EXHIBIT 99.2
Press Release dated June 22, 1999, of Darden Restaurants, Inc.
DARDEN REPORTS STRONG INCREASES IN ANNUAL
AND FOURTH QUARTER EARNINGS PER DILUTED SHARE
ORLANDO, FL - Darden Restaurants Inc. today reported earnings per diluted share
for the fiscal year ending May 30, 1999 of 96 cents (a 43% increase) and
earnings after tax for the year of $135.3 million (a 33% increase), excluding an
unusual fourth quarter non-operating gain of $5.2 million after tax. The world's
largest casual-dining restaurant company said sales rose 5% to $3.46 billion for
the fiscal year. Excluding the non-operating gain, fourth quarter earnings per
diluted share increased 22% to 33 cents from the 27 cents reported the prior
year and fourth quarter earnings after tax increased 15% to $45.9 million. The
strong increases came even though the prior year contained 53 weeks (versus 52
weeks in fiscal 1999) and included a 14 week fourth quarter (vs. a 13 week
fourth quarter in fiscal 1999).
"It has been a terrific year for Darden Restaurants," said Joe R. Lee, Chairman
and Chief Executive Officer. "I am pleased to announce our best performance yet.
The dedication and enthusiasm of our employees make Darden the casual dining
restaurant leader we are today. Our success is a tribute to their excellent work
every day to ensure we provide delicious food, great service and warm
hospitality to every guest, every time. We are meeting that standard now more
than ever, giving us great momentum toward our goal of being the best company in
the casual dining industry, now and for generations."
Highlights for the quarter and fiscal year ended May 30, 1999, included:
o Annual earnings after tax and before the unusual item increased 33% to
$135.3 million, or 96 cents per diluted share, on sales of $3.46 billion
(52 weeks). Prior year earnings after tax were $101.7 million, or 67 cents
per diluted share, on sales of $3.29 billion (53 weeks).
o Fourth quarter earnings after tax before the unusual item were $45.9
million, or 33 cents per diluted share on $914.0 million in sales (13
weeks). Prior year earnings after tax were $40.0 million, or 27 cents per
diluted share, on sales of $921.2 million (14 weeks).
o Olive Garden far outpaced the industry with same-restaurant sales up 9.1%
in the fourth quarter (on a 13 weeks vs. 13 weeks basis). This outstanding
performance represents the 19th consecutive quarter of same-restaurant
sales increases as Olive Garden posted strong double-digit percentage
growth in operating profits to establish significant new records for the
quarter and fiscal year.
o Red Lobster continued its strong turnaround, reporting a same-restaurant
sales gain of 5.4% (on a 13 weeks vs. 13 weeks basis), to mark its 6th
consecutive quarter of positive comparable-restaurant sales. As a result of
its strong sales and growth in traffic, Red Lobster reported a healthy
double-digit percentage increase in operating profit for the fiscal year.
6
o Bahama Breeze opened two restaurants during the quarter, bringing the total
number of restaurants in operation to six. The newest restaurants are
located in Raleigh, NC and Atlanta, GA. Five additional restaurants are
currently under construction.
o The Company purchased 3.4 million shares of its common stock in the fourth
quarter, bringing the total number of shares purchased to 12.2 million for
fiscal year 1999.
o Progressing toward completion of previously announced restructuring
actions, in the fourth quarter Darden reversed a portion of the liability
established for such actions, resulting in a $5.2 million after tax
non-operating gain. Including this gain, earnings per diluted share were 99
cents for fiscal year 1999 and 37 cents for the fourth quarter, and
earnings after tax were $140.5 million for the year and $51.1 million for
the quarter.
Operating Highlights
- --------------------
OLIVE GARDEN'S fourth quarter sales of $388.9 million were up 2% over prior year
despite one less calendar week. Sales of $1.48 billion for the fiscal year were
almost 7% higher than prior year, and average annual sales per restaurant jumped
to a record $3.2 million. The 9.1% same-restaurant sales increase in the fourth
quarter comes on top of a 10.6% same-restaurant sales gain in the fourth quarter
of last year. Olive Garden's sales gain continues to be driven by strong guest
count growth. This performance generated very strong double-digit operating
profit percentage increases for the quarter and fiscal year, establishing
all-time records for Olive Garden.
