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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 25, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
1-13666
Commission File Number
 DARDEN RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
 
Florida 59-3305930
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1000 Darden Center Drive
Orlando,
Florida
 32837
(Address of principal executive offices) (Zip Code)
407-245-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, without par valueDRINew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).      Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No
Number of shares of common stock outstanding as of March 15, 2024: 119,358,947.


TABLE OF CONTENTS
 
2

Cautionary Statement Regarding Forward-Looking Statements
Statements set forth in or incorporated into this report that are not historical facts, including without limitation statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of Darden Restaurants, Inc. and its subsidiaries that are preceded by, followed by or that include words such as “may,” “will,” “expect,” “intend,” “anticipate,” “continue,” “estimate,” “project,” “believe,” “plan”, “outlook” or similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This statement is included for purposes of complying with the safe harbor provisions of that Act. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements for any reason to reflect events or circumstances arising after such date. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. The most significant of these uncertainties are described in Darden’s Form 10-K, Form 10-Q (including this report) and Form 8-K reports.
3

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share data)
(Unaudited)
 
 Three Months EndedNine Months Ended
 February 25,
2024
February 26,
2023
February 25,
2024
February 26,
2023
Sales$2,974.8 $2,786.2 $8,432.7 $7,718.8 
Costs and expenses:
Food and beverage
920.2 887.0 2,617.0 2,500.6 
Restaurant labor
937.1 874.2 2,693.3 2,476.5 
Restaurant expenses
471.9 440.3 1,368.9 1,260.8 
Marketing expenses
31.7 28.2 107.2 89.6 
General and administrative expenses
108.2 107.0 376.3 285.7 
Depreciation and amortization117.9 98.3 340.2 290.7 
Impairments and disposal of assets, net0.4 1.3 11.0 (12.4)
Total operating costs and expenses
$2,587.4 $2,436.3 $7,513.9 $6,891.5 
Operating income387.4 349.9 918.8 827.3 
Interest, net36.5 19.6 103.3 59.2 
Earnings before income taxes350.9 330.3 815.5 768.1 
Income tax expense37.5 43.5 95.0 100.2 
Earnings from continuing operations$313.4 $286.8 $720.5 $667.9 
Losses from discontinued operations, net of tax benefit of $0.6, $0.2, $1.0 and $0.5, respectively
(0.5)(0.2)(1.0)(1.1)
Net earnings$312.9 $286.6 $719.5 $666.8 
Basic net earnings per share:
Earnings from continuing operations$2.62 $2.36 $6.00 $5.47 
Losses from discontinued operations  (0.01)(0.01)
Net earnings $2.62 $2.36 $5.99 $5.46 
Diluted net earnings per share:
Earnings from continuing operations$2.60 $2.34 $5.95 $5.42 
Losses from discontinued operations   (0.01)
Net earnings $2.60 $2.34 $5.95 $5.41 
Average number of common shares outstanding:
Basic
119.4 121.4 120.1 122.2 
Diluted
120.4 122.5 121.0 123.2 

See accompanying notes to our unaudited consolidated financial statements.
4

DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)

Three Months EndedNine Months Ended
February 25,
2024
February 26,
2023
February 25,
2024
February 26,
2023
Net earnings $312.9 $286.6 $719.5 $666.8 
Foreign currency adjustment0.1 (0.1)0.1 (0.3)
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $(0.1), $(1.3), $9.3 and $(1.2), respectively
2.0 (5.9)25.9 1.9 
Net unamortized gain (loss) arising during the period, including amortization of unrecognized net actuarial gain (loss), net of taxes of $0.0, $0.1, $0.1 and $0.2 respectively, related to pension and other post-employment benefits
0.2 0.1 0.5 0.4 
Other comprehensive income$2.3 $(5.9)$26.5 $2.0 
Total comprehensive income$315.2 $280.7 $746.0 $668.8 
See accompanying notes to our unaudited consolidated financial statements.

