As filed with the Securities and Exchange Commission on June 19, 2003.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 19, 2003
Darden Restaurants, Inc.
(Exact name of registrant as specified in its charter)
Florida 1-13666 59-3305930
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification No.)
5900 Lake Ellenor Drive, Orlando, Florida 32809
(Address of principal executive offices)
Registrant's telephone number, including area code:
(407) 245-4000
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events.
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On June 19, 2003, the Company issued a news release entitled
"Darden Restaurants Reports Annual and Fourth Quarter Earnings
Per Diluted Share," a copy of which is being filed herewith as
Exhibit 99.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Number
(by reference to
Item 601 of
Regulation S-K) Description
99 Press Release dated June 19, 2003
entitled "Darden Restaurants Reports
Annual and Fourth Quarter Earnings
Per Diluted Share."
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 19, 2003 DARDEN RESTAURANTS, INC.
By: /s/ Paula J. Shives
-----------------------------------
Paula J. Shives
Senior Vice President
General Counsel and Secretary
3
INDEX TO EXHIBITS
Exhibit Number Description of Exhibit
99 Press Release dated June 19, 2003, entitled "Darden
Restaurants Reports Annual and Fourth Quarter Earnings Per
Diluted Share."
4
EXHIBIT 99
DARDEN RESTAURANTS
Red Lobster(R)Olive Garden(R)Bahama Breeze(R)Smokey Bones(R)
www.darden.com
NEWS/INFORMATION
Corporate Relations
P.O. Box 593330
Orlando, FL 32859
Contacts:
(Analysts) Matthew Stroud (407) 245-6458
(Media) Jim DeSimone (407) 245-4567
FOR RELEASE
June 19, 2003
4:30 PM EDT
DARDEN RESTAURANTS REPORTS ANNUAL AND
FOURTH QUARTER EARNINGS PER DILUTED SHARE
ORLANDO, FL, June 19 - Darden Restaurants, Inc. today reported earnings per
diluted share for the fiscal year and fiscal fourth quarter ended May 25, 2003.
Earnings per diluted share were $1.31 for the year on earnings after tax of
$232.3 million. In fiscal 2002, earnings per diluted share were $1.30, including
after tax restructuring credits of $1.6 million (a $0.01 increase in diluted
earnings per share). Earnings per diluted share were 35 cents for the fourth
quarter, a 13% decline versus prior year, on earnings after tax of $61.1
million.
Darden Restaurants, the world's largest casual dining company, said full year
sales increased 6.6% to $4.7 billion. In the fourth quarter, sales increased
5.6% to $1.2 billion driven by new restaurant growth at each of Darden's
operating companies and comparable-restaurant sales gains at Red Lobster and
Olive Garden.
"We are clearly disappointed with our performance this year," said Joe Lee,
Darden's Chairman and Chief Executive Officer. "We failed to deliver results
consistent with our long-term objective, which is to create industry-leading
shareholder value. We did not respond as effectively as needed to the
competitive and other macro-economic challenges that arose this year. We are
more determined than ever to focus on the keys to sustained long-term success -
brilliance with the basics of operations and brand building excellence. We will
deliver delicious food and exceptional service to our guests and support that
with compelling creative messages. That is how we will create strong shareholder
value and realize our goal of being the best in casual dining, now and for
generations."
Highlights for the year and quarter ended May 25, 2003, include the following:
o Earnings after tax were $232.3 million, or $1.31 per diluted share for the
fiscal year, on sales of $4.7 billion. Last year, earnings per diluted
share were $1.30, including after tax restructuring credits of $1.6 million
(a $0.01 increase in diluted earnings per share).
o Earnings after tax in the fourth quarter were $61.1 million, or 35 cents
per diluted share, on sales of $1.2 billion. Last year, earnings after tax
were $72.9 million, or 40 cents per diluted share, on sales of $1.2
billion.
