As filed with the Securities and Exchange Commission on June 22, 2004.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 22, 2004
Darden Restaurants, Inc.
(Exact name of registrant as specified in its charter)
Florida 1-13666 59-3305930
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification No.)
5900 Lake Ellenor Drive, Orlando, Florida 32809
(Address of principal executive offices)
Registrant's telephone number, including area code:
(407) 245-4000
Not Applicable
(Former name or former address, if changed since last report)
Item 12. Results of Operations and Financial Condition.
---------------------------------------------
On June 22, 2004, the Company issued a news release entitled
"Darden Restaurants Reports Annual and Fourth Quarter Diluted
Net Earnings Per Share," a copy of which is furnished herewith
as Exhibit 99 to this current Report on Form 8-K.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 22, 2004 DARDEN RESTAURANTS, INC.
By: /s/ Paula J. Shives
-------------------------
Paula J. Shives
Senior Vice President and
General Counsel
3
INDEX TO EXHIBITS
Exhibit Number Description of Exhibit
-------------- --------------------------
99 Press Release dated June 22, 2004, entitled "Darden
Restaurants Reports Annual and Fourth Quarter Diluted
Net Earnings Per Share."
4
EXHIBIT 99
DARDEN RESTAURANTS
Red Lobster(R)Olive Garden(R)Bahama Breeze(R)Smokey Bones(R)
www.darden.com
NEWS/INFORMATION
Corporate Relations
P.O. Box 593330
Orlando, FL 32859
Contacts:
(Analysts) Matthew Stroud (407) 245-6458
(Media) Jim DeSimone (407) 245-4567
FOR RELEASE
June 22, 2004
4:30 PM ET
DARDEN RESTAURANTS REPORTS ANNUAL AND
FOURTH QUARTER DILUTED NET EARNINGS PER SHARE
ORLANDO, FL, June 22 - Darden Restaurants, Inc. (NYSE:DRI) today reported
diluted net earnings per share for the fiscal year and fiscal fourth quarter
ended May 30, 2004, which included an additional operating week compared to last
year. Diluted net earnings per share were $1.36 for the year on net earnings of
$231.5 million and 32 cents for the fourth quarter on net earnings of $53.7
million. As described in the table below, annual diluted net earnings per share,
before the previously announced fourth quarter asset impairment and
restructuring charge, was $1.50.
14 weeks ended 5/30/2004 53 weeks ended 5/30/2004
Diluted Net Diluted Net
(In thousands except per share data) Net Earnings Net Earnings
Earnings Per Share Earnings Per Share
As reported $53,716 $0.32 $231,462 $1.36
Asset impairment and restructuring charge 23,053 0.14 23,053 0.14
------ ---- ------ ----
Adjusted $76,769 $0.46 $254,515 $1.50
Darden Restaurants, the world's largest casual dining company, said full year
sales increased 7.5% to $5.0 billion. In the fourth quarter, sales increased
10.7% to $1.4 billion driven primarily by new restaurant growth at Olive Garden
and Smokey Bones and the additional operating week in the quarter.
"This was a good quarter for Darden Restaurants," said Joe Lee, Darden's
Chairman and Chief Executive Officer. "We achieved solid fourth quarter diluted
net earnings per share as a result of exceptional performance once again at
Olive Garden and continued improvement at Red Lobster, Bahama Breeze and Smokey
Bones. Strong leadership is the key to propelling future growth for Darden and
we will benefit from recent steps to fill important leadership positions. We are
committed to building the leadership teams we need to create a great company
that will last for generations."
