Form 8-K DARDEN RESTAURANTS INC For: Sep 29
UNITED STATES
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: September 29, 2016
(Date of earliest event reported)
DARDEN RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 1-13666
Florida | 59-3305930 | |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) | |
1000 Darden Center Drive, Orlando, Florida 32837
(Address of principal executive offices, including zip code)
(407) 245-4000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Darden Restaurants, Inc. (the “Company”) issued a news release dated October 4, 2016, entitled “Darden Restaurants Reports Fiscal 2017 First Quarter Results; Increases Earnings Outlook for the Full Fiscal Year; and Announces New Share Repurchase Authorization,” a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K. In addition, the slide presentation accompanying the Company’s conference call will be posted on the Company’s website.
The information in this Item 2.02 in this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 5.07 | Submission of Matters to a Vote of Security Holders |
(a) | The Annual Meeting of Shareholders of the Company was held on September 29, 2016 in Orlando, Florida. On September 29, 2016, Peter W. Descovich, the independent Inspector of Election for the Annual Meeting, delivered to the Company his final, certified vote results. |
(b) | The name of each director elected at the meeting, a brief description of each other matter voted upon, and the voting results, are provided below. At the Annual Meeting, the shareholders took the following actions: |
(i) | Voted on the election of 7 directors to serve until the next annual meeting of shareholders and until their successors are elected and qualified, as follows: |
Nominees | For | Withheld | Broker Non-Votes | |||||
Margaret Shân Atkins | 92,798,636 | 1,094,702 | 11,171,125 | |||||
Bradley D. Blum | 92,381,584 | 1,511,754 | 11,171,125 | |||||
James P. Fogarty | 92,757,670 | 1,135,668 | 11,171,125 | |||||
Cynthia T. Jamison | 92,701,956 | 1,191,382 | 11,171,125 | |||||
Eugene I. Lee, Jr. | 92,970,169 | 923,169 | 11,171,125 | |||||
William S. Simon | 92,777,597 | 1,115,741 | 11,171,125 | |||||
Charles M. Sonsteby | 92,624,036 | 1,269,302 | 11,171,125 | |||||
Based on these results, the following nominees were elected as directors at the Annual Meeting, each to serve until the next annual meeting of shareholders and until his or her successor is elected and qualified: Margaret Shân Atkins, Bradley D. Blum, James P. Fogarty, Cynthia T. Jamison, Eugene I. Lee, Jr., William S. Simon and Charles M. Sonsteby.
(ii) | Approved a resolution providing advisory approval of the Company’s executive compensation. |
For | 89,490,277 | ||
Against | 3,822,125 | ||
Abstain | 580,936 | ||
Broker Non-Vote | 11,171,125 | ||
(iii) | Ratified the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending May 28, 2017. |
For | 101,836,671 | |
Against | 3,036,044 | |
Abstain | 191,748 | |
Broker Non-Vote | 0 | |
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(iv) | Did not approve the shareholder proposal requesting that the Company adopt a policy to phase out non-therapeutic use of antibiotics in the meat supply chain. |
For | 8,107,937 | |
Against | 81,797,867 | |
Abstain | 3,987,534 | |
Broker Non-Vote | 11,171,125 | |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit Number | Description of Exhibit | |
99.1 | News release dated October 4, 2016, entitled “Darden Restaurants Reports Fiscal 2017 First Quarter Results; Increases Earnings Outlook for the Full Fiscal Year; and Announces New Share Repurchase Authorization.” | |
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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.
DARDEN RESTAURANTS, INC. | |
By: | /s/ Ricardo Cardenas |
Ricardo Cardenas | |
Senior Vice President and Chief Financial Officer | |
Date: October 4, 2016
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EXHIBIT INDEX
Exhibit Number | Description of Exhibit | |
99.1 | News release dated October 4, 2016, entitled “Darden Restaurants Reports Fiscal 2017 First Quarter Results; Increases Earnings Outlook for the Full Fiscal Year; and Announces New Share Repurchase Authorization.” | |
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Exhibit 99.1
Contact: | ||
(Analysts) Kevin Kalicak | (407) 245-5870 | |
FOR RELEASE | (Media) Rich Jeffers | (407) 245-4189 |
DARDEN RESTAURANTS REPORTS FISCAL 2017 FIRST QUARTER RESULTS;
INCREASES EARNINGS OUTLOOK FOR THE FULL FISCAL YEAR; AND
ANNOUNCES NEW SHARE REPURCHASE AUTHORIZATION
ORLANDO (October 4, 2016) - Darden Restaurants, Inc., (NYSE: DRI) today reported its financial results for the first quarter ended August 28, 2016.
