Board Declares 3-for-2 Stock Split
ORLANDO, Fla., March 21 --
Darden Restaurants, Inc. today reported that exceptionally strong same-
restaurant sales growth at Red Lobster and Olive Garden led to record third
quarter earnings per diluted share of 54 cents, a 35% increase from prior
year. Total sales were $1.1 billion for the quarter ending February 24, 2002,
a 14.7% increase over the prior year. Last year, the Company's third quarter
earnings per diluted share were 40 cents on total sales of $988.6 million.
Darden also reported that its Board of Directors approved a 3-for-2 stock
split, which will take the form of a 50% stock dividend to shareholders of
record as of the close of business on April 10, 2002, with a payable date of
May 1, 2002. Cash will be paid in lieu of fractional shares. Common share
and earnings per share data included in this release have not been adjusted
for the impacts of the stock split. The Board of Directors also declared a
4 cents per share dividend to be paid on a pre-split basis on May 1, 2002, to
shareholders of record on April 10, 2002.
"This has been an extraordinary quarter, substantially exceeding our long-
term financial goals," said Joe R. Lee, Chairman and Chief Executive Officer.
"We had all-time third quarter highs in sales and earnings, despite the
economic and social uncertainty the nation continued to face. Our results
demonstrate that we operate in a strong industry, and that we have a powerful
combination of the right brands, strategies and people to offer consumers
excellent dining experiences at great value. Red Lobster and Olive Garden's
same-restaurant sales results for the quarter are testaments to their teams'
operating excellence and success in building and maintaining consumer trust.
Bahama Breeze and Smokey Bones BBQ Sports Bar also have terrific teams who
have generated great consumer excitement, and they are committed to sustained
operating excellence as they expand. I believe Darden is firmly on a path to
becoming the best company in casual dining, now and for generations."
Highlights for the quarter ended February 24, 2002, include the following:
* Earnings after tax for the quarter were $66.2 million, or 54 cents per
diluted share, on sales of $1.1 billion. Last year, earnings after tax
in the third quarter were $49.5 million, or 40 cents per diluted share,
on sales of $988.6 million.
* Red Lobster led Darden with a 12.0% same-restaurant sales increase in
the quarter, its 17th consecutive quarter of same-restaurant sales
gains.
* Olive Garden reported its 30th consecutive quarter of same-restaurant
sales growth, with a 9.8% increase.
* Bahama Breeze opened one new restaurant during the third quarter,
bringing the total open to 26, and plans to open three more restaurants
this fiscal year.
* Smokey Bones BBQ Sports Bar opened four restaurants during the third
quarter, and one since the quarter ended, bringing the total in
operation to 17. Smokey Bones BBQ plans to open two more restaurants
this fiscal year.
* The Company purchased almost 2.8 million shares of its common stock in
the quarter.
Operating Highlights
RED LOBSTER'S third quarter sales of $613.0 million were 13.6% above prior
year, driven by its 12.0% increase in same-restaurant sales -- the company's
17th consecutive quarter of same-restaurant sales growth. Last year, Red
Lobster reported third quarter same-restaurant sales growth of 5.5%. This
year's sales increase was primarily the result of same-restaurant guest count
growth. Guests responded favorably to an attractive "All You Can Eat Shrimp"
feature, which was priced at $12.99, and to the improvements in the Red
Lobster dining experience. The increased sales, and lower food costs and
marketing expenses as a percent of sales, enabled Red Lobster to achieve
strong double-digit operating profit growth.
"It was another tremendous quarter at Red Lobster," said Dick Rivera,
President of Red Lobster. "During this demanding period for our nation and
our industry, the entire Red Lobster crew remained focused on our strategy of
offering guests a fresh approach to casual dining, featuring great seafood,
good times and hospitality. The strong sales and traffic growth we enjoyed
this quarter are powerful evidence of the wonderful job our crew is doing to
deliver on that strategy."
OLIVE GARDEN'S third quarter sales of $481.2 million were 13.9% above
prior year, propelled by strong same-restaurant sales growth and the company's
renewed focus on new restaurant growth. Olive Garden's 9.8% same-restaurant
sales increase for the quarteom
both existing restaurants and new restaurants combined with lower labor,
restaurant and marketing expenses as a percent of sales to produce strong
double-digit operating profit growth.
