DARDEN RESTAURANTS INC

Previous wording

To facilitate review of our discussion and analysis, the following table sets forth our financial results for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the quarters and six months ended November 26, 2023 and November 27, 2022.

Current wording

To facilitate review of our discussion and analysis, the following table sets forth our financial results for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the quarters and nine months ended February 25, 2024 and February 26, 2023.

Previous wording

The following table details the number of company-owned restaurants currently reported in continuing operations that were open at the end of the second quarter of fiscal 2024, compared with the number open at the end of fiscal 2023 and the end of the second quarter of fiscal 2023.

Current wording

The following table details the number of company-owned restaurants currently reported in continuing operations that were open at the end of the third quarter of fiscal 2024, compared with the number open at the end of fiscal 2023 and the end of the third quarter of fiscal 2023.

Previous wording

•Total sales increased 9.7% and 10.6% to $2.73 billion and $5.46 billion for the second quarter and six months of fiscal 2024 compared to $2.49 billion and $4.93 billion for the second quarter and six months of fiscal 2023 driven by sales from the addition of 78 company-owned Ruth's Chris Steak House (Ruth’s Chris) restaurants, blended same-restaurant sales increases of 2.8%1 and 3.9% and 45 net new restaurants.

Current wording

•Total sales increased 6.8% and 9.2% to $2.97 billion and $8.43 billion for the third quarter and nine months of fiscal 2024 compared to $2.79 billion and $7.72 billion for the third quarter and nine months of fiscal 2023 driven by sales from the addition of 79 company-owned Ruth's Chris Steak House (Ruth’s Chris) restaurants and 53 other net new restaurants, partially offset by a blended same-restaurant sales decrease of (1.0)%1 in third quarter. Same-restaurant sales increased by 2.2% for the nine months ended fiscal 2024.

Previous wording

•Our net earnings from continuing operations were $212.3 million and $407.1 million for the second quarter and six months of fiscal 2024 compared to $187.5 million and $381.1 million for the second quarter and six months of fiscal 2023. As a result of the acquisition of Ruth’s Chris and related integration efforts, we incurred expenses of approximately $12.8 million ($9.6 million, net of tax) and $37.6 million ($31.8 million, net of tax) during the second quarter and six months of fiscal 2024, respectively, which are included in general and administrative expenses, impairment, net and interest expense in our consolidated statements of earnings.

Current wording

•Our net earnings from continuing operations were $313.4 million and $720.5 million for the third quarter and nine months of fiscal 2024 compared to $286.8 million and $667.9 million for the third quarter and nine months of fiscal 2023. As a result of the acquisition and related integration efforts, we incurred expenses of approximately $6.8 million ($2.0 million, net of tax) and $44.4 million ($33.8 million, net of tax) during the quarter and nine months ended February 25, 2024, respectively, which are included in general and administrative expenses, impairment, net and interest expense in our consolidated statements of earnings.

Previous wording

•Reported diluted net earnings per share from continuing operations were $1.76 and $3.35 for the second quarter and six months of fiscal 2024 compared to $1.52 and $3.09 for the second quarter and six months of fiscal 2023.

Current wording

•Reported diluted net earnings per share from continuing operations were $2.60 and $5.95 for the third quarter and nine months of fiscal 2024 compared to $2.34 and $5.42 for the third quarter and nine months of fiscal 2023.

Previous wording

We expect sales for fiscal 2024 to be approximately $11.5 billion, driven by same-restaurant sales growth of 2.5 to 3.0 percent 1 and approximately 50 to 55 new restaurant openings inclusive of Ruth’s Chris new restaurant openings. Additionally, we expect capital expenditures incurred to build new restaurants, remodel and maintain existing restaurants and for technology initiatives to be approximately $600 million.

Current wording

We expect sales for fiscal 2024 to be approximately $11.4 billion, driven by same-restaurant sales growth of 1.5 to 2.0 percent 1 and approximately 50 to 55 new restaurant openings inclusive of Ruth’s Chris new restaurant openings. Additionally, we expect capital expenditures incurred to build new restaurants, remodel and maintain existing restaurants and for technology initiatives to be approximately $600 million.

