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Tue, 02 Sep 2014 08:35:00 -0400

Under Reconstituted Board, Eight of Darden's 12 Independent Directors Would be New to the Board This Year
Darden Board Would Include Four New Independent Nominees Unaffiliated with the Company or Starboard, Four Incumbent Independent Nominees and Four Starboard Nominees
New Slate Provides Benefits of Fresh Perspectives and Continuity While Avoiding the Risks Associated with the Full Board Turnover and Control that Starboard Is Seeking
New Darden Nominees Strengthen Company Slate with Additional International Restaurant, Franchise, Consumer, Real Estate and Operations Expertise to Support Development, Oversight and Execution of Operating and Brand Initiatives

ORLANDO, Fla., Sept. 2, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced a new slate of nominees for election to the Company's Board of Directors at the 2014 Annual Meeting of Shareholders, which is scheduled for October 10, 2014.  The new slate reflects the Board's commitment to serving the best interest of all Darden shareholders. Darden's slate and proposed board structure would provide for four new independent nominees unaffiliated with the Company or Starboard, four returning independent director nominees, and four seats to be filled by candidates proposed by Starboard Value L.P. and its affiliates ("Starboard"). 

"We have had extensive conversations with many of Darden's shareholders about the Company and its future direction and expect to continue these discussions.  The Darden Board is committed to looking at the Company with a fresh perspective and this new slate aligns with that priority," said Charles A. Ledsinger, Jr., the Independent Non-Executive Chairman of the Darden Board of Directors.

"New perspectives are valuable, and we believe this slate avoids many of the risks and destabilization that would result from full Board turnover and giving control to a single shareholder's nominees, particularly given the positive momentum we are achieving in Darden's operations and the Olive Garden Brand Renaissance as announced today.  Further, by attempting to replace all 12 members of Darden's Board with its own preferred nominees, Starboard is seeking effective control of the Company – representation which is disproportionate to Starboard's approximate 8.8% stake in Darden and which does not offer Darden shareholders a control premium for such change in control.

"Darden's new slate addresses these considerations by providing fresh perspectives from a total of eight new directors, continuity of experience and expertise from four returning directors, and meaningful representation for Starboard so that its nominees can directly participate in the decisions regarding Darden's strategic direction, including the selection of the Company's next Chief Executive Officer," continued Mr. Ledsinger.

Michael D. Rose, Chairman of the Nominating and Governance Committee of the Darden Board of Directors, said, "Darden's slate of nominees includes highly qualified individuals to support the development, oversight and execution of Darden's operating initiatives, including the turnaround of Olive Garden and its Brand Renaissance plan.  All of Darden's nominees have proven records of value creation, and all bring skills and insights that we believe will help fortify Darden's position as a premier full-service restaurant company.

"Darden's four incumbent directors provide important and deep understanding of the Company's operations and the shifts in industry and consumer trends over time.  By joining this knowledge base with the fresh ideas and new perspectives provided by the four new independent directors on our slate, we believe we can accelerate the progress we are making to improve performance across our brands and enhance shareholder value.  Darden's incumbent directors look forward to working closely with all of the new members on the Darden Board to realize these objectives," said Mr. Rose.

The Company's four new independent nominees, all of whom are current or former Chief Executive Officers, strengthen Darden's slate with additional international restaurant, franchise, consumer, real estate and operations expertise.  They include:


  • Gregory L. Burns is a 26-year veteran of the restaurant industry having led O'Charley's Inc., a multi-concept restaurant company, as Chief Executive Officer for 14 years and serving as its Chairman for 13 years.  Mr. Burns' expertise focuses on brand management through high-quality food and beverage, and service execution.  Mr. Burns also has a track record of successfully developing long-term strategic business plans that encompass and balance operations and new unit growth with capital requirements. 

    Under Mr. Burns' leadership, O'Charley's grew from a single to multi-brand platform with 371 company-owned restaurants and franchises in 28 states operating under the O'Charley's, Ninety Nine Restaurant and Stoney River Legendary Steaks brands with almost 25,000 employees.  Mr. Burns also oversaw the acquisition, development and expansion of a full service manufacturing, distribution and commissary operation, which the Company sold in 2006. 

    Mr. Burns currently serves as President and Chief Executive Officer of The Gregory Burns Consulting Group, LLC, and is a member of the Board of Directors of Pinnacle Financial Partners, Inc.  Previously, he was the founder, President and Chief Executive Officer of NeighborMD Management, LLC, developer of branded retail urgent care centers, which was sold to a JV between HCA and CareSpot Express Healthcare in 2013.
  • Jeffrey H. Fox brings significant leadership, executive management, strategic planning, investment and operations experience to the Darden Board.  Mr. Fox serves as non-executive Chairman of the Board of Convergys Corporation, a market-leading customer management company with $3 billion in revenue, $350 million in EBITDA, and 125,000 global employees.  Prior to becoming Chairman, Mr. Fox served as President and Chief Executive Officer of Convergys and led the Company's transformation from a multi-line business services supplier into a market leader in the customer management business.  This transformation involved divesting approximately $900 million of non-core assets while improving the operating performance of the core customer management business.  Mr. Fox first joined Convergys as a director in February 2009 in connection with an agreement with Convergys' then largest shareholder, JANA Partners LLC.

Prior to joining Convergys, Mr. Fox founded the investment and advisory firm Circumference Group.  As founder, Mr. Fox assembled a team of seasoned operators and led the team through a sector-focused public and private investing platform.  Mr. Fox is actively involved in Circumference Group as its majority owner.

Mr. Fox also provides experience leading consumer facing companies, including serving as a current Director of Avis Budget Group, Inc., and previously as Chief Operating Officer of Alltel Corporation.  Prior to Alltel's acquisition by Verizon Wireless in January 2009, Alltel was the fifth largest wireless company in the United States with over $10 billion in revenues, $3.5 billion in EBITDA and 16,000 employees. 

Prior to Alltel, Mr. Fox worked in investment banking for 10 years with Stephens Inc., preceded by two years with Merrill Lynch; he specialized in merger and acquisition advisory services for public and private companies.

  • Steve Odland has an extensive background in business and corporate governance, successfully leading major companies, including two Fortune 500 companies, through highly challenging environments.  He has led multiple companies in industries directly related to Darden, such as the food and consumer industries, reinvigorating brands, growing sales through new marketing and merchandising programs, expanding margins and improving customer service metrics.  In addition, he has many years of experience in multi-unit retail, including overseeing real estate site optimization, selection, development and expansion.

Previously Mr. Odland served as Chairman and Chief Executive Officer of Office Depot; Chairman, President, and Chief Executive Officer of AutoZone; Chief Operating Officer of Ahold USA; President and Chief Executive Officer of Tops Markets, Inc.; President of the Foodservice Division of Sara Lee Bakery; and was employed in various executive positions by The Quaker Oats Company.  He currently serves as a Director of General Mills and previously served on the Board of Directors of Peapod, Inc. 

Mr. Odland also possesses a strong policy background.  He currently serves as President and Chief Executive Officer of The Committee for Economic Development.  Previously, he was Chairman of the Business Roundtable's Corporate Governance Task Force; a U.S. Presidential appointee as a Commissioner on the National Surface Transportation Policy and Revenue Study Commission; a member of the Committee on Capital Markets Regulation; a U.S. Presidential Appointee on the Council on Service and Civic Participation; a member of the Advisory Council of the Institute for Corporate Ethics; a member of the Advisory Council, University of Notre Dame Mendoza College of Business; and a member of the Florida Council of 100.

Previously, Mr. Odland was also an Adjunct Professor at the Lynn University and Florida Atlantic University graduate schools of business.

  • Enrique Silva, President, Chief Executive Officer and a member of the Board of Directors of Checkers Drive-In Restaurants, Inc., brings more than 20 years of international restaurant experience and a successful track record of partnering with private equity owners to drive strategic growth and turnaround initiatives. Checkers is the #1 operator of double drive-through fast-food restaurants, operating approximately 800 units across 30 states under two brands: Checkers and Rally's. Over 40% of the restaurants are owned and operated as company restaurants and the balance of the restaurants are franchised. 

    Since joining the Company in 2007, Mr. Silva has led a comprehensive restructuring and expansion of the Checkers/Rally's business. He recruited industry-leading talent to the management team, led the development of a new brand strategy, directed the implementation of best-in-class operating and performance management systems, and implemented a set of core values that have become the foundation of the brands' culture. These actions have resulted in category-leading sales growth, with almost four straight years of consecutive comp sales increases every quarter largely driven by traffic, and substantial improvements across all aspects of operations, including restaurant-level profitability, menu and guest satisfaction. 

    Prior to Checkers, Mr. Silva served in a number of leadership roles at Burger King Corporation for more than 13 years. As President of their Latin American region, he grew the Burger King brand across South & Central America, Mexico and the Caribbean. Mr. Silva also ran their U.S. Company Operations, where he oversaw more than 600 company restaurants with a team of 15,000 employees and led the financial, operational and cultural turnaround of those restaurants.  As Senior Vice President, Franchise Operations, he was responsible for more than 3,300 franchise restaurants in the U.S. and Canada.

    Mr. Silva has received numerous awards and recognitions for his business achievements, including being named by Nation's Restaurant News as one of the 2014 "10 Restaurant Executives to Watch," being a 2013 Ernst & Young Entrepreneur of the Year finalist, and being recognized as one of the "100 Most Influential Hispanics" in the US by Hispanic Business Magazine.

The Company's four incumbent independent nominees include:

  • Michael W. Barnes brings to Darden experience as Chief Executive Officer, Chief Operating Officer and as a director of other consumer branded and retail companies, including Signet Jewelers and Fossil.  In these roles, he has developed, implemented and overseen growth strategies like those underway at Darden, built on superior customer service, compelling product offerings, technology and digital initiatives, and targeted advertising and promotion campaigns.

