ORLANDO, Fla., March 23 -- Darden Restaurants, Inc.
(NYSE: DRI) today reported that strong same-restaurant sales growth at Olive
Garden and Red Lobster led to a 33% increase in third quarter earnings per
diluted share to 36 cents for the quarter ended February 27, 2000. Earnings
after tax for the quarter rose over 22% to $46.9 million. The world's largest
casual-dining restaurant company said that third quarter sales increased
approximately 6% to $917.5 million.
"We are extremely delighted with the impressive results Olive Garden and
Red Lobster continue to deliver," said Joe R. Lee, Chairman and Chief
Executive Officer. "These two core businesses are strong and getting
stronger, and they provide Darden with a tremendous advantage to capture the
exceptional growth opportunity in the casual dining industry. We are also
excited about the performance of our emerging business, Bahama Breeze and our
new Smokey Bones test. Everyone on our team is focused on operating
excellence and building compelling brands as we seek to deliver a superior
dining experience to our guests, and outstanding financial performance for our
shareholders."
Highlights for the quarter ended February 27, 2000, included:
- Earnings after tax in the third quarter were $46.9 million, or 36 cents
per diluted share, on sales of $917.5 million. Last year, earnings after tax
were $38.4 million, or 27 cents per diluted share, on sales of $866.9 million.
- Olive Garden's impressive record of growth continued with an 8.3% same-
restaurant sales increase, representing the 22nd consecutive quarter of same-
restaurant sales increases. As a result of healthy sales and traffic growth,
Olive Garden posted a double-digit increase in operating profit to establish a
new record for any quarter in its 18 year history.
- Red Lobster recorded strong sales growth, reporting a 5.0% increase in
same-restaurant sales. This represents Red Lobster's 9th consecutive quarter
of same-restaurant sales increases, and contributed to its strong double-digit
increase in operating profit.
- With the opening of two new restaurants during the quarter, Bahama
Breeze is being well received by guests in eight markets. The two new
restaurants, located in Atlanta (Kennesaw) GA, and Austin, TX, bring the total
number in operation to ten. Three additional restaurants are under
construction and are expected to open by late spring.
- Smokey Bones, Darden's new Sports Bar and BBQ test restaurant, is
surpassing management's initial expectations. The company announced that two
more restaurants are under construction.
- The Company purchased 3.9 million shares of its common stock in the
third quarter.
Operating Highlights
OLIVE GARDEN'S third quarter sales of $395.7 million were 7.7% above the
prior year, and same-restaurant sales increased 8.3%. The comparable sales
performance is particularly strong coming on top of a 7.5% same-restaurant
sales increase in the third quarter last year. Olive Garden's sales
improvement continued to be driven primarily by guest count growth. This
performance, combined with restaurant labor efficiencies, generated a double-
digit operating profit increase.
"Our team is dedicated to delighting every guest with a genuine Italian
dining experience," said Brad Blum, President of Olive Garden. "We are
pleased with another quarter of excellent performance. Our teams are
convinced that by remaining focused on providing exceptional Italian foods and
wines with great hospitality in a warm, inviting environment -- the best is
yet to come."
RED LOBSTER'S third quarter sales of $508.5 million were 3.1% higher than
prior year. Same-restaurant sales increased 5.0%. Operating profit for the
quarter increased at a strong double-digit rate as a result of strong same-
restaurant sales and traffic growth and favorable food and beverage costs and
restaurant expenses. These results were achieved with 17 fewer restaurants in
operation at the end of the quarter compared to last year.
"We are excited with our third quarter performance and our continued same-
restaurant sales momentum," said Dick Rivera, President of Red Lobster. "We
will focus even more intently on operational excellence and marketing that
matters as we strive to be the best in casual dining. Our restaurant crews
are providing guests with great food and service in an energetic, upbeat
environment, and our marketing teams are communicating with guests in an
increasingly more effective manner."
BAHAMA BREEZE sales continue to exceed management's expectations.
Consumer excitement in what has now grown to eight markets, offers good
evidence the company is successfully building a brand that has broad appeal .
Two restaurants in Atlanta (Kennesaw), GA and Austin, TX, were opened during
the quarter, bringing the total number of units in operation to ten. Three
more restaurants, located in Miami, FL, Ft. Myers, FL, and Phoenix, AZ, are
currently expected to open in the fourth quarter of fiscal year 2000.
SMOKEY BONES, Darden's latest test concept, continues to produce sales
above company projections at its first location in Orlando. Management says
it is pleased with the progress of this Sports Bar and BBQ prototype and has
announced that construction is underway on two more restaurants located in
Orlando, FL, and Columbus, OH.
Other Actions
Darden continued its buyback of common stock in the open market,
purchasing 3.9 million shares in the third quarter. Cumulatively, since
initial authorization of its repurchase program in December 1995, the Company
has repurchased 40.7 million shares from a total authorization of 44.6 million
shares and reduced shares outstanding by over 20%. To help reduce the cost of
share repurchase, Darden has engaged in the sale of equity puts, generating
over $5.7 million in cash from premiums since inception of the put selling
program in September 1997.
