SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 23, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ............... to ...............
Commission File Number 1-13666
DARDEN RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
Florida 59-3305930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5900 Lake Ellenor Drive, 32809
Orlando, Florida (Zip Code)
(Address of principal executive offices)
407-245-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days._X_ Yes ___ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares of common stock outstanding as of March 13, 1997:
152,980,212 (excluding 6,941,369 shares held in treasury).
<PAGE>
DARDEN RESTAURANTS, INC.
TABLE OF CONTENTS
Page
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statements of Earnings 2
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Index to Exhibits 13
<PAGE>
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
<CAPTION>
Thirteen Weeks Ended
February 23, 1997 February 25, 1996
- --------------------------------------------------------------------
<S> <C> <C>
Sales....................... $800,846 $795,111
Costs and Expenses:
Cost of sales:
Food and beverages........ 277,824 262,230
Restaurant labor.......... 258,555 237,076
Restaurant expenses....... 116,908 106,973
-------- --------
Total Cost of Sales...... $653,287 $606,279
Selling, general and 85,245 95,092
administrative............
Depreciation and amortization 35,067 31,711
Interest, net............... 5,634 5,532
-------- --------
Total Costs and Expenses. $779,233 $738,614
-------- --------
Earnings before Income Taxes 21,613 56,497
Income Taxes................ (5,890) (20,889)
-------- --------
Net Earnings................ $ 15,723 $ 35,608
======== ========
Earnings per Share.......... $ 0.10 $ 0.22
======= =======
Average Number of Common
Shares Outstanding........ 154,200 159,100
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
<CAPTION>
Thirty-Nine Weeks Ended
February 23, 1997 February 25, 1996
- --------------------------------------------------------------------
<S> <C> <C>
Sales....................... $2,355,158 $2,362,316
Costs and Expenses:
Cost of sales:
Food and beverages........ 803,621 780,544
Restaurant labor.......... 757,763 707,715
Restaurant expenses....... 360,090 343,078
---------- ----------
Total Cost of Sales...... $1,921,474 $1,831,337
Selling, general and 277,636 280,299
administrative............
Depreciation and amortization 105,170 99,833
Interest, net............... 16,191 16,346
Restructuring............... 75,000
---------- ----------
Total Costs and Expenses. $2,320,471 $2,302,815
Earnings before Income Taxes 34,687 59,501
Income Taxes................ (9,660) (19,628)
----------- ----------
Net Earnings................ $ 25,027 $ 39,873
========== ==========
Earnings per Share.......... $ 0.16 $ 0.25
========== ==========
Average Number of Common
Shares Outstanding........ 156,500 158,800
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<CAPTION>
(Unaudited)
February 23, 1997 May 26, 1996
- ----------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........ $ 28,787 $ 30,343
Receivables...................... 30,704 24,772
Prepaid income taxes............. 9,555
Inventories...................... 147,426 120,725
Net assets held for disposal..... 42,341 31,762
Prepaid expenses and other
current assets................. 14,770 17,298
Deferred income taxes............ 50,789 63,080
---------- ----------
Total Current Assets......... $ 324,372 $ 287,980
Land, Buildings and Equipment....... 1,680,506 1,702,861
Other Assets........................ 94,363 97,663
---------- ----------
Total Assets................. $2,099,241 $2,088,504
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.................. $ 152,463 $ 128,196
Short-term debt................... 79,300 72,600
Current portion of long-term debt. 4 54
Accrued payroll................... 56,525 53,677
Accrued income taxes.............. 12,522
Other accrued taxes............... 19,844 18,921
Other current liabilities......... 155,189 159,336
---------- ----------
Total Current Liabilities.... $ 463,325 $ 445,306
