As filed with the Securities and Exchange Commission on September 24, 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):
September 24, 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.
------------
On September 24, 2003, the Company issued a news release
entitled "Darden Restaurants Reports First Quarter Earnings
Per Diluted Share of 40 Cents," 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 September 24, 2003
entitled "Darden Restaurants Reports
First Quarter Earnings Per Diluted
Share of 40 Cents."
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: September 24, 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 September 24, 2003, entitled
"Darden Restaurants Reports First Quarter Earnings Per
Diluted Share of 40 Cents."
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
September 24, 2003
4:30 PM EDT
DARDEN RESTAURANTS REPORTS FIRST QUARTER
EARNINGS PER DILUTED SHARE OF 40 CENTS
ORLANDO, FL, September 24 - Darden Restaurants, Inc. today reported quarterly
sales of $1.26 billion for the first quarter ended August 24, 2003, and earnings
per diluted share of 40 cents.
"This was a challenging quarter for Darden," said Joe Lee, Darden's Chairman and
Chief Executive Officer. "As we previously indicated, we did not expect growth
in diluted earnings per share this quarter. Outstanding financial performance at
Olive Garden, including solid same-restaurant sales growth despite strong sales
comparisons from the prior year, contributed greatly to our reported earnings.
However, crab cost increases and other developments at Red Lobster worked to
offset some of this benefit. Looking ahead to the second quarter, we had
expected to report modest same-restaurant sales and earnings growth. However,
due to sales trends below our expectations at some of our businesses thus far in
fiscal September, we now believe that second quarter diluted earnings per share
will fall short of prior year's results. We expect the second quarter diluted
earnings per share to be in the range of 15 to 18 cents. We reiterate our
expectations for diluted earnings per share growth of 8% to 12% this fiscal
year."
Also, Darden announced that Dick Rivera, its President and Chief Operating
Officer, has assumed additional responsibility as the President of Red Lobster
effective immediately. "Dick is a proven leader with great talent and has
committed himself to putting Red Lobster back on the path to strong, healthy
financial growth," said Lee.
Edna Morris, formerly President of Red Lobster, is leaving the Company to pursue
new career opportunities. "We appreciate her many contributions to Darden and
value her working with Dick to transition responsibilities smoothly," said Lee.
"We wish her the very best."
Highlights for the quarter ended August 24, 2003, include the following:
o Earnings after tax in the first quarter were $68.6 million, or 40 cents per
diluted share, on sales of $1.26 billion. Last year, earnings after tax
were $71.9 million, or 40 cents per diluted share, on sales of $1.17
billion.
-MORE-
-2-
o Total sales of $1.26 billion represent a 7.2% increase over prior year, and
establish a new quarterly record for Darden.
o Olive Garden reported its 36th consecutive quarter of same-restaurant sales
growth with a 3.9% increase.
o Red Lobster reported its 23rd consecutive quarter of same-restaurant sales
growth with a 1.1% increase.
o Same-restaurant sales for Olive Garden and Red Lobster would have been
approximately 0.5% higher but were adversely affected by two factors - this
year's shift of the Independence Day holiday from Thursday in 2002 to
Friday in 2003 and the power outage that impacted several states during
August.
o The Company continued its share repurchases buying back 1.4 million shares
of its common stock in the quarter.
Operating Highlights
OLIVE GARDEN'S first quarter sales of $547.4 million were 9.8% above prior year,
driven by revenue from 31 net new restaurants in operation versus last year and
a same-restaurant sales increase of 3.9%. This is the 36th consecutive quarter
of comparable-restaurant sales growth for Olive Garden and builds on a 4.8%
increase in the first quarter last year. The company's increased sales, combined
with lower food and beverage expense and restaurant labor costs as a percent of
sales, more than offset increased restaurant expenses as a percent of sales,
resulting in a record quarterly profit that also represents a strong
double-digit operating profit increase over last year. This quarter's total
sales, operating profit and return-on-sales were the highest for any quarter in
the company's 20-year history.
"It was a tremendous quarter for Olive Garden," said Drew Madsen, President of
Olive Garden. "We are extremely pleased with our performance, especially the
positive guest traffic we achieved this quarter. We launched a new menu,
promoted two new ravioli entrees that were very popular with our guests and
introduced some powerful new advertising. Additionally, our team continues to
deliver a great experience that delights our guests with a genuine Italian
dining experience and also differentiates us from our competitors."
RED LOBSTER'S first quarter sales of $633.9 million were 2.5% above prior year,
driven by revenue from 7 net new restaurants in operation versus last year and a
same-restaurant sales increase of 1.1%. This is the 23rd consecutive quarter of
comparable-restaurant sales growth for Red Lobster and builds on a 6.6% increase
in the first quarter last year. Red Lobster's total sales, however, were lower
than expected. Despite lower labor costs and selling, general, and
administrative expenses as a percent of sales, Red Lobster experienced increased
food and beverage costs, restaurant expenses, and depreciation as a percent of
sales. This led to a decline in operating profit versus last year.
-MORE-
-3-
"This was a disappointing quarter for Red Lobster," said Dick Rivera. "While
guests responded to the 'World of Crab' promotion featuring several different
crab entrees, sales and operating profit did not reach anticipated levels. And,
much of the reported sales increase was related to pricing on crab entrees,
which reflected the higher year-over-year cost of crab. Despite these results,
Red Lobster remains a strong brand with great consumer loyalty. We have a
dedicated and capable crew that is intent on improving the guest experience
while delivering solid sales and operating profit growth. I am looking forward
to working closely with the entire Red Lobster crew."