At its meeting today the Board of Directors approved an additional share
repurchase authorization totaling 20 million shares, or approximately 16% of
shares outstanding at the end of the third quarter. It also approved the sale
of an additional 1.5 million equity puts bringing total authorization to 7
million, and approved use of equity forward contracts to purchase up to 7
million shares.
The Board of Directors declared the regular 4 cents per share semi-annual
dividend, payable May 1, 2000 to shareholders of record April 10, 2000.
The Board of Directors elected Rita P. Wilson, a director. Ms. Wilson is
President of Allstate Indemnity Company, a subsidiary of Allstate Insurance.
Allstate Indemnity Company is the nation's largest provider of non-standard
automobile insurance accounting for $3 billion in annual revenue and over 3
million policyholders. "I am pleased to welcome Ms. Wilson to our board," said
Lee. "Her leadership skills, financial services knowledge and extensive
experience operating geographically dispersed enterprises will serve us well."
Darden Restaurants Inc., headquartered in Orlando, FL, owns and operates
Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones restaurants with
annual sales of $3.5 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
2/28/99 2/27/00
634 Red Lobster USA 619
34 Red Lobster Canada 32
668 Total Red Lobster 651
459 Olive Garden USA 459
5 Olive Garden Canada 5
464 Total Olive Garden 464
4 Bahama Breeze 10
0 Smokey Bones 1
1,136 Total Restaurants 1,126
DARDEN RESTAURANTS, INC.
THIRD QUARTER FY 2000 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
13 Weeks Ended 39 Weeks Ended
02/27/2000 02/28/1999 02/27/2000 02/28/1999
Sales $917.5 $866.9 $2,695.1 $2,544.1
Net Earnings $46.9 $38.4 $118.7 $89.5
Net Earnings per Share:
Basic $0.37 $0.28 $0.91 $0.65
Diluted $0.36 $0.27 $0.89 $0.63
Average Number of Common
Shares Outstanding:
Basic 127.7 137.1 130.2 138.5
Diluted 130.5 141.2 133.8 142.3
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
02/27/2000 02/28/1999 02/27/2000 02/28/1999
Sales $917,505 $866,907 $2,695,127 $2,544,132
Costs and Expenses:
Cost of sales:
Food and beverages 295,289 284,272 865,919 838,303
Restaurant labor 295,031 280,458 870,208 828,762
Restaurant expenses 123,900 119,667 383,183 372,342
Total Cost of Sales 714,220 684,397 2,119,310 2,039,407
Selling, general and
administrative 90,934 88,156 279,292 259,299
Depreciation and
amortization 32,990 31,415 96,131 93,738
Interest, net 6,646 4,422 16,487 14,643
Total Costs and
Expenses 844,790 808,390 2,511,220 2,407,087
Earnings before
Income Taxes 72,715 58,517 183,907 137,045
Income Taxes -25,823 -20,164 -65,248 -47,594
Net Earnings $46,892 $38,353 $118,659 $89,451
Net Earnings per Share:
Basic $0.37 $0.28 $0.91 $0.65
Diluted $0.36 $0.27 $0.89 $0.63
Average Number of
Common Shares
Outstanding:
Basic 127,700 137,100 130,200 138,500
Diluted 130,500 141,200 133,800 142,300
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
Unaudited
02/27/2000 5/30/1999
ASSETS
Current Assets:
Cash and cash equivalents $20,345 $40,960
Receivables 29,259 20,256
Inventories 204,801 144,115
Net assets held for disposal 25,997 35,269
Prepaid expenses and other
current assets 17,415 21,475
Deferred income taxes 52,430 65,662
Total Current Assets $350,247 $327,737
Land, Buildings and Equipment 1,539,243 1,461,535
Other Assets 103,498 104,388
Total Assets $1,992,988 $1,893,660
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $124,599 $144,725
Short-term debt 155,000 23,500
Current portion of long-term debt 2,386 2,386
Accrued payroll 74,790 74,265
Accrued income taxes 16,683 16,544
Other accrued taxes 23,180 25,965
Other current liabilities 238,711 234,830
Total Current Liabilities $635,349 $522,215
Long-term Debt 309,299 314,065
Deferred Income Taxes 71,988 72,086
Other Liabilities 21,202 21,258
Total Liabilities $1,037,838 $929,624
Stockholders' Equity:
Common stock and surplus $1,349,267 $1,328,796
Retained earnings 291,440 178,008
Treasury stock -613,593 -466,902
Accumulated other comprehensive
income -11,817 -12,115
Unearned compensation -60,147 -63,751
Total Stockholders' Equity $955,150 $964,036
Total Liabilities and
Stockholders' Equity $1,992,988 $1,893,660