- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM 10-Q
------------------------------
(MarkOne)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended August 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ............... to ...............
------------------------------
1-13666
Commission File Number
------------------------------
DARDEN RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
Florida 59-3305930
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
5900 Lake Ellenor Drive,
Orlando, Florida 32809
(Address of principal executive offices) (Zip Code)
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. Yes X No
------------------------------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares of common stock outstanding as of October 1, 1998:
138,959,783 (excluding 24,244,032 shares held in treasury).
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<PAGE>
DARDEN RESTAURANTS, INC.
TABLE OF CONTENTS
Page
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statements of Earnings 2
Consolidated Balance Sheets 3
Consolidated Statements of Changes in Stockholders' Equity 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Index to Exhibits 12
1
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------------------------------------------------------------------------------------------------
August 30, 1998 August 24, 1997
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales $ 886,057 $ 809,331
Costs and Expenses:
Cost of sales:
Food and beverages..................................... 296,415 265,950
Restaurant labor....................................... 282,550 259,017
Restaurant expenses.................................... 131,987 122,744
----------- -----------
Total Cost of Sales................................. $ 710,952 $ 647,711
Selling, general and administrative......................... 84,787 89,205
Depreciation and amortization............................... 31,012 31,472
Interest, net............................................... 5,435 4,693
----------- -----------
Total Costs and Expenses............................. $ 832,186 $ 773,081
----------- -----------
Earnings before Income Taxes................................ 53,871 36,250
Income Taxes................................................ (18,692) (11,842)
----------- -----------
Net Earnings................................................ $ 35,179 $ 24,408
=========== ===========
Net Earnings per Share:
Basic.................................................... $ 0.25 $ 0.16
=========== ===========
Diluted.................................................. $ 0.24 $ 0.16
=========== ===========
Average Number of Common Shares Outstanding:
Basic.................................................... 139,700 152,700
=========== ===========
Diluted.................................................. 145,900 153,600
=========== ===========
--------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
(Unaudited)
- --------------------------------------------------------------------------------------------------------------------
August 30, 1998 May 31, 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................ $ 27,990 $ 33,505
Receivables.............................................. 23,101 27,312
Inventories.............................................. 145,177 182,399
Net assets held for disposal............................. 46,206 49,230
Prepaid expenses and other current assets................ 13,089 20,498
Deferred income taxes.................................... 84,325 84,597
----------- -----------
Total Current Assets................................... $ 339,888 $ 397,541
Land, Buildings and Equipment............................... 1,479,747 1,490,348
Other Assets................................................ 96,751 96,853
----------- -----------
Total Assets........................................... $ 1,916,386 $ 1,984,742
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable......................................... $ 104,404 $ 132,938
Short-term debt.......................................... 29,500 75,100
Current portion of long-term debt........................ 5 5
Accrued payroll.......................................... 60,229 73,240
Accrued income taxes..................................... 23,150 1,067
Other accrued taxes...................................... 25,514 24,172
Other current liabilities................................ 247,551 252,142
----------- -----------
Total Current Liabilities.............................. $ 490,353 $ 558,664
Long-term Debt.............................................. 310,628 310,603
Deferred Income Taxes....................................... 81,306 77,054
Other Liabilities........................................... 18,842 18,576
----------- -----------
Total Liabilities...................................... $ 901,129 $ 964,897
----------- -----------
Stockholders' Equity:
Common stock and surplus................................. $ 1,303,794 $ 1,286,191
Retained earnings........................................ 83,506 48,327
Treasury stock........................................... (292,502) (239,876)
Accumulated other comprehensive income................... (13,730) (11,749)
Unearned compensation.................................... (65,811) (63,048)
----------- -----------
Total Stockholders' Equity............................. $ 1,015,257 $ 1,019,845
----------- -----------
Total Liabilities and Stockholders' Equity.................. $ 1,916,386 $ 1,984,742
=========== ===========
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Thirteen Weeks Ended August 30, 1998 and August 24, 1997
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Common Accumulated
Stock Other Total
and Retained Treasury Comprehensive Unearned Stockholders'
Surplus Earnings Stock Income Compensation Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1998........................ $1,286,191 $ 48,327 $(239,876) $(11,749) $(63,048) $1,019,845
Comprehensive income:
Net earnings................................. 35,179 35,179
Other comprehensive income,
foreign currency adjustment................ (1,981) (1,981)