Long-term Debt...................... 313,757 301,151
Deferred Income Taxes............... 101,429 101,109
Other Liabilities................... 18,573 18,301
---------- ----------
Total Liabilities............ $ 897,084 $ 865,867
---------- ----------
Stockholders' Equity:
Common stock and surplus......... $1,267,944 $1,266,212
Retained earnings................ 80,451 61,708
Treasury stock................... (69,042) (25,037)
Cumulative foreign currency
adjustment..................... (9,691) (10,351)
Unearned compensation............ (67,505) (69,895)
---------- ----------
Total Stockholders' Equity... $1,202,157 $1,222,637
---------- ----------
Total Liabilities and Stockholders'
Equity............................ $2,099,241 $2,088,504
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<CAPTION>
Thirteen Weeks Ended
February 23, February 25,
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows--Operating Activities
Net earnings............................ $15,723 $ 35,608
Adjustments to reconcile net earnings to
cash flow:
Depreciation and amortization.......... 35,067 31,711
Amortization of unearned compensation and
loan costs............................. 960 510
Change in current assets and liabilities 28,461 75,795
Change in other liabilities ........... 91 1,282
Loss on disposal of land, buildings and
equipment.............................. 1,593 1,348
Deferred income taxes.................. 4,581 (2,597)
Other, net............................. (71) (207)
-------- --------
Net Cash Provided by Operating Activities $ 86,405 $143,450
-------- --------
Cash Flows--Investment Activities
Purchases of land, buildings and equipment (42,548) (62,305)
Purchases of intangibles................ (88)
Decrease in other assets................ 247 2,241
Proceeds from disposal of land, buildings
and equipment (including net assets held
for disposal)......................... 9,569 11,213
Net Cash Used by Investment Activities $(32,820) $(48,851)
Cash Flows--Financing Activities
Proceeds from issuance of common stock.. 337 2,104
Income tax benefit credited to equity... 71
Purchases of treasury stock............. (34,813)
ESOP note receivable repayment.......... 1,000 200
Decrease in short-term debt............. (11,000) (52,100)
Proceeds from issuance of long-term debt 248,303
Repayment of long-term debt............. (1,000) (250,027)
Payment of interest rate swap settlement
costs................................. (27,670)
Payment of loan costs................... (1,850)
-------- --------
Net Cash Used by Financing Activities $(45,405) $(81,040)
-------- --------
Increase in Cash and Cash Equivalents..... 8,180 13,559
Cash and Cash Equivalents - Beginning of
Period.................................. 20,607 16,991
-------- --------
Cash and Cash Equivalents - End of Period. $ 28,787 $ 30,550
======== ========
Cash Flow from Changes in Current Assets and
Liabilities:
Receivables............................. (1,805) (7,947)
Prepaid income taxes.................... 1,670 4,284
Inventories............................. (7,524) 25,183
Net assets held for disposal............ (485)
Prepaid expenses and other current assets 3,170 2,640
Accounts payable........................ 22,805 27,516
Accrued payroll......................... 3,246 1,643
Accrued income taxes.................... 1,849
Other accrued taxes..................... (2,106) (2,237)
Other current liabilities............... 9,005 23,349
-------- --------
Change in Current Assets and Liabilities.. $ 28,461 $ 75,795
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Thirty-Nine Weeks Ended
February 23, February 25,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows--Operating Activities
Net earnings............................ $ 25,027 $ 39,873
Adjustments to reconcile net earnings to
cash flow:
Depreciation and amortization.......... 105,170 99,833
Amortization of unearned compensation and 2,781 1,038
loan costs............................
Change in current assets and liabilities (20,806) 4,869
Change in other liabilities ........... 272 2,457
Loss on disposal of land, buildings and 4,461 4,335
equipment.............................
