Darden Restaurants Reports Fourth Quarter and Annual Diluted Net Earnings Per Share; Increases Quarterly Dividend by 25 Percent

Darden Restaurants Reports Fourth Quarter and Annual Diluted Net Earnings Per Share; Increases Quarterly Dividend by 25 Percent

ORLANDO, Fla., June 23, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Darden Restaurants, Inc. (NYSE: DRI) today reported sales and diluted net earnings per share for the fourth quarter and fiscal year ended May 31, 2009, which included an additional operating week compared to last year. In the fourth quarter, diluted net earnings per share from continuing operations increased 21% to 87 cents, versus 72 cents in the prior year. The Company estimates that integration costs and purchase accounting adjustments related to the October 2007 acquisition of RARE Hospitality International, Inc. (RARE) reduced diluted net earnings per share by approximately three cents in the fourth quarter. Excluding the estimated integration costs and purchase accounting adjustments of approximately three cents, diluted net earnings per share from continuing operations were 90 cents. In the fourth quarter of fiscal 2008, excluding the estimated integration costs and purchase accounting adjustments of approximately six cents, diluted net earnings per share from continuing operations were 78 cents.

For the fiscal year, diluted net earnings per share from continuing operations increased 4% to $2.65 from $2.55 in the prior year. The Company estimates that integration costs and purchase accounting adjustments related to the acquisition of RARE reduced diluted net earnings per share by approximately 10 cents in fiscal 2009 and 19 cents in fiscal 2008. Excluding these costs and adjustments, diluted net earnings per share from continuing operations for fiscal 2009 and 2008 were $2.75 and $2.74, respectively. The additional operating week contributed approximately six cents of diluted net earnings per share in fiscal 2009.

Fourth quarter sales from continuing operations were $1.98 billion, compared to $1.83 billion in the prior year, an 8% increase (14 weeks vs. 13 weeks). Combined same-restaurant sales for Olive Garden, Red Lobster and LongHorn Steakhouse were down 1.4% this quarter (13 weeks vs. 13 weeks). For the full year, fiscal 2009 sales from continuing operations were $7.22 billion, a 9% increase (53 weeks vs. 52 weeks) from the prior year's $6.63 billion. Combined same-restaurant sales for Olive Garden, Red Lobster and LongHorn Steakhouse were down 1.4% in fiscal 2009 (52 weeks vs. 52 weeks), which compares to an estimated decline of 5.6% for the Knapp-Track(TM) benchmark of U.S. same-restaurant sales for casual dining chains, excluding Darden. Darden's total sales increase reflects meaningful new unit growth at Olive Garden, LongHorn Steakhouse and Red Lobster as well as the benefit of an additional operating week in fiscal 2009. The additional operating week contributed approximately two percentage points of sales increase in fiscal 2009.

Darden reported fourth quarter diluted net earnings per share including discontinued operations of 87 cents, compared to diluted net earnings per share of 71 cents for the same period last year. Fiscal 2009 diluted net earnings per share including discontinued operations were $2.65, compared to $2.60 in the prior year.
"In a challenging economic environment where consumers have reduced their dining out frequency and there was a significant amount of competitive discounting, our brands performed much better than the industry," said Clarence Otis, Chairman and Chief Executive Officer of Darden. "This is most evident in our blended same-restaurant sales results, which continued to outpace the industry as measured by the Knapp-Track(TM) benchmark. Our organization is able to respond to consumers' needs in both up and down markets because we have talented and dedicated teams in our restaurants and restaurant support center and they are passionate about providing guests with outstanding experiences that include excellent value and high levels of service. We're building on these great strengths by taking steps to further elevate our restaurant operating, brand management and support capabilities. As a result, we're confident we'll emerge from today's challenging environment an even stronger company."
Highlights for the quarter and year ended May 31, 2009 include the following:

--  Net earnings from continuing operations for the fourth quarter were
        $122.8 million, or 87 cents per diluted share on sales of $1.98 billion.
        Excluding estimated integration costs and purchase accounting
        adjustments of approximately three cents, net earnings from continuing
        operations were 90 cents per diluted share for the fourth quarter.  Last
        year, net earnings from continuing operations were $103.3 million, or 72
        cents per diluted share, on sales of $1.83 billion.  Excluding estimated
        integration costs and purchase accounting adjustments of approximately
        six cents, net earnings from continuing operations were 78 cents per
        diluted share for the fourth quarter of fiscal 2008.
   

--  Net earnings from continuing operations for the fiscal year were $371.8
        million, or $2.65 per diluted share, on sales of $7.22 billion.
        Excluding estimated integration costs and purchase accounting
        adjustments of approximately 10 cents, net earnings from continuing
        operations were $2.75 per diluted share for the fiscal year.  Last year,
        net earnings from continuing operations were $369.5 million, or $2.55
        per diluted share, for the fiscal year on sales of $6.63 billion.
        Excluding estimated integration costs and purchase accounting
        adjustments of approximately 19 cents, last year's net earnings
        from continuing operations were $2.74 per diluted share.

