other Commercial Commitments
Standby letters of credit (6)
Guarantees (7)
Total commercial commitments
Payments Due by Period
Total
Less Than
1 Year
1-3
Years
3-5
Years
More Than
5 Years
$ 1,554.9 $
41.6 $
83.2 $
83.2 $ 1,346.9
3,131.4
693.2
357.7
54.1
410.9
642.4
29.4
37.2
756.9
631.2
1,332.4
42.8
63.1
3.8
8.0
68.4
13.1
—
196.8
—
$ 5,791.3 $ 1,161.5 $
949.8 $
803.9 $ 2,876.1
Amount of Commitment Expiration per Period
Total
Amounts
Committed
Less Than
1 Year
1-3
Years
3-5
Years
More Than
5 Years
$
99.4 $
99.4 $
— $
— $
121.5
34.8
52.9
26.2
$
220.9 $
134.2 $
52.9 $
26.2 $
—
7.6
7.6
(1) Includes interest payments associated with existing long-term debt. Excludes discount and issuance costs of $9.1 million.
(2) Includes non-cancelable future operating lease and finance lease commitments.
(3) Includes commitments for food and beverage items and supplies, capital projects, information technology and other
miscellaneous commitments.
(4) Includes expected contributions associated with our supplemental defined benefit pension plan and payments associated with
our postretirement benefit plan and our non-qualified deferred compensation plan through fiscal 2031.
(5) Includes interest on unrecognized income tax benefits of $2.3 million, $1.4 million of which relates to contingencies expected
to be resolved within one year.
(6) Includes letters of credit for $70.5 million of workers’ compensation and general liabilities accrued in our consolidated
financial statements and letters of credit for $28.9 million of surety bonds related to other payments.
(7) Consists solely of guarantees associated with leased properties that have been assigned to third parties and are primarily
related to the disposition of Red Lobster.
35
Our adjusted debt to adjusted total capital ratio was 55 percent and 61 percent as of May 30, 2021 and May 31, 2020,
respectively. Based on these ratios, we believe our financial condition is strong. We include the lease-debt equivalent and
contractual lease guarantees in our adjusted debt to adjusted total capital ratio reported to shareholders, as we believe its inclusion
better represents the optimal capital structure that we target from period to period and because it is consistent with the calculation
of the covenant under our Revolving Credit Agreement. For fiscal 2021 and fiscal 2020, the lease-debt equivalent includes 6.00
times the total annual minimum rent for consolidated lease obligations of $385.7 million and $392.6 million, respectively. The
composition of our capital structure is shown in the following table:
(in millions, except ratios)
CAPITAL STRUCTURE
Short-term debt
Long-term debt, excluding unamortized discount and issuance costs
Total debt
Stockholders’ equity
Total capital
CALCULATION OF ADJUSTED CAPITAL
Total debt
Lease-debt equivalent
Guarantees
Adjusted debt
Stockholders’ equity
Adjusted total capital
CAPITAL STRUCTURE RATIOS
Debt to total capital ratio
Adjusted debt to adjusted total capital ratio
May 30, 2021 May 31, 2020
—
$
$
$
938.9
938.9
2,813.1
270.0
939.1
$
1,209.1
2,331.2
$
3,752.0
$
3,540.3
$
938.9
$
1,209.1
2,314.2
121.5
2,355.4
151.5
$
3,374.6
$
3,716.0
2,813.1
2,331.2
$
6,187.7
$
6,047.2
25 %
55 %
34 %
61 %
Net cash flows provided by operating activities from continuing operations were $1.19 billion and $717.4 million in fiscal
2021 and 2020, respectively. Net cash flows provided by operating activities include net earnings from continuing operations of
$632.4 million in fiscal 2021 and net loss from continuing operations of $49.2 million in fiscal 2020. Net cash flows provided by
operating activities from continuing operations increased in fiscal 2021 primarily due to higher net earnings from continuing
operations.
Net cash flows used in investing activities from continuing operations were $263.7 million in fiscal 2021 compared to net
cash flows used in investing activities from continuing operations of $544.0 million in fiscal 2020. Capital expenditures incurred
principally for building new restaurants, remodeling existing restaurants, replacing equipment, and technology initiatives were
$254.9 million in fiscal 2021, compared to $459.9 million in fiscal 2020. The reduction in capital expenditures during fiscal 2021
was due to COVID-19. Net cash flows used in investing activities for fiscal 2020 also reflect net cash used of $55.8 million in the
acquisition of Cheddar’s Scratch Kitchen restaurants from existing franchisees.
Net cash flows used in financing activities from continuing operations were $478.9 million in fiscal 2021, compared to net
cash flows provided by financing activities from continuing operations of $138.7 million in fiscal 2020. Net cash flows used in
financing activities in fiscal 2021 included repayment of $270.0 million from a 364-day term loan, dividend payments of $202.6
million and share repurchases of $45.4 million, partially offset by proceeds from the exercise of employee stock options. Net cash
flows providing by financing activities in fiscal 2020 included proceeds of $750.0 million from drawing on our Revolving Credit
Agreement, net proceeds of $505.1 million from a follow-on common stock offering, proceeds of $270.0 million from a 364-day
term loan and proceeds from the exercise of employee stock options, partially offset by repayment of the $750.0 million drawn
from our Revolving Credit Agreement, dividend payments of $322.3 million and share repurchases of $330.3 million.
Our defined benefit and other postretirement benefit costs and liabilities are determined using various actuarial assumptions
and methodologies prescribed under Financial Accounting Standards Board Accounting Standards Codification Topic 715,
Compensation - Retirement Benefits and Topic 712, Compensation - Nonretirement Postemployment Benefits. In April 2018, our
Benefit Plans Committee approved the termination of our primary non-contributory defined benefit pension plan (the Retirement
Income Plan for Darden Restaurants, Inc.). Plan participants who had not yet begun receiving their benefit payments were
provided the opportunity to receive their full accrued benefits from plan assets by either (i) electing immediate lump sum
36
distributions or annuities or (ii) deferring commencement of their benefits to a later date. During fiscal 2020, we made a funding
contribution of approximately $12.7 million to fully fund the benefit obligation. As of May 31, 2020, all of the plan assets were
either (i) distributed to settle the benefits for participants who selected the lump sum option or (ii) transferred to a third-party
annuity provider for all other eligible participants. The settlement of the benefit obligation to plan participants in fiscal 2020
resulted in a pre-tax pension settlement charge of $145.5 million recorded in other (income) expense, net in our consolidated
statement of earnings. We expect to contribute approximately $0.4 million to our supplemental defined benefit pension plan and
approximately $2.0 million to our postretirement benefit plan during fiscal 2022.
We are not aware of any trends or events that would materially affect our capital requirements or liquidity. We believe that
our internal cash-generating capabilities, the potential issuance of equity or unsecured debt securities under our shelf registration
statement and short-term commercial paper or drawings under our Revolving Credit Agreement should be sufficient to finance
our capital expenditures, debt maturities and other operating activities through fiscal 2022.
OFF-BALANCE SHEET ARRANGEMENTS
We are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future
material effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity, capital
expenditures or capital resources.
FINANCIAL CONDITION
Our total current assets were $1.87 billion at May 30, 2021, compared with $1.10 billion at May 31, 2020. The increase was
primarily due to an increase in cash and cash equivalents driven by cash from operations as well as an increase in prepaid income
taxes.
Our total current liabilities were $1.85 billion at May 30, 2021, compared with $1.79 billion at May 31, 2020. The increase
was primarily due to an increase in other current liabilities and accounts payable, partially offset by the repayment of our $270
million term loan in fiscal 2021.
APPLICATION OF NEW ACCOUNTING STANDARDS
See Note 1 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report) for a discussion of recently
issued accounting standards.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to a variety of market risks, including fluctuations in interest rates, foreign currency exchange rates,
compensation and commodity prices. To manage this exposure, we periodically enter into interest rate and foreign currency
exchange instruments, equity forward and commodity derivative instruments for other than trading purposes. See Notes 1 and 7
of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report).
We use the variance/covariance method to measure value at risk, over time horizons ranging from one week to one year, at
the 95 percent confidence level. At May 30, 2021, our potential losses in future net earnings resulting from changes in equity
forwards, commodity instruments and floating rate debt interest rate exposures were approximately $74.3 million over a period of
one year. The value at risk from an increase in the fair value of all of our long-term fixed-rate debt, over a period of one year, was
approximately $72.6 million. The fair value of our long-term fixed-rate debt outstanding as of May 30, 2021, averaged $1.01
billion, with a high of $1.06 billion and a low of $917.3 million during fiscal 2021. Our interest rate risk management objective is
to limit the impact of interest rate changes on earnings and cash flows by targeting an appropriate mix of variable and fixed-rate
debt.
37
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Management Responsibilities
Management’s Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Page
39
39
40
41
Consolidated Statements of Earnings for the fiscal years ended May 30, 2021, May 31, 2020 and May 26, 2019
Consolidated Statements of Comprehensive Income for the fiscal years ended May 30, 2021, May 31, 2020 and May 26,
2019
Consolidated Balance Sheets at May 30, 2021 and May 31, 2020
Consolidated Statements of Changes in Stockholders’ Equity for the fiscal years ended May 30, 2021, May 31, 2020 and May
26, 2019
Consolidated Statements of Cash Flows for the fiscal years ended May 30, 2021, May 31, 2020 and May 26, 2019
Notes to Consolidated Financial Statements
43
44
45
46
47
49
38
REPORT OF MANAGEMENT’S RESPONSIBILITIES
The management of Darden Restaurants, Inc. is responsible for the fairness and accuracy of the consolidated financial
statements. The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting
principles, using management’s best estimates and judgments where appropriate. The financial information throughout this report
is consistent with our consolidated financial statements.
Management has established a system of internal controls over financial reporting that provides reasonable assurance that
assets are adequately safeguarded and transactions are recorded accurately, in all material respects, in accordance with
management’s authorization. Our internal controls provide for appropriate segregation of duties and responsibilities and there are
documented policies regarding utilization of our assets and proper financial reporting. These formally stated and regularly
communicated policies set high standards of ethical conduct for all employees. We also maintain a strong audit program that
independently evaluates the adequacy of the design and operating effectiveness of these internal controls.
The Audit Committee of the Board of Directors meets at least quarterly to determine that management, internal auditors and
the independent registered public accounting firm are properly discharging their duties regarding internal control and financial
reporting. Management, internal auditors and the independent registered public accounting firm have full and free access to the
Audit Committee at any time.
KPMG LLP, an independent registered public accounting firm, is retained to audit our consolidated financial statements and
the effectiveness of our internal control over financial reporting. Their reports follow.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in
Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). The Company’s internal control over financial reporting
is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and
fair presentation of published financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of May 30, 2021. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control-Integrated Framework (2013). Management has concluded that, as of May 30, 2021, the
Company’s internal control over financial reporting was effective based on these criteria.
The Company’s independent registered public accounting firm KPMG LLP, has issued an audit report on the effectiveness
of our internal control over financial reporting, which follows.
/s/ Eugene I. Lee, Jr.
Eugene I. Lee, Jr.
Chairman and Chief Executive Officer
39
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Darden Restaurants, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Darden Restaurants, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
May 30, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of May 30, 2021, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of May 30, 2021 and May 31, 2020, the related consolidated
statements of earnings, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-
year period ended May 30, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated
July 23, 2021 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Orlando, Florida
July 23, 2021
40
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Darden Restaurants, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Darden Restaurants, Inc. and subsidiaries (the Company)
as of May 30, 2021 and May 31, 2020, the related consolidated statements of earnings, comprehensive income, changes in
stockholders’ equity, and cash flows for each of the years in the three-year period ended May 30, 2021 and the related notes
(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of May 30, 2021 and May 31,2020, and the results of its operations
and its cash flows for each of the years in the three-year period ended May 30, 2021, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of May 30, 2021, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and
our report dated July 23, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over
financial reporting.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for
leases as of May 27, 2019, due to the adoption of Financial Accounting Standards Board’s Accounting Standards Codification
(ASC) 842, Leases.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of long-lived assets for impairment
As discussed in Notes 1, 4 and 10 to the consolidated financial statements, land, buildings and equipment, net and operating
right-of-use assets were $6.6 billion as of May 30, 2021. The Company tests for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset group may not be recoverable. Such indicators may include, among
41
others: a significant decline in future cash flows and changes in the expected useful life which relates to the Company’s intent and
ability to hold its asset groups for a period that recovers their carrying value.
We identified the evaluation of indicators of potential long-lived assets impairment as a critical audit matter. Subjective
auditor judgment was required to evaluate certain assumptions in the Company’s analysis, including future cash flows and the
expected useful life. Adverse changes in these assumptions could have a significant impact on whether an indicator has been
identified and could have a material impact on the Company’s consolidated financial statements.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls over the Company’s long-lived asset impairment process, including
controls over the identification of indicators of impairment and the assumptions listed above. For certain asset groups, we
compared the future cash flows used by the Company in its evaluation of indicators of potential long-lived asset impairment to
historical results. We evaluated the expected useful life for certain asset groups by inspecting underlying documents, such as real
estate meeting minutes and other documents to assess the Company’s plans to dispose or close asset groups. We corroborated the
Company’s plans with others in the organization who are responsible for, and have authority over, disposition and closure
activities.
/s/ KPMG LLP
We have served as the Company’s auditor since 1996.
Orlando, Florida
July 23, 2021
42
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share data)
Sales
Costs and expenses:
Food and beverage
Restaurant labor
Restaurant expenses
Marketing expenses
General and administrative expenses
Depreciation and amortization
Impairments and disposal of assets, net
Goodwill impairment
Total operating costs and expenses
Operating income
Interest, net
Other (income) expense, net
Earnings (loss) before income taxes
Income tax expense (benefit)
Earnings (loss) from continuing operations
Losses from discontinued operations, net of tax benefit of $3.2, $0.9 and $1.8,
respectively
Net earnings (loss)
Basic net earnings per share:
Earnings (loss) from continuing operations
Losses from discontinued operations
Net earnings (loss)
Diluted net earnings per share:
Earnings (loss) from continuing operations
Losses from discontinued operations
Net earnings (loss)
Average number of common shares outstanding:
Basic
Diluted
See accompanying notes to consolidated financial statements.
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
7,196.1 $
7,806.9 $
8,510.4
2,072.1
2,286.3
1,344.2
91.1
396.2
350.9
6.6
—
2,240.8
2,682.6
1,475.1
238.0
376.4
355.9
221.0
169.2
2,412.5
2,771.1
1,477.8
255.3
405.5
336.7
19.0
—
6,547.4 $
7,759.0 $
7,677.9
648.7 $
47.9 $
63.5
8.7
57.3
151.6
576.5 $
(161.0) $
(55.9)
632.4 $
(3.1)
629.3 $
4.85 $
(0.02)
4.83 $
4.80 $
(0.03)
4.77 $
(111.8)
(49.2) $
(3.2)
(52.4) $
(0.40) $
(0.03)
(0.43) $
(0.40) $
(0.03)
(0.43) $
130.4
131.8
122.7
122.7
832.5
50.2
—
782.3
63.7
718.6
(5.2)
713.4
5.82
(0.04)
5.78
5.73
(0.04)
5.69
123.5
125.4
$
$
$
$
$
$
$
$
$
43
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Net earnings (loss)
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
629.3 $
(52.4) $
713.4
Foreign currency adjustment
Change in fair value of derivatives and amortization of unrecognized gains and
losses on derivatives, net of taxes of $0.4, $(0.3) and $(0.1), respectively
0.7
16.5
5.5
(17.6)
0.6
5.6
Net unamortized gain (loss) arising during period, including amortization of
unrecognized net actuarial loss, net of taxes of $1.5, $30.8 and $(6.4),
respectively
Other comprehensive income (loss)
Total comprehensive income
4.6
21.8 $
651.1 $
$
$
92.7
80.6 $
28.2 $
(19.2)
(13.0)
700.4
See accompanying notes to consolidated financial statements.
