Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - DARDEN RESTAURANTS INC | d768304d8k.htm |
| EX-99.1 - NEWS RELEASE DATED AUGUST 4, 2014 - DARDEN RESTAURANTS INC | d768304dex991.htm |
 Update On
Successful Red Lobster Sale Process
AUGUST 4, 2014
Exhibit 99.2 |
 Forward-Looking Statement
These materials may contain forward-looking statements concerning the Company’s
expectations, goals or objectives. 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 performance of the Company
following the sale of Red Lobster 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, 2014.
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. |
 •
Sale of Red Lobster, completed July 28, was the culmination of a
robust process and deliberate review designed to maximize
value and minimize risks associated with continuing to own the business
•
After careful evaluation, the Board was certain that halting a robust Red Lobster sale
process mid-course would have: •
Red Lobster sale better positions Darden for sustained growth and value creation
•
$2.1
billion
represents
a
premium
multiple
compared
to
comparable
restaurant
deals¹
and
exceeded
industry
analysts’
expected valuation ranges for the business
—
Forward multiple even higher
given anticipated continued financial declines in performance
Red Lobster Sale Recap
DARDEN BOARD MONETIZED RED LOBSTER AT AN ATTRACTIVE PRICE AND IS
NOW
FOCUSED ON OLIVE GARDEN’S TURNAROUND WHERE THERE IS SIGNIFICANT
OPPORTUNITY FOR VALUE CREATION
December 19, 2013
Announced Plans to
Separate Red Lobster
May 16, 2014
Announced
Sale of Red Lobster
July 28, 2014
Red Lobster
Sale Closed
Selected Key Dates of Red Lobster Process
Early 2013
Darden Undertook an Extensive
Strategic Review of its Portfolio
April 29, 2014
Received Final Bids
For Red Lobster
1
Comparable transaction multiples are shown on page 9 of this presentation.
Starboard purchased nearly half of its current total investment in Darden AFTER our December
19th announcement, representing more than $200 million of Darden stock and an
exponential increase from its small prior ownership position March 10, 2014
Filed Form 10 for Red
Lobster
—
Materially reduced the value achieved given the sustained and continuing declines in Red
Lobster’s operating performance
—
Exposed Darden to significant financial performance volatility and distracted from Olive
Garden’s brand renaissance —
Likely resulted in a failed process as bidders strongly advised Darden that the uncertainty
associated with a shareholder approval closing condition would be unacceptable
|
 Strategic
Rationale for Red Lobster Sale •
Red Lobster was experiencing long-term erosion in total traffic and had historically
exhibited significant same-restaurant sales and traffic volatility, adversely
affecting Darden’s performance •
Red Lobster’s growth profile and capital priorities were meaningfully different from the
remainder of Darden •
Sale meaningfully reduced operating and financial volatility of Darden and improved future
growth trajectory Cumulative Sales Growth FY2009 to FY2014
Darden Is Better Positioned for Growth Post Red
Lobster Sale
RED LOBSTER WAS SOLD BECAUSE IT IS A STRUCTURALLY CHALLENGED BUSINESS THAT WAS A DRAG
ON DARDEN’S GROWTH AND DIMINISHED THE SIGNIFICANCE OF THE STRONG PERFORMANCE AT OUR
HIGHER GROWTH BRANDS AND OUR TURNAROUND EFFORTS AT OLIVE GARDEN
5Yr Sales Growth
($
billions)¹
5Yr
Sales
CAGR¹
5Yr EBITDA
CAGR¹
FY14 EBITDA
Margin
Darden Overall
$ 1.7
+4.3%
+1.4%
10.8%
Darden Ex. Red Lobster
1.8
+6.9
+4.5
11.3
Improvement
+$0.1
+2.6%
+3.1%
+50bps
Red Lobster sale improves
growth trajectory and
reduces volatility
Note: EBITDA figures are unaudited and Non-GAAP, please refer to reconciliation on page
17. 1
Time frame: Fiscal year 2009 through fiscal year 2014.
