Darden Restaurants Reports Second Quarter Diluted Net Earnings Per
Share Of 26 Cents; Declares A Quarterly Dividend Of 50 Cents Per
Share
ORLANDO, Fla., Dec. 20, 2012 /PRNewswire/ -- Darden
Restaurants, Inc. (NYSE: DRI) today reported diluted net earnings
per share and sales for the second quarter ended November 25, 2012.
(Logo: http://photos.prnewswire.com/prnh/20050203/FLTH026LOGO
)
Highlights for the quarter include the following:
- Second quarter diluted net earnings per share from continuing
operations were 26 cents, a 37%
decrease from the 41 cents per
diluted share in the second quarter of last year. Earnings from
continuing operations in this year's second quarter were
$33.7 million and sales were
$1.96 billion, which compare to
earnings from continuing operations of $54.1
million and sales of $1.83
billion in the second quarter last year.
- Second quarter total sales from continuing operations of
$1.96 billion represent an increase
of 7.0% compared to the second quarter of last year. The
increase reflects a same-restaurant sales increase of 0.7% for the
Company's Specialty Restaurant Group, incremental sales from the 11
Eddie V's restaurants acquired on November
14, 2011, the acquisition of 40 Yard House restaurants on
August 29, 2012 and the addition and
operation of another 99 net new restaurants compared to the second
quarter last year, offset by a combined same-restaurant sales
decline of 2.7% for Olive Garden, Red Lobster and LongHorn
Steakhouse. In the second quarter, U.S. same-restaurant sales
decreased -0.8%, -2.7% and -3.2% for LongHorn Steakhouse, Red
Lobster and Olive Garden, respectively.
- 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 second
quarter by approximately five
cents.
- Darden's Board of Directors declared a quarterly dividend of
50 cents per share.
Operating Highlights
OLIVE GARDEN'S second quarter sales of $849 million were 1.5% higher than the prior
year, driven by revenue from 46 net new restaurants offset by a
3.2% decrease in U.S. same-restaurant sales. For the quarter,
on a percentage of sales basis, lower food and beverage expenses
offset an increase in restaurant expenses and depreciation expense,
which resulted in an increase for the quarter in operating profit,
but a decrease in operating profit as a percentage of
sales.
RED LOBSTER'S second quarter sales of $590 million were 2.1% lower than the prior year
as a result of a U.S. same-restaurant sales decrease of 2.7% that
was offset somewhat by revenue from five net new restaurants.
For the quarter, on a percentage of sales basis, lower food
and beverage expenses and restaurant labor expenses were more than
offset by an increase in 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 second quarter sales of
$275 million were 7.8% higher than
the prior year, driven by revenue from 32 net new restaurants
offset by a U.S. same-restaurant sales decrease of 0.8%. For the
quarter, on a percentage of sales basis, higher food and beverage
expenses, restaurant labor expenses, restaurant 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 second quarter sales of
$241 million were 76.4% higher than
the prior year, driven by the addition of the 40 Yard House
restaurants purchased on August 29,
2012 plus one new Yard House restaurant that opened in
October 2012; same-restaurant sales
increases of 0.8% at The Capital Grille and 1.9% at Bahama Breeze
offset by a same-restaurant sales decline of -1.0% at Seasons 52;
three net new restaurants at The Capital Grille, five net new
restaurants at Bahama Breeze and four net new restaurants at
Seasons 52; and the addition of the 11 Eddie V's restaurants
purchased on November 14,
2011.
Fiscal 2013 September, October and November U.S.
Same-Restaurant Sales Results
Darden reported U.S. same-restaurant sales for the fiscal months
of September, October and November as follows:
Olive
Garden
|
September
|
October
|
November*
|
Same-Restaurant Sales
|
-3.8%
|
-3.9%
|
-2.0%
|
Same-Restaurant Traffic
|
-7.5%
|
-8.2%
|
-4.8%
|
Pricing
|
2.0%
|
2.3%
|
2.4%
|
Menu-mix
|
1.8%
|
2.0%
|
0.4%
|
|
|
|
|
Red
Lobster
|
September
|
October
|
November*
|
Same-Restaurant Sales
|
0.4%
|
-7.0%
|
-2.8%
|
Same-Restaurant Traffic
|
1.3%
|
-6.1%
|
-3.3%
|
Pricing
|
1.3%
|
1.3%
|
1.2%
|
Menu-mix
|
-2.2%
|
-2.2%
|
-0.7%
|
|
|
|
|
LongHorn
Steakhouse
|
September
|
October
|
November*
|
Same-Restaurant Sales
|
-1.1%
|
-0.1%
|
-1.3%
|
Same-Restaurant Traffic
|
-1.0%
|
-0.2%
|
-0.2%
|
Pricing
|
2.0%
|
2.0%
|
1.9%
|
Menu-mix
|
-2.1%
|
-1.9%
|
-3.0%
|
* Note: Same-restaurant sales results were adversely affected by
approximately 60 and 20 basis points in November and the full
second quarter, respectively, due to Hurricane Sandy which caused
approximately 475 days of restaurant closures.
