Exhibit 99(a)
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) Mike Bernstein (407) 245-4567
FOR RELEASE
March 23, 2005
4:15 PM ET
DARDEN RESTAURANTS REPORTS THIRD QUARTER DILUTED NET EARNINGS
PER SHARE OF 56 CENTS; INCREASES OUTLOOK FOR FISCAL 2005 DILUTED NET
EARNINGS PER SHARE GROWTH; DECLARES DIVIDEND
ORLANDO, FL, March 23 - Darden Restaurants, Inc. today reported quarterly sales
of $1.38 billion for the third quarter ended February 27, 2005, and diluted net
earnings per share of 56 cents, a 24% increase over the prior year.
"We had an outstanding quarter, with sales and earnings growth that were among
the strongest in casual dining," said Clarence Otis, Chief Executive Officer of
Darden. "These results reflect the tremendous efforts of the talented and
committed teams in our restaurants and in our restaurant support center. People
at Darden are passionate about nourishing and delighting everyone we serve, and
about fully capturing the exciting opportunity we have in casual dining. We'll
achieve these goals by combining brand excellence with competitively superior
in-restaurant operations and restaurant support. This quarter, all of our
business units made good progress in each of these critically important areas."
Highlights for the quarter ended February 27, 2005, include the following:
o Net earnings in the third quarter were $92.6 million or 56 cents per
diluted share, on sales of $1.38 billion. Last year, net earnings were
$77.1 million, or 45 cents per diluted share, on sales of $1.24 billion.
o Total sales of $1.38 billion represent a 10.8% increase over prior year.
o Olive Garden reported its 42nd consecutive quarter of U.S. same-restaurant
sales growth with a 10.5% increase.
o Red Lobster reported U.S. same-restaurant sales growth of 5.1% for the
quarter.
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o The Company incurred costs related to the impairment of one Red Lobster and
one Olive Garden restaurant which reduced diluted net earnings per share by
approximately one cent. However, the Company's tax rate this quarter was
slightly lower compared to last year as a result of the favorable
resolution of prior year tax matters and increased tax credits. This
benefit added approximately one cent to diluted earnings per share in the
quarter.
o The Company expects diluted net earnings per share growth for fiscal 2005
in the range of 31% to 33% on a GAAP basis, which is an 19% to 21% increase
excluding the asset impairment and restructuring charge ($23.1 million
after tax or $0.14 per diluted share) in the fourth quarter of fiscal 2004.
o The Company announced that today the Board of Directors declared a cash
dividend of 4 cents per share on the Company's outstanding common stock.
The dividend is payable on May 1, 2005 to shareholders of record at the
close of business on April 8, 2005.
o The Company continued its repurchase of shares, buying back almost 3.7
million shares of its common stock in the quarter.
Operating Highlights
OLIVE GARDEN'S record third quarter sales of $627.8 million were 13.9% above
prior year, driven by a same-restaurant sales increase of 10.5% and revenue from
22 net new restaurants in operation versus last year. This is the 42nd
consecutive quarter of same-restaurant sales growth for Olive Garden and builds
on a 5.4% increase in the third quarter last year. The company's increased
sales, combined with lower selling, general and administrative and depreciation
and amortization expenses as a percent of sales resulted in double-digit
operating profit growth, record operating profit and record returns for the
third quarter.
RED LOBSTER'S third quarter sales of $636.1 million were 5.4% above prior year,
driven by a same-restaurant sales increase of 5.1%. Red Lobster's increased
sales along with lower restaurant expense as a percent of sales and lower
depreciation and amortization expense as a percent of sales, resulted in
near-record operating profit for the third quarter.
BAHAMA BREEZE delivered improved financial performance this quarter. Bahama
Breeze achieved lower cost of sales, labor expense and restaurant expense as a
percent of sales while strengthening the guest experience it provides. It also
substantially reduced its operating loss compared to prior year despite having
five fewer restaurants in operation.
SMOKEY BONES opened 15 restaurants during the third quarter, bringing the total
through the end of the third quarter to 29 openings. In addition, the company
has opened four more restaurants since the end of the quarter. As a result,
Smokey Bones now operates 102 restaurants. It expects to open 35 restaurants
during the fiscal year.
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"Darden delivered outstanding operating performance this quarter," said Drew
Madsen, President and Chief Operating Officer for Darden. "Olive Garden led the
way with tremendous sales and operating profit growth combined with strong guest
satisfaction. Red Lobster continued to make excellent progress on key business
fundamentals and achieved record guest satisfaction scores resulting in solid
growth in sales and operating profit. Bahama Breeze's strengthening business
model led to a substantial improvement in financial performance this quarter
while Smokey Bones continued its rapid growth without compromising the high
level of guest experience it offers."
Outlook
The Company expects diluted net earnings per share growth for fiscal 2005 to be
in the range of 31 to 33% on a GAAP basis, which is an 19% to 21% increase
excluding the asset impairment and restructuring charge ($23.1 million after tax
or $0.14 per diluted share) in the fourth quarter of fiscal 2004. The Company
had previously estimated that diluted net earnings per share growth would be in
the range of 10% to 15% in fiscal 2005 excluding the asset impairment and
restructuring charge taken in the fourth quarter of fiscal 2004.
Other Actions
Darden announced that today the Board of Directors declared a cash dividend of 4
cents per share on the Company's outstanding common stock. The dividend is
payable on May 1, 2005 to shareholders of record at the close of business on
April 8, 2005. Based on this 4-cent semi-annual dividend declaration, the
Company's indicated annual dividend is 8 cents per share.
The Company continued the buyback of its common stock, purchasing almost 3.7
million shares in the third quarter. Since December 1995, the Company has
repurchased 116.1 million shares under authorizations totaling 137.4 million
shares.
