Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 11-K
 ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. [NO FEE REQUIRED].

For the fiscal year ended April 30, 2018.
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. [NO FEE REQUIRED].
For the transition period from              to             
Commission File Number 1-13666
 
A.
Full title of the plan and the address of the plan, if different from that of the issuer named below:
Darden Savings Plan
 
B.
Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
DARDEN RESTAURANTS, INC.
1000 Darden Center Drive
Orlando, Florida 32837






DARDEN SAVINGS PLAN
Table of Contents
 
  
Page
 
 
Report of Independent Registered Public Accounting Firm
1

 
 
Statements of Net Assets Available for Benefits
2

 
 
Statements of Changes in Net Assets Available for Benefits
4

 
 
Notes to Financial Statements
6

 
 
Supplemental Schedules
 
 
 
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
15





Report of Independent Registered Public Accounting Firm
The Benefit Plans Committee as Administrator of the
Darden Savings Plan:

Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of the Darden Savings Plan (the Plan) as of April 30, 2018 and 2017, the related statements of changes in net assets available for benefits for the years then ended, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of April 30, 2018 and 2017, and the changes in net assets available for benefits for the years then ended in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan 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 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.
Accompanying Supplemental Information
The accompanying Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of April 30, 2018 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ KPMG LLP

We have served as the Plan’s auditor since 1997.
Orlando, Florida
October 19, 2018








DARDEN SAVINGS PLAN
Statement of Net Assets Available for Benefits
April 30, 2018
 
 
 
Participant
directed
funds
 
ESOP Funds
(Note 7)
 
Total
Assets:
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
Investments, at fair value
 
$
544,667,044

 
$
471,614

 
$
545,138,658

Common stock of Darden Restaurants, Inc. – allocated
 
71,375,075

 
179,695,615

 
251,070,690

Common stock of Darden Restaurants, Inc. – unallocated
 

 
20,056,831

 
20,056,831

Total investments
 
616,042,119

 
200,224,060

 
816,266,179

Receivables:
 
 
 
 
 
 
Employer contributions
 
2,959,729

 

 
2,959,729

Accrued dividends and interest
 
472,886

 
1,358,245

 
1,831,131

Notes receivable from Participants
 
18,634,126

 

 
18,634,126

Total receivables
 
22,066,741

 
1,358,245

 
23,424,986

Total assets
 
638,108,860

 
201,582,305

 
839,691,165

Liabilities:
 
 
 
 
 
 
ESOP loans
 

 
1,852,314

 
1,852,314

Interest payable
 

 
1,731

 
1,731

Total liabilities
 

 
1,854,045

 
1,854,045

Net assets available for benefits
 
$
638,108,860

 
$
199,728,260

 
$
837,837,120

 
 
 
 
 
 
 
See accompanying notes to financial statements.

2



DARDEN SAVINGS PLAN
Statement of Net Assets Available for Benefits
April 30, 2017
 
 
 
Participant
directed
funds
 
ESOP Funds
(Note 7)
 
Total
Assets:
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
Investments, at fair value
 
$
463,171,104

 
$
1,243,853

 
$
464,414,957

Common stock of Darden Restaurants, Inc. – allocated
 
61,369,087

 
173,222,875

 
234,591,962

Common stock of Darden Restaurants, Inc. – unallocated
 

 
28,123,861

 
28,123,861

Total investments
 
524,540,191

 
202,590,589

 
727,130,780

Receivables:
 
 
 
 
 
 
Employer contributions
 
1,798,740

 

 
1,798,740

Accrued dividends and interest
 
404,457

 
1,339,425

 
1,743,882

Notes receivable from Participants
 
16,275,100

 

 
16,275,100

Total receivables
 
18,478,297

 
1,339,425

 
19,817,722

Total assets
 
543,018,488

 
203,930,014

 
746,948,502

Liabilities:
 
 
 
 
 
 
ESOP loans
 

 
2,480,314

 
2,480,314

Interest payable
 

 
1,242

 
1,242

Total liabilities
 

 
2,481,556

 
2,481,556

Net assets available for benefits
 
$
543,018,488

 
$
201,448,458

 
$
744,466,946

See accompanying notes to financial statements.


