As filed with the Securities and Exchange Commission on December 18, 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):
December 18, 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 December 18, 2003, the Company issued a news release
entitled "Darden Restaurants Reports Second Quarter Earnings
Per Diluted Share of 18 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 December 18,
2003, entitled "Darden Restaurants
Reports Second Quarter Earnings Per
Diluted Share of 18 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: December 18, 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 December 18, 2003, entitled "Darden
Restaurants Reports Second Quarter Earnings Per Diluted
Share of 18 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
December 18, 2003
4:30 p.m. EST
DARDEN RESTAURANTS REPORTS SECOND QUARTER
EARNINGS PER DILUTED SHARE OF 18 CENTS
ORLANDO, FL, December 18 - Darden Restaurants, Inc. today reported quarterly
sales of $1.14 billion for the second quarter ended November 23, 2003, and
earnings per diluted share of 18 cents.
"Earnings per diluted share of 18 cents were at the upper end of our guidance
for the quarter," said Joe Lee, Darden's Chairman and Chief Executive Officer.
"Once again, Olive Garden delivered outstanding financial performance with
impressive same-restaurant sales growth and set second-quarter records for
sales, operating profit, return on sales and return on capital. The quarter also
featured the continued expansion of Smokey Bones, which opened an additional
nine restaurants, and the completion of the planned introduction of lunch at
Bahama Breeze, which is an important element of its business building plan. Red
Lobster continued to face several challenges and has begun to take steps to
stabilize and improve the business. We are confident that Red Lobster will
regain momentum, helping Darden achieve the kind of strong financial performance
we have enjoyed historically. The current range of estimates of diluted earnings
per share for this fiscal year, which is $1.31 to $1.43, is relatively broad.
Given the uncertainty of the timing of Red Lobster's recovery and other factors,
we think that's appropriate."
Highlights for the quarter ended November 23, 2003, include the following:
o Earnings after tax in the second quarter were $31.3 million, or 18 cents
per diluted share, on sales of $1.14 billion. Last year, earnings after tax
were $37.5 million, or 21 cents per diluted share, on sales of $1.07
billion.
o Total sales of $1.14 billion represent a 6.6% increase over prior year.
o Olive Garden reported its 37th consecutive quarter of same-restaurant sales
growth with a 4.3% increase.
o The Company continued its share repurchase program, buying back 0.8 million
shares of its common stock in the quarter.
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Operating Highlights
OLIVE GARDEN'S second quarter sales of $518.5 million were 9.7% above prior
year, driven by a same-restaurant sales increase of 4.3% and revenue from 25 net
new restaurants in operation versus last year. This is the 37th consecutive
quarter of comparable-restaurant sales growth for Olive Garden and builds on a
3.5% increase in the second 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 and
depreciation as a percent of sales, resulting in a record quarterly operating
profit that also represents a strong double-digit increase over last year.
"This was a great quarter for Olive Garden," said Drew Madsen, President of
Olive Garden. "Our financial results in the areas of sales, operating profit,
return on sales and return on capital represent the best second quarter
performance in the history of Olive Garden. We also reported another quarter of
positive traffic growth due to our strong foundation of guest satisfaction and
the success of our recently introduced stuffed chicken entrees. I want to thank
our team at Olive Garden for their unrelenting focus on delighting our guests
with a genuine Italian dining experience."
RED LOBSTER'S second quarter sales of $545.1 million were 0.7% below prior year,
driven by a same-restaurant sales decrease of 3.1% that was partially offset by
revenue from 10 net new restaurants in operation versus last year. Red Lobster's
total sales were lower than expected. Despite lower food and beverage expenses
and restaurant labor costs as a percent of sales, Red Lobster experienced
increased restaurant expenses, selling, general, and administrative expenses,
and depreciation as a percent of sales. These factors led to a decline in
operating profit versus last year.
"Although we are disappointed with our second quarter sales and operating
profit," said Dick Rivera, President and Chief Operating Officer of Darden, "we
know Red Lobster is America's favorite place for seafood and we're intent on
rebuilding our financial performance. We are making progress enhancing the guest
experience in our restaurants and are looking forward to enhancing our
promotional messages as well. We recognize there is more work ahead of us and
that it will take time to accomplish all of our goals. However, our crews are
energized and focused, and we will continue to improve our marketing efforts,
our hospitality and our menu offerings in order to regain our guest count and
sales momentum."
BAHAMA BREEZE opened three restaurants during the second quarter bringing the
total number in operation to 37 restaurants. One more opening is scheduled for
this fiscal year. The company also completed the introduction of lunch to most
of the system during the quarter. This effort is expected to help build their
business and improve financial performance as they position themselves for
long-term success.
SMOKEY BONES opened nine restaurants during the second quarter, bringing the
year-to-date total to 14 openings. In addition, the company has opened three
more restaurants since the end of the quarter. As a result, Smokey Bones now has
56 restaurants in operation. During this fiscal year, 25 to 30 restaurants are
expected to open.