Previous wording

Other Business’ sales increase for the second quarter of fiscal 2024 was primarily driven by revenue from new restaurants offset by U.S. same-restaurant sales decreases. The decrease in same-restaurant sales for the second quarter of fiscal 2024 resulted from a 3.4 percent decrease in same-restaurant guest counts offset by a 2.5 percent increase in average check. Other Business’ sales increase for the six months of fiscal 2024 was primarily driven by revenue from new restaurants and by U.S. same-restaurant sales increases. The increase in U.S. same-restaurant sales for the six months of fiscal 2024 resulted from a 2.9 percent increase in average check offset by a 2.5 percent decrease in same-restaurant guest counts.

Current wording

Olive Garden’s sales increase for the third quarter of fiscal 2024 was primarily driven by revenue from new restaurants offset by same-restaurant sales decreases. The decrease in U.S. same-restaurant sales for the third quarter of fiscal 2024 resulted from a 3.8 percent decrease in same-restaurant guest counts offset by a 2.1 percent increase in average check. Olive Garden’s sales increase for the nine months of fiscal 2024 was primarily driven by U.S. same-restaurant sales increases combined with revenue from new restaurants. The increase in U.S. same-restaurant sales for the nine months of fiscal 2024 resulted from a 3.9 percent increase in average check offset by a 1.2 percent decrease in same-restaurant guest counts.

Previous wording

LongHorn Steakhouse’s sales increase for the second quarter and six months of fiscal 2024 was primarily driven by same-restaurant sales increases combined with revenue from new restaurants. The increase in same-restaurant sales for the second quarter of fiscal 2024 resulted from a 6.3 percent increase in average check offset by a 1.3 percent decrease in same-restaurant guest counts. The increase in U.S. same-restaurant sales for the six months of fiscal 2024 resulted from a 6.4 percent increase in average check combined with a 0.1 percent increase in same-restaurant guest counts.

Current wording

LongHorn Steakhouse’s sales increase for the third quarter and nine months of fiscal 2024 was primarily driven by same-restaurant sales increases combined with revenue from new restaurants. The increase in same-restaurant sales for the third quarter of fiscal 2024 resulted from a 5.2 percent increase in average check offset by a 2.7 percent decrease in same-restaurant guest counts. The increase in U.S. same-restaurant sales for the nine months of fiscal 2024 resulted from a 5.9 percent increase in average check offset by a 0.9 percent decrease in same-restaurant guest counts.

Previous wording

Fine Dining’s sales increase for the second quarter and six months of fiscal 2024 was primarily driven by the acquisition of Ruth’s Chris, offset by same-restaurant sales decreases. The decrease in same-restaurant sales for the second quarter of fiscal 2024 resulted from a 6.0 percent decrease in same-restaurant guest counts offset by a 4.5 percent increase in average check. The decrease in U.S. same-restaurant sales for the six months of fiscal 2024 resulted from a 6.5 percent decrease in same-restaurant guest counts offset by a 4.5 percent increase in average check.

Current wording

Fine Dining’s sales increase for the third quarter and nine months of fiscal 2024 was primarily driven by the acquisition of Ruth’s Chris, offset by same-restaurant sales decreases. The decrease in same-restaurant sales for the third quarter of fiscal 2024 resulted from a 7.0 percent decrease in same-restaurant guest counts offset by a 5.1 percent increase in average check. The decrease in U.S. same-restaurant sales for the nine months of fiscal 2024 resulted from a 6.7 percent decrease in same-restaurant guest counts offset by a 4.8 percent increase in average check.

Previous wording

Olive Garden’s sales increase for the second quarter and six months of fiscal 2024 was primarily driven by U.S. same-restaurant sales increases combined with revenue from new restaurants. The increase in U.S. same-restaurant sales for the second quarter of fiscal 2024 resulted from a 4.1 percent increase in average check. The increase in U.S. same-restaurant sales for the six months of fiscal 2024 resulted from a 5.0 percent increase in average check combined with a 0.1 percent increase in same-restaurant guest counts.

