Our Strategic Building Blocks AT DARDEN RESTAURANTS WE HAVE AN ESTABLISHED STRATEGIC FRAMEWORK THAT GUIDES US ON OUR JOURNEY FROM “GETTING BETTER” TO BECOMING THE BEST, SUPPORTED BY OUR CORE VALUES OF INTEGRITY AND FAIRNESS, RESPECT AND CARING, DIVERSITY, ALWAYS LEARNING/ALWAYS TEACHING, BEING OF SERVICE, TEAMWORK AND EXCELLENCE. AT THE CORE OF THIS FRAMEWORK ARE THREE STRATEGIC IMPERATIVES, OR WHAT WE CALL STRATEGIC “BUILDING BLOCKS”: Leadership Development This is the essential building block. To make our strategic vision a reality, we must have leaders throughout the Company who inspire in their teams a great passion and enthusiasm for people, restaurants and dining. Darden Restaurants, Inc. Culinary and Beverage Excellence We are committed not only to continually improving and innovating in this critically important This is the Bottom Line part of our business, but also to redefining culinary and beverage excellence in casual dining. This is the BottomBottom LineLine (In this year’s Annual Report we’ll focus on our Culinary and Beverage Excellence strategic imperative.) 2002 Service and Hospitality Excellence Annual Report The restaurant business is a people business, and we intend to establish and achieve the industry’s very highest service and hospitality standards, as defined by our guests. SUPPORTING OUR STRATEGIC BUILDING BLOCKS ARE TWO KEY ENABLERS: Diversity We will create an environment that welcomes diversity, understands its implications and translates that understanding into appropriate systematic practices at every level of the organization. Technology Technology offers tremendous opportunities to directly benefit our guests, employees and suppliers. Darden Restaurants, Inc. We want leaders who know how to develop and take full advantage of those opportunities. 5900 Lake Ellenor Drive Orlando, Florida 32809 (407) 245-4000 www.darden.com TABLE OF CONTENTS Divisional Overviews fold-out This is the Bottom Line 1 Letter to Shareholders 10 Operations Overview 13 Financial Review 17 Corporate Responsibility 45 Board of Directors 48 2002 Annual Report Shareholder Information 49 Great Food Produces 1 Great Results in 2002 Our Strategic Building Blocks AT DARDEN RESTAURANTS WE HAVE AN ESTABLISHED STRATEGIC FRAMEWORK THAT GUIDES US ON OUR JOURNEY FROM “GETTING BETTER” TO BECOMING THE BEST, SUPPORTED BY OUR CORE VALUES OF INTEGRITY AND FAIRNESS, RESPECT AND CARING, DIVERSITY, ALWAYS LEARNING/ALWAYS TEACHING, BEING OF SERVICE, TEAMWORK AND EXCELLENCE. AT THE CORE OF THIS FRAMEWORK ARE THREE STRATEGIC IMPERATIVES, OR WHAT WE CALL STRATEGIC “BUILDING BLOCKS”: Leadership Development This is the essential building block. To make our strategic vision a reality, we must have leaders throughout the Company who inspire in their teams a great passion and enthusiasm for people, restaurants and dining. Darden Restaurants, Inc. Culinary and Beverage Excellence We are committed not only to continually improving and innovating in this critically important This is the Bottom Line part of our business, but also to redefining culinary and beverage excellence in casual dining. This is the BottomBottom LineLine (In this year’s Annual Report we’ll focus on our Culinary and Beverage Excellence strategic imperative.) 2002 Service and Hospitality Excellence Annual Report The restaurant business is a people business, and we intend to establish and achieve the industry’s very highest service and hospitality standards, as defined by our guests. SUPPORTING OUR STRATEGIC BUILDING BLOCKS ARE TWO KEY ENABLERS: Diversity We will create an environment that welcomes diversity, understands its implications and translates that understanding into appropriate systematic practices at every level of the organization. Technology Technology offers tremendous opportunities to directly benefit our guests, employees and suppliers. Darden Restaurants, Inc. We want leaders who know how to develop and take full advantage of those opportunities. 5900 Lake Ellenor Drive Orlando, Florida 32809 (407) 245-4000 www.darden.com TABLE OF CONTENTS Divisional Overviews fold-out This is the Bottom Line 1 Letter to Shareholders 10 Operations Overview 13 Financial Review 17 Corporate Responsibility 45 Board of Directors 48 2002 Annual Report Shareholder Information 49 Great Food Produces 1 Great Results in 2002 DARDEN RESTAURANTS This is the Bottom Line Business Description Divisional Overviews Darden Restaurants, Inc. is the largest publicly traded casual dining company in the world, serving more than Shareholder Information 300 million meals a year at 1,211 restaurants in 49 states across the United States and in Canada. The Company, ® Transfer Agent, Registrar and Darden Restaurants Foundation which operates four distinct restaurant concepts, has annual sales of $4.4 billion. The flagship brands, Red Lobster Dividend Payments Annual Report and Olive Garden®, are the market share leaders in their segments of casual dining, making Darden the only Wachovia Bank National Association To receive a copy of the 2002 Darden Restaurants 1525 West W.T. Harris Boulevard, 3C3 Foundation Annual Report, mail a request to