The success of these strategies is reflected in the value created by the companies in which Mr. Barnes has led.  For example, since becoming Chief Executive Officer of Signet Jewelers, the nation's largest specialty jeweler and parent of Kay Jewelers and Jared, in January 2011, Signet's stock price has increased over 177%1, the Company has achieved substantial gains in revenue and earnings per share, and expanded its footprint, including the recent $1.4 billion acquisition of Zale CorporationSignet Jewelers' value creation reflects its successful strategic growth initiatives, including creating an outstanding customer experience, delivering compelling merchandise, heightening awareness through advertising investment, and offering customer finance programs to support its customers' purchases and drive sales.  

Mr. Barnes was also part of the management team that took Fossil public in 1993 and contributed to the continuing financial success and growth of the business as President and Chief Operating Officer.  In his roles, he oversaw Fossil's state-of-the-art international sourcing and supply chain operations, led business development, and managed the relationships with many of Fossil's retail and licensing/brand partners. In addition, he helped the Company diversify into other businesses and categories outside of its wholesale branded and licensed watches.

  • Christopher J. Fraleigh brings to Darden 25 years of experience in consumer products, retail and food services, including serving as Chairman and Chief Executive Officer of Shearer's Foods, a global manufacturer of snack foods, where he has doubled the business in the last two years through both organic growth and acquisitions.  In his previous role as Chief Executive Officer of Sara Lee North America, Mr. Fraleigh built a global retail and food-services business around brands such as Jimmy Dean, Ball Park, Sara Lee and Hillshire Farms, and helped lead Sara Lee's 2011 decision to split into two publicly traded companies.

In addition to his strategic achievements as CEO of the $7 billion Sara Lee North America, Mr. Fraleigh's record of value creation is reflected in the Company's financial and operating performance.  In particular, during his 6 1/2 year tenure:
-   Operating profit more than doubled with significant gains across operating segments, including Retail, Foodservice and Fresh Bakery;
-   Supply chain was enhanced with improvements in innovation, pricing and plant automation, which resulted in significant cost reductions and increased efficiencies;
-   Sara Lee increased share in 11 of 12 categories, realized 25% growth in key items carried in-store, increased shelf space by 35%, and expanded strategic relationships with top retailers; and
-   The Company restructured all divisions and optimized its brand portfolio through the acquisition of new brands and the sale or shutdown of non-core assets.

Mr. Fraleigh's experience also includes his executive roles at General Motors Corporation's GMC-Buick-Pontiac division and at PepsiCo, where he accelerated both revenue and earnings growth for brands including Cadillac, Pepsi and Mountain Dew.  As a result of his collective experience, Mr. Fraleigh provides Darden with valuable insight in consumer marketing/brand building, franchising, and supply chain management and distribution.

  • Michael D. Rose brings extensive knowledge of the restaurant, food and consumer industries, gained serving as a director of Darden and as General Mills' current independent Lead Director. Mr. Rose also has extensive experience executing spin-offs and divestitures.  Darden also benefits from his finance and accounting expertise, as well as the considerable executive management and corporate governance experience he has gained through his years of service on the boards and leadership teams of other public companies, including REITs and other hospitality- and restaurant-focused companies.

Over the course of his executive leadership career as Chairman and Chief Executive Officer of other companies, Mr. Rose has overseen and directed:
-   The successful turnaround of a leading regional financial institution through recruiting a new management team, the sale of non-core businesses, completing significant debt refinancings and capital raises, and employee and community engagement;
-   The growth of The Promus Companies (an owner of hotels operating under the Embassy Suites, Hampton Inn and Homewood Suites brands), including its merger with Doubletree Corporation and subsequent sale for $3.7 billion to Hilton Hotels Corporation in 1999;
-   The growth and spin-off of Harrah's Entertainment Inc. from Promus.  Under his leadership, Harrah's became one of the largest casino companies in the world. Promus Companies was created following the divestiture of the Holiday Inn brand for over 13x EBITDA.  During his tenure, Promus was named as the highest performing large cap stock of the NYSE for the decade of the 1980s by Fortune Magazine;
-   The growth and expansion of Holiday Inns Hotel Brands, which was sold in two transactions for more than $3 billion.  Mr. Rose served as Chief Executive Officer of Holiday Inns Inc. when it was the largest hotel chain in the world; and
-   Holiday Inns, Inc.'s acquisition of Perkins Cake & Steak, a national chain of family restaurants.  Perkins was formulated on the same successful strategy as Holiday Inn – identical establishments with similar menus and uniform quality standards.

In light of his many accomplishments and track record in the hospitality industry, Mr. Rose was selected to receive the Lifetime Achievement Award at the inaugural Americas Lodging Investment Summit.  Mr. Rose was also elected to the Lodging Hospitality Hall of Fame, the Gaming Hall of Fame and was named by Corporate America's Outstanding Directors Top 10 Directors of the Year in 2000.

  • Maria A. Sastre brings to Darden a record of accomplishment leading companies and serving on boards that have been category leaders in the hospitality, retail (supermarkets), transportation, and aviation industries.  Her expertise in North American and International Operations, Supply Chain and Distribution, Customer Service, Mergers and Acquisitions, Corporate Finance, Marketing and Real Estate Management have supported Darden and its brands across numerous strategic business initiatives.

Ms. Sastre has been President and Chief Operating Officer of Signature Flight Support Corporation (Signature), the premier fixed based operations network for private aviation services, since January 2013. She served as Chief Operating Officer of Signature from May 2010 until January 2013.

Ms. Sastre also served as Vice President of International Sales and Marketing, Latin America and Caribbean, for Royal Caribbean International, Celebrity Cruises and Azamara Cruises, all units of Royal Caribbean Cruises, Ltd., a global cruise line company, from January 2005 to September 2008. In this role, she led strategic growth in emerging markets. She held additional Executive roles with Royal Caribbean International, as Vice President of Hotel Operations from 2000 to 2004, managing all aspects of Hotel Operations, Food & Beverage, Entertainment and the Guest Experience for the entire fleet. 

Prior to Royal Caribbean, Ms. Sastre was with United Airlines, where she held Executive positions in North America and Global Customer Services.  At United Airlines, she was also responsible for International Operations and International Expansion and the launch of e-technology systems, completely changing and improving the customer service experience.

In addition to serving on the Board of Darden Restaurants, Ms. Sastre serves on the Board of Publix Super Markets, renowned as a category leader in customer satisfaction.  She also served on the Board of Laidlaw International through its emergence from bankruptcy, its turnaround and ultimate sale.  Ms. Sastre has been recognized as a Top 10 Hispanic American Leader by Hispanic Executive in 2013 and a Top 100 Most Influential Hispanic by Hispanic Business in 2011.

Darden's director nominees are proven leaders in their respective fields with knowledge and expertise relevant to the needs of the business and the Company's strategies.  Darden's director nominees have experience:

  • Leading global consumer and retail companies with skill sets in operations, food service and restaurants, hospitality, consumer marketing/brand building, supply chain and distribution management, and consumer packaged goods;
  • Developing and successfully executing significant corporate turnarounds through operational improvements, increased financial discipline and exiting of non-core businesses;
  • Optimizing asset portfolios through franchising, real estate development, and mergers and acquisitions, with many of Darden's independent directors directly overseeing or guiding the strategic direction of substantial real estate portfolios;
  • Serving as senior executive leaders at other publicly traded companies, including in the roles of Chairman, Chief Executive Officer, Chief Operating Officer, as well as serving in Board committee leadership roles and as individual directors; and
  • Developing strategies and policies in other key areas, including technology, human resources, and corporate governance.

The leadership of these director nominees is complemented by Darden's deep management team, including Darden's President and Chief Operating Officer, Specialty Restaurant Group President and seven brand Presidents, who collectively have over 225 years of combined restaurant operations experience and a proven record in running restaurant operations at Darden and elsewhere.

In connection with today's announcement, Leonard L. Berry, Victoria D. Harker, Charles A. Ledsinger, William M. Lewis and William S. Simon will be not be standing for reelection at the 2014 Annual Meeting.

Mr. Rose concluded, "On behalf of Darden and its Board, I want to express our sincere appreciation to our outgoing directors for their years of service, many contributions, and dedication to the Company."

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. 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.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to accelerate the improvement of performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, 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 made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. 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 (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, 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 including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, 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, 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 unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, 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

Important Additional Information

The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with the Company's 2014 annual meeting of stockholders (the "Annual Meeting").  Information regarding the names and interests of such participants in the Company's proxy solicitation is set forth in the Company's preliminary proxy statement, filed with the SEC on July 31, 2014, as amended, and the Company revocation solicitation statement, filed with the SEC on April 1, 2014.  Additional information can be found in the Company's Annual Report on Form 10-K for the year ended May 25, 2014, filed with the SEC on July 18, 2013.  These documents are available free of charge at the SEC's website at www.sec.gov.

The Company will be mailing a definitive proxy statement and proxy card to the stockholders entitled to vote at the Annual Meeting.  WE URGE INVESTORS TO READ ANY PROXY STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  Stockholders will be able to obtain, free of charge, copies of any proxy statement and any other documents filed by the Company with the SEC in connection with the proxy solicitation at the SEC's website at www.sec.gov. In addition, copies will also be available at no charge at the Investors section of the Company's website at http://investor.darden.com/investors/investor-relations/default.aspx.

1 As of August 29, 2014

SOURCE Darden Restaurants, Inc.

(Analysts) Matthew Stroud, (407) 245-5288, or (Media) Bob McAdam, (407) 245-5404
Tue, 02 Sep 2014 08:31:00 -0400

Anticipated Results Also Show Improved Guest Satisfaction, Sales and Traffic Trends at Olive Garden as a Result of Brand Renaissance Plan

ORLANDO, Fla., Sept. 2, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today reported that it expects diluted net loss per share from continuing operations for its fiscal first quarter ended August 24, 2014 to be approximately 13 to 15 cents.  On an adjusted basis, the Company expects diluted net earnings per share from continuing operations for its fiscal first quarter to be approximately 31 to 33 cents.  The adjusted results exclude approximately two cents of Red Lobster related shared support costs incurred in June and July that moved to Red Lobster with the sale of that business, approximately three cents of costs related to other aspects of the Company's strategic action plan, approximately four cents related to restaurant impairment charges and approximately 37 cents of debt breakage costs related to the planned retirement of $1 billion of the Company's debt.