"We had another fabulous quarter," said Brad Blum, President of Olive
Garden. "I'm so proud of how well our teams have responded to what has been a
challenging business environment. Olive Garden is a distinctive and trusted
brand. We are doing a better job than ever of providing guests with a genuine
Italian dining experience. Our team truly believes that 'When you are here,
you are family', and it shows in the extraordinary food, service and
atmosphere guests are experiencing in our restaurants."
BAHAMA BREEZE opened a new restaurant in Troy, MI (Detroit), during the
quarter. It now operates 26 restaurants in 17 markets, and three more
openings are scheduled for this fiscal year. Average sales per restaurant at
Bahama Breeze continued to rebound from the lower second quarter levels
experienced when travel safety concerns were most acute.
SMOKEY BONES BBQ SPORTS BAR opened four more restaurants in the third
quarter, bringing the total number in operation at quarter end to 16. Since
the end of the quarter, a new restaurant has opened in Bowling Green, KY. Two
additional restaurants currently under construction are expected to open this
fiscal year.
Other Actions
Darden continued its buyback of common stock, purchasing nearly
2.8 million shares in the third quarter. Cumulatively, since the initial
authorization of its repurchase program in December 1995, the Company has
repurchased 57.5 million shares from a total authorization of 64.6 million
shares.
February 2002 Same-Restaurant Sales Results
Darden also reported same-restaurant sales results for the four-week
February fiscal month that ended February 24, 2002. This period is the last
month of the Company's fiscal 2002 third quarter.
Same-restaurant sales at Red Lobster were up 12% to 13% for the month,
reflecting a 7% to 8% increase in guest counts, a 2% to 3% increase in pricing
and a 2% to 3% increase because of menu mix changes. In the beginning of
fiscal February, Red Lobster featured its "All You Can Eat Shrimp" promotion.
The offering, which was priced at $12.99, started on January 7 and ended
February 10. On February 18, Red Lobster began its popular Lobsterfest
promotion. Lobsterfest started a week earlier this year than last year, when
the entire promotion took place in the fiscal fourth quarter. In fiscal
February last year, Red Lobster ran its "Pound of Crab for $10.99" promotion
and same-restaurant sales were up 5% to 6%.
Same-restaurant sales were up 6% to 7% at Olive Garden for fiscal
February, driven by a 2% to 3% increase in guest counts, a 2% to 3% increase
in pricing and a 1% increase from menu mix changes. This year on
February 3rd, Olive Garden concluded its advertising of the Culinary Institute
in Italy featuring Executive Chef Neri and her "Tortelloni di Fizzano" priced
at $8.95. The company's "Seafood Alfredo and Chicken Alfredo" feature began
on February 18 and will run through March 31, 2002. In fiscal February of
last year, Olive Garden had two features, "Chicken Scampi" for $8.95 and
"Seafood and Chicken Alfredo" without a price point, and its same-restaurant
sales increased 6% to 7%.
At the end of its fiscal third quarter, Darden Restaurants, Inc., in
Orlando, FL, owned and operated 1,193 Red Lobster, Olive Garden, Bahama Breeze
and Smokey Bones BBQ Sports Bar restaurants in North America.
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
02/25/01 02/24/02
623 Red Lobster USA 631
32 Red Lobster Canada 32
655 Total Red Lobster 663
464 Olive Garden USA 482
5 Olive Garden Canada 6
469 Total Olive Garden 488
19 Bahama Breeze 26
5 Smokey Bones BBQ 16
------ ------
1,148 Total Restaurants 1,193
DARDEN RESTAURANTS, INC.