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
February 1, 2013 to shareholders of
record at the close of business on January
10, 2013.
Fiscal 2013 Financial Outlook
Darden affirmed its financial outlook for fiscal 2013. The
Company anticipates total sales growth of between +7.5% and +8.5%
for the year based upon combined U.S. same-restaurant sales of
approximately -1.0% to flat for Red Lobster, Olive Garden and
LongHorn Steakhouse, incremental sales starting in fiscal September
from the acquisition of Yard House and the opening of approximately
100 net new restaurants in fiscal 2013, not including the initial
40 Yard House restaurants operating at the close of the
acquisition. And, the Company expects diluted net earnings
per share from continuing operations of $3.29 to $3.49 for fiscal 2013, which includes
approximately 8 to 10 cents of
transaction and closing costs associated with the purchase of Yard
House USA, Inc.
Darden Restaurants, Inc., (NYSE: DRI), the world's largest
full-service restaurant company, owns and operates more than 2,000
restaurants that generate $8.0
billion in annual sales. Headquartered in Orlando, Florida and employing more than
185,000 people, Darden is recognized for a culture that rewards
caring for and responding to people. In 2012, Darden was named to
the FORTUNE "100 Best Companies to Work For" list for the second
year in a row. Our restaurant brands - Red Lobster, Olive Garden,
LongHorn Steakhouse, The Capital Grille, Bahama Breeze, Seasons 52,
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
|
11/25/12
|
|
|
|
11/27/11
|
679
|
|
Red
Lobster USA
|
|
674
|
27
|
|
Red
Lobster Canada
|
|
27
|
706
|
|
Total Red
Lobster
|
|
701
|
803
|
|
Olive
Garden USA
|
|
757
|
6
|
|
Olive
Garden Canada
|
|
6
|
809
|
|
Total
Olive Garden
|
|
763
|
399
|
|
LongHorn
Steakhouse
|
|
367
|
48
|
|
The
Capital Grille
|
|
45
|
32
|
|
Bahama
Breeze
|
|
27
|
25
|
|
Seasons
52
|
|
21
|
11
|
|
Eddie
V's
|
|
11
|
41
|
|
Yard
House
|
|
-
|
4
|
|
Other
|
|
1
|
2,075
|
|
Total
Restaurants
|
|
1,936
|
DARDEN
RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In
millions, except per share data)
(Unaudited)
|
|
Three
Months Ended
|
|
Six Months
Ended
|
|
11/25/2012
|
|
11/27/2011
|
|
11/25/2012
|
|
11/27/2011
|
Sales
|
$
|
1,960.0
|
|
|
$
|
1,831.5
|
|
|
$
|
3,994.8
|
|
|
$
|
3,773.4
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|
Food and beverage
|
607.5
|
|
|
573.3
|
|
|
1,226.3
|
|
|
1,166.7
|
|
Restaurant labor
|
635.7
|
|
|
594.2
|
|
|
1,262.5
|
|
|
1,207.3
|
|
Restaurant expenses
|
325.5
|
|
|
293.1
|
|
|
629.7
|
|
|
593.0
|
|
Total cost of sales (1)
|
$
|
1,568.7
|
|
|
$
|
1,460.6
|
|
|
$
|
3,118.5
|
|
|
$
|
2,967.0
|
|
Selling, general and administrative
|
216.1
|
|
|
187.4
|
|
|
434.2
|
|
|
370.2
|
|
Depreciation and amortization
|
99.2
|
|
|
85.8
|
|
|
191.8
|
|
|
169.8
|
|
Interest, net
|
32.9
|
|
|
25.2
|
|
|
