Exhibit 99
DARDEN RESTAURANTS
Red Lobster(R) Olive Garden(R) Bahama Breeze(R) Smokey Bones(R)
www.darden.com
NEWS/INFORMATION
Corporate Affairs
P.O. Box 593330
Orlando, FL 32859
Contacts:
(Analysts) Matthew Stroud (407) 245-6458
(Media) Jim DeSimone (407) 245-4567
FOR RELEASE
March 21, 2006
4:30 PM ET
DARDEN RESTAURANTS REPORTS THIRD QUARTER DILUTED
NET EARNINGS PER SHARE OF 67 CENTS, UP 20% FROM PRIOR YEAR;
DECLARES DIVIDEND OF 20 CENTS PER SHARE
ORLANDO, FL, March 21 - Darden Restaurants, Inc. (NYSE:DRI) today reported sales
of $1.47 billion for the third quarter ended February 26, 2006, and quarterly
diluted net earnings per share of 67 cents, up 20% from prior year.
"This was a strong quarter for Darden," said Clarence Otis, Chairman and Chief
Executive Officer of Darden. "We had outstanding financial results despite some
difficult prior year comparisons, driven by continued strength at Red Lobster
and Olive Garden. Throughout this fiscal year, both have demonstrated the power
of combining effective brand management and continuously improving in-restaurant
excellence. With this solid foundation, we expect continued momentum into the
fourth quarter and beyond. We also had good progress at Smokey Bones and Bahama
Breeze, as they work to become more broadly appealing. Our direction is clear -
we are passionately focused on nourishing and delighting everyone we serve, so
we earn the distinction of being the best in casual dining, now and for
generations."
Highlights for the quarter ended February 26, 2006, include the following:
o Net earnings in the third quarter were $105.3 million, or 67 cents per
diluted share, on sales of $1.47 billion. Last year, net earnings were
$92.6 million, or 56 cents per diluted share, on sales of $1.38 billion.
o Total sales of $1.47 billion represent a 7.1% increase over prior year.
o Olive Garden achieved its 46th consecutive quarter of U.S. same-restaurant
sales growth with a 5.7% increase.
o Red Lobster's U.S. same-restaurant sales growth was 1.6% for the quarter,
its 6th consecutive quarter of same-restaurant sales growth, despite the
shift of Lent and Red Lobster's signature Lobsterfest into this year's
fourth quarter, which adversely affected same-restaurant sales by an
estimated two percentage points.
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o The Company incurred costs to resolve legal disputes in California related
to the exempt classification of certain managerial employees, which reduced
diluted net earnings per share by approximately four cents. The Company
also incurred costs related to the impairment of five Smokey Bones
restaurants, which reduced diluted net earnings per share by approximately
three cents.
o The Company's tax rate this quarter was lower than anticipated and lower
than reflected in its previously announced expectations for the 2006 fiscal
year due to the favorable resolution of prior year tax matters and higher
than projected tax credits. These items benefited diluted earnings per
share for the quarter by approximately six cents.
o The Company continued its share repurchases, buying back over 3.7 million
shares of its common stock in the quarter.
o The Company revised upwards its earnings guidance for fiscal 2006 and now
expects diluted net earnings per share growth to be at the top of its
previously announced 15% to 20% growth range.
Operating Highlights
OLIVE GARDEN'S third quarter sales of $689.0 million were 9.8% above prior year,
driven by a U.S. same-restaurant sales increase of 5.7% and revenue from 19 net
new restaurants in operation versus last year. This is the 46th consecutive
quarter of same-restaurant sales growth for Olive Garden and builds on a 10.5%
increase in the third quarter of last year. The company's increased sales,
combined with lower food and beverage costs, restaurant labor costs and selling,
general and administrative expenses as a percent of sales, more than offset
increased restaurant and depreciation expenses as a percent of sales. Olive
Garden had record third quarter operating profit that also represented
double-digit operating profit growth over last year.
