Table of Contents Strategic Framework 2003 Financial Highlights Operating Company Overviews Great Expectations   Ambience   Service   Attentiveness   Knowledge   Friendliness   Cleanliness Letter To Shareholders Operating Highlights   Red Lobster   Olive Garden   Bahama Breeze   Smokey Bones BBQ New Business Opportunities Financial Review 2003   Management’s Discussion and Analysis...   Report of Management Responsibilities   Independent Auditors’ Report   Consolidated Statements of Earnings   Consolidated Balance Sheets   Consolidated Statements of Changes...   Consolidated Statements of Cash Flows   Notes to Consolidated Financial Statements Corporate Responsibility Board of Directors Corporate Officers Shareholders Information
Notes to Consolidated Financial Statements (continued)   Five-Year Financial Summary   Fiscal Year Ended   May 25, May 26, May 27, May 28, May 30,    (In thousands, except per share data) 2003 2002 2001 2000 1999    Operating Results                                  Sales   $ 4,654,971     $ 4,366,911     $ 3,992,419     $ 3,675,461     $ 3,432,375      Costs and expenses:                                     Cost of sales:                                        Food and beverage   1,449,162     1,384,481     1,302,926     1,199,709     1,133,705            Restaurant labor   1,485,046     1,373,416     1,261,837     1,181,156     1,117,401            Restaurant expenses   700,182     625,710     559,670     510,727     485,708      Total cost of sales, excluding restaurant                                     depreciation and amortization(1) $ 3,634,390   $ 3,383,607   $ 3,124,433   $ 2,891,592   $ 2,736,814      Selling, general, and administrative   439,376     420,149     389,240     363,041     343,280      Depreciation and amortization   191,218     165,829     146,864     130,464     125,327      Interest, net   42,597     36,585     30,664     22,388     19,540      Restructuring and asset impairment credit, net   (358 )    (2,568 )    –     (5,931 )    (8,461 )     Total costs and expenses $ 4,307,223   $ 4,003,602   $ 3,691,201   $ 3,401,554   $ 3,216,500      Earnings before income taxes   347,748     363,309     301,218     273,907     215,875      Income taxes   115,488     125,521     104,218     97,202     75,337      Net earnings $ 232,260   $ 237,788   $ 197,000   $ 176,705   $ 140,538      Net earnings per share:                                     Basic $ 1.36   $ 1.36   $ 1.10   $ 0.92   $ 0.68         Diluted $ 1.31   $ 1.30   $ 1.06   $ 0.89   $ 0.66      Average number of common shares                                     outstanding, net of shares held in Treasury:                                        Basic   170,300     174,700     179,600     192,800     206,000            Diluted   177,400     183,500     185,600     197,800     212,100                                      Financial Position                                  Total assets $ 2,664,633   $ 2,529,736   $ 2,216,534   $ 1,969,555   $ 1,888,560      Land, buildings, and equipment   2,157,132     1,926,947     1,779,515     1,578,541     1,461,535      Working capital (deficit)   (314,280 )    (157,662 )    (226,116 )    (316,427 )    (194,478 )     Long-term debt   658,086     662,506     520,574     306,586     316,451      Stockholders’ equity   1,196,191     1,128,877     1,033,318     958,602     962,349      Stockholders’ equity per outstanding share   7.25     6.56     5.87     5.23     4.86                                      Other Statistics                                  Cash flow from operations $ 509,292   $ 508,142   $ 420,570   $ 342,626   $ 357,942      Capital expenditures   426,204     318,392     355,139     268,946     123,673      Dividends paid   13,501     9,225     9,458     10,134     10,857      Dividends paid per share   0.080     0.053     0.053     0.053     0.053      Advertising expense   203,393     187,950     177,998     165,590     162,934      Stock price:                                     High   27.83     29.767     19.660     15.375     15.583         Low   16.46     15.400     10.292     8.292     9.458         Close $ 18.35   $ 25.030   $ 19.267   $ 12.583   $ 14.208                                      Number of employees   140,700     133,200     128,900     122,300     116,700      Number of restaurants   1,271     1,211     1,168     1,139     1,139   (1) Total cost of sales, excluding restaurant depreciation and amortization of $177,127, $155,837, $138,229, $123,477, and $119,140, respectively.