60.8
|
|
|
46.9
|
|
Total costs and expenses
|
$
|
1,916.9
|
|
|
$
|
1,759.0
|
|
|
$
|
3,805.3
|
|
|
$
|
3,553.9
|
|
Earnings
before income taxes
|
43.1
|
|
|
72.5
|
|
|
189.5
|
|
|
219.5
|
|
Income
taxes
|
(9.4)
|
|
|
(18.4)
|
|
|
(44.7)
|
|
|
(58.7)
|
|
Earnings
from continuing operations
|
$
|
33.7
|
|
|
$
|
54.1
|
|
|
$
|
144.8
|
|
|
$
|
160.8
|
|
Losses
from discontinued operations, net of tax benefit of
$0.1,
$0.2, $0.3 and $0.4,
respectively
|
(0.1)
|
|
|
(0.4)
|
|
|
(0.4)
|
|
|
(0.5)
|
|
Net
earnings
|
$
|
33.6
|
|
|
$
|
53.7
|
|
|
$
|
144.4
|
|
|
$
|
160.3
|
|
Basic net
earnings per share:
|
|
|
|
|
|
|
|
Earnings from continuing operations
|
$
|
0.26
|
|
|
$
|
0.42
|
|
|
$
|
1.13
|
|
|
$
|
1.22
|
|
Losses from discontinued operations
|
—
|
|
|
(0.01)
|
|
|
(0.01)
|
|
|
(0.01)
|
|
Net earnings
|
$
|
0.26
|
|
|
$
|
0.41
|
|
|
$
|
1.12
|
|
|
$
|
1.21
|
|
Diluted
net earnings per share:
|
|
|
|
|
|
|
|
Earnings from continuing operations
|
$
|
0.26
|
|
|
$
|
0.41
|
|
|
$
|
1.10
|
|
|
$
|
1.19
|
|
Losses from discontinued operations
|
—
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
Net earnings
|
$
|
0.26
|
|
|
$
|
0.40
|
|
|
$
|
1.10
|
|
|
$
|
1.19
|
|
Average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
128.8
|
|
|
130.3
|
|
|
128.5
|
|
|
132.0
|
|
Diluted
|
131.7
|
|
|
133.2
|
|
|
131.4
|
|
|
135.2
|
|
|
|
|
|
|
|
|
|
(1)
Excludes restaurant depreciation and amortization as
follows:
|
$
|
94.1
|
|
|
$
|
80.6
|
|
|
$
|
181.5
|
|
|
$
|
159.0
|
|
DARDEN
RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In
millions)
|
|
11/25/2012
|
|
5/27/2012
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash equivalents
|
$
|
61.4
|
|
|
$
|
70.5
|
|
Receivables, net
|
66.7
|
|
|
71.4
|
|
Inventories
|
425.3
|
|
|
404.1
|
|
Prepaid income taxes
|
11.3
|
|
|
12.2
|
|
Prepaid expenses and other current assets
|
83.6
|
|
|
74.9
|
|
Deferred income taxes
|
152.3
|
|
|
124.5
|
|
Total current assets
|
$
|
800.6
|
|
|
$
|
757.6
|
|
Land,
buildings and equipment, net
|
4,285.7
|
|
|
3,951.3
|
|
Goodwill
|
904.9
|
|
|
538.6
|
|
Trademarks
|
574.2
|
|
|
464.9
|
|
Other
assets
|
267.3
|
|
|
231.8
|
|
Total assets
|
$
|
6,832.7
|
|
|
$
|
5,944.2
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable
|
$
|
315.6
|
|
|
$
|
260.7
|
|
Short-term debt
|
376.0
|
|
|
262.7
|
|
Accrued payroll
|
134.8
|
|
|
154.3
|
|
Accrued income taxes
|
7.8
|
|
|
—
|
|
Other accrued taxes
|
52.7
|
|
|
60.4
|
|
Unearned revenues
|
220.7
|
|
|
231.7
|
|
Current portion of long-term debt
|
—
|
|
|
349.9
|
|
Other current liabilities
|
436.0
|
|
|
454.4
|
|
Total current liabilities
|
$
|
1,543.6
|
|
|
$
|
1,774.1
|
|
Long-term
debt, less current portion
|
2,503.5
|
|
|
1,453.7
|
|
Deferred
income taxes
|
343.3
|
|
|
312.9
|
|
Deferred
rent
|
216.5
|
|
|
204.4
|
|
Obligations under capital leases, net of current
installments
|
53.5
|
|
|
54.4
|
|
Other
liabilities