Current wording

Other Business’ sales increase for the third quarter and nine months of fiscal 2024 was primarily driven by revenue from new restaurants partially offset by U.S. same-restaurant sales decreases. The decrease in same-restaurant sales for the third quarter of fiscal 2024 resulted from a 5.0 percent decrease in same-restaurant guest counts offset by a 2.5 percent increase in average check. The decrease in U.S. same-restaurant sales for the nine months of fiscal 2024 resulted from a 3.3 percent decrease in same-restaurant guest counts offset by a 2.7 percent increase in average check.

Previous wording

The following table sets forth selected operating data as a percent of sales for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the quarters and six months ended November 26, 2023 and November 27, 2022.

Current wording

The following table sets forth selected operating data as a percent of sales for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the quarters and nine months ended February 25, 2024 and February 26, 2023.

Previous wording

•Food and beverage costs decreased as a percent of sales primarily due to a 1.7% impact from pricing leverage.

Current wording

•Food and beverage costs decreased as a percent of sales primarily due to a 1.1% impact from pricing leverage and a 0.4% impact from mix and other, offset by a 0.5% impact from inflation.

Previous wording

•Restaurant labor costs decreased as a percent of sales primarily due to a 1.1% impact from sales leverage, a 0.4% productivity improvement and a 0.3% impact related to brand mix including Ruth’s Chris, partially offset by a 1.5% impact from inflation.

Current wording

•Restaurant expenses increased as a percent of sales primarily due to a 0.4% impact from inflation and a 0.2% impact related to brand mix, including Ruth’s Chris, partially offset by a 0.4% impact from sales leverage and other.

Previous wording

•Marketing expenses increased as a percent of sales primarily due to increased marketing and media.

Current wording

•Marketing expenses increased as a percent of sales primarily due to increased marketing and media spend.

Previous wording

•General and administrative expenses increased as a percent of sales primarily due to a 0.6% impact from the Ruth’s Chris transaction and integration costs, a 0.5% impact from incentive pay accrual, a 0.1% impact from inflation and a 0.1% impact from brand mix, partially offset by a 0.2% impact from sales leverage.

Current wording

•General and administrative expenses decreased as a percent of sales primarily due to a 0.3% impact from incentive pay accrual and a 0.2% impact from sales leverage and other, partially offset by a 0.2% impact from Ruth’s Chris transaction and integration costs and a 0.1% impact from inflation.

Previous wording

•Depreciation and amortization expenses increased as a percent of sales primarily due to the acquisition of Ruth’s Chris as well as overall capital expenditures.

Current wording

•Depreciation and amortization expenses increased as a percent of sales primarily due to capital expenditures and the acquisition of Ruth’s Chris.

Previous wording

•Food and beverage costs decreased as a percent of sales primarily due to a 1.9% impact from pricing leverage, partially offset by a 0.2% impact from inflation.

Current wording

•Food and beverage costs decreased as a percent of sales primarily due to a 1.3% impact from pricing leverage, and a 0.4% impact from mix and other, partially offset by a 0.3% impact from inflation.

Previous wording

•Restaurant labor costs decreased as a percent of sales primarily due to a 1.4% impact from sales leverage, a 0.4% impact from productivity improvement and a 0.2% impact related to brand mix including Ruth’s Chris, partially offset by a 1.7% impact from inflation.

Current wording

•Restaurant labor costs decreased as a percent of sales primarily due to a 1.2% impact from sales leverage, a 0.3% impact from productivity improvement and a 0.2% impact related to brand mix, including Ruth’s Chris, partially offset by a 1.6% impact from inflation.

Previous wording

•Restaurant expenses decreased as a percent of sales primarily due to a 0.8% impact from sales leverage, partially offset by a 0.5% impact from inflation and a 0.2% impact related to brand mix including Ruth’s Chris.

Current wording

•Restaurant expenses decreased as a percent of sales due to a 0.5% impact from sales leverage, which was almost completely offset by the impact from inflation.

