2012 Financial Highlights

Fiscal Year Ended      
(In Millions, Except Per Share Amounts) May 27, 2012  May 29, 2011  May 30, 2010 
Sales $  7,998.7  $  7,500.2  $  7,113.1 
Earnings from Continuing Operations $     476.5  $     478.7  $     407.0 
Losses from Discontinued Operations, net of tax $       (1.0) $       (2.4) $       (2.5)
Net Earnings $     475.5  $     476.3  $     404.5 
Earnings per Share from Continuing Operations:      
    Basic $       3.66  $       3.50  $       2.92 
    Diluted $       3.58  $       3.41  $       2.86 
Net Earnings per Share:      
    Basic $       3.65  $       3.48  $       2.90 
    Diluted $       3.57  $       3.39  $       2.84 
Dividends Paid per Share $       1.72  $       1.28  $       1.00 
Average Shares Outstanding:      
    Basic 130.1  136.8  139.3 
    Diluted 133.2  140.3  142.4 
Red Lobster

Red Lobster ended the fiscal year with 704 restaurants and has the ultimate potential for 800 total locations. During the next several years, the brand will slow new-unit development to focus on remodeling existing restaurants. With its high return on sales and strong cash flow, Red Lobster serves an important role helping fund growth and our return of capital to shareholders.

Olive garden

Olive Garden ended the fiscal year with 792 restaurants and has the ultimate potential for 925 to 975 total locations. We expect to open more than 125 new restaurants by fiscal 2017, which will generate annual sales of $700 million and annual operating profit of $110 million. With its combination of a high return on sales, strong cash flows and meaningful new-unit capacity, Olive Garden is both a growth engine and growth funder within our portfolio.

Longhorn Steakhouse

LongHorn Steakhouse ended the fiscal year with 386 restaurants and has the ultimate potential for 600 to 800 total locations. We expect to open more than 200 new restaurants by fiscal 2017, which will generate annual sales of $650 million and annual operating profit of $90 million. With its current locations concentrated in the eastern third of the country, LongHorn Steakhouse's opportunity to expand nationwide makes it a valuable growth engine in our portfolio.

The Specialty Restaurant Group

The Specialty Restaurant Group ended the fiscal year with 110 restaurants and has the ultimate potential for over 350 total locations. We expect to open more than 100 new-restaurant units by fiscal 2017, which will generate annual sales of $650 million and annual operating profit of $80 million. With its strong cash flows, the Specialty Restaurant Group is a growth engine that is able to fund its own growth.

Same-restaurant sales growth

Marketing Initiatives

Our marketing teams are focused on developing initiatives to help drive same-restaurant sales growth while building brand equity and ensuring differentiated guest experiences. Among other things, in fiscal 2013: Olive Garden will introduce a new advertising campaign that puts a fresh face on the brand while also launching a new core menu that focuses on increasing everyday affordability and strengthening its value leadership position. Building on the success of its remodel initiative and "Real People" advertising campaign, Red Lobster plans to introduce a new core menu that addresses affordability and broadens the selection of non-seafood items. And LongHorn Steakhouse will launch a new advertising campaign that even more effectively communicates its unique brand promise.

To further strengthen our marketing capabilities, we're also embarking on a multi-year, enterprise-wide effort to build a robust digital technology platform and richer guest database. To maintain strong brand relevance, we recognize the need for a digital technology platform that supports the guest-facing applications that are becoming more and more expected as guests adopt more and more digitally enabled lifestyles. The platform will also enable us to capture the guest-specific information required to complement our broad-based advertising and promotion efforts with much more targeted direct marketing and relationship-building programs.

Same-restaurant sales growth

Restaurant Operations

Our restaurant operations teams are focused on delivering exceptional experiences for millions of guests every week across seven different brands in nearly 2,000 restaurant locations. Successfully delivering each brand's unique guest experience not only requires the commitment and dedication of our restaurant teams, but also a network of systems and support that gives our people time to make the human touch an even larger part of dining with us. Tools such as our proven and increasingly effective guest forecasting systems help ensure we're prepared with the right amount of food and the right amount of labor to serve our guests.

We're also working to better enable operations-driven sales growth and further strengthen operations talent development by implementing a new operations leadership structure at Red Lobster, Olive Garden and LongHorn Steakhouse. We're adding a new leadership role between our Senior Vice Presidents of Operations and our Directors of Operations. This new role – Regional Vice President or Managing Director – reports to a Senior Vice President of Operations and manages Directors of Operations. The change reduces the span of control of Senior Vice Presidents of Operations, allowing them to focus on identifying new tools and support and operations strategies to sustainably grow guest counts and sales in their divisions, while increasing the leadership attention dedicated to day-to-day, in-restaurant execution.