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o Olive Garden's same-restaurant sales increased 0.1% in the fourth quarter,
its 35th consecutive quarter of comparable-restaurant sales growth,
bringing Olive Garden's increase for the fiscal year to 2.2%. Olive Garden
also opened eight restaurants in the fourth quarter and 28 restaurants
during fiscal 2003.
o Red Lobster's same-restaurant sales increased 0.9% in the fourth quarter,
its 22nd consecutive quarter of comparable-restaurant sales growth,
bringing Red Lobster's increase for the fiscal year to 2.7%.
o Bahama Breeze opened two restaurants during the quarter to reach 34 total
restaurants in operation, and its sales for the full fiscal year exceeded
$137 million.
o Smokey Bones BBQ opened five restaurants during the quarter and, with a
total of 20 openings during the full fiscal year, more than doubled in size
to 39 restaurants in operation. Sales for Smokey Bones in fiscal 2003 were
$93 million.
o Darden opened Seasons 52(SM), a new test restaurant in Orlando, FL, this
fiscal year. Seasons 52 is a casually sophisticated fresh grill and wine
bar with seasonally inspired menus offering fresh ingredients to create
great tasting, nutritionally balanced meals lower in calories than
comparable restaurant meals.
o Darden purchased 5.8 million shares of its common stock in the fourth
quarter, bringing the total number of shares repurchased during the year to
10.7 million.
Operating Highlights
OLIVE GARDEN'S fourth quarter sales of $513.1 million were 5.9% above prior
year, driven primarily by revenue from 28 new restaurants opened during fiscal
2003 and a same-restaurant sales increase of 0.1%. This is the 35th consecutive
quarter of comparable-restaurant sales growth for Olive Garden and builds on a
5.3% increase in the fourth quarter last year. Olive Garden had record total
sales for the fiscal year of $2.0 billion, up 6.8% from last year, and its
average annual sales per restaurant were $3.9 million. The company's sales
gains, combined with lower food and beverage expense and restaurant labor costs
as a percent of sales, more than offset increased restaurant and marketing
expenses, resulting in a record annual operating profit and return on sales.
"We achieved solid growth in total sales and operating profit in a difficult
year," said Drew Madsen, President of Olive Garden. "The combination of a
challenging external environment and the same-restaurant sales success we
enjoyed last year made it difficult to achieve stronger same-restaurant sales
growth this year. Our team stayed focused on delivering a great guest
experience, brand building innovation and balanced cost management to produce
strong financial results for the year. Our promise of providing a genuine
Italian dining experience continues to resonate with our guests and
differentiates us from our competitors."
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RED LOBSTER'S fourth quarter sales of $644.7 million were 2.8% above prior year,
driven by a 0.9% same-restaurant sales increase and revenue from 11 new
restaurants opened during fiscal 2003. This is the 22nd consecutive quarter of
comparable-restaurant sales growth for Red Lobster and builds on a 3.7% increase
in the fourth quarter last year. Red Lobster's total sales for the fiscal year
were $2.4 billion, up 4.1% from last year, and its average annual sales per
restaurant were $3.7 million - record levels for Red Lobster. Nevertheless, Red
Lobster's total sales were lower than expected. Despite lower food and beverage
costs as a percent of sales, Red Lobster experienced increased expenses
particularly restaurant labor costs, restaurant expenses, selling, general and
administrative expenses and depreciation as a percent of sales. This led to a
decline in operating profit versus last year.
"Our operating profit performance was very disappointing," said Edna Morris,
President of Red Lobster. "It was a challenging year with difficult comparisons
and several of the actions we undertook did not produce the desired results.
Still, we have a powerful brand and our guest satisfaction measures remain at
high levels. Given our great crew's ability and commitment to deliver
outstanding food and hospitality, we are confident we can deliver solid sales
and operating profit growth."