44
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
ASSETS
Current assets:
Cash and cash equivalents
Receivables, net
Inventories
Prepaid income taxes
Prepaid expenses and other current assets
Total current assets
Land, buildings and equipment, net
Operating lease right-of-use assets
Goodwill
Trademarks
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Short-term debt
Accrued payroll
Accrued income taxes
Other accrued taxes
Unearned revenues
Other current liabilities
Total current liabilities
Long-term debt
Deferred income taxes
Operating lease liabilities - non-current
Other liabilities
Total liabilities
Stockholders’ equity:
Common stock and surplus, no par value. Authorized 500.0 shares; issued 130.8 and 129.9
shares, respectively; outstanding 130.8 and 129.9 shares, respectively
Preferred stock, no par value. Authorized 25.0 shares; none issued and outstanding
Retained earnings
Accumulated other comprehensive income (loss)
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying notes to consolidated financial statements.
45
May 30, 2021 May 31, 2020
$
1,214.7 $
68.2
190.8
337.2
60.2
$
1,871.1 $
2,869.2
3,776.4
1,037.4
806.3
295.7
763.3
49.8
206.9
18.4
63.0
1,101.4
2,756.9
3,969.2
1,037.4
805.9
275.3
$
10,656.1 $
9,946.1
$
304.5 $
—
177.4
35.9
60.5
474.2
795.8
249.4
270.0
150.0
6.2
43.4
467.9
605.9
$
1,848.3 $
1,792.8
929.8
221.6
4,088.5
754.8
928.8
56.1
4,276.3
560.9
$
7,843.0 $
7,614.9
2,286.6
2,205.3
—
522.3
4.2
—
143.5
(17.6)
$
$
2,813.1 $
10,656.1 $
2,331.2
9,946.1
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In millions, except per share data)
Common
Stock
And
Surplus
Treasury
Stock
Shares
Amount
Retained
Earnings
Shares
Amount
Accumulated
Other
Comprehensive
Income (Loss)
Unearned
Compensation
Total
Stockholders’
Equity
Balances at May 27, 2018
123.5 $
1,631.9 $
Net earnings
Other comprehensive income
Dividends declared ($3.00 per share)
Stock option exercises
Stock-based compensation
—
—
—
1.2
—
—
—
—
52.2
26.8
657.6
713.4
—
(373.5)
—
—
Repurchases of common stock
(1.9)
(26.2)
(181.3)
Issuance of stock under Employee
Stock Purchase Plan and other plans
Other
0.3
—
7.1
(6.8)
—
(9.6)
(1.3)
1.3 $
(7.8) $
(85.2) $
(1.7) $
2,194.8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7.8
—
(13.0)
—
—
—
—
—
—
—
—
—
—
—
—
0.8
0.1
713.4
(13.0)
(373.5)
52.2
26.8
(207.5)
7.9
(8.5)
Balances at May 26, 2019
123.1 $
1,685.0 $
806.6
— $
— $
(98.2) $
(0.8) $
2,392.6
Net earnings
Other comprehensive income
Dividends declared ($2.64 per share)
Stock option exercises
Stock-based compensation
—
—
—
0.3
—
—
—
—
12.4
33.4
(52.4)
—
(325.1)
—
—
Repurchases of common stock
(2.9)
(40.9)
(289.4)
Issuance of stock under Employee
Stock Purchase Plan and other plans
Stock issuance - Public Offering
Other
0.4
9.0
—
8.4
505.1
1.9
Balances at May 31, 2020
129.9 $
2,205.3 $
Net earnings
Other comprehensive income
Dividends declared ($1.55 per share)
Stock option exercises
Stock-based compensation
Repurchases of common stock
Issuance of stock under Employee
Stock Purchase Plan and other plans
Other
—
—
—
0.7
—
(0.4)
0.6
—
—
—
—
36.6
39.8
(6.3)
9.6
1.6
—
—
3.8
143.5
629.3
—
(203.9)
—
—
(39.1)
—
(7.5)
Balances at May 30, 2021
130.8 $
2,286.6 $
522.3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
80.6
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0.8
(52.4)
80.6
(325.1)
12.4
33.4
(330.3)
8.4
505.1
6.5
— $
— $
(17.6) $
— $
2,331.2
—
—
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
—
—
21.8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
629.3
21.8
(203.9)
36.6
39.8
(45.4)
9.6
(5.9)
— $
4.2 $
— $
2,813.1
See accompanying notes to consolidated financial statements.
46
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Cash flows - operating activities
Net earnings (loss)
Losses from discontinued operations, net of tax
Adjustments to reconcile net earnings (loss) from continuing operations to cash flows:
Depreciation and amortization
Goodwill and other impairments and disposal of assets, net
Stock-based compensation expense
Change in current assets and liabilities
Contributions to pension and postretirement plans
Deferred income taxes
Change in deferred rent
Change in other assets and liabilities
Pension settlement charge
Other, net
Net cash provided by operating activities of continuing operations
Cash flows - investing activities
Purchases of land, buildings and equipment
Proceeds from disposal of land, buildings and equipment
Cash used in business acquisitions, net of cash acquired
Purchases of capitalized software and other assets
Other, net
Net cash used in investing activities of continuing operations
Cash flows - financing activities
Net proceeds from issuance of common stock
Dividends paid
Repurchases of common stock
Proceeds from issuance of short-term debt
Repayments of short-term debt
Principal payments on finance leases
Proceeds from financing lease obligation
Other, net
Net cash provided by (used in) financing activities of continuing operations
Cash flows - discontinued operations
Net cash provided by (used in) operating activities of discontinued operations
Net cash used in discontinued operations
Increase in cash and cash equivalents
Cash and cash equivalents - beginning of year
Cash and cash equivalents - end of year
May 30, 2021
Fiscal Year Ended
May 31, 2020
May 26, 2019
$
629.3 $
3.1
(52.4) $
3.2
713.4
5.2
350.9
6.6
72.4
(25.9)
(1.8)
169.2
—
23.0
—
(33.3)
1,193.5 $
(254.9)
5.4
—
(15.4)
1.2
(263.7) $
46.2
(202.6)
(45.4)
—
(270.0)
(7.1)
—
—
(478.9) $
0.5
0.5 $
451.4
763.3
1,214.7 $
355.9
390.2
53.0
(73.3)
(14.4)
(133.6)
—
38.3
145.5
5.0
717.4 $
(459.9)
5.8
(55.8)
(24.6)
(9.5)
(544.0) $
525.9
(322.3)
(330.3)
1,020.0
(750.0)
(5.2)
—
0.6
138.7 $
(6.1)
(6.1) $
306.0
457.3
763.3 $
336.7
19.0
59.8
36.4
(1.7)
47.5
34.3
9.5
—
7.5
1,267.6
(452.0)
13.2
—
(25.9)
2.1
(462.6)
59.3
(370.8)
(207.5)
137.5
(137.5)
(6.2)
40.9
0.1
(484.2)
(10.4)
(10.4)
310.4
146.9
457.3
$
$
$
$
$
47
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
Cash flows from changes in current assets and liabilities
Receivables, net
Inventories
Prepaid expenses and other current assets
Accounts payable
Accrued payroll
Prepaid/accrued income taxes
Other accrued taxes
Unearned revenues
Other current liabilities
Change in current assets and liabilities
See accompanying notes to consolidated financial statements.
May 30, 2021
Fiscal Year Ended
May 31, 2020
May 26, 2019
$
$
(18.4) $
16.1
3.1
48.9
27.4
(289.1)
17.1
6.2
162.8
(25.9) $
13.7 $
(13.9)
(2.8)
(68.5)
(25.3)
17.8
(10.9)
39.4
(22.8)
(73.3) $
2.1
(2.1)
(8.2)
55.0
(2.2)
(14.2)
(2.4)
11.3
(2.9)
36.4
48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements include the operations of Darden Restaurants, Inc. and its wholly
owned subsidiaries (Darden, the Company, we, us or our). We own and operate the Olive Garden®, LongHorn Steakhouse®,
Cheddar’s Scratch Kitchen®, Yard House®, The Capital Grille®, Seasons 52®, Bahama Breeze® and Eddie V’s Prime Seafood®
restaurant brands located in the United States and Canada. Through subsidiaries, we own and operate all of our restaurants in the
United States and Canada, except for 2 joint venture restaurants managed by us and 33 franchised restaurants. We also have 24
franchised restaurants in operation located in Latin America. All significant intercompany balances and transactions have been
eliminated in consolidation.
For fiscal 2021, 2020 and 2019, all gains and losses on disposition, impairment charges and disposal costs, along with the
sales, costs and expenses and income taxes attributable to discontinued locations, have been aggregated in a single caption entitled
“Losses from discontinued operations, net of tax benefit” in our consolidated statements of earnings for all periods presented.
COVID-19 Pandemic
For much of fiscal 2021, the COVID-19 pandemic resulted in a significant reduction in guest traffic at our restaurants due to
changes in consumer behavior as public health officials encouraged social distancing and required personal protective equipment
and state and local governments mandated restrictions including suspension of dine-in operations, reduced restaurant seating
capacity, table spacing requirements, bar closures and additional physical barriers. Beginning in late March 2020, we operated
with all of our dining rooms closed and served our guests in a To Go only or To Go and delivery format. In late April 2020, state
and local governments began to allow us to open dining rooms at limited capacities, along with other operating restrictions.
As a result, we began fiscal 2021 with significant limitations on our operations, which over the course of the fiscal year
varied widely from time to time, state to state and city to city. During November 2020, rising case rates resulted in certain
jurisdictions implementing restrictions that again reduced dining room capacity or mandated the re-closure of dining rooms.
Once COVID-19 vaccines were approved and moved into wider distribution in the United States in early 2021, public health
conditions improved and almost all of the COVID-19 restrictions on businesses have eased. As of the date of this report, all of our
restaurants were able to open their dining rooms to some extent and few capacity restrictions or other COVID-19 restrictions
remained in place in the United States. However, it is possible additional outbreaks could require us to again reduce our capacity
or limit or suspend our in-restaurant dining operations.
Unless otherwise noted, amounts and disclosures throughout these notes to consolidated financial statements relate to our
continuing operations. We have reclassified certain amounts in prior-period financial statements to conform to the current period’s
presentation.
Fiscal Year
We operate on a 52/53-week fiscal year, which ends on the last Sunday in May. Fiscal 2021, which ended May 30, 2021,
consisted of 52 weeks. Fiscal 2020, which ended May 31, 2020, consisted of 53 weeks and fiscal 2019, which ended May 26,
2019, consisted of 52 weeks.
Use of Estimates
We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP).
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of sales and expenses during the reporting period. Actual results could differ from those estimates.
Franchise Acquisitions
During fiscal 2020, we completed the acquisition of eight Cheddar's Scratch Kitchen restaurants (seven operating and one
closed) and certain assets and liabilities from existing franchisees. The acquisitions were funded with cash on hand for $58.1
million in total consideration, of which approximately $29.9 million was allocated to land, buildings and equipment. The results
of operations of these restaurants are included in our consolidated financial statements from the date of acquisition. Pro-forma
financial information of the combined entities for periods prior to the acquisitions is not presented due to the immaterial impact,
both individually and in the aggregate, of the financial results of the acquired restaurants on our consolidated financial statements.
Cash and Cash Equivalents
49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Cash equivalents include highly liquid investments such as bank deposits and money market funds that have an original
maturity of three months or less. Amounts receivable from credit card companies are also considered cash equivalents because
they are both short term and highly liquid in nature and are typically converted to cash within three days of the sales transaction.
The components of cash and cash equivalents are as follows:
(in millions)
Short-term investments
Credit card receivables
Depository accounts
Total cash and cash equivalents
May 30, 2021 May 31, 2020
$
890.9 $
123.2
200.6
$
1,214.7 $
673.5
64.0
25.8
763.3
As of May 30, 2021, and May 31, 2020, we had cash and cash equivalent accounts in excess of insured limits. We manage
the credit risk of our positions through utilizing multiple financial institutions and monitoring the credit quality of those financial
institutions that hold our cash and cash equivalents.
Receivables, Net
Receivables, net of the allowance for doubtful accounts, represent their estimated net realizable value. Provisions for
doubtful accounts are recorded based on historical collection experience and the age of the receivables. Receivables are written
off when they are deemed uncollectible. See Note 11 for additional information.
Inventories
Inventories consist of food and beverages and are valued at the lower of weighted-average cost or net realizable value.
Land, Buildings and Equipment, Net
Land, buildings and equipment are recorded at cost less accumulated depreciation. Building components are depreciated
over estimated useful lives ranging from 7 to 40 years using the straight-line method. Leasehold improvements, which are
reflected on our consolidated balance sheets as a component of buildings in land, buildings and equipment, net, are amortized
over the lesser of the expected lease term or the estimated useful lives of the related assets using the straight-line method.
Equipment is depreciated over estimated useful lives ranging from 2 to 20 years also using the straight-line method. See Note 4
for additional information. Gains and losses on the disposal of land, buildings and equipment are included in impairments and
disposal of assets, net, while the write-off of undepreciated book value associated with the replacement of equipment in the
normal course of business is recorded as a component of restaurant expenses in our accompanying consolidated statements of
earnings. Depreciation and amortization expense from continuing operations associated with buildings and equipment and losses
on replacement of equipment were as follows:
(in millions)
Depreciation and amortization on buildings and equipment
Losses on replacement of equipment
Fiscal Year Ended
May 30, 2021
May 31, 2020
May 26, 2019
$
323.5 $
2.6
326.8 $
2.4
308.8
3.6
Capitalized Software Costs and Other Definite-Lived Intangibles
Capitalized software, which is a component of other assets, is recorded at cost less accumulated amortization. Capitalized
software is amortized using the straight-line method over estimated useful lives ranging from 3 to 10 years. The cost of capitalized
software and related accumulated amortization was as follows:
(in millions)
Capitalized software
Accumulated amortization
Capitalized software, net of accumulated amortization
May 30, 2021 May 31, 2020
$
$
227.1 $
(175.5)
51.6 $
227.9
(159.7)
68.2
50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
We have other definite-lived intangible assets, including assets related to the value of reacquired franchise rights resulting
from our acquisitions that are included as a component of other assets and definite-lived intangible liabilities related to the value
of below-market agreements resulting from our acquisitions that are included in other liabilities on our consolidated balance
sheets. Definite-lived intangibles are amortized on a straight-line basis over estimated useful lives of 1 to 20 years. The cost and
related accumulated amortization was as follows:
(in millions)
Definite-lived intangible assets
Accumulated amortization
Definite-lived intangible assets, net of accumulated amortization
Definite-lived intangible liabilities
Accumulated amortization
Definite-lived intangible liabilities, net of accumulated amortization
May 30, 2021 May 31, 2020
$
$
$
$
23.8 $
(8.5)
15.3 $
(3.0) $
1.2
(1.8) $
23.8
(6.4)
17.4
(3.0)
0.9
(2.1)
Amortization expense from continuing operations associated with capitalized software and other definite-lived intangibles
included in depreciation and amortization in our accompanying consolidated statements of earnings was as follows:
(in millions)
Amortization expense - capitalized software
Amortization expense - other definite-lived intangibles
Fiscal Year Ended
May 30, 2021
May 31, 2020
May 26, 2019
$
25.4 $
25.7 $
2.0
3.4
26.7
1.2
Based on the net book values of our definite-lived intangible assets and liabilities at May 30, 2021, we expect amortization
of capitalized software and other definite-lived intangible assets will be approximately $21.0 million annually for fiscal 2022
through 2026.
Trust-Owned Life Insurance
We have a trust that purchased life insurance policies covering certain of our officers and other key employees (trust-owned
life insurance or TOLI). The trust is the owner and sole beneficiary of the TOLI policies. The policies were purchased to offset a
portion of our obligations under our non-qualified deferred compensation plan. The cash surrender value for each policy is
included in other assets, while changes in cash surrender values are included in general and administrative expenses.
