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
September 22, 2005
4:30 PM ET
DARDEN RESTAURANTS REPORTS A 20% INCREASE IN FIRST QUARTER DILUTED NET EARNINGS
PER SHARE TO 53 CENTS; INCREASES SEMI-ANNUAL DIVIDEND 400% TO 20 CENTS PER
SHARE; RE-AFFIRMS ANNUAL EARNINGS GUIDANCE
ORLANDO, FL, September 22 - Darden Restaurants, Inc. (NYSE:DRI) today reported
sales of $1.41 billion for the first quarter ended August 28, 2005, and
quarterly diluted net earnings per share of 53 cents, up 20% from prior year.
The Company also increased its semi-annual dividend to 20 cents per share. This
represents a 400% increase from the previous 4 cents per share semi-annual
dividend.
"This was an outstanding quarter, with industry leading sales and earnings
growth," said Clarence Otis, Darden's Chief Executive Officer. "This strong
start to the fiscal year speaks to the inherent strength of our brands and our
restaurant and restaurant support teams, who bring those brands to life. Our
people are skilled and well-trained, but it's their passion for nourishing and
delighting everyone we serve that is at the heart of this organization. It
motivates our teams to provide excellent yet continuously improving experiences
to our guests. It's evident in the many things our teams are doing to assist
members of the Darden family and others in our communities who have been
severely affected by recent hurricanes. And it will enable us to fulfill our
mission of being the best in casual dining now and for generations"
Highlights for the quarter ended August 28, 2005, include the following:
o Net earnings in the first quarter were $85.5 million, or 53 cents per
diluted share, on sales of $1.41 billion. Last year, net earnings were
$71.0 million, or 44 cents per diluted share, on sales of $1.28 billion.
o Total sales of $1.41 billion represent a 10.2% increase over prior year.
o Olive Garden achieved its 44th consecutive quarter of U.S. same-restaurant
sales growth with a 7.4% increase.
o Red Lobster had U.S. same-restaurant sales growth of 5.7% for the quarter,
well above the estimated Knapp-Track industry average excluding Darden.
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o The Company continued its share repurchases, buying back 4.1 million shares
of its common stock in the quarter.
o The Company's Board of Directors declared a semi-annual dividend of 20
cents per share, a 400% increase from the previous semi-annual 4 cents per
share.
o The Company's Board of Directors also elected Clarence Otis, Jr., Darden's
Chief Executive Officer, to the additional position of Chairman of Darden
effective November 29, 2005.
o The Company re-affirmed its annual guidance for low double-digit range
diluted net earnings per share growth.
Operating Highlights
OLIVE GARDEN'S first quarter sales of $643.5 million were 10.8% above prior
year, driven by a U.S. same-restaurant sales increase of 7.4% and revenue from
21 net new restaurants in operation versus last year. This is the 44th
consecutive quarter of same-restaurant sales growth for Olive Garden and builds
on a 2.8% increase in the first quarter of last year. The company's increased
sales, combined with lower food and beverage costs, restaurant expenses and
depreciation expenses as a percent of sales, more than offset increased
restaurant labor costs and selling, general and administrative expenses as a
percent of sales. Olive Garden had a record quarterly profit that also
represents double-digit operating profit growth over last year.
RED LOBSTER'S first quarter sales of $634.1 million were 6.6% above prior year,
reflecting a U.S. same-restaurant sales increase of 5.7%. The company's
increased sales and lower food and beverage costs and depreciation expenses as a
percent of sales more than offset higher restaurant labor costs, restaurant
expenses and selling, general and administrative expenses as a percent of sales.
As a result, operating profits increased at a strong double-digit percentage
rate over last year.
BAHAMA BREEZE'S same-restaurant sales declined 0.4% in the first quarter,
primarily as a result of a changing sales mix. The company continued to
implement key elements of its turnaround plan, which led to increased operating
profits over last year.
