As filed with the Securities and Exchange Commission on December 18, 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):
December 17, 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 December 17, 2002, the Company issued a news release
entitled "Darden Restaurants Reports Double-Digit Second
Quarter EPS Growth," a copy of which is being filed herewith
as Exhibit 99.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Number
(by reference to
Item 601 of
Regulation S-K) Description
99 Press Release dated December
17, 2002, entitled "Darden
Restaurants Reports Double-Digit
Second 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: December 17, 2002 DARDEN RESTAURANTS, INC.
By: /s/ Paula J. Shives
-----------------------------------
Paula J. Shives
Senior Vice President
General Counsel and Secretary
3
INDEX TO EXHIBITS
Exhibit Number Description of Exhibit
99 Press Release dated December 17, 2002, entitled
"Darden Restaurants Reports Double-Digit Second
Quarter EPS Growth."
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) 245-5550
(Media) Jim DeSimone (407)245-5192
FOR RELEASE
December 17, 2002
4:30 PM EST
DARDEN RESTAURANTS REPORTS DOUBLE-DIGIT
SECOND QUARTER EPS GROWTH
ORLANDO, FL., Dec. 17 - Darden Restaurants, Inc. today reported record quarterly
sales of $1.07 billion for the fiscal second quarter ended November 24, 2002,
and that earnings per diluted share also reached a new quarterly high of 21
cents, an 11% increase from prior year, excluding an unusual restructuring
credit last year.
"We held up well this quarter despite difficult conditions, but there was more
variability than we would have liked," said Joe Lee, Darden's Chairman and Chief
Executive Officer. "While Olive Garden achieved record levels of performance for
the quarter, Red Lobster's results during the first two months were softer than
expected. However, Red Lobster did experience very strong sales growth in the
final month, and we're encouraged by the renewed momentum. Fundamentals of the
business, such as guest satisfaction and employee retention trends, remain
strong and we believe Darden is well-positioned to achieve solid, consistent
growth this fiscal year and for the long-term."
Highlights for the quarter ended November 24, 2002, included the following:
o Earnings after tax in the second quarter were $37.5 million, or 21 cents
per diluted share, on sales of $1.07 billion. Last year, earnings after tax
before an unusual restructuring credit were $35.1 million, or 19 cents per
diluted share, on sales of $1.01 billion.
o Total sales of $1.07 billion for the quarter represent a 6.4% increase over
prior year, and establish a new second quarter record for Darden.
o Olive Garden led the Company with a 3.5% increase in same-restaurant sales,
its 33rd consecutive quarter of same-restaurant sales growth.
o Red Lobster reported its 20th consecutive quarter of same-restaurant sales
growth with a 2.3% increase.
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o Same-restaurant sales results for Red Lobster and Olive Garden benefited by
approximately one percentage point this quarter from a shift in the
Thanksgiving holiday. Both companies close for the holiday, which was not
in Darden's fiscal second quarter this year while it did occur in the
second quarter last year.
o Bahama Breeze opened two new restaurants during the quarter, bringing its
total number of restaurants to 32.
o Smokey Bones opened six new restaurants during the quarter, bringing the
total number of restaurants it operates to 27.
o The Company continued its share repurchase program, buying back 1.2 million
shares of its common stock in the quarter.
Operating Highlights
OLIVE GARDEN'S second quarter sales of $472.7 million were a 7.2% increase from
the prior year due to its same-restaurant sales growth and its having 23 more
restaurants in operation than the prior year. With the company's 3.5% gain,
Olive Garden achieved its 33rd consecutive quarter of same-restaurant sales
growth and opened 11 restaurants during the quarter, the most since 1995. The
increased sales, combined with lower food and beverage expense and restaurant
labor costs as a percent of sales, resulted in record quarterly operating profit
that also represents a strong double-digit increase over last year.
"It was another successful quarter at Olive Garden," said Drew Madsen, President
of Olive Garden. "The focus on operating excellence and strong branding led to
same-restaurant sales growth that was again ahead of the casual dining industry
average. Guests continued to be motivated by our promise of a genuine Italian
dining experience featuring fresh, simple and delicious Italian food,
accompanied by a great glass of wine, in a home-like Italian setting where
everyone is treated like family. And, our teams continued to deliver on that
promise throughout the company."