Darden excl. Red Lobster +40%
Darden Overall +23%
Red Lobster (5%)
40%
30%
20%
10%
0%
(10%)
Jun-2009
FY2010
FY2011
FY2012
FY2013
FY2014 |
 Starboard Has
Misled Investors Regarding the Red Lobster Sale
STARBOARD HAS REPEATEDLY MISREPRESENTED THE FACTS IN ORDER TO FURTHER
ITS OWN AGENDA
1
2
4
3
5
6
Starboard Claims
Reality
Red Lobster sale was rushed
•
Decision
to
sell
was
made
after
an
extensive
strategic
review
by
Darden
that
began in early 2013 and on the heels of a sustained decade long period of
declining trends at Red Lobster
Darden received a negative value for Red
Lobster OpCo
•
Starboard erroneously attributes all transaction taxes, transaction expenses and
debt breakage costs to OpCo and also carelessly double counts transaction
expenses, resulting in analytical errors amounting to nearly half a billion dollars
in value
Value was destroyed as there were viable
“tax-efficient”
alternatives readily available
•
Sale/leaseback transaction resulted in premium valuation for real estate and
avoided valuation issues related to publicly-traded REIT such as single tenant
exposure, limited diversification and relatively high switching costs
Significant debt breakage costs were value
destructive
•
Through careful liability management afforded by a competitive process, the
after-tax net cash premium Darden will incur is negligible
Darden blatantly ignored a shareholder vote
to hold a special meeting
•
After serious consideration, the risk to shareholder value of effectively
terminating a process that had been developed before virtually all of
Starboard’s investment and which was generating significant competitive
tension
to
the
benefit
of
shareholders,
led
the
Board
to
proceed
with
the
Red
Lobster sale, strongly believing it was in the best interest of shareholders
The Board destroyed $1 billion in value by
electing to pursue the sale of Red Lobster
•
The
sale
allowed
Darden
to
monetize
Red
Lobster
at
an
attractive
price
and
avoided
risk
of
further
performance
deterioration
harming
Darden
and
its
shareholders, and Starboard’s claims conveniently ignore continuing negative
operating trends that began well before their investment
|
 Peak in Average
Weekly Guests Was Over a
Decade
Ago,
in
2002
Average Weekly Guests Have Been in Decline Since
2002
1
Early 2013
Undertake Extensive
Strategic Review
December 2013
Announce Plans
to Separate Red
Lobster
April / May 2014
Received Final
Bids / Announce
Sale of
Red Lobster
July 2014
Red Lobster
Sale Close
AVERAGE WEEKLY GUEST COUNT PER STORE AT RED LOBSTER HAS FALLEN 21% OVER
THE PAST DECADE
After over 15 years of growth
General Mills elected to spin-off its
restaurant group, which included
Red Lobster, in 1995
Note: Average weekly guest counts are per store.
1
Time frame: Fiscal year 2004 through fiscal year 2014 (trailing twelve month average).
Key Reasons for Long Term Structural Decline in Red Lobster’s Operations:
3,945
3,664
3,650
3,664
3,878
4,110
4,175
4,307
4,285
4,014
3,989
4,090
3,994
3,946
3,750
3,529
3,461
3,543
3,471
3,151
1
Economic and financial pressure on the middle class consumer increased and growth in household
income overall slowed; Red Lobster’s less affluent core guest impacted heavily Increased competition as
increased shrimp availability made it easy for non-seafood specialists to also offer shrimp
Persistent upward pressure on other seafood costs made it difficult for Red Lobster to take
advantage of its “beyond shrimp” differentiation
Aggressive promotions brought guests into the restaurants, but were not sustainable once
prices normalized
|
 Red
Lobster’s Financial Trends Continued to Deteriorate Post Transaction Announcement
1
December 2013
Announce Plans to
Separate Red Lobster
April / May 2014
Received Final Bids /
Announce Sale of Red Lobster
Early 2013
Undertake Extensive
Strategic Review
Note: Quarterly figures are unaudited. All growth rates are shown YoY.