3



DARDEN SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended April 30, 2018
 
 
 
Participant
directed
funds
 
ESOP Funds
(Note 7)
 
Total
Additions to net assets attributed to:
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
Net appreciation in fair value of investments
 
$
44,071,222

 
$
17,097,579

 
$
61,168,801

Dividends and interest
 
12,014,060

 
5,663,969

 
17,678,029

Net investment income
 
56,085,282

 
22,761,548

 
78,846,830

Notes receivable from Participants activity during the year:
 
 
 
 
 
 
Interest
 
774,008

 

 
774,008

Total notes receivable from Participants activity
 
774,008

 

 
774,008

Contributions:
 
 
 
 
 
 
Participants
 
47,172,502

 

 
47,172,502

Employer
 
23,824,572

 

 
23,824,572

Total contributions
 
70,997,074

 

 
70,997,074

 
 
 
 
 
 
 
Receipt of Assets for Cheddar's Merger
 
9,338,130

 

 
9,338,130

Total additions
 
137,194,494

 
22,761,548

 
159,956,042

Deductions from net assets attributed to:
 
 
 
 
 
 
Benefits paid to participants
 
(52,208,113
)
 
(13,104,361
)
 
(65,312,474
)
Interest expense
 

 
(30,495
)
 
(30,495
)
Administrative expenses
 
(965,106
)
 
(277,793
)
 
(1,242,899
)
Transfers between funds
 
11,069,097

 
(11,069,097
)
 

Total deductions
 
(42,104,122
)
 
(24,481,746
)
 
(66,585,868
)
 
 
 
 
 
 
 
Net increase (decrease)
 
$
95,090,372

 
$
(1,720,198
)
 
$
93,370,174

Net assets available for benefits:
 
 
 
 
 
 
Beginning of year
 
543,018,488

 
201,448,458

 
744,466,946

End of year
 
$
638,108,860

 
$
199,728,260

 
$
837,837,120

See accompanying notes to financial statements.

4



DARDEN SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended April 30, 2017
 
 
 
Participant
directed
funds
 
ESOP Funds
(Note 7)
 
Total
Additions to net assets attributed to:
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
Net appreciation in fair value of investments
 
$
63,147,325

 
$
58,149,738

 
$
121,297,063

Dividends and interest
 
9,402,643

 
5,686,939

 
15,089,582

Net investment income
 
72,549,968

 
63,836,677

 
136,386,645

Notes receivable from Participants activity during the year:
 
 
 
 
 
 
Interest
 
643,414

 

 
643,414

Total notes receivable from Participants activity
 
643,414

 

 
643,414

Contributions:
 
 
 
 
 
 
Participants
 
39,141,363

 

 
39,141,363

Employer
 
12,012,787

 

 
12,012,787

Total contributions
 
51,154,150

 

 
51,154,150

Total additions
 
124,347,532

 
63,836,677

 
188,184,209

Deductions from net assets attributed to:
 
 
 
 
 
 
Benefits paid to participants
 
(51,472,760
)
 
(14,908,360
)
 
(66,381,120
)
Interest expense
 

 
(21,013
)
 
(21,013
)
Administrative expenses
 
(1,187,380
)
 
(164,020
)
 
(1,351,400
)
Transfers between funds
 
33,014,603

 
(33,014,603
)
 

Total deductions
 
(19,645,537
)
 
(48,107,996
)
 
(67,753,533
)
 
 
 
 
 
 
 
Net increase
 
$
104,701,995

 
$
15,728,681

 
$
120,430,676

Net assets available for benefits:
 
 
 
 
 
 
Beginning of year
 
438,316,493

 
185,719,777

 
624,036,270

End of year
 
$
543,018,488

 
$
201,448,458

 
$
744,466,946

See accompanying notes to financial statements.

