News Release Details

Darden Restaurants Reports Record Annual And Record Fourth Quarter Earnings Per Diluted Share

June 20, 2002

ORLANDO, Fla., June 20-- Darden Restaurants, Inc. (NYSE: DRI - News) today reported record earnings per diluted share for the fiscal year and fiscal fourth quarter ended May 26, 2002. Earnings per diluted share were $1.30 for the year on earnings after tax of $237.8 million, and 40 cents for the fourth quarter on earnings after tax of $72.9 million. Excluding unusual restructuring credits in the second and fourth quarters, earnings per diluted share were $1.29 for the year, a 22% increase over the prior year, and 40 cents for the fourth quarter, a 21% increase.

Darden, the world's largest casual dining company, said full year sales increased over 9% to $4.4 billion. Fourth quarter sales increased over 8% to $1.2 billion, driven by comparable-restaurant sales gains at Red Lobster and Olive Garden that again exceeded the casual dining industry average as measured by Knapp-Track.

Sales for all reporting periods have been adjusted to reflect recently adopted accounting rules, which require that sales incentives such as coupons and discounts be recorded as reductions to sales rather than marketing expenses. All earnings per share results and outstanding shares have been adjusted to reflect the 3 for 2 stock split in the form of a 50% share dividend that was paid on May 1, 2002 for shareholders of record as of April 10, 2002.

"This was another year of strong performance at Darden Restaurants, capped off by an outstanding fourth quarter," said Joe R. Lee, Chairman and Chief Executive Officer. "We prepared well for the economic softness that existed for much of the year, with effective strategies that included an even stronger focus on operating excellence as well as attractive advertising and appealing promotions. And, in a year marked by unimaginable loss in our nation, the people of Darden Restaurants were great sources of support to our guests, to our friends and neighbors and to one another. Their spirit of service, our trusted brands and our powerful combination of leadership breadth and financial strength give me confidence we will achieve our vision of being the best in casual dining, now and for generations."

Highlights for the year and quarter ended May 26, 2002, include the following:

  • Earnings after tax were $237.8 million, or $1.30 per diluted share for the fiscal year, and $72.9 million, or 40 cents per diluted share, for the fourth quarter. These results include unusual items totaling approximately $1.6 million after-tax, which include after-tax restructuring credits of $1.4 million in the second quarter and $184,000 in the fourth quarter. The credits reflect the reversal of a portion of the Company's fiscal 1997 restructuring reserve, primarily because of favorable lease terminations.
  • Excluding the unusual credits, earnings after tax for the fiscal year were $236.2 million, or $1.29 per diluted share, on sales of $4.4 billion. Last year, earnings after tax were $197.0 million, or $1.06 cents per diluted share, on sales of $4.0 billion.
  • Excluding the unusual credit, earnings after tax for the fourth quarter were $72.8 million, or 40 cents per diluted share, on sales of $1.2 billion. Last year, earnings after tax were $61.0 million, or 33 cents per diluted share, on sales of $1.1 billion.
  • Olive Garden's same-restaurant sales increased 5.3% in the fourth quarter, its 31st consecutive quarter of comparable-restaurant sales growth, bringing Olive Garden's increase for the fiscal year to 6.3%.
  • Red Lobster's same-restaurant sales rose 3.7% in the fourth quarter, its 18th consecutive quarter of comparable-restaurant sales growth, and resulted in a 6.2% increase for the year.
  • Bahama Breeze opened three restaurants during the quarter, bringing its total number of restaurants to 29, and its sales for the full fiscal year exceeded $125 million.
  • Smokey Bones BBQ Sports Bar also opened three restaurants during the quarter and, with ten openings for the full fiscal year, more that doubled in size to 19 restaurants in operation.
  • Darden purchased 1.4 million shares of its common stock in the fourth quarter, bringing the total number of shares repurchased during the year to 9 million.

Operating Highlights

OLIVE GARDEN'S fourth quarter sales of $484.3 million were 9.6% above prior year; driven by a 5.3% same-restaurant sales increase and increased revenues from 19 new restaurants opened in fiscal 2002. This is the 31st consecutive quarter of comparable-restaurant sales growth for Olive Garden, and builds on a 7.1% increase in the fourth quarter last year. Olive Garden's total sales for the fiscal year were $1.86 billion, up 9.5% from the prior year, and its annual average sales per restaurant increased to $3.9 million -- both record levels. Olive Garden had a double-digit percentage increase in operating profit for the 7th consecutive fiscal year, reaching a new high in operating profit as well.