February 2005 U.S. Same-Restaurant Sales Results
Darden reported U.S. same-restaurant sales for the four-week February fiscal
month ended February 27, 2005. This period is the last month of Darden's fiscal
2005 third quarter.
Same-restaurant sales at Olive Garden increased almost 13% for fiscal February,
which reflected an 11% to 12% increase in guest counts and approximately 2%
increase in check average due primarily to pricing. Last year, Olive Garden had
an increase of 4% to 5% in same-restaurant sales during fiscal February.
Same-restaurant sales at Red Lobster increased approximately 9% to 10% for
fiscal February, which reflected an increase of approximately 7% in guest counts
and an increase of approximately 2% to 3% in check average from menu mix
changes. Last year, Red Lobster reported a 0% to 1% increase in same-restaurant
sales during fiscal February.
The Company estimates that this year's shift of Valentine's Day from Saturday to
Monday positively affected same-restaurant sales results at both Olive Garden
and Red Lobster by approximately 2 to 3 percentage points. Additionally, the
Company estimates that adverse winter weather negatively affected
same-restaurant sales results at both Olive Garden and Red Lobster by
approximately one percentage point.
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Darden Restaurants, Inc., headquartered in Orlando, FL, owns and operates over
1,350 Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones and Seasons 52
restaurants with annual sales of over $5.0 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, 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
02/27/05 02/22/04
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648 Red Lobster USA 649
31 Red Lobster Canada 31
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679 Total Red Lobster 680
550 Olive Garden USA 528
6 Olive Garden Canada 6
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556 Total Olive Garden 534
32 Bahama Breeze 37
98 Smokey Bones BBQ 59
3 Seasons 52 1
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1,368 Total Restaurants 1,311
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DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
02/27/2005 02/22/2004 2/27/2005 2/22/2004
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(as restated) (as restated)
Sales $ 1,375,879 $ 1,241,952 $ 3,883,896 $ 3,644,184
Costs and expenses:
Cost of sales:
Food and beverage 412,863 372,544 1,172,320 1,115,457
Restaurant labor 435,660 391,019 1,242,190 1,158,968
Restaurant expenses 206,918 190,310 604,222 576,087
Total cost of sales (1) $ 1,055,441 $ 953,873 $ 3,018,732 $ 2,850,512
Selling, general and administrative 126,488 113,552 371,853 347,513
Depreciation and amortization 52,721 52,179 158,657 155,780
Interest, net 10,405 10,944 32,376 32,310
Total costs and expenses $ 1,245,055 $ 1,130,548 $ 3,581,618 $ 3,386,115
Earnings before income taxes 130,824 111,404 302,278 258,069
Income taxes (38,194) (34,316) (95,661) (83,577)
Net earnings $ 92,630 $ 77,088 $ 206,617 $ 174,492
Net earnings per share:
Basic $ 0.59 $ 0.47 $ 1.31 $ 1.06
Diluted $ 0.56 $ 0.45 $ 1.26 $ 1.02
Average number of common shares outstanding:
Basic 157,300 164,200 157,200 164,600
Diluted 164,500 170,100 163,800 170,600
(1) Excludes restaurant depreciation and
amortization as follows: $ 49,047 $ 48,690 $ 147,752 $ 145,215
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DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
2/27/2005 5/30/2004
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(as restated)
ASSETS
Current assets:
Cash and cash equivalents $ 87,782 $ 36,694
Receivables 47,610 30,258
Inventories 271,088 198,781
Assets held for sale 599 --
Prepaid expenses and other current assets 29,036 25,316
Deferred income taxes 60,693 55,258
Total current assets $ 496,808 $ 346,307
Land, buildings and equipment 2,318,359 2,250,616
Other assets 180,672 183,425
Total assets $ 2,995,839 $ 2,780,348
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 186,482 $ 174,624
Short-term debt -- 14,500
Accrued payroll 112,273 103,327
Accrued income taxes 80,151 48,753
Other accrued taxes 41,211 38,440
Unearned revenues 103,440 75,513
Current portion of long-term debt 299,887 --
Other current liabilities 263,630 228,324
Total current liabilities $ 1,087,074 $ 683,481
Long-term debt, less current portion 351,412 653,349
Deferred income taxes 120,125 132,690
Deferred rent 128,722 122,879
Other liabilities 20,785 12,661
Total liabilities $ 1,708,118 $ 1,605,060
Stockholders' equity:
Common stock and surplus $ 1,661,683 $ 1,584,115
Retained earnings 1,328,019 1,127,653
Treasury stock (1,649,985) (1,483,768)
Accumulated other comprehensive income (8,204) (10,173)
Unearned compensation (43,076) (41,401)
Officer notes receivable (716) (1,138)
Total stockholders' equity $ 1,287,721 $ 1,175,288
Total liabilities and
stockholders' equity $ 2,995,839 $ 2,780,348
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DARDEN RESTAURANTS, INC.
THIRD QUARTER FY 2005 FINANCIAL HIGHLIGHTS
(In millions, except per share data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
2/27/2005 2/22/2004 2/27/2005 2/22/2004
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(as restated) (as restated)
Sales $ 1,375.9 $ 1,242.0 $ 3,883.9 $ 3,644.2
Net Earnings $ 92.6 $ 77.1 $ 206.6 $ 174.5
Net Earnings per Share:
Basic $ 0.59 $ 0.47 $ 1.31 $ 1.06
Diluted $ 0.56 $ 0.45 $ 1.26 $ 1.02
Average Number of Common Shares Outstanding:
Basic 157.3 164.2 157.2 164.6
Diluted 164.5 170.1 163.8 170.6
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