Red Lobster 2009 Annual Report Download - page 3

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1
To Our
Shareholders
Fiscal 2009 was clearly a tumultuous time in both the
global and domestic economies and in the full-service
dining industry. As dicult as the year’s developments
were, we believe they conrm that Darden is on the
right strategic path. In the Q&A that follows, we outline
why that’s the case and how – despite the challenges –
we continued to invest in our Company’s future. We’re
especially proud that, as we invested for our long-term
success, Darden was also able to deliver nancial results
from continuing operations for scal 2009 that once
again outpaced the industry.
• Sales from continuing operations increased
8.9 percent to $7.22 billion for scal 2009, which reects
inclusion of LongHorn Steakhouse and The Capital
Grille for the full year, as well as new restaurant growth
at each brand, the eect of an additional operating
week in scal 2009 and same-restaurant sales growth
at Olive Garden.
• Net earnings from continuing operations for
scal 2009 were $371.8 million, a 0.6 percent increase
from the $369.5 million earned in scal 2008. Diluted
net earnings per share from continuing operations for
scal 2009 were $2.65, a 3.9 percent increase from the
$2.55 earned in scal 2008. Acquisition and integration
costs and purchase accounting adjustments related to
the October 2007 acquisition of RARE Hospitality (RARE)
reduced diluted net earnings per share from continuing
operations by approximately 10 and 19 cents in scal
2009 and 2008, respectively.
• Excluding acquisition and integration costs
and purchase accounting adjustments related to
the RARE acquisition, diluted net earnings per share
from continuing operations were $2.75 in scal 2009,
an increase of 0.4 percent compared to the $2.74 earned
inscal 2008 on the same basis. The additional operating
week in scal 2009 contributed approximately six cents
of diluted net earnings per share for the year.
• In scal 2009, net earnings from discontinued
operations were $0.4 million, and diluted net earnings
per share from discontinued operations were $0.00,
related primarily to Smokey Bones Barbeque & Grill,
which was sold in January 2008. This compares to net
earnings and diluted net earnings per share from
discontinued operations of $7.7 million and $0.05,
respectively, in scal 2008. When results from discon-
tinued and continuing operations are combined, our
diluted net earnings per share were $2.65 and $2.60
in scal 2009 and 2008, respectively.
• Combined U.S. same-restaurant sales for Olive
Garden, Red Lobster and LongHorn Steakhouse declined
1.4 percent in scal 2009, which reects the year’s
challenging operating environment. This is, however,
more than four percentage points favorable to the
5.6 percent decline for the Knapp-Track™ benchmark of
U.S. same-restaurant sales excluding Darden. U.S. same-
restaurant sales increased 0.3 percent at Olive Garden and
decreased 2.2 percent and 5.6 percent at Red Lobster
and LongHorn Steakhouse, respectively.
• We continued the buyback of Darden common
stock in scal 2009, spending $144.9 million to repurchase
5.1 million shares. Since beginning our share repurchase
program in 1995, we have repurchased approximately
152 million shares of our common stock for more than
$2.9 billion.
1