Red Lobster 2014 Annual Report Download - page 21

Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Darden
2014 Annual Report 19
FORWARD-LOOKING STATEMENTS
Statements set forth in or incorporated into this report regarding the
expected net increase in the number of our restaurants, U.S. same-restaurant
sales, total sales growth, diluted net earnings per share growth, and capital
expenditures in fiscal 2015, 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” 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 Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the
year ended May 25, 2014, which are summarized as follows:
• Our ability to achieve the strategic plan to enhance shareholder value,
including the sale of Red Lobster;
• Our ability to respond to actions by activist shareholders, which can
be costly and time-consuming, disrupt our operations and divert the
attention of our management;
• Any potential proxy contest for the election of directors at our annual
meeting, which could distract our management, divert our resources
and, absent Board action, trigger a change of control under our
indebtedness;
• Food safety and food-borne illness concerns throughout the
supply chain;
• Litigation, including allegations of illegal, unfair or inconsistent
employment practices;
• Unfavorable publicity, or a failure to respond effectively to
adverse publicity;
• 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, data
privacy, menu labeling, immigration requirements and taxes;
• Labor and insurance costs;
• 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;
• Our inability or failure to execute a comprehensive business continuity
plan following a major natural disaster such as a hurricane or
manmade disaster, including terrorism;
• Health concerns arising from food-related pandemics, outbreaks
of flu viruses or other diseases;
• Intense competition, or an insufficient focus on competition and the
consumer landscape;
• 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 developing or acquiring new
dining brands;
• Our plans to expand our smaller brands Bahama Breeze, Seasons 52
and Eddie V’s, and the testing of other new business ventures, that
have not yet proven their long-term viability;
• A lack of suitable new restaurant locations or a decline in the quality
of the locations of our current restaurants;
• Higher-than-anticipated costs to open, close, relocate or
remodel restaurants;
• A failure to identify and execute innovative marketing and customer
relationship tactics, ineffective or improper use of social media or other
marketing initiatives, and increased advertising and marketing costs;
• A failure to recruit, develop and retain effective leaders or the loss or
shortage of key personnel, or an inability to adequately monitor and
respond to employee dissatisfaction;
• A failure to address cost pressures, including rising costs for
commodities, health care and utilities used by our restaurants, and a
failure to effectively deliver cost management activities and achieve
economies of scale in purchasing;
• The impact of shortages or interruptions in the delivery of food and
other products from third-party vendors and suppliers;
• Adverse weather conditions and natural disasters;
• Volatility in the market value of derivatives we use to hedge
commodity prices;
• Economic and business factors specific to the restaurant industry
and other general macroeconomic factors including unemployment,
energy prices and interest rates that are largely out of our control;
• Disruptions in the financial markets that may impact consumer
spending patterns, affect the availability and cost of credit and
increase pension plan expenses;
• Risks associated with doing business with franchisees, business
partners and vendors in foreign markets;
• Failure to protect our service marks or other intellectual property;
• Impairment of the carrying value of our goodwill or other
intangible assets;
• A failure of our internal controls over financial reporting and future
changes in accounting standards; and
• An inability or failure to recognize, respond to and effectively manage
the accelerated impact of social media.
Any of the risks described above or elsewhere in this report or our other
filings with the SEC 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. Therefore, the above is not intended to be a complete discussion
of all potential risks or uncertainties.