================================================================================
UNITED STATES
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: September 22, 2004
(date of earliest event reported)
DARDEN RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 1-13666
Florida 59-3305930
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
5900 Lake Ellenor Drive, Orlando, Florida 32809
(Address of principal executive offices, including zip code)
(407) 245-4000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
================================================================================
Item 2.02 Results of Operations and Financial Condition.
Darden Restaurants, Inc. issued a news release dated September 22, 2004,
entitled "Darden Restaurants Reports First Quarter Diluted Earnings Per Share of
44 Cents," a copy of which is furnished herewith as Exhibit 99 to this Current
Report on Form 8-K.
The information in this Current Report on Form 8-K, including Exhibit 99 hereto,
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to
the liabilities of that section. The information in this Current Report on Form
8-K shall not be deemed to be incorporated by reference in any filing under the
Securities Act of 1933, as amended, or the Exchange Act, except as expressly set
forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
The following exhibit is being furnished with this Current Report:
Exhibit Number
(by reference to
Item 601 of
Regulation S-K) Description
99 Press Release dated September 22, 2004, entitled
"Darden Restaurants Reports First Quarter Diluted Net
Earnings Per Share of 44 Cents."
2
SIGNATURE
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.
DARDEN RESTAURANTS, INC.
By: /s/ Paula J. Shives
------------------------------------
Paula J. Shives
Senior Vice President, General Counsel and
Secretary
Date: September 22, 2004
3
EXHIBIT INDEX
Exhibit Number Description of Exhibit
99 Press Release dated September 22, 2004, entitled "Darden
Restaurants Reports First Quarter Diluted Net Earnings
Per Share of 44 Cents."
4
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 22, 2004
4:30 PM ET
DARDEN RESTAURANTS REPORTS FIRST QUARTER
DILUTED NET EARNINGS PER SHARE OF 44 CENTS
ORLANDO, FL, September 22 - Darden Restaurants, Inc. today reported sales of
$1.28 billion for the first quarter ended August 29, 2004, and quarterly diluted
net earnings per share of 44 cents, up 10% from prior year.
"We are pleased with this quarter's improved results," said Joe Lee, Chairman
and Chief Executive Officer of Darden Restaurants. "Despite the adverse effects
of Hurricane Charley and the Summer Olympics, we achieved solid earnings growth.
Olive Garden continues to perform well, Red Lobster and Bahama Breeze are making
progress in important areas and Smokey Bones continues its successful expansion.
We're focused on sustained brilliance with the basics. That means providing
outstanding service, great tasting food and a clean, comfortable and inviting
atmosphere in our restaurants. We know operating excellence and strong
leadership teams are what it takes to be the best in casual dining."
Highlights for the quarter ended August 29, 2004, include the following:
o Net earnings in the first quarter were $72.1 million, or 44 cents per
diluted share, on sales of $1.28 billion. Last year, net earnings were
$68.6 million, or 40 cents per diluted share, on sales of $1.26 billion.
o Total sales of $1.28 billion represent a 1.5% increase over prior year.
o Olive Garden reported its 40th consecutive quarter of U.S. same-restaurant
sales growth with a 2.8% increase.
o On August 11, the Company announced that Clarence Otis, Jr. would succeed
Joe Lee as Darden's CEO in December 2004. Lee will remain as Chairman of
the Board until his planned retirement in December 2005, when Otis is
expected to become Chairman.
o The Company also announced that Drew Madsen, now President of Olive Garden,
will become Darden's President and Chief Operating Officer in December
2004.
-MORE-
-2-
o The Company continued its share repurchases, buying back 2.9 million shares
of its common stock in the quarter.
Operating Highlights
OLIVE GARDEN'S first quarter sales of $580.5 million were 6.0% above prior year,
driven by revenue from 18 net new restaurants in operation versus last year and
a U.S. same-restaurant sales increase of 2.8%. This is the 40th consecutive
quarter of same-restaurant sales growth for Olive Garden and builds on a 3.9%
increase in the first quarter of last year. The company's increased sales,
combined with lower restaurant expenses and selling, general and administrative
expenses as a percentage of sales, more than offset increased labor costs,
resulting in a record quarterly profit that also represents a strong
double-digit operating profit increase over last year.
"This was a strong quarter for Olive Garden," said Drew Madsen, President of
Olive Garden. "Our financial results in the areas of operating profit and return
on sales were outstanding. We've delivered 10 straight years of same-restaurant
sales growth, and our goal is to deliver that kind of sustained excellence well
into the future. To accomplish that, our teams will continue to focus on
delighting our guests with a genuine Italian dining experience."
RED LOBSTER'S first quarter sales of $594.8 million were 6.2% below prior year,
reflecting a U.S. same-restaurant sales decrease of 7.6% that was partially
offset by revenue from an additional five net new restaurants in operation
versus last year. Profit margins per guest improved, as this year's lower food
and beverage costs and restaurant expenses more than offset higher labor costs
and selling, general and administrative expenses as a percent of sales.
Operating profits were slightly lower than last year, as expected.
"Red Lobster's new `Simply Great' operational discipline is having a positive
impact," said Kim Lopdrup, President of Red Lobster. "We achieved record guest
satisfaction scores during the quarter. We also earned higher profit margins per
guest because of greater efficiencies and reduced waste. While we have a great
deal more work to do, we are pleased that the operating performance of our
restaurants is improving rapidly. I am also delighted with how quickly our
senior leaders have become an effective team."