Liquor Licenses
The costs of obtaining non-transferable liquor licenses that are directly issued by local government agencies for nominal
fees are expensed as incurred. The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a
limited number of authorized liquor licenses are capitalized as indefinite-lived intangible assets and included in other assets.
Liquor licenses are reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the
carrying amount may not be recoverable. Annual liquor license renewal fees are expensed over the renewal term.
Goodwill and Intangible Assets
Our goodwill and trademark balances are allocated as follows:
(in millions)
Olive Garden
LongHorn Steakhouse
Cheddar’s Scratch Kitchen
Yard House
The Capital Grille
Seasons 52
Eddie V’s
Total
Goodwill
Trademarks
May 30, 2021
May 31, 2020
May 30, 2021
May 31, 2020
$
30.2 $
30.2 $
0.7 $
49.3
165.1
369.2
401.6
—
22.0
49.3
165.1
369.2
401.6
—
22.0
307.8
230.1
109.3
147.4
0.5
10.5
$
1,037.4 $
1,037.4 $
806.3 $
0.7
307.8
230.1
109.3
147.0
0.5
10.5
805.9
51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
We have eight reporting units, six of which have goodwill and seven of which have trademarks. Goodwill and trademarks
are not subject to amortization and have been assigned to reporting units for purposes of impairment testing. The reporting units
are our restaurant brands. A significant amount of judgment is involved in determining if an indicator of impairment has occurred.
Such indicators may include, among others: a significant decline in our expected future cash flows; a sustained, significant decline
in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated
competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any
adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material
impact on our consolidated financial statements. We review our goodwill and trademarks for impairment annually, as of the first
day of our fourth fiscal quarter, or more frequently if indicators of impairment exist.
During fiscal 2021, we elected to perform a qualitative assessment for our annual review of goodwill and trademarks to
determine whether or not indicators of impairment exist. In considering the qualitative approach related to goodwill, we evaluated
factors including, but not limited to, COVID-19, macro-economic conditions, market and industry conditions, commodity cost
fluctuations, competitive environment, share price performance, results of prior impairment tests, operational stability, the overall
financial performance of the reporting units and the impacts of discount rates. As it relates to trademarks, we evaluate similar
factors from the goodwill assessment, in addition to impacts of royalty rates. As a result of the qualitative assessment, no
indicators of impairment were identified and no additional indicators of impairment were identified through the end of our fourth
fiscal quarter that would require us to test further for impairment.
During fiscal 2020, due to the economic impact of COVID-19 on Darden’s overall market capitalization and the impact on
Cheddar’s Scratch Kitchen projected sales and cash flows, we determined that both the estimated fair values of the trademark and
the reporting unit for Cheddar’s Scratch Kitchen were less than their carrying values. As a result, we recorded in our fiscal 2020
fourth quarter pre-tax non-cash impairment charges of $145.0 million and $169.2 million related to the Cheddar’s Scratch Kitchen
trademark and goodwill balances, respectively. The fair value of our remaining reporting units exceeded their carrying values by
at least 30 percent and the trademark fair value of our remaining reporting units exceeded their carrying values by at least 40
percent.
We evaluate the useful lives of our other intangible assets to determine if they are definite or indefinite-lived. A
determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand,
competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing
regulatory environment and expected changes in distribution channels), the level of required maintenance expenditures and the
expected lives of other related groups of assets.
Impairment or Disposal of Long-Lived Assets
Land, buildings and equipment, operating lease right-of-use assets and certain other assets, including definite-lived
intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount
of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash flows are measured
at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at
the restaurant level. If such assets are determined to be impaired, the recognized impairment is measured by the amount by which
the carrying amount of the assets exceeds their fair value. Fair value is generally determined based on appraisals, sales prices of
comparable assets or discounted future net cash flows expected to be generated by the assets. Restaurant sites and certain other
assets to be disposed of are reported at the lower of their carrying amount or fair value, less estimated costs to sell, and are
included in assets held for sale on our consolidated balance sheets when certain criteria are met. These criteria include, among
other factors, the requirement that the likelihood of disposing of these assets within one year is probable. Assets not meeting the
“held for sale” criteria remain in land, buildings and equipment until their disposal is probable within one year.
We account for exit or disposal activities, including restaurant closures, in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) Topic 420, Exit or Disposal Cost Obligations. Such costs include the
cost of disposing of the assets as well as other facility-related expenses from previously closed restaurants. These costs are
generally expensed as incurred. Additionally, at the date we cease using a property, we adjust the lease liability for the net present
value of any remaining lease obligations, net of estimated sublease income. Any subsequent adjustments to the lease liability as a
result of lease termination or changes in estimates of sublease income are recorded in the period incurred. Upon disposal of the
assets, primarily land, associated with a closed restaurant, any gain or loss is recorded in the same caption within our consolidated
statements of earnings as the original impairment. See Note 3 for additional information.
Insurance Accruals
52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Through the use of insurance program deductibles and self-insurance, we retain a significant portion of expected losses
under our workers’ compensation and general liability programs. Accrued liabilities have been recorded based on our estimates of
the anticipated ultimate costs to settle all claims, both reported and not yet reported.
Revenue Recognition
Sales, as presented in our consolidated statements of earnings, represents food and beverage product sold and is presented
net of discounts, coupons, employee meals and complimentary meals. Revenue from restaurant sales is recognized when food and
beverage products are sold. Revenue is presented net of sales tax. Sales taxes collected from customers are included in other
accrued taxes on our consolidated balance sheets until the taxes are remitted to governmental authorities.
Franchise royalties, which are a percentage of net sales of franchised restaurants, are recognized in the period the related
sales occur. Revenue from area development and franchise fees are recognized as the performance obligations are satisfied over
the term of the franchise agreement, which is generally 10 years. Advertising contributions, which are a percentage of net sales of
franchised restaurants, are recognized in the period the related sales occur. Additionally, franchisee purchases of our inventory
through our distribution network are recognized as revenue in the period the purchases are made.
Revenue from the sale of consumer packaged goods includes ongoing royalty fees based on a percentage of licensed retail
product sales and is recognized upon the sale of product by our licensed manufacturers to retail outlets.
Unearned Revenues
Unearned revenues primarily represent our liability for gift cards that have been sold but not yet redeemed. We recognize
sales from our gift cards when the gift card is redeemed by the customer. Although there are no expiration dates or dormancy fees
for our gift cards, based on our analysis of our historical gift card redemption patterns, we can reasonably estimate the amount of
gift cards for which redemption is remote, which is referred to as “breakage.” We recognize breakage within sales for unused
gift card amounts in proportion to actual gift card redemptions, which is also referred to as the “redemption recognition” method.
The estimated value of gift cards expected to remain unused is recognized over the expected period of redemption as the
remaining gift card values are redeemed, generally over a period of 12 years. Utilizing this method, we estimate both the amount
of breakage and the time period of redemption. If actual redemption patterns vary from our estimates, actual gift card breakage
income may differ from the amounts recorded. We update our estimates of our redemption period and our breakage rate
periodically and apply that rate prospectively to gift card redemptions. Discounts for gift cards sold by third parties are recorded
to unearned revenues and are recognized over a period that approximates redemption patterns.
Food and Beverage Costs
Food and beverage costs include inventory, warehousing, related purchasing and distribution costs, and gains and losses on
certain commodity derivative contracts. Vendor allowances received in connection with the purchase of a vendor’s products are
recognized as a reduction of the related food and beverage costs as earned. For certain contracts, advance payments are made by
the vendors based on estimates of volume to be purchased from the vendors and the terms of the agreement. As we make
purchases from the vendors each period, we recognize the pro rata portion of allowances earned as a reduction of food and
beverage costs for that period. Differences between estimated and actual purchases are settled in accordance with the terms of the
agreements. Vendor agreements are generally for a period of one year or more and payments received are initially recorded as
long-term liabilities. Amounts expected to be earned within one year are recorded as current liabilities.
Income Taxes
We provide for federal and state income taxes currently payable as well as for those deferred because of temporary
differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal income tax
credits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. Interest recognized
on reserves for uncertain tax positions is included in income tax expense in our consolidated statements of earnings. A
corresponding liability for accrued interest is included as a component of other current liabilities on our consolidated balance
sheets. Penalties, when incurred, are recognized in general and administrative expenses.
FASB ASC Topic 740, Income Taxes, requires that a position taken or expected to be taken in a tax return be recognized (or
derecognized) in the financial statements when it is more likely than not (i.e., a likelihood of more than 50 percent) that the
position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount
of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. See Note 12 for additional information.
53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Derivative Instruments and Hedging Activities
We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging
instruments as required by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. We use
financial and commodities derivatives to manage interest rate, compensation and commodities pricing risks inherent in our
business operations. Our use of derivative instruments is currently limited to interest rate hedges, equity forwards contracts and
commodity swaps. These instruments are generally structured as hedges of the variability of cash flows related to forecasted
transactions (cash flow hedges). However, we do at times enter into instruments designated as fair value hedges to reduce our
exposure to changes in fair value of the related hedged item. We do not enter into derivative instruments for trading or speculative
purposes, where changes in the cash flows or fair value of the derivative are not expected to offset changes in cash flows or fair
value of the hedged item. However, we have entered into equity forwards to economically hedge changes in the fair value of
employee investments in our non-qualified deferred compensation plan. All derivatives are recognized on the balance sheet at fair
value. For those derivative instruments for which we intend to elect hedge accounting, on the date the derivative contract is
entered into, we document all relationships between hedging instruments and hedged items, as well as our risk-management
objective and strategy for undertaking the various hedge transactions. This process includes linking all derivatives designated as
cash flow hedges to specific assets and liabilities on the consolidated balance sheet or to specific forecasted transactions. We also
formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are
highly effective in offsetting changes in cash flows of hedged items.
To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise meet the cash
flow hedge accounting criteria required by FASB ASC Topic 815, changes in the derivatives’ fair value are not included in
current earnings but are included in accumulated other comprehensive income (loss), net of tax. These changes in fair value will
be reclassified into earnings at the time of the forecasted transaction. Ineffectiveness measured in the hedging relationship is
recorded currently in earnings in the period in which it occurs. To the extent our derivatives are effective in mitigating changes in
fair value, and otherwise meet the fair value hedge accounting criteria required by FASB ASC Topic 815, gains and losses in the
derivatives’ fair value are included in current earnings, as are the gains and losses of the related hedged item. To the extent the
hedge accounting criteria are not met, the derivative contracts are utilized as economic hedges, and changes in the fair value of
such contracts are recorded currently in earnings in the period in which they occur. Cash flows related to derivatives are included
in operating activities. See Note 7 for additional information.
Leases
The majority of our restaurant locations, as well as our restaurant support center, are subject to a lease. We evaluate our
leases at the commencement of the lease to determine the classification as an operating or finance lease. Upon adoption of FASB
ASC Topic 842, we recognized operating and finance lease liabilities based on the present value of minimum lease payments over
the remaining expected lease term and corresponding right-of-use assets. We recognize lease expense related to operating leases
on a straight-line basis. Amortization expense and interest expense related to finance leases are included in depreciation and
amortization and interest, net, respectively, in our consolidated statements of earnings. Sale-leasebacks are transactions through
which we sell assets (such as restaurant properties) at fair value and subsequently lease them back. The resulting leases qualify
and are accounted for as operating leases. Failed sale-leaseback transactions are generally classified as finance leases and result in
retention of the “sold” assets within land, buildings and equipment with a finance lease liability equal to the amount of proceeds
received recorded as a component of other liabilities on our consolidated balance sheets.
Within the provisions of certain of our leases, there are rent holidays and escalations in payments over the base lease term,
as well as renewal periods. The effects of the holidays and escalations have been reflected in lease expense on a straight-line basis
for operating leases over the expected lease term. The lease term commences on the date when we have the right to control the use
of the leased property, which is typically before lease payments are due under the terms of the lease. Many of our leases have
renewal periods totaling 5 to 20 years, exercisable at our option, and require payment of property taxes, insurance and
maintenance costs in addition to the lease payments. At lease inception, we include option periods that we are reasonably certain
to exercise as failure to renew the lease would impose an economic penalty either from the loss of our investment in leasehold
improvements or future cash flows from operating the restaurant. The consolidated financial statements reflect the same lease
term for amortizing leasehold improvements as we use to determine finance versus operating lease classifications. Variable lease
expense is generally based on sales levels and is accrued at the point in time we determine that it is probable that such sales levels
will be achieved. Landlord allowances are recorded as an adjustment to the right-of-use assets. Gains and losses on sale-leaseback
transactions are recognized immediately. We elected the practical expedient to not separate lease and non-lease components for
real estate leases entered into after adoption. See Note 10 for additional information.
Pre-Opening Expenses
Non-capital expenditures associated with opening new restaurants are expensed as incurred. These costs are reported as
restaurant expenses in our consolidated statements of earnings.
54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Advertising
Production costs of commercials are expensed in the fiscal period the advertising is first aired while the costs of
programming and other advertising, promotion and marketing programs are expensed as incurred. These costs are reported as
marketing expenses in our consolidated statements of earnings.
Stock-Based Compensation
We recognize the cost of employee service received in exchange for awards of equity instruments based on the grant date
fair value of those awards. We recognize compensation expense, net of estimated forfeitures, on a straight-line basis over the
employee service period for awards granted. We utilize the Black-Scholes option pricing model to estimate the fair value of stock
option awards. The dividend yield has been estimated based upon our historical results and expectations for changes in dividend
rates. The expected volatility was determined using historical stock prices. The risk-free interest rate was the rate available on
zero coupon U.S. government obligations with a term approximating the expected life of each grant. The expected life was
estimated based on the exercise history of previous grants, taking into consideration the remaining contractual period for
outstanding awards. We utilize a Monte Carlo simulation to estimate the fair value of our market-based equity-settled
performance awards. The dividend yield assumes reinvestment of dividends. The expected volatility was determined using
historical stock prices. The risk-free interest rate was the rate available on zero coupon U.S. government obligations with a term
approximating the expected life of each grant. The expected life was estimated based on the performance measurement period for
outstanding awards. See Note 14 for further information.
Net Earnings per Share
Basic net earnings per share are computed by dividing net earnings by the weighted-average number of common shares
outstanding for the reporting period. Diluted net earnings per share reflect the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common stock. Outstanding stock options, restricted stock
units and equity-settled performance stock units granted by us represent the only dilutive effect reflected in diluted weighted-
average shares outstanding. These stock-based compensation instruments do not impact the numerator of the diluted net earnings
per share computation.
The following table presents the computation of basic and diluted net earnings per common share:
(in millions, except per share data)
Earnings (loss) from continuing operations
Losses from discontinued operations
Net earnings (loss)
Weighted average common shares outstanding – Basic
Effect of dilutive stock-based compensation
Weighted average common shares outstanding – Diluted
Basic net earnings per share:
Earnings (loss) from continuing operations
Losses from discontinued operations
Net earnings (loss)
Diluted net earnings per share:
Earnings (loss) from continuing operations
Losses from discontinued operations
Net earnings (loss)
Fiscal Year Ended
May 31, 2020
May 26, 2019
May 30, 2021
$
632.4 $
(3.1)
$
629.3 $
130.4
1.4
131.8
4.85 $
(0.02)
4.83 $
4.80 $
(0.03)
4.77 $
$
$
$
$
(49.2) $
(3.2)
(52.4) $
122.7
—
122.7
(0.40) $
(0.03)
(0.43) $
(0.40) $
(0.03)
(0.43) $
718.6
(5.2)
713.4
123.5
1.9
125.4
5.82
(0.04)
5.78
5.73
(0.04)
5.69
Stock options, restricted stock units and equity-settled performance stock units excluded from the calculation of diluted net
earnings per share because the effect would have been anti-dilutive, are as follows:
(in millions)
Anti-dilutive stock-based compensation awards
55
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
0.3
0.7
2.0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Foreign Currency
The Canadian dollar is the functional currency for our Canadian restaurant operations. Assets and liabilities denominated in
foreign currencies are translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Results of operations
are translated using the average exchange rates prevailing throughout the period. Translation gains and losses are reported as a
separate component of other comprehensive income (loss). Aggregate cumulative translation gains (losses) were $5.2 million and
$4.5 million at May 30, 2021 and May 31, 2020, respectively. Net gains (losses) from foreign currency transactions recognized in
our consolidated statements of earnings were $0.6 million, $(0.2) million and $(1.0) million for fiscal 2021, 2020 and 2019,
respectively.