Deferred income taxes.................. 12,611 1,727
Non-cash restructuring expenses........ 71,225
Other, net............................. 10 1,443
-------- --------
Net Cash Provided by Operating
Activities...................... $129,526 $226,800
-------- --------
Cash Flows--Investment Activities
Purchases of land, buildings and equipment (125,948) (148,210)
Purchases of intangibles.............. (617) (969)
Decrease in other assets.............. 1,265 44
Proceeds from disposal of land, buildings
and equipment (including net assets
held for disposal).................... 22,303 13,435
Net Cash Used by Investment
Activities...................... $(102,997) $(135,700)
Cash Flows--Financing Activities
Proceeds from issuance of common stock.. 1,275 5,224
Income tax benefit credited to equity... 360
Dividends paid.......................... (6,284) (6,332)
Purchases of treasury stock............. (44,005)
ESOP note receivable repayment.......... 1,600 1,100
Increase (decrease) in short-term debt.. 6,700 (49,400)
Proceeds from issuance of long-term debt 16,900 248,303
Repayment of long-term debt............. (4,454) (250,059)
Payment of interest rate swap settlement
costs................................. (27,670)
Payment of loan costs................... (177) (1,850)
-------- --------
Net Cash Used by Financing Activities $(28,085) $(80,684)
-------- --------
Increase (Decrease) in Cash and Cash
Equivalents............................. (1,556) 10,416
Cash and Cash Equivalents - Beginning of Period 30,343 20,134
-------- --------
Cash and Cash Equivalents - End of Period. $ 28,787 $ 30,550
======== ========
Cash Flow from Changes in Current Assets and
Liabilities:
Receivables............................. (5,932) (9,547)
Prepaid income taxes.................... (9,555)
Inventories............................. (26,701) 16,777
Net assets held for disposal............ (2,194)
Prepaid expenses and other current assets 2,528 11,164
Accounts payable........................ 24,267 (10,562)
Accrued payroll......................... 2,848 (1,644)
Accrued income taxes.................... (12,522) (10,101)
Other accrued taxes..................... 923 (800)
Other current liabilities............... 3,338 11,776
-------- --------
Change in Current Assets and Liabilities.. $(20,806) $ 4,869
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar Amounts in Thousands, Except per Share Data)
Note 1 - Background
These consolidated financial statements do not include certain information
and footnotes required by generally accepted accounting principles for complete
financial statements. However, in the opinion of management, all adjustments
considered necessary for a fair presentation have been included and are of a
normal recurring nature. Operating results for the thirteen and thirty-nine
weeks ended February 23, 1997 are not necessarily indicative of the results that
may be expected for the fiscal year ending May 25, 1997.
These statements should be read in conjunction with the consolidated
financial statements and footnotes included in our annual report on Form 10-K
for the year ended May 26, 1996. The accounting policies used in preparing these
consolidated financial statements are the same as those described in our annual
report on Form10-K.
Note 2 - Consolidated Statements of Cash Flows
During the thirteen and thirty-nine weeks ended February 23, 1997, Darden
paid $8,975 and $18,109, respectively, for interest (net of amount capitalized)
and $471 and $19,669, respectively, for income taxes.
Note 3 - Restructuring Expense
Darden recorded restructuring expense of $75,000 during the thirty-nine
weeks ended February 25, 1996 related to the closing of all China Coast
restaurants. These expenses resulted in a reduction of net earnings of
approximately $44,800 ($.28 per share) and primarily relate to the write-down of
land, buildings and equipment to net realizable value. These restructuring
actions are expected to be substantially completed in fiscal 1997. As of
February 23, 1997, $10,722 of cash payments had been charged against the
restructuring reserve.
Note 4 - Subsequent Event
The Company's Board of Directors approved a fourth quarter fiscal 1997
charge totaling $230,100 representing a $159,200 asset impairment write-down
under Statement of Financial Accounting Standards No. 121 (SFAS 121) and $70,900
in other restructuring and administrative expenses, including the closing of
certain restaurant properties. The asset impairment portion of the charge
relates primarily to low performing restaurant properties and other long-lived
assets including those restaurants closed in the fourth quarter. The total
charge also provides for a planned change in the method of operating in Canada
from all company-owned restaurants to franchising. These expenses will result in
a reduction of annual and fourth quarter fiscal 1997 net earnings of $145,491
($0.94 per share).
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
<TABLE>
The following table sets forth selected restaurant operating data as a
percentage of sales for the periods indicated. All information is derived from
the consolidated statements of earnings for the thirteen and thirty-nine weeks
ended February 23, 1997 and February 25, 1996.
