EX-99 3 exhibit99_121505.txt EXHIBIT 99 - PRESS RELEASE 12-15-05 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 December 15, 2005 4:30 PM ET DARDEN RESTAURANTS REPORTS SECOND QUARTER DILUTED NET EARNINGS PER SHARE OF 35 CENTS, UP 35% FROM PRIOR YEAR; RAISES ANNUAL OUTLOOK FOR EARNINGS GROWTH ORLANDO, FL, December 15 - Darden Restaurants, Inc. (NYSE:DRI) today reported sales of $1.33 billion for the second quarter ended November 27, 2005, and quarterly diluted net earnings per share of 35 cents, up 35% from prior year. "Our strong financial results for the quarter reflect excellent operating momentum across most of our businesses," said Clarence Otis, Darden's Chairman and Chief Executive Officer. "Olive Garden and Red Lobster enjoyed industry-leading same-restaurant sales growth, which speaks to the power of those brands and the quality job their teams do every day. That combination - great brands and great operations - is critical. And, our emerging businesses, Bahama Breeze and Smokey Bones, also continue to strengthen operationally. As they do so, they are working to develop brands that are as compelling and durable as Olive Garden and Red Lobster. The entire Company is working on the right things and we have the right people in place - dedicated and talented people - so we expect continued momentum throughout the balance of this fiscal year. With competitively superior people and continued focus on nourishing and delighting everyone we serve, we will achieve our ultimate goal, which is to be the best in casual dining, now and for generations." Highlights for the quarter ended November 27, 2005, include the following: o Net earnings in the second quarter were $55.1 million, or 35 cents per diluted share, on sales of $1.33 billion. Last year, net earnings were $43.0 million, or 26 cents per diluted share, on sales of $1.23 billion. o Total sales of $1.33 billion represent a 7.8% increase over prior year. o Olive Garden achieved its 45th consecutive quarter of U.S. same-restaurant sales growth with a 6.4% increase. o Red Lobster reported U.S. same-restaurant sales growth of 2.7% for the quarter. -MORE- -2- o The Company continued its share repurchases, buying back over 1.7 million shares of its common stock in the quarter. o The Company reported that it now expects diluted net earnings per share growth for fiscal year 2006 of 15% to 20%, an increase from the previously expected low double-digit growth. Operating Highlights OLIVE GARDEN'S total second quarter sales of $618.4 million were 9.6% above prior year, driven by a U.S. same-restaurant sales increase of 6.4% and revenue from 21 net new restaurants in operation versus last year. This is the 45th consecutive quarter of same-restaurant sales growth for Olive Garden and builds on a 5.5% increase in the second quarter of last year. The company's increased sales, combined with lower food and beverage costs, selling, general and administrative expenses and depreciation expenses as a percent of sales, more than offset increased restaurant labor costs and restaurant expenses as a percent of sales. Olive Garden had record second quarter operating profit that also represented double-digit operating profit growth over last year. RED LOBSTER'S total second quarter sales of $588.8 million were 3.4% above prior year, reflecting a U.S. same-restaurant sales increase of 2.7%. The company's increased sales and lower food and beverage costs, restaurant expenses, selling, general and administrative expenses and depreciation expenses as a percent of sales more than offset higher restaurant labor costs as a percent of sales. Red Lobster had record second quarter operating profit that also represented very strong double-digit operating profit growth over last year. BAHAMA BREEZE'S second quarter sales totaled $36.3 million, a 1.9% increase from prior year. Same-restaurant sales also increased 1.9% in the second 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 second quarter sales of $77.3 million were 31% above prior year primarily because of 34 more restaurants in operation, including seven restaurants that were opened during the second quarter, and despite a same-restaurant sales decline of 8.5%. Restaurant level operating profit increased 40% 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. "We made tremendous operating and strategic progress this quarter," said Drew Madsen, President and Chief Operating Officer of Darden. "Red Lobster and Olive Garden both delivered strong quarterly same-restaurant sales and operating profit growth. In addition, Red Lobster continued to strengthen its guest satisfaction and operating margins - both of which are now at record levels - while Olive Garden continued to lay the foundation for accelerated new restaurant growth. Bahama Breeze also made additional progress on key elements of its turnaround plan, and its recent sales strength is evidence of that. At Smokey Bones there was greater sales weakness than we had anticipated this quarter. While it was a challenging environment, we also recognize that Smokey Bones' brand positioning needs further refinement to broaden consumer appeal. As we do that, we have a good foundation to build upon because Smokey Bones' current guests continue to