The Company reported that it anticipates U.S. same-restaurant sales for the first quarter to be approximately +2.8% for LongHorn Steakhouse, -1.3% for Olive Garden and +2.1% for its Specialty Restaurant GroupThe Specialty Restaurant Group's results reflect preliminary U.S. same-restaurant sales of approximately +3.9% for The Capital Grille, +2.5% for Eddie V's,  +2.3% for Yard House, +1.1% for Bahama Breeze and -0.3% for Seasons 52.

Darden also reported that preliminary U.S. same-restaurant sales for the fiscal first quarter by month for Olive Garden and LongHorn Steakhouse were as follows:

 

Olive Garden

June

July

August

Same-Restaurant Sales

-1.0%

-4.2%

0.8%

Same-Restaurant Traffic

-0.9%

-4.3%

-2.3%

 

LongHorn Steakhouse

June

July

August

Same-Restaurant Sales

3.3%

1.5%

3.2%

Same-Restaurant Traffic

-1.1%

-1.6%

0.2%

 

Olive Garden Brand Renaissance Plan

The Company reported continued progress on its Olive Garden Brand Renaissance Plan, including:

  • Improvement in guest satisfaction scores across several categories in the first quarter, including Overall, Attentiveness, Pace of Meal and Food Taste, as a result of an intensified focus on service and food quality;
  • Completion of three remodels that reflect significant interior and exterior changes, including a new logo and new signage, menus and plateware. This has resulted in a more than 10% increase in traffic on average in the remodeled restaurants as guests respond enthusiastically to the changes. With fiscal first-quarter same-restaurant sales of -2.1% at the approximately 300 restaurants in need of a remodel compared to -0.3% at the balance of Olive Garden's restaurants, the remodel program is working and remains a high priority. Another 75 remodels are planned for fiscal 2015;
  • A 13% increase in Olive Garden's take-out business during the first quarter compared to the first quarter last year, enabled by the company-wide roll-out of online ordering during this year's first quarter; and
  • Testing of tablet technology in several restaurants, which has generated very encouraging results, including check growth due to an increase in add-on sales, increased table turns, a 60% pay-at-the-table rate and increased guest survey response rates, as well as an increase in tip percentage for servers.

"While we are pleased with our continued success at LongHorn and at our Specialty Restaurant brands, we are especially pleased with the progress we are making at Olive Garden," said Gene Lee, President and Chief Operating Officer of Darden.  "Improved same-restaurant sales and traffic trends indicate that the actions we are taking are continuing to get traction with consumers.  At Olive Garden, we are seeing improvement in base traffic trends following the introduction of a comprehensive new menu in late February that offers better value and higher quality at both the low- and high-ends of the menu.  The improvement in Olive Garden's same-restaurant results for August is particularly encouraging since August of last year included three weeks of a proven guest-driving promotion – Never Ending Pasta Bowl – that was not repeated this period as this promotion has moved to late September.  We are continuing to execute plans to build on the momentum we are seeing and look forward to reporting on further progress."

Mr. Lee concluded, "The progress we are making would not be possible without the strong support and dedicated efforts of our operations leaders, restaurant staffs and restaurant support teams.  Our team is excited about and energized by the changes taking place at Olive Garden, which are very clearly reinforcing their commitment to providing 100% guest delight."

Fiscal 2015 Financial Outlook

Darden also commented on its sales and earnings expectations for fiscal year 2015.  The Company affirmed that it continues to expect diluted net earnings per share from continuing operations of $1.81 to $1.90 for fiscal 2015.  On an adjusted basis, the Company continues to anticipate diluted net earnings per share from continuing operations of $2.22 to $2.30 for the year, which excludes the cost of shared support incurred prior to the sale of Red Lobster that moved to Red Lobster with the sale, costs the Company expects to incur in connection with implementation of its strategic action plan and debt breakage costs.  These expectations reflect the Company's projection that U.S. same-restaurant sales growth for fiscal 2015 for Olive Garden, LongHorn Steakhouse and the Specialty Restaurant Group will be flat to +1%, +1% to +2% and approximately +2%, respectively.  Current earnings expectations for the year also reflect previously announced plans for the opening of approximately 37 net new restaurants and a 53rd operating week.   

Darden expects to release sales and earnings results for its fiscal first quarter on Friday, September 12, 2014, before the market opens.

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing more than 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. 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.

Information about Forward-Looking Statements

Forward-looking statements in this communication regarding our expected earnings performance and our ability to execute on our brand renaissance program and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, 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 made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. 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 (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, 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 including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, 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, 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 unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, 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.

Important Additional Information

The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with the Company's 2014 annual meeting of stockholders (the "Annual Meeting").  Information regarding the names and interests of such participants in the Company's proxy solicitation is set forth in the Company's preliminary proxy statement, filed with the SEC on July 31, 2014, as amended, and the Company revocation solicitation statement, filed with the SEC on April 1, 2014.  Additional information can be found in the Company's Annual Report on Form 10-K for the year ended May 25, 2014, filed with the SEC on July 18, 2013.  These documents are available free of charge at the SEC's website at www.sec.gov.

The Company will be mailing a definitive proxy statement and proxy card to the stockholders entitled to vote at the Annual Meeting.  WE URGE INVESTORS TO READ ANY PROXY STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  Stockholders will be able to obtain, free of charge, copies of any proxy statement and any other documents filed by the Company with the SEC in connection with the proxy solicitation at the SEC's website at www.sec.gov.  In addition, copies will also be available at no charge at the Investors section of the Company's website at http://investor.darden.com/investors/investor-relations/default.aspx.

Non-GAAP Information

The information in this press release includes financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"), such as adjusted diluted net earnings per share.  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. 

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SOURCE Darden Restaurants, Inc.: Financial

(Analysts) Matthew Stroud, (407) 245-5288, or (Media) Rich Jeffers, (407) 245-4189
Thu, 28 Aug 2014 09:00:00 -0400

Record Date for the Annual Meeting Remains Unchanged

ORLANDO, Fla., Aug. 28, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) announced today it is rescheduling its 2014 Annual Meeting of Shareholders for Friday, October 10, 2014. Preliminary proxy statement materials for the 2014 Annual Meeting are currently in the process of required review by the Securities and Exchange Commission ("SEC") and have not yet gone definitive.  As a result, definitive proxy statement materials have not yet been distributed to shareholders.  It is expected that these materials will be filed with the SEC and distributed to shareholders soon.  The new meeting date will help ensure that Darden shareholders have adequate time to review these materials and make informed decisions at the 2014 Annual Meeting regarding Darden's future.  The record date for the Annual Meeting will remain August 11, 2014.

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. 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.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our expected ability to improve our credit metrics, improve sales and earnings growth, reduce earnings volatility, maintain our dividend policy and buy back stock and execute on our brand renaissance program and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, 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 made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. 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 (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, 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 including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, 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, 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 unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, 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

Important Additional Information

The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with the Company's 2014 annual meeting of stockholders (the "Annual Meeting").  Information regarding the names and interests of such participants in the Company's proxy solicitation is set forth in the Company's preliminary proxy statement, filed with the SEC on July 31, 2014, as amended, and the Company revocation solicitation statement, filed with the SEC on April 1, 2014.  Additional information can be found in the Company's Annual Report on Form 10-K for the year ended May 25, 2014, filed with the SEC on July 18, 2013.  These documents are available free of charge at the SEC's website at www.sec.gov.

The Company will be mailing a definitive proxy statement and proxy card to the stockholders entitled to vote at the Annual Meeting.  WE URGE INVESTORS TO READ ANY PROXY STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  Stockholders will be able to obtain, free of charge, copies of any proxy statement and any other documents filed by the Company with the SEC in connection with the proxy solicitation at the SEC's website at www.sec.gov. In addition, copies will also be available at no charge at the Investors section of the Company's website at http://investor.darden.com/investors/investor-relations/default.aspx.

Contacts:


(Analysts) Matthew Stroud

(407) 245-5288

(Media) Bob McAdam

(407) 245-5404

 

SOURCE Darden Restaurants, Inc.

Fri, 15 Aug 2014 09:00:00 -0400

ORLANDO, Fla., Aug. 15, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced that it has retained global executive search firm Russell Reynolds Associates to assist the Company with the recruitment of its next Chief Executive Officer.  As previously announced, Clarence Otis is stepping down as Chairman and Chief Executive Officer of Darden.  To ensure a smooth transition, Charles A. Ledsinger, Jr. has been appointed Independent Non-Executive Chairman of the Board, and Mr. Otis has agreed to continue serving as Chief Executive Officer of Darden until the earlier of the appointment of his successor or December 31, 2014.

Mr. Ledsinger is leading the search along with the Board's Nominating and Governance Committee, which consists solely of independent directors.  Russell Reynolds Associates will work closely with the Committee and the Darden Board.

Michael D. Rose, Chairman of the Nominating and Governance Committee, said, "The search for a new CEO is a top priority.  We are committed to a thorough and deliberate process and are pleased to bring on a leading executive search firm to assist us.  We are confident that the transition will be smooth during this interim period given the strength of Darden's senior management team, including Gene Lee, Darden's Chief Operating Officer; Brad Richmond, Darden's Chief Financial Officer; Dave George, President of Olive Garden; Valerie Insignares, President of LongHorn Steakhouse; and Harald Herrmann, President of the Specialty Restaurant Group.

"As we move forward with the search process, all of us at Darden remain focused on continuing to execute on our strategic initiatives.  We remain committed to advancing our identification of the ideal leader for Darden with the right vision, experience and track record to drive value for our shareholders, employees and guests."