5


DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2018 and 2017

 
(1)
Description of the Plan
The following description of the Darden Savings Plan (the Plan) provides only general information. Participants should refer to official Plan documents and the summary plan description for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan sponsored by Darden Restaurants, Inc. (Company or Darden). The Plan was originally effective as of June 1, 1973, but was most recently amended and restated effective as of January 1, 2016 and has been subsequently amended. The Plan is subject to applicable provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The assets of the Plan are held and invested through the Darden Savings Plan Trust (the Trust). The Plan covers certain employees of the Company’s operating and administrative subsidiaries, and their divisions and affiliates who meet the Plan’s age and service requirements.
Participants are permitted to defer into the Plan on both an “after-tax” and “before-tax” basis. The Internal Revenue Code (the Code) limits the amount of before-tax contributions that can be made to the Plan each year. The limit for Plan participants under age 50 was $18,500 in 2018 and $18,000 in 2017. Participants who were at least age 50 or older during the year were permitted to make an additional “catch-up contribution” of $6,000 in 2018 and 2017.
Effective December 31, 2017, the Cheddar’s 401(k) Plan was merged into the Plan. All balances transferred from the Cheddar’s 401(k) Plan to the Plan were automatically invested in the Plan’s Qualified Default Investment Alternative (the applicable Vanguard Target Retirement Fund). Effective January 1, 2018, active participants of the Cheddar’s 401(k) Plan were generally eligible to continue participating in the Plan so long as they satisfied the Plan’s definition of “Qualified Employee.”
Employee Contributions
Qualified employees who are at least 21 years of age may immediately begin making before-tax and after-tax contributions to the Plan upon commencement of employment. Generally, qualified employees may contribute 1% to 25% of eligible compensation to the Plan. Plan participants age 50 or older, who make maximum before-tax contributions to the Plan, may generally make an additional catch-up contribution.
Employer Contributions
Generally, qualified employees who are at least age 21 and complete a year of service are eligible for Company Matching Contributions. The following groups of salaried qualified employees are also generally eligible for a Retirement Plus Contribution (RPC): (i) employees hired on or after June 1, 2008 who are at least age 21 and complete a year of service; (ii) employees hired before June 1, 2008 who made a one-time irrevocable election under the Retirement Income Plan for Darden Restaurants, Inc. (RIP) to forego accruing cash balance benefits as of October 1, 2008; and (iii) employees who were actively accruing benefits under the RIP on December 31, 2014.
Company Matching Contributions
The Company will make a variable matching contribution ranging from 25% to 120% of an employee’s contributions, up to the first 6% of eligible compensation contributed to the Plan. Company Matching Contributions are contributed to the Plan on a quarterly basis. Company Matching Contributions can be funded through the ESOP component of the Plan, the non-ESOP component of the Plan, or a combination of both. Company Matching Contributions are invested in Darden common stock through the ESOP portion of the Plan or in accordance with participant investment elections through the non-ESOP portion of the Plan.
DSP Advantage Bonus and DSP Advantage Matching Allocations
Prior to January 1, 2009, the Plan made DSP Advantage Bonus and DSP Advantage Matching Allocations to certain restaurant management and Restaurant Support Center administrative employees that had at least five years of service with the Company. Contributions were made in the form of Darden common stock through the ESOP portion of the Plan.
DSP Retirement Plus Contribution
Eligible employees need not make contributions to the Plan to be eligible to receive RPCs. RPCs are made on a quarterly basis and equal 1.5% of eligible compensation. RPCs can be funded through the ESOP component of the Plan, the non-ESOP component of the Plan, or a combination of both. RPCs are invested in Darden common stock through the ESOP portion of the Plan or in accordance with participant investment elections through the non-ESOP portion of the Plan.
Distributions and In-Service Withdrawals

6


DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2018 and 2017

Active employees may take regular, hardship and DSP Advantage withdrawals from the Plan, subject to certain limitations prescribed by the Plan.
Upon termination of employment, participants are entitled to receive a distribution of their entire vested account balance. The vested portion of a participant’s account will automatically be distributed in a lump sum distribution at termination if the vested balance of a participant’s account is $1,000 or less. Terminated participants who have a vested account balance greater than $1,000 may elect either to receive a lump sum distribution or to leave their account in the Plan until attainment of age 65. The Plan charges a quarterly fee to terminated participants who leave their accounts in the Plan.
Vesting
Each participant is 100% vested in all employee contributions to the Plan and DSP Advantage Allocations, including earnings on all such amounts. Company Matching Contributions and RPC allocations are vested at a rate of 5% for each fiscal quarter beginning with the participant’s fifth quarter of service. An employee is fully vested after completion of 24 fiscal quarters of vesting service (except in the event of retirement, severance, divestiture or death) based on a participant’s years of service and is forfeited if a participant leaves prior to completing such vesting service requirements.
Employee Stock Ownership Plan (ESOP) Fund
The Plan purchased Company stock held in the Darden ESOP Fund (Note 7) using the proceeds of the ESOP loans. There are currently two ESOP loans outstanding payable to the Company to fund such purchases. These ESOP loans are secured by a pledge of the purchased Company stock. As ESOP loan repayments are made, the ESOP Trustee releases the leveraged shares. The Plan then uses these released shares to fund certain Company Matching Contributions and certain RPCs, which are then allocated to eligible participants’ ESOP accounts.
Dividends are also automatically reinvested in participants’ ESOP accounts unless a participant has elected to receive such dividends in cash. Cash dividends on unallocated shares of Company stock can be used to repay promissory notes, pay Plan expenses, or fund the RPCs. Participants are able to immediately transfer ESOP funds credited to their ESOP accounts to any of the Plan’s other investment funds. However, amounts may not be transferred from any of the other investment funds into the ESOP Fund.
Plan Administration
Wells Fargo Institutional Retirement and Trust (Trustee), a business unit of Wells Fargo Bank, N.A., serves as trustee and recordkeeper of the Plan. Wells Fargo Bank, N.A. is wholly-owned by Wells Fargo & Company.
Each participant is entitled to exercise voting rights attributable to the common stock of the Company shares allocated to his or her account and is notified prior to the time that such rights are to be exercised. The Trustee will vote any allocated shares for which instructions have not been given by a participant and any unallocated shares in the same proportion as votes received.
Additionally, as of March 19, 2015, Newport Trust (formally known as Evercore Trust) was appointed as the independent fiduciary and investment manager for the Company Stock Fund held in the plan. Newport Trust will act as a fiduciary within the meaning of Section 3(21) of ERISA and an investment manager within the meaning of Section 3(38) of ERISA.

