As filed with the Securities and Exchange Commission on September 19, 2002.
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):
September 18, 2002
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 5. Other Events.
------------
On September 18, 2002, the Company issued a news release entitled
"Darden Restaurants Reports Strong Performance at Red Lobster and
Olive Garden that led to 18% First Quarter EPS Growth," a copy of
which is being filed herewith as Exhibit 99.
At the Annual Meeting of Shareholders held on September 19, 2002,
the shareholders of the Company took the following actions:
1. Elected thirteen directors (Leonard L. Berry, Bradley D.
Blum, Odie C. Donald, Julius Erving, II, David H. Hughes,
Joe R. Lee, Senator Connie Mack, III, Richard E. Rivera,
Michael D. Rose, Maria A. Sastre, Jack A. Smith, Blaine
Sweatt, III, and Rita P. Wilson);
2. Approved the Darden Restaurants, Inc. 2002 Stock Incentive
Plan; and
3. Approved the appointment of KPMG LLP as independent auditors
for the fiscal year ending May 25, 2003.
Item 7. Financial Statements and Exhibits.
---------------------------------
(c) Exhibits.
Exhibit Number
(by reference to
Item 601 of
Regulation S-K) Description
99 Press Release dated September 18,
2002, entitled "Darden Restaurants
Reports Strong Performance at Red
Lobster and Olive Garden that led to
18% First Quarter EPS Growth."
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: September 19, 2002 DARDEN RESTAURANTS, INC.
By: /s/ William R. White, III
-----------------------------------
William R. White, III
Vice President and Treasurer
3
INDEX TO EXHIBITS
Exhibit Number Description of Exhibit
99 Press Release dated September 18, 2002, entitled
"Darden Restaurants Reports Strong Performance at Red
Lobster and Olive Garden that led to 18% First Quarter
EPS Growth."
4
EXHIBIT 99
[OBJECT OMITTED]
www.darden.com NEWS/INFORMATION
Corporate Relations
P.O. Box 593330
Orlando, FL 32859
Contacts:
(Analysts) Matthew Stroud (407) 245-5550
(Media) Rick Walsh (407) 245-5366
FOR RELEASE
September 18, 2002
4:30 PM EDT
DARDEN RESTAURANTS REPORTS STRONG PERFORMANCE AT RED LOBSTER AND OLIVE GARDEN
THAT LED TO 18% FIRST QUARTER EPS GROWTH
ORLANDO, FL., Sept. 18 - Darden Restaurants, Inc. today reported that strong
restaurant sales growth led to record quarterly sales of $1.17 billion for the
fiscal first quarter ended August 25, 2002. Earnings per diluted share also
reached a new quarterly high of 40 cents, an 18% increase from prior year.
"We had a great start to the new fiscal year with our strong first quarter
financial results," said Joe Lee, Darden's Chairman and Chief Executive Officer.
"These results, like the long-term success we've enjoyed, speak to the power of
the unique blend of strengths Darden has within casual dining. We have the best
people in the industry. And, they have an unrelenting focus on improving the
operating excellence in our restaurants, as well as a deep commitment to using
great marketing and other brand management skills to strengthen our operating
companies' positioning among casual dining guests. I believe this combination
will help Darden achieve strong, consistent growth during times of economic
strength, as well as during periods, like the first quarter when social and
economic conditions are challenging."
Highlights for the quarter ended August 25, 2002, included the following:
o Earnings after tax in the first quarter were $71.9 million, or 40 cents per
diluted share, on sales of $1.17 billion. Last year, earnings after tax
were $62.2 million, or 34 cents per diluted share, on sales of $1.07
billion.
o Total sales of $1.17 billion for the quarter represent a 9.4% increase over
prior year and same- restaurant sales continue to outperform the casual
dining industry.
o Red Lobster led the Company with an impressive 6.6% increase in
same-restaurant sales, its 19th consecutive quarter of same-restaurant
sales growth.
o Olive Garden reported its 32nd consecutive quarter of same-restaurant sales
growth with a strong 4.8% increase.