Supply Chain Automation

We are working to more fully automate our supply chain, from product pricing and demand forecasting through replenishment ordering and shipment to our restaurants. In addition, optimizing the interface with our manufacturing and distribution process, including storage, freight and receiving, is also foundational to this initiative. We believe this program can reduce costs $60 million to $65 million annually, and we are over halfway there.

Facilities Maintenance Centralization

Centralizing our facilities maintenance, when fully implemented, will allow restaurant Managers anywhere in the country to call a single 800 number to get help with their common restaurant maintenance needs. At that point, our national service center will take over, leveraging national pricing and a pre-approved set of vendors. This program should generate annual savings of $15 million to $20 million and, more importantly, allow our managers to spend more time with employees and guests.

Sustainable Practices

Sustainable restaurant operating practices are about changing practices to reduce the amount of water, energy and cleaning supplies used in our restaurants. Actions include installing low-flow water nozzles in our kitchens and restrooms, implementing power-up and power-down schedules for equipment, installing more energy-efficient lighting in our kitchens, parking lots and dining rooms, and adhering more closely to dining room temperature standards. This program can ultimately save $25 million to $30 million on an annual basis.

Labor Optimization

Labor optimization focuses on key areas such as improving guest count and labor scheduling, refining key restaurant team pay practices across Red Lobster, Olive Garden and LongHorn Steakhouse and identifying the optimal balance between full-time and part-time hourly employees at each brand. All this work was guided by our commitment to improve both the guest and employee experiences. These changes will allow us to save $40 million to $45 million on an annual basis.

Clarence Otis, Jr.
Chairman of the Board and Chief Executive Officer, Darden Restaurants, Inc.

Andrew H. Madsen
President and Chief Operating Officer, Darden Restaurants, Inc.

Michael W. Barnes
Chief Executive Officer of Signet Jewelers Limited, a specialty retail jeweler.

Dr. Leonard L. Berry
Presidential Professor for Teaching Excellence, Distinguished Professor of Marketing, and M.B. Zale Chair in Retailing and Marketing Leadership, Mays Business School, Texas A&M University.

Odie C. Donald
President of Odie Donald Investment Enterprises, LLC, a private investment firm. Retired President of DIRECTV, Inc., a satellite television service.

Christopher J. (CJ) Fraleigh
Former Chief Executive Officer of Sara Lee North America and Executive Vice President of Sara Lee Corporation, a global consumer products company.

Victoria D. Harker
Chief Financial Officer of Gannett Co., Inc., an international media and marketing solutions company.

David H. Hughes
Retired Chairman of the Board of Hughes Supply, Inc., a building supply company.

Charles A. Ledsinger, Jr.
Chairman of Realty Investment Company, Inc., a private operating and investment company, and Sunburst Hospitality Corporation, a private hotel and real estate operator. Retired Vice Chairman and Chief Executive Officer of Choice Hotels International, a lodging franchisor.

William M. Lewis, Jr.
Managing Director and Co-Chairman of Investment Banking for Lazard Ltd., an investment banking firm.

Senator Connie Mack, III
Partner and Senior Policy Advisor of Liberty Partners Group, a public policy consulting firm. Former Senior Policy Advisor for King & Spalding LLP, a law firm. Former U.S. Senator.

Michael D. Rose
Chairman of the Board of Midaro Investments, Inc., a privately held investment firm. Former Chairman of the Board of First Horizon National Corporation, a national financial services company.

Maria A. Sastre
Chief Operating Officer of Signature Flight Support Corporation, a fixed based operation and distribution network for business aviation services and retired Vice President, Latin America and Caribbean Sales and Marketing, Royal Caribbean Cruises Ltd., a global cruise line company.

William S. Simon
Executive Vice President of Wal-Mart Stores, Inc., a global retailer, and President and Chief Executive Officer of Walmart U.S.

Ronald Bojalad
Senior Vice President, Group Human Resources

JJ Buettgen
Senior Vice President, Chief Marketing Officer

John Caron
President, Olive Garden

David George
President, LongHorn Steakhouse

Valerie Insignares
Senior Vice President, Chief Restaurant Operations Officer

James Lawrence
Senior Vice President, Chief Supply Chain Officer

Eugene Lee
President, Specialty Restaurant Group

Kim Lopdrup
Senior Vice President, Business Development

Dave Lothrop
Senior Vice President, Corporate Controller

Robert McAdam
Senior Vice President, Government and Community Affairs

Daisy Ng
Senior Vice President, Chief Human Resources Officer

David Pickens
President, Red Lobster

Patti Reilly White
Senior Vice President, Chief Information Officer

Brad Richmond
Senior Vice President, Chief Financial Officer

Teresa Sebastian
Senior Vice President, General Counsel and Secretary

Suk Singh
Senior Vice President, Chief Development Officer