(2)
Summary of Significant Accounting Policies

(a)Basis of Presentation
The financial statements of the Plan are prepared under the accrual-basis method of accounting in accordance with U.S. generally accepted accounting principles.

(b)Investments
The Plan’s investments include funds that invest in various types of investment securities and in various companies within various markets. Investment securities are exposed to several risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Plan’s financial statements and schedule.
As of April 30, 2018, 33% of the Plan’s investments are in the common stock of the Company. Accordingly, changes in the value of the Company’s common stock could have a greater effect on the Plan’s financial statements than other Plan investments.


7


DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2018 and 2017

(c)Notes Receivable from Participants
Notes receivable from Participants are recorded at their unpaid principal balance plus any accrued but unpaid interest. Participants may borrow from their vested account as follows: a minimum of $1,000 up to a maximum equal to the lesser of $50,000, minus the highest outstanding loan balance in the preceding 12 months even if repaid; 50% of their vested account balance; or the vested balance in the participant’s account excluding the Participant’s ESOP and RPC accounts. The loan amount may not result in loan repayments that exceed 50% of the participant’s 13 week average net take-home pay. Loan repayment terms generally may not exceed 5 years, unless the Participant receives a principal residence loan, in which case the loan repayment term can be up to 15 years. The loans are secured by the balance in the participant’s account and bear market rates of interest. Principal and interest are paid through payroll deductions and may be repaid in full at any time without penalty. As of April 30, 2018, interest rates ranged from 4.25% to 9.50% and loans mature through March 28, 2033.

(d)Use of Estimates
The preparation of financial statements, in accordance with U.S. generally accepted accounting principles, requires the Plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the reported amounts of additions to and deductions from those net assets during the reporting period. Actual results could differ from those estimates.

(e) Application of New Accounting Standards
The Plan has not adopted any new accounting standards in the current plan year. Other applicable accounting standards that have been issued by the Financial Accounting Standards Board or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

(3)
Forfeitures
Forfeitures of nonvested Company contributions to the Plan can be used in the following order of priority, to: (i) pay Plan expenses, (ii) reinstate previously forfeited amounts to rehired employees, (iii) be applied to Company Matching Contributions, (iv) to correct errors or resolve Plan claims, or (v) be allocated to participants’ Plan accounts. During the 2018 and 2017 Plan years, $689,719 and $1,032,327, respectively, of forfeitures were used to pay administrative expenses of the Plan. Forfeited funds were not used for any other reason during Plan years 2018 and 2017. Additionally, as of April 30, 2018 and 2017 forfeitures available for future use totaled $252,461 and $16,404, respectively.

(4)
Choice of Investments
As of April 30, 2018, all contributions except those made through the ESOP component of the Plan may be directed to 19 basic investment alternatives: Columbia Trust Stable Government I-0 Fund, DFA US Small Cap Portfolio, TS&W Collective/International Large Cap Equity Fund, Vanguard Institutional Index Fund, Vanguard Target Retirement 2060 Fund, Vanguard Target Retirement 2055 Fund, Vanguard Target Retirement 2050 Fund, Vanguard Target Retirement 2045 Fund, Vanguard Target Retirement 2040 Fund, Vanguard Target Retirement 2035 Fund, Vanguard Target Retirement 2030 Fund, Vanguard Target Retirement 2025 Fund, Vanguard Target Retirement 2020 Fund, Vanguard Target Retirement 2015 Fund, Vanguard Institutional Target Retirement Income Fund, Vanguard Total Bond Market Index, Vanguard Extended Market Index Fund, Vanguard Total International Stock Index, and Company Common Stock. Certain Company Matching Contributions and certain RPC are automatically invested in the Darden ESOP Fund; however, participants may set up a separate automatic investment fund election to diversify their Company match (or RPC if applicable) to other investment options in the Plan.