"We are thankful for the outstanding financial success achieved this year with
record operating profits, a record return on sales and a record return on
capital" said Brad Blum, President of Olive Garden. "We are equally proud of the
culture we are building throughout the company to provide a genuine Italian
dining experience for every guest every time they visit one of our restaurants.
Special thanks goes to each member of the Olive Garden team for their dedicated
commitment to Hospitaliano, Our Passion for 100% Guest Delight. We are focused
on creating an even more exciting future at Olive Garden."
RED LOBSTER'S fourth quarter sales of $517.0 million were 3% lower than prior
year, as its strong same-restaurant sales growth did not offset fully the effect
of one less calendar week and 13 fewer restaurants than in the prior year. Sales
of $1.96 billion for the fiscal year were almost 4% above prior year and average
sales per restaurant for the year were $2.9 million. Same-restaurant sales
increased 5.4% in the fourth quarter and operating profit for the quarter
increased at a nearly double-digit percentage pace.
"We turned an important corner this year," said Dick Rivera, President of Red
Lobster. "Our vision is clear, each member of our crew is enthusiastic about
helping to bring it to life and we are seeing the early results. Our restaurant
crews deserve tremendous credit for our progress in providing over-the-top
service to our guests with zip and pride. We approach the work ahead with great
momentum and strong confidence we are on the right course."
7
BAHAMA BREEZE successfully opened its fifth and sixth restaurants in Raleigh, NC
and Atlanta, GA, respectively. Sales at the new restaurants and the rest of the
company continue to exceed company expectations. In addition, construction has
begun on five more restaurants, all of which are expected to open during fiscal
2000.
Other Actions
- -------------
As a result of strong operating performance for Red Lobster and Olive Garden,
Darden reversed a portion of the liability established for previously announced
restructuring actions to reflect its fourth quarter determination of a lower
number of restaurant closings than initially planned. This resulted in an
unusual non-operating gain that increased earnings per diluted share from 96
cents to 99 cents for fiscal year 1999 and from 33 cents to 37 cents for the
fourth quarter. These actions increased earnings after tax from $135.3 million
to $140.5 million for fiscal year 1999 and from $45.9 million to $51.1 million
for the fourth quarter. The gain has no effect on the Company's cash flow.
The Board of Directors elected Hector de J. Ruiz, Ph.D., a Director. Dr. Ruiz is
Executive Vice President of Motorola and President of Motorola's Semiconductor
Products Sector (SPS). SPS is a U.S. based, broad-line supplier of semiconductor
solutions with 1998 sales of $7.3 billion. "It is a pleasure to welcome Dr. Ruiz
to our board," said Lee. "His high-technology and international business
background will help Darden as we chart a course into the next millennium. Dr.
Ruiz is also known for his numerous community involvement activities, much like
our own Darden employee family."
Darden continued its buyback of common stock in the open market, purchasing 3.4
million shares in the fourth quarter for a total of 12.2 million shares
purchased during the year. Cumulatively, since the initial authorization of its
repurchase program, the Company has repurchased 32.6 million shares out of a
total authorization of 44.6 million shares.
Darden Restaurants Inc., headquartered in Orlando, Florida, owns and operates
Red Lobster, Olive Garden and Bahama Breeze restaurants with annual sales of
$3.5 billion.
8
DARDEN RESTAURANTS, INC.
NUMBER OF RESTAURANTS
05/31/98 05/30/99
648 Red Lobster USA 635
34 Red Lobster Canada 34
------ ------
682 Total Red Lobster 669
461 Olive Garden USA 459
5 Olive Garden Canada 5
------ ------
466 Total Olive Garden 464
3 Bahama Breeze 6
------ ------
1,151 Total Restaurants 1,139
9