Darden Restaurants Reports Fourth Quarter And Fiscal Year Diluted Net Earnings Per Share And Declares Its Quarterly Dividend

Darden Restaurants Reports Fourth Quarter And Fiscal Year Diluted Net Earnings
                Per Share And Declares Its Quarterly Dividend

PR Newswire

ORLANDO, Fla., June 20, 2014

ORLANDO, Fla., June 20, 2014 /PRNewswire/ --Darden Restaurants, Inc. (NYSE:
DRI) today reported earnings and sales results for the fourth quarter and
fiscal year ended May 25, 2014.Headlines include:

Fourth Quarter Earnings Per Share and Total Sales

Fourth quarter diluted net earnings per share were 65 cents, which compares to
$1.01 in last year's fourth quarter. The Company estimates that diluted net
earnings per share for the fourth quarter of this year were adversely affected
by approximately 19 cents due to legal, financial advisory and other costs
related to implementation of the strategic action plan Darden announced in
December 2013 and charges related to various asset impairments. Fourth
quarter total sales from continuing and discontinued operations were $2.32
billion, which compares to $2.30 billion in the fourth quarter last year. As
a result of the pending sale of Red Lobster, operating results for Red Lobster
are included in discontinued operations for all periods presented. However,
the Company did not allocate any general and administrative operating support
expenses to net earnings from discontinued operations.

  oDiluted net earnings per share in the fourth quarter of this year include
    36 cents from continuing operations and 29 cents from discontinued
    operations. Of the approximately 19 cents that adversely affected diluted
    net earnings for this year's fourth quarter, approximately 13 cents
    affected continuing operations and approximately six cents affected
    discontinued operations. Diluted net earnings per share for the fourth
    quarter of last year include 59 cents from continuing operations and 42
    cents from discontinued operations.
  oNet earnings in the fourth quarter of this year were $86.5 million, which
    includes $48.4 million from continuing operations and $38.1 million from
    discontinued operations. Net earnings in the fourth quarter of last year
    were $133.2 million, and included $78.5 million from continuing operations
    and $54.7 million from discontinued operations.
  oFourth quarter total sales from continuing and discontinued operations
    were $2.32 billion, which compares to $2.30 billion in the fourth quarter
    last year. Total sales for the fourth quarter of this year include sales
    of $1.65 billion from continuing operations and sales of $666.2 million
    from discontinued operations. Total sales in the fourth quarter of last
    year include sales of $1.59 billion from continuing operations and sales
    of $706.5 million from discontinued operations. The increase in total
    sales for the fourth quarter of this year reflects the operation of 69 net
    new restaurants compared to the fourth quarter last year and same
    restaurant-sales increases for LongHorn Steakhouse and the Company's
    Specialty Restaurants, offset by same-restaurant sales declines for Olive
    Garden and Red Lobster.
  oIn the fourth quarter, U.S. same-restaurant sales increased 2.4% at
    LongHorn Steakhouse and 2.0% at the Specialty Restaurant Group and
    declined 3.5% at Olive Garden and 5.6% at Red Lobster.

Fiscal Year 2014 Earnings Per Share and Total Sales

Fiscal year 2014 diluted net earnings per share were $2.15, which compares to
$3.13 last year. For the fiscal year, diluted net earnings per share were
adversely affected by approximately 32 cents due to strategic action plan
costs and charges related to various asset impairments. For fiscal year 2014,
total sales from continuing and discontinued operations were $8.76 billion, a
2.4% increase from $8.55 billion last year. As a result of the pending sale
of Red Lobster, operating results for Red Lobster are included in discontinued
operations for all periods presented. However, we did not allocate any
general and administrative operating support expenses to net earnings from
discontinued operations.