rate their experience very highly. While we work to broaden the appeal, we will moderate the pace of new restaurant openings at Smokey Bones' in fiscal 2007." -MORE- -3- Other Actions Darden continued the buyback of its common stock, purchasing over 1.7 million shares in the second quarter. Since commencing its share repurchases in December 1995, the Company has repurchased 126.4 million shares under authorizations totaling 137.4 million shares. Fiscal November 2006 U.S. Same-Restaurant Sales Results Darden reported U.S. same-restaurant sales for the four-week fiscal November ended November 27, 2005. This period is the last month of Darden's fiscal 2006 second quarter. Same-restaurant sales at Olive Garden were up approximately 6% for fiscal November. The increase reflected a 3% to 4% increase in guest counts and a 2% to 3% increase in check average. The check average increase was a result of an approximate 2% increase in pricing and a 0% to 1% increase from menu mix changes. Last year, Olive Garden had a 4% to 5% increase in same-restaurant sales for fiscal November. Same-restaurant sales at Red Lobster increased approximately 3% for fiscal November. This reflected an approximate 1% increase in guest counts and a 2% increase in check average due primarily to pricing. Last year, Red Lobster had an approximate 2% increase in same-restaurant sales for fiscal November. 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 in the 15% to 20% range based on its expectation of combined U.S. same-restaurant sales growth of 4% to 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. -MORE- -4- DARDEN RESTAURANTS, INC. NUMBER OF RESTAURANTS 11/27/05 11/28/04 -------- -------- 647 Red Lobster USA 649 31 Red Lobster Canada 31 ------ ------------------ ------ 678 Total Red Lobster 680 562 Olive Garden USA 541 6 Olive Garden Canada 6 ------ ------------------- ------ 568 Total Olive Garden 547 32 Bahama Breeze 32 117 Smokey Bones 83 3 Seasons 52 1 ------ ------- 1,398 Total Restaurants 1,343 DARDEN RESTAURANTS, INC. SECOND QUARTER FY 2006 FINANCIAL HIGHLIGHTS (In millions, except per share data) (Unaudited)
13 Weeks Ended 26 Weeks Ended -------------- -------------- 11/27/2005 11/28/2004 11/27/2005 11/28/2004 ---------- ---------- ---------- ---------- Sales $ 1,325.1 $ 1,229.4 $ 2,734.3 $ 2,508.0 Net earnings $ 55.1 $ 43.0 $ 140.6 $ 114.0 Net earnings per share: Basic $ 0.37 $ 0.27 $ 0.93 $ 0.73 Diluted $ 0.35 $ 0.26 $ 0.89 $ 0.70 Average number of common shares outstanding: Basic 149.6 156.8 151.4 157.2 Diluted 156.2 163.4 158.3 163.4
-MORE- -5- DARDEN RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited)
13 Weeks Ended 26 Weeks Ended -------------- -------------- 11/27/2005 11/28/2004 11/27/2005 11/28/2004 ---------- ---------- ---------- ---------- Sales $ 1,325,093 $ 1,229,373 $ 2,734,260 $ 2,508,017 Costs and expenses: Cost of sales: Food and beverage 389,575 368,036 808,770 759,457 Restaurant labor 440,956 400,714 890,115 806,530 Restaurant expenses 215,081 202,287 429,775 397,304 Total cost of sales (1) $ 1,045,612 $ 971,037 $ 2,128,660 $ 1,963,291 Selling, general and administrative 132,181 130,785 265,216 245,365 Depreciation and amortization 54,761 53,176 108,899 105,936 Interest, net 11,670 11,007 22,618 21,971 Total costs and expenses $ 1,244,224 $ 1,166,005 $ 2,525,393 $ 2,336,563 Earnings before income taxes 80,869 63,368 208,867 171,454 Income taxes (25,812) (20,393) (68,296) (57,467) Net earnings $ 55,057 $ 42,975 $ 140,571 $ 113,987 Net earnings per share: Basic $ 0.37 $ 0.27 $ 0.93 $ 0.73 Diluted $ 0.35 $ 0.26 $ 0.89 $ 0.70 Average number of common shares outstanding: Basic 149,600 156,800 151,400 157,200 Diluted 156,200 163,400 158,300 163,400 (1) Excludes restaurant depreciation and amortization as follows: $ 50,600 $ 49,486 $ 101,020 $ 98,705
-MORE- -6- DARDEN RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) 11/27/2005 5/29/2005 ASSETS Current assets: Cash and cash equivalents $ 72,536 $ 42,801 Short-term investments 10,000 -- Receivables 38,066 36,510 Inventories 247,353 235,444 Prepaid expenses and other current assets 31,723 28,927 Deferred income taxes 63,613 63,584 Total current assets $ 463,291 $ 407,266 Land, buildings and equipment 2,404,948 2,351,454 Other assets 187,270 179,051 Total assets $ 3,055,509 $ 2,937,771 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 209,767 $ 191,197 Accrued payroll 102,637 114,602 Accrued income taxes 43,993 52,404 Other accrued taxes 41,558 43,825 Unearned revenues 81,086 88,472 Current portion of long-term debt 149,988 299,929 Other current liabilities 259,522 254,178 Total current liabilities $ 888,551 $ 1,044,607 Long-term debt, less current portion 645,830 350,318 Deferred income taxes 103,821 114,846 Deferred rent 134,841 130,872 Other liabilities 27,676 24,109 Total liabilities $ 1,800,719 $ 1,664,752 Stockholders' equity: Common stock and surplus $ 1,758,851 $ 1,703,336 Retained earnings 1,516,471 1,405,754 Treasury stock (1,968,849) (1,784,835) Accumulated other comprehensive income (loss) (1,911) (8,876) Unearned compensation (49,283) (41,685) Officer notes receivable (489) (675) Total stockholders' equity $ 1,254,790 $ 1,273,019 Total liabilities and stockholders' equity $ 3,055,509 $ 2,937,771 -END-