First Quarter 2017 Financial Highlights Versus Same Fiscal Quarter Last Year
• | Total sales from continuing operations increased 1.6% to $1.71 billion |
• | Reported diluted net earnings per share from continuing operations increased 39.7% to $0.88 and increased 29.4% from last year's adjusted diluted net earnings per share* |
• | The Company repurchased approximately $196 million of its outstanding common stock during the quarter |
• | Same-restaurant sales increased 1.3% for the quarter |
+2.0% for Olive Garden | -1.2% for The Capital Grille | +0.0% for Yard House | |||
+0.6% for LongHorn Steakhouse | -1.7% for Eddie V’s | +0.7% for Seasons 52 | |||
+3.9% for Bahama Breeze | |||||
* See the "Non-GAAP Information" below for more details
“I’m pleased with our performance during the quarter and the progress we made against our strategic initiatives,” said CEO Gene Lee. “We continued to gain market share and our same-restaurant sales growth outperformed the industry by a considerable margin. We also returned significant capital to shareholders in the form of our regular dividend and $196 million in share repurchases.”
Segment Performance Versus Same Fiscal Period Last Year
Segment profit represents sales, less costs for food and beverage, restaurant labor, restaurant expenses and marketing expenses. Segment profit for fiscal 2017 includes the impact of additional rent and other tax expense related to the completion of our real estate strategy, primarily impacting Olive Garden and LongHorn Steakhouse.
*Represents the incremental impact to segment profit of the fiscal 2016 real estate transactions, primarily rent expense.
Sales | Segment Profit | Real Estate Impact* $ | ||||||||||||||
($ in millions) | Q1 2017 | Q1 2016 | % Change | Q1 2017 | Q1 2016 | % Change | ||||||||||
Consolidated Darden | $1,714.4 | $1,687.0 | 1.6 | % | ||||||||||||
Olive Garden | $961.2 | $944.6 | 1.8 | % | $186.3 | $192.0 | -3.0 | % | ($22.0) | |||||||
LongHorn Steakhouse | $386.3 | $383.9 | 0.6 | % | $60.1 | $57.1 | 5.3 | % | ($5.8) | |||||||
Fine Dining | $114.2 | $113.3 | 0.8 | % | $16.9 | $17.8 | -5.1 | % | ($0.1) | |||||||
Other Business | $252.7 | $245.2 | 3.1 | % | $44.7 | $43.8 | 2.1 | % | ($1.5) | |||||||
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U.S. Same-Restaurant Sales Results - Fiscal Calendar Basis
Olive Garden | June | July | August | Q1 |
Same-Restaurant Sales | 2.0% | 1.6% | 2.4% | 2.0% |
Same-Restaurant Traffic | (1.9)% | (0.8)% | (0.2)% | (1.0)% |
Pricing | 1.8% | 1.8% | 1.8% | 1.8% |
Menu-mix | 2.1% | 0.6% | 0.8% | 1.2% |
LongHorn Steakhouse | June | July | August | Q1 |
Same-Restaurant Sales | (0.4)% | (0.5)% | 3.1% | 0.6% |
Same-Restaurant Traffic | (2.7)% | (3.0)% | 2.1% | (1.3)% |
Pricing | 1.7% | 1.4% | 2.2% | 1.8% |
Menu-mix | 0.6% | 1.1% | (1.2)% | 0.1% |
Share Repurchase Program
During the quarter, the Company repurchased approximately 3.2 million shares of its common stock for a total cost of approximately $196 million. An additional $4 million in shares were repurchased subsequent to the close of the first quarter, for a total of $200 million in shares repurchased year-to-date. In addition, Darden's Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $500 million of its outstanding common stock. This repurchase program does not have an expiration and replaces the previously existing share repurchase authorization.
Updated Fiscal 2017 Financial Outlook
The Company reaffirms its outlook for same-restaurant sales of approximately 1.0% to 2.0% and increased the outlook for diluted net earnings per share to $3.87 to $3.97 from $3.80 to $3.90. This reflects approximately 126 million diluted average common shares outstanding for the year.
The Company reaffirms its outlook for same-restaurant sales of approximately 1.0% to 2.0% and increased the outlook for diluted net earnings per share to $3.87 to $3.97 from $3.80 to $3.90. This reflects approximately 126 million diluted average common shares outstanding for the year.