RED LOBSTER'S third quarter sales of $651.7 million were 2.5% above prior year,
driven primarily by a U.S. same-restaurant sales increase of 1.6%. Red Lobster's
same-restaurant sales results reflect a three week shift in the start of its
Lobsterfest promotion, which commenced in the third quarter last year versus the
fourth quarter this year. The company's increased sales and lower food and
beverage costs, selling, general and administrative expenses and depreciation
expenses as a percent of sales more than offset higher restaurant labor costs
and restaurant expenses as a percent of sales. Red Lobster had record third
quarter operating profit that represented solid growth over last year.
BAHAMA BREEZE'S third quarter sales totaled $38.2 million, a 1.8% increase from
prior year. Same-restaurant sales also increased 1.7% in the third quarter,
primarily because of higher guest counts than last year as the company continued
to successfully implement key elements of its turnaround plan.
SMOKEY BONES third quarter sales of $88.5 million were 23.1% above prior year
primarily because of 27 more restaurants in operation, including nine
restaurants that were opened during the third quarter. Smokey Bones'
same-restaurant sales declined 5.0% in the quarter. Restaurant level operating
profit increased 34% as a result of the increased number of restaurants in
operation combined with lower food and beverage costs and restaurant expenses as
a percent of sales, offset partially by increased restaurant labor costs as a
percent of sales.
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"We again achieved solid operating performance improvement this quarter while
also strengthening our foundation for future growth," said Drew Madsen,
President and Chief Operating Officer of Darden. "Olive Garden combined strong
guest satisfaction with brand building promotions and took further steps to
position their business for accelerated unit growth. Red Lobster guest
satisfaction and restaurant level returns both improved versus prior year,
providing a strong platform to support continued growth in guest traffic to
historical levels. Bahama Breeze and Smokey Bones also made progress executing
their respective plans to broaden appeal and strengthen their business model. We
are confident they are taking the appropriate action to fully realize their
potential."
Other Actions
Darden announced today that the Board of Directors declared a cash dividend of
20 cents per share on the Company's outstanding common stock. The dividend is
payable on May 1, 2006 to shareholders of record at the close of business on
April 10, 2006. Based on this 20-cent semi-annual dividend declaration, the
Company's indicated annual dividend is 40 cents per share.
Darden continued the buyback of its common stock, purchasing over 3.7 million
shares in the third quarter. Since commencing its share repurchases in December
1995, the Company has repurchased 130.2 million shares under authorizations
totaling 137.4 million shares.
Fiscal February 2006 U.S. Same-Restaurant Sales Results
Darden reported U.S. same-restaurant sales for the four-week fiscal February
ended February 26, 2006. This period is the last month of Darden's fiscal 2006
third quarter.
Same-restaurant sales at Olive Garden were up approximately 3% for fiscal
February. The increase reflected a 1% increase in guest counts and a 2% increase
in check average. The check average increase was a result of an approximate 2%
increase in pricing. Last year, Olive Garden had a 13% increase in
same-restaurant sales for fiscal February.
Same-restaurant sales at Red Lobster fell 7% to 8% for fiscal February. This
reflected an approximate 7% decrease in guest counts and a 1% decline in check
average. The check average decrease was a result of an approximate 1% increase
in pricing and 2% decrease in menu mix changes. Last year, Red Lobster had a 9%
to 10% increase in same-restaurant sales for the fiscal month. The Company
estimates that this year's shift in the start of Lent from fiscal February last
year to fiscal March this year, and the resulting shift in the start of
Lobsterfest, negatively affected same-restaurant sales results at Red Lobster in
February by approximately six percentage points. The Company will benefit from
this holiday and promotional calendar shift in fiscal March and fiscal April.
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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Fiscal 2006 Outlook
The Company revised upward its sales and earnings guidance for fiscal 2006. The
Company now expects diluted net earnings per share growth for fiscal 2006 to be
at the top of its previously announced 15% to 20% growth range based on its
expectation of combined U.S. same-restaurant sales growth of approximately 5%
for Red Lobster and Olive Garden, and new unit growth of approximately 4%.