Recently Adopted Accounting Standards
As of June 1, 2020, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU)
2016-13 Financial Instruments - Credit Losses (Topic 326). The amendments in this update require entities to estimate an
expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. This
guidance impacts, among other items, how a company determines liabilities associated with financial guarantees related to
assigned leases. We remain contingently liable for lease payments under certain restaurant leases related to dispositions. We
adopted this guidance using the modified retrospective transition method. Upon adoption, we recorded a $7.5 million (net of tax
of $2.5 million) cumulative-effect adjustment to the beginning balance of retained earnings related to an expected credit loss
liability for the contingent aspect of our lease guarantees. See Note 15 for information regarding contingent lease guarantees.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740). The amendments in this update are
intended to simplify the accounting for income taxes by removing certain exceptions in the existing guidance and simplify areas
such as franchise taxes, recognizing deferred taxes for tax goodwill, separate entity financial statements and interim recognition of
enactment of tax laws or tax rate changes. This update is effective for us in the first quarter of fiscal 2022, however we elected to
early adopt this guidance during the quarter ended August 30, 2020. The adoption of this guidance did not have a material impact
on our consolidated financial statements.
Application of New Accounting Standards
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the current
guidance on contract modifications and hedge accounting. These changes are intended to simplify the market transition from the
London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. This guidance is
effective upon issuance to modifications made as early as the beginning of the interim period through December 31, 2022. We are
currently evaluating the impact of the transition from LIBOR to alternative reference rates but do not expect a significant impact
to our consolidated financial statements.
NOTE 2 - REVENUE RECOGNITION
Deferred revenue liabilities from contracts with customers included on our accompanying consolidated balance sheets is
comprised of the following:
(in millions)
Unearned revenues
Deferred gift card revenue
Deferred gift card discounts
Other
Total
Other liabilities
Deferred franchise fees - non-current
May 30, 2021 May 31, 2020
$
494.3
$
(20.5)
0.4
474.2
$
494.6
(28.2)
1.5
467.9
2.2
$
2.8
$
$
56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table presents a rollforward of deferred gift card revenue:
(in millions)
Beginning balance
Activations
Redemptions and breakage
Ending balance
Twelve Months Ended
May 30, 2021 May 31, 2020
$
494.6 $
510.0
(510.3)
$
494.3 $
453.6
683.9
(642.9)
494.6
NOTE 3 –IMPAIRMENTS AND DISPOSAL OF ASSETS, NET
Impairments and disposal of assets, net, in our accompanying consolidated statements of earnings are comprised of the
following:
(in millions)
Restaurant impairments
Disposal (gains) losses
Other
Impairments and disposal of assets, net
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
19.5
$
51.2 $
5.3 $
(2.1)
3.4
6.6 $
(2.4)
172.2
221.0 $
(0.7)
0.2
19.0
$
Restaurant impairments for fiscal 2021 were primarily related to 4 underperforming restaurants. Restaurant impairments for
fiscal 2020 were primarily related to the economic impact of COVID-19 on 11 underperforming restaurants that were
permanently closed during the fourth quarter of fiscal 2020 and 9 other restaurants whose projected cash flows were not sufficient
to cover their respective carrying values. Restaurant impairments for fiscal 2019 were primarily related to underperforming
restaurants.
Disposal gains for fiscal 2021, 2020 and 2019 are primarily related to sale-leasebacks, disposal of closed locations, and the
sale of liquor licenses.
Other impairment charges for fiscal 2021 were primarily related to software and lease right-of-use asset impairments. Other
impairment charges for fiscal 2020 were primarily related to a trademark impairment resulting from the economic impact of
COVID-19 on Cheddar’s Scratch Kitchen forecasted sales, in addition to impairments related to inventory obsolescence and a
receivable deemed uncollectible.
Impairment charges were measured based on the amount by which the carrying amount of these assets exceeded their fair
value. Fair value is generally determined based on appraisals or sales prices of comparable assets and estimates of discounted
future cash flows (see Note 8). These amounts are included in impairments and disposal of assets, net as a component of earnings
from continuing operations in the accompanying consolidated statements of earnings.
NOTE 4 - LAND, BUILDINGS AND EQUIPMENT, NET
The components of land, buildings and equipment, net, are as follows:
57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in millions)
Land
Buildings
Equipment
Assets under finance leases
Construction in progress
Total land, buildings and equipment
Less accumulated depreciation and amortization
Less amortization associated with assets under finance leases
Land, buildings and equipment, net
NOTE 5 - SEGMENT INFORMATION
May 30, 2021 May 31, 2020
$
122.7 $
3,214.6
1,794.6
455.9
125.2
126.5
3,082.2
1,756.3
278.0
154.8
$
5,713.0 $
5,397.8
(2,793.4)
(2,598.0)
(50.4)
(42.9)
$
2,869.2 $
2,756.9
We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The
Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s in North America as operating segments. The brands operate
principally in the U.S. within full-service dining. We aggregate our operating segments into reportable segments based on a
combination of the size, economic characteristics and sub-segment of full-service dining within which each brand operates. We
have four reportable segments: (1) Olive Garden, (2) LongHorn Steakhouse, (3) Fine Dining and (4) Other Business.
The Olive Garden segment includes the results of our company-owned Olive Garden restaurants in the U.S. and Canada.
The LongHorn Steakhouse segment includes the results of our company-owned LongHorn Steakhouse restaurants in the U.S.
The Fine Dining segment aggregates our premium brands that operate within the fine-dining sub-segment of full-service dining
and includes the results of our company-owned The Capital Grille and Eddie V’s restaurants in the U.S. The Other Business
segment aggregates our remaining brands and includes the results of our company-owned Cheddar’s Scratch Kitchen, Yard
House, Seasons 52 and Bahama Breeze restaurants in the U.S and results from our franchise operations.
External sales are derived principally from food and beverage sales. We do not rely on any major customers as a source of
sales, and the customers and long-lived assets of our reportable segments are predominantly in the U.S. There were no material
transactions among reportable segments.
Our management uses segment profit as the measure for assessing performance of our segments. Segment profit includes
revenues and expenses directly attributable to restaurant-level results of operations (sometimes referred to as restaurant-level
earnings). These expenses include food and beverage costs, restaurant labor costs, restaurant expenses and marketing expenses
(collectively, restaurant and marketing expenses). During the first quarter of fiscal 2020, we changed our internal management
reporting related to non-cash lease-related expenses, as these are expenses for which our operating segments are no longer being
evaluated. This change reallocates non-cash lease-related expenses from our operating segments to the corporate level for
restaurant expenses (which is a component of segment profit) and depreciation and amortization. Additionally, our lease-related
right-of-use assets are not managed or evaluated at the operating segment level, but rather at the corporate level. Fiscal 2019
segment profit and depreciation and amortization have been restated for comparability. For fiscal 2021, restaurant and marketing
expenses included approximately $28.9 million of costs related to special team member and manager bonuses as well as
emergency and furlough pay for restaurant employees due to COVID-19, reflected at the corporate level as they are costs for
which our operating segments are not being evaluated. For fiscal 2020, restaurant and marketing expenses includes approximately
$43.7 million of costs, net of retention credits associated with the CARES Act, related to emergency and furlough pay for
restaurant employees due to COVID-19, reflected at the corporate level as they are costs for which our operating segments are not
being evaluated.
58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
(in millions)
At May 30, 2021 and for the year ended
Olive
Garden
LongHorn
Steakhouse Fine Dining
Other
Business
Corporate Consolidated
Sales
$ 3,593.4 $ 1,810.4 $
446.9 $ 1,345.4 $
— $
7,196.1
Restaurant and marketing expenses
2,760.5
1,486.9
367.6
1,151.5
27.2
5,793.7
832.9 $
323.5 $
79.3 $
193.9 $
(27.2) $
1,402.4
Segment profit
Depreciation and amortization
$
$
142.1 $
65.9 $
31.4 $
97.1 $
14.4 $
350.9
6.6
Impairments and disposal of assets, net
0.1
0.3
—
3.9
2.3
Segment assets
2,663.5
1,816.1
1,277.3
2,830.4
2,068.8
10,656.1
Purchases of land, buildings and equipment
106.5
43.4
41.3
60.4
3.3
254.9
(in millions)
At May 31, 2020 and for the year ended
Olive
Garden
LongHorn
Steakhouse Fine Dining
Other
Business
Corporate Consolidated
Sales
$ 4,013.8 $ 1,701.1 $
541.1 $ 1,550.9 $
— $
7,806.9
Restaurant and marketing expenses
3,281.0
1,439.2
452.8
1,413.6
49.9
6,636.5
Segment profit
Depreciation and amortization
Impairments and disposal of assets, net
Goodwill impairment
Segment assets
$
$
732.8 $
261.9 $
88.3 $
137.3 $
(49.9) $
1,170.4
144.2 $
68.4 $
33.4 $
101.0 $
8.9 $
3.4
—
1.8
—
11.5
—
171.3
169.2
33.0
—
355.9
221.0
169.2
2,757.5
1,830.0
1,251.3
2,902.0
1,205.3
9,946.1
Purchases of land, buildings and equipment
199.3
74.1
62.1
117.0
7.4
459.9
(in millions)
At May 26, 2019 and for the year ended
Olive
Garden
LongHorn
Steakhouse Fine Dining
Other
Business
Corporate Consolidated
Sales
$ 4,287.3 $ 1,810.6 $
605.9 $ 1,806.6 $
— $
8,510.4
Restaurant and marketing expenses
3,408.3
1,481.8
481.3
1,540.7
4.6
6,916.7
Segment profit
Depreciation and amortization
Impairments and disposal of assets, net
Purchases of land, buildings and equipment
$
$
879.0 $
328.8 $
124.6 $
265.9 $
(4.6) $
1,593.7
140.8 $
8.9
187.3
68.2 $
0.3
65.6
29.6 $
—
49.1
92.7 $
10.3
147.2
5.4 $
(0.5)
2.8
336.7
19.0
452.0
Reconciliation of segment profit to earnings from continuing operations before income taxes:
(in millions)
Segment profit
Less general and administrative expenses
Less depreciation and amortization
Less impairments and disposal of assets, net
Less goodwill impairment
Less interest, net
Less other (income) expense, net
Earnings (loss) before income taxes
59
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
1,593.7
$
(405.5)
(336.7)
(19.0)
—
(50.2)
—
782.3
1,402.4 $
(396.2)
(350.9)
(6.6)
—
(63.5)
(8.7)
576.5 $
1,170.4 $
(376.4)
(355.9)
(221.0)
(169.2)
(57.3)
(151.6)
(161.0) $
$
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 6 - DEBT
The components of short-term debt are as follows:
(in millions)
Variable-rate term loan (3.750% at May 31, 2020) due April 2021
May 30, 2021 May 31, 2020
$
— $
270.0
On April 6, 2020, we entered into a $270.0 million 364-day Term Loan Credit Agreement (the Term Loan Agreement)
with Bank of America, N.A. (BOA), as administrative agent, and the lenders and other agents party thereto. The Term Loan
Agreement was a senior unsecured obligation of the Company and contained customary representations and affirmative and
negative covenants (including limitations on liens and subsidiary debt and a maximum consolidated total debt to total
capitalization ratio of 0.75 to 1.00). The Term Loan Agreement also contained events of default customary for credit agreements
of this type. The Term Loan Agreement was fully drawn on April 6, 2020, during the fourth fiscal quarter of 2020, and was fully
repaid during the first fiscal quarter of 2021.
The components of long-term debt are as follows:
(in millions)
3.850% senior notes due May 2027
6.000% senior notes due August 2035
6.800% senior notes due October 2037
4.550% senior notes due February 2048
Total long-term debt
Fair value hedge
Less unamortized discount and issuance costs
Total long-term debt less unamortized discount and issuance costs
May 30, 2021 May 31, 2020
$
500.0 $
96.3
42.8
300.0
939.1 $
(0.2)
(9.1)
929.8 $
$
$
500.0
96.3
42.8
300.0
939.1
—
(10.3)
928.8
The aggregate contractual maturities of long-term debt for each of the five fiscal years subsequent to May 30, 2021, and
thereafter are as follows:
(in millions)
Fiscal Year
Debt repayments
2022
2023
2024
2025
2026
Thereafter
$
— $
— $
— $
— $
— $
939.1
We maintain a $750.0 million revolving credit agreement (Revolving Credit Agreement) with BOA, as administrative agent,
and the lenders and other agents party thereto. The Revolving Credit Agreement is a senior unsecured credit commitment to the
Company and contains customary representations and affirmative and negative covenants (including limitations on liens and
subsidiary debt and a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of
default usual for credit facilities of this type. As of May 30, 2021, we were in compliance with all covenants under the Revolving
Credit Agreement.
The Revolving Credit Agreement matures on October 27, 2022, and the proceeds may be used for working capital and
capital expenditures, the refinancing of certain indebtedness, certain acquisitions and general corporate purposes. Loans under the
Revolving Credit Agreement bear interest at a rate of LIBOR plus a margin determined by reference to a ratings-based pricing
grid (Applicable Margin), or the base rate (which is defined as the highest of the BOA prime rate plus 0.075 percent, the Federal
Funds rate plus 0.500 percent, and the Eurocurrency Rate plus 1.075 percent) plus the Applicable Margin. Assuming a “BBB-”
equivalent credit rating level, the Applicable Margin under the Revolving Credit Agreement will be 1.075 percent for LIBOR
loans and 0.075 percent for base rate loans. As of May 30, 2021, we had no outstanding balances under the Revolving Credit
Agreement.
The interest rate on our $42.8 million 6.800 percent senior notes due October 2037 is subject to adjustment from time to
time if the debt rating assigned to such series of notes is downgraded below a certain rating level (or subsequently upgraded). The
maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial
interest rate. As of May 30, 2021, no such adjustments are made to this rate.
NOTE 7 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
We use financial derivatives to manage commodity price, interest rate and equity-based compensation risks inherent in our
business operations. By using these instruments, we expose ourselves, from time to time, to credit risk and market risk. Credit risk
is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract
is positive, the counterparty owes us, which creates credit risk for us. We minimize this credit risk by entering into transactions
with high-quality counterparties. We currently do not have any provisions in our agreements with counterparties that would
require either party to hold or post collateral in the event that the market value of the related derivative instrument exceeds a
certain limit. As such, the maximum amount of loss due to counterparty credit risk we would incur at May 30, 2021, if
counterparties to the derivative instruments failed completely to perform, would approximate the values of derivative instruments
currently recognized as assets on our consolidated balance sheet. Market risk is the adverse effect on the value of a financial
instrument that results from a change in interest rates, commodity prices or the market price of our common stock. We minimize
this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.
We periodically enter into commodity futures, swaps and option contracts (collectively, commodity contracts) to reduce the
risk of variability in cash flows associated with fluctuations in the price we pay for commodities, such as natural gas and diesel
fuel. For certain of our commodity purchases, changes in the price we pay for these commodities are highly correlated with
changes in the market price of these commodities. For these commodity purchases, we designate commodity contracts as cash
flow hedging instruments. For the remaining commodity purchases, changes in the price we pay for these commodities are not
highly correlated with changes in the market price, generally due to the timing of when changes in the market prices are reflected
in the price we pay. For these commodity purchases, we utilize these commodity contracts as economic hedges. Our commodity
contracts for fiscal 2021 did not extend beyond May 2021.
We are currently party to interest-rate swap agreements with $300.0 million of notional value to limit the risk of change in
fair value through fiscal 2031, of the $300.0 million 4.550 percent senior notes due February 2048. The swap agreements
effectively swap the fixed-rate obligations for floating-rate obligations over the term of the agreements, thereby mitigating
changes in fair value of the related debt. The swap agreements were designated as fair value hedges of the related debt and met
the requirements to be accounted for under the short-cut method, resulting in no ineffectiveness in the hedging relationship.
