News Release Details

Darden Restaurants Reports Record Second Quarter Earnings Per Diluted Share Of 24 Cents, A 33% Increase Over Last Year

December 20, 2000

ORLANDO, Fla., Dec. 20 - Darden Restaurants, Inc. (NYSE: DRI) today reported record earnings per diluted share of 24 cents for its second quarter, which ended November 26, 2000. This represents a 33% increase in earnings per diluted share from prior year and the 14th consecutive period of quarterly earnings growth above 15%. Sales for the second quarter were $932.0 million, a 9.9% increase over prior year. These results were driven by significant same-restaurant sales growth at Red Lobster and Olive Garden. Last year, second quarter earnings per diluted share were 18 cents on sales of $848.2 million.

"This was another fantastic quarter," said Joe R. Lee, Chairman and Chief Executive Officer. "We're excited about the favorable results at Red Lobster and Olive Garden. We're also delighted with how well our emerging brands, Bahama Breeze and Smokey Bones BBQ, continue to be received. Solid core businesses and promising new concepts give us an excellent platform for expansion. These strengths enable us to capitalize on the powerful long-term growth trends in casual dining and respond well to any near-term challenges."

Highlights for the quarter ended November 26, 2000, include the following:

  • Earnings after tax in the second quarter were $29.5 million, or 24 cents per diluted share, on sales of $932.0 million. Last year, earnings after tax were $24.5 million, or 18 cents per diluted share, on sales of $848.2 million.
  • Red Lobster led the Company with an 8.4% same-restaurant sales increase in the quarter, its 12th consecutive quarter of same-restaurant sales gains.
  • Olive Garden reported its 25th consecutive quarter of same-restaurant sales growth with a 7.2% increase.
  • Bahama Breeze opened another restaurant, its 15th, during the quarter and expects to open nine more restaurants this fiscal year.
  • Smokey Bones BBQ opened two restaurants during the quarter, bringing the total number in operation to four in three different markets.
  • The Company purchased 1.1 million shares of its common stock in the quarter.

Operating Highlights

RED LOBSTER'S second quarter sales of $503.1 million were 8.9% above prior year, due primarily to its 8.4% increase in same-restaurant sales -- the 12th consecutive quarter of same-restaurant sales growth for Red Lobster. Last year, Red Lobster reported second quarter same-restaurant sales growth of 8.2%. This year's sales improvement resulted from increased same-restaurant guest counts and menu mix changes as guests responded favorably to exciting new items and the successful "30-Shrimp for $10.99" promotional offering. With the increased sales and lower labor and restaurant expenses as a percent of sales, Red Lobster achieved strong double-digit operating profit growth for the quarter.

"The second quarter results reflect continued improvement in virtually every aspect of our business," said Dick Rivera, President of Red Lobster. "We are introducing appealing new menu items with great flavors, preparing everything we offer more consistently and providing our guests with greater service excellence that reflects 'hospitality you can touch.' I am pleased with the progress we're making toward our ultimate goal, which is to be the best in casual dining."

OLIVE GARDEN'S second quarter sales of $407.4 million were 8.4% above prior year, propelled by its 7.2% same-restaurant sales increase for the quarter. This is the 25th consecutive quarter of same-restaurant sales growth for Olive Garden, and comes on top of a 6.8% increase last year. The continued sales improvement reflects terrific acceptance of Olive Garden's new menu, a higher check average due to menu mix and pricing, good response to proven promotions like "Never Ending Pasta Bowl" and outstanding wine sales increases exceeding 20% growth. The increased sales, along with lower labor and restaurant expenses as a percent of sales, combined to produce double- digit operating profit growth and second quarter profits.

"We're proud of our results for the quarter," said Brad Blum, President of Olive Garden. "They represent our team's progress in elevating critical elements of the dining experience we provide. Our family of local restaurants continues to get better and better at delighting every guest with a genuine Italian dining experience that includes fresh, simple and delicious Italian food, great wines and superior service. We are committed to excellence in everything we do, and to making everyone feel welcome, special and appreciated."

BAHAMA BREEZE continued to produce impressive sales results during the quarter, and opened one new restaurant in Oklahoma City, Okla. Two additional restaurants have opened since the end of the quarter -- one on November 27 in Lake Buena Vista (Orlando) and the other on December 18 in Pembroke Pines (Miami). At least seven more openings are scheduled for this fiscal year. These new restaurants are planned for Detroit (2), Cincinnati, Rochester, N.Y., Dallas, Las Vegas, and Phoenix.

"We have established a very appealing experience," said Gary Heckel, President of Bahama Breeze, "one that is based on a serious passion for creating great food from scratch, hand-crafted drinks and incredible service. We aim to provide a memorable two-hour island vacation that leaves our guests with a burning desire to return. Bahama Breeze is enjoying very strong revenues per restaurant in a variety of markets. Sales at restaurants in major markets are annualizing to an average that's between $6.0 million and $6.5 million, and restaurants in mid-size markets are annualizing to an average that's between $4.5 million and $5.0 million."