Previous wording

•Marketing expenses increased as a percent of sales primarily due to increased marketing and media.

Current wording

•Marketing expenses increased as a percent of sales primarily due to increased marketing and media spend.

Previous wording

•General and administrative expenses increased as a percent of sales primarily due to a 0.5% impact from incentive pay accrual, 0.2% impact from Ruth’s Chris transaction and integration costs and a 0.2% impact from inflation, partially offset by a 0.3% impact from sales leverage.

Current wording

•General and administrative expenses increased as a percent of sales primarily due to a 0.5% impact from the Ruth’s Chris transaction and integration costs, a 0.2% impact from incentive pay accrual, a 0.2% impact from inflation and other, partially offset by a 0.2% impact from sales leverage.

Previous wording

•Depreciation and amortization expenses increased as a percent of sales primarily due the acquisition of Ruth’s Chris as well as overall capital expenditures.

Current wording

•Depreciation and amortization expenses increased as a percent of sales primarily due to capital expenditures and the acquisition of Ruth’s Chris.

Previous wording

•Impairment and disposal of assets, net increased as a percent of sales primarily due to five properties that either closed or will close during fiscal 2024 and write-offs of acquired Ruth’s Chris assets, compared to gains on the sale of properties last year.

Current wording

•Impairment and disposal of assets, net increased as a percent of sales primarily due to five properties that either closed or will close during fiscal 2024, write-offs of acquired Ruth’s Chris assets and a liquor license impairment, compared to gains on the sale of properties last year.

Previous wording

Net interest expense increased as a percent of sales for the quarter and six months ended November 26, 2023 primarily due to interest related to financing the acquisition of Ruth’s Chris. See Liquidity and Capital Resources for a description of the financing. At the closing date of acquisition, we entered into a $600 million 3-year Term Loan which was paid off upon issuance of $500.0 million of senior notes issued during the quarter ended November 26, 2023. See Liquidity and Capital Resources below and Note 2 for a description of the Term Loan and senior notes issuance.

Current wording

Net interest expense increased as a percent of sales for the quarter and nine months ended February 25, 2024 primarily due to interest related to financing the acquisition of Ruth’s Chris. See Liquidity and Capital Resources for a description of the financing. At the closing date of acquisition, we entered into a $600 million 3-year Term Loan which was paid off upon issuance of $500.0 million of senior notes issued during the second quarter of fiscal year 2024. See Liquidity and Capital Resources below and Note 2 for a description of the Term Loan and senior notes issuance.

Previous wording

The effective income tax rate for continuing operations for the quarter ended November 26, 2023 and November 27, 2022 was 12.1 percent. The effective income tax rate for continuing operations for the six months ended November 26, 2023 was 12.4 percent compared to an effective income tax rate for the six months ended November 27, 2022 of 13.0 percent. This change was primarily driven by the impact of federal tax credits.

Current wording

The effective income tax rate for continuing operations for the quarter ended February 25, 2024 was 10.7 percent compared to an effective income tax rate for the quarter ended February 26, 2023 of 13.2 percent. This decrease in tax rate was primarily driven by mark-to-market activity and deductions related to Ruth’s Chris transaction costs. The effective income tax rate for continuing operations for the nine months ended February 25, 2024 was 11.6 percent compared to an effective income tax rate for the nine months ended February 26, 2023 of 13.0 percent. This change was primarily driven by the impact of federal tax credits and higher benefits related to option exercises.

Previous wording

The Inflation Reduction Act (IRA) was enacted on August 16, 2022. The IRA includes provisions imposing a 1 percent excise tax on share repurchases that occur after December 31, 2022 and introduces a 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income. The impact of the IRA excise tax and CAMT are immaterial to our consolidated financial statements for the quarter and six months ended November 26, 2023.

Current wording

The Inflation Reduction Act (IRA) was enacted on August 16, 2022. The IRA includes provisions imposing a 1.0 percent excise tax on share repurchases that occur after December 31, 2022 and introduces a 15.0 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income. The impact of the IRA excise tax and CAMT are immaterial to our consolidated financial statements for the quarter and nine months ended February 25, 2024.

