8-K 1 form8k_032102.txt FORM 8-K, 3/21/02 As filed with the Securities and Exchange Commission on March 22, 2002. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 21, 2002 Darden Restaurants, Inc. (Exact name of registrant as specified in its charter) Florida 1-13666 59-330593 (State or other jurisdiction (Commission file number) (IRS employer of incorporation) identification No.) 5900 Lake Ellenor Drive, Orlando, Florida 32809 (Address of principal executive offices) Registrant's telephone number, including area code: (407) 245-4000 Not Applicable (Former name or former address, if changed since last report) Item 5. Other Events. ------------ On March 21, 2002, the Registrant issued a news release entitled "Darden Restaurants Reports 35% EPS Growth In The Third Quarter; Board Declares 3-For-2 Stock Split," and a copy is being filed herewith as Exhibit 99. Item 7. Financial Statements and Exhibits. --------------------------------- (c) Exhibits. Exhibit Number (by reference to Item 601 of Regulation S-K) Description -------------- ----------- 99 Press Release dated March 21, 2002, entitled "Darden Restaurants Reports 35% EPS Growth In The Third Quarter; Board Declares 3-For-2 Stock Split." 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: March 21, 2002 DARDEN RESTAURANTS, INC. By: /s/ Paula J. Shives _________________________ Paula J. Shives Senior Vice President, General Counsel and Secretary 3 INDEX TO EXHIBITS Exhibit Number Description of Exhibit -------------- ---------------------- 99 Press Release dated March 21, 2002, entitled Darden Restaurants Reports 35% EPS Growth In The Third Quarter; Board Declares 3-For-2 Stock Split." 4 EXHIBIT 99 [OBJECT OMITTED] Red Lobster(R)Olive Garden(R)Bahama Breeze(R)Smokey Bones BBQ(R) www.darden.com NEWS/INFORMATION Corporate Relations P.O. Box 593330 Orlando, FL 32859 Contacts: (Analysts) Matthew Stroud (407) 245-5550 (Media) Rick Walsh (407) 245-5366 FOR RELEASE March 21, 2002 4:30 PM EST DARDEN RESTAURANTS REPORTS 35% EPS GROWTH IN THE THIRD QUARTER; BOARD DECLARES 3-FOR-2 STOCK SPLIT ORLANDO, FL -Darden Restaurants, Inc. today reported that exceptionally strong same-restaurant sales growth at Red Lobster and Olive Garden led to record third quarter earnings per diluted share of 54 cents, a 35% increase from prior year. Total sales were $1.1 billion for the quarter ending February 24, 2002, a 14.7% increase over the prior year. Last year, the Company's third quarter earnings per diluted share were 40 cents on total sales of $988.6 million. Darden also reported that its Board of Directors approved a 3-for-2 stock split, which will take the form of a 50% stock dividend to shareholders of record as of the close of business on April 10, 2002, with a payable date of May 1, 2002. Cash will be paid in lieu of fractional shares. Common share and earnings per share data included in this release have not been adjusted for the impacts of the stock split. The Board of Directors also declared a 4 cents per share dividend to be paid on a pre-split basis on May 1, 2002, to shareholders of record on April 10, 2002. "This has been an extraordinary quarter, substantially exceeding our long-term financial goals," said Joe R. Lee, Chairman and Chief Executive Officer. "We had all-time third quarter highs in sales and earnings, despite the economic and social uncertainty the nation continued to face. Our results demonstrate that we operate in a strong industry, and that we have a powerful combination of the right brands, strategies and people to offer consumers excellent dining experiences at great value. Red Lobster and Olive Garden's same-restaurant sales results for the quarter are testaments to their teams' operating excellence and success in building and maintaining consumer trust. Bahama Breeze and Smokey Bones BBQ Sports Bar also have terrific teams who have generated great consumer excitement, and they are committed to sustained operating excellence as they expand. I believe Darden is firmly on a path to becoming the best company in casual dining, now and for generations." -MORE- -2- Highlights for the quarter ended February 24, 2002, include the following: o Earnings after tax for the quarter were $66.2 million, or 54 cents per diluted share, on sales of $1.1 billion. Last year, earnings after tax in the third quarter were $49.5 million, or 40 cents per diluted share, on sales of $988.6 million. o Red Lobster led Darden with a 12.0% same-restaurant sales increase in the quarter, its 17th consecutive quarter of same-restaurant sales gains. o Olive Garden reported its 30th consecutive quarter of same-restaurant sales growth, with a 9.8% increase. o Bahama Breeze opened one new restaurant during the third quarter, bringing the total open to 26, and plans to open three more restaurants this fiscal year. o Smokey Bones BBQ Sports Bar opened four restaurants during the third quarter, and one since the quarter ended, bringing the total in operation to 