5


DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
February 25,
2024
May 28,
2023
 (Unaudited) 
ASSETS
Current assets:
Cash and cash equivalents$243.9 $367.8 
Receivables, net72.2 80.2 
Inventories298.2 287.9 
Prepaid income taxes122.6 107.3 
Prepaid expenses and other current assets139.5 154.5 
Total current assets$876.4 $997.7 
Land, buildings and equipment, net of accumulated depreciation and amortization of $3,667.8 and $3,422.0, respectively
4,101.9 3,725.1 
Operating lease right-of-use assets3,494.3 3,373.9 
Goodwill1,397.8 1,037.4 
Trademarks1,148.0 806.3 
Other assets339.8 301.1 
Total assets$11,358.2 $10,241.5 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$406.0 $426.2 
Short-term debt158.7  
Accrued payroll195.6 173.0 
Accrued income taxes8.5 7.8 
Other accrued taxes69.0 65.9 
Unearned revenues626.0 512.0 
Other current liabilities808.6 752.5 
Total current liabilities$2,272.4 $1,937.4 
Long-term debt1,372.8 884.9 
Deferred income taxes240.9 142.2 
Operating lease liabilities - non-current3,774.4 3,667.6 
Other liabilities1,516.8 1,407.9 
Total liabilities$9,177.3 $8,040.0 
Stockholders’ equity:
Common stock and surplus$2,252.8 $2,230.8 
Retained earnings (deficit)(101.6)(32.5)
Accumulated other comprehensive income29.7 3.2 
Total stockholders’ equity$2,180.9 $2,201.5 
Total liabilities and stockholders’ equity$11,358.2 $10,241.5 


See accompanying notes to our unaudited consolidated financial statements.
6

DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Three and Nine Months Ended February 25, 2024 and February 26, 2023
(In millions)
(Unaudited)
Common Stock
And Surplus
SharesAmountRetained
Earnings (Deficit)
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
Balance at November 26, 2023119.5 $2,240.8 $(228.5)$27.4 $2,039.7 
Net earnings— — 312.9 312.9 
Other comprehensive income (loss)— — — 2.3 2.3 
Dividends declared ($1.31 per share)
— — (157.3)— (157.3)
Stock option exercises0.1 8.1 — — 8.1 
Stock-based compensation— 4.9 — — 4.9 
Repurchases of common stock(0.2)(3.9)(28.8)— (32.7)
Issuance of stock under Employee Stock Purchase Plan and other plans— 3.0 — — 3.0 
Other— (0.1)0.1 —  
Balance at February 25, 2024119.4$2,252.8 $(101.6)$29.7 $2,180.9 
Balance at May 28, 2023121.1$2,230.8 $(32.5)$3.2 $2,201.5 
Net earnings— 719.5 — 719.5 
Other comprehensive income (loss)— — 26.5 26.5 
Dividends declared ($3.93 per share)
— (475.5)— (475.5)
Stock option exercises0.3 28.3 — — 28.3 
Stock-based compensation31.0 — — 31.0 
Repurchases of common stock(2.3)(43.5)(313.1)— (356.6)
Issuance of stock under Employee Stock Purchase Plan and other plans0.3 8.7 — — 8.7 
Other(2.5)— — (2.5)
Balance at February 25, 2024119.4$2,252.8 $(101.6)$29.7 $2,180.9 
Balance at November 27, 2022121.9$2,214.6 $(199.7)$6.0 $2,020.9 
Net earnings— 286.6 — 286.6 
Other comprehensive income (loss)— — (5.9)(5.9)
Dividends declared ($1.21 per share)
— (147.8)— (147.8)
Stock option exercises0.13.8 — — 3.8 
Stock-based compensation7.9 — — 7.9 
Repurchases of common stock(0.9)(15.8)(108.5)— (124.3)
Issuance of stock under Employee Stock Purchase Plan and other plans2.8 — — 2.8 
Other(0.1)— — (0.1)
Balance at February 26, 2023121.1$2,213.2 $(169.4)$0.1 $2,043.9 
Balance at May 29, 2022123.9$2,226.0 $(25.9)$(1.9)$2,198.2 
Net earnings— 666.8 — 666.8 
Other comprehensive income (loss)— — 2.0 2.0 
Dividends declared ($3.63 per share)
— (446.7)— (446.7)
Stock option exercises0.210.0 — — 10.0 
Stock-based compensation27.8 — — 27.8 
Repurchases of common stock(3.3)(59.9)(363.6)— (423.5)
Issuance of stock under Employee Stock Purchase Plan and other plans0.38.3 — — 8.3 
Other1.0 — — 1.0 
Balance at February 26, 2023121.1$2,213.2 $(169.4)$0.1 $2,043.9 