Previous wording

On an after-tax basis, losses from discontinued operations for the second quarter and six months ended of fiscal 2024 were $0.2 million ($0.00 per diluted share) and $0.5 million ($0.00 per diluted share) compared with losses from discontinued operations for the second quarter and six months ended of fiscal 2023 of $0.3 million ($0.00 per diluted share) and $0.9 million ($0.01 per diluted share).

Current wording

On an after-tax basis, losses from discontinued operations for the quarter and nine months ended February 25, 2024 were $0.5 million ($0.00 per diluted share) and $1.0 million ($0.00 per diluted share) compared with losses from discontinued operations for the quarter and nine months ended February 26, 2023 of $0.2 million ($0.00 per diluted share) and $1.1 million ($0.01 per diluted share).

Previous wording

The increase in Olive Garden’s segment profit margin for the second quarter and six months of fiscal 2024 was driven primarily by positive same-restaurant sales, lower food and beverages costs, restaurant labor costs and restaurant expense, partially offset by increased marketing costs. The increase in Longhorn Steakhouse’s segment profit margin for the second quarter and six months of fiscal 2024 was driven primarily by positive same-restaurant sales as well as lower food and beverages costs, restaurant labor and restaurant expenses. The decrease in Fine Dining’s segment profit margin for the second quarter and six months of fiscal 2024 was driven primarily by negative same-restaurant sales and higher restaurant labor costs, restaurant expenses and marketing costs. The increase in Other Business’ segment profit margin for the second quarter of fiscal 2024 was driven primarily by increased franchise revenue with the addition of Ruth’s Chris and lower food and beverage costs, partially offset by negative same-restaurant sales and increased restaurant labor costs. The increase in Other Business’ segment profit margin for the six months of fiscal 2024 was driven primarily by positive same-restaurant sales, increased franchise revenue with the addition of Ruth’s Chris and lower food and beverage costs, partially offset by increased restaurant labor costs.

Current wording

The increase in Olive Garden’s segment profit margin for the nine months of fiscal 2024 was driven primarily by positive same-restaurant sales, lower food and beverages costs, restaurant labor costs and restaurant expense, partially offset by increased marketing costs. The increase in Longhorn Steakhouse’s segment profit margin for the third quarter and nine months of fiscal 2024 was driven primarily by positive same-restaurant sales as well as lower food and beverages costs, restaurant labor and restaurant expenses. The decrease in Fine Dining’s segment profit margin for the nine months of fiscal 2024 was driven primarily by negative same-restaurant sales and higher restaurant labor, restaurant expenses and marketing costs partially offset by lower food and beverage costs. The increase in Other Business’ segment profit margin for the third quarter and nine months of fiscal 2024 was driven primarily by increased franchise revenue with the addition of Ruth’s Chris and lower food and beverage costs, partially offset by negative same-restaurant sales, increased restaurant labor costs and marketing costs.

Previous wording

On October 23, 2023, we entered into a $1.25 billion Revolving Credit Agreement (Revolving Credit Agreement) with Bank of America, N.A. (BOA), as administrative agent, and the lenders and other agents party thereto. The Revolving Credit Agreement replaced our prior $1.0 billion Revolving Credit Agreement (Prior Revolving Credit Agreement), dated as of September 10, 2021, and the Prior Revolving Credit Agreement was terminated concurrently with our entry into the Revolving Credit Agreement. The Revolving Credit Agreement is a senior unsecured credit commitment to the Company and contains customary representations and affirmative and negative covenants (including limitations on liens and subsidiary debt and a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of default usual for credit facilities of this type, and consistent with our Prior Revolving Credit Agreement. As of November 26, 2023, we had no outstanding balances and were in compliance with all covenants under the Revolving Credit Agreement. As of November 26, 2023, $350.0 million of commercial paper was outstanding in addition to $0.5 million of letters of credit outstanding, which were both backed by this facility. After consideration of commercial paper and letters of credit backed by the Revolving Credit Agreement, as of November 26, 2023, we had $899.5 million of credit available under the Revolving Credit Agreement.