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
02/26/06 02/27/05
-------- --------
649 Red Lobster USA 648
31 Red Lobster Canada 31
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680 Total Red Lobster 679
569 Olive Garden USA 550
6 Olive Garden Canada 6
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575 Total Olive Garden 556
32 Bahama Breeze 32
125 Smokey Bones 98
4 Seasons 52 3
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1,416 Total Restaurants 1,368
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DARDEN RESTAURANTS, INC.
THIRD QUARTER FY 2006 FINANCIAL HIGHLIGHTS
(In millions, except per share data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
2/26/2006 2/27/2005 2/26/2006 2/27/2005
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Sales $1,474.2 $1,375.9 $4,208.4 $3,883.9
Net Earnings $ 105.3 $ 92.6 $ 245.9 $ 206.6
Net Earnings per Share:
Basic $ 0.70 $ 0.59 $ 1.63 $ 1.31
Diluted $ 0.67 $ 0.56 $ 1.56 $ 1.26
Average Number of Common
Shares Outstanding:
Basic 149.4 157.3 150.8 157.2
Diluted 156.9 164.5 157.9 163.8
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DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
02/26/2006 02/27/2005 02/26/2006 2/27/2005
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Sales $1,474,181 $1,375,879 $4,208,441 $3,883,896
Costs and expenses:
Cost of sales:
Food and beverage 431,074 412,863 1,239,844 1,172,320
Restaurant labor 472,659 435,660 1,362,775 1,242,190
Restaurant expenses 225,931 206,918 655,705 604,222
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Total cost of sales (1) $1,129,664 $1,055,441 $3,258,324 $3,018,732
Selling, general and administrative 138,984 126,488 404,201 371,853
Depreciation and amortization 56,085 52,721 164,984 158,657
Interest, net 10,312 10,405 32,930 32,376
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Total costs and expenses $1,335,045 $1,245,055 $3,860,439 $3,581,618
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Earnings before income taxes 139,136 130,824 348,002 302,278
Income taxes (33,818) (38,194) (102,114) (95,661)
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Net earnings $ 105,318 $ 92,630 $ 245,888 $ 206,617
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Net earnings per share:
Basic $ 0.70 $ 0.59 $ 1.63 $ 1.31
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Diluted $ 0.67 $ 0.56 $ 1.56 $ 1.26
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Average number of common shares
outstanding:
Basic 149,400 157,300 150,800 157,200
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Diluted 156,900 164,500 157,900 163,800
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(1) Excludes restaurant depreciation
and amortization as follows: $ 51,926 $ 49,047 $ 152,946 $ 147,752
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DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
2/26/2006 5/29/2005
ASSETS
Current assets:
Cash and cash equivalents $ 53,122 $ 42,801
Receivables 39,235 36,510
Inventories 245,254 235,444
Prepaid expenses and other current assets 30,246 28,927
Deferred income taxes 66,339 63,584
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Total current assets $ 434,196 $ 407,266
Land, buildings and equipment, net 2,408,896 2,351,454
Other assets 187,309 179,051
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Total assets $ 3,030,401 $ 2,937,771
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 222,544 $ 191,197
Short-term debt 44,000 --
Accrued payroll 115,663 114,602
Accrued income taxes 50,414 52,404
Other accrued taxes 47,098 43,825
Unearned revenues 120,464 88,472
Current portion of long-term debt -- 299,929
Other current liabilities 268,459 254,178
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Total current liabilities $ 868,642 $ 1,044,607
Long-term debt, less current portion 645,125 350,318
Deferred income taxes 99,053 114,846
Deferred rent 136,245 130,872
Other liabilities 31,449 24,109
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Total liabilities $ 1,780,514 $ 1,664,752
Stockholders' equity:
Common stock and surplus $ 1,796,108 $ 1,703,336
Retained earnings 1,621,788 1,405,754
Treasury stock (2,117,041) (1,784,835)
Accumulated other comprehensive income/(loss) (3,950) (8,876)
Unearned compensation (46,579) (41,685)
Officer notes receivable (439) (675)
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Total stockholders' equity $ 1,249,887 $ 1,273,019
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Total liabilities and stockholders' equity $ 3,030,401 $ 2,937,771
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