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Darden Restaurants F4Q08 (Qtr End 5/25/08) Earnings Call Transcript

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2008-06-25 10:05:33.0

Tags: Darden Restaurants Inc.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question this morning comes from the line of John Glass with Morgan Stanley.

John Glass - Morgan Stanley

Thanks very much. Just going back, Brad, to your guidance on the 52-week basis being 7% to 8% earnings growth, and you talked in February about 9% to 12% in a tougher operating environment. So is the change that the environment from February to now has gotten that much worse from a cost perspective? Is your view different on a top line? Can you maybe just reconcile what you talked about in February versus today?

Brad Richmond

John, you are actually right on both points. It’s a little bit of the tougher consumer environment, so when we talk about our same-restaurant sales performance, we are today seeing a little less there than what we talked about back in February, and the cost environment continues to be challenging. So we are pretty close to that but a little bit up from there, and so those are the real two driving factors that lead us to the guidance we have today.

John Glass - Morgan Stanley

Okay, and then my follow-up is that your buy-backs in 2009, around $200 million, I think were less than your longer term goal of $350 million to $400 million, so maybe -- is this a lower buy-back than maybe you initially had expected this year, given the operating environment? Or when should we expect you to be able to achieve the full potential of buy-backs longer term?

Brad Richmond

I believe the guidance that we had at the time was once we get two to three years out past the acquisition, we return to our normal buy-back amount. We do anticipate it will take us a couple of years to get our debt metrics solidly in the range that we want them to be, principally on adjusted -- debt to adjusted capital of about 55% to 65%, so we are moving close with this guidance to the middle of that range. And on a debt-to-EBITDAR calculation, where we’d like to get that closer to 2, we’re a little bit above that.

So if we look where we are today, I’d say we’re probably a year, maybe just a little bit longer from returning to what I’d call more normalized share repurchase approach.

Operator

Thank you. Our next question comes from the line of Steven Kron with Goldman Sachs.

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