  oFor fiscal year 2014, diluted net earnings per share of $2.15 include
    $1.38 from continuing operations and 77 cents from discontinued
    operations. Last year, diluted net earnings per share were $3.13, and
    included $1.80 from continuing operations and $1.33 from discontinued
    operations. Net earnings were $286.2 million in fiscal 2014 and include
    $183.2 million from continuing operations and $103.0 million from
    discontinued operations. Net earnings were $411.9 million last year,
    including $237.3 million from continuing operations and $174.6 million
    from discontinued operations.
  oFor fiscal year 2014, total sales were $8.76 billion, a 2.4% increase from
    $8.55 billion last year. Total sales for fiscal 2014 include sales of
    $6.29 billion from continuing operations and sales of $2.47 billion from
    discontinued operations. Total sales for fiscal 2013 include sales of
    $5.92 billion from continuing operations and sales of $2.63 billion from
    discontinued operations. The increase reflects 5.6% of growth in sales
    for the year due to new restaurants (including incremental operating weeks
    this year compared to last year as a result of the acquisition of 40 Yard
    House restaurants in the second quarter of last year) same-restaurant
    sales growth of 2.7% for LongHorn Steakhouse and 1.6% for the Company's
    Specialty Restaurants, offset partially by same-restaurant sales declines
    of 3.4% for Olive Garden and 6.0% for Red Lobster.

Operating Headlines

OLIVE GARDEN'S fourth quarter sales of $926 million were 2.7% lower than the
prior year due to its U.S. same-restaurant sales decline of 3.5% partially
offset by revenue from nine net new restaurants. For the quarter, on a
percentage of sales basis, food and beverage expenses, restaurant labor
expenses, restaurant expenses, selling, general and administrative expenses
and depreciation and amortization expenses were higher. This resulted in a
decline for the quarter in both operating profit and operating profit as a
percentage of sales. For the full fiscal year, total sales were $3.64 billion,
a 1.1% decline from last year, average annual sales per restaurant were $4.4
million and U.S. same-restaurant sales declined 3.4%.

LONGHORN STEAKHOUSE'S fourth quarter sales of $376 million were 10.8% higher
than the prior year, driven by revenue from 34 net new restaurants and its
U.S. same-restaurant sales increase of 2.4%. For the quarter, on a percentage
of sales basis, higher food and beverage expenses, restaurant expenses and
selling, general and administrative expenses were slightly offset by lower
restaurant labor expenses. This resulted in a decline in both in operating
profit and operating profit as a percentage of sales. For the full fiscal
year, total sales were $1.38 billion, a 12.4% increase from last year, average
annual sales per restaurant were $3.1 million and U.S. same-restaurant sales
increased 2.7%.

THE SPECIALTY RESTAURANTS' fourth quarter sales of $342 million were 15.9%
higher than the prior year, driven by same-restaurant sales increases of 4.1%
at Bahama Breeze, 4.0% at The Capital Grille, 0.8% at Yard House, 0.3% at
Eddie Vs partially offset by a same-restaurant sale decline of 1.6% at Seasons
52. Sales growth for the group also reflected revenue from five new
restaurants at The Capital Grille, four at Bahama Breeze, seven at Seasons 52,
three at Eddie V's and eight at Yard House. For the full fiscal year, total
sales for the Specialty Restaurants were $1.23 billion, a 25% increase from
last year. At The Capital Grille, average annual sales per restaurant were
$7.1 million and same-restaurant sales increased 3.4% for the fiscal year. At
Bahama Breeze, average annual sales per restaurant were $5.6 million and
same-restaurant sales increased 4.1% for the fiscal year. At Seasons 52,
average annual sales per restaurant were $5.7 million and same-restaurant
sales declined 2.2% for the fiscal year. At Eddie V's, average annual sales
per restaurant were $6.0 million and same-restaurant sales increased 1.1% for
the fiscal year. And, at Yard House, average annual sales per restaurant were
$8.2 million and same-restaurant sales increased 0.3% for the fiscal year.

Discontinued Operations

We have classified the results of operations, impairment charges and
separation costs related to Red Lobster and its related franchise and consumer
products businesses and two closed synergy restaurants as discontinued
operations.