--  Total fourth quarter sales from continuing operations of $1.98 billion
        represent an 8.2% increase over the prior year (14 weeks vs. 13 weeks).
        For the 2009 fiscal year, total sales from continuing operations were
        $7.22 billion, an 8.9% increase over the prior year (53 weeks vs. 52
        weeks).

--  In the fourth quarter, U.S. same-restaurant sales decreased 0.6% at both
        Olive Garden and Red Lobster while LongHorn Steakhouse's U.S.
        same-restaurant sales decreased 6.5% (13 weeks vs. 13 weeks).  These
        results compare to an estimated decrease of 6.7% for our fiscal fourth
        quarter in The Knapp-Track(TM) benchmark of U.S. same-restaurant sales
        for casual dining chains, excluding Darden (13 weeks vs. 13 weeks).

--  The Company purchased over 424,000 shares of its common stock during the
        fourth quarter, bringing the total number of shares it repurchased
        during the year to over 5 million.

    --  The Company's Board of Directors declared a quarterly dividend of
        25 cents per share, a 25% increase from the Company's previous
        quarterly dividend.

Operating Highlights

OLIVE GARDEN'S fourth quarter sales of $890 million were 11.5% above prior year (14 weeks vs. 13 weeks), driven by revenue from 38 net new restaurants, partially offset by a U.S. same-restaurant sales decline of 0.6% (13 weeks vs. 13 weeks). For the quarter, on a percentage of sales basis, the company's decreased food and beverage expenses, restaurant labor expenses and restaurant expenses more than offset the company's increased selling, general and administrative expenses, resulting in an operating profit increase for the quarter. Olive Garden had record total sales and operating profit for the fiscal year. Total sales were $3.29 billion, a 7.2% increase from last year (53 weeks vs. 52 weeks). Average annual sales per restaurant were $4.8 million and U.S. same-restaurant sales increased 0.3% for the fiscal year (52 weeks vs. 52 
weeks).

RED LOBSTER'S fourth quarter sales of $734 million were 6.8% above prior year (14 weeks vs. 13 weeks), driven by revenue from 10 net new restaurants, partially offset by a U.S. same-restaurant sales decrease of 0.6% (13 weeks vs. 13 weeks). For the quarter, on a percentage of sales basis, lower food and beverage expenses, restaurant labor expenses and restaurant expenses more than offset the company's increased selling, general, and administrative expenses, resulting in an increase in operating profit. Total sales were $2.62 billion, a 0.2% decrease compared to last year (53 weeks vs. 52 weeks). Average annual sales per restaurant were $3.8 million and U.S. same-restaurant sales decreased 2.2% for the fiscal year (52 weeks vs. 52 weeks).

LONGHORN STEAKHOUSE'S fourth quarter sales of $239 million were 6.5% above the prior year (14 weeks vs. 13 weeks), driven by revenue from 16 net new restaurants, partially offset by a same-restaurant sales decrease of 6.5% (13 weeks vs. 13 weeks). For the quarter, on a percentage of sales basis, the company's increased restaurant labor expenses and restaurant expenses were almost completely offset by lower food and beverage expenses. LongHorn Steakhouse had record total sales for the fiscal year. Total sales of $888 million increased 3.6% from the comparable prior year period (53 weeks vs. 52 weeks). Average annual sales per restaurant were $2.8 million and U.S. same-restaurant sales decreased 5.6% for the fiscal year (52 weeks vs. 52 weeks).

THE CAPITAL GRILLE'S fourth quarter sales of $58 million were 9.9% below the prior year results (14 weeks vs. 13 weeks), driven by a same-restaurant sales decrease of 22.1% (13 weeks vs. 13 weeks) and partially offset by the addition of five net new restaurants. Total sales for the fiscal year were $234 million. Average annual sales per restaurant were $6.8 million and same-restaurant sales decreased 15.5% for the fiscal year (52 weeks vs. 52 weeks).

BAHAMA BREEZE'S fourth quarter sales of $39 million were 7.6% above prior year (14 weeks vs. 13 weeks), driven by the addition of one net new restaurant and partially offset by a same-restaurant sales decrease of 4.3% (13 weeks vs. 13 weeks). Total sales for the fiscal year were $131 million. Average annual sales per restaurant were $5.5 million and same-restaurant sales decreased 6.0% for the fiscal year (52 weeks vs. 52 weeks).

Other Actions
Darden's Board of Directors declared a quarterly cash dividend of 25 cents per share on the Company's outstanding common stock. The dividend is payable on August 3, 2009 to shareholders of record at the close of business on July 10, 2009. Previously, the Company paid a quarterly dividend of 20 cents per share. Based on the 25 cent quarterly dividend declaration, the Company's indicated annual dividend is $1.00 per share, an increase of 25%.

Darden continued the buyback of its common stock, purchasing 0.4 million shares in the fourth quarter. In fiscal 2009, the Company spent $145 million purchasing 5.1 million shares. Since commencing its repurchase program in December 1995, the Company has purchased over 152 million shares for $2.92 billion under authorizations totaling 162.4 million shares.

Darden's Annual Meeting of Shareholders will be held on September 25, 2009 at the Hyatt Regency Orlando International Airport in Orlando, FL. The record date for shareholders entitled to vote at the Annual Meeting is July 24, 2009.


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