News Release Details

Darden Restaurants Reports Record Annual and Fourth Quarter Earnings per Diluted Share

June 22, 2000

ORLANDO, FL - Darden Restaurants, Inc. today reported record earnings per diluted share of $1.31 for the fiscal year ended May 28, 2000 on earnings after tax of $173.1 million, excluding unusual fourth quarter non-operating gains this year and last year. This represents a 36% increase in annual earnings per diluted share.

Fourth quarter earnings per diluted share increased 30% to 43 cents on earnings after tax of $54.4 million (excluding the unusual gains). The world's largest casual dining company said full year sales increased 7% to $3.70 billion. Fourth quarter sales increased by over 10% to $1.01 billion, propelled by impressive comparable restaurant sales gains at Red Lobster and Olive Garden.

"This has been an outstanding year for Darden Restaurants," said Joe R. Lee, Chairman and Chief Executive Officer. "We achieved record sales and earnings per share and solidly positioned Darden for continued success. Guests are telling us that the foundations for our growth, Red Lobster and Olive Garden, are providing more satisfying food and more gracious service in a more enjoyable atmosphere. With the strong momentum at Red Lobster and Olive Garden, we are ramping up new restaurant growth at both companies. The current strength and growth prospects of Red Lobster and Olive Garden, the continued excitement and expansion of Bahama Breeze and the very encouraging early results of our Smokey Bones test concept, give me great confidence in our ability to capitalize on the tremendous growth opportunity in the casual dining industry."

Highlights for the quarter and fiscal year ended May 28, 2000, included the following:

  • Annual earnings after tax, excluding an unusual $3.6 million after tax fourth quarter non-operating gain, were $173.1 million, or $1.31 per diluted share, on sales of $3.70 billion. Last year, earnings after tax before an unusual fourth quarter non-operating gain were $135.3 million, or 96 cents per diluted share, on sales of $3.46 billion.
  • Fourth quarter earnings after tax, before the non-operating gain, were $54.4 million, or 43 cents per diluted share, on sales of $1.01 billion. Last year, fourth quarter earnings after tax before the non-operating gain were $45.9 million, or 33 cents per diluted share, on sales of $914.0 million.
  • Red Lobster led the casual dining industry with a same-restaurant sales increase of 13.1% in the fourth quarter. This was Red Lobster's 10th consecutive quarter of comparable restaurant sales increases.
  • Olive Garden continued its impressive record of growth with a 5.3% same-restaurant sales increase, its 23rd consecutive quarter of comparable restaurant sales increases, and opened six new Tuscan farmhouse style restaurants.
  • Bahama Breeze opened four additional restaurants during the fourth quarter, increasing the total number of restaurants in operation to 14. The newest restaurants are located in Phoenix, Miami, Ft. Myers, FL and Atlanta.
  • Smokey Bones Sports Bar and BBQ opened its second restaurant in Orlando, and expects to open a third restaurant later this summer, in Columbus, OH.
  • Darden purchased 3.4 million shares of its common stock in the fourth quarter bringing to 11.5 million the total number of shares repurchased during the year.
  • As a result of favorable lease terminations, Darden reversed certain liabilities established for previously announced restructuring actions. This unusual, non-operating gain increased earnings after tax by $3.6 million and diluted earnings per share by 3 cents for the fourth quarter and the year.

Operating Highlights

RED LOBSTER'S fourth quarter sales of $576.4 million were 11% above prior year. The company's signature "Lobsterfest" promotion was particularly successful this year and contributed to a record fourth quarter same-restaurant sales increase of 13.1%. Strong guest traffic accounted for over half of the comparable sales gain. Sales of $2.07 billion for the fiscal year were almost 6% above prior year and average sales per restaurant for the year were $3.2 million - a record level for Red Lobster. Operating profits for the fourth quarter and fiscal year increased at strong double-digit percentage rates.