Current wording

On October 23, 2023, we entered into a $1.25 billion Revolving Credit Agreement (Revolving Credit Agreement) with Bank of America, N.A. (BOA), as administrative agent, and the lenders and other agents party thereto. The Revolving Credit Agreement replaced our prior $1.0 billion Revolving Credit Agreement (Prior Revolving Credit Agreement), dated as of September 10, 2021, and the Prior Revolving Credit Agreement was terminated concurrently with our entry into the Revolving Credit Agreement. The Revolving Credit Agreement is a senior unsecured credit commitment to the Company and contains customary representations and affirmative and negative covenants (including limitations on liens and subsidiary debt and a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of default usual for credit facilities of this type, and consistent with our Prior Revolving Credit Agreement. As of February 25, 2024, we had no outstanding balances and were in compliance with all covenants under the Revolving Credit Agreement. As of February 25, 2024, $158.7 million of commercial paper was outstanding in addition to $0.5 million of letters of credit outstanding, which were both backed by this facility. After consideration of commercial paper and letters of credit backed by the Revolving Credit Agreement, as of February 25, 2024, we had $1.09 billion of credit available under the Revolving Credit Agreement.

Previous wording

On May 31, 2023, the Company also entered into a senior unsecured $600 million 3-year Term Loan Credit Agreement (Term Loan) with Bank of America, N.A., as administrative agent, the lenders and other agents party thereto, the material terms of which are consistent with the Revolving Credit Agreement, as amended. We borrowed $600 million under the Term Loan to fund a portion of the consideration paid in connection with the acquisition of Ruth’s Chris. The $600 million outstanding under the Term Loan were subsequently paid in full on October 10, 2023 with the $500 million proceeds from our 2033 Note (as defined and discussed below) along with $100 million from cash on hand. The Term Loan was terminated on October 10, 2023 in connection with its payment in full and no amounts remain outstanding.

Current wording

On May 31, 2023, the Company also entered into a senior unsecured $600 million 3-year Term Loan Credit Agreement (Term Loan) with Bank of America, N.A., as administrative agent, the lenders and other agents party thereto, the material terms of which are consistent with the Revolving Credit Agreement, as amended. We borrowed $600 million under the Term Loan to fund a portion of the consideration paid in connection with the acquisition of Ruth’s Chris. The $600 million outstanding under the Term Loan was subsequently paid in full on October 10, 2023 with the $500 million proceeds from our 2033 Notes (as defined and discussed below) along with $100 million from cash on hand. The Term Loan was terminated on October 10, 2023 in connection with its payment in full and no amounts remain outstanding.

Previous wording

On October 10, 2023, the Company entered into $500 million aggregate principal amount of its 6.300% Senior Notes due 2033 (the 2033 Notes) pursuant to the provisions of the Underwriting Agreement, dated October 4, 2023 (Underwriting Agreement), among the Company and BofA Securities, Inc., Truist Securities, Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein. The 2033 Notes were issued under the Company’s Indenture, dated as of January 1, 1996 (Base Indenture), between the Company and Computershare Trust Company, National Association (as successor to Wells Fargo Bank, National Association, successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as trustee (Base Trustee), as amended and supplemented by the Second Supplemental Indenture, dated as of October 4, 2023 (Second Supplemental Indenture), among the Company, the Base Trustee and U.S. Bank Trust Company, National Association, as a successor trustee with respect to the 2033 Notes. The 2033 Notes will mature on October 10, 2033. Interest on the 2033 Notes will be paid semi-annually in arrears on April 10 and October 10 of each year, commencing on April 10, 2024, to holders of record on the preceding March 26 or September 25, as the case may be.