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
----------------------------------------------
February February February February
23, 1997 25, 1996 23, 1997 25, 1996
----------------------------------------------
<S> <C> <C> <C> <C>
Sales............................... 100.0% 100.0% 100.0% 100.0%
Costs and Expenses:
Cost of sales:
Food and beverages............... 34.7 33.0 34.1 33.0
Restaurant labor................. 32.3 29.8 32.2 30.0
Restaurant expenses.............. 14.6 13.4 15.3 14.5
----- ----- ----- -----
Total Cost of Sales.......... 81.6% 76.2% 81.6% 77.5%
Selling, general and administrative. 10.6 12.0 11.8 11.9
Depreciation and amortization....... 4.4 4.0 4.4 4.2
Interest, net....................... 0.7 0.7 0.7 0.7
----- ----- ----- -----
Total Costs and Expenses
before Restructuring
Expenses................... 97.3% 92.9% 98.5% 94.3%
Restructuring....................... 0.0 0.0 0.0 3.2
----- ----- ----- -----
Total Costs and Expenses
after Restructuring
Expenses................... 97.3% 92.9% 98.5% 97.5%
----- ----- ----- -----
Earnings before Income Taxes........ 2.7 7.1 1.5 2.5
Income Taxes........................ (0.7) (2.6) (0.4) (0.8)
----- ----- ----- -----
Net Earnings ....................... 2.0% 4.5% 1.1% 1.7%
===== ===== ===== =====
Net Earnings before Restructuring
Expenses:
Earnings before Restructuring
Expenses and Income Taxes......... 2.7% 7.1% 1.5% 5.7%
Income Taxes before Restructuring
Expenses.......................... (0.7) (2.6) (0.4) (2.1)
----- ----- ----- -----
Net Earnings before Restructuring
Expenses............................ 2.0% 4.5% 1.1% 3.6%
===== ===== ===== =====
</TABLE>
RESULTS OF OPERATIONS
<TABLE>
Operating results before restructuring expenses for the thirteen and
thirty-nine weeks ended February 23, 1997 and February 25, 1996 are summarized
below:
<CAPTION>
(Dollar Amounts in Thousands, Except per Share Data)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
---------------------------------------------------
February February February February
23, 1997 25, 1996 23, 1997 25, 1996
---------------------------------------------------
<S> <C> <C> <C> <C>
Earnings before Restructuring
Expenses and Income Taxes......... $21,613 $56,497 $34,687 $134,501
Income Taxes before Restructuring
Expenses.......................... (5,890) (20,889) (9,660) (49,779)
------- ------- ------- --------
Net Earnings before Restructuring
Expenses.......................... $15,723 $35,608 $25,027 $ 84,722
======= ======= ======= ========
Earnings per Share before
Restructuring Expenses............ $ 0.10 $ 0.22 $ 0.16 $ 0.53
======= ======= ======= ========
</TABLE>
<PAGE>
For the fiscal 1997 third quarter ended February 23, 1997, earnings after
tax were $15.7 million or ten cents per share, compared to earnings after tax of
$35.6 million or 22 cents per share in the third quarter of last fiscal year.
The decline in third quarter earnings was mainly attributable to lower earnings
at Red Lobster due to actions initiated during the second quarter to enhance
long-term performance including new menu items, bolder flavors, lower prices and
service improvements. Sales of $800.8 million for the quarter were up almost one
percent compared to last year.
For the first nine months of fiscal 1997, net earnings were $25.0 million
or 16 cents per share, compared to earnings before unusual items of $84.7
million or 53 cents per share in the same fiscal 1996 period. The closing of all
China Coast restaurants during the first quarter of fiscal 1996 resulted in a
$44.8 million after-tax charge (28 cents per share). Fiscal 1996 nine month
earnings including this unusual item amounted to $39.9 million or 25 cents per
share.
All cost elements as a percentage of sales in the third quarter were
affected by Red Lobster's repositioning strategy initiated in the second
quarter. Food and beverage costs for the quarter were 34.7% of sales, compared
to 33.0% last year, because of the strategy to lower check averages, and
increase portions at Red Lobster. Restaurant labor increased to 32.3% of sales,
compared to 29.8% last year, due to continued wage inflation and additional
training initiatives to improve service at both Red Lobster and The Olive
Garden. Restaurant expenses increased to 14.6% of sales compared to 13.4% last
year, primarily due to overall inflation in operating costs during a period when
sales grew only modestly. As a result, the store-level profit margin decreased
to 18.4% in the third quarter, compared to 23.8% in the prior year. The decrease
in third-quarter selling, general and administrative expenses to 10.6% of sales,
compared to 12.0% of sales last year, was the result of reduced marketing
expense at both Red Lobster and The Olive Garden.
Food and beverage costs for the first nine months of fiscal 1997 were
34.1% of sales, up from last year's 33.0%. Again, this unfavorable increase was
expected and resulted from the strategy to lower check averages and increase
portions at Red Lobster. Restaurant labor costs were 32.2%, up from last year's
30.0% due to one-time training costs at Red Lobster to launch the new menu,
continued wage inflation and additional training initiatives to improve service
at both Red Lobster and The Olive Garden. Restaurant expenses were 15.3% of
sales, compared to 14.5% in the prior year. Selling, general and administrative
expense decreased to 11.8% of sales, compared to 11.9% in the prior year.