"Our fourth quarter performance was remarkable," said Dick Rivera, President of Red Lobster. "Our outstanding crew members are dedicated to providing our guests with hospitality you can taste and touch, and this commitment led to the most successful Lobsterfest promotion in our history. Our crew's passion for these fundamental tenets of our operating principles - Our Compass - is also why we enjoyed such exciting results for the year. Our vision is clear, we want to be a world-class company of seafood restaurants. This year, we made meaningful progress toward that goal."

OLIVE GARDEN'S fourth quarter sales of $408.6 million were 5% above prior year and its fourth quarter same-restaurant sales increased 5.3% - the 23rd consecutive quarter of comparable restaurant sales increases. Sales gains continue to be driven by strong guest count growth and increased guest satisfaction levels. In addition, Olive Garden restarted growth in new restaurants by opening six Tuscan farmhouse style restaurants during the fourth quarter. Sales of $1.58 billion for the fiscal year were almost 7% higher than the prior year, and annual average sales per restaurant increased to $3.4 million - a record level for Olive Garden. This increase in sales volume generated a strong double-digit percentage increase in operating profit for the fiscal year.

"We are pleased to have taken our company to yet another level of excellence this year," said Brad Blum, President of Olive Garden. "Record sales and operating profits led to a record return on sales and record return on capital. These financial results reflect the Olive Garden team's success in elevating every aspect of our dining experience. Our dedication to Hospitaliano, and providing our guests a genuine Italian dining experience, makes us determined to do an even better job of offering exceptional Italian foods and wines with great hospitality in a warm, inviting environment."

BAHAMA BREEZE opened four additional restaurants during the quarter, bringing the total number of restaurants in operation to 14. The newest restaurants are located in Phoenix, Miami, Ft. Myers, FL and Atlanta. The concept continues to be well received by guests, with exceptionally strong sales volumes producing restaurant earnings levels that exceed management's expectations. Bahama Breeze has begun construction on five more restaurants set to open later this year.

SMOKEY BONES opened its second restaurant in Orlando during the quarter. Initial results from the two restaurants in operation are very encouraging, and a third restaurant is expected to open in Columbus, OH later this summer.

Other Actions

Darden continued its repurchase of common stock in the open market, purchasing 3.4 million shares in the fourth quarter, for a total of 11.5 million shares purchased during the year. Cumulatively, since the inception of its repurchase program in December 1995, the Company has repurchased 44.1 million shares from a total authorization of 64.6 million shares.

As a result of favorable lease terminations associated with previously announced restructuring actions, Darden reversed certain estimated liabilities in the fourth quarter. This resulted in a $3.6 million after tax unusual gain. Including this unusual gain, earnings per diluted share were $1.34 for fiscal year 2000 and 46 cents for the fourth quarter, and earnings after tax were $176.7 million for the year and $58.0 million for the quarter. This unusual gain had no impact on the Company's cash flow.

Darden Restaurants Inc., in Orlando, FL, owns and operates Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones restaurants with annual sales of $3.7 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

5/28/00 5/30/99

622 Red Lobster USA 635 32 Red Lobster Canada 34 654 Total Red Lobster 669

464 Olive Garden USA 459 5 Olive Garden Canada 5 469 Total Olive Garden 464

14 Bahama Breeze 6

2 Smokey Bones 0

1,139 Total Restaurants 1,139

DARDEN RESTAURANTS, INC. FOURTH QUARTER FY 2000 FINANCIAL HIGHLIGHTS (In Millions, Except per Share Data)



13 Weeks Ended 52 Weeks Ended

5/28/2000 5/30/1999 5/28/2000 5/30/1999 Sales $1,006.1 $914.0 $3,701.3 $3,458.1

Net Earnings $58.0 $51.1 $176.7 $140.5

Net Earnings per Share: Basic $0.47 $0.38 $1.38 $1.02 Diluted $0.46 $0.37 $1.34 $0.99

Average Number of Common Shares Outstanding: Basic 123.3 133.7 128.5 137.3 Diluted 126.1 138.4 131.9 141.4

Earnings before Restructuring and Asset Impairment Expense or (Credit), net:

Earnings before Restructuring and Asset Impairment Expense or (Credit), net $54.4 $45.9 $173.1 $135.3

Earnings per Share before Restructuring and Asset Impairment Expense or (Credit), net: Basic $0.44 $0.34 $1.35 $0.99 Diluted $0.43 $0.33 $1.31 $0.96

DARDEN RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In Thousands, Except per Share Data)



13 Weeks Ended 52 Weeks Ended (Unaudited) (Unaudited) (Unaudited) 05/28/2000 05/30/1999 05/28/2000 05/30/1999 Sales $1,006,129 $913,975 $3,701,256 $3,458,107 Costs and Expenses: Cost of sales: Food and beverages 333,790 295,402 1,199,709 1,133,705 Restaurant labor 309,882 288,639 1,180,090 1,117,401 Restaurant expenses 137,976 121,469 521,159 493,811 Total Cost of Sales 781,648 705,510 2,900,958 2,744,917 Selling, general and administrative 100,178 101,610 379,470 360,909 Depreciation and amortization 34,333 31,589 130,464 125,327 Interest, net 5,901 4,897 22,388 19,540 Restructuring and asset impairment expense or (credit), net (1) -5,931 -8,461 -5,931 -8,461 Total Costs and Expenses 916,129 835,145 3,427,349 3,242,232 Earnings before Income Taxes 90,000 78,830 273,907 215,875 Income Taxes -31,954 -27,743 -97,202 -75,337 Net Earnings $58,046 $51,087 $176,705 $140,538

Net Earnings per Share: Basic $0.47 $0.38 $1.38 $1.02 Diluted $0.46 $0.37 $1.34 $0.99

Average Number of Common Shares Outstanding: Basic 123,300 133,700 128,500 137,300 Diluted 126,100 138,400 131,900 141,400

Note: (1) Earnings before restructuring and asset impairment expense or (credit), net were as follows:

13 Weeks Ended 52 Weeks Ended (Unaudited) (Unaudited) (Unaudited) 05/28/2000 05/30/1999 05/28/2000 05/30/1999

Pretax Earnings before Restructuring and Asset Impairment Expense or (Credit), net $84,069 $70,369 $267,976 $207,414 Income Taxes -29,646 -24,507 -94,894 -72,101 Earnings before Restructuring and Asset Impairment Expense or (Credit), net $54,423 $45,862 $173,082 $135,313

Earnings per Share before Restructuring and Asset Impairment Expense or (Credit), net: Basic $0.44 $0.34 $1.35 $0.99 Diluted $0.43 $0.33 $1.31 $0.96



DARDEN RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS (In Thousands)

(Unaudited) 5/28/2000 5/30/1999

ASSETS Current Assets: Cash and cash equivalents $26,102 $40,960 Receivables 27,962 20,256 Inventories 142,187 140,702 Net assets held for disposal 19,614 35,269 Prepaid expenses and other current assets 26,525 21,475 Deferred income taxes 48,070 65,662 Total Current Assets 290,460 324,324 Land, Buildings and Equipment 1,578,541 1,461,535 Other Assets 102,422 104,388 Total Assets $1,971,423 $1,890,247

LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $140,487 $144,725 Short-term debt 115,000 23,500 Current portion of long-term debt 2,513 2,386 Accrued payroll 77,805 74,265 Accrued income taxes 33,256 16,544 Other accrued taxes 25,524 25,965 Other current liabilities 212,302 231,417 Total Current Liabilities 606,887 518,802 Long-term Debt 304,073 314,065 Deferred Income Taxes 79,102 72,086 Other Liabilities 20,891 21,258 Total Liabilities $1,010,953 $926,211

Stockholders' Equity: Common stock and surplus $1,351,707 $1,328,796 Retained earnings 344,579 178,008 Treasury stock -666,837 -466,902 Accumulated other comprehensive income -12,457 -12,115 Unearned compensation -56,522 -63,751 Total Stockholders' Equity 960,470 964,036 Total Liabilities and Stockholders' Equity $1,971,423 $1,890,247