Current wording

On October 10, 2023, the Company issued $500 million aggregate principal amount of our 6.300% Senior Notes due 2033 (the 2033 Notes) pursuant to the provisions of the Underwriting Agreement, dated October 4, 2023 (Underwriting Agreement), among the Company and BofA Securities, Inc., Truist Securities, Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein. The 2033 Notes were issued under the Company’s Indenture, dated as of January 1, 1996 (Base Indenture), between the Company and Computershare Trust Company, National Association (as successor to Wells Fargo Bank, National Association, successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as trustee (Base Trustee), as amended and supplemented by the Second Supplemental Indenture, dated as of October 4, 2023 (Second Supplemental Indenture), among the Company, the Base Trustee and U.S. Bank Trust Company, National Association, as successor trustee with respect to the 2033 Notes. The 2033 Notes will mature on October 10, 2033. Interest on the 2033 Notes will be paid semi-annually in arrears on April 10 and October 10 of each year, commencing on April 10, 2024, to holders of record on the preceding March 26 or September 25, as the case may be.

Previous wording

The interest rate on our $42.8 million senior notes due in October 2037 is subject to adjustment from time to time if the debt rating assigned to such series of notes is downgraded below a certain rating level (or subsequently upgraded). The maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial interest rate. As of November 26, 2023, no such adjustments are made to this rate.

Current wording

The interest rate on our $42.8 million senior notes due in October 2037 is subject to adjustment from time to time if the debt rating assigned to such series of notes is downgraded below a certain rating level (or subsequently upgraded). The maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial interest rate. As of February 25, 2024, no such adjustments have been made to this rate.

Previous wording

Net cash flows provided by operating activities of continuing operations decreased to $609.9 million for the first six months of fiscal 2024, from $635.6 million for the six months of fiscal 2023. Net cash flows provided by operating activities include net earnings from continuing operations of $407.1 million and $381.1 million in the first six months of fiscal 2024 and 2023, respectively. Net cash flows provided by operating activities decreased in fiscal 2024 primarily due to the change in working capital compared to fiscal 2023.

Current wording

Net cash flows provided by operating activities of continuing operations increased to $1.20 billion for the first nine months of fiscal 2024, from $1.14 billion for the nine months of fiscal 2023. Net cash flows provided by operating activities include net earnings from continuing operations of $720.5 million and $667.9 million in the first nine months of fiscal 2024 and 2023, respectively. Net cash flows provided by operating activities increased in fiscal 2024 primarily due to the increase in net earnings compared to fiscal 2023.

Previous wording

Net cash flows used in investing activities of continuing operations were $1.02 billion for the first six months of fiscal 2024, compared to $273.4 million for the first six months of fiscal 2023. Capital expenditures increased to $312.4 million for the first six months of fiscal 2024 from $280.3 million for the first six months of fiscal 2023 reflecting an increase in new restaurant construction and remodel activity during fiscal 2024. Net cash used in the acquisition of Ruth’s Chris was $699.9 million during fiscal 2024.

Current wording

Net cash flows used in investing activities of continuing operations were $1.18 billion for the first nine months of fiscal 2024, compared to $409.5 million for the first nine months of fiscal 2023. Capital expenditures increased to $460.8 million for the first nine months of fiscal 2024 from $410.5 million for the first nine months of fiscal 2023 reflecting an increase in new restaurant construction and remodel activity during fiscal 2024. Net cash used in the acquisition of Ruth’s Chris was $699.9 million during fiscal 2024.

Previous wording

Net cash flows provided by financing activities of continuing operations were $216.7 million for the first six months of fiscal 2024, compared to net cash used by financing activities of $534.9 million for the first six months of fiscal 2023. Net cash flows provided by financing activities for the first six months of fiscal 2024 included net proceeds from issuance of short term debt of $350.0 million, net proceeds from the 2033 Notes of $500.0 million, dividends paid of $315.7 million and share repurchases of $323.9 million. Net cash flows used in financing activities for the first six months of fiscal 2023 included dividends paid of $296.5 million and share repurchases of $299.2 million, partially offset by net proceeds from the issuance of short-term debt of $58.0 million. Dividends declared by our Board of Directors totaled $2.62 and $2.42 per share for the first six months of fiscal 2024 and 2023, respectively.