Russell Reynolds Associates, with more than 300 consultants in 41 offices around the world, is a leader in assessment, recruitment and succession planning for Chief Executive Officers, boards of directors, and key roles within the C-suite.

About Darden

Darden Restaurants, Inc., (NYSE: DRI), the world's largest full-service restaurant company, owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales.  Headquartered in Orlando, Fla., and employing more than 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people.  In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row.  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.  

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our expected ability to identify and recruit a new Chief Executive Officer, execute on our strategic initiatives and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, 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 made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. 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 (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, 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 including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, 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, 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 unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, 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

Important Additional Information

The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with the Company's 2014 annual meeting of stockholders (the "Annual Meeting").  Information regarding the names and interests of such participants in the Company's proxy solicitation is set forth in the Company's preliminary proxy statement, filed with the SEC on July 31, 2014, as amended, and the Company revocation solicitation statement, filed with the SEC on April 1, 2014.  Additional information can be found in the Company's Annual Report on Form 10-K for the year ended May 25, 2014, filed with the SEC on July 18, 2013.  These documents are available free of charge at the SEC's website at www.sec.gov.

The Company will be mailing a definitive proxy statement and proxy card to the stockholders entitled to vote at the Annual Meeting.  WE URGE INVESTORS TO READ ANY PROXY STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  Stockholders will be able to obtain, free of charge, copies of any proxy statement and any other documents filed by the Company with the SEC in connection with the proxy solicitation at the SEC's website at www.sec.gov. In addition, copies will also be available at no charge at the Investors section of the Company's website at http://investor.darden.com/investors/investor-relations/default.aspx.

 

Darden Contacts:

(Analysts) Matthew Stroud

(407) 245-5288

(Media) Bob McAdam

(407) 245-5404

 

SOURCE Darden Restaurants, Inc.

Mon, 11 Aug 2014 08:30:00 -0400

ORLANDO, Fla., Aug. 11, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) has completed the repurchase of approximately $900 million of the previously announced $1 billion debt retirement leaving approximately $1.6 billion of debt on its balance sheet.  The remaining $100 million of debt has been called for redemption and is expected to be retired later in August 2014.  As previously announced, the Company used after-tax proceeds from its sale of Red Lobster to consummate the debt retirement and to initiate a $500 million accelerated stock buyback (ASB) program.

With the closing of the debt retirement, the Company is today affirming its previously announced fiscal 2015 outlook and providing quarterly expectations for fiscal 2015 to reflect the benefits and other factors associated with the tender offer, the ASB program and the sale of the Company's Red Lobster business, which was completed on July 28.

"The completion of this tender offer further reinforces Darden's strong financial foundation.  In addition to the debt reduction, the Red Lobster sale proceeds also enable us to increase our capital return to shareholders and support the Company's current dividend despite the change in our operating structure following the sale," said Chuck Ledsinger, non-executive Chairman of the Board of Directors of Darden. 

"As demonstrated by the affirmation of our financial outlook, we  continue to make progress at Olive Garden.  While we still have work to do, the improvements we are seeing reinforce our confidence in the brand and the actions we are taking to drive growth and value creation," continued Ledsinger.

Debt Retirements

As a result of the debt retirements, Darden will reduce its interest expense by approximately $49 million on an annualized basis. The interest expense reduction in fiscal 2015 will be approximately $38 million, which will affect the second, third and fourth quarters of the fiscal year.  The interest expense reduction excludes one-time breakage and other costs of approximately $96 million, of which approximately $50 million relates to non-cash charges associated with hedge and loan cost write-offs and the remaining $46 million relates to repurchase premiums, make-whole amounts and other fees.  The Company estimates that the after-tax cash cost of the repurchase premiums, make-whole amounts and other fees will be less than $3 million in fiscal 2015.

Accelerated Stock Buyback (ASB) Program

As noted, the Company has initiated an ASB program.  Previously, the Company announced that it entered into agreements with Goldman, Sachs & Co. and Wells Fargo Bank, National Association (each, a "Dealer") to repurchase an aggregate of $500 million of the Company's common stock under the ASB program. 

Under the ASB agreements, the Company paid an aggregate of $500 million to the Dealers in August 2014 and will receive an initial delivery of approximately 8.5 million shares in October 2014, which represents approximately 80% of the total shares that will be repurchased under the ASB transactions based on current share prices. The total number of shares the Company ultimately purchases in ASB transactions will be determined based on the average of the daily volume-weighted average share price of its common stock over the duration of the ASB transactions, less an agreed discount, and is subject to certain adjustments under the agreements.

The agreements contemplate that final settlement is expected to occur in, or prior to, December 2014, although the completion date may be accelerated or, under certain circumstances, extended.  At settlement, the Company may be entitled to receive additional shares of its common stock from a Dealer or, under certain circumstances, may be required to deliver shares or make a cash payment (at its option) to a Dealer.

In fiscal 2015, the Company anticipates that the ASB program will benefit diluted net earnings per share by approximately one cent in the second quarter, approximately seven cents in the third quarter and approximately eight cents in the fourth quarter.  The annualized benefit to diluted net earnings per share in fiscal 2015 is expected to be approximately 12 cents.  Because the Company will not take delivery of the shares until the second fiscal quarter of fiscal 2015, there is no anticipated effect on diluted net earnings per share in the first fiscal quarter.

Financial Outlook

Darden affirmed its annual diluted earnings per share outlook for fiscal 2015, which is $1.81 to $1.90 for earnings from continuing operations.  On an adjusted basis, the Company continues to anticipate diluted net earnings per share from continuing operations of $2.22 to $2.30 for the year, which excludes the cost of shared support incurred prior to the sale of Red Lobster that moved to Red Lobster with the sale, costs the Company expects to incur in connection with implementation of its strategic action plan and debt breakage costs.  These expectations reflect the Company's projection that fiscal 2015 U.S. same-restaurant sales growth for Olive Garden, LongHorn Steakhouse and the Specialty Restaurants will be flat to +1%, +1% to +2% and approximately +2%, respectively.  Current earnings expectations for the year also reflect the opening of approximately 37 net new restaurants. 

With the sale of the more seasonally variable Red Lobster business, there are some related impacts to the seasonal trends of the Company's sales and earnings.  Historically, the Company's sales and earnings were appreciably lower in the second fiscal quarter compared to the first, third and fourth fiscal quarters due in large part to Red Lobster's promotional calendar and seasonality.   Looking forward, the Company expects more tempered seasonal and quarterly fluctuations in sales and earnings than it experienced prior to the sale of Red Lobster.

As previously noted, fiscal 2015 is a 53-week year.  The anticipated benefit from the additional week is five cents diluted net earnings per share and that benefit will be fully realized in the fourth quarter, which will be a 14 week fiscal quarter versus a 13 week fiscal quarter the prior year.

Based on the impact of the debt retirements, the accelerated share buyback program, and the other expectations noted above, the Company anticipates that diluted net earnings per share from continuing operations on quarterly basis will be as follows:

 

Per Share

Q1

Q2

Q3

Q4

Fiscal 2015

Diluted Net EPS from Continuing Operations

 

($0.16-$0.18)

 

$0.24 - $0.28

 

$0.80 - $0.84

 

$0.87 - $0.91

 

$1.81 - $1.90

Red Lobster-Related Shared Support Costs

 

$0.02

 

$0.00

 

$0.00

 

$0.00

 

$0.02

Other Strategic Action Plan Costs

 

TBD

 

TBD

 

TBD

 

TBD

 

TBD

Debt Breakage Costs

$0.44

$0.00

$0.00

$0.00

$0.44

Adjusted Diluted Net EPS from Continuing Operations

 

$0.28 - $0.30

 

$0.24 - $0.28

 

$0.80 - $0.84

 

$0.87 - $0.91

 

$2.22 - $2.30

 

Darden Restaurants, Inc., (NYSE: DRI), the world's largest full-service restaurant company, owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing more than 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. 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.

Information about Forward-Looking Statements

Forward-looking statements in this communication regarding our expected ability to improve sales and earnings growth, reduce earnings volatility, buy back stock and execute on our brand renaissance program and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, 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 made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. 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 (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, 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 including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, 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, 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 unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, 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.

Important Additional Information

The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with the Company's 2014 annual meeting of stockholders (the "Annual Meeting").  Information regarding the names and interests of such participants in the Company's proxy solicitation is set forth in the Company's preliminary proxy statement, filed with the SEC on July 31, 2014, as amended, and the Company revocation solicitation statement, filed with the SEC on April 1, 2014.  Additional information can be found in the Company's Annual Report on Form 10-K for the year ended May 25, 2014, filed with the SEC on July 18, 2013.  These documents are available free of charge at the SEC's website at www.sec.gov.

The Company will be mailing a definitive proxy statement and proxy card to the stockholders entitled to vote at the Annual Meeting.  WE URGE INVESTORS TO READ ANY PROXY STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  Stockholders will be able to obtain, free of charge, copies of any proxy statement and any other documents filed by the Company with the SEC in connection with the proxy solicitation at the SEC's website at www.sec.gov.  In addition, copies will also be available at no charge at the Investors section of the Company's website at http://investor.darden.com/investors/investor-relations/default.aspx.

Non-GAAP Information

The information in this press release includes financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"), such as adjusted diluted net earnings per share.  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.

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SOURCE Darden Restaurants, Inc.: Financial

(Analysts) Matthew Stroud, (407) 245-5288, (Media) Rich Jeffers, (407) 245-4189
Fri, 08 Aug 2014 08:30:00 -0400

ORLANDO, Fla., Aug. 8, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced the final results for its previously announced cash tender offers (each offer an "Offer" and collectively, the "Offers") for up to $610,000,000 aggregate principal amount of its outstanding 4.50% Senior Notes due 2021 ("2021 Notes"), 3.350% Senior Notes due 2022 ("2022 Notes"), 6.000% Senior Notes due 2035 (the "2035 Notes") and 6.200% Senior Notes due 2017 ("2017 Notes" and, together with the 2021 Notes, 2022 Notes and 2035 Notes, the "Notes").