|
308.9
|
|
|
302.7
|
|
Total liabilities
|
$
|
4,969.3
|
|
|
$
|
4,102.2
|
|
Stockholders' equity:
|
|
|
|
Common stock and surplus
|
$
|
1,164.3
|
|
|
$
|
2,518.8
|
|
Retained earnings
|
861.8
|
|
|
3,172.8
|
|
Treasury stock
|
(8.7)
|
|
|
(3,695.8)
|
|
Accumulated other comprehensive income
(loss)
|
(147.7)
|
|
|
(146.6)
|
|
Unearned compensation
|
(6.3)
|
|
|
(7.2)
|
|
Total stockholders' equity
|
$
|
1,863.4
|
|
|
$
|
1,842.0
|
|
Total liabilities and stockholders' equity
|
$
|
6,832.7
|
|
|
$
|
5,944.2
|
|
DARDEN
RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In
millions)
(Unaudited)
|
|
Six Months
Ended
|
|
11/25/2012
|
|
11/27/2011
|
Cash
flows—operating activities
|
|
|
|
Net earnings
|
$
|
144.4
|
|
|
$
|
160.3
|
|
Losses from discontinued operations, net of tax
benefit
|
0.4
|
|
|
0.5
|
|
Adjustments to reconcile net earnings from continuing
operations to cash flows:
|
|
|
|
Depreciation and amortization
|
191.8
|
|
|
169.8
|
|
Stock-based compensation expense
|
28.7
|
|
|
24.7
|
|
Change in current assets and liabilities and other,
net
|
(97.7)
|
|
|
(275.0)
|
|
Net cash provided by operating activities of
continuing operations
|
$
|
267.6
|
|
|
$
|
80.3
|
|
Cash
flows—investing activities
|
|
|
|
Purchases of land, buildings and equipment
|
(355.2)
|
|
|
(338.4)
|
|
Proceeds from disposal of land, buildings and
equipment
|
—
|
|
|
2.1
|
|
Cash used in business acquisitions, net of cash
acquired
|
(578.4)
|
|
|
(59.2)
|
|
Increase in other assets
|
(15.8)
|
|
|
(12.6)
|
|
Net cash used in investing activities of continuing
operations
|
$
|
(949.4)
|
|
|
$
|
(408.1)
|
|
Cash
flows—financing activities
|
|
|
|
Proceeds from issuance of common stock
|
37.4
|
|
|
28.3
|
|
Income tax benefits credited to equity
|
8.3
|
|
|
8.3
|
|
Dividends paid
|
(128.5)
|
|
|
(113.6)
|
|
Purchases of treasury stock
|
(52.3)
|
|
|
(279.1)
|
|
ESOP note receivable repayment
|
0.9
|
|
|
1.2
|
|
Proceeds from issuance of short-term debt,
net
|
113.4
|
|
|
269.5
|
|
Repayment of long-term debt
|
(350.9)
|
|
|
(1.2)
|
|
Principal payments on capital leases
|
(0.8)
|
|
|
(0.8)
|
|
Proceeds from issuance of long-term debt
|
1,050.0
|
|
|
400.0
|
|
Payment of debt issuance costs
|
(7.3)
|
|
|
(4.8)
|
|
Net cash provided by financing activities of
continuing operations
|
$
|
670.2
|
|
|
$
|
307.8
|
|
Cash
flows—discontinued operations
|
|
|
|
Net cash used in operating activities of discontinued
operations
|
(0.2)
|
|
|
(0.3)
|
|
Net cash provided by investing activities of
discontinued operations
|
2.7
|
|
|
—
|
|
Net cash provided by (used in) discontinued
operations
|
$
|
2.5
|
|
|
$
|
(0.3)
|
|
|
|
|
|
Decrease
in cash and cash equivalents
|
(9.1)
|
|
|
(20.3)
|
|
Cash and
cash equivalents - beginning of period
|
70.5
|
|
|
70.5
|
|
Cash and
cash equivalents - end of period
|
$
|
61.4
|
|
|
$
|
50.2
|
|
SOURCE Darden Restaurants, Inc.: Financial