8-KOther Events

DARDEN RESTAURANTS INC 8-K Report (Jun 22, 2004)

Filed June 22, 2004For Securities:DRI

Summary

Darden Restaurants, Inc. filed this Form 8-K on June 22, 2004, to report its annual and fourth-quarter financial results for the fiscal year ended May 30, 2004. The company reported full-year sales of $5.0 billion, a 7.5% increase over the prior year. Diluted net earnings per share for the full year were $1.36, or $1.50 on an adjusted basis (excluding asset impairment and restructuring charges). The fourth quarter saw sales increase by 10.7% to $1.4 billion, with diluted net earnings per share of $0.32, or $0.46 adjusted. The report highlights the strong performance of Olive Garden, which achieved its 39th consecutive quarter of same-restaurant sales growth, and significant expansion at Smokey Bones. However, the company also incurred a substantial asset impairment and restructuring charge of $23.1 million primarily related to the closure and write-down of several Bahama Breeze locations.

Key Highlights

  • 1Full fiscal year 2004 sales reached $5.0 billion, up 7.5% from the prior year.
  • 2Full fiscal year 2004 diluted net earnings per share were $1.36, with an adjusted figure of $1.50 (excluding charges).
  • 3Fourth-quarter fiscal year 2004 sales increased 10.7% to $1.4 billion.
  • 4Fourth-quarter fiscal year 2004 diluted net earnings per share were $0.32, with an adjusted figure of $0.46.
  • 5Olive Garden reported its 39th consecutive quarter of same-restaurant sales growth (5.0% in Q4 FY04).
  • 6A significant asset impairment and restructuring charge of approximately $23.1 million (after tax) was recorded in Q4 FY04, mainly for Bahama Breeze restaurant closures and write-downs.
  • 7Darden repurchased 10.7 million shares of its common stock during fiscal year 2004.

Frequently Asked Questions

The company recorded an asset impairment and restructuring charge of approximately $23.1 million after tax, primarily due to the closure of six Bahama Breeze restaurants and the write-down of the value of four other Bahama Breeze restaurants, along with one Olive Garden and one Red Lobster restaurant.

Olive Garden demonstrated strong performance, achieving its 39th consecutive quarter of same-restaurant sales growth, with a 5.0% increase in the fourth quarter and a 4.6% increase for the full fiscal year. It also opened 23 new restaurants during fiscal 2004 and reported record total sales of $2.2 billion.

Darden expects combined same-restaurant sales growth of 1% to 3% for Red Lobster and Olive Garden in fiscal 2005. They also plan to open 50 to 60 new restaurants. The company anticipates diluted net earnings per share growth in the range of 8% to 12% for fiscal 2005, with a long-term target of double-digit annual diluted earnings per share growth.

Red Lobster experienced a 6.4% decrease in same-restaurant sales in the fourth quarter and a 3.5% decrease for the full fiscal year, despite opening seven net new restaurants and an additional operating week. However, the company saw a strong double-digit increase in operating profit for the quarter due to cost management and reported improved guest satisfaction scores.