(5)
Fair Value Measurement
Plan investments are recorded at fair value. Short-term investments are stated at cost, which approximates fair value. Shares of common stock are valued at closing market prices and shares of mutual funds are valued at quoted market prices, which represent the net asset value of shares held by the mutual fund at year end.
Investments in common collective trusts are valued using a Readily Determinable Fair Value (RDFV) based on the fair value of the underlying securities in which the account is invested. The RDFV is used if the fair value per share is determined and published and is the basis for current transactions. There are currently no redemption restrictions or unfunded commitments on these investments.
Purchases and sales of securities are recorded on a trade-date basis. Dividend income is recorded on the ex-dividend date. Interest income, net realized and unrealized gains or losses, and administrative expenses are recorded on the accrual basis. The

8


DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2018 and 2017

cost of investment securities sold is determined on the weighted average basis. Deposits and withdrawals are made at fair value determined as of the end of the business day of the transaction. The ESOP loan is stated at cost, which approximates fair value because the loan bears interest at rates commensurate with loans of similar credit quality and duration as of year-end. The fair values of receivables and interest payable approximate their carrying amounts due to their short duration.
The following table summarizes the fair values of financial instruments measured at fair value on a recurring basis at April 30, 2018:
 
 
Fair value
of assets
at April 30,
2018
 
Quoted prices
in active
markets for
identical assets
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
Darden common stock
 
$
271,127,521

 
$
271,127,521

 
$

 
$

Short-term investments
 
1,324,685

 
1,324,685

 

 

Mutual funds
 
465,111,406

 
465,111,406

 

 

Common collective trust
 
78,702,567

 

 
78,702,567

 

Total
 
$
816,266,179

 
$
737,563,612

 
$
78,702,567

 
$

 
 
The following table summarizes the fair values of financial instruments measured at fair value on a recurring basis at April 30, 2017:
 
 
Fair value
of assets
at April 30,
2017
 
Quoted prices
in active
markets for
identical assets
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
Darden common stock
 
$
262,715,823

 
$
262,715,823

 
$

 
$

Short-term investments
 
2,967,626

 
2,967,626

 

 

Mutual funds
 
415,532,476

 
415,532,476

 

 

Common collective trust
 
45,914,855

 

 
45,914,855

 

Total
 
$
727,130,780

 
$
681,215,925

 
$
45,914,855

 
$

    
For the years ended April 30, 2018 and 2017, there were no investments classified as level 3 nor were there any transfers in or out of levels 1, 2, or 3.

(6)
Common Stock of Darden Restaurants, Inc.
At April 30, 2018 and 2017, the fair value of the shares held in non-ESOP Fund participant directed accounts was $71,375,075 (768,631 shares) and $61,369,087 (720,379 shares), respectively. For further information on the Company, participants should refer to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

(7)
ESOP Funds
The Plan previously entered into several ESOP loan transactions and borrowed money from the Company to purchase shares of Company stock. These ESOP loans are secured by pledges of the purchased Company stock. The ESOP Trustee holds the purchased shares (also referred to as leveraged shares) in a designated ESOP Fund, along with some cash held in short-term investments. As ESOP loan repayments are made, the ESOP Trustee releases these shares. The Plan may use these released shares to fund Company Matching Contributions and RPCs, which are then allocated to eligible participants’ ESOP accounts. Dividends are also automatically reinvested in participants’ ESOP accounts unless a participant has elected to receive such dividends in cash. Participants are able to immediately transfer ESOP funds credited to their ESOP accounts to any of the Plan’s other investment funds. However, amounts may not be transferred from any of the other investment funds into the ESOP Fund. Shares used to fund Company contributions reduce the net assets of the non-participant directed portion of the ESOP fund and increase the net assets of the participant directed funds. These contributions are included as transfers between funds on the accompanying statements of changes in net assets available for benefits.
At April 30, 2018 and 2017, the Darden ESOP Fund consists of 2,151,114 and 2,363,502 shares, respectively, of Darden's common stock. Of the total shares held by the Darden ESOP Fund, 1,935,124 shares at April 30, 2018 and 2,033,371 shares at

