As filed with the Securities and Exchange Commission on March 20, 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):
March 20, 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 March 20, 2003, the Company issued a news release entitled
"Darden Restaurants Reports Third Quarter Diluted Earnings Per
Share of 35 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 March 20, 2003
entitled "Darden Restaurants Reports
Third Quarter Diluted Earnings Per
Share of 35 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: March 20, 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 March 20, 2003, entitled "Darden
Restaurants Reports Third Quarter Diluted Earnings Per Share
of 35 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
March 20, 2003
4:30 PM EST
DARDEN RESTAURANTS REPORTS THIRD QUARTER
DILUTED EARNINGS PER SHARE OF 35 CENTS
ORLANDO, FL., Mar. 20 - Darden Restaurants, Inc. today reported record quarterly
sales of $1.18 billion for the fiscal third quarter ended February 23, 2003, and
earnings per diluted share of 35 cents, a 3% decline from prior year.
"We are disappointed with our performance this quarter," said Joe Lee, Darden's
Chairman and Chief Executive Officer. "We achieved strong sales and profit
growth last year, and some of the actions we took to build on this performance,
did not meet expectations. Unanticipated workers' compensation and public
liability expenses and severe weather also adversely affected our performance.
We are re-focusing the efforts of all of our companies on the keys to sustained
long-term success - brilliance with the basics of operations, and brand building
excellence. Our goals are to deliver delicious food and exceptional service to
our guests in a warm and friendly atmosphere; this will reinforce their
emotional connection to and trust in our terrific combination of proven and
emerging brands. This is the path to once again create industry-leading
shareholder value and achieve our goal of being the best in casual dining, now
and for generations."
Highlights for the quarter ended February 23, 2003, included the following:
o Earnings after tax in the third quarter were $61.8 million, or 35 cents per
diluted share, on sales of $1.18 billion. Last year, earnings after tax
were $66.2 million, or 36 cents per diluted share, on sales of $1.12
billion.
o Total sales of $1.18 billion for the quarter represent a 5.1% increase over
prior year, and establish a new third quarter record for Darden.
o Red Lobster reported its 21st consecutive quarter of same-restaurant sales
growth with a 1.2% increase.
o Olive Garden reported its 34th consecutive quarter of same-restaurant sales
growth with a 0.3% increase.
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o Same-restaurant sales results for Red Lobster and Olive Garden would have
been approximately two percentage points higher this quarter but were
adversely affected by two factors - a shift in the Thanksgiving holiday,
which was observed in Darden's fiscal third quarter this year but in the
second quarter last year, and more severe winter weather than last year.
Each factor impacted sales by approximately one percentage point.
o Earnings results were also negatively impacted by unanticipated worker's
compensation and insurance costs, higher than expected utility expense,
increased marketing expense in response to the challenging economic and
competitive environment and higher incremental pre-opening expense versus
prior year due to an increase in new restaurant openings.
o The Company continued its share repurchase program, buying back 1.7 million
shares of its common stock in the quarter.
Operating Highlights
OLIVE GARDEN'S third quarter sales grew 5.7% from prior year to $505.4 million,
driven primarily by its 28 net new restaurants in operation versus last year.
Olive Garden achieved its 34th consecutive quarter of same-restaurant sales
growth with a 0.3% increase on top of last year's 9.8% same-restaurant sales
growth. Nine new restaurants with Olive Garden's Tuscan Farmhouse design were
opened during the quarter. The company's sales, a third quarter record, combined
with lower food and beverage expense and restaurant labor costs as a percent of
sales, to more than offset increased restaurant and marketing expense to deliver
record third quarter operating profit.
"We achieved solid growth in total sales and operating profit in a difficult
environment," said Drew Madsen, President of Olive Garden. "Severe winter
weather and a weak economy hindered our same restaurant sales growth, but our
team stayed focused on delivering a great guest experience, brand building
innovation and balanced cost management to produce strong financial results for
the quarter. Our promise of providing a genuine Italian dining experience
continues to resonate with our guests and differentiate us from our
competitors."