During fiscal 2021, $0.1 million was recorded as a reduction to interest expense related to net swap settlements.
We enter into equity forward contracts to hedge the risk of changes in future cash flows associated with the unvested,
unrecognized stock-based awards we grant to certain employees (Darden stock units). The equity forward contracts will be settled
at the end of the vesting periods of their underlying Darden stock units, which range between three and five years and currently
extend through July 2025. The contracts were initially designated as cash flow hedges to the extent the Darden stock units are
unvested and, therefore, unrecognized as a liability in our financial statements. The forward contracts have net cash settlement
terms and net settle every three months. As the Darden stock units vest, we will de-designate that portion of the equity forward
contract that no longer qualifies for hedge accounting, and changes in fair value associated with that portion of the equity forward
contract will be recognized in current earnings. We periodically incur interest on the notional value of the contracts and receive
dividends on the underlying shares. These amounts are recognized currently in earnings as they are incurred or received.
We enter into equity forward contracts to hedge the risk of changes in future cash flows associated with recognized,
employee-directed investments in Darden stock within the non-qualified deferred compensation plan. We do not elect hedge
accounting with the expectation that changes in the fair value of the equity forward contracts would offset changes in the fair
value of Darden stock investments in the non-qualified deferred compensation plan within general and administrative expenses in
our consolidated statements of earnings. These contracts currently extend through July 2024.
61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The notional and fair values of our derivative contracts are as follows:
(in millions, except
per share data)
Number of
Shares
Outstanding
Weighted-
Average
Per Share
Forward Rates
Notional
Values
May 30, 2021
Derivative Assets (1)
May 30,
2021
May 31,
2020
Derivative Liabilities (1)
May 31,
May 30,
2020
2021
Fair Values
Equity Forwards
Designated
Not designated
Total equity forwards
Commodity contracts
Designated
Not designated
Total commodity contracts
Interest rate related
Designated
Not designated
Total interest rate related
Total derivative contracts
0.2 $
0.5 $
105.88 $
24.0 $
0.9 $
1.8 $
— $
98.22 $
45.8
2.0
4.4
—
$
2.9 $
6.2 $
— $
N/A
N/A
N/A
N/A
N/A $
N/A $
0.8 $
0.1 $
0.3 $
— $
—
—
—
—
$
0.1 $
0.3 $
— $
N/A $
300.0 $
N/A
$
$
$
— $
— $
— $
3.0 $
— $
— $
— $
6.5 $
0.2 $
— $
0.2 $
0.2 $
—
—
—
1.8
0.3
2.1
—
—
—
2.1
(1) Derivative assets and liabilities are included in receivables, net, and other current liabilities, as applicable, on our
consolidated balance sheets.
The effects of derivative instruments in cash flow hedging relationships in the consolidated statements of earnings are as
follows:
(in millions)
Equity (1)(2)
Commodity (3)
Interest rate (4)
Total
Amount of Gain (Loss) Recognized in AOCI
Fiscal Year Ended
Amount of Gain (Loss) Reclassified from AOCI to
Earnings
Fiscal Year Ended
May 30,
2021
May 31,
2020
May 26,
2019
May 30,
2021
May 31,
2020
May 26,
2019
$
$
16.9 $
(15.5) $
10.8 $
0.8
—
17.7 $
(3.7)
—
(19.2) $
0.2
—
11.0 $
1.6 $
(0.7)
(0.1)
0.8 $
1.0 $
(2.3)
(0.1)
(1.4) $
4.9
0.7
(0.1)
5.5
(1) In fiscal 2021 and 2020, location of the gain (loss) reclassified from AOCI to earnings is general and administrative expenses.
(2) In fiscal 2019, location of the gain (loss) reclassified from AOCI to earnings is restaurant labor expenses and general and
administrative expenses.
(3) Location of the gain (loss) reclassified from AOCI to earnings is food and beverage costs and restaurant expenses.
(4) Location of the gain (loss) reclassified from AOCI to earnings is interest, net.
62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The effects of derivative instruments in fair value hedging relationships in the consolidated statements of earnings are as
follows:
Amount of Gain (Loss) Recognized in Earnings on
Derivatives
Fiscal Year Ended
Amount of Gain (Loss) Recognized in Earnings on
Related Hedged Item
Fiscal Year Ended
May 30,
2021
May 31,
2020
May 26,
2019
May 30,
2021
May 31,
2020
May 26,
2019
$
$
(0.2)
(0.2) $
—
— $
— $
— $
0.2
0.2 $
—
— $
—
—
(in millions)
Interest rate (1)(2)
Total
(1) Location of the gain (loss) recognized in earnings on derivatives and related hedged item is interest, net.
(2) Hedged item in fair value hedge relationship is debt.
The effects of derivatives not designated as hedging instruments in the consolidated statements of earnings are as follows:
(in millions)
Location of Gain (Loss) Recognized in Earnings on Derivatives
Food and beverage costs and restaurant expenses
Restaurant labor expenses
General and administrative expenses
Total
Amount of Gain (Loss)
Recognized in Earnings
Fiscal Year Ended
May 31,
2020
May 30,
2021
May 26,
2019
$
0.1 $
0.3 $
—
32.7
—
(12.3)
$
32.8 $
(12.0) $
—
11.2
14.6
25.8
Based on the fair value of our derivative instruments designated as cash flow hedges as of May 30, 2021, we expect to
reclassify $0.3 million of net gains on derivative instruments from accumulated other comprehensive income (loss) to earnings
during the next 12 months based on the maturity of equity forward, commodity, and interest rate contracts. However, the amounts
ultimately realized in earnings will be dependent on the fair value of the contracts on the settlement dates.
NOTE 8 – FAIR VALUE MEASUREMENTS
The fair values of cash equivalents, receivables, net, accounts payable and short-term debt approximate their carrying
amounts due to their short duration.
The following tables summarize the fair values of financial instruments measured at fair value on a recurring basis at
May 30, 2021 and May 31, 2020:
Items Measured at Fair Value at May 30, 2021
(in millions)
Derivatives:
Commodities futures, swaps & options
Equity forwards
Interest rate swaps
(1)
(2)
(3)
Total
Quoted Prices
in Active
Market for
Identical Assets
(Liabilities)
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value
of Assets
(Liabilities)
0.1 $
2.9
(0.2)
2.8 $
— $
—
—
— $
0.1 $
2.9
(0.2)
2.8 $
—
—
—
—
$
$
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Items Measured at Fair Value at May 31, 2020
Quoted Prices
in Active
Market for
Identical Assets
(Liabilities)
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value
of Assets
(Liabilities)
(in millions)
Derivatives:
Commodities futures, swaps & options
Equity forwards
Total
(1)
(2)
$
$
(1.8) $
6.2
4.4 $
— $
—
— $
(1.8) $
6.2
4.4 $
—
—
—
(1) The fair value of our commodities futures, swaps and options is based on closing market prices of the contracts, inclusive of
the risk of nonperformance.
(2) The fair value of equity forwards is based on the closing market value of Darden stock, inclusive of the risk of
nonperformance.
(3) The fair value of our interest rate swap agreements is based on current and expected market interest rates, inclusive of the risk
of nonperformance.
The carrying value and fair value of long-term debt, as of May 30, 2021, was $929.8 million and $1.06 billion, respectively.
The carrying value and fair value of long-term debt as of May 31, 2020, was $928.8 million and $1.20 billion, respectively. The
fair value of long-term debt, which is classified as Level 2 in the fair value hierarchy, is determined based on market prices or, if
market prices are not available, the present value of the underlying cash flows discounted at our incremental borrowing rates.
The fair value of non-financial assets measured at fair value on a non-recurring basis, classified as Level 2 in the fair value
hierarchy, is generally determined based on third-party market appraisals which includes market data for similar assets. As of
May 30, 2021, adjustments to the fair values of non-financial assets measured at fair value on a non-recurring basis, classified as
Level 2, were not material. As of May 31, 2020, operating lease right-of-use assets with a carrying amount of $24.2 million,
primarily related to seven restaurants, were determined to have a fair value of $17.6 million resulting in an impairment of
$6.6 million.
The fair value of non-financial assets measured at fair value on a non-recurring basis, classified as Level 3 in the fair value
hierarchy, is determined based on appraisals, sales prices of comparable assets, or estimates of discounted future cash flows. As of
May 30, 2021, long-lived assets held and used with a carrying amount of $5.6 million, primarily related to four underperforming
restaurants, were determined to have a fair value of $0.6 million resulting in an impairment charge of $5.0 million. As of May 31,
2020, long-lived assets held and used with a carrying amount of $35.1 million, primarily related to thirteen underperforming
restaurants as well as two restaurants damaged by natural disasters, were determined to have a fair value of $0.2 million resulting
in an impairment of $34.9 million. Also as of May 31, 2020, goodwill and trademarks for our Cheddar’s Scratch Kitchen brand
with carrying values of $334.3 million and $375.1 million, respectively, were determined to have fair values of $165.1 million
and $230.1 million, respectively, resulting in a total impairment of $314.2 million.
NOTE 9 - STOCKHOLDERS’ EQUITY
Share Repurchase Program
All of the shares purchased during the fiscal year ended May 30, 2021 were purchased as part of our repurchase program
authorized by our Board of Directors. On March 23, 2021, our Board of Directors authorized a share repurchase program under
which we may repurchase up to $500.0 million of our outstanding common stock. This repurchase program does not have an
expiration and replaced the previously existing share repurchase authorization.
Share Retirements
As of May 30, 2021, of the 196.6 million cumulative shares repurchased under the current and previous authorizations,
185.2 million shares were retired and restored to authorized but unissued shares of common stock and there are no remaining
treasury shares. We expect that all shares of common stock acquired in the future will also be retired and restored to authorized
but unissued shares of common stock.
Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss), net of tax, are as follows:
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in millions)
Balances at May 26, 2019
Gain (loss)
Reclassification realized in net earnings
Balances at May 31, 2020
Gain (loss)
Reclassification realized in net earnings
Balances at May 30, 2021
Foreign
Currency
Translation
Adjustment
Unrealized
Gains (Losses)
on Derivatives
Benefit Plan
Funding
Position
Accumulated
Other
Comprehensive
Income (Loss)
$
$
$
(1.0) $
9.0 $
(106.2) $
5.5
—
(18.3)
0.7
(16.6)
109.3
4.5 $
(8.6) $
(13.5) $
0.7
—
5.2 $
17.5
(1.0)
7.9 $
3.8
0.8
(8.9) $
(98.2)
(29.4)
110.0
(17.6)
22.0
(0.2)
4.2
The following table presents the amounts and line items in our consolidated statements of earnings where other adjustments
reclassified from AOCI into net earnings were recorded:
(in millions)
AOCI Components
Derivatives
Commodity contracts
Equity contracts
Interest rate contracts
(in millions)
AOCI Components
Benefit plan funding position
Pension/postretirement plans- actuarial losses
Recognized net actuarial gain - other plans
Location of Gain
(Loss) Recognized in
Earnings
Fiscal Year Ended
May 30,
2021
May 31,
2020
(1)
(2)
(3)
Total before tax
Tax benefit (expense)
Net of tax
Location of Gain
(Loss) Recognized in
Earnings
(4)
(5)
Total before tax
Tax benefit (expense)
Net of tax
$
$
$
$
$
$
(0.7) $
1.6
(0.1)
0.8 $
0.2
1.0 $
(2.3)
1.0
(0.1)
(1.4)
0.7
(0.7)
Fiscal Year Ended
May 30,
2021
May 31,
2020
(0.1) $
(2.2)
(2.3) $
1.5
(0.8) $
(148.9)
3.3
(145.6)
36.3
(109.3)
(1) Primarily included in food and beverage costs and restaurant expenses. See Note 7 for additional details.
(2) Included in general and administrative expenses. See Note 7 for additional details.
(3) Included in interest, net, on our consolidated statements of earnings.
(4) Included in the computation of net periodic benefit costs - pension and postretirement plans, which is a component of other
(income) expense, net, restaurant labor expenses and general and administrative expenses. See Note 13 for additional details.
(5) Included in the computation of net periodic benefit costs - other plans, which, for fiscal 2021, is a component of restaurant
labor, general and administrative expenses and other (income) expense, net, and for fiscal 2020, is a component of general
and administrative expenses.
NOTE 10 – LEASES
The components of lease expense for continuing operations in the consolidated statement of earnings for the fiscal years
ended May 30, 2021 and May 31, 2020 are as follows:
65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in millions)
Operating lease expense
Finance lease expense
Amortization of leased assets
Interest on lease liabilities
Variable lease expense
Total lease expense
May 30, 2021
May 31, 2020
$
384.6 $
403.2
14.4
20.9
6.9
426.8 $
8.9
15.9
5.4
433.4
$
The components of lease assets and liabilities on the consolidated balance sheet as of May 30, 2021 and May 31, 2020 are as
follows:
(in millions)
Operating lease right-of-use assets
Finance lease right-of-use assets
Total lease assets, net
Operating lease liabilities - current
Finance lease liabilities - current
Operating lease liabilities - non-current
Finance lease liabilities - non-current
Total lease liabilities
Balance Sheet Classification
May 30, 2021
May 31, 2020
Operating lease right-of-use assets
Land, buildings and equipment, net
Other current liabilities
Other current liabilities
Operating lease liabilities - non-current
Other liabilities
$
$
$
$
3,776.4 $
405.6
4,182.0 $
176.8 $
7.3
4,088.5
555.3
4,827.9 $
3,969.2
235.2
4,204.4
160.6
5.7
4,276.3
368.4
4,811.0
Supplemental cash flow information related to leases for the fiscal years ended May 30, 2021 and May 31, 2020:
(in millions)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for new operating lease liabilities
Right-of-use assets obtained in exchange for new finance lease liabilities
May 30, 2021
May 31, 2020
$
369.2 $
20.9
7.1
14.5
196.4
371.7
15.9
5.2
171.3
191.9
The weighted-average remaining lease terms and discount rates as of May 30, 2021 and May 31, 2020 are as follows:
(in millions)
Weighted-Average Remaining Lease Term (Years)
Operating leases
Finance leases
Weighted-Average Discount Rate (1)
Operating leases
Finance leases
May 30, 2021
May 31, 2020
16.2
21.8
4.2 %
4.4 %
16.9
20.6
4.2 %
4.8 %
(1) We cannot determine the interest rate implicit in our leases. Therefore, the discount rate represents our incremental
borrowing rate and is determined based on the risk-free rate, adjusted for the risk premium attributed to our corporate
credit rating for a secured or collateralized instrument.
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The annual maturities of our lease liabilities as of May 30, 2021 are as follows:
(in millions)
Fiscal Year
2022
2023
2024
2025
2026
Thereafter
Total future lease commitments (1)
Less imputed interest
Present value of lease liabilities (2)
Operating
Leases
Finance
Leases
384.2
386.7
389.1
393.1
395.0
36.3
37.7
38.0
38.6
39.5
4,165.6
$ 6,113.7 $
714.4
904.5
(1,848.4)
(341.9)
$ 4,265.3 $
562.6
(1) Of the $6,113.7 million of total future operating lease commitments and $904.5 million of total future finance lease
commitments, $2,723.7 million and $407.7 million, respectively, are non-cancelable.
(2) Excludes approximately $111.5 million of net present value of lease payments related to 29 real estate leases signed, but
not yet commenced.