9


DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2018 and 2017

April 30, 2017 of Darden's common stock have been allocated to individual participant accounts. The remaining 215,990 shares at April 30, 2018 and 330,131 shares at April 30, 2017 of Darden's common stock, which are held by the ESOP Trustee, are unallocated (suspense) shares reserved for future Company Matching Contributions or RPCs. At April 30, 2018, the fair value of the 215,990 unallocated Company shares was $20,056,831 and the fair value of the 1,935,124 allocated shares was $179,695,615. At April 30, 2017, the fair value of the 330,131 unallocated Company shares was $28,123,861 and the fair value of the 2,033,371 allocated shares was $173,222,875. Cash dividends on unallocated shares of Company stock can be used to repay promissory notes, pay Plan expenses, or fund the RPCs.
The Darden ESOP Fund has two promissory notes payable to the Company, with outstanding principal balances of $896,360 (Original Loan) and $955,954 (Additional Loan) as of April 30, 2018 and $1,424,360 and $1,055,954 as of April 30, 2017. The notes bear interest at variable rates payable on a monthly, bi-monthly, or quarterly basis at the discretion of the Company. As of April 30, 2018, the interest rates on the notes were 1.8956% and 2.3416%, respectively. As of April 30, 2017, the interest rates on the notes were 0.9122% and 1.13122%, respectively. The Original Loan has no required principal payments on the remaining note balance until its maturity date on December 15, 2019. The Additional Loan requires a $100,000 annual principal payment over three years starting December 15, 2015, a $200,000 principal payment due on December 15, 2018 and the remaining outstanding balance is due at maturity on December 31, 2018. Any or all of the principal may be prepaid at any time. For the years ended April 30, 2018 and 2017, the Darden ESOP Fund made principal payments of $628,000 and $943,540, respectively.

10


DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2018 and 2017

Information about the net assets and significant components of the changes in net assets relating to the ESOP Funds as of and for the years ended April 30, 2018 and 2017 is presented in the following tables:
ESOP Funds Statement of Net Assets Available for Benefits
April 30, 2018
 
 
Non-participant
 Directed
 
Participant
 Directed
 
Total
Assets:
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
Investments, at fair value
 
$

 
$
471,614

 
$
471,614

Common stock of Darden Restaurants, Inc – allocated
 

 
179,695,615

 
179,695,615

Common stock of Darden Restaurants, Inc. – unallocated
 
20,056,831

 

 
20,056,831

Total investments
 
20,056,831

 
180,167,229

 
200,224,060

Receivables:
 
 
 
 
 
 
Accrued dividends and interest
 
137,654

 
1,220,591

 
1,358,245

Total receivables
 
137,654

 
1,220,591

 
1,358,245

Total assets
 
20,194,485

 
181,387,820

 
201,582,305

Liabilities:
 
 
 
 
 
 
ESOP loans
 
1,852,314

 

 
1,852,314

Interest payable
 
1,731

 

 
1,731

Total liabilities
 
1,854,045

 

 
1,854,045

Net assets available for benefits
 
$
18,340,440

 
$
181,387,820

 
$
199,728,260

 
 
 
 
 
 
 
ESOP Funds Statement of Net Assets Available for Benefits
April 30, 2017
 
 
Non-participant
 Directed
 
Participant
 Directed
 
Total
Assets:
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
Investments, at fair value
 
$
188

 
$
1,243,665

 
$
1,243,853

Common stock of Darden Restaurants, Inc. – allocated
 

 
173,222,875

 
173,222,875

Common stock of Darden Restaurants, Inc. – unallocated
 
28,123,861

 

 
28,123,861

Total investments
 
28,124,049

 
174,466,540


202,590,589

Receivables:
 
 
 
 
 
 
Accrued dividends and interest
 
184,998

 
1,154,427

 
1,339,425

Total receivables
 
184,998

 
1,154,427

 
1,339,425

Total assets
 
28,309,047

 
175,620,967

 
203,930,014

Liabilities:
 
 
 
 
 
 
ESOP loans
 
2,480,314

 

 
2,480,314

Interest payable
 
1,242

 

 
1,242

Total liabilities
 
2,481,556

 

 
2,481,556

Net assets available for benefits
 
$
25,827,491

 
$
175,620,967

 
$
201,448,458

 
 


 
 
 
 


11


DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2018 and 2017

ESOP Funds Statement of Changes in Net Assets Available for Benefits
Year ended April 30, 2018
 
 
Non-participant
 Directed
 
Participant
 Directed
 
Total
Additions to net assets attributed to:
 
 
 
 
 
 
Net appreciation in fair value of investments
 
$
2,053,891

 
$
15,043,688

 
$
17,097,579

Dividends and interest
 
698,051

 
4,965,918

 
5,663,969

Total additions
 
2,751,942

 
20,009,606

 
22,761,548

 
 
 
 
 
 
 
Deductions from net assets attributed to:
 
 
 
 
 
 
Benefits paid to participants
 

 
(13,104,361
)
 
(13,104,361
)
Interest expense
 
(30,495
)
 

 
(30,495
)
Administrative expenses
 
(219,225
)
 
(58,568
)
 
(277,793
)
Transfers between funds
 
(9,989,273
)
 
(1,079,824
)
 