RED LOBSTER'S third quarter sales of $620.6 million were a 2.3% increase from
the prior year, driven by nine additional restaurants in operation versus prior
year and a 1.2% increase in same-restaurant sales. The increase extended Red
Lobster's string of comparable sales gains to 21 consecutive quarters. However,
Red Lobster's total sales were lower than planned. As a result, restaurant labor
costs, restaurant expenses, and selling, general and administrative expenses
each increased as a percent of sales, leading to a decline in operating profit
versus last year.
"We are disappointed with our performance this quarter," said Edna Morris,
President of Red Lobster. "It was a challenging period with tough comparisons
from prior year and many of our investments did not produce the results we
anticipated. However, our crews continue to deliver outstanding food and
hospitality to our guests and external measures show the dining experience
continues to improve. The fundamental strength of our brand and quality of our
crew demonstrates we have the necessary tools to help us achieve solid sales and
operating profit growth in the future."
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BAHAMA BREEZE has opened three restaurants this fiscal year and two more
restaurants, located in Cleveland and Seattle, are scheduled to open during the
fourth quarter.
SMOKEY BONES opened seven new restaurants during the quarter. In addition, two
more restaurants have opened since the end of the quarter, one in Boca Raton and
the other in Indianapolis. Year-to-date, Smokey Bones has opened 17 new
restaurants. In fiscal year 2003, at least 20 restaurants are expected to open,
more than doubling the number open at the end of fiscal 2002.
Other Actions
The Board of Directors also today declared a regular semi-annual cash dividend
of 4 cents per share on the Company's outstanding common stock. The dividend is
payable on May 1, 2003 to shareholders of record at the close of business on
April 10, 2003.
Darden continued its buyback of common stock, purchasing 1.7 million shares in
the third quarter. Cumulatively, since the initial authorization of its
repurchase program in December 1995, the Company has repurchased 92.7 million
shares, and it has approximately 22.7 million shares remaining under current
authorizations.
After the end of the third quarter, Darden opened a new test restaurant in
Orlando called Seasons 52(SM). It is a casually sophisticated fresh grill and
wine bar with seasonally inspired menus offering the freshest ingredients to
create great tasting, nutritionally balanced entrees that are lower in calories
than comparable restaurant meals.
February 2003 Same-Restaurant Sales Results
Darden also reported same-restaurant sales for the four-week February fiscal
month ended February 23, 2003. This period is the last month of the Company's
fiscal 2003 third quarter. February's sales and traffic at both Olive Garden and
Red Lobster were affected adversely by approximately 2.5 percentage points as a
result of more severe weather than last year across much of the nation.
Same-restaurant sales at Olive Garden were up 1% for the month, reflecting a 3%
to 4% increase in check average and a 2% to 3% decline in guest traffic. 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. Same-restaurant sales at Olive Garden
during February last year increased 6% to 7%.
Same-restaurant sales at Olive Garden were up 1% for the month, reflecting a 3%
to 4% increase in check average and a 2% to 3% decline in guest traffic. 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. Same-restaurant sales at Olive Garden
during February last year increased 6% to 7%.
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Same-restaurant sales at Red Lobster were down 2% to 3% for the month,
reflecting a 4% increase in check average and a 6% to 7% decline in guest
traffic. The check average increase was a result of a 1% to 2% increase in
pricing and a 2% to 3% increase from menu mix changes. Same-restaurant sales at
Red Lobster during February last year increased 12% to 13%.
Darden Restaurants, Inc., headquartered in Orlando, FL, owns and operates over
1,250 Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones restaurants with
annual sales of $4.4 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
2/23/03 2/24/02
------- -------
641 Red Lobster USA 631
31 Red Lobster Canada 32
---- ----
672 Total Red Lobster 663
510 Olive Garden USA 482
6 Olive Garden Canada 6
----- -----
516 Total Olive Garden 488
32 Bahama Breeze 26
34 Smokey Bones 16
---- -----
1,254 Total Restaurants 1,193
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DARDEN RESTAURANTS, INC.