THIRD QUARTER FY 2002 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
2/24/2002 2/25/2001 2/24/2002 2/25/2001
--------- --------- --------- ---------
Sales $1,134.4 $988.6 $3,229.4 $2,938.8
Net Earnings (1) $66.2 $49.5 $164.8 $136.0
Net Earnings
per Share (1)(2):
Basic $0.57 $0.41 $1.41 $1.13
Diluted $0.54 $0.40 $1.34 $1.10
Average Number of Common
Shares Outstanding (2):
Basic 116.7 119.8 116.9 120.4
Diluted 123.0 124.0 122.6 124.1
Note:
(1) Earnings before restructuring credit were as follows:
Earnings before
Restructuring Credit $66.2 $49.5 $163.4 $136.0
Earnings per Share before Restructuring Credit (2):
Basic $0.57 $0.41 $1.40 $1.13
Diluted $0.54 $0.40 $1.33 $1.10
(2) Common share and earnings per share data have not been adjusted for
the impact of the stock split payable on May 1, 2002 to shareholders
of record on April 10, 2002.
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
2/24/2002 2/25/2001 2/24/2002 2/25/2001
---------- ---------- ---------- ----------
Sales $1,134,388 $988,635 $3,229,382 $2,938,798
Costs and Expenses:
Cost of sales:
Food and beverage 350,310 313,242 1,015,204 942,640
Restaurant labor 358,327 313,930 1,020,134 935,469
Restaurant expenses 160,710 141,897 468,518 417,198
Total Cost of Sales 869,347 769,069 2,503,856 2,295,307
Selling, general
and administrative 111,284 98,455 324,379 303,755
Depreciation and
amortization 41,865 37,092 122,436 108,517
Interest, net 9,116 8,528 26,372 22,579
Restructuring
credit (1) --- --- -2,269 ---
Total Costs
and Expenses 1,031,612 913,144 2,974,774 2,730,158
Earnings before
Income Taxes 102,776 75,491 254,608 208,640
Income Taxes -36,556 -25,964 -89,769 -72,651
Net Earnings $66,220 $49,527 $164,839 $135,989
Net Earnings
per Share (2):
Basic $0.57 $0.41 $1.41 $1.13
Diluted $0.54 $0.40 $1.34 $1.10
Average Number of
Common Shares
Outstanding (2):
Basic 116,700 119,800 116,900 120,400
Diluted 123,000 124,000 122,600 124,100
Note:
(1) Earnings before restructuring credit were as follows:
13 Weeks Ended 39 Weeks Ended
2/24/2002 2/25/2001 2/24/2002 2/25/2001
--------- --------- --------- ---------
Pretax Earnings before
Restructuring Credit $102,776 $75,491 $252,339 $208,640
Income Taxes -36,556 -25,964 -88,894 -72,651
Earnings before
Restructuring Credit $66,220 $49,527 $163,445 $135,989
Earnings per Share
before Restructuring
Credit (2):
Basic $0.57 $0.41 $1.40 $1.13
Diluted $0.54 $0.40 $1.33 $1.10
(2) Common share and earnings per share data have not been adjusted for
the impact of the stock split payable on May 1, 2002 to shareholders
of record on April 10, 2002.
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited) (Unaudited)
2/24/2002 5/27/2001
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $37,144 $61,814
Receivables 29,485 32,870
Inventories 229,427 148,429
Net assets held for disposal 10,579 10,087
Prepaid expenses and other current assets 16,727 26,942
Deferred income taxes 50,538 48,000
Total Current Assets 373,900 328,142
Land, Buildings and Equipment 1,870,658 1,779,515
Other Assets 153,201 108,877
Total Assets $2,397,759 $2,216,534
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $174,394 $156,859
Short-term debt 62,700 12,000
Current portion of long-term debt 2,640 2,647
Accrued payroll 88,770 82,588
Accrued income taxes 47,185 47,698
Other accrued taxes 29,081 27,429
Other current liabilities 268,584 225,037
Total Current Liabilities $673,354 $554,258
Long-term Debt 513,053 517,927
Deferred Income Taxes 106,728 90,782
Other Liabilities 19,780 20,249
Total Liabilities $1,312,915 $1,183,216
Stockholders' Equity:
Common stock and surplus $1,463,190 $1,405,799
Retained earnings 692,323 532,121
Treasury stock -1,007,760 -840,254
Accumulated other comprehensive income -14,282 -13,102
Unearned compensation -46,644 -49,322
Officer notes receivable -1,983 -1,924
Total Stockholders' Equity $1,084,844 $1,033,318
Total Liabilities
and Stockholders' Equity $2,397,759 $2,216,534