(11,069,097
)
Total deductions
 
(10,238,993
)
 
(14,242,753
)
 
(24,481,746
)
 
 
 
 
 
 
 
Net (decrease) increase
 
$
(7,487,051
)
 
$
5,766,853

 
$
(1,720,198
)
Net assets available for benefits:
 
 
 
 
 
 
Beginning of year
 
25,827,491

 
175,620,967

 
201,448,458

End of year
 
$
18,340,440

 
$
181,387,820

 
$
199,728,260

ESOP Funds Statement of Changes in Net Assets Available for Benefits
Year ended April 30, 2017
 
 
Non-participant
 Directed
 
Participant
 Directed
 
Total
Additions to net assets attributed to:
 
 
 
 
 
 
Net appreciation in fair value of investments
 
$
8,518,456

 
$
49,631,282

 
$
58,149,738

Dividends and interest
 
984,973

 
4,701,966

 
5,686,939

Total additions
 
9,503,429

 
54,333,248

 
63,836,677

 
 
 
 
 
 
 
Deductions from net assets attributed to:
 
 
 
 
 
 
Benefits paid to participants
 

 
(14,908,360
)
 
(14,908,360
)
Interest expense
 
(21,013
)
 

 
(21,013
)
Administrative expenses
 
(19,011
)
 
(145,009
)
 
(164,020
)
Transfers between funds
 
(12,154,303
)
 
(20,860,300
)
 
(33,014,603
)
Total deductions
 
(12,194,327
)
 
(35,913,669
)
 
(48,107,996
)
 
 
 
 
 
 
 
Net (decrease) increase
 
$
(2,690,898
)
 
$
18,419,579

 
$
15,728,681

Net assets available for benefits:
 
 
 
 
 
 
Beginning of year
 
28,518,389

 
157,201,388

 
185,719,777

End of year
 
$
25,827,491

 
$
175,620,967

 
$
201,448,458


(8)
Party-in-Interest Transactions
Certain Plan investments are in common stock of the Company and money market funds managed by the Trustee, and therefore, these transactions qualify as party-in-interest transactions. However, such transactions qualify for prohibited transaction exemptions. The Company pays the Trustee’s administrative and trustee fees. Such fees, inclusive of fees paid by plan forfeitures and fees paid by terminated participants used to cover plan expenses, were $1,113,374 and $1,032,327 for the years ended April 30, 2018 and 2017, respectively.

12


DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2018 and 2017

Certain Plan assets are loans to participants who are employees of the Company; therefore, these transactions qualify as party-in-interest transactions. However, such transactions qualify for prohibited transaction exemptions. Terminated participants that elect to leave their accounts in the Plan are required to pay quarterly fees; therefore, these transactions also qualify as party-in-interest transactions. However, such transactions qualify for prohibited transaction exemptions. Fees paid by terminated participants were $276,968 and $191,345 for the years ended April 30, 2018 and 2017, respectively.

(9)
Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for plan benefits per the accompanying financial statements to Form 5500:
 
 
2018
 
2017
Net assets available for benefits per the accompanying financial statements
 
$
837,837,120

 
$
744,466,946

Notes receivable from Participants – deemed distributions
 
(823,754
)
 
(576,629
)
Net assets available for benefits per Form 5500
 
$
837,013,366

 
$
743,890,317


The following is a reconciliation of total deductions to net assets, net, per the accompanying financial statements to Form 5500:
 
 
2018
 
2017
Total deductions per the accompanying financial statements
 
$
66,585,868

 
$
67,753,533

Deemed distributed notes receivable from Participants offset by total distributions
 
247,126

 
43,864

Total deductions per Form 5500
 
$
66,832,994

 
$
67,797,397

    
Amounts allocated to deemed distributions of notes receivable from Participants are recorded as a receivable in the accompanying financial statements and recorded as an expense on Form 5500.

A note receivable from a Participant is deemed distributed during the plan year for the Form 5500 under the provisions of the Code section 72(p) and the Treasury Regulation section 1.72(p) if the note receivable is treated as a note receivable solely of the participant’s individual account and the participant has discontinued payment of the note receivable as of the end of the year. However, in accordance with U.S. generally accepted accounting principles, for the accompanying financial statements the note receivable balance is still considered an outstanding note receivable until the note receivable obligation has been satisfied and is not treated as an actual distribution until such time the participant separates from employment and the participant’s vested account balance is fully distributed.