Current wording

Net cash flows used in financing activities of continuing operations were $158.5 million for the first nine months of fiscal 2024, compared to net cash used in financing activities of $862.7 million for the first nine months of fiscal 2023. Net cash flows used in financing activities for the first nine months of fiscal 2024 included net proceeds from issuance of short term debt of $158.7 million, net proceeds from the 2033 Notes of $500.0 million, dividends paid of $472.1 million and share repurchases of $356.6 million. Net cash flows used in financing activities for the first nine months of fiscal 2023 included dividends paid of $443.3 million and share repurchases of $423.5 million. Dividends declared by our Board of Directors totaled $3.93 and $3.63 per share for the first nine months of fiscal 2024 and 2023, respectively.

Previous wording

On June 22, 2022, our Board of Directors authorized a new share repurchase program under which we may repurchase up to $1 billion of our outstanding common stock. This repurchase program does not have an expiration. During the quarter and six months ended November 26, 2023, we repurchased 1.2 million and 2.1 million shares of our common stock, respectively, compared to 0.7 million and 2.4 million shares of our common stock, respectively, during the quarter and six months ended November 27, 2022.

Current wording

On March 20, 2024, our Board of Directors authorized a new share repurchase program under which we may repurchase up to $1 billion of our outstanding common stock. This repurchase program does not have an expiration and replaced the previously existing share repurchase authorization. Repurchases are subject to prevailing market prices, may be made in open market or private transactions, may occur or be discontinued at any time and remain subject to the discretion of our Board of Directors. There can be no assurance that we will repurchase any shares. During the quarter and nine months ended February 25, 2024, we repurchased 0.2 million and 2.3 million shares of our common stock, respectively, compared to 0.87 million and 3.3 million shares of our common stock, respectively, during the quarter and nine months ended February 26, 2023.

Previous wording

Impairment of our assets, including goodwill or trademarks, adversely affects our financial position and results of operations, and our leverage ratio for purposes of our Revolving Credit Agreement. A leverage ratio exceeding the maximum permitted under our Revolving Credit Agreement would be a default under our Revolving Credit Agreement. At November 26, 2023, write-downs of goodwill, other indefinite-lived intangible assets, or any other assets in excess of approximately $530.9 million would have been required to cause our leverage ratio to exceed the permitted maximum. As our leverage ratio is determined on a quarterly basis, and due to the seasonal nature of our business, a lesser amount of impairment in future quarters could cause our leverage ratio to exceed the permitted maximum.

Current wording

Impairment of our assets, including goodwill or trademarks, adversely affects our financial position and results of operations, and our leverage ratio for purposes of our Revolving Credit Agreement. A leverage ratio exceeding the maximum permitted under our Revolving Credit Agreement would be a default under our Revolving Credit Agreement. At February 25, 2024, write-downs of goodwill, other indefinite-lived intangible assets, or any other assets in excess of approximately $716.4 million would have been required to cause our leverage ratio to exceed the permitted maximum. As our leverage ratio is determined on a quarterly basis, and due to the seasonal nature of our business, a lesser amount of impairment in future quarters could cause our leverage ratio to exceed the permitted maximum.

Previous wording

Our current assets totaled $867.7 million as of November 26, 2023, compared to $997.7 million as of May 28, 2023. The decrease was primarily due to a decrease in cash and cash equivalents.

Current wording

Our current assets totaled $876.4 million as of February 25, 2024, compared to $997.7 million as of May 28, 2023. The decrease was primarily due to a decrease in cash and cash equivalents.

Previous wording

Our current liabilities totaled $2.38 billion as of November 26, 2023, compared to $1.94 billion as of May 28, 2023. The increase was primarily driven by an increase in short-term debt as well as an increase in other current liabilities and unearned revenues associated with the acquisition of Ruth’s Chris.

Current wording

Our current liabilities totaled $2.27 billion as of February 25, 2024, compared to $1.94 billion as of May 28, 2023. The increase was primarily driven by an increase in short-term debt as well as an increase in other current liabilities and unearned revenues associated with the acquisition of Ruth’s Chris.