----------
Total comprehensive income............... 33,198
Stock option exercises (1,167 shares).......... 9,881 9,881
Issuance of restricted stock (288 shares),
net of forfeiture adjustments................ 3,263 (3,235) 28
Earned compensation............................ 472 472
Income tax benefit credited to equity.......... 3,633 3,633
Proceeds from issuance of equity put options... 826 826
Purchases of common stock for treasury
(3,219 shares).............................. (52,626) (52,626)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at August 30, 1998..................... $1,303,794 $ 83,506 $(292,502) $(13,730) $(65,811) $1,015,257
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Common Retained Accumulated
Stock Earnings Other Total
and (Accumulated Treasury Comprehensive Unearned Stockholders'
Surplus Deficit) Stock Income Compensation Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at May 25, 1997........................ $1,268,656 $(41,706) $ (69,184) $(10,037) $(66,516) $1,081,213
Comprehensive income:
Net earnings................................. 24,408 24,408
Other comprehensive income,
foreign currency adjustment................ (547) (547)
----------
Total comprehensive income............... 23,861
Stock option exercises (154 shares)............ 410 410
Issuance of restricted stock (116 shares),
net of forfeiture adjustments................ (56) 36 (20)
Earned compensation............................ 280 280
ESOP note receivable repayments................ 1,800 1,800
Income tax benefit credited to equity.......... 227 227
Purchases of common stock for treasury
(2,199 shares)............................... (21,810) (21,810)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at August 24, 1997..................... $1,269,237 $(17,298) $ (90,994) $(10,584) $(64,400) $1,085,961
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
- --------------------------------------------------------------------------------------------------------------------
August 30, 1998 August 24, 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows--Operating Activities
Net earnings...................................................... $ 35,179 $ 24,408
Adjustments to reconcile net earnings to cash flow:
Depreciation and amortization................................... 31,012 31,472
Amortization of unearned compensation and loan costs............ 1,099 896
Change in current assets and liabilities........................ 19,990 37,752
Change in other liabilities .................................... 266 76
(Gain) loss on disposal of land, buildings and equipment........ (866) 261
Deferred income taxes........................................... 4,524 1,243
Other, net...................................................... (574) (278)
---------- ----------
Net Cash Provided by Operating Activities..................... $ 90,630 $ 95,830
---------- ----------
Cash Flows--Investment Activities
Purchases of land, buildings and equipment........................ (24,364) (28,569)
Purchases of intangibles.......................................... (508) (347)
Increase in other assets.......................................... (207) (2,346)
Proceeds from disposal of land, buildings and equipment
(including net assets held for disposal)........................ 12,825 4,875
---------- ----------
Net Cash Used by Investment Activities........................ $ (12,254) $ (26,387)
---------- ----------
Cash Flows--Financing Activities
Proceeds from issuance of common stock............................ 9,881 410
Income tax benefit credited to equity............................. 3,633 227
Purchases of treasury stock....................................... (52,626) (21,810)
ESOP note receivable repayment.................................... 1,800
Decrease in short-term debt....................................... (45,600) (43,400)
Repayment of long-term debt....................................... (5) (1,805)
Proceeds from issuance of equity put options...................... 826
---------- ----------
Net Cash Used by Financing Activities......................... $ (83,891) $ (64,578)
---------- ----------
Increase (Decrease) in Cash and Cash Equivalents..................... (5,515) 4,865
Cash and Cash Equivalents - Beginning of Period...................... 33,505 25,490
---------- ----------
Cash and Cash Equivalents - End of Period............................ $ 27,990 $ 30,355
========== ==========
Cash Flow from Changes in Current Assets and Liabilities
Receivables....................................................... 4,211 114
Refundable income taxes, net...................................... 10,504
Inventories....................................................... 37,222 9,967
Prepaid expenses and other current assets......................... 384 1,702
Accounts payable.................................................. (28,534) 11,373
Accrued payroll................................................... (13,011) (104)
Accrued income taxes.............................................. 22,083
Other accrued taxes............................................... 1,342 3,056
Other current liabilities......................................... (3,707) 1,140
---------- ----------
Change in Current Assets and Liabilities........................ $ 19,990 $ 37,752
========== ==========
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<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 weeks ended August
30, 1998 are not necessarily indicative of the results that may be expected for
the fiscal year ending May 30, 1999.
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 31, 1998. The accounting policies used in preparing these
consolidated financial statements are the same as those described in our annual
report on Form 10-K, except that during the current period the Company adopted
the provisions of Statement of Financial Accounting Standards No. 130, (SFAS
130), "Reporting Comprehensive Income". The Company adopted SFAS 130 by
reporting all items of comprehensive income in the consolidated statements of
changes in stockholders' equity.