SMOKEY BONES BBQ opened two more restaurants in the second quarter, bringing the total number in operation to four. The two newest are located in Columbus, Ohio, and Albany, N.Y., the first test markets outside of Orlando. "With the continued strength of the initial two restaurants in Orlando and exceptional early success of the Columbus and Albany restaurants, we are moving to the next test phase," said Joe Lee, Darden's Chairman and CEO. "We plan to open another five Smokey Bones BBQ restaurants this fiscal year. Like the first four, these new openings will be conversions of our own existing restaurant properties."

Other Actions

Darden continued its buyback of common stock, purchasing 1.1 million shares in the second quarter. Cumulatively, since the initial authorization of its repurchase program in December 1995, the Company has repurchased 48.6 million shares from a total authorization of 64.6 million shares.

Darden Restaurants, Inc., in Orlando, Fla., owns and operates Red Lobster, Olive Garden, Bahama Breeze, and Smokey Bones BBQ restaurants.

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

          11/28/99                                  11/26/00

               618    Red Lobster USA                    620
                32    Red Lobster Canada                  32
               650    Total Red Lobster                  652
               458    Olive Garden USA                   463
                 5    Olive Garden Canada                  5
               463    Total Olive Garden                 468
                 8    Bahama Breeze                       15
                 1    Smokey Bones BBQ                     4
             1,122    Total Restaurants                1,139

                           DARDEN RESTAURANTS, INC.
                     (In Millions, Except per Share Data)

                              13 Weeks Ended             26 Weeks Ended
                        11/26/2000    11/28/1999   11/26/2000    11/28/1999
    Sales                   $932.0        $848.2     $1,950.2      $1,777.6

    Net Earnings             $29.5         $24.5        $86.5         $71.8

    Net Earnings per Share:
      Basic                  $0.25         $0.19        $0.72         $0.55
      Diluted                $0.24         $0.18        $0.70         $0.53

    Average Number of Common
     Shares Outstanding:
      Basic                  119.8         130.8        120.7         131.5
      Diluted                123.7         134.5        124.1         135.5

                           DARDEN RESTAURANTS, INC.
                    (In Thousands, Except per Share Data)

                                 13 Weeks Ended           26 Weeks Ended
                           11/26/2000   11/28/1999   11/26/2000   11/28/1999
    Sales                    $931,958     $848,231   $1,950,163   $1,777,622
    Costs and Expenses:
     Cost of sales:
      Food and beverage       298,361      271,802      629,398      570,630
      Restaurant labor        302,908      280,310      621,539      575,723
      Restaurant expenses     135,857      126,910      275,359      258,737
       Total Cost of Sales    737,126      679,022    1,526,296    1,405,090
     Selling, general
      and administrative      105,955       94,208      205,242      188,358
     Depreciation and
     amortization              35,789       31,771       71,425       63,141
    Interest, net               7,777        5,265       14,051        9,841
       Total Costs and
        Expenses              886,647      810,266    1,817,014    1,666,430
    Earnings before
     Income Taxes              45,311       37,965      133,149      111,192
    Income Taxes              -15,770      -13,511      -46,687      -39,425
    Net Earnings              $29,541      $24,454      $86,462      $71,767

    Net Earnings per Share:
      Basic                     $0.25        $0.19        $0.72        $0.55
      Diluted                   $0.24        $0.18        $0.70        $0.53

    Average Number of Common
     Shares Outstanding:
      Basic                   119,800      130,800      120,700      131,500
      Diluted                 123,700      134,500      124,100      135,500

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

                                                  11/26/2000      5/28/2000

    Current Assets:
      Cash and cash equivalents                       $7,753        $26,102
      Receivables                                     35,214         27,962
      Inventories                                    207,850        142,187
      Net assets held for disposal                    12,749         19,614
      Prepaid expenses and other current assets       17,964         26,525
      Deferred income taxes                           49,915         48,070
        Total Current Assets                        $331,445       $290,460
    Land, Buildings and Equipment                  1,662,370      1,578,541
    Other Assets                                     104,449        102,422
        Total Assets                              $2,098,264     $1,971,423

    Current Liabilities:
      Accounts payable                              $144,209       $140,487
      Short-term debt                                 89,300        115,000
      Current portion of long-term debt                2,514          2,513
      Accrued payroll                                 66,674         77,805
      Accrued income taxes                            18,314         33,256
      Other accrued taxes                             26,289         25,524
      Other current liabilities                      205,946        212,302
        Total Current Liabilities                   $553,246       $606,887
    Long-term Debt                                   447,739        304,073
    Deferred Income Taxes                             79,790         79,102
    Other Liabilities                                 20,849         20,891
        Total Liabilities                         $1,101,624     $1,010,953

    Stockholders' Equity:
      Common stock and surplus                    $1,384,947     $1,351,707
      Retained earnings                              426,275        344,579
      Treasury stock                                -747,869       -666,837
      Accumulated other comprehensive income         -13,136        -12,457
      Unearned compensation                          -53,577        -56,522
        Total Stockholders' Equity                  $996,640       $960,470
    Total Liabilities and Stockholders' Equity    $2,098,264     $1,971,423