The Offers were made pursuant to an Offer to Purchase, dated June 30, 2014 (the "Offer to Purchase"), and the related Letter of Transmittal, as amended by Darden's press releases on July 15, 2014 and July 25, 2014.

The Offers for the Notes expired at 12:00 midnight, New York City time, on August 7, 2014 (the "Expiration Date").  The principal amount of each series of Notes that were validly tendered and not validly withdrawn in the Offers as of the Expiration Date are outlined in the table below:

 

Title of Securities and
CUSIP Numbers

Principal

Amount

Outstanding

Acceptance

Priority

Level

Aggregate Principal

Amount Tendered

as of the

Expiration Date

Percent of Amount

Outstanding

Tendered

Total

Consideration1,2

4.50% Senior Notes due 2021

(CUSIP No. 237194AJ4)

$400,000,000

1

$278,052,000

69.51%

$1,056.73

3.350% Senior Notes due 2022

(CUSIP No. 237194AK1)

$450,000,000

2

$388,334,000

86.30%

$1,000.04

6.000% Senior Notes due 2035

(CUSIP No. 237194AE5)

$150,000,000

3

$110,215,000

73.48%

$1,107.18

6.200% Senior Notes due 2017

(CUSIP No. 237194AG0)

$500,000,000

4

$229,781,000

45.96%

$1,152.84

1 Per $1,000 principal amount of the Notes tendered and accepted for purchase. Holders will also receive accrued interest on Notes accepted for purchase up to, but excluding, the Settlement Date (as defined below).

2 The Total Consideration for all series of Notes, based on the Reference Yield (as defined in the Offer to Purchase) of the Reference Treasury Security (as set forth in the Offer to Purchase) as of 2:00 p.m., New York City time on July 14, 2014, includes the early tender payment of $30.00 per $1,000 principal amount of the Notes accepted for purchase.

The total aggregate principal amount of Notes validly tendered at or prior to the Expiration Date and not validly withdrawn was $1,006,382,000, which amount exceeds the Maximum Amount of $610,000,000

$278,052,000 aggregate principal amount of 2021 Notes (Acceptance Priority Level 1) has been accepted for purchase.  In accordance with the terms of the Offers, the 2022  Notes (Acceptance Priority Level 2) have been accepted for purchase on a prorated basis using a single proration factor of approximately 85.55%, resulting in the purchase of $331,941,000 principal amount of the 2022 Notes. The 2035 Notes (Acceptance Priority 3) and 2017 Notes (Acceptance Priority 4) have not been accepted for purchase and will be returned to holders in accordance with the Offer to Purchase.

The settlement for the Notes (the "Settlement Date") tendered and accepted by Darden is currently expected to take place today.

For Notes accepted for purchase by Darden, all Holders will receive the Total Consideration set forth above.  In addition, holders whose Notes are purchased will be paid accrued and unpaid interest on their purchased Notes from the applicable last interest payment date up to, but excluding, the Settlement Date.

This press release does not constitute an offer to purchase securities or a solicitation of an offer to sell any securities nor does it constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is unlawful.  Capitalized terms used in this press release but not otherwise defined herein have the meanings assigned to them in the Offer to Purchase.

BofA Merrill Lynch, US Bancorp and Wells Fargo Securities served as the Lead Dealer Managers and Deutsche Bank Securities and Mizuho Securities served as the Co-Dealer Managers for the Offers. Questions regarding the Offers may be directed to BofA Merrill Lynch at (888) 292-0070 (toll free) or (980) 387-3907 (collect), directed to US Bancorp at (877) 558-2607 (toll free) or (612) 336-7604 (collect) or directed to Wells Fargo Securities at (866) 309-6316 (toll free) or (704) 410-4760 (collect).  Requests for the Offer to Purchase and the Letter of Transmittal may be directed to D.F. King & Co., Inc. at 48 Wall Street, 22nd Floor, New York, New York 10005, (212) 269-5550  (for banks and brokers) or (800) 967-4617 (for all others).

Darden Restaurants, Inc., (NYSE: DRI), the world's largest full-service restaurant company, owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing more than 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. 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.

Forward-looking statements in this news release 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 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 (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, the outcome of any legal proceeding that may be instituted against Darden relating to the Red Lobster transaction or otherwise, actions of activist investors which could distract management and divert our resources, 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 including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, failure to successfully integrate the Yard House business and the additional indebtedness incurred to finance the Yard House acquisition, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, 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, 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 unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, 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.

 

 

SOURCE Darden Restaurants, Inc.: Financial

(Analysts) Matthew Stroud, (407) 245-5288, (Media) Rich Jeffers, (407) 245-4189
Mon, 04 Aug 2014 08:30:00 -0400

Files Presentation and Issues Open Letter to Shareholders Regarding Red Lobster Divestiture

ORLANDO, Fla., Aug. 4, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced that it has filed a presentation with the Securities and Exchange Commission ("SEC") and is issuing the following open letter to shareholders to correct a number of inaccurate and misleading statements made by Starboard Value LP and its affiliates ("Starboard") as part of Starboard's efforts to take control of the Company by replacing all 12 members of Darden's Board of Directors with its own preferred nominees at the Company's 2014 Annual Meeting of Shareholders.

Highlights of the letter are as follows:

  • Darden's Board determined that divesting Red Lobster was in the best interests of Darden and its shareholders.  Despite numerous actions taken to improve the business, Red Lobster experienced years of declines in guest traffic, resulting in volatile and consistently weakening financial performance that significantly burdened Darden's results.  Red Lobster's negative trends were continuing and accelerating at the time its sale was announced in May. 
  • Contrary to Starboard's assertion that it was "rushed," the sale of Red Lobster was the culmination of a robust and deliberate review process that began in early 2013 – well before Starboard's investment.  This process was designed – and enabled Darden – to maximize value and minimize risks associated with continuing to own the business, including risks from the brand's ongoing deterioration.
  • The Red Lobster sale better positions Darden for sustained growth, value creation and consistent return of cash to our shareholders in contrast to Starboard's erroneous claim of value destruction.
  • After careful evaluation, the Board was certain that halting a robust Red Lobster sale process mid-course would have negative consequences for the value received and (if any sale could be effected) for the value of Darden.
  • Although Starboard erroneously claims the business was sold at a "discount," the $2.1 billion purchase price represents a premium multiple compared to comparable restaurant deals and exceeded many industry analysts' expected valuation ranges for the business, particularly taking into account Red Lobster's deteriorating performance.
  • Tax free and other tax efficient alternatives, as suggested by Starboard, were explored in depth by the Board and our advisors but were determined not to be viable, value creating options.
  • Replacing the entire Darden Board, as Starboard is seeking to do, could be significantly destabilizing to the Company and could jeopardize the Board's current commitment to its $2.20 per share annual dividend.

The full text of the open letter is below:

August 4, 2014

Dear Darden Shareholder:

In press statements and SEC filings, Starboard has continued to misrepresent the facts about the actions we are taking to improve performance and enhance shareholder value, and the progress we are making on these initiatives.  This includes inaccurate and misleading statements regarding the value achieved with the recent sale of Red Lobster.  Starboard's assertions continue to be based on incorrect and unrealistic analysis, including the unfounded assumption that a sale of the Red Lobster real estate could be implemented on a tax free basis.

We are writing to set the record straight.

FACT: Darden's Board determined that divesting Red Lobster was in the best interests of Darden and its shareholders.  Despite numerous actions taken to improve the business, Red Lobster experienced years of declines in guest traffic, resulting in volatile and consistently weakening financial performance that significantly burdened Darden's results.  Red Lobster's negative trends were continuing and accelerating at the time its sale was announced in May. 

Darden has long been the market leader in full-service dining and has a record of long-term performance and value creation.  More recently, there have been significant changes within the restaurant industry.  These changes include slowing sales growth as the industry continues to mature as well as important shifts in consumer demographics and expectations.

Many consumers, including Red Lobster's core customer base, have faced increasing financial pressure that has not eased despite some improvement in the overall economy.  To offset this dynamic, we have taken numerous actions over the years to reach new consumer segments and to increase demand from Red Lobster's existing consumer base in order to reignite the success Red Lobster once enjoyed.  However, these initiatives, which have included capital investments, operational and personnel changes, new menus, advertising changes and remodels, only interrupted the brand's long-term erosion and declining financial performance. 

In fact:

  • Due to the higher costs of seafood, Red Lobster has long had a relatively high average check compared to other nationally advertised casual dining brands, which has been a distinct disadvantage when competing for visits from financially constrained consumers.
  • As the business declined, Red Lobster's priorities and operating support requirements came to differ meaningfully from those of Darden's other brands, including Olive Garden, which had nearly 40% more guest visits in fiscal 2014 than it had a decade ago.
  • Red Lobster's deteriorating performance was significantly harming the Company's financial results.  Indeed, Red Lobster's sales and earnings volatility has been detrimental to Darden's overall performance for some time:
    • Over the past decade, average weekly guest count per restaurant fell 21%
    • Over the past two fiscal years:
      • Red Lobster same-restaurant sales declined -8.1%
      • Red Lobster underperformed the Knapp-Track casual dining index by 720 bps
      • EBITDA declined -$106 million, or -32%
      • EBITDA margins fell 330 bps to 9.3%, the lowest in a decade

FACT: Contrary to Starboard's assertion that it was "rushed," the sale of Red Lobster was the culmination of a robust and deliberate process designed to maximize value and minimize risks associated with continuing to own the business, including the brand's ongoing deterioration.

To best position your company for continued growth and success against this backdrop, Darden's Board and leadership team carefully examined various strategic, operational and financial alternatives.  This review process began in early 2013 – well before Starboard made its investment in Darden.  The analysis included advice from the Company's financial advisor, Goldman, Sachs & Co., and legal counsel, Latham & Watkins.  It also included advice from Wachtell, Lipton, Rosen & Katz, as legal counsel to Darden's Board, and, subsequent to the initial advice provided by Goldman, Sachs & Co., from Morgan Stanley, as financial advisor to Darden's Board.