NOTE 11 - ADDITIONAL FINANCIAL INFORMATION
The tables below provide additional financial information related to our consolidated financial statements:
Balance Sheets
(in millions)
Receivables, net
Gift card sales
Miscellaneous
Allowance for doubtful accounts
Total
Other Current Liabilities
Non-qualified deferred compensation plan
Sales and other taxes
Insurance-related
Employee benefits
Accrued interest
Lease liabilities - current
Miscellaneous
Total
May 30, 2021 May 31, 2020
$
$
$
37.9 $
30.5
(0.2)
68.2 $
269.8 $
73.9
49.0
48.7
9.7
184.1
160.6
$
795.8 $
23.1
27.9
(1.2)
49.8
242.5
50.4
43.1
42.2
9.7
166.3
51.7
605.9
67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Statements of Earnings
(in millions)
Interest, net
Interest expense
Imputed interest on finance leases
Capitalized interest
Interest income
Total
Statements of Cash Flows
(in millions)
Cash paid during the fiscal year for:
Interest, net of amounts capitalized
Income taxes, net of refunds
Non-cash investing and financing activities:
Increase in land, buildings and equipment through accrued purchases
NOTE 12 - INCOME TAXES
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
47.5 $
49.3 $
20.9
(3.2)
(1.7)
15.9
(3.0)
(4.9)
$
63.5 $
57.3 $
44.3
11.9
(2.2)
(3.8)
50.2
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
$
$
62.5 $
62.5 $
57.6 $
0.3 $
50.8
23.7
29.1 $
23.2 $
38.3
The CARES Act was enacted on March 27, 2020. In an effort to enhance liquidity for businesses, the CARES Act provides
for, among other items, federal net operating loss (NOL) carryback provisions, the deferral of the employer-paid portion of social
security taxes and refundable employee retention tax credits. Additionally, the CARES Act includes provisions addressing
technical amendments for accelerated tax depreciation on qualified improvement property (QIP).
We utilized the CARES Act provisions in the following ways in fiscal 2021:
• We will carry back the federal NOL generated in fiscal 2021 to the preceding five years;
• We elected to defer an additional $99.8 million of our employer-paid portion of social security taxes generated in fiscal
2021, while repaying the $24.8 million we deferred from fiscal 2020;
• We recognized additional acceleration of $81.7 million in tax depreciation as a result of the technical amendments to
QIP; and
• We claimed additional refundable employee retention tax credits of approximately $13.0 million in fiscal 2021.
Total income tax expense (benefit) was allocated as follows:
(in millions)
Earnings (loss) from continuing operations
Loss from discontinued operations
Total consolidated income tax expense (benefit)
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
$
(55.9) $
(111.8) $
(3.2)
(0.9)
(59.1) $
(112.7) $
63.7
(1.8)
61.9
The components of earnings (loss) from continuing operations before income taxes and the provision for income taxes
thereon are as follows:
68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in millions)
Earnings (loss) from continuing operations before income taxes:
U.S.
Foreign
Earnings (loss) from continuing operations before income taxes
Income taxes:
Current:
Federal
State and local
Foreign
Total current
Deferred (principally U.S.):
Federal
State and local
Total deferred
Total income tax expense (benefit)
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
$
575.1 $
(165.1) $
1.4
4.1
576.5 $
(161.0) $
780.7
1.6
782.3
$
(226.9) $
5.8 $
5.3
(0.2)
15.9
1.0
(221.8) $
22.7 $
151.9 $
(109.0) $
14.0
165.9 $
(55.9) $
(25.5)
(134.5) $
(111.8) $
$
$
$
$
(7.2)
20.3
1.4
14.5
44.9
4.3
49.2
63.7
The effective income tax rates for fiscal 2021 and 2020 for continuing operations were (9.7) percent and 69.4 percent,
respectively. During fiscal 2021, we had an income tax benefit of $55.9 million on earnings before income tax of $576.5 million
compared to an income tax benefit of $111.8 million on a loss from continuing operations before income taxes of $161.0 million
in fiscal 2020. The change was driven primarily by an increase in earnings before income taxes offset by the generation of a net
operating loss for tax purposes in fiscal 2021 that will be carried back to fiscal years 2016 and 2017. An income tax benefit is
generated due to the difference in federal tax rates between fiscal 2021 at 21.0 percent and fiscal 2016 and 2017 at 35.0 percent.
We generated a net operating loss for tax purposes due to several factors, including the impact of COVID-19, accelerated tax
depreciation, increased tax deductions for equity vesting and exercises, tax accounting method changes and various other tax
planning initiatives.
The following table is a reconciliation of the U.S. statutory income tax rate to the effective income tax rate from continuing
operations included in the accompanying consolidated statements of earnings:
Fiscal Year Ended
U.S. statutory rate
State and local income taxes, net of federal tax benefits
Benefit of federal income tax credits
Stock-based compensation tax benefit
Nondeductible goodwill impairment
Deferred revaluation (1)
Federal net operating loss
Other, net
Effective income tax rate (2)
May 30, 2021 May 31, 2020 May 26, 2019
21.0 %
21.0 %
21.0 %
2.7
(11.1)
(1.9)
—
—
(20.6)
0.2
(9.7) %
3.7
47.3
5.0
(16.4)
6.3
—
2.5
69.4 %
2.4
(10.8)
(2.0)
—
—
—
(2.5)
8.1 %
(1) In fiscal 2020, we amended tax returns that were subject to a 35.0 percent or 29.4 percent statutory rate. Corresponding
deferred tax balances were revalued at 21.0 percent.
(2) Our effective income tax rate of (9.7) percent for fiscal 2021 represents an income tax benefit as we generated pre-tax income
from continuing operations in fiscal 2021. Our effective income tax rate of 69.4 percent for fiscal 2020 represents an income
tax benefit as we generated a pre-tax loss from continuing operations in fiscal 2020, whereas our effective income tax rate of
8.1 percent for fiscal 2019 represents income tax expense as we generated pre-tax income from continuing operations in
fiscal 2019.
69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
As of May 30, 2021, we had estimated current prepaid state and federal income taxes of $15.7 million and $321.5 million,
respectively, which is included on our accompanying consolidated balance sheets as prepaid income taxes and estimated current
state and federal income taxes payable of $6.1 million and $29.8 million which is included on our accompanying consolidated
balance sheets as accrued income taxes.
As of May 30, 2021, we had unrecognized tax benefits of $51.8 million, which represents the aggregate tax effect of the
differences between tax return positions and benefits recognized in our consolidated financial statements, all of which would
favorably affect the effective tax rate if resolved in our favor. Included in the balance of unrecognized tax benefits at May 30,
2021, is $35.9 million related to tax positions for which it is reasonably possible that the total amounts could change during the
next 12 months based on the outcome of examinations. Of the $35.9 million, $18.0 million relates to items that would impact our
effective income tax rate.
A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
(in millions)
Balances at May 31, 2020
Additions related to current-year tax positions
Additions related to prior-year tax positions
Net reductions due to settlements with taxing authorities
Reductions to tax positions due to statute expiration
Balances at May 30, 2021
$
21.6
3.6
30.0
(0.9)
(2.5)
$
51.8
Interest recorded on reserves for uncertain tax positions was included in income tax expense in our consolidated statements
of earnings as follows:
(in millions)
Interest recorded on unrecognized tax benefits
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
0.7 $
1.8 $
1.5
At May 30, 2021, we had $2.3 million accrued for the payment of interest associated with unrecognized tax benefits.
For U.S. federal income tax purposes, we participate in the IRS’s Compliance Assurance Process (CAP), whereby our U.S.
federal income tax returns are reviewed by the IRS both prior to and after their filing. Income tax returns are subject to audit by
state and local governments, generally years after the returns are filed. These returns could be subject to material adjustments or
differing interpretations of the tax laws. The major jurisdictions in which the Company files income tax returns include the U.S.
federal jurisdiction, Canada, and all states in the U.S. that have an income tax. With a few exceptions, the Company is no longer
subject to U.S. federal income tax examinations by tax authorities for years before fiscal 2021, and state and local, or non-U.S.
income tax examinations by tax authorities for years before fiscal 2017.
The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows:
70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in millions)
Accrued liabilities
Compensation and employee benefits
Lease liabilities
Net operating loss, credit and charitable contribution carryforwards
Other
Gross deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance
Trademarks and other acquisition related intangibles
Buildings and equipment
Capitalized software and other assets
Lease assets
Other
Gross deferred tax liabilities
Net deferred tax liabilities
May 30, 2021 May 31, 2020
$
65.4 $
120.4
1,189.3
195.5
21.8
81.0
127.5
1,186.8
117.3
11.4
$
$
$
$
1,592.4 $
1,524.0
(26.6)
(19.3)
1,565.8 $
1,504.7
(171.5)
(492.9)
(22.3)
(164.4)
(263.7)
(25.7)
(1,089.9)
(1,098.0)
(10.8)
(9.0)
(1,787.4) $
(1,560.8)
(221.6) $
(56.1)
We have deferred tax assets of $61.2 million reflecting the benefit of state loss carryforwards, before federal benefit and
valuation allowance, which expire at various dates between fiscal 2022 and fiscal 2040. We have deferred tax assets of $91.5
million of federal and $46.3 million state tax credits, before federal benefit and valuation allowance, which expire at various dates
between fiscal 2022 and fiscal 2041.
We have taken current and potential future expirations into consideration when evaluating the need for valuation allowances
against these deferred tax assets. A valuation allowance for deferred tax assets is provided when it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Realization is dependent upon the generation of future taxable
income or the reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. We
consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making
this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in
which our deferred tax assets are deductible, we believe it is more likely than not that we will realize the benefits of these
deductible differences, net of the existing valuation allowances at May 30, 2021.
NOTE 13 - RETIREMENT PLANS
Defined Benefit Plans and Postretirement Benefit Plan
As of December 2014, our non-contributory defined benefit pension plans were frozen and no additional benefits accrued
for participants (except for continuing interest credits for eligible participants in the Cash Balance formula). In April 2018, our
Benefit Plans Committee approved the termination of our primary non-contributory defined benefit pension plan (the Retirement
Income Plan for Darden Restaurants, Inc.). Plan participants who had not yet begun receiving their benefit payments were
provided the opportunity to receive their full accrued benefits from plan assets by either (i) electing immediate lump sum
distributions or annuities or (ii) deferring commencement of their benefits to a later date. During fiscal 2020, we made a funding
contribution of approximately $12.7 million to fully fund the benefit obligation. As of May 31, 2020, all of the plan assets were
either (i) distributed to settle the benefits for participants who selected the lump sum option or (ii) transferred to a third-party
annuity provider for all other eligible participants. The settlement of the benefit obligation to plan participants in fiscal 2020
resulted in a pre-tax pension settlement charge of $145.5 million recorded in other (income) expense, net in our consolidated
statement of earnings.
We also sponsor a non-contributory postretirement benefit plan that provides health care benefits to certain eligible salaried
retirees as a subsidy credit to a health care reimbursement account. This benefit is not impacted by future changes in health care
cost trend rates.
71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Fundings related to the defined benefit pension plans and postretirement benefit plan, which are funded on a pay-as-you-go
basis, were as follows:
(in millions)
Defined benefit pension plans funding
Postretirement benefit plan funding
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
0.4 $
1.4
13.2 $
1.3
0.4
1.3
We expect to contribute approximately $0.4 million to our remaining defined benefit pension plan and approximately $2.0
million to our postretirement benefit plan during fiscal 2022.
We are required to recognize the over- or under-funded status of the plans as an asset or liability as measured by the
difference between the fair value of the plan assets and the benefit obligation and any unrecognized prior service costs and
actuarial gains and losses as a component of accumulated other comprehensive income (loss), net of tax.
The following provides a reconciliation of the changes in the plan benefit obligation, fair value of plan assets and the funded
status of the plans as of May 30, 2021 and May 31, 2020:
(in millions)
Change in Benefit Obligation:
Defined Benefit Plans
Postretirement Benefit Plan
May 30, 2021 May 31, 2020 May 30, 2021 May 31, 2020
Benefit obligation at beginning of period
$
5.0 $
252.0 $
20.9 $
Service cost
Interest cost
Benefits paid (1)
Actuarial (gain) loss
Special termination benefits (3)
Benefit obligation at end of period (2)
Change in Plan Assets:
Fair value at beginning of period
Actual return on plan assets
Employer contributions
Benefits paid (1)
Fair value at end of period
Unfunded status at end of period
$
$
$
$
—
0.1
—
3.3
(0.4)
(272.2)
0.1
—
21.9
—
—
0.6
(1.4)
(4.9)
7.2
4.8 $
5.0 $
22.4 $
— $
248.5 $
— $
10.5
13.2
(272.2)
— $
—
1.4
(1.4)
— $
—
0.4
(0.4)
— $
(4.8) $
(5.0) $
(22.4) $
(20.9)
19.8
0.1
0.7
(1.3)
1.6
—
20.9
—
—
1.3
(1.3)
—
(1) Fiscal 2020 includes $271.8 million of benefits paid in accordance with the termination of our primary non-contributory
defined benefit pension plan.
(2) Remaining defined benefit plan obligation relates to a supplemental defined benefit pension plan, which is an unfunded
nonqualified plan separate from our primary pension plan which was settled in fiscal 2020. The supplemental plan is frozen
and therefore no longer accruing benefits for participants.
(3) Special termination benefits relate to the fiscal 2021 voluntary early retirement incentive program. See Note 17 for further
information.
72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following is a detail of the balance sheet components of each of our plans and a reconciliation of the amounts included
in accumulated other comprehensive income (loss):
(in millions)
Components of the Consolidated Balance Sheets:
Current liabilities
Noncurrent liabilities
Net amounts recognized
Amounts Recognized in Accumulated Other Comprehensive
Income (Loss), net of tax:
Prior service credit
Net actuarial gain (loss)
Net amounts recognized
Defined Benefit Plans
Postretirement Benefit Plan
May 30, 2021 May 31, 2020 May 30, 2021 May 31, 2020
$
$
$
$
— $
4.8
4.8 $
— $
(1.6)
(1.6) $
— $
5.0
5.0 $
— $
(1.6)
(1.6) $
2.0 $
20.4
22.4 $
— $
(3.7)
(3.7) $
1.3
19.6
20.9
0.2
(8.8)
(8.6)
The following is a summary of our accumulated and projected benefit obligations for our defined benefit plans:
(in millions)
May 30, 2021 May 31, 2020
Accumulated benefit obligation for all defined benefit plans
$
4.8 $
Pension plans with accumulated benefit obligations in excess of plan assets:
Accumulated benefit obligation
Projected benefit obligations for all plans with projected benefit obligations in excess of plan
assets
4.8
4.8
5.0
5.0
5.0
The following table presents the weighted-average assumptions used to determine benefit obligations and net expense:
Defined Benefit Plans
Postretirement Benefit Plan
May 30, 2021 May 31, 2020 May 30, 2021 May 31, 2020
Weighted-average assumptions used to determine benefit
obligations at May 30 and May 31 (1)
Discount rate
2.46 %
2.58 %
2.86 %
2.98 %
Weighted-average assumptions used to determine net
expense for fiscal years ended May 30 and May 31 (2)
Discount rate
2.58 %
3.70 %
2.92 %
3.95 %
(1) Determined as of the end of fiscal year.
(2) Determined as of the beginning of fiscal year.
We set the discount rate assumption annually for each of the plans at their valuation dates to reflect the yield of high-quality
fixed-income debt instruments, with lives that approximate the maturity of the plan benefits. Additionally, for our mortality
assumption as of fiscal year end, we selected the most recent Pri-2012 mortality tables and MP-2020 mortality improvement scale
to measure the benefit obligations.
73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Components of net periodic benefit cost included in earnings are as follows:
Defined Benefit Plans
Postretirement Benefit Plan
(in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized prior service cost
Recognized net actuarial loss
Settlement loss recognized
Fiscal Year Ended
May 31,
2020
May 30,
2021
May 26,
2019
May 30,
2021
Fiscal Year Ended
May 31,
2020
May 26,
2019
$
— $
— $
— $
— $
0.1 $
0.1
—
—
0.1
—
3.3
9.3
(4.0)
(11.2)
0.6
—
0.7
—
—
1.8
145.5
—
2.5
—
(0.3)
(4.8)
(4.8)
1.9
—
1.5
—
1.5
—
0.1
0.8
—
Net pension and postretirement cost (benefit)
$
0.2 $
146.6 $
0.6 $
2.2 $
(2.5) $
(2.4)
The amortization of the net actuarial gain (loss) component of our fiscal 2022 net periodic benefit cost for the remaining
defined benefit plan and postretirement benefit plan is expected to be approximately $0.2 million and $0.4 million, respectively.