BAHAMA BREEZE opened two restaurants since the end of the first quarter, one in
Cherry Hill, NJ and the other in Towson, MD, bringing the total number in
operation to 36 restaurants. Two more openings are scheduled for this fiscal
year.
SMOKEY BONES opened five restaurants during the first quarter. In addition, the
company has opened four more restaurants since the end of the quarter, bringing
the total number in operation to 48 restaurants. During this fiscal year, 25 to
30 restaurants are expected to open.
Other Actions
Darden continued the buyback of its common stock, purchasing 1.4 million shares
in the first quarter. Since commencing its share repurchases in December 1995,
the Company has repurchased a total of 99.9 million shares under authorizations
totaling 115.4 million shares.
The Board of Directors also declared a cash dividend of 4 cents per share on the
Company's outstanding common stock. The dividend is payable on November 1, 2003
to shareholders of record at the close of business on October 10, 2003. Based on
this 4-cent semi-annual dividend declaration, the Company's indicated annual
dividend is 8 cents per share.
August 2003 Same-Restaurant Sales Results
Darden reported same-restaurant sales for the four-week August fiscal month
ended August 24, 2003. This period is the last month of Darden's fiscal 2004
first quarter.
Same-restaurant sales at Red Lobster were up 11% to 12% for fiscal August, which
reflected a 2% to 3% increase in guest counts and an 8% to 9% increase in check
average. The check average increase was a result of a 1% to 2% increase in
pricing and a 6% to 7% increase from menu mix changes. Last year, Red Lobster
had a 4% to 5% increase in same-restaurant sales during fiscal August.
Same-restaurant sales at Olive Garden were up approximately 6% for fiscal
August, which reflected a 3% to 4% increase in guest counts and a 2% to 3%
increase in check average. 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 a 3% to 4% increase in same-restaurant sales during fiscal
August.
The Company estimates that the power outage in several states during fiscal
August adversely affected August same-restaurant sales results at both Red
Lobster and Olive Garden by approximately 0.4%.
-MORE-
-4-
Darden Restaurants, Inc., headquartered in Orlando, FL, owns and operates over
1,280 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.
DARDEN RESTAURANTS, INC.
NUMBER OF RESTAURANTS
08/24/03 08/25/02
-------- --------
645 Red Lobster USA 638
31 Red Lobster Canada 31
------ ------------------ ------
676 Total Red Lobster 669
521 Olive Garden USA 490
6 Olive Garden Canada 6
------- ------------------- -------
527 Total Olive Garden 496
34 Bahama Breeze 30
44 Smokey Bones BBQ 21
1 Seasons 52 0
------- -------
1,282 Total Restaurants 1,216
-MORE-
-5-
DARDEN RESTAURANTS, INC.
FIRST QUARTER FY 2004 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
(Unaudited)
13 Weeks Ended
08/24/2003 08/25/2002
---------- ----------
Sales $1,259.7 $1,174.6
Net earnings $68.6 $71.9
Net earnings per share:
Basic $0.42 $0.42
Diluted $0.40 $0.40
Average number of common shares outstanding:
Basic 164.7 171.6
Diluted 170.5 180.0
-MORE-
-6-
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended
08/24/2003 08/25/2002
---------- ----------
Sales $1,259,689 $1,174,565
Costs and expenses:
Cost of sales:
Food and beverage 396,713 365,236
Restaurant labor 392,335 369,362
Restaurant expenses 190,822 169,504
Total cost of sales (1) 979,870 904,102
Selling, general and administrative 113,641 106,064
Depreciation and amortization 51,553 45,141
Interest, net 10,641 10,253
Total costs and expenses 1,155,705 1,065,560
Earnings before income taxes 103,984 109,005
Income taxes -35,390 -37,119
Net earnings $68,594 $71,886
Net earnings per share:
Basic $0.42 $0.42
Diluted $0.40 $0.40
Average number of common shares outstanding:
Basic 164,700 171,600
Diluted 170,500 180,000
(1) Excludes restaurant depreciation and
amortization as follows: $48,082 $41,823
-MORE-
-7-
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
08/24/2003 05/25/2003
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $96,522 $48,630
Receivables 41,737 29,023
Inventories 173,735 173,644
Prepaid expenses and other current assets 32,658 25,126
Deferred income taxes 51,194 49,206
Total current assets $395,846 $325,629
Land, buildings and equipment 2,191,119 2,157,132
Other assets 181,929 181,872
Total assets $2,768,894 $2,664,633
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $195,989 $175,991
Accrued payroll 81,122 85,975
Accrued income taxes 81,652 67,975
Other accrued taxes 37,860 35,069
Unearned revenues 66,687 72,698
Other current liabilities 218,917 202,201
Total current liabilities $682,227 $639,909
Long-term debt 656,874 658,086
Deferred income taxes 155,832 150,537
Other liabilities 20,304 19,910
Total liabilities $1,515,237 $1,468,442
Stockholders' equity:
Common stock and surplus $1,547,582 $1,525,957
Retained earnings 1,048,037 979,443
Treasury stock -1,280,767 -1,254,293
Accumulated other comprehensive income -11,638 -10,489
Unearned compensation -48,281 -42,848
Officer notes receivable -1,276 -1,579
Total stockholders' equity $1,253,657 $1,196,191
Total liabilities and
stockholders' equity $2,768,894 $2,664,633
-END-