The effective tax rate for the first nine months of fiscal 1997 was 28%
compared to 33% last year. The decline in the effective tax rate reflects higher
tax credits and lower pretax income for the year.
DIVISION RESULTS
Red Lobster sales of $475.3 million were down slightly compared to the
third quarter last year. Same-store sales in the U.S. were down 3.6% in the
third quarter as a result of the menu changes implemented in September and a
move away from high-priced promotions. The shift of the Thanksgiving holiday
into this year's third quarter reduced sales and customer traffic by about one
percentage point due to all restaurants being closed for business on
Thanksgiving day. Customer reaction to the new menu and service initiatives
continues to be positive, and third quarter traffic rose by almost four percent
over the same period last year (up five percent without the holiday shift),
compared with traffic declines of over three percent for competitive casual
dining companies. Because of the short-term costs of the many actions underway
to improve Red Lobster's operating performance, third-quarter operating profits
were significantly below the prior year. In each month of the quarter, however,
earnings and profit margins improved over the prior month. Through the first
nine months of fiscal 1997, Red Lobster's sales declined 2.0% to $1.39 billion
and same-store sales in the U.S. declined by 4.5%.
<PAGE>
During the third quarter, Red Lobster opened three restaurants and closed
ten for a total of 726 restaurants compared to 716 at the end of the third
quarter last year. Red Lobster also relocated five restaurants during the
quarter, all of which utilized former China Coast sites, and intends to relocate
four more restaurants during the fourth quarter. Also, during the third quarter,
55 restaurants were remodeled with the wharfside decor package at an average
cost of under $200,000 each. The balance of restaurants to be remodeled are
expected to be completed by the end of the fiscal year.
The Olive Garden continued its positive momentum in the third quarter of
fiscal 1997 as sales increased 2.5% to $323.9 million. Same-store sales in the
U.S. increased 0.6% marking the tenth consecutive quarter of same-store sales
increases. As was the case with Red Lobster, the shift of the Thanksgiving
holiday into the third quarter reduced same-store sales by about one percentage
point. The Olive Garden's third-quarter operating profits were slightly ahead of
last year. Through the first nine months of fiscal 1997, The Olive Garden's
sales increased 3.5% to $962.4 million and same-store sales in the U.S.
increased by 1.2%. During the third quarter, The Olive Garden opened one
restaurant and closed three for a total of 489 restaurants at the end of the
third quarter, compared to 480 restaurants last year.
The initial Bahama Breeze restaurant in Orlando celebrated its one-year
anniversary with record sales in February. A second restaurant is under
construction in the Orlando market and is expected to open in the fourth
quarter. The Company hopes to build two to three more Bahama Breeze restaurants
in fiscal 1998.
<TABLE>
The table below details the number of restaurants open at the end of the
third quarter fiscal year 1997, compared with the number open at the end fiscal
year 1996 and the end of last fiscal year's third quarter.
<CAPTION>
NUMBER OF RESTAURANTS
February 23, 1997 May 26, 1996 February 25, 1996
----------------- ------------ -----------------
<S> <C> <C> <C>
Red Lobster - USA 674 677 664
Red Lobster - Canada 52 52 52
----- ----- -----
Total 726 729 716
Olive Garden - USA 473 471 464
Olive Garden - Canada 16 16 16
----- ----- -----
Total 489 487 480
Bahama Breeze 1 1 1
----- ----- -----
Total 1,216 1,217 1,197
===== ===== =====
</TABLE>
Darden recently completed market optimization studies for Red Lobster and
The Olive Garden that assessed the strength of each restaurant location, its
financial performance and other factors to determine the optimal number and
location of restaurants in major markets. The result is a planned fourth-quarter
pretax charge of $230.1 million which will include a write-down of assets under
SFAS 121 of $159.2 million for operations in both the U.S. and Canada and other
restructuring and administrative actions aggregating $70.9 million. The total
cash flow effect is expected to be modestly positive. The fourth-quarter charge
covers the following actions:
The write-down of certain restaurant operating assets to their net realizable
value as required under SFAS 121.
<PAGE>
The immediate closing of the Company's poorest performing restaurants in the
U.S., including 24 Red Lobster and 12 The Olive Garden restaurants.
A change in the method of operating in Canada from all company-operated
restaurants to franchising. The Company plans to pursue franchising
arrangements for its existing 52 Red Lobster and 16 The Olive Garden
restaurants in Canada with appropriately capitalized and experienced
operators, but no franchising arrangements have been finalized as of the date
of filing this report.
