Darden Restaurants Reports Third Quarter Diluted Net Earnings Per Share of $1.02; Declares a Quarterly Dividend of 50 Cents Per

  Darden Restaurants Reports Third Quarter Diluted Net Earnings Per Share of
          $1.02; Declares a Quarterly Dividend of 50 Cents Per Share

PR Newswire

ORLANDO, Fla., March 22, 2013

ORLANDO, Fla., March 22, 2013 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE:
DRI) today reported diluted net earnings per share and sales for the third
quarter ended February 24, 2013.

(Logo:  http://photos.prnewswire.com/prnh/20050203/FLTH026LOGO)

Headlines for the quarter include the following:

  o Third quarter diluted net earnings per share from continuing operations
    were $1.02, an 18% decrease from the $1.25 per diluted share in the third
    quarter of last year. Earnings from continuing operations in this year's
    third quarter were $134.5 million and sales were $2.26 billion, which
    compare to earnings from continuing operations of $164.1 million and sales
    of $2.16 billion in the third quarter last year.
     
  o Third quarter total sales from continuing operations of $2.26 billion
    represent an increase of 4.6% compared to the third quarter of last year. 
    The increase reflects a same-restaurant sales increase of 2.3% for the
    Company's Specialty Restaurant Group, incremental sales from the
    acquisition of 40 Yard House restaurants on August 29, 2012 and the
    addition and operation of another 108 net new restaurants compared to the
    third quarter last year, offset by a combined same-restaurant sales
    decline of -4.6% for Olive Garden, Red Lobster and LongHorn Steakhouse. 
    In the third quarter, U.S. same-restaurant sales decreased -1.6%, -4.1%
    and -6.6% for LongHorn Steakhouse, Olive Garden and Red Lobster,
    respectively.  In the third quarter, the Company estimates that winter
    weather adversely affected same-restaurant sales results by approximately
    90 basis points.
     
  o The Company estimated that costs associated with the acquisition of Yard
    House USA, Inc., which was completed on August 29, 2012, the beginning of
    this year's second quarter, adversely affected diluted net earnings per
    share for this year's third quarter by approximately two cents.
     
  o Darden's Board of Directors declared a quarterly dividend of 50 cents per
    share.

Operating Headlines

OLIVE GARDEN'S third quarter sales of $962 million were 0.6% higher than the
prior year, driven by revenue from 42 net new restaurants offset by a -4.1%
decrease in U.S. same-restaurant sales.  For the quarter, on a percentage of
sales basis, higher food and beverage expenses, restaurant labor expenses,
restaurant expenses, selling, general and administrative expenses and
depreciation expense resulted in a decrease for the quarter in both operating
profit and operating profit as a percentage of sales. 

RED LOBSTER'S third quarter sales of $669 million were -6.0% lower than the
prior year as a result of a U.S. same-restaurant sales decrease of -6.6% that
was partially offset by revenue from three net new restaurants.  For the
quarter, on a percentage of sales basis, lower food and beverage expenses were
more than offset by higher restaurant labor expenses, restaurant expenses,
selling, general and administrative expenses and depreciation expense, which
resulted in a decrease for the quarter in both operating profit and operating
profit as a percentage of sales. 

LONGHORN STEAKHOUSE'S third quarter sales of $332 million were 6.9% higher
than the prior year, driven by revenue from 42 net new restaurants offset by a
U.S. same-restaurant sales decrease of -1.6%. For the quarter, on a percentage
of sales basis, higher food and beverage expenses, restaurant labor expenses,
restaurant expenses, selling, general and administrative expenses and
depreciation expense resulted in a decline for the quarter in both operating
profit and operating profit as a percentage of sales.

THE SPECIALTY RESTAURANT GROUP'S third quarter sales of $287 million were
61.1% higher than the prior year, driven by the addition of the 40 Yard House
restaurants purchased on August 29, 2012 plus three new Yard House
restaurants, three net new restaurants at The Capital Grille, five net new
restaurants at Bahama Breeze and seven net new restaurants at Seasons 52;
same-restaurant sales increases of 4.1% at The Capital Grille, 2.3% at Eddie
V's, 0.4% at Seasons 52 and slightly offset by a same-restaurant sales decline
of -0.3% at Bahama Breeze.