See accompanying notes to our unaudited consolidated financial statements.
7

DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Nine Months Ended
 February 25,
2024
February 26,
2023
Cash flows—operating activities
Net earnings$719.5 $666.8 
Losses from discontinued operations, net of tax1.0 1.1 
Adjustments to reconcile net earnings from continuing operations to cash flows:
Depreciation and amortization340.2 290.7 
Impairments and disposal of assets, net11.0 (12.4)
Stock-based compensation expense57.8 52.6 
Change in current assets and liabilities90.6 192.7 
Contributions to pension and postretirement plans(1.1)(1.6)
Deferred income taxes3.0 (54.8)
Change in other assets and liabilities(10.8)1.9 
Other, net(15.5)3.5 
Net cash provided by operating activities of continuing operations$1,195.7 $1,140.5 
Cash flows—investing activities
Purchases of land, buildings and equipment(460.8)(410.5)
Proceeds from disposal of land, buildings and equipment2.0 21.4 
Cash used in business acquisitions, net of cash acquired(699.9) 
Purchases of capitalized software and other assets(18.9)(20.9)
Other, net1.6 0.5 
Net cash used in investing activities of continuing operations$(1,176.0)$(409.5)
Cash flows—financing activities
Proceeds from issuance of common stock37.0 18.3 
Dividends paid(472.1)(443.3)
Repurchases of common stock(356.6)(423.5)
Proceeds from issuance of commercial paper, net158.7  
Proceeds from issuance of long-term debt1,100.0  
Repayments of long-term debt(600.0) 
Principal payments on finance leases(16.2)(14.2)
Tenant incentive cash received on finance leases2.2  
Payments of debt issuance costs(11.5) 
Net cash used in financing activities of continuing operations$(158.5)$(862.7)
Cash flows—discontinued operations
Net cash used in operating activities of discontinued operations(9.3)(5.5)
Net cash used in discontinued operations$(9.3)$(5.5)
Decrease in cash, cash equivalents, and restricted cash(148.1)(137.2)
Cash, cash equivalents, and restricted cash - beginning of period416.2 472.1 
Cash, cash equivalents, and restricted cash - end of period$268.1 $334.9 

Reconciliation of cash, cash equivalents, and restricted cash:February 25,
2024
February 26,
2023
Cash and cash equivalents$243.9 $275.3 
Restricted cash included in prepaid expenses and other current assets24.2 59.6 
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows$268.1 $334.9 



8





DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)
Nine Months Ended
February 25,
2024
February 26,
2023
Cash flows from changes in current assets and liabilities
Receivables, net16.2 14.4 
Inventories(1.8)(35.2)
Prepaid expenses and other current assets(5.2)(23.7)
Accounts payable(9.7)23.1 
Accrued payroll13.3 (13.6)
Prepaid/accrued income taxes(3.7)180.0 
Other accrued taxes2.5 0.1 
Unearned revenues52.2 50.0 
Other current liabilities26.8 (2.4)
Change in current assets and liabilities$90.6 $192.7 

See accompanying notes to our unaudited consolidated financial statements.

9

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1.Basis of Presentation
Darden Restaurants, Inc. (we, our, Darden or the Company) owns and operates full-service dining restaurants in the United States and Canada under the trade names Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, Ruth’s Chris Steak House®, The Capital Grille®, Seasons 52®, Bahama Breeze®, Eddie V’s Prime Seafood® and The Capital Burger®. As of February 25, 2024, through subsidiaries, we own and operate all of our restaurants in the United States and Canada, except for 2 joint venture restaurants managed by us, 4 managed locations operating under contractual agreements and 91 franchised restaurants. We also have 55 franchised restaurants in operation located in Latin America, the Caribbean, Asia, and the Middle East.
We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. We operate on a 52/53-week fiscal year which ends on the last Sunday in May. Our fiscal year ending May 26, 2024 will contain 52 weeks of operation. Operating results for interim periods presented are not necessarily indicative of results that may be expected for the full fiscal year.
These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023. We prepare our consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and costs and expenses during the reporting period. Actual results could differ from those estimates.
We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which updates income tax disclosures related to the rate reconciliation and requires disclosure of income taxes paid by jurisdiction. The amendment also provides further disclosure comparability. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied prospectively; however, retrospective application is permitted. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures.
Note 2.Acquisition of Ruth’s Chris Steak House
On June 14, 2023, we acquired 100 percent of the equity interest of Ruth’s Chris Steak House (Ruth’s Chris) for $724.6 million in total consideration. We funded the acquisition with the proceeds from the issuance of a $600.0 million Term Loan (Term Loan) combined with cash on hand. We repaid the Term Loan in full on October 10, 2023 with proceeds from the issuance of $500 million aggregate principal amount of our 6.30% Senior Notes, due 2033 (the 2033 Notes), and cash on hand. The 2033 Notes were issued pursuant to a supplement per the Company’s Indenture, dated as of January 1, 1996 between the Company and Computershare Trust Company, National Association, as trustee (Base Trustee), as amended and supplemented by the Second Supplemental Indenture, dated October 4, 2023, 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.
10