Investor Conference Call
The Company will host a conference call and slide presentation on Tuesday, October 4 at 8:30 am ET to review its recent financial performance. To listen to the call live, please go to https://www.webcaster4.com/Webcast/Page/1007/16908 at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot access the Internet, please dial 1-800-779-9102 and enter passcode 3833399. For those who cannot listen to the live broadcast, a replay will be available shortly after the call. In addition, at the conclusion of the call, we will post the slide presentation from the call on the Investor Relations section of our website at: www.darden.com that provides more context on our first quarter fiscal 2017 results.
Darden Restaurants, Inc., (NYSE: DRI) owns and operates more than 1,500 restaurants that generate $7.0 billion in annual sales. Headquartered in Orlando, Florida, and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. Our restaurant brands - Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V’s and Yard House - reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.
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Information about Forward-Looking Statements
Forward-looking statements in this communication regarding our expected earnings performance and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are first made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports. These risks and uncertainties include:
Technology failures including failure to maintain a secure cyber network, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business, labor and insurance costs, failure to execute a business continuity plan following a disaster, health concerns including food-related pandemics or virus outbreaks, intense competition, failure to drive profitable sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of availability of suitable locations for new restaurants, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products and services, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our intellectual property, impairment in the carrying value of our goodwill or other intangible assets, failure of our internal controls over financial reporting, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.
Non-GAAP Information
The information in this press release includes financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”), such as adjusted diluted net earnings per share from continuing operations. The Company’s management uses these non-GAAP measures in its analysis of the Company’s performance. The Company believes that the presentation of certain non-GAAP measures provides useful supplemental information that is essential to a proper understanding of the operating results of the Company’s businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP measures are included in this release.
Fiscal Q1 Reported to Adjusted Earnings Reconciliation | |||
Q1 2017 | Q1 2016 | % Change | |
Reported Diluted Net EPS from Continuing Operations | $0.88 | $0.63 | 39.7% |
Real Estate Plan Implementation | — | 0.05 | |
Adjusted Diluted Net EPS from Continuing Operations | $0.88 | $0.68 | 29.4% |
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DARDEN RESTAURANTS, INC.
NUMBER OF COMPANY-OWNED RESTAURANTS
8/28/16 | 8/30/15 | |||
Olive Garden1 | 843 | 843 | ||
LongHorn Steakhouse | 483 | 482 | ||
Yard House | 65 | 59 | ||
The Capital Grille | 56 | 54 | ||
Bahama Breeze | 36 | 37 | ||
Seasons 52 | 40 | 43 | ||
Eddie V's | 16 | 16 | ||
Darden Continuing Operations | 1,539 | 1,534 | ||
1Includes six locations in Canada for all periods presented. | ||||
-MORE-
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DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share data)
(Unaudited)
Three Months Ended | |||||||
8/28/2016 | 8/30/2015 | ||||||
Sales | $ | 1,714.4 | $ | 1,687.0 | |||
Costs and expenses: | |||||||
Food and beverage | 493.2 | 502.8 | |||||
Restaurant labor | 545.8 | 536.0 | |||||
Restaurant expenses | 303.7 | 271.9 | |||||
Marketing expenses | 63.7 | 65.6 | |||||
General and administrative expenses | 87.7 | 97.1 | |||||
Depreciation and amortization | 66.8 | 81.1 | |||||
Impairments and disposal of assets, net | (7.8 | ) | (1.7 | ) | |||
Total operating costs and expenses | $ | 1,553.1 | $ | 1,552.8 | |||
Operating income | 161.3 | 134.2 | |||||
Interest, net | 9.9 | 22.4 | |||||
Earnings before income taxes | 151.4 | 111.8 | |||||
Income tax expense | 40.3 | 30.8 | |||||
Earnings from continuing operations | $ | 111.1 | $ | 81.0 | |||