"It was another rewarding year for our company," said Drew Madsen, President of Olive Garden. "The Olive Garden guest experience has never been stronger, and this operating excellence is supported by solid marketing that continues to build the brand and fuel guest count growth. Our team keeps demonstrating the power of providing our guests with a genuine Italian dining experience, which we define as fresh, simple, delicious Italian food, accompanied by great wine in a home-like Italian setting, where you're treated like family."

RED LOBSTER'S fourth quarter sales of $626.9 million were 5.2% above prior year, propelled by a 3.7% same-restaurant sales increase. This 18th consecutive quarter of growth comes on top of Red Lobster's 3.8% same- restaurant sales increase in last year's fourth quarter. Total sales of $2.34 billion for the fiscal year were 7.1% above last year and average sales per restaurant for the year were $3.5 million -- record levels for Red Lobster. Operating profit for the fiscal year increased at a double-digit percentage rate and established a new record for Red Lobster.

"It was a terrific year," said Edna Morris, President of Red Lobster. "In our 34th year, Red Lobster remains a trusted brand; and we're strengthening our brand with significant improvements in our look, our culinary and beverage offerings and our service. A key element is the stability, expertise and commitment of our crew. Inspired by a passion for providing hospitality you can taste and touch, they are delivering to our guests a fresh approach to casual dining with great seafood, good times and hospitality."

BAHAMA BREEZE opened three restaurants during the quarter bringing the total number in operation to 29 restaurants. The latest restaurants are located in Indianapolis, Las Colinas (Dallas, TX) and Schaumburg (Chicago, IL). Bahama Breeze now operates restaurants in 20 different markets located in 16 states, and delivered annual sales of over $125 million in fiscal 2002. Bahama Breeze expects to open between six and ten restaurants in fiscal 2003.

SMOKEY BONES BBQ SPORTS BAR opened three restaurants during the quarter, and now has 19 units in operation. The newest are in Bowling Green, KY, Tallahassee, FL and Melbourne, FL. Annual sales for Smokey Bones were over $42 million in fiscal 2002, and it plans to open 20 to 25 restaurants in fiscal 2003.

Other Actions

Darden continued the buyback of its common stock, purchasing 1.4 million shares in the fourth quarter. Since commencing its repurchase program in December 1995, the Company has repurchased a total of 87.7 million shares under authorizations totaling 96.9 million shares.

The Board of Directors announced that the Company's Annual Meeting of Shareholders will be held on September 19, 2002 at the Gaylord Palms Resort in Kissimmee, FL. The Board of Directors declared July 22, 2002 as the record date for shareholders entitled to vote at the Annual Meeting.

May 2002 Same-Restaurant Sales Results

Darden reported same-restaurant sales for the four-week May fiscal month ended May 26, 2002. This period is the last month of the Company's fiscal 2002 fourth quarter.

Same-restaurant sales at Olive Garden were up 8% to 9% for the month, driven by a 3% to 4% increase in guest counts. Average check increased 4% to 5% due to a 2% increase in pricing and a 2% to 3% increase from menu mix changes. Olive Garden's "Chicken and Shrimp Limone" was featured from April 8 to May 5 and that feature was resumed from May 13 to May 26. In fiscal May of last year, Olive Garden had a 3% to 4% same-restaurant sales increase and promoted its "Tour of Italy" featured at $9.95.

Same-restaurant sales at Red Lobster were up 6% to 7% for the month driven by a 4% increase in guest counts and growth of 2% to 3% in check average. The average check increase resulted from a 1% to 2% increase in pricing and 1% increase from menu mix changes. Red Lobster's Lobsterfest promotion, which began February 18, continued through May 5. This was followed by a new promotion, "Jumbo Shrimp Combo" for $12.99, which started on May 20 and will continue through June 30. In fiscal May of last year, Red Lobster recorded a 3% to 4% same-restaurant sales increase and its Lobsterfest promotion ran for the first week of the month.

Darden Restaurants, Inc., headquartered in Orlando, FL, owns and operates Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones BBQ Sports Bar 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
     05/27/01                                      05/26/02
          629               Red Lobster USA             636
           32            Red Lobster Canada              31
          661             Total Red Lobster             667


          472              Olive Garden USA             490
            5           Olive Garden Canada               6
          477            Total Olive Garden             496


           21                 Bahama Breeze              29


            9              Smokey Bones BBQ              19


        1,168             Total Restaurants           1,211




                          DARDEN RESTAURANTS, INC.
                   FOURTH QUARTER FY 2002 FINANCIAL HIGHLIGHTS
                      (In Millions, Except per Share Data)
                                 (Unaudited)


                                        13 Weeks Ended      52 Weeks Ended


                                      5/26/2002 5/27/2001 5/26/2002 5/27/2001
    Sales                              $1,162.4  $1,074.0  $4,368.7  $3,992.4