Red Lobster's fourth quarter sales of $664 million were 5.6% lower than the
prior year, which reflected its U.S. same-restaurant sales decline of 5.6%.
For the quarter, on a percentage of sales basis, food and beverage expenses,
restaurant expenses, and depreciation and amortization expenses were higher
compared to the fourth quarter of last year, while selling, general and
administrative expenses were lower. The net result is that operating profit
and operating profit as a percentage of sales were below last year. For the
full fiscal year, total sales were $2.46 billion, a 6.2% decrease compared to
last year, average annual sales per restaurant were $3.5 million and U.S.
same-restaurant sales decreased 6.0%.

Fiscal 2014 March, April, May U.S. Same-Restaurant Sales Results

Darden reported U.S. same-restaurant sales for the fiscal months of March,
April and May as follows:

Olive Garden            March April May
Same-Restaurant Sales   -4.4% -2.6% -3.3%
Same-Restaurant Traffic -6.1% -3.5% -1.7%
Pricing                 1.7%  1.7%  1.7%
Menu mix                0.0%  -0.9% -3.3%

LongHorn Steakhouse     March April May
Same-Restaurant Sales   1.9%  2.6%  2.7%
Same-Restaurant Traffic -0.7% -0.9% -0.3%
Pricing                 2.4%  2.7%  2.7%
Menu Mix                0.2%  0.9%  0.2%

Red Lobster             March  April May
Same-Restaurant Sales   -7.6%  -3.6% -4.4%
Same-Restaurant Traffic -10.0% -8.8% -10.1%
Pricing                 1.5%   1.6%  1.7%
Menu mix                0.9%   3.5%  4.0%

Red Lobster Sale

Darden expects to receive net cash proceeds from the sale of Red Lobster,
after tax and transaction costs, of approximately $1.6 billion, of which
approximately $1.0 billion will be used to retire outstanding debt. The
remaining net proceeds of approximately $500 million to $600 million will be
deployed in fiscal 2015 for a new share repurchase program of up to $700
million. In addition to strengthening the Company's credit metrics, with the
lower debt levels and reduced outstanding share count, Darden expects to
maintain its current quarterly dividend of 55 cents per share, or $2.20
annually. The transaction is expected to close in the Company's first quarter
of fiscal 2015.

Other Actions

Darden's Board of Directors declared a quarterly cash dividend of 55 cents per
share on the Company's outstanding common stock. The dividend is payable on
August 1, 2014 to shareholders of record at the close of business on July 10,
2014.

The Board of Directors expanded the Company's existing share repurchase
authorization to include structured transactions. The Company's available
share repurchase authorization totals 15.5 million shares, which is
approximately 12% of the 132.3 million shares the Company had outstanding at
the end of fourth quarter of fiscal 2014.

Darden's Annual Meeting of Shareholders will be held on September 30, 2014 in
Orlando, FL. The record date for shareholders entitled to vote at the Annual
Meeting is August 11, 2014.

Fiscal 2015 Financial Outlook

Given significant adjustments related to the sale of Red Lobster, the Company
will discuss its fiscal 2015 financial outlook during the fourth quarter
conference call and slide presentation that is scheduled for Friday, June 20
at 8:30 am ET and that can be accessed by clicking on the following link:
http://www.videonewswire.com/event.asp?id=99683 .