Earnings (loss) from discontinued operations, net of tax expense (benefit) of $(0.7) and $3.1, respectively | (0.9 | ) | 5.4 | ||||
Net earnings | $ | 110.2 | $ | 86.4 | |||
Basic net earnings per share: | |||||||
Earnings from continuing operations | $ | 0.89 | $ | 0.64 | |||
Earnings (loss) from discontinued operations | (0.01 | ) | 0.04 | ||||
Net earnings | $ | 0.88 | $ | 0.68 | |||
Diluted net earnings per share: | |||||||
Earnings from continuing operations | $ | 0.88 | $ | 0.63 | |||
Earnings (loss) from discontinued operations | (0.01 | ) | 0.04 | ||||
Net earnings | $ | 0.87 | $ | 0.67 | |||
Average number of common shares outstanding: | |||||||
Basic | 124.9 | 127.4 | |||||
Diluted | 126.7 | 129.3 | |||||
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DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
8/28/2016 | 5/29/2016 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 114.7 | $ | 274.8 | |||
Receivables, net | 56.3 | 64.0 | |||||
Inventories | 161.8 | 175.4 | |||||
Prepaid income taxes | 10.2 | 46.1 | |||||
Prepaid expenses and other current assets | 82.3 | 76.4 | |||||
Deferred income taxes | 168.6 | 163.3 | |||||
Assets held for sale | 16.9 | 20.3 | |||||
Total current assets | $ | 610.8 | $ | 820.3 | |||
Land, buildings and equipment, net | 2,035.9 | 2,041.6 | |||||
Goodwill | 872.3 | 872.3 | |||||
Trademarks | 574.6 | 574.6 | |||||
Other assets | 276.7 | 273.8 | |||||
Total assets | $ | 4,370.3 | $ | 4,582.6 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 214.1 | $ | 241.9 | |||
Accrued payroll | 111.0 | 135.1 | |||||
Accrued income taxes | 7.1 | — | |||||
Other accrued taxes | 53.7 | 49.1 | |||||
Unearned revenues | 327.6 | 360.4 | |||||
Other current liabilities | 418.6 | 400.6 | |||||
Total current liabilities | $ | 1,132.1 | $ | 1,187.1 | |||
Long-term debt, less current portion | 440.2 | 440.0 | |||||
Deferred income taxes | 257.6 | 255.2 | |||||
Deferred rent | 257.1 | 249.7 | |||||
Other liabilities | 482.0 | 498.6 | |||||
Total liabilities | $ | 2,569.0 | $ | 2,630.6 | |||
Stockholders’ equity: | |||||||
Common stock and surplus | $ | 1,472.4 | $ | 1,502.6 | |||
Retained earnings | 429.3 | 547.5 | |||||
Treasury stock | (7.8 | ) | (7.8 | ) | |||
Accumulated other comprehensive income (loss) | (89.4 | ) | (87.0 | ) | |||
Unearned compensation | (3.2 | ) | (3.3 | ) | |||
Total stockholders’ equity | $ | 1,801.3 | $ | 1,952.0 | |||
Total liabilities and stockholders’ equity | $ | 4,370.3 | $ | 4,582.6 | |||
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DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended | |||||||
8/28/2016 | 8/30/2015 | ||||||
Cash flows—operating activities | |||||||
Net earnings | $ | 110.2 | $ | 86.4 | |||
(Earnings) losses from discontinued operations, net of tax | 0.9 | (5.4 | ) | ||||
Adjustments to reconcile net earnings from continuing operations to cash flows: | |||||||
Depreciation and amortization | 66.8 | 81.1 | |||||
Stock-based compensation expense | 6.2 | 10.2 | |||||
Change in current assets and liabilities and other, net | (11.0 | ) | (34.3 | ) | |||
Net cash provided by operating activities of continuing operations | $ | 173.1 | $ | 138.0 | |||
Cash flows—investing activities | |||||||
Purchases of land, buildings and equipment | (60.1 | ) | (64.9 | ) | |||
Proceeds from disposal of land, buildings and equipment | 3.8 | 130.2 | |||||
Purchases of capitalized software and other assets | (6.8 | ) | (3.7 | ) | |||
Net cash provided by (used in) investing activities of continuing operations | $ | (63.1 | ) | $ | 61.6 | ||
Cash flows—financing activities | |||||||
Proceeds from issuance of common stock | 3.3 | 56.9 | |||||
Income tax benefits credited to equity | 0.6 | 11.6 | |||||
Dividends paid | (70.5 | ) | (70.0 | ) | |||
Repurchases of common stock | (195.6 | ) | — | ||||
ESOP note receivable repayment | 0.1 | 0.3 | |||||
Repayment of long-term debt | — | (15.0 | ) | ||||
Principal payments on capital and financing leases | (1.0 | ) | (0.8 | ) | |||
Net cash used in financing activities of continuing operations | $ | (263.1 | ) | $ | (17.0 | ) | |
Cash flows—discontinued operations | |||||||
Net cash used in operating activities of discontinued operations | (7.0 | ) | (28.4 | ) | |||
Net cash used in discontinued operations | $ | (7.0 | ) | $ | (28.4 | ) | |
Increase (decrease) in cash and cash equivalents | (160.1 | ) | 154.2 | ||||
Cash and cash equivalents - beginning of period | 274.8 | 535.9 | |||||
Cash and cash equivalents - end of period | $ | 114.7 | $ | 690.1 | |||
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