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Highlights for the quarter and year ended May 30, 2004 include the following:
o Net earnings were $231.5 million, or $1.36 per diluted share, for the
fiscal year and $53.7 million, or 32 cents per diluted share, for the
fourth quarter. These results include fourth quarter asset impairment and
restructuring charges totaling approximately $23.1 million after tax for
the closure of six Bahama Breeze restaurants and a write down of the value
of four other Bahama Breeze restaurants, one Olive Garden restaurant and
one Red Lobster restaurant.
o Net earnings for the fiscal year (excluding the asset impairment and
restructuring charges) were $254.5 million, or $1.50 per diluted share, on
sales of $5.0 billion (53 weeks). Last year net earnings were $232.3
million, or $1.31 per diluted share, on sales of $4.7 billion (52 weeks).
o Net earnings for the fourth quarter (excluding the asset impairment and
restructuring charges) were $76.8 million, or 46 cents per diluted share,
on sales of $1.4 billion (14 weeks). Last year net earnings were $61.1
million, or 35 cents per diluted share, on sales of $1.2 billion (13
weeks).
o Olive Garden's same-restaurant sales increased 5.0% in the fourth quarter
on a 13 weeks versus 13 weeks basis. This is the 39th consecutive quarter
of same-restaurant sales growth, bringing Olive Garden's same-restaurant
sales increase for the fiscal year to 4.6%. Olive Garden also opened 11 new
restaurants in the fourth quarter and 23 new restaurants during fiscal
2004.
o On May 20, the Company announced that Kim Lopdrup, a 19-year industry
veteran, would become President of Red Lobster. In addition to Lopdrup, the
Company announced that Kelly Baltes, who has spent 19 years in the casual
dining industry, would become Executive Vice President of Operations for
Red Lobster and Jane Diange, a 10-year casual dining veteran, would become
Senior Vice President of Human Resources for Red Lobster.
o Smokey Bones opened 10 restaurants during the fourth quarter and, with a
total of 30 openings during the full fiscal year, increased in size to 69
restaurants in operation. Total sales for Smokey Bones in fiscal 2004 were
$174.3 million and average annual sales per restaurant were $3.2 million.
o Darden purchased 4.4 million shares of its common stock in the fourth
quarter, bringing the total number of shares repurchased during the year to
10.7 million.
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Operating Highlights
OLIVE GARDEN'S fourth quarter sales of $593.5 million were 15.7% above prior
year, driven primarily by a same-restaurant sales increase of 5.0% (on a 13
weeks versus 13 weeks basis), revenue from 19 net new restaurants opened during
fiscal 2004 and sales from the additional operating week. This is the 39th
consecutive quarter of comparable-restaurant sales growth for Olive Garden.
Olive Garden had record total sales for the fiscal year of $2.2 billion, up
11.1% from last year, and its average annual sales per restaurant were $4.1
million (52 week base). For the quarter, the company's sales gains, combined
with lower food and beverage costs, restaurant expenses and selling, general,
and administrative expenses as a percent of sales, more than offset increased
restaurant labor expenses. This resulted in a strong double-digit increase in
operating profit for the quarter and the year along with record annual operating
profit and return on sales.
"This was a great quarter to complete an outstanding year for Olive Garden,"
said Drew Madsen, President of Olive Garden. "I am delighted that we could
deliver such strong growth and record financial performance in sales, operating
profit and return on sales. We have an exceptional team that is focused on
delighting our guests with a genuine Italian dining experience. I want to thank
that team for making our guests feel like family, whenever they choose to dine
at Olive Garden. We are excited about our future and the opportunity to achieve
even higher levels of success."
RED LOBSTER'S fourth quarter sales of $652.8 million were 1.3% above prior year,
driven by seven net new restaurants opened during fiscal 2004 and sales from the
additional operating week partially offset by a 6.4% decrease in same-restaurant
sales (on a 13 weeks versus 13 weeks basis). Red Lobster's total sales for the
fiscal year were $2.4 billion, up 0.1% from last year, and its average annual
sales per restaurant were $3.6 million (52 week base). Same-restaurant sales for
the fiscal year were down 3.5%. Lower food and beverage costs, restaurant
expenses and selling, general and administrative expenses as a percent of sales
more than offset higher restaurant labor expenses, which led to a strong
double-digit increase in operating profit for the quarter versus last year.