(10)
Tax Status
The Plan obtained a determination letter on June 23, 2017, in which the Internal Revenue Service (IRS) stated that the Plan, as restated effective January 1, 2016, was in compliance with the applicable requirements of the Code. Although the Plan has been amended since receiving the determination letter, the Company believes that the Plan currently is designed and being operated in compliance with the applicable requirements of the Code, and therefore, the Plan qualifies under Sections 401(a) and 4975(e)(7) and the related Trust is tax exempt as of April 30, 2018. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
U.S. generally accepted accounting principles require Plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of April 30, 2018 there were no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are no audits for any tax periods in progress. The Plan Administrator believes it is no longer subject to income tax examinations for plan years ended through April 30, 2015.

(11)
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of the Employee Retirement Income Security Act of 1974. In the event of Plan termination, no further contributions shall be made to the Plan by either the Company or the

13


DARDEN SAVINGS PLAN
Notes to Financial Statements
April 30, 2018 and 2017

participants, participants would become fully vested in their employer contributions and the related Plan Trust would be used exclusively for the benefit of participants and beneficiaries after the payment of liquidation expenses. Any unallocated leveraged shares in the ESOP Fund would be sold to the Company or on the open market. The proceeds of such sale would be used to satisfy any outstanding acquisition loan and the balance of any funds remaining would be allocated to each participant's ESOP account based on the proportion that each such participant's ESOP account balance bears in relation to the total of all ESOP account balances.

(12)
Subsequent Events
There have been no other subsequent events through the issuance of these financial statements on October 19, 2018.


14



DARDEN SAVINGS PLAN
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
April 30, 2018
 
Issuer
 
Face amount
or number
of units
 
Cost
 
Current
value
Darden common stock *, **
 
2,919,745

 
$
51,269,904

 
$
271,127,521

Columbia Trust Stable Government I-0 Fund
 
3,834,400

 
42,643,051

 
43,328,717

DFA US Small Cap Portfolio
 
1,142,717

 
37,219,787

 
40,703,592

TS&W Collective/International Large Cap Equity Fund
 
3,392,329

 
34,001,613

 
35,373,850

Vanguard Institutional Index Fund
 
454,503

 
72,579,474

 
109,785,283

Vanguard Target Retirement 2060 Fund
 
137,258

 
3,015,867

 
3,272,231

Vanguard Target Retirement 2055 Fund
 
566,473

 
12,201,170

 
13,504,718

Vanguard Target Retirement 2050 Fund
 
1,340,283

 
27,632,937

 
31,898,730

Vanguard Target Retirement 2045 Fund
 
2,054,903

 
41,382,319

 
48,845,037

Vanguard Target Retirement 2040 Fund
 
1,237,223

 
25,291,895

 
29,186,080

Vanguard Target Retirement 2035 Fund
 
1,929,638

 
38,498,176

 
44,999,156

Vanguard Target Retirement 2030 Fund
 
971,984

 
19,905,919

 
22,394,500

Vanguard Target Retirement 2025 Fund
 
1,491,899

 
30,058,502

 
33,970,544

Vanguard Target Retirement 2020 Fund
 
589,173

 
12,048,506

 
13,209,265

Vanguard Target Retirement 2015 Fund
 
325,217

 
6,524,760

 
7,112,487

Vanguard Institutional Target Retirement Income Fund
 
212,538

 
4,278,558

 
4,527,063

Vanguard Total Bond Market Index
 
2,147,696

 
23,286,359

 
22,357,512

Vanguard Extended Market Index
 
393,503

 
26,223,249

 
33,384,779

Vanguard Total International Stock Index
 
195,168

 
5,412,342

 
5,960,429

Short-term Investment Fund*
 
1,324,685

 
1,324,685

 
1,324,685

Notes receivable from Participants outstanding – interest rates ranging from 4.25% – 9.50% with varying maturities*
 
3,785

 

 
18,634,126

Total
 


 
 
 
834,900,305

*
Party-in-interest
**
Includes unallocated shares held in the Darden ESOP Fund as collateral for the promissory notes
See accompanying report of independent registered public accounting firm.


15



EXHIBIT INDEX
 
Exhibit
Number
 
Description of Exhibit
23
 

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Darden Savings Plan has duly caused this Annual Report to be signed on its behalf by the Benefit Plans Committee (as Plan Fiduciary and administrator of the financial aspects of the Darden Savings Plan), by the undersigned hereunto duly authorized.
 
 
 
 
By:
Benefit Plans Committee,
 
 
 
 
as Plan Fiduciary and administrator
 
 
 
 
of the financial aspects of
 
 
 
 
the Darden Savings Plan
 
 
 
 
Dated:
October 19, 2018
 
By:
/s/ Julie Griffin
 
 
 
 
Julie Griffin, Chairperson
 
 
 
 
Benefit Plans Committee
 
 
 
 
Darden Restaurants, Inc.