Fiscal 2013 December, January and February U.S. Same-Restaurant Sales Results

Darden reported U.S. same-restaurant sales for the fiscal months of December,
January and February as follows:

Olive Garden                      December  January  February
Same-Restaurant Sales             -2.5%     -0.6%    -9.1%
Same-Restaurant Traffic           -3.7%     -0.9%    -7.0%
Pricing                           2.3%      2.1%     1.2%
Menu-mix                          -1.2%     -1.7%    -3.4%
Red Lobster                       December  January  February
Same-Restaurant Sales             -7.1%     -5.2%    -7.5%
Same-Restaurant Traffic           -5.5%     -1.7%    -6.0%
Pricing                           1.2%      1.3%     1.2%
Menu-mix                          -2.8%     -4.8%    -2.7%
LongHorn Steakhouse               December  January  February
Same-Restaurant Sales             -3.6%     2.5%     -3.0%
Same-Restaurant Traffic           -4.4%     0.1%     -2.9%
Pricing                           2.0%      2.0%     2.0%
Menu-mix                          -1.3%     0.4%     -2.2%

Note: The Company estimates that winter weather adversely affected results by
approximately 110 basis points in December and 150 basis points in February. 
There was no adverse weather impact in January.

Other Actions

Darden's Board of Directors declared a quarterly cash dividend of 50 cents per
share on the Company's outstanding common stock. The dividend is payable on
May 1, 2013 to shareholders of record at the close of business on April 10,
2013.

Fiscal 2013 Financial Outlook

Darden affirmed its financial outlook for fiscal 2013.  The Company
anticipates total sales growth for the year of between +6% and +7%, which
reflects combined U.S. same-restaurant sales for the year for Red Lobster,
Olive Garden and LongHorn Steakhouse that is expected to be between -1.5% to
-2.5%, incremental sales starting in fiscal September from the acquisition of
Yard House and the addition of approximately 105 net new restaurants this
year, not including the initial 40 Yard House restaurants in operation when
the acquisition was completed.  The Company expects diluted net earnings per
share from continuing operations for fiscal 2013 to be between $3.06 to $3.22,
which includes approximately 9 cents of transaction and closing costs
associated with the purchase of Yard House. 

Darden Restaurants, Inc., (NYSE: DRI), the world's largest full-service
restaurant company, owns and operates more than 2,000 restaurants that
generate over $8.0 billion in annual sales. Headquartered in Orlando, Fla.,
and employing more than 190,000 people, Darden is recognized for a culture
that rewards caring for and responding to people. In 2013, Darden was named to
the FORTUNE "100 Best Companies to Work For" list for the third year in a row
and is the only full-service restaurant company to ever appear on the list.
Our restaurant brands – Red Lobster, Olive Garden, LongHorn Steakhouse, Bahama
Breeze, Seasons 52, The Capital Grille, Eddie V's and Yard House – reflect the
rich diversity of those who dine with us. Our brands are built on deep
insights into what our guests want. For more information, please visit
www.darden.com.