the DICK RIVERA, Vice Chairman BRAD BLUM, Vice Chairman company in the industry to operate more than one restaurant company with sales exceeding $1.8 billion. Charlotte, NC 28288-1153 Foundation Administrator, Darden Restaurants, Inc., Bahama Breeze® and Smokey Bones® BBQ Sports Bar are Darden’s two newest concepts, and both were developed Phone: (800) 829-8432 P.O. Box 593330, Orlando, FL 32859-3330, or visit our Web site at www.darden.com. internally. Darden employs more than 133,000 individuals and is headquartered in Orlando, Florida. Address correspondence as appropriate to the attention of: The Company trades on the New York Stock Exchange under the symbol DRI. Address Changes Notice of Annual Meeting Stock Transfers The Annual Meeting of Shareholders will be held at Shareholder Services 10:00 a.m. Eastern Daylight Time, Thursday, September 19, 2002, at Gaylord Palms Resort, Independent Auditors 6000 W. Osceola Parkway, Kissimmee, FL 34746. KPMG LLP 111 North Orange Avenue Markets EDNA MORRIS, President DREW MADSEN, President Suite 1600 New York Stock Exchange Orlando, FL 32801 Stock Exchange Symbol: DRI Number of Number of Phone: (407) 423-3426 Red Lobster Restaurants 667 Olive Garden Restaurants 496 Total Sales $2.34 Billion Total Sales $1.86 Billion Web Site Addresses Founded in 1968, Red Lobster is Olive Garden is a family of local Form 10-K Report America’s most successful casual Average restaurants that is the leader in Average www.darden.com dining seafood restaurant com- Restaurant Sales $3.5 Million the highly competitive Italian Restaurant Sales $3.9 Million Shareholders may request a free copy of the Company’s 2002 Financial Highlights www.redlobster.com pany. It has led this segment of Market Share of segment of casual dining. As a Market Share of Form 10-K, including schedules but excluding exhibits, Darden Restaurants the industry since its inception Casual Dining Seafood 49% result of its successful reposition- Casual Dining Italian 30% by writing to Investor Relations, Darden Restaurants, Inc., www.olivegarden.com by continually evolving with the ing to remain relevant to today’s Fiscal Year Ended May 26, May 27, May 28, casual dining consumer, and now FY02 Same-Restaurant consumer, the 20-year-old com- FY02 Same-Restaurant P.O. Box 593330, Orlando, FL 32859-3330. tuscany.olivegarden.com (1,2) (1) (1,2) Sales Growth 6.2% Sales Growth 6.3% (In millions, except per share amounts) 2002 2001 2000 boasts record profits and 18 con- pany has posted record profits www.bahamabreeze.com Sales $4,368.7 $ 3,992.4 $ 3,675.5 secutive quarters of positive and 31 quarters of consecutive same-restaurant sales results. same-restaurant sales growth. Shareholder Reports/Investor Inquiries www.smokeybones.com Restaurant Operating Profit $ 984.1 $ 868.0 $ 783.9 Shareholders seeking information about Darden Restaurants Net Earnings after Tax $ 237.8 $ 197.0 $ 176.7 are invited to contact the Investor Relations Department at Company Address Net Earnings per Share (800) 832-7336. Recorded summaries of quarterly earnings Darden Restaurants, Inc. Basic $ 1.36 $ 1.10 $ 0.92 announcements and other Company news are available on 5900 Lake Ellenor Drive Diluted $ 1.30 $ 1.06 $ 0.89 the toll-free line. Shareholders may also request to receive, Orlando, FL 32809 Dividends per Share $ 0.053 $ 0.053 $ 0.053 free of charge, copies of the quarterly earnings releases. Phone: (407) 245-4000 Average Shares Outstanding Basic 174.7 179.6 192.8 Information may also be obtained by visiting the Company’s Mailing Address Diluted 183.5 185.6 197.8 Web site at www.darden.com. Annual reports, SEC filings, (1) Adjusted to reflect new accounting rules for sales incentives adopted in the fourth quarter of fiscal 2002. press releases, and other Company news are readily available Darden Restaurants, Inc. (2) After-tax restructuring credits of $1.6 million and $5.2 million were taken in 2002 and 2000, respectively, as the Company reversed portions on the Web site. P.O. Box 593330 of its 1997 restructuring liability. The liability related to a fiscal year 1997 restructuring and asset impairment charge for restaurant properties GARY HECKEL, President BOB MOCK, President Orlando, FL 32859-3330 that were identified as low performing. During 2000, an after-tax asset impairment charge of $1.6 million was taken related to additional write-downs of impaired properties. Number of Number of Bahama Breeze Restaurants 29 Smokey Bones Restaurants 19 Darden’s newest concept, After six years of operation, Total Sales $125.5 Million Total Sales $42.4 Million Smokey Bones BBQ Sports Bar, was Bahama Breeze has built an introduced in September 1999 exciting brand based on its and began a national expansion promise of a memorable Island in fiscal 2002. The restaurant vacation experience, with mixes great-tasting barbecue delicious Caribbean cuisine, with mountain lodge comfort hand-crafted drinks, live music and exciting sports action. and a relaxed atmosphere. Great Food and Beverage 49 Produce Great Results in 2002 Great Food and Beverage Produce Great Results And so do service, hospitality and atmosphere.