SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 17, 1997
Darden Restaurants, Inc.
(Exact name of registrant as specified in its charter)
Florida 1-13666 59-3305930
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification No.)
5900 Lake Ellenor Drive, Orlando, Florida 32809
(Address of principal executive offices)
Registrant's telephone number, including area code:
(407) 245-4000
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On June 17, 1997, the Registrant issued a news release entitled
"Darden Reports Annual Results and Meets Fourth Quarter
Expectations," including certain preliminary financial statements.
Final financial statements with additional analyses will be filed as
part of the Company's Annual Report on Form 10-K
in August, 1997.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description
27 Financial Data Schedule.
99 Press release dated June 17, 1997,
entitled "Darden Reports Annual Results
and Meets Fourth Quarter Expectations."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 18, 1997 DARDEN RESTAURANTS, INC.
By /s/ C.L. Whitehill
C.L. Whitehill
Senior Vice President,
General Counsel and Secretary
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Page
27 Financial Data Schedule 4
99 Press release dated June 17, 1997,
entitled "Darden Reports Annual
Results and Meets Fourth Quarter Expectations." 5
<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> 12-MOS
<FISCAL-YEAR-END> May-25-1997
<PERIOD-START> May-27-1996
<PERIOD-END> May-25-1997
<CASH> 25,490
<SECURITIES> 0
<RECEIVABLES> 16,333
<ALLOWANCES> 249
<INVENTORY> 132,241
<CURRENT-ASSETS> 337,369
<PP&E> 2,390,523
<DEPRECIATION> 857,251
<TOTAL-ASSETS> 1,963,722
<CURRENT-LIABILITIES> 480,580
<BONDS> 313,192
0
0
<COMMON> 1,268,656
<OTHER-SE> (187,443)
<TOTAL-LIABILITY-AND-EQUITY> 1,963,722
<SALES> 3,171,810
<TOTAL-REVENUES> 3,171,810
<CGS> 1,077,316
<TOTAL-COSTS> 2,575,979
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 196
<INTEREST-EXPENSE> 22,291
<INCOME-PRETAX> (154,486)
<INCOME-TAX> (63,457)
<INCOME-CONTINUING> (91,029)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (91,029)
<EPS-PRIMARY> (0.59)
<EPS-DILUTED> (0.59)
</TABLE>
EXHIBIT 99
Press Release dated June 17, 1997 of Darden Restaurants, Inc.
DARDEN REPORTS ANNUAL RESULTS
AND MEETS FOURTH QUARTER EXPECTATIONS
ORLANDO, FL - Darden Restaurants today reported that strong performance at The
Olive Garden and continued progress at Red Lobster led to fourth quarter results
in line with expectations.
"We're very encouraged by the progress made in the fourth quarter," said Joe
R. Lee, Chairman and Chief Executive Officer. "The improvements in food,
service and customer experience in our restaurants are beginning to show
positive results in what has been a disappointing year."
Highlights for the quarter and fiscal year ended May 25 included:
Earnings after tax in the fourth quarter were $29.3 million, or 19 cents per
share before unusual items, on $816.7 million in sales. Earnings after tax
before unusual items for the year were $54.3 million, or 35 cents per share
on sales of $3.2 billion.
Red Lobster continued its repositioning strategy and margin improvement
initiatives during the quarter. Although operating profits for the quarter
and year were below prior-year levels, fourth-quarter profits were
significantly better than in the third quarter.
The Olive Garden achieved its eleventh consecutive quarter of same-store
sales increases. Margins improved for the quarter and the year. Operating
profits for the year increased at a double digit rate and set a record high.
Darden's newest concept, Bahama Breeze, successfully opened its second
restaurant during the quarter and the Company is actively looking for
additional sites.
As previously announced, a $230 million pretax charge for FAS 121 asset
impairment and other restructuring actions was recorded in the fourth
quarter. This charge reduced the year's after-tax earnings before unusual
items of $54.3 million by $145 million or $0.93 per share, resulting in a net
reported loss of $91 million or $0.59 per share.
The Company purchased 5 million shares of common stock during the fiscal
year, for a cumulative total of 7 million shares purchased under the 15.8
million share buyback authorization.
Division Results
RED LOBSTER'S sales of $486.1 million were down 3% compared to the fourth
quarter last year owing to a 2.2% decline in same-store sales and fewer
restaurants open. Sales of $1.87 billion for the fiscal year declined 2%
compared to the prior year. Average store sales were $2.6 million for the fiscal
year. Operating profit for the fourth quarter and year was substantially lower
than the prior year, but fourth quarter profits showed a significant sequential
improvement over those in the third.