July
Red Lobster
Sale Close
(4.0)%
(3.3)%
(5.1)%
2.3%
(3.3)%
(4.5)%
(6.5)%
(5.3)%
Q1 FY13
Q2 FY13
Q3 FY13
Q4 FY13
Q1 FY14
Q2 FY14
Q3 FY14
Q4 FY14
Red Lobster vs. Knapp
-Track
TM
Same-
Restaurant Sales
(4.6)%
(2.2)%
(4.4)%
4.2%
(5.9)%
(7.4)%
(14.3)%
(9.7)%
Q1 FY13
Q2 FY13
Q3 FY13
Q4 FY13
Q1 FY14
Q2 FY14
Q3 FY14
Q4 FY14
Traffic
(2.6)%
(2.7)%
(6.6)%
3.2%
(5.2)%
(4.5)%
(8.8)%
(5.6)%
Q1 FY13
Q2 FY13
Q3 FY13
Q4 FY13
Q1 FY14
Q2 FY14
Q3 FY14
Q4 FY14
Same-Restaurant Sales |
 •
$2.1 billion represented approximately 9x April LTM EBITDA and expected to be closer to
approximately 10x as of transaction close, compared with approximately 8x for
comparable casual dining transactions
•
Combined with Starboard’s latest estimates for rent expense, Red Lobster OpCo was
expected to have less than $100 million of EBITDA as of transaction close
•
Red
Lobster
sale
allowed
Darden
to
monetize
a
declining
asset
at
an
optimal
price
with
proceeds used for buybacks and debt retirement which benefits shareholders more than
carrying the risk and volatility associated with owning Red Lobster
•
Red Lobster’s EBITDA declined 26% YoY from FY13 to FY14; same-restaurant sales well
below Knapp-Track
TM
•
Given deteriorating trends at Red Lobster and multiple turnaround attempts, the divestiture
is projected to be medium and long-term accretive
Starboard Wrongly Asserts That Red Lobster OpCo Was
Sold For a Negative Value
2
Starboard’s
analytical errors
amount to nearly
half a billion dollars
in total value
Value Paid For Red Lobster OpCo Was Significantly More Than Starboard Claims
Comparable Casual
Dining Transactions
LTM EV /
EBITDA
Tilman Fertitta / Landry's
8.0x
Oak Hill / Dave & Buster's
6.9x
Kelso & Co. / Logan's Roadhouse
7.8x
Golden Gate Capital /
California Pizza Kitchen
7.8x
Landry's / McCormick &
Schmick's Seafood
7.9x
Fidelity National / O’Charleys
5.8x
Centerbridge / P.F. Chang's
8.4x
Angelo Gordon / Benihana
9.1x
Thomas
H
Lee
/
Fogo
De
Chao
2
8.0x
Apollo / CEC Fidelity Entertainment
7.7x
Median
7.9x
Starboard then chose
to ignore the tax
implications on selling
Red Lobster real estate
in a letter published
May 22, 2014, by
hundreds of millions of
dollars
Starboard’s recent
letter published on July
15, 2014 also double
counted debt breakage
and transaction costs in
misleading statements
amounting to over
$100 million of value
On March 31, 2014,
Starboard quoted ~$1.5
billion of value for the
Red Lobster real estate
portfolio in the context
of a potential REIT Spin,
but its assumptions
proved to be faulty¹
Note: $ in millions, EBITDA figures are unaudited and Non-GAAP, please refer to
reconciliation on page 17. 1
Starboard assumed $106 million in rent capitalized at a 14.6x REIT trading multiple in March
31 presentation. Starboard later estimated rental income of $119 million based 2
Source: Duff and Phelps.
on the ARCP transaction press release dated May 16, 2014, which would imply a multiple of
12.6x. |
 Tax-Efficient Alternatives For Real Estate Not Viable
3
Darden
REIT
Red Lobster
REIT
Key Differences
Eliminate
Valuation risk
X
X
•
Valuation is crystalized in a partial sale /
leaseback, whereas a REIT spin is subject to
public market trading
Avoid Discount
to Peers
X
X
•
There are many factors that indicate a Darden
REIT would most likely trade at a significant discount to
its NNN REIT peers; ARCP was also criticized for these
reasons (i.e. lower credit rated tenant, negative SRS)
following its acquisition of Red Lobster Real Estate¹
Certainty and
speed to
execute
transaction
X
X
•
It would take 12 -
18 months for a REIT spin to be
completed and the tax free status is dependent
on IRS tax determinations
Avoid Debt
Breakage
X
X
•
A Darden REIT could have resulted in significant
debt breakage costs (including make-whole payments on
existing bonds, despite Starboard’s assertions to the
contrary)
Maintain
Operational
Flexibility
X
X
•
Ability to easily close or relocate
underperforming units
•
Provides further evidence that Starboard's
assertions regarding availability of "tax-efficient"
buyers/structures is unrealistic
and not based on facts
•
Ultimately, value maximized through sale
to large diversified REIT
•
Even larger buyers had reduced interest
given tenant concentration concerns
•
Size of Red Lobster real estate portfolio
would negatively impact tenant diversity
for smaller buyers
•
Darden considered all potential transaction
structures
•
Broad group of real estate buyers were
contacted during publicly announced Red
Lobster process
Considerations
Red Lobster REIT Was Not a Viable “Tax-Efficient” Alternative
Starboard claims that value was destroyed as there were viable “tax-efficient”
alternatives readily available
Sale /
Leaseback
¹
Please
refer
to
Darden’s
March
3 ,
2014
investor
presentation
for
reasons
that
a
REIT
might
trade
at
a
discount.