"We are encouraged that our team was able to grow profits in the fourth quarter,
despite considerable challenges," said Kim Lopdrup, President of Red Lobster.
"Importantly, we also increased our guest satisfaction scores significantly, and
our sales trend since April has improved after we introduced our new
transitional advertising campaign. Our 63,000 dedicated employees are committed
to enhancing the dining experience of all our guests and building a simply great
future for Red Lobster and all its stakeholders."
BAHAMA BREEZE opened its new, reduced-investment prototype building in
Pittsburgh, PA during the fourth quarter. Bahama Breeze also closed six
restaurants during the quarter, reducing the total number in operation to 32
restaurants. Total sales for Bahama Breeze were $176.3 million in fiscal 2004
and average annual sales per restaurant (excluding the six closed restaurants)
were $5.2 million (on a 52 week basis).
SMOKEY BONES opened 10 restaurants during the fourth quarter and had 69
restaurants in operation at the end of the fiscal year. Since the end of the
quarter, Smokey Bones has opened one restaurant located in Bowie, MD. Total
sales for Smokey Bones were $174.3 million in fiscal 2004 and average annual
sales per restaurant were $3.2 million (on a 52 week basis). The company plans
to open 30 to 40 restaurants during fiscal 2005.
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Other Actions
Darden continued the buyback of its common stock, purchasing 4.4 million shares
in the fourth quarter. Since commencing its repurchase program in December 1995,
the Company has repurchased a total of 109.2 million shares under authorizations
totaling 115.4 million shares.
The Company's Annual Meeting of Shareholders will be held on September 29, 2004
at the Gaylord Palms Orlando Resort Hotel in Kissimmee, FL. The record date for
shareholders entitled to vote at the Annual Meeting is July 26, 2004.
May 2004 Same-Restaurant Sales Results
Darden reported same-restaurant sales for the five-week May fiscal month ended
May 30, 2004, which had an additional operating week versus last year. This
period is the last month of Darden's fiscal 2004 fourth quarter.
Same-restaurant sales at Olive Garden were up 1% to 2% for fiscal May on a four
weeks versus four weeks basis, which reflected a 2% to 3% increase in check
average and a 1% to 2% decrease in guest counts. The check average increase was
a result of a 2% to 3% increase in pricing and a 0% to 1% increase from menu mix
changes. Last year, same-restaurant sales at Olive Garden were flat during
fiscal May.
Same-restaurant sales at Red Lobster were down 4% to 5% for fiscal May on a four
weeks versus four weeks basis, which reflected a 0% to 1% decrease in check
average and a 4% to 5% decrease in guest counts. The check average increase was
a result of a 0% to 1% increase in pricing and a 1% decrease from menu mix
changes. Last year, same-restaurant sales at Red Lobster were down 2% to 3%
during fiscal May.
Fiscal 2005 Outlook
Darden expects combined same-restaurant sales growth in fiscal 2005 of between
1% and 3% for Red Lobster and Olive Garden. Darden also expects to open at least
50 to 60 new restaurants in fiscal 2005.
"We have strong, consumer driven businesses and we will continue to do what is
necessary to drive their growth. Given our near term focus to strengthen the
performance at Red Lobster and Bahama Breeze, the continued roll-out of Smokey
Bones as well as some uncertainty in economic conditions and the extra operating
week in fiscal 2004, we believe diluted net earnings per share growth in the
range of 8% to 12% is appropriate for fiscal 2005," said Lee. "Over the long
term, we believe we can achieve annual diluted earnings per share growth in the
double-digit range."
Darden Restaurants, Inc., headquartered in Orlando, FL, owns and operates over
1,300 Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones and Seasons 52
restaurants with annual sales of $5.0 billion.