BAHAMA BREEZE opened two restaurants during the fourth quarter, bringing the
total number in operation to 34 restaurants. The most recent restaurant openings
are located in Cleveland, OH and Seattle, WA. Bahama Breeze delivered annual
sales of over $137 million in fiscal 2003 and the company expects to open four
restaurants in fiscal 2004.
SMOKEY BONES opened five restaurants during the fourth quarter and had 39 units
in operation at the end of the fiscal year. In addition, the company has opened
two more restaurants, located in Dickson City, PA, and Douglasville, GA, since
the end of the fiscal year. Annual sales for Smokey Bones were $93 million in
fiscal 2003, and it plans to open 25 to 30 restaurants during fiscal 2004.
Other Actions
Darden continued the buyback of its common stock, purchasing 5.8 million shares
in the fourth quarter. Since commencing its repurchase program in December 1995,
the Company has repurchased a total of 98.5 million shares under authorizations
totaling 115.4 million shares.
The Company's Annual Meeting of Shareholders will be held on September 25, 2003
at the Gaylord Palms Orlando Resort Hotel in Kissimmee, FL. The record date for
shareholders entitled to vote at the Annual Meeting is July 28, 2003.
May 2003 Same-Restaurant Sales Results
Darden reported same-restaurant sales for the four-week May fiscal month ended
May 25, 2003. This period is the last month of Darden's fiscal 2003 fourth
quarter.
Same-restaurant sales at Olive Garden were flat for fiscal May, which reflected
a 3% to 4% increase in check average and a 3% to 4% decrease in guest counts.
The check average increase was a result of a 2% to 3% increase in pricing and a
0% to 1% increase from menu mix changes. Last year, Olive Garden had an 8% to 9%
increase in same-restaurant sales during fiscal May.
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Same-restaurant sales at Red Lobster were down 2% to 3% for fiscal May, which
reflected a 2% to 3% increase in check average and a 5% to 6% decrease in guest
counts. The check average increase was a result of a 1% to 2% increase in
pricing and a 1% to 2% increase from menu mix changes. Last year, Red Lobster
had a 6% to 7% increase in same-restaurant sales during fiscal May.
Fiscal 2004 Outlook
Darden expects combined same-restaurant sales growth in fiscal 2004 of between
1% and 3% for Red Lobster and Olive Garden. This near-term goal is below the
Company's long-term growth target of 3% to 5%. The Company also expects to build
at least 60 new restaurants in fiscal 2004, which would put it at the upper end
of the 3% to 5% long-term new unit growth range it has historically targeted.
"Given the current state of our business and present economic conditions, we
believe diluted earnings per share growth in the range of 8% to 12% is
appropriate for fiscal 2004," said Joe Lee. "However, in a normalized economic
environment, we continue to believe we can achieve long-term annual diluted
earnings per share growth of at least 15%."
The Company also noted that its fiscal 2004 is a 53-week fiscal year; typically
the additional operating week would be expected to generate approximately 5 to 6
cents in diluted earnings per share. Darden expects that investments in
operating programs to strengthen the business for long-term success will offset
much of the financial benefit from the additional operating week.
Darden Restaurants, Inc., headquartered in Orlando, FL, owns and operates over
1,270 Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones and Seasons 52
restaurants with annual sales of $4.7 billion.
Forward-looking statements in this news release, if any, are made under the Safe
Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Certain important factors could cause results to differ materially from those
anticipated by the forward-looking statements, including the impact of changing
economic or business conditions, the impact of competition, the availability of
favorable credit and trade terms, the impact of changes in the cost or
availability of food and real estate, government regulation, construction costs,
weather conditions and other factors discussed from time to time in reports
filed by the Company with the Securities and Exchange Commission.
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DARDEN RESTAURANTS, INC.