In light of Red Lobster's trends and the extensive analysis, in December 2013, Darden's Board approved a plan to, among other actions, separate the Red Lobster business through either a sale or a spin-off.  The Board believed that, given the challenges facing the Red Lobster business, a full separation was necessary to enable Darden to capitalize on its highest return and value creating opportunities in its remaining brand portfolio and to deliver increased shareholder returns over the long-term. 

In May 2014, we announced the sale of Red Lobster to Golden Gate Capital.  The sale, which closed on July 28, 2014, was the culmination of a thorough and robust process that enabled us to maximize the value of the business, eliminate the risks and volatility associated with continuing to own it, and provide a realistic market-validated valuation of Darden's real estate assets.  As part of this process, the Company and its advisors directly contacted a broad universe of approximately 70 potential financial and strategic buyers to purchase the Red Lobster business and related debt. In addition, approximately 25 real estate buyers were also contacted to facilitate attractive sale-leaseback financing for the purchase of the Red Lobster business.

The $2.1 billion all cash consideration from the Red Lobster sale provided Darden with immediate and certain value to reduce debt and support our capital return initiatives, including a significant share repurchase and maintaining the Company's annual dividend at $2.20 per share, which Darden shareholders have stated is a priority for them.  In the past five fiscal years, Darden has returned nearly $2 billion to shareholders through share repurchases and dividends.

The transaction also enabled us to eliminate, for the Company and all Darden shareholders, the risks, uncertainties and financial volatility relating to the continued struggles of the Red Lobster turnaround. 

FACT:  The Red Lobster sale better positions Darden for sustained growth, value creation and consistent return of cash to our shareholders in contrast to Starboard's erroneous claim of value destruction.

Following the completion of the Red Lobster sale, Darden is significantly better positioned for success.  From a financial perspective, the new Darden will benefit from:

  • Higher and more consistent sales and earnings growth driven by a stronger overall positioning with the most attractive consumer segments and by an expanding restaurant footprint;
  • A more balanced commodity purchasing profile that reflects much lower exposure to the historically volatile seafood category;
  • Stable and growing cash flow with reduced quarterly sales and earnings volatility;
  • A $1 billion debt reduction, which will improve credit metrics; and
  • Continued leading capital return.  With stronger cash flows and the proceeds from the Red Lobster sale, our shareholders will continue to benefit from an active share repurchase program, including a new share repurchase program of up to $700 million in fiscal 2015, and a strong quarterly dividend, which equates to $2.20 per share annually.

From an operational perspective, Darden will benefit from a sharper focus on growing our highly attractive brands without the distraction of continuing to operate a business that is not as well positioned for the future.  In this regard, while still in the early stages, progress on our operating priorities is leading to enhanced performance throughout the Company:

  • At Olive Garden, guest experience and satisfaction scores are improving across the system and are expected to translate into higher traffic trends over time.  Online ordering, including a redesigned web experience and the national launch of an online To-Go platform, is underway and strengthening the take-out business.  Initial sales results of a pilot remodel program are encouraging – the sales trends have improved by mid-single digits since the completion of the remodels and the installation of new signage. 
  • At LongHorn Steakhouse, cumulative same-restaurant sales results for the last five years have exceeded the Knapp-Track casual dining competitive benchmark by over 17 percentage points.  In fiscal 2014, LongHorn's same-restaurant sales grew 2.7% year-over-year and exceeded the industry by 3.9 percentage points.
  • The Specialty Restaurant Group continues to deliver solid performance.  In fiscal 2014, total sales exceeded $1.2 billion, a 25.2% increase from the prior year, and blended same-restaurant sales grew 1.6%.
  • As a result of the Company's aggressive cost management, general and administrative (G&A) expenses as a percentage of sales are expected to remain at approximately 5.0% following the Red Lobster sale, despite the lower revenue base.  In addition, in fiscal 2015, selling, general and administrative (SG&A) expenses as a percentage of sales are expected to be the lowest since Darden became a public company.

Further, our Board concluded that the multiples at which Darden shares trade have been consistently harmed by Red Lobster's deteriorating performance.  With the sale complete, we expect these to improve.

FACT:  After careful evaluation, the Board was certain that halting a robust Red Lobster sale process mid-course would have negative consequences for the value received and for the value of Darden.

We believe that the Company and its shareholders would have been harmed if Red Lobster remained a part of Darden.  We also believe that the value obtained for Red Lobster would have been compromised had the sale not been completed as planned.  Darden's Board based this determination on Red Lobster's declining performance and the nature of the rigorous sales process. 

Since entering the agreement to sell Red Lobster in May, Red Lobster's business continued to decline through fiscal year-end, and based upon industry trends, the declines were expected to continue for an extended time.

If a sale agreement had been delayed, we believe it would have resulted in a significantly lower valuation – substantially less than the $2.1 billion achieved.  This assumes, of course, that a sale could even have been completed later, which was not clear at the time, given our expectation for continued deterioration of Red Lobster's business.  There was also no assurance that the financing environment for a transaction would have remained attractive to bidders.

The terms of the Red Lobster sale were the result of a comprehensive, competitive process.  If Darden had suddenly stopped the process, the Board believed it would have been virtually impossible to restart it months later with the same momentum, if at all, particularly given Red Lobster's declining performance.  Following Starboard's announcement that it would seek a special meeting, bidders in the Red Lobster sales process strongly advised the Company that the uncertainty associated with a shareholder approval closing condition would be unacceptable given the time and financial resources required to explore a transaction and formulate a final bid. Nevertheless, after the Company received a final bid, the Company further sought to negotiate a shareholder approval condition in the sale agreement but was unable to do so.  In view of the risk of losing the deal altogether and keeping Darden and its shareholders exposed to Red Lobster's continuing declining performance, putting the sale to a separate shareholder vote over bidders' objections was simply not a prudent course to follow.

The choice the Board confronted was either to proceed with the sale on the terms negotiated or to postpone the sale, which was virtually certain to result in a materially lower price, if any sale transaction were to be available at all.  And if no sale occurred, the consequences of retaining Red Lobster would have been detrimental to the Company and its value because of the continued adverse exposure to Red Lobster's struggling performance.

The decision to proceed with the sale prior to holding a Special Meeting was a difficult one.  It was made only after careful consideration over the course of multiple Board meetings of the large risks from terminating a highly competitive sale process in the midst of Red Lobster's deteriorating business performance.  The Board considered and was deeply concerned about proceeding notwithstanding the shareholder support of the Special Meeting, but believed these concerns were outweighed by the considerable adverse consequences of a delay. 

FACT: Although Starboard claims the business was sold at a "discount," the $2.1 billion purchase price represents a premium multiple compared to comparable restaurant deals and exceeded industry analysts' expected valuation ranges for the business, particularly taking into account Red Lobster's deteriorating performance.

The Red Lobster transaction was valued at approximately 9x LTM EBITDA when we announced the agreement to sell the business on May 16, 2014.  On average, comparable restaurant deals have been completed at approximately 8x LTM EBITDA – meaningfully lower than the value we achieved.  Notably, the majority of the restaurants sold in comparable deals exhibited increasing earnings trends as opposed to the declining earnings trends at Red Lobster. 

Given the expected continued decline in Red Lobster's operating performance through closing, Red Lobster's sale multiple is expected to be closer to approximately 10x LTM EBITDA at transaction close compared to the 9x LTM EBITDA at announcement, underscoring the wisdom of the Board's decision to lock in the value we achieved with the Golden Gate Capital transaction.

FACT:  Tax free and other tax efficient alternatives, as suggested by Starboard, were explored in depth by the Board and our advisors but were not viable, value creating options.

Optimizing the value of Darden's real estate assets is an ongoing focus for the Company.  Many of Darden's independent directors have experience and proven records optimizing asset portfolios through franchising, real estate development, and mergers and acquisitions, including  directly overseeing or guiding the strategic direction of substantial real estate portfolios.

Before unanimously concluding that the sale of Red Lobster to Golden Gate Capital was the best available value-creating alternative, Darden's Board, with the assistance of its advisors, explored numerous separation alternatives for Red Lobster and the value potential of each, including (i) a spin-off of the Red Lobster business, (ii) a sale of the Red Lobster business, (iii) a spin-off of the Red Lobster operating company and a separate sale of its real estate, (iv) retaining the Red Lobster operating company and separating its real estate, and (v) retaining both the Red Lobster operating company and its real estate.   

The Board believes that a Red Lobster REIT is not (and was not) a viable tax efficient alternative.  Given its exposure to a single property type and single tenant, a Red Lobster REIT would likely trade at a meaningful discount to publicly-traded triple net REITs.  Market reaction to the real estate aspects of the Red Lobster transaction confirms the validity of the Board's concern.  Further, our expansive real estate process did not result in any tax efficient proposals. 

In its public statements, Starboard has wrongly asserted that Darden received "less than zero" for Red Lobster's operating business.  This statement is based on a highly inaccurate analysis.  Among other things, Starboard:

  • Erroneously treats a taxable transaction as tax free, attributing all transaction taxes to the Red Lobster operating company and none to the real estate (i.e., Starboard assumes incorrectly that the real estate aspect of the transaction was or could be tax free);
  • Not only carelessly double-counts the transaction costs, but also erroneously attributes all transaction costs to the Red Lobster operating company rather than allocating them to the different pieces of the business;
  • Overlooks the fact that we were able to structure the transaction so that the cash debt breakage costs after-tax are minimal, and again attributes all of the costs to the Red Lobster operating company;
  • Inappropriately reduces after-tax proceeds of the entire transaction (the operating company sale and the real estate transaction) by the pre-tax value of the real estate financing to present an inaccurate and misleading picture of what actually occurred; and
  • Incorrectly assumes that a $1.5 billion valuation of Red Lobster's real estate, which was achieved through a highly competitive bidding process, could have been achieved in a stand-alone REIT which, in the view of the Company's financial advisors, was highly unlikely.