The following benefit payments are expected to be paid between fiscal 2022 and fiscal 2031:
(in millions)
2022
2023
2024
2025
2026
2027-2031
Defined Benefit
Plan
Postretirement B
enefit Plan
$
0.4 $
0.4
0.4
0.4
0.4
1.7
2.0
1.9
1.8
1.7
1.6
6.3
Defined Contribution Plan
We have a defined contribution (401(k)) plan (Darden Savings Plan) covering most employees age 21 and older. We match
contributions for participants with at least one year of service up to 6 percent of compensation, based on our performance. The
match ranges from a minimum of $0.25 to $1.20 for each dollar contributed by the participant. The Darden Savings Plan also
provides for a profit sharing contribution for eligible participants equal to 1.5 percent of the participant’s compensation. The
Darden Savings Plan had net assets of $1.2 billion at May 30, 2021, and $870.2 million at May 31, 2020. Expense recognized in
fiscal 2021, 2020 and 2019 was $14.4 million, $19.9 million and $26.1 million, respectively. Employees classified as “highly
compensated” under the IRC are not eligible to participate in the Darden Savings Plan. Instead, highly compensated employees
are eligible to participate in a separate non-qualified deferred compensation (FlexComp) plan. The FlexComp plan allows eligible
employees to defer the payment of part of their annual salary and all or part of their annual bonus and provides for awards that
approximate the matching contributions that participants would have received had they been eligible to participate in the Darden
Savings Plan, as well as an additional retirement contribution amount. Amounts payable to highly compensated employees under
the FlexComp plan totaled $269.8 million and $242.5 million at May 30, 2021 and May 31, 2020, respectively. These amounts
are included in other current liabilities on our accompanying consolidated balance sheets.
Prior to fiscal 2021, the Darden Savings Plan included a leveraged Employee Stock Ownership Plan (ESOP). The ESOP
borrowed $16.9 million from us at a variable rate of interest in July 1996 and was fully repaid during fiscal 2020. Compensation
expense was recognized as contributions were accrued. Fluctuations in our stock price impacted the amount of expense
recognized. Contributions to the Darden Savings Plan, plus the dividends accumulated on unallocated shares held by the ESOP,
were used to pay principal, interest and expenses of the Darden Savings Plan. Prior to paying off the ESOP loan in fiscal 2020, as
loan payments were made, common stock was allocated to ESOP participants. In fiscal years 2020 and 2019, the ESOP used
dividends received of $0.2 million and $0.2 million, respectively, and contributions received from us of $0.5 million and $1.0
million, respectively, to pay principal and interest on our debt.
NOTE 14 - STOCK-BASED COMPENSATION
74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In September 2015, our shareholders approved the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (2015 Plan). All
equity grants subject to ASC Topic 718 after the date of approval are made under the 2015 Plan. No further equity grants after
that date are permitted under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, the RARE Hospitality International, Inc.
Amended and Restated 2002 Long-Term Incentive Plan or any other prior stock option and/or stock grant plans (collectively, the
Prior Plans). The 2015 Plan and the Prior Plans are administered by the Compensation Committee of the Board of Directors. The
2015 Plan provides for the issuance of up to 7.6 million common shares in connection with the granting of non-qualified stock
options, restricted stock, restricted stock units (RSUs), performance-based restricted stock units (PRSUs) and other stock-based
awards such as Darden stock units to employees, consultants and non-employee directors. There are outstanding awards under the
Prior Plans that may still vest and be exercised in accordance with their terms. As of May 30, 2021, approximately 0.6
million shares may be issued under outstanding awards that were granted under the Prior Plans.
Stock-based compensation expense included in continuing operations was as follows:
(in millions)
Stock options
Restricted stock units
Darden stock units
Equity-settled performance-based restricted stock units
Employee stock purchase plan
Director compensation program/other
Total
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
8.6 $
6.1 $
9.5
32.6
17.9
2.5
1.3
8.0
19.6
16.1
1.8
1.4
$
72.4 $
53.0 $
5.0
6.1
33.0
12.9
1.5
1.3
59.8
Excess income tax benefits related to the exercise of stock options and vesting of other equity-settled stock-based
compensation recognized in income tax expense from continuing operations was as follows:
(in millions)
Income tax benefits
Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
14.0 $
10.0 $
19.5
The weighted-average fair value of non-qualified stock options and the related assumptions used in the Black-Scholes model
to record stock-based compensation are as follows:
Weighted-average fair value
Dividend yield
Expected volatility of stock
Risk-free interest rate
Expected option life (in years)
Granted in Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
$
20.07
$
19.94
$
18.78
3.0 %
37.3 %
0.4 %
6.4
3.0 %
22.5 %
1.9 %
6.3
3.2 %
22.6 %
2.9 %
6.4
Weighted-average exercise price per share
$
78.84
$
124.24
$
107.05
75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table presents a summary of our stock option activity as of and for the year ended May 30, 2021:
Outstanding beginning of period
Options granted
Options exercised
Options canceled
Outstanding end of period
Exercisable
Options
(in millions)
Weighted-
Average
Exercise Price
Per Share
2.62
0.28
(0.73)
(0.02)
2.15
1.23
$71.77
78.84
49.86
105.00
$79.89
$64.54
Weighted-Average
Remaining
Contractual Life (Yrs)
Aggregate
Intrinsic Value
(in millions)
5.87
$41.7
6.02
4.61
$136.4
$96.8
The total intrinsic value of options exercised during fiscal 2021, 2020 and 2019 was $57.3 million, $21.3 million and $83.5
million, respectively. Cash received from option exercises during fiscal 2021, 2020 and 2019 was $36.6 million, $12.4 million
and $52.2 million, respectively. Stock options generally vest over 4 years and have a maximum contractual period of 10 years
from the date of grant. We settle employee stock option exercises with authorized but unissued shares of Darden common stock.
As of May 30, 2021, there was $6.5 million of unrecognized compensation cost related to unvested stock options granted
under our stock plans. This cost is expected to be recognized over a weighted-average period of 2.5 years. The total fair value of
stock options that vested during fiscal 2021 was $8.6 million.
Restricted stock and RSUs are granted at a value equal to the market price of our common stock on the date of grant, and
amortized over their service periods which generally range from one to four years. Restrictions with regard to restricted stock and
RSUs lapse at the end of their service periods at which employees receive unrestricted shares of Darden stock.
The following table presents a summary of our RSU activity as of and for the fiscal year ended May 30, 2021:
Outstanding beginning of period
Shares granted
Shares vested
Shares canceled
Outstanding end of period
Shares
(in millions)
Weighted-Average
Grant Date Fair
Value Per Share
0.28
0.10
(0.11)
(0.01)
0.26
$99.44
84.65
88.03
99.80
$96.90
As of May 30, 2021, there was $6.2 million of unrecognized compensation cost related to unvested RSUs granted under our
stock plans. This cost is expected to be recognized over a weighted-average period of 1.7 years. The total fair value of RSUs that
vested during fiscal 2021, 2020 and 2019 was $10.6 million, $4.6 million and $2.3 million, respectively.
Darden stock units are granted at a value equal to the market price of our common stock on the date of grant and will be
settled in cash at the end of their vesting periods, which typically range from three to five years, at the then market price of our
common stock. Compensation expense is measured based on the market price of our common stock each period, is amortized over
the vesting period and the vested portion is carried as a liability on our accompanying consolidated balance sheets. We also enter
into equity forward contracts to hedge the risk of changes in future cash flows associated with the unvested, unrecognized Darden
stock units granted (see Note 7 for additional information).
76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table presents a summary of our Darden stock unit activity as of and for the fiscal year ended May 30, 2021:
(All units settled in cash)
Outstanding beginning of period
Units granted
Units vested
Units canceled
Outstanding end of period
Units
(in millions)
Weighted-Average
Fair Value
Per Unit
1.03
0.28
(0.44)
(0.07)
0.80
$76.86
78.84
93.05
91.98
$143.23
As of May 30, 2021, our total Darden stock unit liability was $63.8 million, including $28.9 million recorded in other
current liabilities and $34.9 million recorded in other liabilities on our consolidated balance sheets. As of May 31, 2020, our total
Darden stock unit liability was $49.1 million, including $27.7 million recorded in other current liabilities and $21.4 million
recorded in other liabilities on our consolidated balance sheets.
Based on the value of our common stock as of May 30, 2021, there was $32.1 million of unrecognized compensation cost
related to Darden stock units granted under our incentive plans. This cost is expected to be recognized over a weighted-average
period of 2.6 years but the amount that vests is ultimately dependent on the value of Darden stock at the vesting date. The total
fair value of Darden stock units that vested during fiscal 2021 was $40.7 million.
Relative total shareholder return PRSUs are equity-settled awards that vest over the service period which ranges from three
to four years, and the number of units that actually vest is determined based on the achievement of performance criteria set forth
in the award agreement. The awards vest based on the achievement of market-based targets, are measured based on estimated fair
value as of the date of grant using a Monte Carlo simulation, and are amortized over the service period. Additionally, under
special circumstances, Darden grants equity-settled PRSUs which are earned based on specific performance criteria. These
PRSUs are measured based on a value equal to the market price of our common stock on the date of grant, and amortized over the
service periods which generally range from two to five years.
The weighted-average grant date fair value of equity-settled PRSUs and the related assumptions used in the Monte Carlo
simulation to record stock-based compensation are as follows:
Dividend yield (1)
Expected volatility of stock
Risk-free interest rate
Expected option life (in years)
Weighted-average grant date fair value per unit
(1) Assumes a reinvestment of dividends.
Granted in Fiscal Year Ended
May 30, 2021 May 31, 2020 May 26, 2019
0.0 %
50.5 %
0.1 %
2.8
0.0 %
23.1 %
1.8 %
2.9
0.0 %
23.4 %
2.7 %
2.9
$
83.46
$
98.16
$
100.72
The following table presents a summary of our equity-settled PRSU activity as of and for the fiscal year ended May 30,
2021:
Outstanding beginning of period
Units granted
Units vested
Units canceled
Outstanding end of period
77
Units
(in millions)
Weighted-Average
Grant Date
Fair Value
Per Unit
0.55
0.14
(0.20)
(0.01)
0.48
$97.03
83.46
72.92
102.63
$100.38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
As of May 30, 2021, there was $11.3 million of unrecognized compensation cost related to unvested equity-settled PRSUs
granted under our stock plans. This cost is expected to be recognized over a weighted-average period of 2 years. The total fair
value of equity-settled PRSUs that vested during fiscal 2021 was $14.9 million.
We maintain an Employee Stock Purchase Plan to provide eligible employees who have completed one year of service
(excluding senior officers subject to Section 16(b) of the Securities Exchange Act of 1934, and certain other employees who are
employed less than full time or own 5 percent or more of our capital stock or that of any subsidiary) an opportunity to invest up to
$5.0 thousand per calendar quarter to purchase shares of our common stock, subject to certain limitations. Under the plan, up to an
aggregate of 5.2 million shares are available for purchase by employees at a purchase price that is 85.0 percent of the fair market
value of our common stock on either the first or last trading day of each calendar quarter, whichever is lower. Cash received from
employees pursuant to the plan during fiscal 2021, 2020 and 2019 was $9.6 million, $8.3 million and $7.1 million, respectively.
NOTE 15 - COMMITMENTS AND CONTINGENCIES
As collateral for performance on contracts and as credit guarantees to banks and insurers, we were contingently liable for
guarantees of subsidiary obligations under standby letters of credit. At May 30, 2021 and May 31, 2020, we had $70.5 million and
$65.2 million, respectively, of standby letters of credit related to workers’ compensation and general liabilities accrued in our
consolidated financial statements. At May 30, 2021 and May 31, 2020, we had $28.9 million and $44.0 million, respectively, of
surety bonds related to other payments. Most surety bonds are renewable annually.
At May 30, 2021 and May 31, 2020, we had $121.5 million and $151.5 million, respectively, of guarantees associated with
leased properties that have been assigned to third parties. These amounts represent the maximum potential amount of future
payments under the guarantees. The fair value of the maximum potential payments discounted at our weighted-average cost of
capital at May 30, 2021 and May 31, 2020, amounted to $99.7 million and $122.4 million, respectively. In the event of default by
a third party, the indemnity and default clauses in our assignment agreements govern our ability to recover from and pursue the
third party for damages incurred as a result of its default. We do not hold any third-party assets as collateral related to these
assignment agreements, except to the extent that the assignment allows us to repossess the building and personal property. These
guarantees expire over their respective lease terms, which range from fiscal 2022 through fiscal 2034. In conjunction with the
adoption of ASU 2016-13 in the first quarter of fiscal 2021, the liability recorded for our expected credit losses under these leases
as of May 30, 2021 was $10.0 million. See Note 1.
We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business. A
number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from
guests, employees and others related to operational issues common to the restaurant industry, and can also involve infringement
of, or challenges to, our trademarks. While the resolution of a lawsuit, proceeding or claim may have an impact on our financial
results for the period in which it is resolved, we believe that the final disposition of the lawsuits, proceedings and claims in which
we are currently involved, either individually or in the aggregate, will not have a material adverse effect on our financial position,
results of operations or liquidity.
NOTE 16 - SUBSEQUENT EVENT
On June 23, 2021, the Board of Directors declared a cash dividend of $1.10 per share to be paid August 2, 2021 to all
shareholders of record as of the close of business on July 9, 2021.
NOTE 17 - CORPORATE RESTRUCTURING
During the first quarter of fiscal 2021, as a result of the impact of COVID-19 on our business operations, we undertook a
strategic restructuring of our corporate organization and workforce in order to reduce costs and better align corporate expenses to
our sales levels in the current environment. The corporate restructuring included a voluntary early retirement incentive program
and other involuntary strategic workforce reductions. In accordance with these actions, we incurred employee termination
benefits costs and other costs of $47.0 million, including cash and non-cash components of $37.3 million and $9.7 million,
respectively. These costs are reflected in general and administrative expenses and other (income) expense, net in our consolidated
statements of earnings for the twelve months ended May 30, 2021.
The following table summarizes the accrued employee termination benefits and other costs which are included in other
current liabilities on our consolidated balance sheet as of May 30, 2021. We expect the remaining liability to be paid by the fourth
quarter of fiscal 2022.
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in millions)
Initial Liability
Payments
Adjustments
Balance at May 30, 2021
Accrued liability (1)
$
38.1 $
(21.8) $
(0.8) $
15.5
(1)
valuation adjustment.
Excludes costs associated with equity awards that will be settled in shares upon vesting and postretirement benefit plan
79
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There were no changes in or disagreements with accountants on accounting and financial disclosure requiring disclosure
under this Item.
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, 2021, 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, 2021.
During the fiscal quarter ended May 30, 2021, there were no changes in our internal control over financial reporting (as
defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
The annual report of our management on internal control over financial reporting, and the audit report of KPMG LLP, our
independent registered public accounting firm, regarding our internal control over financial reporting are included in this Annual
Report under the caption “Item 8 - Financial Statements and Supplementary Data.”
Item 9B. OTHER INFORMATION
None.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information contained in the sections entitled “Executive Officers of the Registrant,” “Proposal 1 – Election of Eight
Directors From the Named Director Nominees,” “Meetings of the Board of Directors and Its Committees,” “Corporate
Governance and Board Administration” and “Delinquent Section 16(a) Reports” in our definitive Proxy Statement for our 2021
Annual Meeting of Shareholders is incorporated herein by reference.