SMOKEY BONES first quarter sales of $81.7 million were 46% above prior year as a
result of 34 more restaurants in operation, including seven restaurants that
were opened during the first quarter, and a same-restaurant sales decline of
0.1%. Restaurant level operating profit increased 73% as increased sales
combined with lower food and beverage costs and restaurant expenses offset
increased restaurant labor costs on a percent of sales basis.
"We are very pleased with our operating performance this quarter," said Drew
Madsen, President and Chief Operating Officer of Darden. "Once again, Olive
Garden led the way with strong sales and operating profit growth. Red Lobster
continued to show strong improvement in its guest experience, same-restaurant
sales and operating profit growth. And, Bahama Breeze and Smokey Bones
demonstrated solid improvement in their operating results. We are excited about
the progress we have made this quarter in strengthening and improving the
performance of all our operating companies, which is creating a solid foundation
for accelerated future growth."
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Other Actions
Darden continued the buyback of its common stock, purchasing 4.1 million shares
in the first quarter. Since commencing its share repurchases in December 1995,
the Company has repurchased a total of 124.6 million shares under authorizations
totaling 137.4 million shares.
Darden's Board of Directors declared an increase in the cash dividend to 20
cents per share on the Company's outstanding common stock. The dividend is
payable on November 1, 2005 to shareholders of record at the close of business
on October 10, 2005. Based on this 20-cent semi-annual dividend declaration, the
Company's indicated annual dividend is 40 cents per share. Previously, the
Company had paid a semi-annual dividend of 4 cents per share.
The Company's Board of Directors also elected Clarence Otis, Jr., Darden's Chief
Executive Officer, to the additional position of Chairman of Darden effective
November 29, 2005. Otis replaces Joe R. Lee, Darden's Chairman of the Board and
founding Chairman and Chief Executive Officer of Darden since 1995, who is
retiring. Lee led the company for 38 years as it grew from a single Red Lobster
restaurant in Lakeland, Florida in 1968, into the largest company owned and
operated publicly traded casual dining restaurant company in the world.
Fiscal August 2006 U.S. Same-Restaurant Sales Results
Darden reported U.S. same-restaurant sales for the four-week fiscal August ended
August 28, 2005. This period is the last month of Darden's fiscal 2006 first
quarter.
Same-restaurant sales at Olive Garden were up 7% to 8% for fiscal August. The
increase reflected a 6% to 7% increase in guest counts and a 1% to 2% increase
in check average. The check average increase was a result of an approximate 2%
increase in pricing and a 0% to 1% decrease from menu mix changes. Last year,
Olive Garden had a 2% to 3% decrease in same-restaurant sales during fiscal
August.
Same-restaurant sales at Red Lobster increased 3% to 4% for fiscal August. This
reflected a 2% to 3% increase in guest counts and a 0% to 1% increase in check
average. The check average increase was a result of an approximate 1% increase
in pricing and a 0% to 1% decline from menu mix changes. Last year, Red Lobster
had an approximate 16% decrease in same-restaurant sales during fiscal August.
Fiscal 2006 Outlook
The Company estimates that Hurricane Katrina, which occurred in fiscal
September, will adversely affect September U.S. same-restaurant sales results at
both Red Lobster and Olive Garden by approximately 0.1%. For the full fiscal
year, total sales for Darden are expected to be adversely affected by $16.0 to
$17.0 million and the effect on operating profit is expected to be minimal.
There are currently five restaurants (three Olive Gardens and two Red Lobsters)
that are closed indefinitely; two (one Red Lobster and one Olive Garden) were
total losses and the three others incurred significant damage. Decisions
regarding rebuilding and reopening are pending clean-up and recovery efforts in
Louisiana and Mississippi.
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The Company re-affirmed its sales and earnings guidance for fiscal 2006. The
Company continues to expect diluted net earnings per share growth for fiscal
2006 in the low double-digit range based on its continued expectation of
combined U.S. same-restaurant sales growth of 2% to 4% for Red Lobster and Olive
Garden and new unit growth of approximately 4% to 5%.