Starboard's flawed analysis results in $107 million of incorrect costs that were never incurred and undervalues the amount of the deal consideration attributable to Red Lobster's operating business and related assets by nearly half a billion dollars.

Your Board remains committed to taking all appropriate steps to serve the interests of Darden and all Darden shareholders.

We believe that further distraction and costs associated with Starboard's proxy contest are not in the best interests of Darden or Darden shareholders.  Accordingly, we have attempted, on numerous occasions, to reach an agreement with Starboard, and we remain ready to engage with them to resolve this proxy contest.

***

Goldman, Sachs & Co. is serving as Darden's financial advisor.  Morgan Stanley is serving as financial advisor, and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Darden's Board of Directors.

Innisfree M&A Incorporated is serving as the Company's proxy solicitor and can be contacted toll-free at (888) 750-5834.

 

Darden Restaurants, Inc.

Update on Successful Red Lobster Sale Process

Non-GAAP Reconciliation


($ in millions)


Non-GAAP Reporting


In addition to U.S. generally accepted accounting principles (GAAP) reporting, Darden has presented certain measures on a non-GAAP basis in the Update On Successful Red Lobster Sale Process, such as Earnings Before Interest and Taxes (EBIT) and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). This non-GAAP information should be viewed in addition to, and not in lieu of, our reported amounts as calculated in accordance with GAAP.




Twelve Months Ended:






Q1 FY13


Q2 FY13


Q3 FY13


Q4 FY13


Q1 FY14


Q2 FY14


Q3 FY14


Q4 FY14

Earnings Before Interest and Taxes (EBIT):

















Sales


$2,655.2


$ 2,642.4


$ 2,600.1


$ 2,622.4


$ 2,586.3


$ 2,557.6


$ 2,499.4


$ 2,460.0


















EBT: Earnings Before Taxes


232.6


229.7


197.4


191.0


158.4


139.4


118.6


104.1


















Interest Expense


(0.4)


(0.4)


(0.2)


(0.0)


(0.0)


(0.1)


(0.1)


(0.1)


















EBIT


$232.2


$ 229.4


$ 197.2


$ 191.0


$ 158.4


$ 139.4


$ 118.5


$ 104.0


















Depreciation & Amortization


110.0


112.3


114.2


115.9


118.9


121.9


124.8


123.9


















Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA):






























EBITDA


$342.2


$ 341.7


$ 311.4


$ 306.9


$ 277.3


$ 261.2


$ 243.3


$ 227.9


















EBITDA Margin


12.9%


12.9%


12.0%


11.7%


10.7%


10.2%


9.7%


9.3%


















 

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI, the world's largest full-service restaurant company, owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing more than 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. 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

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our expected ability to retire outstanding debt, improve our credit metrics, improve sales and earnings growth, reduce earnings volatility, maintain our dividend policy and buy back stock and execute on our brand renaissance program and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, 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 made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. 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 (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, 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 including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, 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, 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 unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, 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.  

Important Additional Information

The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with the Company's 2014 annual meeting of stockholders (the "Annual Meeting").  Information regarding the names and interests of such participants in the Company's proxy solicitation is set forth in the Company's preliminary proxy statement, filed with the SEC on July 31, 2014, as amended, and the Company revocation solicitation statement, filed with the SEC on April 1, 2014.  Additional information can be found in the Company's Annual Report on Form 10-K for the year ended May 25, 2014, filed with the SEC on July 18, 2013.  These documents are available free of charge at the SEC's website at www.sec.gov.

The Company will be mailing a definitive proxy statement and proxy card to the stockholders entitled to vote at the Annual Meeting.  WE URGE INVESTORS TO READ ANY PROXY STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  Stockholders will be able to obtain, free of charge, copies of any proxy statement and any other documents filed by the Company with the SEC in connection with the proxy solicitation at the SEC's website at www.sec.gov.  In addition, copies will also be available at no charge at the Investors section of the Company's website at http://investor.darden.com/investors/investor-relations/default.aspx.  Permission to use quotations in these materials was neither sought nor obtained.

SOURCE Darden Restaurants, Inc.

(Analysts) Matthew Stroud, (407) 245-5288, (Media) Bob McAdam, (407) 245-5404
Thu, 31 Jul 2014 08:00:00 -0400

ORLANDO, Fla., July 31, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced that it has entered into agreements with each of Goldman, Sachs & Co. and Wells Fargo Bank, National Association (each, a "Dealer") to repurchase an aggregate of $500 million of the Company's common stock under an accelerated stock buyback program (the "ASB transactions").  A portion of the proceeds from the Company's recently completed Red Lobster transaction will be used to fund the ASB transactions.

Under the agreements, the Company is scheduled to pay an aggregate of $500 million to the Dealers in August 2014 and will receive an initial delivery of approximately 8.6 million shares in October 2014, which represents approximately 80% of the total shares that would be repurchased under the ASB transactions based on current share prices. The total number of shares that the Company ultimately purchases in the ASB transactions will be determined based on the average of the daily volume-weighted average share price of its common stock over the duration of the ASB transactions, less an agreed discount, and is subject to certain adjustments under the agreements.

The agreements contemplate that final settlement is expected to occur in, or prior to, December 2014, although the completion date may be accelerated or, under certain circumstances, extended. At settlement, the Company may be entitled to receive additional shares of its common stock from a Dealer or, under certain circumstances, may be required to deliver shares or make a cash payment (at its option) to a Dealer.

About Darden

Darden Restaurants, Inc., (NYSE: DRI), the world's largest full-service restaurant company, owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing more than 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. 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.  

Information About Forward-Looking Statements

Forward-looking statements in this communication that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, 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 made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. 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 (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, the outcome of any legal proceeding that may be instituted against Darden relating to the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, 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 including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, 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, 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 unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, 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.

SOURCE Darden Restaurants, Inc.: Financial

Analysts: Matthew Stroud, (407) 245-5288; Media: Bob McAdam, (407) 245-5366
Mon, 28 Jul 2014 16:32:00 -0400

Reduced Slate of Independent Directors Ensures At Least Three Starboard Nominees Will be Elected at the Annual Meeting
Darden Remains Willing to Discuss Mutually Acceptable Resolution to Pending Proxy Contest

ORLANDO, Fla., July 28, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced that its Board of Directors expects to nominate nine of its independent directors as the Board's slate of nominees for election at the Annual Meeting of Shareholders to be held on September 30, 2014.  The Darden Board will continue to be comprised of 12 members until a new Chief Executive Officer is appointed in accordance with the leadership succession plan separately announced today.  

By nominating a slate of nine directors for the 12 available seats at the Annual Meeting, Darden has ensured that at least three of the nominees proposed by Starboard Value L.P. and its affiliates ("Starboard") would be elected at the Annual Meeting. 

Charles A. Ledsinger, Jr., the Independent Non-Executive Chairman of the Darden Board of Directors, said, "With today's announcement, the Board's slate of directors would provide both continuity of experience and expertise in the midst of our turnaround efforts as well as additional new directors proposed by Starboard.  We are committed to taking all appropriate steps to serve the interests of Darden and all Darden shareholders." 

The Company also announced that it has engaged in settlement discussions with Starboard with respect to Starboard's pending proxy contest but has been unable to reach an agreement with Starboard.  The Company remains interested in a mutually acceptable resolution. 

The Company will present details regarding its recommended slate of director nominees in Darden's definitive proxy statement and other materials to be filed with the Securities and Exchange Commission with respect to the 2014 Annual Meeting.

Goldman, Sachs & Co. is serving as Darden's financial advisor.  Morgan Stanley is serving as financial advisor, and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Darden's Board of Directors.

About Darden
Darden Restaurants, Inc., (NYSE: DRI), the world's largest full-service restaurant company, owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales.  Headquartered in Orlando, Fla., and employing more than 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people.  In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row.  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.

Information About Forward-Looking Statements
Forward-looking statements in this communication that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, 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 made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. 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 (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, the outcome of any legal proceeding that may be instituted against Darden relating to the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, 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 including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, 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, 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 unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, 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.

Important Additional Information
The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from the Company's stockholders. The Company intends to file a preliminary proxy statement and proxy card with the U.S. Securities and Exchange Commission (the "SEC") in connection with any such solicitations of proxies from the Company's stockholders. Information regarding the names and interests of such participants in the Company's proxy solicitation is set forth in the Company's revocation solicitation statement, filed with the SEC on April 1, 2014 and will also be included in the applicable proxy statement. These documents are available free of charge at the SEC's website at www.sec.gov.

The Company will be mailing a definitive proxy statement and proxy card to the stockholders entitled to vote at the applicable meeting. WE URGE INVESTORS TO READ ANY PROXY STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able to obtain, free of charge, copies of any proxy statement and any other documents filed by the Company with the SEC in connection with the possible proxy solicitations at the SEC's website at www.sec.gov. In addition, copies will also be available at no charge at the Investors section of the Company's website at http://investor.darden.com/investors/investor-relations/default.aspx.

NEWS/INFORMATION


Corporate Relations


P.O. Box 695011


Orlando, FL 32869-5011


Darden Contacts:



(Analysts) Matthew Stroud

(407) 245-5288


(Media) Bob McAdam

(407) 245-5404

SOURCE Darden Restaurants, Inc.

Mon, 28 Jul 2014 16:31:00 -0400

Clarence Otis to Step Down as Chairman and CEO
Board Separates Chairman and CEO Roles and Appoints Charles A. Ledsinger, Jr. Independent Non-Executive Chairman of the Board

ORLANDO, Fla., July 28, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced that Clarence Otis is stepping down as Chairman and Chief Executive Officer of the Company.  Darden's Board of Directors has appointed the Company's current Independent Lead Director, Charles A. Ledsinger, Jr., as Independent Non-Executive Chairman of the Board, effective immediately.  The Company also announced that it has amended its corporate governance policies to provide for the separation of the Chairman and Chief Executive Officer roles. 