"This has been a tough year for Red Lobster," said Jeff O'Hara, President and
Chief Operating Officer. "However, we made significant progress in the second
half with food, value and overall experience substantially improving and
customer traffic continuing to outperform the industry."
THE OLIVE GARDEN continued favorable momentum in the fourth quarter. Same-store
sales in the U.S. increased 0.9% marking the eleventh consecutive quarter of
same-store sales increases. Total sales were $328.2 million, a slight increase
from last year. Annual sales were $1.29 billion, an increase of 3% from the
prior year, and average store sales for the year were $2.6 million. Operating
profit showed a double-digit increase for the second year in a row and set a new
record high.
<PAGE>
"We are pleased with our record-setting year," said Brad Blum, President
of The Olive Garden. "During the year we made investments in food and training
to ensure our guests have a great dining experience and the result was strong
sales and record earnings."
BAHAMA BREEZE completed its first full year and opened a second
restaurant in Altamonte Springs, Florida, in May. Sales continue to exceed
expectations and plans are underway to secure sites for three more restaurants
in fiscal 1998.
Fourth-quarter Charge
As previously announced, a pretax charge of $230 million was recorded in the
fourth quarter. The charge includes a writedown of assets under FAS 121 of about
$160 million for operations in both the U.S. and Canada and other restructuring
and administrative actions aggregating approximately $70 million. Canadian
operations for both Red Lobster and The Olive Garden were profitable this year,
and the Company is actively pursuing franchising arrangements for its existing
51 Red Lobster and 16 Olive Garden restaurants in Canada. Darden's operating
profits are expected to benefit by $15-20 million annually as a result of these
actions, and the total cash flow effect of this charge is expected to be
modestly positive.
Fiscal Year Results
For fiscal 1997, sales of $3.2 billion were down less than 1% from the prior
year, which included $16 million from the discontinued China Coast stores.
After-tax earnings before unusual items were $54.3 million, or 35 cents per
share, down from $119.2 million, or 75 cents per share in fiscal 1996. Including
the fourth-quarter charge, after-tax losses were $91.0 million, or 59 cents per
share in fiscal 1997. In last year's first quarter, the Company recorded a $44.8
million after-tax charge (28 cents per share) to discontinue China Coast.
Including this charge, after-tax earnings were $74.4 million, or 47 cents per
share last year.
Darden Restaurants headquartered in Orlando, Florida, owns and operates Red
Lobster, The Olive Garden and Bahama Breeze restaurants.
<PAGE>
<TABLE>
DARDEN RESTAURANTS, INC.
NUMBER OF RESTAURANTS
<CAPTION>
05/26/96 05/25/97
<S> <C> <C>
Red Lobster USA 677 652
Red Lobster Canada 52 51
-- --
Total Red Lobster 729 703
The Olive Garden USA 471 461
The Olive Garden Canada 16 16
-- --
Total Olive Garden 487 477
Bahama Breeze 1 2
--- ---
Total Restaurants 1,217 1,182
</TABLE>
<PAGE>
<TABLE>
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(In Thousands, Except per Share Data)
<CAPTION>
13 WEEKS ENDED 52WEEKS ENDED
Unaudited Unaudited Unaudited
05/25/97 05/26/96 05/25/97 05/26/96
<S> <C> <C> <C> <C>
Sales $816,652 $829,463 $3,171,810 $3,191,779
Costs and Expenses:
Cost of sales:
Food and beverages 273,695 282,080 1,077,316 1,062,624
Restaurant labor 259,552 247,171 1,017,315 954,886
Restaurant expenses 121,258 112,548 481,348 455,626
------- ------- ------- -------
Total Cost of Sales 654,505 641,799 2,575,979 2,473,136
Selling, general and
administrative 83,627 93,621 361,263 373,920
Depreciation and
amortization 31,706 34,766 136,876 134,599
Interest, net, 6,100 5,060 22,291 21,406
Restructuring and asset
impairment expense (1) 229,887 _____ 229,887 75,000
------- ------- ------
Total Costs
and Expenses 1,005, 825 775,246 3,326,296 3,078,061
---------- ------- --------- ---------
Earnings (Loss)
Before Income Taxes -189,173 54,217 -154,486 113,718
Income Taxes 73,117 -19,735 63,457 -39,363
Net Earnings (Loss) $-116,056 34,482 -$91,029 $74,355
Earnings (Loss) per
Share -$0.76 $0.22 -$0.59 $0.47
Average Common Shares
Outstanding 153,000 158,400 155,600 158,700
<FN>
NOTES:
(1) Operating results before restructuring and asset impairment charges were as
follows:
</FN>
<CAPTION>
13 WEEKS ENDED 52 WEEKS ENDED
Unaudited Unaudited Unaudited
05/25/97 05/26/96 05/25/97 05/26/96
<S> <C> <C> <C> <C>
Pretax Earnings before
Restructuring and Asset
Impairment Charges $40,714 $54,217 $75,401 $188,718
Income Taxes -11,411 -19,735 -21,071 -69,514
Net Earnings before
Restructuring and Asset
Impairment Charges $29,303 $34,482 $54,330 $119,204
EPS before Restructuring
and Asset Impairment
Charges $0.19 $0.22 $0.35 $0.75
<FN>
(2) The after-tax effect of the fiscal year 1997 restructuring and asset
impairment charge was $145,359 ($0.93 per share) in the fourth quarter.