Darden Restaurants, Inc., (NYSE: DRI), the world's largest full-service
restaurant company, owns and operates more than 1,500 restaurants that
generate approximately $6.3 billion in annual sales. Headquartered in Orlando,
Fla., and employing more than 150,000 people, Darden is recognized for a
culture that rewards caring for and responding to people. In 2014, Darden was
named to the FORTUNE "100 Best Companies to Work For" list for the fourth year
in a row. Our restaurant brands – 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 the ability to achieve the
strategic plan to enhance shareholder value including realizing the expected
benefits from the sale of Red Lobster, the occurrence of any event, change or
other circumstances that could give rise to the termination of the agreement
to sell Red Lobster, the outcome of any legal proceeding that may be
instituted against Darden relating to the Red Lobster transaction or
otherwise, the failure of the Red Lobster transaction to close for any reason
including non-fulfillment of any conditions to close, the timing of the
completion of the transaction, actions of activist investors and the cost and
disruption of responding to those actions, 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 smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of
suitable new restaurant locations, higher-than-anticipated costs to open,
close, relocate 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, 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, an inability or failure to manage the
accelerated impact of social media 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
05/25/14                                 05/26/13
831       Olive Garden USA               822
6         Olive Garden Canada            6
837       Total Olive Garden             828
464       LongHorn Steakhouse            430
54        The Capital Grille             49
37        Bahama Breeze                  33
38        Seasons 52                     31
15        Eddie V's                      12
52        Yard House                     44
4         Other                          6
1,501     Total Darden excl Red Lobster  1,433
679       Red Lobster USA                678
27        Red Lobster Canada             27
706       Total Red Lobster              705
2,207     Total Darden incl Red Lobster  2,138



DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share data)
(Unaudited)
                                Three Months Ended      Twelve Months Ended
                                5/25/2014   5/26/2013   5/25/2014   5/26/2013
Sales                           $ 1,650.1   $ 1,592.4   $ 6,285.6   $ 5,921.0
Costs and expenses:
Cost of sales:
Food and beverage               505.5       466.0       1,892.2     1,743.6
Restaurant labor                525.6       512.1       2,017.6     1,892.6
Restaurant expenses             284.9       265.3       1,080.7     980.4
Total cost of sales (1)         $ 1,316.0   $ 1,243.4   $ 4,990.5   $ 4,616.6
Selling, general and            171.5       160.2       663.5       625.4
administrative
Depreciation and amortization   78.3        72.5        304.4       278.3
Interest, net                   35.6        33.2        134.3       126.0
Asset impairment, net           14.8        —           18.3        0.7
Total costs and expenses        $ 1,616.2   $ 1,509.3   $ 6,111.0   $ 5,647.0
Earnings before income taxes    33.9        83.1        174.6       274.0
Income taxes                    (14.5)      4.6         (8.6)       36.7
Earnings from continuing        $ 48.4      $ 78.5      $ 183.2     $ 237.3
operations
Earnings from discontinued
operations, net of tax expense
of                              38.1        54.7        103.0       174.6

$9.8, $21.6, $32.3 and
$72.7, respectively
Net earnings                    $ 86.5      $ 133.2     $ 286.2     $ 411.9
Basic net earnings per share:
Earnings from continuing        $ 0.37      $ 0.60      $ 1.40      $ 1.84
operations
Earnings from discontinued      0.29        0.43        0.78        1.35
operations
Net earnings                    $ 0.66      $ 1.03      $ 2.18      $ 3.19
Diluted net earnings per share:
Earnings from continuing        $ 0.36      $ 0.59      $ 1.38      $ 1.80
operations
Earnings from discontinued      0.29        0.42        0.77        1.33
operations
Net earnings                    $ 0.65      $ 1.01      $ 2.15      $ 3.13
Average number of common shares
outstanding:
Basic                           131.9       129.8       131.0       129.0
Diluted                         133.8       132.2       133.2       131.6
(1) Excludes restaurant
depreciation and amortization   $ 72.5      $ 67.0      $ 282.3     $ 257.5
as follows:



DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
                                                       5/25/2014    5/26/2013
                                                       (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                              $  98.3      $ 88.2
Receivables, net                                       83.8         85.4
Inventories                                            196.8        356.9
Prepaid income taxes                                   10.9         6.4
Prepaid expenses and other current assets              72.3         83.4
Deferred income taxes                                  124.0        144.6
Assets held for sale                                   1,390.3      —
Total current assets                                   $  1,976.4   $ 764.9
Land, buildings and equipment, net                     3,381.0      4,391.1
Goodwill                                               872.5        908.3
Trademarks                                             574.6        573.8
Other assets                                           296.2        298.8
Total assets                                           $  7,100.7   $ 6,936.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                       $  233.1     $ 296.5
Short-term debt                                        207.6        164.5
Accrued payroll                                        125.7        150.5
Accrued income taxes                                   —            16.5
Other accrued taxes                                    64.5         67.6
Unearned revenues                                      299.7        270.5
Current portion of long-term debt                      15.0         —
Other current liabilities                              457.4        450.3
Liabilities associated with assets held for sale       215.5        —
Total current liabilities                              $  1,618.5   $ 1,416.4
Long-term debt, less current portion                   2,481.4      2,496.2
Deferred income taxes                                  286.1        356.4
Deferred rent                                          206.2        230.5
Obligations under capital leases, net of current       52.0         52.5
installments
Other liabilities                                      299.6        325.4
Total liabilities                                      $  4,943.8   $ 4,877.4
Stockholders' equity:
Common stock and surplus                               $  1,302.2   $ 1,207.6
Retained earnings                                      995.8        998.9
Treasury stock                                         (7.8)        (8.1)
Accumulated other comprehensive income (loss)          (128.1)      (132.8)
Unearned compensation                                  (5.2)        (6.1)
Total stockholders' equity                             $  2,156.9   $ 2,059.5
Total liabilities and stockholders' equity             $  7,100.7   $ 6,936.9



DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
                                                      Twelve Months Ended
                                                      5/25/2014   5/26/2013
Cash flows—operating activities
Net earnings                                          $ 286.2     $ 411.9
Earnings from discontinued operations, net of tax     (103.0)     (174.6)
Adjustments to reconcile net earnings from continuing
operations to cash flows:
Depreciation and amortization                         304.4       278.3
Stock-based compensation expense                      46.8        49.3
Change in current assets and liabilities and other,   49.0        38.8
net
Net cash provided by operating activities of          $ 583.4     $ 603.7
continuing operations
Cash flows—investing activities
Purchases of land, buildings and equipment            (414.8)     (510.1)
Proceeds from disposal of land, buildings and         4.4         0.3
equipment
Cash used in business acquisitions, net of cash       —           (577.4)
acquired
Increase in other assets                              (25.9)      (27.4)
Net cash used in investing activities of continuing   $ (436.3)   $ (1,114.6)
operations
Cash flows—financing activities
Proceeds from issuance of common stock                58.1        64.4
Income tax benefits credited to equity                10.9        13.6
Dividends paid                                        (288.3)     (258.2)
Repurchases of common stock                           (0.5)       (52.4)
ESOP note receivable repayment                        0.9         1.1
Proceeds from issuance of short-term debt, net        43.1        (98.1)
Repayment of long-term debt                           —           (355.9)
Proceeds from issuance of long-term debt              —           1,050.0
Payment of debt issuance costs                        (1.4)       (7.4)
Principal payments on capital leases                  (2.0)       (1.7)
Net cash (used in) provided by financing activities   $ (179.2)   $ 355.4
of continuing operations
Cash flows—discontinued operations
Net cash provided by operating activities of          186.7       345.6
discontinued operations
Net cash used in investing activities of discontinued (144.5)     (172.4)
operations
Net cash provided by discontinued operations          $ 42.2      $ 173.2
Increase in cash and cash equivalents                 10.1        17.7
Cash and cash equivalents - beginning of period       88.2        70.5
Cash and cash equivalents - end of period             $ 98.3      $ 88.2



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SOURCE Darden Restaurants, Inc.: Financial

Website: http://www.darden.com
Contact: (Analysts) Matthew Stroud, (407) 245-5288; (Media) Bob McAdam, (407)
245-5366
 
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