THIRD QUARTER FY 2003 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
2/23/2003 2/24/2002 2/23/2003 2/24/2002
--------- --------- --------- ---------
Sales $1,181.4 $1,124.5 $3,427.5 $3,205.0
Net Earnings (1) $61.8 $66.2 $171.2 $164.8
Net Earnings per Share (1):
Basic $0.36 $0.38 $1.00 $0.94
Diluted $0.35 $0.36 $0.96 $0.90
Average Number of Common Shares
Outstanding:
Basic 170.7 175.0 171.1 175.4
Diluted 177.5 184.4 178.7 183.8
Note:
(1) Earnings before restructuring credit were as
follows:
Earnings before Restructuring Credit $61.8 $66.2 $171.2 $163.4
Earnings per Share before Restructuring Credit:
Basic $0.36 $0.38 $1.00 $0.93
Diluted $0.35 $0.36 $0.96 $0.89
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DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
2/23/2003 2/24/2002 2/23/2003 2/24/2002
--------- --------- --------- ---------
Sales $1,181,383 $1,124,472 $3,427,479 $3,204,962
Costs and Expenses:
Cost of sales:
Food and beverage 364,328 350,310 1,060,518 1,015,204
Restaurant labor 375,320 358,327 1,098,456 1,020,134
Restaurant expenses 180,674 157,596 519,140 459,942
Total Cost of Sales 920,322 866,233 2,678,114 2,495,280
Selling, general and administrative 108,935 104,482 319,818 308,535
Depreciation and amortization 48,132 41,865 139,203 122,436
Interest, net 10,669 9,116 31,651 26,372
Restructuring credit and asset impairment (1) -- -- 143 -2,269
Total Costs and Expenses 1,088,058 1,021,696 3,168,929 2,950,354
Earnings before Income Taxes 93,325 102,776 258,550 254,608
Income Taxes -31,539 -36,556 -87,400 -89,769
Net Earnings $61,786 $66,220 $171,150 $164,839
Net Earnings per Share:
Basic $0.36 $0.38 $1.00 $0.94
Diluted $0.35 $0.36 $0.96 $0.90
Average Number of Common Shares Outstanding:
Basic 170,700 175,000 171,100 175,400
Diluted 177,500 184,400 178,700 183,800
Note:
(1) Earnings before restructuring credit were as follows:
13 Weeks Ended 39 Weeks Ended
2/23/2003 2/24/2002 2/23/2003 2/24/2002
--------- --------- --------- ---------
Pretax Earnings before Restructuring Credit $93,325 $102,776 $258,550 $252,339
Income Taxes -31,539 -36,556 -87,400 -88,894
Earnings before Restructuring Credit $61,786 $66,220 $171,150 $163,445
Earnings per Share before Restructuring Credit:
Basic $0.36 $0.38 $1.00 $0.93
Diluted $0.35 $0.36 $0.96 $0.89
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DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
2/23/2003 05/26/2002
ASSETS
Current Assets:
Cash and cash equivalents $124,678 $152,875
Short-term investments -- 9,904
Receivables 29,828 29,089
Inventories 213,856 172,413
Assets held for disposal 9,613 10,047
Prepaid expenses and other current assets 17,013 23,076
Deferred income taxes 49,874 52,127
Total Current Assets $444,862 $449,531
Land, Buildings and Equipment 2,101,089 1,920,768
Other Assets 172,401 159,437
Total Assets $2,718,352 $2,529,736
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $189,223 $160,064
Accrued payroll 80,729 87,936
Accrued income taxes 60,764 68,504
Other accrued taxes 32,481 30,474
Other current liabilities 302,806 254,036
Total Current Liabilities $666,003 $601,014
Long-term Debt 658,648 662,506
Deferred Income Taxes 135,542 117,709
Other Liabilities 19,528 19,630
Total Liabilities $1,479,721 $1,400,859
Stockholders' Equity:
Common stock and surplus $1,520,999 $1,474,054
Retained earnings 925,039 760,684
Treasury stock -1,148,677 -1,044,915
Accumulated other comprehensive income -12,578 -12,841
Unearned compensation -44,568 -46,108
Officer notes receivable -1,584 -1,997
Total Stockholders' Equity $1,238,631 $1,128,877
Total Liabilities and Stockholders' Equity $2,718,352 $2,529,736
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