NUMBER OF RESTAURANTS
05/25/03 05/26/02
-------- --------
642 Red Lobster USA 636
31 Red Lobster Canada 31
--- ------------------ ---
673 Total Red Lobster 667
518 Olive Garden USA 490
6 Olive Garden Canada 6
--- ------------------- ---
524 Total Olive Garden 496
34 Bahama Breeze 29
39 Smokey Bones BBQ 19
1 Seasons 52 0
--- ---
1,271 Total Restaurants 1,211
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DARDEN RESTAURANTS, INC.
FOURTH QUARTER FY 2003 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
(Unaudited)
13 Weeks Ended 52 Weeks Ended
5/25/2003 5/26/2002 5/25/2003 5/26/2002
--------- --------- --------- ---------
Sales $1,227.5 $1,161.9 $4,655.0 $4,366.9
Net Earnings $61.1 $72.9 $232.3 $237.8
Net Earnings per Share:
Basic $0.36 $0.42 $1.36 $1.36
Diluted $0.35 $0.40 $1.31 $1.30
Average Number of Common Shares
Outstanding:
Basic 168.0 172.7 170.3 174.7
Diluted 173.4 182.2 177.4 183.5
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DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended 52 Weeks Ended
5/25/2003 5/26/2002 5/25/2003 5/26/2002
--------- --------- --------- ---------
Sales $1,227,492 $1,161,949 $4,654,971 $4,366,911
Costs and Expenses:
Cost of sales:
Food and beverage 388,644 369,278 1,449,162 1,384,481
Restaurant labor 386,590 353,282 1,485,046 1,373,416
Restaurant expenses 181,042 165,768 700,182 625,710
Total Cost of Sales (1) 956,276 888,328 3,634,390 3,383,607
Selling, general and administrative 119,415 111,613 439,376 420,149
Depreciation and amortization 52,015 43,393 191,218 165,829
Interest, net 10,946 10,213 42,597 36,585
Restructuring credit -358 -299 -358 -2,568
Total Costs and Expenses 1,138,294 1,053,248 4,307,223 4,003,602
Earnings before Income Taxes 89,198 108,701 347,748 363,309
Income Taxes -28,088 -35,752 -115,488 -125,521
Net Earnings $61,110 $72,949 $232,260 $237,788
Net Earnings per Share:
Basic $0.36 $0.42 $1.36 $1.36
Diluted $0.35 $0.40 $1.31 $1.30
Average Number of Common Shares Outstanding:
Basic 168,000 172,700 170,300 174,700
Diluted 173,400 182,200 177,400 183,500
(1) Excludes restaurant depreciation and
amortization as follows: $48,244 $40,526 $177,127 $155,837
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DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
5/25/2003 5/26/2002
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ASSETS
Current Assets:
Cash and cash equivalents $48,630 $152,875
Short-term investments -- 9,904
Receivables 29,023 29,089
Inventories 173,644 172,413
Assets held for disposal -- 3,868
Prepaid expenses and other current assets 25,126 23,076
Deferred income taxes 49,206 52,127
Total Current Assets $325,629 $443,352
Land, Buildings and Equipment 2,157,132 1,926,947
Other Assets 181,872 159,437
Total Assets $2,664,633 $2,529,736
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $175,991 $160,064
Accrued payroll 85,975 87,936
Accrued income taxes 67,975 68,504
Other accrued taxes 35,069 30,474
Unearned revenues 72,698 56,632
Other current liabilities 202,201 197,404
Total Current Liabilities $639,909 $601,014
Long-term Debt 658,086 662,506
Deferred Income Taxes 150,537 117,709
Other Liabilities 19,910 19,630
Total Liabilities $1,468,442 $1,400,859
Stockholders' Equity:
Common stock and surplus $1,525,957 $1,474,054
Retained earnings 979,443 760,684
Treasury stock -1,254,293 -1,044,915
Accumulated other comprehensive income -10,489 -12,841
Unearned compensation -42,848 -46,108
Officer notes receivable -1,579 -1,997
Total Stockholders' Equity $1,196,191 $1,128,877
Total Liabilities and Stockholders' Equity $2,664,633 $2,529,736
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