    Net Earnings (1)                      $72.9     $61.0    $237.8    $197.0


    Net Earnings per Share (1):
      Basic                               $0.42     $0.35     $1.36     $1.10
      Diluted                             $0.40     $0.33     $1.30     $1.06


    Average Number of Common Shares
      Outstanding:
      Basic                               172.7     176.8     174.7     179.6
      Diluted                             182.2     184.0     183.5     185.6


    Note:
    (1) Earnings before restructuring credit were as follows:


    Earnings before Restructuring
      Credit                              $72.8     $61.0    $236.2    $197.0


    Earnings per Share before
       Restructuring Credit:
       Basic                              $0.42     $0.35     $1.35     $1.10
       Diluted                            $0.40     $0.33     $1.29     $1.06



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



                                    13 Weeks Ended         52 Weeks Ended


                                 5/26/2002  5/27/2001    5/26/2002  5/27/2001
    Sales                       $1,162,373 $1,074,032   $4,368,701 $3,992,419
    Costs and Expenses:
     Cost of sales:
       Food and beverage           369,277    360,286    1,384,481  1,302,926
       Restaurant labor            353,282    326,368    1,373,416  1,261,837
       Restaurant expenses         166,003    149,865      626,702    559,670
         Total Cost of Sales       888,562    836,519    3,384,599  3,124,433
    Selling, general and
     administrative                111,803     98,503      420,947    389,240
    Depreciation and amortization   43,393     38,347      165,829    146,864
    Interest, net                   10,213      8,085       36,585     30,664
    Restructuring credit (1)          -299         --       -2,568         --
         Total Costs and
          Expenses               1,053,672    981,454    4,005,392  3,691,201
    Earnings before Income
      Taxes                        108,701     92,578      363,309    301,218
    Income Taxes                   -35,752    -31,567     -125,521   -104,218
    Net Earnings                   $72,949    $61,011     $237,788   $197,000


    Net Earnings per Share:
     Basic                           $0.42      $0.35        $1.36      $1.10
     Diluted                         $0.40      $0.33        $1.30      $1.06


    Average Number of Common
     Shares Outstanding:
     Basic                         172,700    176,800      174,700    179,600
     Diluted                       182,200    184,000      183,500    185,600


    Note:
    (1) Earnings before restructuring credit were as follows:


                                        13 Weeks Ended       52 Weeks Ended


                                      5/26/2002 5/27/2001 5/26/2002 5/27/2001


    Pretax Earnings before
     Restructuring Credit              $108,402   $92,578  $360,741  $301,218
    Income Taxes                        -35,637   -31,567  -124,530  -104,218


    Earnings before Restructuring
     Credit                             $72,765   $61,011  $236,211  $197,000


    Earnings per Share before
     Restructuring Credit:
      Basic                               $0.42     $0.35     $1.35     $1.10
      Diluted                             $0.40     $0.33     $1.29     $1.06




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



                                      5/26/2002           5/27/2001
    ASSETS
    Current Assets:
       Cash and cash equivalents       $152,875             $61,814
       Short-term investments             9,904                  --
       Receivables                       29,089              32,870
       Inventories                      172,413             148,429
       Net assets held for disposal      10,047              10,087
       Prepaid expenses and other
        current assets                   23,076              26,942
       Deferred income taxes             52,127              48,000
           Total Current Assets        $449,531            $328,142
    Land, Buildings and Equipment     1,920,768           1,779,515
    Other Assets                        159,437             108,877
              Total Assets           $2,529,736          $2,216,534


    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities:
       Accounts payable                $160,064            $156,859
       Short-term debt                       --              12,000
       Current portion of long-term
       debt                                  --               2,647
       Accrued payroll                   87,936              82,588
       Accrued income taxes              68,504              47,698
       Other accrued taxes               30,474              27,429
       Other current liabilities        254,036             225,037
           Total Current Liabilities   $601,014            $554,258
    Long-term Debt                      662,506             517,927
    Deferred Income Taxes               117,709              90,782
    Other Liabilities                    19,630              20,249
           Total Liabilities         $1,400,859          $1,183,216


    Stockholders' Equity:
       Common stock and surplus      $1,474,054          $1,405,799
       Retained earnings                760,684             532,121
       Treasury stock                -1,044,915            -840,254
       Accumulated other
       comprehensive income             -12,841             -13,102
       Unearned compensation            -46,108             -49,322
       Officer notes receivable          -1,997              -1,924
           Total Stockholders'
            Equity                   $1,128,877          $1,033,318
               Total Liabilities
                and Stockholders'
                Equity               $2,529,736          $2,216,534