All of our employees are subject to our Code of Conduct (Employee Code of Conduct). We also have a Code of Ethics for
CEO and Senior Financial Officers (CEO and Senior Financial Officer Code of Ethics) that highlights specific responsibilities of
our CEO and senior financial officers. We also have a Code of Business Conduct and Ethics for the members of our Board of
Directors (the Board Code of Conduct, and together with the Employee Code of Conduct, and the CEO and Senior Financial
Officer Code of Ethics, our Codes of Business Conduct and Ethics). 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 of Business Conduct and Ethics 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: the Audit
Committee, which was established in accordance with Section 5(a)(58)(A) of the Exchange Act, Compensation Committee,
Nominating and Governance Committee and Finance Committee. The Corporate Governance Guidelines and committee charters
are available on our website at www.darden.com under the Investors - Governance tab 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., 1000 Darden Center Drive, Orlando, Florida 32837,
Attention: Corporate Secretary.
Item 11. EXECUTIVE COMPENSATION
The information contained in the sections entitled “Director Compensation,” “Executive Compensation,” “Compensation
Discussion and Analysis,” “Compensation Committee Report,” “Compensation Committee Interlocks and Insider Participation”
and “Corporate Governance and Board Administration” in our definitive Proxy Statement for our 2021 Annual Meeting of
Shareholders is incorporated herein by reference.
80
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information contained in the sections entitled “Stock Ownership of Principal Shareholders,” “Stock Ownership of
Management” and “Equity Compensation Plan Information” in our definitive Proxy Statement for our 2021 Annual Meeting of
Shareholders is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information contained in the sections entitled “Meetings of the Board of Directors and Its Committees” and “Corporate
Governance and Board Administration” in our definitive Proxy Statement for our 2021 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 2021 Annual Meeting of Shareholders is incorporated herein by reference.
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
1. Financial Statements:
PART IV
All financial statements. See Index to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.
2. Financial Statement Schedules:
Not applicable.
3. Exhibits:
The exhibits listed in the accompanying Exhibit Index are filed as part of this Form 10-K and incorporated herein by
reference. 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. The Exhibit Index specifically identifies with an asterisk each management contract or compensatory
plan or arrangement required to be filed as an exhibit to this Form 10-K. We will furnish copies of any exhibit listed on the
Exhibit Index upon request upon the payment of a reasonable fee to cover our expenses in furnishing such exhibits.
81
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.
Date: July 23, 2021
DARDEN RESTAURANTS, INC.
SIGNATURES
By:
/s/ Eugene I. Lee, Jr.
Eugene I. Lee, Jr., Chairman 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
/s/ Eugene I. Lee, Jr.
Eugene I. Lee, Jr.
/s/ Rajesh Vennam
Rajesh Vennam
/s/ John W. Madonna
John W. Madonna
/s/ Margaret Shan Atkins*
Margaret Shan Atkins
/s/ James P. Fogarty*
James P. Fogarty
/s/ Cynthia T. Jamison*
Cynthia T. Jamison
/s/ Nana Mensah*
Nana Mensah
/s/ William S. Simon*
William S. Simon
/s/ Timothy J. Wilmott*
Timothy J. Wilmott
/s/ Charles M. Sonsteby*
Charles M. Sonsteby
*By:
/s/ Anthony G. Morrow
Anthony G. Morrow, Attorney-In-Fact
July 23, 2021
Title
Director, Chairman and Chief Executive Officer
(Principal executive officer)
Date
July 23, 2021
Senior Vice President, Chief Financial Officer and
Treasurer
(Principal financial officer)
July 23, 2021
Senior Vice President, Corporate Controller
(Principal accounting officer)
July 23, 2021
Director
Director
Director
Director
Director
Director
Director
82
Exhibit
Number
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
*10.1
*10.2
*10.3
*10.4
*10.5
*10.6
EXHIBIT INDEX
Title
Amended and Restated Articles of Incorporation effective June 29, 2016 (incorporated by reference to Exhibit
3.1 to our Current Report on Form 8-K filed July 5, 2016).
Bylaws as amended effective June 24, 2020 (incorporated by reference to Exhibit 3.1 to our Current Report on
Form 8-K filed June 25, 2020).
Indenture dated as of January 1, 1996, between Darden Restaurants, Inc. and Wells Fargo Bank, National
Association (as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest
Bank Minnesota, National Association) (incorporated by reference to Exhibit 4.1 to our Registration
Statement on Form S-3 (Commission File No. 333-146582) filed October 9, 2007).
Officers’ Certificate and Authentication Order, dated August 9, 2005, for the 6.000% Senior Notes due 2035
(which includes the form of Note) issued pursuant to the Indenture dated as of January 1, 1996, between
Darden Restaurants, Inc. and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank
Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as
Trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed August 11, 2005).
Officers’ Certificate and Authentication Order, dated October 10, 2007, for the 6.800% Senior Notes due
2037 (which includes the form of Note) issued pursuant to the Indenture dated as of January 1, 1996, between
Darden Restaurants, Inc. and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank
Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as
Trustee (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed October 16, 2007).
Officers’ Certificate and Authentication Order dated April 18, 2017 for the 3.850% Senior Notes due 2027
(which includes the form of Note) issued pursuant to the Indenture dated as of January 1, 1996, between the
Company and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota, National
Association, formerly known as Norwest Bank Minnesota, National Association), as Trustee (incorporated by
reference to Exhibit 4.1 to our Amendment to Current Report on Form 8-K/A filed April 18, 2017).
First Supplemental Indenture dated as of February 20, 2018 to the Indenture dated as of January 1, 1996, all
between the Company and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank
Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as
Trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed February 22, 2018).
Officers’ Certificate and Authentication Order dated February 22, 2018 for the 4.550% Senior Notes due 2048
(which includes the form of Note) issued pursuant to the Indenture dated as of January 1, 1996, as amended
and supplemented by the First Supplemental Indenture dated as of February 20, 2018 between the Company
and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota, National
Association, formerly known as Norwest Bank Minnesota, National Association), as Trustee (incorporated by
reference to Exhibit 4.1 to our Amendment to Current Report on Form 8-K/A filed February 22, 2018).
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of
1934 (incorporated by reference to Exhibit 4.7 to our Annual Report on Form 10-K for the fiscal year ended
May 26, 2019).
Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10 to
our Current Report on Form 8-K filed September 20, 2013).
Form of Non-Qualified Stock Option Award Agreement under the Darden Restaurants, Inc. 2002 Stock
Incentive Plan, as amended (incorporated by reference to Exhibit 10(o) to our Annual Report on Form 10-K
for the fiscal year ended May 31, 2009).
Form of annual Non-employee Director Restricted Stock Units Award Agreement under the Darden
Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10(mm) to our
Annual Report on Form 10-K for the fiscal year ended May 31, 2015).
Form of initial Non-employee Director Restricted Stock Units Award Agreement under the Darden
Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10(nn) to our
Annual Report on Form 10-K for the fiscal year ended May 31, 2015).
Form of quarterly Non-employee Director Restricted Stock Units Award Agreement under the Darden
Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10(oo) to our
Annual Report on Form 10-K for the fiscal year ended May 31, 2015).
Form of annual Non-employee Director Stock Option Award Agreement under the Darden Restaurants, Inc.
2002 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10(pp) to our Annual Report on
Form 10-K for the fiscal year ended May 31, 2015).
83
*10.7
*10.8
*10.9
*10.10
*10.11
*10.12
*10.13
*10.14
*10.15
*10.16
*10.17
*10.18
*10.19
*10.20
*10.21
10.22
*10.23
*10.24
*10.25
Form of initial Non-employee Director Stock Option Award Agreement under the Darden Restaurants, Inc.
2002 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10(qq) to our Annual Report on
Form 10-K for the fiscal year ended May 31, 2015).
Form of Change in Control Agreement (incorporated by reference to Exhibit 10(rr) to our Annual Report on
Form 10-K for the fiscal year ended May 31, 2015).
Form of Non-Qualified Stock Option Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive
Plan, as amended (incorporated by reference to Exhibit 10.12 to our Quarterly Report on Form 10-Q for the
fiscal quarter ended August 30, 2015).
Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K filed September 22, 2015).
Form of Nonqualified Stock Option Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus
Incentive Plan (incorporated by reference to Exhibit 10.13 to our Quarterly Report on Form 10-Q for the fiscal
quarter ended August 30, 2015).
Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (Quarterly Grant in Lieu of
Cash Retainer) under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorporated by reference to
Exhibit 10.14 to our Quarterly Report on Form 10-Q for the fiscal quarter ended August 30, 2015).
Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the Darden Restaurants,
Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.15 to our Quarterly Report on
Form 10-Q for the fiscal quarter ended August 30, 2015).
Form of Nonqualified Stock Option Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus
Incentive Plan (incorporated by reference to Exhibit 10.54 to our Annual Report on Form 10-K for the fiscal
year ended May 29, 2016).
Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the Darden Restaurants,
Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.58 to our Annual Report on Form
10-K for the fiscal year ended May 29, 2016).
Form of Nonqualified Stock Option Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus
Incentive Plan (incorporated by reference to Exhibit 10.40 to our Annual Report on Form 10-K for the fiscal
year ended May 28, 2017).
Form of Performance Stock Unit Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus
Incentive Plan (incorporated by reference to Exhibit 10.41 to our Annual Report on Form 10-K for the fiscal
year ended May 28, 2017).
Form of Restricted Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015
Omnibus Incentive Plan (incorporated by reference to Exhibit 10.42 to our Annual Report on Form 10-K for
the fiscal year ended May 28, 2017).
Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the Darden Restaurants,
Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.44 to our Annual Report on Form
10-K for the fiscal year ended May 28, 2017).
Special Equity Award Grant Agreement under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan
between the Company and Eugene I. Lee, Jr., dated as of June 29, 2017 (incorporated by reference to Exhibit
10.45 to our Annual Report on Form 10-K for the fiscal year ended May 28, 2017).
Darden Restaurants, Inc. Amended and Restated FlexComp Plan, amended and restated as of June 1, 2017
(incorporated by reference to Exhibit 10.46 to our Annual Report on Form 10-K for the fiscal year ended May
28, 2017).
Credit Agreement, dated as of October 27, 2017, among Darden Restaurants, Inc., certain lenders party thereto
and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed November 1, 2017).
Amendment to Darden Restaurants, Inc. 2015 Omnibus Incentive Plan, adopted May 23, 2018 (incorporated
by reference to Exhibit 10.34 to our Annual Report on Form 10-K for the fiscal year ended May 27, 2018).
Form of Performance Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015
Omnibus Incentive Plan (incorporated by reference to Exhibit 10.35 to our Annual Report on Form 10-K for
the fiscal year ended May 27, 2018).
RARE Hospitality International, Inc. Deferred Compensation Plan, as amended and restated effective as of
January 1, 2009 (incorporated by reference to Exhibit 10.36 to our Annual Report on Form 10-K for the fiscal
year ended May 27, 2018).
84
*10.26
*10.27
*10.28
*10.29
*10.30
*10.31
*10.32
*10.33
*10.34
*10.35
10.36
*10.37
*10.38
*10.39
*10.40
*10.41
*10.42
*10.43
Amendment to the RARE Hospitality Management [sic], Inc. Deferred Compensation Plan, effective July 28,
2014 (incorporated by reference to Exhibit 10.37 to our Annual Report on Form 10-K for the fiscal year ended
May 27, 2018).
Form of Performance Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015
Omnibus Incentive Plan (incorporated by reference to Exhibit 10.34 to our Annual Report on Form 10-K for
the fiscal year ended May 26, 2019).
Form of Performance Stock Unit Award Agreement for Eugene I. Lee, Jr., under the Darden Restaurants, Inc.
2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.35 to our Annual Report on Form 10-K
for the fiscal year ended May 26, 2019).
Form of Restricted Stock Unit Award Agreement for Eugene I. Lee, Jr., under the Darden Restaurants, Inc.
2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.36 to our Annual Report on Form 10-K
for the fiscal year ended May 26, 2019).
Form of Nonqualified Stock Option Award Agreement for Eugene I. Lee, Jr., under the Darden Restaurants,
Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.37 to our Annual Report on Form
10-K for the fiscal year ended May 26, 2019).
Amended and Restated Darden Restaurants, Inc. Benefits Trust Agreement, dated as of October 1, 2017, by
and between Darden Restaurants, Inc. and Wells Fargo Bank, National Association (incorporated by reference
to Exhibit 10.38 to our Annual Report on Form 10-K for the fiscal year ended May 26, 2019).
Amended and Restated RARE Hospitality International, Inc. Deferred Compensation Plan Trust Agreement,
dated as of October 1, 2017, by and between Darden Restaurants, Inc. and Wells Fargo Bank, National
Association (incorporated by reference to Exhibit 10.39 to our Annual Report on Form 10-K for the fiscal
year ended May 26, 2019).
First Amendment to the Darden Restaurants, Inc. FlexComp Plan (as amended and restated effective June 1,
2017), effective as of June 1, 2018 (incorporated by reference to Exhibit 10.40 to our Annual Report on Form
10-K for the fiscal year ended May 26, 2019).
Second Amendment to the Darden Restaurants, Inc. FlexComp Plan (as amended and restated effective June
1, 2017), effective as of June 1, 2019 (incorporated by reference to Exhibit 10.41 to our Annual Report on
Form 10-K for the fiscal year ended May 26, 2019).
Second Amendment to the RARE Hospitality International, Inc. Deferred Compensation Plan (as amended
and restated effective January 1, 2009), effective as of June 1, 2019 (incorporated by reference to Exhibit
10.42 to our Annual Report on Form 10-K for the fiscal year ended May 26, 2019).
Letter Agreement (amendment to Credit Agreement), dated as of March 25, 2020, among Darden Restaurants,
Inc., certain lenders party thereto and Bank of America, N.A., as administrative agent (incorporated by
reference to Exhibit 10.43 to our Quarterly Report on Form 10-Q for the fiscal quarter ended February 23,
2020).
Separation Agreement and General Release between Darden Restaurants, Inc. and David C. George dated as of
June 24, 2020 (incorporated by reference to Exhibit 10.42 to our Annual Report on Form 10-K for the fiscal
year ended May 31, 2020).
Form of Performance Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015
Omnibus Incentive Plan (incorporated by reference to Exhibit 10.43 to our Annual Report on Form 10-K for
the fiscal year ended May 31, 2020).
Form of Nonqualified Stock Option Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus
Incentive Plan (incorporated by reference to Exhibit 10.44 to our Annual Report on Form 10-K for the fiscal
year ended May 31, 2020).
Form of Restricted Stock Unit Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus Incentive
Plan (incorporated by reference to Exhibit 10.45 to our Annual Report on Form 10-K for the fiscal year ended
May 31, 2020).
Form of Restricted Stock Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.46 to our Annual Report on Form 10-K for the fiscal year ended May
31, 2020).
Form of Performance Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015
Omnibus Incentive Plan (incorporated by reference to Exhibit 10.47 to our Quarterly Report on Form 10-Q for
fiscal quarter ended August 30, 2020).
Form of Performance Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015
Omnibus Incentive Plan.
85
*10.44
*10.45
*10.46
*10.47
21
23
24
31(a)
31(b)
32(a)
32(b)
Form of Performance Stock Unit Award Agreement for Eugene I. Lee, Jr., under the Darden Restaurants, Inc.
2015 Omnibus Incentive Plan.
Darden Restaurants, Inc. Annual Incentive Plan, amended and restated effective as of May 31, 2021.
Third Amendment to the Darden Restaurants, Inc. FlexComp Plan (as amended and restated effective June 1,
2017), effective as of October 24, 2019.
Fourth Amendment to the Darden Restaurants, Inc. FlexComp Plan (as amended and restated effective June 1,
2017), effective as of January 1, 2021.
Subsidiaries of Darden Restaurants, Inc.
Consent of Independent Registered Public Accounting Firm.
Power of Attorney.
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
XBRL Instance Document
101.SCH
XBRL Schema Document
101.CAL
XBRL Calculation Linkbase Document
101.DEF
XBRL Definition Linkbase Document
101.LAB
XBRL Label Linkbase Document
101.PRE
XBRL Presentation Linkbase Document
* Items marked with an asterisk are management contracts or compensatory plans or arrangements required to be filed as an
exhibit pursuant to Item 15 of Form 10-K and Item 601(b)(10)(iii)(A) of Regulation S-K.
86