The write-off of outdated restaurant decor, smallwares and equipment,
including point-of-sale computer systems in the restaurants.
PART II-OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit 11 Determination of Common Shares and Common Share
Equivalents
Exhibit 12 Computation of Ratio of Consolidated Earnings to
Fixed Charges
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K.
On December 11, 1996, the Company filed a current report on Form 8-K
to announce certain financial results for the second quarter of
fiscal year 1997.
<PAGE>
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 thereunto duly authorized.
DARDEN RESTAURANTS, INC.
Dated: March 21, 1997 By: /s/ C. L. Whitehill
----------------------
C.L. Whitehill
Senior Vice President,
General Counsel and Secretary
Dated: March 21, 1997 By: /s/ James D. Smith
---------------------
James D. Smith
Senior Vice President - Finance
(Principal financial and
accounting officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit Title Page
11 Determination of Common Shares and Common Share Equivalents 14
12 Computation of Ratio of Consolidated Earnings to Fixed Charges 15
27 Financial Data Schedule 16
<TABLE>
Exhibit 11
DARDEN RESTAURANTS, INC.
DETERMINATION OF COMMON SHARES AND COMMON SHARE EQUIVALENTS
(In Thousands)
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
--------------------------------------------
February February February February
23, 1997 25, 1996 23, 1997 25, 1996
--------------------------------------------
<S> <C> <C> <C> <C>
Computation of Shares:
Weighted average number of shares
outstanding..................... 154,200 159,100 156,500 158,800
Net shares resulting from the
assumed exercise of certain stock
options (a)..................... 674(b) 2,900(b) 823(b) 2,300(b)
------- ------- ------- -------
Total common shares and common share
equivalents..................... 154,874 162,000 157,323 161,100
======= ======= ======= =======
<FN>
Notes to Exhibit:
(a)Common share equivalents are computed by the "treasury stock" method. This
method first determines the number of shares issuable under stock options
that had an option price below the average market price for the period, and
then deducts the number of shares that could have been repurchased with the
proceeds of options exercised.
(b)Common share equivalents for the thirteen and thirty-nine weeks ended
February 23, 1997 and February 25, 1996 are not material. As a result,
earnings per share has been computed using the weighted average number of
shares outstanding.
</FN>
</TABLE>
<TABLE>
Exhibit 12
DARDEN RESTAURANTS, INC.
COMPUTATION OF RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES
(Dollar Amounts in Thousands)
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
--------------------------------------------
February February February February
23, 1997 25, 1996 23, 1997 25, 1996
--------------------------------------------
<S> <C> <C> <C> <C>
Consolidated Earnings from Operations
before Restructuring Charges and
Income Taxes................... $21,613 $56,497 $34,687 $134,501
Plus Fixed Charges................. 9,979 10,293 29,593 31,002
Less Capitalized Interest.......... (162) (421) (866) (1,494)
------- ------- ------- --------
Consolidated Earnings from Operations
before Restructuring Charges and
Income Taxes Available to Cover
Fixed Charges.................. $31,430 $66,369 $63,414 $164,009
======= ======= ======= ========
Ratio of Consolidated Earnings to Fixed
Charges........................ 3.15 6.45 2.14 5.29
======= ======= ======= ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Darden Restaurants, Inc. and Subsidiaries
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-25-1997
<PERIOD-END> FEB-23-1997
<CASH> $28,787
<SECURITIES> 0
<RECEIVABLES> 30,704
<ALLOWANCES> 0
<INVENTORY> 147,426
<CURRENT-ASSETS> 324,372
<PP&E> 2,445,038
<DEPRECIATION> 764,532
<TOTAL-ASSETS> 2,099,241
<CURRENT-LIABILITIES> 463,325
<BONDS> 313,761
0
0
<COMMON> 1,267,944
<OTHER-SE> (65,787)
<TOTAL-LIABILITY-AND-EQUITY> 897,084
<SALES> 2,355,158
<TOTAL-REVENUES> 2,355,158
<CGS> 803,621
<TOTAL-COSTS> 1,921,474
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,191
<INCOME-PRETAX> 34,687
<INCOME-TAX> 9,660
<INCOME-CONTINUING> 25,027
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,027
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
</TABLE>