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o Bahama Breeze opened one new restaurant during the quarter, bringing its
total number of restaurants to 30.
o Smokey Bones BBQ Sports Bar opened two new restaurants during the quarter
bringing the total number of restaurants to 21.
o The Company continued its share repurchase program, buying back 2.0 million
shares of its common stock in the quarter and the Board of Directors
approved an additional share repurchase authorization totaling 18.5 million
shares.
Operating Highlights
RED LOBSTER'S first quarter sales of $618.4 million were 7.9% above prior year,
with most of the growth produced by the 6.6% increase in same-restaurant sales,
extending Red Lobster's string of comparable sales gains to 19 consecutive
quarters. Red Lobster's record first quarter operating profit represents a
double-digit increase compared to last year primarily as a result of the
increased sales and lower food costs and selling, general and administrative
expenses as a percent of sales.
"It was another terrific quarter at Red Lobster," said Edna Morris, President of
Red Lobster. "This quarter's strong sales growth reflects our crew's focus on
operating excellence, which was leveraged by effective advertising that featured
appealing entrees that only Red Lobster can deliver. We are committed to
offering our guests a fresh approach to casual dining, featuring great seafood,
good times and hospitality. This should help ensure that Red Lobster remains
America's leader among casual dining seafood restaurants."
OLIVE GARDEN'S first quarter sales of $498.7 million were an 8.4% increase from
the prior year due to strong same-restaurant sales growth and 16 more
restaurants in operation than prior year. Olive Garden achieved its 32nd
consecutive quarter of comparable-restaurant sales growth with its
same-restaurant sales increase of 4.8%. The increased sales, combined with lower
food and restaurant labor costs as a percent of sales, resulted in record
quarterly profit that also represents a strong double-digit operating profit
increase over last year.
"This has been a great quarter for Olive Garden," said Drew Madsen, President of
Olive Garden. "Our teams continue to delight guests with a genuine Italian
dining experience featuring fresh, simple and delicious Italian food,
accompanied by a great glass of wine, in a home-like setting where everyone is
treated like family. We also benefited from a great new menu and highly
effective advertising. Our compelling brand positioning and commitment to
excellence in everything we do are the reasons Olive Garden is America's
favorite casual dining Italian restaurant."
BAHAMA BREEZE opened one new restaurant in Phoenix, AZ. Average sales per
restaurant remain high, annualizing at over $5 million over the last 12 months.
At least five more openings are scheduled for this fiscal year.
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SMOKEY BONES BBQ SPORTS BAR opened two restaurants during the quarter, one in
Montgomery, AL and another in Evansville, IN. Since the end of the quarter,
another new restaurant has opened in Erie, PA and an additional five to seven
are expected to open during the second quarter. Twenty to twenty-five
restaurants are expected to open in fiscal year 2003, which will more than
double the total number of Smokey Bones open at the end of fiscal 2002.
Other Actions
Darden continued its buyback of common stock, purchasing 2.0 million shares in
the first quarter. Cumulatively, since the initial authorization of its
repurchase program in December 1995, the Company has repurchased 89.8 million
shares.
The Board of Directors today approved an additional share repurchase
authorization totaling 18.5 million shares, bringing the total authorization to
115.4 million shares. Combined with unused capacity from prior authorizations,
Darden's available share repurchase authorization now totals 25.6 million, which
is approximately 15% of the shares the Company had outstanding at the end of the
first quarter.
The Board of Directors also today declared a regular semi-annual cash dividend
of 4 cents per share on the Company's outstanding common stock. The dividend is
payable on November 1, 2002 to shareholders of record at the close of business
on October 10, 2002. Based on this 4 cent semi-annual dividend declaration, the
Company's indicated annual dividend is 8 cents per share. This represents a 50%
increase in the Company's cash dividend.
August 2002 Same-Restaurant Sales Results
Darden reported same-restaurant sales for the four-week August fiscal month
ended August 25, 2002. This period is the last month of the Company's fiscal
2003 first quarter.