Note 2. Consolidated Statements of Cash Flows
-------------------------------------
During the thirteen weeks ended August 30, 1998 and August 24, 1997, Darden
paid $8,673 and $8,194, respectively, for interest (net of amount capitalized).
During the same periods, Darden received income tax refunds of $10,051 and paid
income taxes of $380, respectively.
Note 3. Net Earnings Per Share
----------------------
Options to purchase 3,000 and 12.9 million shares of common stock were
excluded from the calculation of diluted EPS for the thirteen weeks ended August
30, 1998 and August 24, 1997, respectively, because their exercise prices
exceeded the average market price of common shares for the period.
Note 4. Derivative Financial and Commodity Instruments
----------------------------------------------
On January 31, 1997, the Securities and Exchange Commission (SEC) issued
amended disclosure rules for derivatives and exposures to market risk from
derivative and other financial and certain commodity instruments. Enhanced
accounting policy disclosures in accordance with this SEC release follow.
The Company may, from time to time, use financial and commodities
derivatives in the management of interest rate and commodities pricing risks
that are inherent in its business operations. The Company may also use financial
derivatives as part of its stock repurchase program. Such instruments are not
held or issued for trading or speculative purposes.
The Company may, from time to time, use interest rate swap and cap
agreements in the management of interest rate exposure. The interest rate
differential to be paid or received is normally accrued as interest rates
change, and is recognized as a component of interest expense over the life of
the agreements. If an agreement is terminated prior to the maturity date and is
characterized as a hedge, any accrued rate differential would be deferred and
recognized as interest expense over the life of the hedged item.
6
<PAGE>
The Company uses commodities hedging instruments including forwards,
futures and options, to reduce the risk of price fluctuations related to future
raw materials requirements for commodities such as coffee, soybean oil, and
shrimp. The terms of such instruments generally do not exceed twelve months, and
depend on the commodity and other market factors. Deferred gains and losses are
subsequently recorded as cost of products sold in the statement of earnings when
the inventory is sold. If the inventory is not acquired and the hedge is
disposed of, the deferred gain or loss is recognized immediately in cost of
products sold.
The Company does not have any material risk from any of the above financial
instruments, and the Company does not anticipate any material losses from the
use of such instruments.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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 weeks ended August 30,
1998 and August 24, 1997.
<TABLE>
<CAPTION>
Thirteen Weeks Ended
- --------------------------------------------------------------------------------------------------------------------
August 30, 1998 August 24, 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales....................................................... 100.0% 100.0%
Costs and Expenses:
Cost of sales:
Food and beverages....................................... 33.4 32.9
Restaurant labor......................................... 31.9 32.0
Restaurant expenses...................................... 14.9 15.1
------- -------
Total Cost of Sales.................................... 80.2% 80.0%
Selling, general and administrative......................... 9.6 11.0
Depreciation and amortization............................... 3.5 3.9
Interest, net............................................... 0.6 0.6
------- -------
Total Costs and Expenses............................... 93.9% 95.5%
------- -------
Earnings before Income Taxes................................ 6.1 4.5
Income Taxes................................................ (2.1) (1.5)
------- -------
Net Earnings................................................ 4.0% 3.0%
======= =======
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
RESULTS OF OPERATIONS
For the fiscal 1999 first quarter ended August 30, 1998, earnings after tax
were $35.2 million or 24 cents per diluted share, compared to earnings after tax
of $24.4 million or 16 cents per diluted share in the first quarter of fiscal
1998. The increase in first quarter earnings was primarily attributable to
increased sales and customer traffic at both Red Lobster and The Olive Garden.
Sales of $886.1 million for the quarter were over 9% higher than last year.
Food and beverage costs for the quarter were 33.4% of sales, compared to
32.9% of sales last year, primarily attributable to two very successful high
volume, lower margin promotions run by Red Lobster during the quarter.
Restaurant labor decreased to 31.9% of sales, compared to last year's 32.0%,
primarily due to efficiencies resulting from higher sales volumes. Restaurant
expenses decreased modestly to 14.9% of sales, compared to 15.1% last year. The
decrease in first quarter selling, general and administrative expenses to 9.6%
of sales, compared to 11.0% of sales last year, was primarily attributable to
reduced marketing expenses. Although the dollar amount of depreciation and
amortization expense for the quarter was slightly higher than last year, that
expense as a percentage of sales decreased to 3.5% from 3.9% last year. That
percentage of sales decrease also resulted from higher sales volumes.