RED LOBSTER'S second quarter sales of $549.2 million were 3.5% above prior year,
driven primarily by its 2.3% increase in same-restaurant sales, which extended
Red Lobster's string of comparable sales gains to 20 consecutive quarters. Red
Lobster enjoyed strong November sales growth, partially offsetting the sales
softness it experienced during September and October. Due to the combination of
lower than expected sales growth and a value-oriented marketing calendar during
the first two months of the quarter, Red Lobster's restaurant labor costs,
restaurant expenses, and selling, general and administrative expenses each
increased as a percent of sales. As a result, its operating profit declined
versus last year.
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"We finished the quarter strongly, with a very good November," said Edna Morris,
President of Red Lobster. "We did so by building upon the improving operating
excellence of our crew with an appealing, effectively advertised entree feature
after a disappointing marketing feature the previous two months. Our ability to
quickly reverse unfavorable sales trends underscores Red Lobster's many
competitive advantages, including the quality of our crew and the fundamental
strength of our brand and operations."
BAHAMA BREEZE opened two new restaurants during the quarter, one in Sunrise, FL
and the other in Chesterfield, MO, bringing the year-to-date total to three
openings. Three more openings are scheduled for this fiscal year.
SMOKEY BONES opened six new restaurants during the quarter. In addition, two
more restaurants have opened since the end of the quarter, one in Dunwoody, GA
and the other in Duluth, GA. In fiscal year 2003, at least 20 restaurants are
expected to open, more than doubling the number open at the end of fiscal 2002.
Other Actions
After the end of the second quarter, Darden announced that it will begin the
next phase of testing for a new restaurant called Seasons 52(SM). It is a
casually sophisticated fresh grill and wine bar with seasonally inspired menus
offering the freshest ingredients to create great tasting entrees that are
nutritionally balanced and lower in calories. Seasons 52(SM) is currently under
construction and is scheduled to open in Orlando, FL, in Darden's fiscal third
quarter.
Darden continued its buyback of common stock, purchasing 1.2 million shares in
the second quarter. Cumulatively, since the initial authorization of its
repurchase program in December 1995, the Company has repurchased 91.0 million
shares, and it has approximately 24.4 million shares remaining under current
authorizations.
November 2002 Same-Restaurant Sales Results
Darden also reported same-restaurant sales for the four-week November fiscal
month ended November 24, 2002. This period is the last month of the Company's
fiscal 2003 second quarter.
Same-restaurant sales at Red Lobster were up 10% to 11% for the month, which
reflected a 5% to 6% increase in guest traffic and a 4% to 5% increase in check
average. The check average increase was due to a 1% to 2% increase in pricing
and a 2% to 3% increase from menu mix changes. Red Lobster's fiscal November
2003 results include the final week of the "30-Shrimp for $9.99" promotion that
started on September 9 and ended on November 3, as well as three weeks of a
"Lobster and Shrimp" feature. During fiscal November of last year, the
"30-Shrimp for $9.99" promotion ran for three weeks, followed by one week
without any advertising, and Red Lobster had a 6% to 7% same-restaurant sales
increase.
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Same-restaurant sales at Olive Garden were up approximately 3% for the month,
and that reflected a 4% increase in check average and a 1% decline in guest
traffic. The check average increase was a result of a 2% to 3% increase in
pricing and a 1% to 2% increase from menu mix changes. This fiscal November,
Olive Garden had four weeks of advertising featuring "Chicken Marsala". During
fiscal November of last year, "Chicken Marsala" was featured concurrently with
"Soup and Salad" advertising for three weeks followed by one week without any
advertising. Same-restaurant sales at Olive Garden during November last year
increased 8% to 9%.
This year's shift of the Thanksgiving holiday from fiscal November to fiscal
December favorably affected November same-restaurant sales results at both Red
Lobster and Olive Garden by approximately three percentage points. Fiscal
December results will be adversely affected by a similar amount as a result of
the calendar shift.
Darden Restaurants, Inc., headquartered in Orlando, FL, owns and operates over
1,200 Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones 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
11/24/02 11/25/01
-------- --------
639 Red Lobster USA 629
31 Red Lobster Canada 32
-- --
670 Total Red Lobster 661
501 Olive Garden USA 478
6 Olive Garden Canada 6
- -
507 Total Olive Garden 484
32 Bahama Breeze 25
27 Smokey Bones 12
-- --
1,236 Total Restaurants 1,182
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DARDEN RESTAURANTS, INC.