BAHAMA BREEZE continued to deliver strong sales improvement, driven by the
addition of the lunch daypart in most of the restaurants and in spite of
operating two fewer restaurants than in the first quarter of the prior year.
SMOKEY BONES operated 32 more restaurants than the prior year, including seven
restaurants that were opened during the first quarter. For the full fiscal year,
30 to 40 new restaurants are expected to open.
Other Actions
Darden continued the buyback of its common stock, purchasing 2.9 million shares
in the first quarter. Since commencing its share repurchases in December 1995,
the Company has repurchased a total of 112.2 million shares under authorizations
totaling 115.4 million shares.
-MORE-
-3-
August 2004 U.S. Same-Restaurant Sales Results
Darden reported same-restaurant sales for the four-week fiscal August ended
August 29, 2004. This period is the last month of Darden's fiscal 2005 first
quarter.
Same-restaurant sales at Olive Garden were down 2% to 3% for fiscal August as
expected, impacted by the company's decision not to advertise during the final
two weeks of the month during the Olympics. The decline reflected a 5% to 6%
decrease 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 an approximate 6%
increase in same-restaurant sales during fiscal August. The company estimates
that the 2004 Summer Olympics in August and the decision not to advertise during
the final two weeks of fiscal August adversely affected Olive Garden's
same-restaurant sales by approximately 2% to 3%.
Heavily affected by a shift in promotional strategy compared to last year,
same-restaurant sales at Red Lobster were down approximately 16% for fiscal
August. This reflected a 14% to 15% decline in guest counts and a 1% to 2%
decline in check average. The check average decrease was a result of
approximately a 0% to 1% increase in pricing and a 1% to 2% decline from menu
mix changes. Last year, Red Lobster had an 11% to 12% increase in
same-restaurant sales during fiscal August.
The Company estimates that Hurricane Charley, which occurred in fiscal August,
adversely affected August same-restaurant sales results at both Red Lobster and
Olive Garden by approximately 0.5% for a total sales impact at Darden of $1.5 to
$2.0 million.
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 $5.0 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.
-MORE-
-4-
DARDEN RESTAURANTS, INC.
NUMBER OF RESTAURANTS
08/29/04 08/24/03
-------- --------
650 Red Lobster USA 645
31 Red Lobster Canada 31
---- ------------------ ----
681 Total Red Lobster 676
539 Olive Garden USA 521
6 Olive Garden Canada 6
---- ------------------- ----
545 Total Olive Garden 527
32 Bahama Breeze 34
76 Smokey Bones 44
1 Seasons 52 1
---- ----
1,335 Total Restaurants 1,282
-MORE-
-5-
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended
8/29/2004 8/24/2003
Sales $ 1,278,644 $ 1,259,689
Costs and expenses:
Cost of sales:
Food and beverage 391,421 396,713
Restaurant labor 405,816 392,335
Restaurant expenses 193,214 190,822
Total cost of sales (1) $ 990,451 $ 979,870
Selling, general and administrative 114,580 113,641
Depreciation and amortization 52,760 51,553
Interest, net 10,964 10,641
Total costs and expenses $ 1,168,755 $ 1,155,705
Earnings before income taxes 109,889 103,984
Income taxes (37,764) (35,390)
Net earnings $ 72,125 $ 68,594
Net earnings per share:
Basic $ 0.46 $ 0.42
Diluted $ 0.44 $ 0.40
Average number of common shares
outstanding:
Basic 157,600 164,700
Diluted 163,200 170,500
(1) Excludes restaurant depreciation and
amortization as follows: $ 49,219 $ 48,082
-MORE-
-6-
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
8/29/2004 5/30/2004
ASSETS
Current assets:
Cash and cash equivalents $ 38,603 $ 36,694
Receivables 25,522 30,258
Inventories 217,989 198,781
Prepaid expenses and other current assets 27,803 25,316
Deferred income taxes 56,745 55,258
Total current assets $ 366,662 $ 346,307
Land, buildings and equipment 2,261,646 2,250,616
Other assets 181,123 183,425
Total assets $ 2,809,431 $ 2,780,348
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 164,698 $ 174,624
Short-term debt 17,800 14,500
Accrued payroll 89,427 103,327
Accrued income taxes 78,088 48,753
Other accrued taxes 40,273 38,440
Unearned revenues 65,091 75,513
Other current liabilities 233,401 228,324
Total current liabilities $ 688,778 $ 683,481
Long-term debt 652,672 653,349
Deferred income taxes 173,528 176,216
Other liabilities 22,077 21,532
Total liabilities $ 1,537,055 $ 1,534,578
Stockholders' equity:
Common stock and surplus $ 1,605,563 $ 1,584,115
Retained earnings 1,270,046 1,197,921
Treasury stock (1,544,882) (1,483,768)
Accumulated other comprehensive income
(loss) (10,369) (9,959)
Unearned compensation (47,190) (41,401)
Officer notes receivable (792) (1,138)
Total stockholders' equity $ 1,272,376 $ 1,245,770
Total liabilities and
stockholders' equity $ 2,809,431 $ 2,780,348
-MORE-
-7-
DARDEN RESTAURANTS, INC.
FIRST QUARTER FY 2005 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
(Unaudited)
13 Weeks Ended
8/29/2004 8/24/2003
Sales $ 1,278.6 $ 1,259.7
Net earnings $ 72.1 $ 68.6
Net earnings per share:
Basic $ 0.46 $ 0.42
Diluted $ 0.44 $ 0.40
Average number of common shares outstanding:
Basic 157.6 164.7
Diluted 163.2 170.5
-END-