7
<PAGE>
The effective tax rate for the first quarter of fiscal 1999 was 34.7%
compared to 32.7% in last year's first quarter. The increase in the effective
tax rate reflects a higher level of expected pre-tax income for the year.
Division Results
Red Lobster sales of $513.3 million were up 9.3% compared to the first
quarter of last year mainly due to the strong "Bottomless Crab" and "30 Shrimp"
promotional offerings which generated increased customer traffic and sales
throughout the chain. Same-restaurant sales in the United States were up 11.6%
for the quarter, Red Lobster's best comparable sales performance this decade.
First quarter operating profits were significantly above the prior year.
The Olive Garden continued its positive momentum in the first quarter with
a 9.3% increase in sales to $367.3 million. Same-restaurant sales in the United
States increased 10.7% representing the sixteenth consecutive quarter of
same-restaurant sales increases and the second consecutive quarter of double
digit gains. First quarter operating profits were significantly above the prior
year.
Darden's newest concept, Bahama Breeze, continued to produce strong sales
at all three restaurants, including the newest location in Memphis. Five more
Bahama Breeze restaurants are currently under development.
The table below details the number of restaurants open at the end of the
first quarter, compared with the number open at the end of fiscal year 1998 and
the end of last year's first quarter.
<TABLE>
<CAPTION>
NUMBER OF RESTAURANTS
- --------------------------------------------------------------------------------------------------------------------
August 30, 1998 May 31, 1998 August 24, 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Red Lobster - USA.............................. 646 648 652
Red Lobster - Canada........................... 34 34 50
------ ------ ------
Total..................................... 680 682 702
Olive Garden - USA............................. 459 461 459
Olive Garden - Canada.......................... 5 5 16
------ ------ ------
Total..................................... 464 466 475
Bahama Breeze.................................. 3 3 2
------ ------ ------
Total................................. 1,147 1,151 1,179
====== ====== ======
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
YEAR 2000
Background
In the past, many computers, software programs, and other information
technology ("IT systems"), as well as other equipment relying on microprocessors
or similar circuitry ("non-IT systems"), were written or designed using two
digits, rather than four, to define the applicable year. As a result,
date-sensitive systems (both IT systems and non-IT systems) may recognize a date
identified with "00" as the year 1900, rather than the year 2000. This is
generally described as the Year 2000 issue. If this situation occurs, the
potential exists for system failures or miscalculations, which could impact
business operations.
The Securities and Exchange Commission ("SEC") has asked public companies
to disclose four general types of information related to Year 2000 preparedness:
the company's state of readiness, costs (historical and prospective), risks, and
contingency plans. See SEC Release No. 33-7558 (July 29, 1998). Accordingly, the
Company has included the following discussion in this report, in addition to the
Year 2000 disclosures previously filed with the SEC.
8
<PAGE>
State of Readiness
The Company began a concerted effort and established a dedicated project
team to address its Year 2000 issues in fiscal year 1997. In fiscal year 1998,
the Company formalized a task force (the "Year 2000 Project Office") to
coordinate the Company's response to Year 2000 issues. The Year 2000 Project
Office reports to the Chief Executive Officer, his executive team, and the Audit
Committee of the Company's Board of Directors.
Under the auspices of the Year 2000 Project Office, the Company believes
that it has identified all significant IT systems and non-IT systems that
require modification in connection with Year 2000 issues. Internal and external
resources have been used and are continuing to be used, to make the required
modifications and test Year 2000 readiness. The required modifications of all
significant systems are well under way. The Company plans on completing the
modifications and testing of all significant systems by the end of fiscal 1999.
In addition, through its Year 2000 Project Office, the Company has
communicated with suppliers, banks, vendors and others with whom it does
significant business (collectively, its "business partners") to determine their
Year 2000 readiness and the extent to which the Company is vulnerable to any
other organization's Year 2000 issues. Based on these communications and related
responses, the Company is monitoring the Year 2000 preparations and state of
readiness of its business partners. Although the Company is not aware of any
significant Year 2000 problems with its business partners, there can be no
guarantee that the systems of other organizations on which the Company's systems
rely will be converted in a timely manner, or that a failure to convert by
another organization, or a conversion that is incompatible with the Company's
systems, would not have a material adverse effect on the Company.