SECOND QUARTER FY 2003 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
11/24/2002 11/25/2001 11/24/2002 11/25/2001
---------- ---------- ---------- ----------
Sales $1,071.5 $1,007.1 $2,246.1 $2,080.5
Net Earnings (1) $37.5 $36.5 $109.4 $98.6
Net Earnings per Share (1):
Basic $0.22 $0.21 $0.64 $0.56
Diluted $0.21 $0.20 $0.61 $0.54
Average Number of Common Shares
Outstanding:
Basic 170.9 175.1 171.3 175.6
Diluted 178.7 182.9 179.3 183.3
Note:
(1) Earnings before restructuring credit
were as follows:
Earnings before Restructuring Credit $37.5 $35.1 $109.4 $97.2
Earnings per Share before Restructuring Credit:
Basic $0.22 $0.20 $0.64 $0.55
Diluted $0.21 $0.19 $0.61 $0.53
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DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
11/24/2002 11/25/2001 11/24/2002 11/25/2001
---------- ---------- ---------- ----------
Sales $1,071,531 $1,007,081 $2,246,096 $2,080,491
Costs and Expenses:
Cost of sales:
Food and beverage 330,954 321,302 696,190 664,894
Restaurant labor 353,774 328,361 723,136 661,807
Restaurant expenses 169,889 151,096 338,466 302,346
Total Cost of Sales 854,617 800,759 1,757,792 1,629,047
Selling, general and administrative 103,892 102,293 210,883 204,054
Depreciation and amortization 45,930 41,061 91,071 80,571
Interest, net 10,729 8,982 20,982 17,256
Restructuring credit and asset impairment (1) 143 -2,269 143 -2,269
Total Costs and Expenses 1,015,311 950,826 2,080,871 1,928,659
Earnings before Income Taxes 56,220 56,255 165,225 151,832
Income Taxes -18,742 -19,792 -55,861 -53,213
Net Earnings $37,478 $36,463 $109,364 $98,619
Net Earnings per Share:
Basic $0.22 $0.21 $0.64 $0.56
Diluted $0.21 $0.20 $0.61 $0.54
Average Number of Common Shares Outstanding:
Basic 170,900 175,100 171,300 175,600
Diluted 178,700 182,900 179,300 183,300
Note:
(1) Earnings before restructuring credit were as follows:
13 Weeks Ended 26 Weeks Ended
11/24/2002 11/25/2001 11/24/2002 11/25/2001
---------- ---------- ---------- ----------
Pretax Earnings before Restructuring Credit $56,220 $53,986 $165,225 $149,563
Income Taxes -18,742 -18,917 -55,861 -52,338
Earnings before Restructuring Credit $37,478 $35,069 $109,364 $97,225
Earnings per Share before Restructuring Credit:
Basic $0.22 $0.20 $0.64 $0.55
Diluted $0.21 $0.19 $0.61 $0.53
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DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
11/24/2002 05/26/2002
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ASSETS
Current Assets:
Cash and cash equivalents $20,880 $152,875
Short-term investments -- 9,904
Receivables 32,415 29,089
Inventories 231,814 172,413
Net assets held for disposal 10,087 10,047
Prepaid expenses and other current assets 17,424 23,076
Deferred income taxes 46,966 52,127
Total Current Assets $359,586 $449,531
Land, Buildings and Equipment 2,039,977 1,920,768
Other Assets 162,549 159,437
Total Assets $2,562,112 $2,529,736
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $165,625 $160,064
Accrued payroll 73,696 87,936
Accrued income taxes 52,190 68,504
Other accrued taxes 31,271 30,474
Other current liabilities 247,200 254,036
Total Current Liabilities $569,982 $601,014
Long-term Debt 659,656 662,506
Deferred Income Taxes 125,091 117,709
Other Liabilities 19,060 19,630
Total Liabilities $1,373,789 $1,400,859
Stockholders' Equity:
Common stock and surplus $1,501,787 $1,474,054
Retained earnings 863,253 760,684
Treasury stock -1,114,668 -1,044,915
Accumulated other comprehensive income -13,774 -12,841
Unearned compensation -46,594 -46,108
Officer notes receivable -1,681 -1,997
Total Stockholders' Equity $1,188,323 $1,128,877
Total Liabilities and Stockholders' Equity $2,562,112 $2,529,736
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