Same-restaurant sales at Red Lobster were up 4% to 5% for the month driven by a
2% to 3% increase in pricing, a 1% increase in check average due to menu mix
changes and a 1% increase in guest traffic. During fiscal August, Red Lobster
promoted its "Summer Festival of Crab," which featured "Bottomless Buckets of
Crab" (a $19.99 item in restaurant) for one week, followed by three weeks of
"Pound of Crab at $10.99." In fiscal August of last year the "Summer Festival of
Crab" promotion ran for the entire month and Red Lobster had a 2% to 3%
same-restaurant sales increase.
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Same-restaurant sales at Olive Garden were up 3% to 4% for the month. This
reflected a 2% to 3% increase in pricing, a 1% to 2% gain from menu mix changes
and a 0% to 1% decline in guest counts. This fiscal August, Olive Garden had
three weeks of advertising featuring "Lobster Spaghetti" (a $17.95 item in
restaurant) compared to four weeks of advertising last year in fiscal August,
featuring "Chicken Con Broccoli" (a $10.50 item in restaurant). In fiscal August
of last year, Olive Garden had a 7% to 8% same-restaurant sales increase.
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
08/26/01 08/25/02
-------- --------
628 Red Lobster USA 638
32 Red Lobster Canada 31
-- --
660 Total Red Lobster 669
475 Olive Garden USA 490
5 Olive Garden Canada 6
- -
480 Total Olive Garden 496
23 Bahama Breeze 30
10 Smokey Bones BBQ 21
-------- -------
1,173 Total Restaurants 1,216
-END-
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended
08/25/2002 08/26/2001
---------- ----------
Sales $1,174,565 $1,073,410
Costs and Expenses:
Cost of sales:
Food and beverage 365,236 343,592
Restaurant labor 369,362 333,446
Restaurant expenses 168,577 151,250
Total Cost of Sales 903,175 828,288
Selling, general and administrative 106,991 101,761
Depreciation and amortization 45,141 39,510
Interest, net 10,253 8,274
Total Costs and Expenses 1,065,560 977,833
Earnings before Income Taxes 109,005 95,577
Income Taxes -37,119 -33,421
Net Earnings $71,886 $62,156
Net Earnings per Share:
Basic $0.42 $0.35
Diluted $0.40 $0.34
Average Number of Common Shares Outstanding:
Basic 171,600 176,100
Diluted 180,000 183,800
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
08/25/2002 05/26/2002
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $137,076 $152,875
Short-term investments 9,994 9,904
Receivables 27,353 29,089
Inventories 180,590 172,413
Net assets held for disposal 10,688 10,047
Prepaid expenses and other current assets 16,574 23,076
Deferred income taxes 53,918 52,127
Total Current Assets $436,193 $449,531
Land, Buildings and Equipment 1,984,980 1,920,768
Other Assets 164,593 159,437
Total Assets $2,585,766 $2,529,736
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $181,181 $160,064
Accrued payroll 73,864 87,936
Accrued income taxes 85,195 68,504
Other accrued taxes 33,950 30,474
Other current liabilities 242,553 254,036
Total Current Liabilities $616,743 $601,014
Long-term Debt 661,103 662,506
Deferred Income Taxes 121,335 117,709
Other Liabilities 19,214 19,630
Total Liabilities $1,418,395 $1,400,859
Stockholders' Equity:
Common stock and surplus $1,488,987 $1,474,054
Retained earnings 832,570 760,684
Treasury stock -1,089,928 -1,044,915
Accumulated other comprehensive income -13,477 -12,841
Unearned compensation -49,052 -46,108
Officer notes receivable -1,729 -1,997
Total Stockholders' Equity $1,167,371 $1,128,877
Total Liabilities and Stockholders' Equity $2,585,766 $2,529,736
DARDEN RESTAURANTS, INC.
FIRST QUARTER FY 2003 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
(Unaudited)
13 Weeks Ended
08/25/2002 08/26/2001
---------- ----------
Sales $1,174.6 $1,073.4
Net Earnings $71.9 $62.2
Net Earnings per Share:
Basic $0.42 $0.35
Diluted $0.40 $0.34
Average Number of Common Shares Outstanding:
Basic 171.6 176.1
Diluted 180.0 183.8