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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
05/30/04 05/25/03
-------- --------
649 Red Lobster USA 642
31 Red Lobster Canada 31
--- ------------------ ---
680 Total Red Lobster 673
537 Olive Garden USA 518
6 Olive Garden Canada 6
--- ------------------- ---
543 Total Olive Garden 524
32 Bahama Breeze 34
69 Smokey Bones 39
1 Seasons 52 1
----- -----
1,325 Total Restaurants 1,271
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DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
14 weeks 13 weeks 53 weeks 52 weeks
ended ended ended ended
5/30/2004 5/25/2003 5/30/2004 5/25/2003
--------- --------- --------- ---------
Sales $1,359,171 $1,227,492 $5,003,355 $4,654,971
Costs and expenses:
Cost of sales:
Food and beverage 411,418 388,644 1,526,875 1,449,162
Restaurant labor 442,290 386,590 1,601,258 1,485,046
Restaurant expenses 197,043 181,859 767,584 703,554
Total cost of sales (1) $1,050,751 $957,093 $3,895,717 $3,637,762
Selling, general and administrative 128,641 114,316 472,109 431,722
Depreciation and amortization 54,224 52,015 210,004 191,218
Interest, net 11,349 10,946 43,659 42,597
Asset impairment and restructuring charge,net 37,823 3,924 41,868 3,924
Total costs and expenses $1,282,788 $1,138,294 $4,663,357 $4,307,223
Earnings before income taxes 76,383 89,198 339,998 347,748
Income taxes (22,667) (28,088) (108,536) (115,488)
Net earnings $53,716 $61,110 $231,462 $232,260
Net earnings per share:
Basic $0.34 $0.36 $1.42 $1.36
Diluted $0.32 $0.35 $1.36 $1.31
Average number of common shares outstanding:
Basic 160,300 168,000 163,500 170,300
Diluted 166,900 173,400 169,700 177,400
(1) Excludes restaurant depreciation and
amortization as follows: $50,271 $48,244 $195,486 $177,127
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DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
05/30/2004 05/25/2003
ASSETS
Current assets:
Cash and cash equivalents $ 36,694 $ 48,630
Receivables 30,258 29,023
Inventories 198,781 173,644
Prepaid expenses and other current assets 25,316 25,126
Deferred income taxes 55,258 49,206
Total current assets $ 346,307 $ 325,629
Land, buildings and equipment 2,250,616 2,157,132
Other assets 183,425 181,872
Total assets $2,780,348 $ 2,664,633
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 174,624 $ 175,991
Short term debt 14,500 --
Accrued payroll 103,327 85,975
Accrued income taxes 48,753 67,975
Other accrued taxes 38,440 35,069
Unearned revenues 75,513 72,698
Other current liabilities 228,324 202,201
Total current liabilities $ 683,481 $ 639,909
Long-term debt 653,349 658,086
Deferred income taxes 176,216 150,537
Other liabilities 21,532 19,910
Total liabilities $ 1,534,578 $ 1,468,442
Stockholders' equity:
Common stock and surplus $ 1,584,115 $ 1,525,957
Retained earnings 1,197,921 979,443
Treasury stock (1,483,768) (1,254,293)
Accumulated other comprehensive income (9,959) (10,489)
Unearned compensation (41,401) (42,848)
Officer notes receivable (1,138) (1,579)
Total stockholders' equity $ 1,245,770 $ 1,196,191
Total liabilities and stockholders' equity $ 2,780,348 $ 2,664,633
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DARDEN RESTAURANTS, INC.
FOURTH QUARTER FY 2004 FINANCIAL HIGHLIGHTS
(In millions, except per share data)
(Unaudited)
14 weeks 13 weeks 53 weeks 52 weeks
ended ended ended ended
5/30/2004 5/25/2003 5/30/2004 5/25/2003
--------- --------- --------- ---------
Sales $1,359.2 $1,227.5 $5,003.4 $4,655.0
Net Earnings $53.7 $61.1 $231.5 $232.3
Net Earnings per Share:
Basic $0.34 $0.36 $1.42 $1.36
Diluted $0.32 $0.35 $1.36 $1.31
Average number of common shares outstanding:
Basic 160.3 168.0 163.5 170.3
Diluted 166.9 173.4 169.7 177.4
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