Please
also
refer
to
Forbes’
article
dated
June
30 ,
2014.
Expansive Real Estate Process Did Not
Result in Any “Tax-Efficient" Proposals
rd
th |
 Starboard
Misrepresented Debt Breakage Costs 4
THROUGH CAREFUL LIABILITY MANAGEMENT, DARDEN DID NOT INCUR FINANCIALLY
SIGNIFICANT CASH COSTS WHEN PAYING DOWN DEBT
•
Estimated 2014 $0.43 EPS impact, resulting from loan breakage and related unamortized
non-cash charges, ameliorated by retiring $1.0 billion of debt with transaction
cash proceeds, resulting in minimal $3 million after-tax cash cost
•
The cash efficiency of this effort was accomplished through careful liability management
afforded by a competitive process selectively applied to a limited amount of the debt
portfolio Included individual negotiations with private placement debt holders that
yielded a substantial discount to make whole premiums
Waterfall
tender
process
focused
on
tranches
with
lower
premiums
and
maximum
tax
shield
opportunities
Private placement debt has settled and tender offer settlement of public notes expected in
early August
Tax benefit of non-cash charges significantly accelerated tax benefits of unamortized
deferred costs
•
This is to be contrasted with a retirement of the entire debt portfolio likely required under
certain scenarios
proposed
by
Starboard,
which
would
clearly
necessitate
much
more
costly
make
whole
call
premium payments |
 After Careful
Consideration of Shareholder Interests the Board Decided to Proceed with the Sale of Red
Lobster 5
•
On
December
19,
2013
Darden
announced
the
Red
Lobster
process
and
garnered
interest
from
numerous
financial,
strategic
and
real estate buyers
•
On April 29, 2014 Darden received final bids for Red Lobster
Key Considerations For the Board
Clear Messages Received From Shareholders
•
The sale of Red Lobster was highly attractive both financially
and strategically
•
The real estate investment climate is excellent and the debt
markets are currently very strong
•
The competitive Red Lobster process would be extremely
difficult to restart if it were interrupted and significantly
delayed
•
Delay would risk further decline in Red Lobster’s performance
continuing to harm Darden
•
Delay would most likely result in a less attractive acquisition
price or a failed process
•
Many shareholders expressed concern about a spin-off of Red
Lobster because either the spun-off entity’s market
capitalization would be too small to meet their investment
guidelines or they were reluctant to hold Red Lobster shares
for a potentially extended turnaround period
•
Many shareholders expressed the view that an attractive sale
of Red Lobster would be a favorable outcome for Darden
shareholders
•
Many shareholders indicated that, while they supported the
call of the special meeting, they had not decided how they
would vote at the meeting and noted that the special meeting
request did not distinguish between a spin and a sale
THE DECISION TO PROCEED WITH THE SALE WAS MADE AFTER CAREFUL CONSIDERATION, TAKING INTO
ACCOUNT SHAREHOLDER FEEDBACK AND THE RISK OF TERMINATING A HIGHLY COMPETITIVE RED
LOBSTER SALE PROCESS
Following Starboard’s announcement that it would seek a special shareholder meeting
regarding the Red Lobster separation, bidders strongly advised Darden 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 —
Darden’s Board was faced with the decision of either effectively terminating the process
or proceeding with an attractive transaction
which
had
been
developed
over
nearly
six
months
in
a
process
that
created
significant
competitive
tension
—
Darden’s Board concluded that the best interests of Darden and its shareholders would be
served by proceeding with the sale |
 6
IF THE TRANSACTION HAD BEEN DELAYED UNTIL JULY, WE BELIEVE IT WOULD HAVE
RESULTED IN A VALUATION SUBSTANTIALLY LESS THAN THE $2.1 BILLION
ACHIEVED
Note: $ in millions, except per share data, EBITDA figures are unaudited and Non-GAAP,
please refer to reconciliation on page 17. Early 2013