Forward-looking statements in this news release regarding our expected
earnings per share and U.S. same-restaurant sales for the fiscal year, new
restaurant growth and all other statements that are not historical facts,
including without limitation statements concerning our future economic
performance, plans or objectives, are made under the Safe Harbor provisions of
the Private Securities Litigation Reform Act of 1995.  Any forward-looking
statements speak only as of the date on which such statements are made, and we
undertake no obligation to update such statements to reflect events or
circumstances arising after such date. We wish to caution investors not to
place undue reliance on any such forward-looking statements.  By their nature,
forward-looking statements involve risks and uncertainties that could cause
actual results to materially differ from those anticipated in the statements.
The most significant of these uncertainties are described in Darden's Form
10-K, Form 10-Q and Form 8-K reports (including all amendments to those
reports). These risks and uncertainties include food safety and food-borne
illness concerns, litigation, unfavorable publicity, risks relating to public
policy changes and federal, state and local regulation of our business
including health care reform, labor and insurance costs, technology failures,
failure to execute a business continuity plan following a disaster, health
concerns including virus outbreaks, intense competition, failure to drive
sales growth, failure to successfully integrate the Yard House business and
the additional indebtedness incurred to finance the Yard House acquisition,
our plans to expand our newer brands like Bahama Breeze, Seasons 52 and Eddie
V's, a lack of suitable new restaurant locations, higher-than-anticipated
costs to open, close or remodel restaurants, a failure to execute innovative
marketing tactics and increased advertising and marketing costs, a failure to
develop and recruit effective leaders, a failure to address cost pressures,
shortages or interruptions in the delivery of food and other products, adverse
weather conditions and natural disasters, volatility in the market value of
derivatives, economic factors specific to the restaurant industry and general
macroeconomic factors including unemployment and interest rates, disruptions
in the financial markets, risks of doing business with franchisees and vendors
in foreign markets, failure to protect our service marks or other intellectual
property,  a possible impairment in the carrying value of our goodwill or
other intangible assets, a failure of our internal controls over financial
reporting, or changes in accounting standards, and other factors and
uncertainties discussed from time to time in reports filed by Darden with the
Securities and Exchange Commission.

DARDEN RESTAURANTS, INC.

NUMBER OF COMPANY-OWNED RESTAURANTS
02/24/13                       02/26/12
678       Red Lobster USA      675
27        Red Lobster Canada   27
705       Total Red Lobster    702
812       Olive Garden USA     770
6         Olive Garden Canada  6
818       Total Olive Garden   776
416       LongHorn Steakhouse  374
48        The Capital Grille   45
33        Bahama Breeze        28
28        Seasons 52           21
11        Eddie V's            11
43        Yard House           -
5         Other                2
2,107     Total Restaurants    1,959

 

DARDEN RESTAURANTS, INC.

 

CONSOLIDATED STATEMENTS OF EARNINGS

(In millions, except per share data)

(Unaudited)
                                Three Months Ended      Nine Months Ended
                                2/24/2013   2/26/2012   2/24/2013   2/26/2012
Sales                           $ 2,258.2   $ 2,159.7   $ 6,253.0   $ 5,933.2
Costs and expenses:
Cost of sales:
Food and beverage               695.1       661.7       1,921.5     1,828.5
Restaurant labor                709.0       657.2       1,971.5     1,864.6
Restaurant expenses             348.2       308.4       977.8       901.2
Total cost of sales (1)         $ 1,752.3   $ 1,627.3   $ 4,870.8   $ 4,594.3
Selling, general and            199.8       198.0       634.1       568.3
administrative
Depreciation and amortization   101.0       88.9        292.8       258.8
Interest, net                   31.9        27.7        92.7        74.5
Total costs and expenses        $ 2,085.0   $ 1,941.9   $ 5,890.4   $ 5,495.9
Earnings before income taxes    173.2       217.8       362.6       437.3
Income taxes                    (38.7)      (53.7)      (83.3)      (112.3)
Earnings from continuing        $ 134.5     $ 164.1     $ 279.3     $ 325.0
operations
Losses from discontinued
operations, net of tax benefit
                                (0.1)       —           (0.5)       (0.7)

         of $0.2, $0.0, $0.4
and $0.4, respectively
Net earnings                    $ 134.4     $ 164.1     $ 278.8     $ 324.3
Basic net earnings per share:
Earnings from continuing        $ 1.04      $ 1.28      $ 2.17      $ 2.49
operations
Losses from discontinued        —           —           —           (0.01)
operations
Net earnings                    $ 1.04      $ 1.28      $ 2.17      $ 2.48
Diluted net earnings per share:
Earnings from continuing        $ 1.02      $ 1.25      $ 2.13      $ 2.43
operations
Losses from discontinued        —           —           (0.01)      (0.01)
operations
Net earnings                    $ 1.02      $ 1.25      $ 2.12      $ 2.42
Average number of common shares
outstanding:
Basic                           129.3       128.0       128.7       130.7
Diluted                         131.5       130.9       131.4       133.8
(1) Excludes restaurant
depreciation and amortization   $ 95.8      $ 83.2      $ 277.2     $ 242.2
as follows:

 