17. Smokey Bones BBQ plans to open two more restaurants this fiscal year. o The Company purchased almost 2.8 million shares of its common stock in the quarter. Operating Highlights RED LOBSTER'S third quarter sales of $613.0 million were 13.6% above prior year, driven by its 12.0% increase in same-restaurant sales - the company's 17th consecutive quarter of same-restaurant sales growth. Last year, Red Lobster reported third quarter same-restaurant sales growth of 5.5%. This year's sales increase was primarily the result of same-restaurant guest count growth. Guests responded favorably to an attractive "All You Can Eat Shrimp" feature, which was priced at $12.99, and to the improvements in the Red Lobster dining experience. The increased sales, and lower food costs and marketing expenses as a percent of sales, enabled Red Lobster to achieve strong double-digit operating profit growth. "It was another tremendous quarter at Red Lobster," said Dick Rivera, President of Red Lobster. "During this demanding period for our nation and our industry, the entire Red Lobster crew remained focused on our strategy of offering guests a fresh approach to casual dining, featuring great seafood, good times and hospitality. The strong sales and traffic growth we enjoyed this quarter are powerful evidence of the wonderful job our crew is doing to deliver on that strategy." OLIVE GARDEN'S third quarter sales of $481.2 million were 13.9% above prior year, propelled by strong same-restaurant sales growth and the company's renewed focus on new restaurant growth. Olive Garden's 9.8% same-restaurant sales increase for the quarter represented its 30th consecutive quarter of comparable-restaurant sales growth, and follows a 5.6% increase in the third quarter last year. Olive Garden also operated 19 more restaurants during the quarter than in the same period last -MORE- -3- year. The healthy increase in sales from both existing restaurants and new restaurants combined with lower labor, restaurant and marketing expenses as a percent of sales to produce strong double-digit operating profit growth. "We had another fabulous quarter," said Brad Blum, President of Olive Garden. "I'm so proud of how well our teams have responded to what has been a challenging business environment. Olive Garden is a distinctive and trusted brand. We are doing a better job than ever of providing guests with a genuine Italian dining experience. Our team truly believes that `When you are here, you are family', and it shows in the extraordinary food, service and atmosphere guests are experiencing in our restaurants." BAHAMA BREEZE opened a new restaurant in Troy, MI (Detroit), during the quarter. It now operates 26 restaurants in 17 markets, and three more openings are scheduled for this fiscal year. Average sales per restaurant at Bahama Breeze continued to rebound from the lower second quarter levels experienced when travel safety concerns were most acute. SMOKEY BONES BBQ SPORTS BAR opened four more restaurants in the third quarter, bringing the total number in operation at quarter end to 16. Since the end of the quarter, a new restaurant has opened in Bowling Green, KY. Two additional restaurants currently under construction are expected to open this fiscal year. Other Actions Darden continued its buyback of common stock, purchasing nearly 2.8 million shares in the third quarter. Cumulatively, since the initial authorization of its repurchase program in December 1995, the Company has repurchased 57.5 million shares from a total authorization of 64.6 million shares. February 2002 Same-Restaurant Sales Results Darden also reported same-restaurant sales results for the four-week February fiscal month that ended February 24, 2002. This period is the last month of the Company's fiscal 2002 third quarter. Same-restaurant sales at Red Lobster were up 12% to 13% for the month, reflecting a 7% to 8% increase in guest counts, a 2% to 3% increase in pricing and a 2% to 3% increase because of menu mix changes. In the beginning of fiscal February, Red Lobster featured its "All You Can Eat Shrimp" promotion. The offering, which was priced at $12.99, started on January 7 and ended February 10. On February 18, Red Lobster began its popular Lobsterfest promotion. Lobsterfest started a week earlier this year than last year, when the entire promotion took place in the fiscal fourth quarter. In fiscal February last year, Red Lobster ran its "Pound of Crab for $10.99" promotion and same-restaurant sales were up 5% to 6%. -MORE- -4- Same-restaurant sales were up 6% to 7% at Olive Garden for fiscal February, driven by a 2% to 3% increase in guest counts, a 2% to 3% increase in pricing and a 1% increase from menu mix changes. This year on February 3rd, Olive Garden concluded its advertising of the Culinary Institute in Italy featuring Executive Chef Neri and her "Tortelloni di Fizzano" priced at $8.95. The company's "Seafood Alfredo and Chicken Alfredo" feature began on February 18 and will run through March 31, 2002. In fiscal February of last year, Olive Garden had two features, "Chicken Scampi" for $8.95 and "Seafood and Chicken Alfredo" without a price point, and its same-restaurant sales increased 6% to 7%. At the end of its fiscal third quarter, Darden Restaurants, Inc., in Orlando, FL, owned and operated 1,193 Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones BBQ Sports Bar restaurants in North America. 