To ensure a smooth transition, Mr. Otis has agreed to continue serving as Chief Executive Officer of Darden until the earlier of the appointment of his successor or December 31, 2014.  Mr. Otis will remain a director of the Company, but will not stand for re-election at the 2014 Annual Meeting of Shareholders.  Darden's Board will initiate a search to identify Mr. Otis's successor as CEO.  Internal and external candidates will be considered.  The search process will be led by Mr. Ledsinger and the Board's Nominating and Governance Committee, which consists solely of independent directors.  

Mr. Otis joined Darden in 1995.  He was appointed Chief Executive Officer of Darden in November 2004 and Chairman of Darden's Board in November 2005.  During his tenure, Darden has grown to become the world's largest full-service restaurant company with a strong multi-brand portfolio and an industry-leading, cost-effective operating support platform.  For his tenure ending with Darden's fiscal year 2014, the Company grew from 1,381 restaurants with $5.2 billion in annual sales to more than 2,200 restaurants with more than $8.7 billion in annual sales.  From November 29, 2004, when Mr. Otis was appointed Chief Executive Officer, through the end of the Company's fiscal 2014, Darden's total shareholder return was 133%, outpacing the return of the S&P 500 for the same period by 36 percentage points.  Under Mr. Otis's leadership, Darden also became the first full-service restaurant company to be named to Fortune's Best Places to Work list, and it has remained on that list in each of the three years since. 

Mr. Otis said, "I am proud to have been a part of Darden's significant growth and expansion, which has enabled us to reach new consumer segments and markets and create significant long-term shareholder value.  With the Red Lobster sale complete and progress on our Olive Garden brand renaissance and other strategic priorities underway, this is the right time for me to step down.  Darden benefits from thousands of talented employees who work tirelessly to nourish and delight our guests every day.  I am confident that they, under the leadership of our Board and management team, will continue to make progress on the actions we are taking to reinvigorate restaurant performance and further enhance shareholder value."

Mr. Ledsinger commented, "Clarence has played an important role in leading Darden and our industry, successfully expanding Darden's footprint and restaurant portfolio with new brands.  As a restaurant company, Darden's value is driven in part by the strength and support of employees and the communities in which the Company operates.  Darden has excelled as well under Clarence's leadership.  The Board is profoundly appreciative of Clarence's substantial contributions to Darden, the Board and our work to provide long-term value to Darden shareholders."

Mr. Ledsinger continued, "Given Darden's many strengths, we expect an expeditious search process.  As we work to identify the Company's next CEO, Darden, its shareholders, employees and guests are well-served by the extraordinary depth and talent of our senior management team, including Gene Lee, Darden's Chief Operating Officer; Brad Richmond, Darden's Chief Financial Officer; Dave George, President of Olive Garden; Valerie Insignares, President of LongHorn Steakhouse; and Harald Herrmann, President of the Specialty Restaurant Group.  The positive results we are beginning to see within our operations as a result of the actions we are taking reinforce the Board's confidence in this team and in Darden's strategic direction."

Darden's Board affirmed that it is unwavering in its commitment to continue executing Darden's operating priorities, including the brand renaissance at Olive Garden, developing LongHorn into America's favorite steakhouse, building on the solid performance at the Specialty Restaurant Group, further optimizing the Company's cost structure and real estate assets, and maintaining a disciplined approach to capital allocation that reflects Darden's investment grade credit rating and record of returning capital to shareholders through share repurchase and the Company's current dividend.

Darden noted that, while still in the early stages, progress on its operating priorities is leading to enhanced performance throughout the Company.  For example: 

  • At Olive Garden, guest experience and satisfaction scores are improving across the system and are expected to translate into higher traffic trends over time.  Online ordering, including a redesigned web experience and the national launch of an online To-Go platform, is underway and strengthening the take-out business.  In fiscal 2014, the Company reimaged both the interior and exterior of one of its Revitalia restaurants. The new design is natural, up to date, comfortable and engaging.  Initial sales results of the remodeled restaurant are encouraging – the sales trends have improved by mid-single digits since the completion of the remodel and the installation of new signage. 
  • At Longhorn Steakhouse, cumulative same-restaurant sales results for the last five years have exceeded the Knapp-Track casual dining competitive benchmark by over 17%.  In fiscal 2014, LongHorn's same-restaurant sales grew 2.7% year-over-year and exceeded the industry by 3.8 percentage points.
  • The Specialty Restaurant Group continues to deliver solid performance.  In fiscal 2014, total sales exceeded $1.2 billion, a 25.2% increase from the prior year, and blended same-restaurant sales grew 1.6%.
  • As a result of the Company's aggressive cost management, general and administrative (G&A) expenses as a percentage of sales is expected to remain at approximately 5.0% following the Red Lobster sale, despite the lower revenue base.  In addition, in fiscal 2015, selling, general and administrative (SG&A) expenses as a percentage of sales are expected to be the lowest since Darden became a public company.  
  • As a result of Darden's strong cash flows and the proceeds from the Red Lobster sale, Darden shareholders will continue to benefit from an active share repurchase program, including a new share repurchase program of up to $700 million in fiscal 2015 and a strong quarterly dividend, which equates to $2.20 per share annually.  Darden has returned $1.2 billion to shareholders through share repurchase and dividends in the past three years.

About Clarence Otis 
Mr. Otis joined Darden in 1995 as Vice President and Treasurer, progressing to the position of Chief Financial Officer several years later.  He was appointed Chief Executive Officer of Darden in November 2004 and Chairman of Darden's Board in November 2005.  Prior to joining Darden, he served as Managing Director and Manager of Public Finance for Chemical Securities, Inc. (now JP Morgan Securities, Inc.), capping an 11 year career in investment banking.

A member of the New York Bar Association, Mr. Otis earned a Juris Doctor degree from Stanford Law School and worked as a securities attorney in New York City for four years prior to beginning his career in financial services.  He earned a bachelor's degree, magna cum laude, from Williams College in Williamstown, Mass., where he was elected a member of the Phi Beta Kappa Society.  He currently serves as a member of the school's Board of Trustees.  Mr. Otis also serves on the board of directors of VF Corporation, Verizon Communications, Inc. and the Federal Reserve Bank of Atlanta.

In 2012, Mr. Otis received the International Foodservice Manufacturers Association's (IFMA) Silver Plate Award which recognizes outstanding achievement and innovation in the foodservice industry.  In 2007, he was presented with a Horatio Alger Award and inducted as a lifetime member of the Horatio Alger Association of Distinguished Americans.

About Charles A. Ledsinger, Jr.
Mr. Ledsinger has been a member of Darden's Board of Directors since 2005 and was appointed as the Company's Independent Lead Director in 2012.  He brings to Darden significant real estate and franchising expertise, and a proven record of leading strong, profitable companies in the hospitality, restaurant and service industries.

Mr. Ledsinger is the former Vice Chairman, President and Chief Executive Officer of Choice Hotels International, one of the largest franchised lodging companies in the world with more than 6,300 hotels open in more than 35 countries and territories, and brands including Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion and Cambria Suites, among others.  Under his leadership, Choice established a business model built for growth, profitability and sustainability with a franchise system that is highly regarded as one of the most successful franchising strategies in the industry.

Mr. Ledsinger's career includes nearly 20 years at Promus (now Hilton) and its predecessor companies, where he managed the successful separation of Harrah's and Promus in a spin-off to create two publicly traded companies.  He also served as president and chief operating officer at St. Joe Company, Florida's largest private landowner and developer of master-planned communities, resorts, and commercial and industrial facilities. 

Mr. Ledsinger currently serves as Chairman and Managing Director of SunBridge Manager, LLC, an investment management firm.  He also serves as Chairman of the boards of directors of Realty Investment Company, Inc., a private operating and investment company, and Sunburst Hospitality Corporation, a private hotel and real estate operator.  In addition, Mr. Ledsinger is currently a director of FelCor Lodging Trust Incorporated, and previously served as a director of both Choice and Friendly Ice Cream Corp. 

About Darden
Darden Restaurants, Inc., (NYSE: DRI), the world's largest full-service restaurant company, owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales.  Headquartered in Orlando, Fla., and employing more than 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people.  In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row.  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.

Information About Forward-Looking Statements
Forward-looking statements in this communication regarding our expected ability to maintain our investment grade credit rating and dividend policy, our ability to retire outstanding debt and buy back stock, our ability to execute on our brand renaissance program and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, 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 made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. 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 (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, the outcome of any legal proceeding that may be instituted against Darden relating to the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, 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 including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, 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, 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 unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, 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.

Important Additional Information
The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from the Company's stockholders. The Company intends to file a preliminary proxy statement and proxy card with the U.S. Securities and Exchange Commission (the "SEC") in connection with any such solicitations of proxies from the Company's stockholders. Information regarding the names and interests of such participants in the Company's proxy solicitation is set forth in the Company's revocation solicitation statement, filed with the SEC on April 1, 2014 and will also be included in the applicable proxy statement. These documents are available free of charge at the SEC's website at www.sec.gov.

The Company will be mailing a definitive proxy statement and proxy card to the stockholders entitled to vote at the applicable meeting. WE URGE INVESTORS TO READ ANY PROXY STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able to obtain, free of charge, copies of any proxy statement and any other documents filed by the Company with the SEC in connection with the possible proxy solicitations at the SEC's website at www.sec.gov. In addition, copies will also be available at no charge at the Investors section of the Company's website at http://investor.darden.com/investors/investor-relations/default.aspx.

NEWS/INFORMATION



Corporate Relations



P.O. Box 695011



Orlando, FL 32869-5011


Darden Contacts:




(Analysts) Matthew Stroud

(407) 245-5288


(Media) Bob McAdam

(407) 245-5404





 

SOURCE Darden Restaurants, Inc.