DARDEN RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions)
                                                       2/24/2013    5/27/2012
                                                       (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                              $  103.9     $ 70.5
Receivables, net                                       68.1         71.4
Inventories                                            432.6        404.1
Prepaid income taxes                                   12.7         12.2
Prepaid expenses and other current assets              82.5         74.9
Deferred income taxes                                  153.6        124.5
Total current assets                                   $  853.4     $ 757.6
Land, buildings and equipment, net                     4,335.0      3,951.3
Goodwill                                               904.5        538.6
Trademarks                                             574.2        464.9
Other assets                                           290.7        231.8
Total assets                                           $  6,957.8   $ 5,944.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                       $  324.8     $ 260.7
Short-term debt                                        216.9        262.7
Accrued payroll                                        135.5        154.3
Accrued income taxes                                   12.9         —
Other accrued taxes                                    69.7         60.4
Unearned revenues                                      315.4        231.7
Current portion of long-term debt                      —            349.9
Other current liabilities                              460.2        454.4
Total current liabilities                              $  1,535.4   $ 1,774.1
Long-term debt, less current portion                   2,502.4      1,453.7
Deferred income taxes                                  369.9        312.9
Deferred rent                                          223.4        204.4
Obligations under capital leases, net of current       53.0         54.4
installments   
Other liabilities                                      323.4        302.7
Total liabilities                                      $  5,007.5   $ 4,102.2
Stockholders' equity:
Common stock and surplus                               $  1,184.5   $ 2,518.8
Retained earnings                                      930.9        3,172.8
Treasury stock                                         (8.5)        (3,695.8)
Accumulated other comprehensive income (loss)          (150.3)      (146.6)
Unearned compensation                                  (6.3)        (7.2)
Total stockholders' equity                             $  1,950.3   $ 1,842.0
Total liabilities and stockholders' equity             $  6,957.8   $ 5,944.2

 

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)
                                                      Nine Months Ended
                                                      2/24/2013     2/26/2012
Cash flows—operating activities
Net earnings                                          $ 278.8       $ 324.3
Losses from discontinued operations, net of tax       0.5           0.7
benefit
Adjustments to reconcile net earnings from continuing
operations to cash flows:  
Depreciation and amortization                         292.8         258.8
Stock-based compensation expense                      36.0          41.3
Change in current assets and liabilities and other,   81.9          (74.6)
net
Net cash provided by operating activities of          $ 690.0       $ 550.5
continuing operations
Cash flows—investing activities
Purchases of land, buildings and equipment            (518.5)       (483.4)
Proceeds from disposal of land, buildings and         —             3.3
equipment
Cash used in business acquisitions, net of cash       (577.4)       (58.6)
acquired
Increase in other assets                              (23.0)        (21.1)
Net cash used in investing activities of continuing   $ (1,118.9)   $ (559.8)
operations
Cash flows—financing activities
Proceeds from issuance of common stock                49.4          45.1
Income tax benefits credited to equity                10.4          12.0
Dividends paid                                        (193.2)       (168.6)
Repurchases of common stock                           (52.4)        (357.0)
ESOP note receivable repayment                        0.9           1.5
Proceeds from issuance of short-term debt, net        (45.7)        102.2
Repayment of long-term debt                           (350.9)       (1.5)
Principal payments on capital leases                  (1.2)         (1.2)
Proceeds from issuance of long-term debt              1,050.0       400.0
Payment of debt issuance costs                        (7.4)         (5.1)
Net cash provided by financing activities of          $ 459.9       $ 27.4
continuing operations
Cash flows—discontinued operations
Net cash used in operating activities of discontinued (0.3)         (0.4)
operations
Net cash provided by investing activities of          2.7           0.3
discontinued operations
Net cash provided by (used in) discontinued           $ 2.4         $ (0.1)
operations
Increase in cash and cash equivalents                 33.4          18.0
Cash and cash equivalents - beginning of period       70.5          70.5
Cash and cash equivalents - end of period             $ 103.9       $ 88.5

 

SOURCE Darden Restaurants, Inc.: Financial

Website: http://www.darden.com
Contact: (Analysts) Matthew Stroud (407) 245-6458; (Media) Rich Jeffers (407)
245-4189