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, including 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 02/25/01 02/24/02 -------- -------- 623 Red Lobster USA 631 32 Red Lobster Canada 32 -- -- 655 Total Red Lobster 663 464 Olive Garden USA 482 5 Olive Garden Canada 6 - - 469 Total Olive Garden 488 19 Bahama Breeze 26 5 Smokey Bones BBQ 16 ------ ----- 1,148 Total Restaurants 1,193 -END- DARDEN RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In Thousands, Except per Share Data) (Unaudited)
13 Weeks Ended 39 Weeks Ended 2/24/2002 2/25/2001 2/24/2002 2/25/2001 --------- --------- --------- --------- Sales $1,134,388 $988,635 $3,229,382 $2,938,798 Costs and Expenses: Cost of sales: Food and beverage 350,310 313,242 1,015,204 942,640 Restaurant labor 358,327 313,930 1,020,134 935,469 Restaurant expenses 160,710 141,897 468,518 417,198 Total Cost of Sales 869,347 769,069 2,503,856 2,295,307 Selling, general and administrative 111,284 98,455 324,379 303,755 Depreciation and amortization 41,865 37,092 122,436 108,517 Interest, net 9,116 8,528 26,372 22,579 Restructuring credit (1) -2,269 Total Costs and Expenses 1,031,612 913,144 2,974,774 2,730,158 Earnings before Income Taxes 102,776 75,491 254,608 208,640 Income Taxes -36,556 -25,964 -89,769 -72,651 Net Earnings $66,220 $49,527 $164,839 $135,989 Net Earnings per Share (2): Basic $0.57 $0.41 $1.41 $1.13 Diluted $0.54 $0.40 $1.34 $1.10 Average Number of Common Shares Outstanding (2): Basic 116,700 119,800 116,900 120,400 Diluted 123,000 124,000 122,600 124,100 Note: (1) Earnings before restructuring credit were as follows: 13 Weeks Ended 39 Weeks Ended 2/24/2002 2/25/2001 2/24/2002 2/25/2001 --------- --------- --------- --------- Pretax Earnings before Restructuring Credit $102,776 $75,491 $252,339 $208,640 Income Taxes -36,556 -25,964 -88,894 -72,651 Earnings before Restructuring Credit $66,220 $49,527 $163,445 $135,989 Earnings per Share before Restructuring Credit (2): Basic $0.57 $0.41 $1.40 $1.13 Diluted $0.54 $0.40 $1.33 $1.10 (2) Common share and earnings per share data have not been adjusted for the impact of the stock split payable on May 1, 2002 to shareholders of record on April 10, 2002.
DARDEN RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS (In Thousands)
(Unaudited) (Unaudited) 2/24/2002 5/27/2001 --------- --------- ASSETS Current Assets: Cash and cash equivalents $37,144 $61,814 Receivables 29,485 32,870 Inventories 229,427 148,429 Net assets held for disposal 10,579 10,087 Prepaid expenses and other current assets 16,727 26,942 Deferred income taxes 50,538 48,000 Total Current Assets 373,900 328,142 Land, Buildings and Equipment 1,870,658 1,779,515 Other Assets 153,201 108,877 Total Assets $2,397,759 $2,216,534 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $174,394 $156,859 Short-term debt 62,700 12,000 Current portion of long-term debt 2,640 2,647 Accrued payroll 88,770 82,588 Accrued income taxes 47,185 47,698 Other accrued taxes 29,081 27,429 Other current liabilities 268,584 225,037 Total Current Liabilities $673,354 $554,258 Long-term Debt 513,053 517,927 Deferred Income Taxes 106,728 90,782 Other Liabilities 19,780 20,249 Total Liabilities $1,312,915 $1,183,216 Stockholders' Equity: Common stock and surplus $1,463,190 $1,405,799 Retained earnings 692,323 532,121 Treasury stock -1,007,760 -840,254 Accumulated other comprehensive income -14,282 -13,102 Unearned compensation -46,644 -49,322 Officer notes receivable -1,983 -1,924 Total Stockholders' Equity $1,084,844 $1,033,318 Total Liabilities and Stockholders' Equity $2,397,759 $2,216,534
DARDEN RESTAURANTS, INC. THIRD QUARTER FY 2002 FINANCIAL HIGHLIGHTS (In Millions, Except per Share Data) (Unaudited)
13 Weeks Ended 39 Weeks Ended 2/24/2002 2/25/2001 2/24/2002 2/25/2001 --------- --------- --------- --------- Sales $1,134.4 $988.6 $3,229.4 $2,938.8 Net Earnings (1) $66.2 $49.5 $164.8 $136.0 Net Earnings per Share (1) (2): Basic $0.57 $0.41 $1.41 $1.13 Diluted $0.54 $0.40 $1.34 $1.10 Average Number of Common Shares Outstanding (2): Basic 116.7 119.8 116.9 120.4 Diluted 123.0 124.0 122.6 124.1 Note: (1) Earnings before restructuring credit were as follows: Earnings before Restructuring Credit $66.2 $49.5 $163.4 $136.0 Earnings per Share before Restructuring Credit (2): Basic $0.57 $0.41 $1.40 $1.13 Diluted $0.54 $0.40 $1.33 $1.10 (2) Common share and earnings per share data have not been adjusted for the impact of the stock split payable on May 1, 2002 to shareholders of record on April 10, 2002.