Costs
The total cost to the Company of Year 2000 activities has not been and is
not anticipated to be material to its financial position or results of
operations in any given year. As of the end of the first quarter of fiscal 1999,
the Company had spent approximately $2 million on Year 2000 issues. The total
costs to the Company of addressing Year 2000 issues is estimated to be less than
$5 million. These total costs, as well as the date on which the Company plans to
complete the Year 2000 modification and testing processes, are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain resources,
third-party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved, and actual results could differ
from those estimates.
Risks
The Company utilizes IT systems and non-IT systems in many aspects of its
business. Year 2000 problems in some of the Company's systems could possibly
disrupt operations at some restaurants, but the Company does not expect that any
such disruption would have a material adverse impact on the Company's operating
results.
The Company is also exposed to the risk that one or more of its suppliers
or vendors could experience Year 2000 problems that could impact the ability of
such suppliers or vendors to provide goods and services. Although this risk is
lessened by the availability of alternative suppliers, the disruption of certain
services, such as utilities, could, depending upon the extent of the disruption,
potentially have a material adverse impact on the Company's operations.
Contingency Plans
The Year 2000 Project Office is in the process of developing contingency
plans for the Company's significant IT systems and non-IT systems requiring Year
2000 modification. In addition, the Company is developing contingency plans to
deal with the possibility that some suppliers or vendors might fail to provide
goods and services on a timely basis as a result of Year 2000 problems. These
contingency plans will include the identification, acquisition and/or
preparation of backup systems, suppliers and vendors.
9
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain information included in this report and other materials filed or to
be filed by the Company with the Securities and Exchange Commission (as well as
information included in oral statements or written statements made or to be made
by the Company) may contain statements that are forward-looking within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements include
information relating to current expansion plans, business development
activities, and Year 2000 compliance. Such forward-looking information is based
on assumptions concerning important risks and uncertainties that could
significantly affect anticipated results in the future and, accordingly, such
results may differ from those expressed in any forward-looking statements made
by or on behalf of the Company. These risks and uncertainties include, but are
not limited to, those relating to real estate development and construction
activities, the issuance and renewal of licenses and permits for restaurant
development and operation, economic conditions, changes in federal or state laws
or the administration of such laws, and the Year 2000 readiness of suppliers,
banks, vendors and others having a direct or indirect business relationship with
the Company.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit 12 Computation of Ratio of Consolidated Earnings to
Fixed Charges
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K.
The Company filed one report on Form 8-K on June 24, 1998,
reporting certain financial results for the fourth quarter of of
fiscal year 1998.
10
<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: October 8, 1998 By: /s/ C.L. Whitehill
----------------------------------
C.L. Whitehill
Senior Vice President,
General Counsel and Secretary
Dated: October 8, 1998 By: /s/ Linda Dimopoulos
----------------------------------
Linda Dimopoulos
Senior Vice President - Corporate
Controller and Business Information
Systems
(Principal accounting officer)
11
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit Title Page
12 Computation of Ratio of Consolidated Earnings
to Fixed Charges 13
27 Financial Data Schedule 14
12
Exhibit 12
DARDEN RESTAURANTS, INC.
COMPUTATION OF RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
- --------------------------------------------------------------------------------------------------------------------
August 30,1998 August 24,1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consolidated Earnings from Operations Before Income Taxes............ $ 53,871 $ 36,250
Plus Fixed Charges................................................... 10,526 9,052
Less Capitalized Interest............................................ (260) (286)
--------- ---------
Consolidated Earnings from Operations Before Income
Taxes Available to Cover Fixed Charges............................ $ 64,137 $ 45,016
========= =========
Ratio of Consolidated Earnings to Fixed Charges...................... 6.09 4.97
========= =========
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Darden Restaurants, Inc. and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000940944
<NAME> Darden Restaurants, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-30-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> AUG-30-1998
<CASH> 27,990
<SECURITIES> 0
<RECEIVABLES> 23,101
<ALLOWANCES> (235)
<INVENTORY> 145,177
<CURRENT-ASSETS> 339,888
<PP&E> 2,373,768
<DEPRECIATION> (894,021)
<TOTAL-ASSETS> 1,916,386
<CURRENT-LIABILITIES> 490,353
<BONDS> 310,633
0
0
<COMMON> 1,303,794
<OTHER-SE> (288,537)
<TOTAL-LIABILITY-AND-EQUITY> 1,916,386
<SALES> 886,057
<TOTAL-REVENUES> 886,057
<CGS> 296,415
<TOTAL-COSTS> 710,952
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,435
<INCOME-PRETAX> 53,871
<INCOME-TAX> 18,692
<INCOME-CONTINUING> 35,179
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,179
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.24
</TABLE>