Forward-looking statements in this news release 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 intense
competition, changing economic or business conditions, the price and
availability of food, ingredients and utilities, labor and insurance costs,
increased advertising and marketing costs, higher-than-anticipated costs to open
or close restaurants, litigation, unfavorable publicity, a lack of suitable
locations, government regulations, a failure to achieve growth objectives,
weather 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
08/28/05 08/29/04
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650 Red Lobster USA 650
31 Red Lobster Canada 31
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681 Total Red Lobster 681
560 Olive Garden USA 539
6 Olive Garden Canada 6
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566 Total Olive Garden 545
32 Bahama Breeze 32
110 Smokey Bones 76
3 Seasons 52 1
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1,392 Total Restaurants 1,335
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DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended
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8/28/2005 8/29/2004
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Sales $ 1,409,167 $ 1,278,644
Costs and expenses:
Cost of sales:
Food and beverage 419,195 391,421
Restaurant labor 449,159 405,816
Restaurant expenses 214,694 195,017
Total cost of sales (1) $ 1,083,048 $ 992,254
Selling, general and administrative 133,035 114,580
Depreciation and amortization 54,138 52,760
Interest, net 10,948 10,964
Total costs and expenses $ 1,281,169 $ 1,170,558
Earnings before income taxes 127,998 108,086
Income taxes (42,484) (37,074)
Net earnings 85,514 $ 71,012
Net earnings per share:
Basic $ 0.56 $ 0.45
Diluted $ 0.53 $ 0.44
Average number of common shares
outstanding:
Basic 153,300 157,600
Diluted 160,400 163,200
(1) Excludes restaurant depreciation
and amortization as follows: $ 50,420 $ 49,219
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DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
8/28/2005 5/29/2005
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ASSETS
Current assets:
Cash and cash equivalents $ 244,721 $ 42,801
Short-term investments 100,000 --
Receivables 40,069 36,510
Inventories 225,717 235,444
Prepaid expenses and other current assets 35,708 28,927
Deferred income taxes 65,153 63,584
Total current assets $ 711,368 $ 407,266
Land, buildings and equipment 2,380,936 2,351,454
Other assets 183,576 179,051
Total assets $ 3,275,880 $ 2,937,771
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 228,991 $ 191,197
Accrued payroll 99,305 114,602
Accrued income taxes 90,772 52,404
Other accrued taxes 47,125 43,825
Unearned revenues 76,561 88,472
Current portion of long-term debt 299,970 299,929
Other current liabilities 257,659 254,178
Total current liabilities $ 1,100,383 $ 1,044,607
Long-term debt, less current portion 646,933 350,318
Deferred income taxes 109,072 114,846
Deferred rent 133,127 130,872
Other liabilities 24,991 24,109
Total liabilities $ 2,014,506 $ 1,664,752
Stockholders' equity:
Common stock and surplus $ 1,743,252 $ 1,703,336
Retained earnings 1,491,268 1,405,754
Treasury stock (1,916,469) (1,784,835)
Accumulated other comprehensive income
(loss) (3,759) (8,876)
Unearned compensation (52,346) (41,685)
Officer notes receivable (572) (675)
Total stockholders' equity $ 1,261,374 $ 1,273,019
Total liabilities and
stockholders' equity $ 3,275,880 $ 2,937,771
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DARDEN RESTAURANTS, INC.
FIRST QUARTER FY 2006 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
(Unaudited)
13 Weeks Ended
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8/28/2005 8/29/2004
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Sales $ 1,409.2 $ 1,278.6
Net earnings $ 85.5 $ 71.0
Net earnings per share:
Basic $ 0.56 $ 0.45
Diluted $ 0.53 $ 0.44
Average number of common shares outstanding:
Basic 153.3 157.6
Diluted 160.4 163.2
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