Undertook Extensive
Strategic Review
December 2013
Announced Plans to
Separate Red Lobster
April /May 2014
Received Final Bids /
Announced Sale of Red Lobster
July 2014
Red Lobster
Sale Closed
Delaying the Red Lobster Sale Would Have Materially
Reduced Value Achieved
12.9 %
12.9 %
12.0 %
11.7 %
10.7 %
10.2 %
9.7 %
9.3 %
Q1 FY13
Q2 FY13
Q3 FY13
Q4 FY13
Q1 FY14
Q2 FY14
Q3 FY14
Q4 FY14
LTM EBITDA Margin
$232
$229
$197
$191
$158
$139
$119
$104
Q1 FY13
Q2 FY13
Q3 FY13
Q4 FY13
Q1 FY14
Q2 FY14
Q3 FY14
Q4 FY14
LTM EBIT ($ in millions)
$342
$342
$311
$307
$277
$261
$243
$228
Q1 FY13
Q2 FY13
Q3 FY13
Q4 FY13
Q1 FY14
Q2 FY14
Q3 FY14
Q4 FY14
LTM EBITDA ($ in millions) |
 Analysts
Recognize the Value We Achieved With the Sale of Red Lobster…
6
“The 9x EBITDA valuation for the trailing 12 months through February still
represents a reasonable deal
for
DRI,
in
our
view,
while
providing
an
opportunity
for
DRI
to
(1)
strengthen
its
balance
sheet;
and
(2)
turn
operational
focus
toward
turning
around
operations
at
the
flagship
Olive
Garden
concept.”
(Miller Tabak & Co., 16-May-2014)
(Wunderlich Securities, 16-May-2014)
“Darden rids itself of its most troubled business. And, the sale price is about
what the Street was expecting.” (Janney Montgomery Scott LLC,
16-May-2014) “We believe Darden received a fair price for the Red
Lobster business, comparable with similar restaurant transactions and
slightly above our estimated stand-alone valuation.” (Telsey Advisory Group,
19-May-2014) “We
recognize
[the
sale
of
Red
Lobster]
as
a
positive
development
for
Darden,
allowing
management
to:
1)
jettison
its
struggling
Red
Lobster
division
for
what
appears
to
be
a
fair
price
(quoted
at
~9x
Red Lobster trailing 12 month EBITDA).” |
 …And the
Positive Implications for Darden “Absent recent activist involvement, we believe
investors would have appreciated the strategic merit of such
a
transaction;
monetizing
the
most
volatile
brand,
while
allowing
for
renewed
focus
on
resurrecting the
Olive Garden brand.”
(Barclays Bank PLC, 16-May-2014)
“We view [the sale of Red Lobster] as a positive for Darden shareholders,
as it will enhance the company’s overall growth and margin profile, reduce the
company’s exposure to seafood commodity cost swings, improve Darden’s credit
metrics, and allow the company to return cash to shareholders.” (Morningstar
Equity Research, 16-May-2014) “We
believe
that
the
sale
of
Red
Lobster
is
a
long-term
positive
for
DRI
as
it
reduces
the
volatility
of
the
Company’s financial performance and will provide for reduction in debt.”
(Sterne, Agee & Leach, Inc., 16-May-2014)
“The
net
impact
of
this
transaction
is
that
Darden
will
be
a
high
dividend
yielding
company
without
the
volatility
and ongoing earnings drag from Red Lobster.”
(RBC Capital Markets, 16-May-2014)
“The sale of RL should result in less earnings volatility for DRI, but should
allow management to focus on
improving
sales
at
Olive
Garden,
as
we
believe
improved
sales
trends
at
OG
are
critical
to
driving EPS
growth and meaningful share appreciation for DRI.”
(KeyBanc Capital Markets, 19-May-2014)
6 |
 Red Lobster
Sale: Delivering on Our Ongoing Commitment to Darden's Strategic and Financial
Transformation Objectives for Darden
Achieved By the
Red Lobster Sale
Transform Darden’s restaurant portfolio into two independent companies that can
each focus on separate and distinct opportunities to maximize shareholder value
Allow “New Darden”
and “New Red Lobster”
to better serve increasingly divergent
guest targets
Maintain current dividend
Maintain investment grade credit metrics at Darden
Avoid complexity that could derail Olive Garden improvement
Maintain operational and financial flexibility |
 Non-GAAP
EBITDA Reconciliation 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. 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
$
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%
Twelve Months Ended:
EBT:
Earnings Before Taxes |
 |