The charge related to low-performing restaurant properties and other
long-lived assets including those restaurants that have been closed.
(3) The after-tax effect of the fiscal year 1996 restructuring and asset
impairment charge was $44.8 million ($0.28 per share) in the first quarter.
The charge related to the closing of all China Coast restaurants.
</FN>
</TABLE>
<PAGE>
<TABLE>
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<CAPTION>
Unaudited
May 25,1997 May 26,1996
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash
equivalents $25,490 $30,343
Receivables 16,333 24,772
Refundable income taxes, net 16,968
Inventories 132,241 120,725
Net assets held for disposal 47,471 31,762
Prepaid expenses and
other current assets 14,709 17,298
Deferred income taxes 84,157 63,080
------ ------
Total Current Assets $337,369 $287,980
Land, Buildings and Equipment $1,533,272 $1,702,861
Other Assets 93,081 97,663
------ ------
Total Assets $1,963,722 $2,088,504
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts payable $113,087 $128,196
Short-term debt 43,400 72,600
Current portion of long-term debt 5 54
Accrued payroll 58, 312 53,677
Accrued income taxes 12,522
Other accrued taxes 22,180 18,921
Other current liabilities 243,596 159,336
------- -------
Total Current Liabilities $480,580 $445,306
Long-term Debt 313,187 301,151
Deferred Income Taxes 70,118 101,109
Other Liabilities 18,624 18,301
Total Liabilities $882,509 $865,867
Stockholders Equity:
Common stock and surplus $1,268,656 $1,266,212
Retained earnings (deficit) -41,706 61,708
Treasury stock -69,184 -25,037
Cumulative foreign currency
adjustment -10,037 -10,351
Unearned compensation -66,516 -69,895
------- -------
Total Stockholders Equity $1,081,213 $1,222,637
--------- ---------
Total Liabilities and
Stockholders Equity $1,963,722 $2,088,504
--------- ---------
</TABLE>
<PAGE>
<TABLE>
DARDEN RESTAURANTS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, In Thousands)
<CAPTION>
Fiscal Year Ended
May 25, 1997 May 26,1996
<S> <C> <C>
Sources
Earnings (loss) from operations -$91,029 $74,355
Non-cash restructuring and
asset impairment expenses 226,342 69,073
Depreciation and amortization 136,876 134,599
Deferred income taxes -52,068 -3,513
Asset dispositions 34,017 16,338
Other, net 15,984 -10,669
Total Sources $270,122 $280,183
Uses
Fixed asset additions -$159,688 -$213,905
Dividends -12,385 -12,647
Change in working capital -41,401 9,722
Total Uses -$213,474 -$216,830
Net Operating Cash Flow $56,648 $63,353
Stock Buyback -44,147 -25,037
Change in Net Debt -17,354 -28,107
Net Cash Flow -$4,853 $10,209
</TABLE>
<PAGE>
<TABLE>
DARDEN RESTAURANTS, INC.
FOURTH QUARTER FY 1997 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
<CAPTION>
13 WEEKS ENDED 52 WEEKS ENDED
Unaudited Unaudited Unaudited
05/25/97 05/26/96 05/25/97 05/26/96
<S> <C> <C> <C> <C>
Sales $816.7 $829.5 $3,171.8 $3,191.8
Net Earnings (Loss) -$116.1 $34.5 -$91.0 $74.4
Earnings (Loss) per Share -$0.76 $0.22 -$0.59 $0.47
Average Shares Outstanding 153.0 158.4 155.6 158.7
Earnings Before Restructuring
and Asset Impairment Charges:
Earnings from Operations before
Restructuring and Asset
Impairment Charges $29.3 $34.5 $54.3 $119.2
EPS from Operations before
Restructuring and Asset
Impairment Charges $0.19 $0.22 $0.35 $0.75
</TABLE>