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Other Actions
Darden continued the buyback of its common stock, purchasing 0.8 million shares
in the second quarter. Since December 1995, the Company has repurchased a total
of 100.7 million shares under authorizations totaling 115.4 million shares.
November 2003 Same-Restaurant Sales Results
Darden reported same-restaurant sales for the four-week November fiscal month
ended November 23, 2003. This period is the last month of Darden's fiscal 2004
second quarter.
Same-restaurant sales at Olive Garden were up 8% to 9% for fiscal November,
which reflected a 6% to 7% 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% decrease from menu mix changes. Last year, Olive Garden
had an approximate 3% increase in same-restaurant sales during fiscal November.
Same-restaurant sales at Red Lobster were down 8% to 9% for fiscal November,
which reflected a 10% to 11% decrease in guest counts and a 2% to 3% increase in
check average. 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 10% to 11% increase in same-restaurant sales during fiscal November.
The Company estimates that this year's shift of Halloween from Thursday in 2002
to Friday in 2003 adversely affected November same-restaurant sales results at
both Olive Garden and Red Lobster by approximately 0.6%.
Darden Restaurants, Inc., headquartered in Orlando, FL, owns and operates over
1,300 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
11/23/03 11/24/02
-------- --------
649 Red Lobster USA 639
31 Red Lobster Canada 31
------ ------------------ ------
680 Total Red Lobster 670
526 Olive Garden USA 501
6 Olive Garden Canada 6
------- ------------------- -------
532 Total Olive Garden 507
37 Bahama Breeze 32
53 Smokey Bones BBQ 27
1 Seasons 52 0
------- -------
1,303 Total Restaurants 1,236
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DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
11/23/2003 11/24/2002 11/23/2003 11/24/2002
---------- ---------- ---------- ----------
Sales $1,142,543 $1,071,531 $2,402,232 $2,246,096
Costs and Expenses:
Cost of sales:
Food and beverage 346,200 330,954 742,913 696,190
Restaurant labor 375,614 353,774 767,949 723,136
Restaurant expenses 191,010 170,727 381,832 340,231
Total Cost of Sales (1) 912,824 855,455 1,892,694 1,759,557
Selling, general and administrative 120,320 103,197 233,961 209,261
Depreciation and amortization 52,048 45,930 103,601 91,071
Interest, net 10,725 10,729 21,366 20,982
Total Costs and Expenses 1,095,917 1,015,311 2,251,622 2,080,871
Earnings before Income Taxes 46,626 56,220 150,610 165,225
Income Taxes -15,373 -18,742 -50,763 -55,861
Net Earnings $31,253 $37,478 $99,847 $109,364
Net Earnings per Share:
Basic $0.19 $0.22 $0.61 $0.64
Diluted $0.18 $0.21 $0.58 $0.61
Average Number of Common Shares Outstanding:
Basic 164,900 170,900 164,800 171,300
Diluted 171,000 178,700 170,700 179,300
(1) Excludes restaurant depreciation and
amortization as follows: $48,443 $42,150 $96,525 $83,973
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DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
11/23/2003 5/25/2003
----------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $27,806 $48,630
Receivables 25,672 29,023
Inventories 256,997 173,644
Prepaid expenses and other current assets 24,736 25,126
Deferred income taxes 53,971 49,206
Total Current Assets $389,182 $325,629
Land, Buildings and Equipment 2,239,571 2,157,132
Other Assets 183,897 181,872
Total Assets $2,812,650 $2,664,633
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $167,535 $175,991
Short-term debt 70,900 --
Accrued payroll 83,155 85,975
Accrued income taxes 50,843 67,975
Other accrued taxes 34,761 35,069
Unearned revenues 64,894 72,698
Other current liabilities 222,455 202,201
Total Current Liabilities $694,543 $639,909
Long-term Debt 655,066 658,086
Deferred Income Taxes 160,980 150,537
Other Liabilities 20,693 19,910
Total Liabilities $1,531,282 $1,468,442
Stockholders' Equity:
Common stock and surplus $1,559,909 $1,525,957
Retained earnings 1,072,715 979,443
Treasury stock -1,295,038 -1,254,293
Accumulated other comprehensive income -9,544 -10,489
Unearned compensation -45,418 -42,848
Officer notes receivable -1,256 -1,579
Total Stockholders' Equity $1,281,368 $1,196,191
Total Liabilities and Stockholders' Equity $2,812,650 $2,664,633
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DARDEN RESTAURANTS, INC.
SECOND QUARTER FY 2004 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
11/23/2003 11/24/2002 11/23/2003 11/24/2002
---------- ---------- ---------- ----------
Sales $1,142.5 $1,071.5 $2,402.2 $2,246.1
Net Earnings $31.3 $37.5 $99.8 $109.4
Net Earnings per Share:
Basic $0.19 $0.22 $0.61 $0.64
Diluted $0.18 $0.21 $0.58 $0.61
Average Number of Common Shares Outstanding:
Basic 164.9 170.9 164.8 171.3
Diluted 171.0 178.7 170.7 179.3
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