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The acquired operations of Ruth’s Chris included 77 company-owned locations, 74 franchisee-owned locations and 4 managed locations operating under contractual agreement. The results of Ruth’s Chris operations are included in our consolidated financial statements from the date of acquisition.
The assets and liabilities of Ruth’s Chris were recorded at their respective fair values as of the date of acquisition. We are in the process of confirming, through internal studies and third-party valuations, the fair value of these assets, including land, buildings and equipment, intangible assets, income tax assets, unearned revenues and other liabilities. The fair values set forth below are based on preliminary valuations and are subject to adjustment as additional information is obtained. When the valuation process is completed, adjustments to goodwill may result.
The preliminary allocation of the purchase price is as follows:
Balances atBalances at
(in millions)June 14, 2023AdjustmentsFebruary 25, 2024
Cash$24.7 $— $24.7 
Other current assets20.9 (0.2)20.7 
Land, buildings and equipment170.5 (27.0)143.5 
Operating lease right-of-use assets291.6 10.0 301.6 
Goodwill339.5 20.9 360.4 
Trademark341.7 — 341.7 
Other assets12.0 12.4 24.4 
     Total assets acquired$1,200.9 $16.1 $1,217.0 
Current liabilities113.5 1.2 114.7 
Deferred income taxes79.5 5.1 84.6 
Operating lease liabilities - non-current276.3 9.5 285.8 
Other liabilities7.0 0.3 7.3 
     Total liabilities assumed$476.3 $16.1 $492.4 
Net assets acquired$724.6 $ $724.6 

The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill. Of the $360.4 million recorded as goodwill, $15.2 million is deductible for tax purposes. The portion of the purchase price attributable to goodwill represents benefits expected because of the acquisition, including sales and unit growth opportunities in addition to supply-chain and support-cost synergies. The trademark has an indefinite life based on the expected use of the asset and the regulatory and economic environment within which it is being used. The trademark represents a highly respected brand with positive connotations, and we intend to cultivate and protect the use of this brand. Goodwill and indefinite-lived trademarks are not amortized, but are reviewed annually for impairment or more frequently if indicators of impairment exist. Buildings and equipment will be depreciated over a period of 2 years to 30 years.
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. Pro-forma financial information of the combined entities for periods prior to the acquisition is not presented due to the immaterial impact of the financial results of Ruth’s Chris on our consolidated financial statements.
11

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3. Revenue Recognition  
Deferred revenue liabilities from contracts with customers included on our accompanying consolidated balance sheets was comprised of the following:
(in millions)February 25, 2024May 28, 2023
Unearned revenues
Deferred gift card revenue$666.6 $537.0 
Deferred gift card discounts(41.3)(25.5)
Other0.7 0.5 
Total$626.0 $512.0 
Other liabilities
Deferred franchise fees - non-current$5.0 $2.7 
The following table presents a rollforward of deferred gift card revenue.
Three Months EndedNine Months Ended
(in millions)February 25, 2024February 26, 2023February 25, 2024February 26, 2023
Beginning balance$580.7 $484.9 $537.0 $521.1 
Acquired deferred gift card revenue  61.8  
Activations350.6 343.1 626.4 577.4 
Redemptions and breakage(264.7)(250.1)(558.6)(520.6)
Ending balance$666.6 $577.9 $666.6 $577.9 

12

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4. Additional Financial Information
Supplemental Balance Sheet Information
The components of lease assets and liabilities on the consolidated balance sheet were as follows:
(in millions)Balance Sheet ClassificationFebruary 25, 2024May 28, 2023
Operating lease right-of-use assetsOperating lease right-of-use assets$3,494.3 $3,373.9 
Finance lease right-of-use assetsLand, buildings and equipment, net1,053.5 958.1 
Total lease assets, net$4,547.8 $4,332.0 
Operating lease liabilities - currentOther current liabilities$192.6 $182.5 
Finance lease liabilities - currentOther current liabilities13.8 13.5 
Operating lease liabilities - non-currentOperating lease liabilities - non-current3,774.4 3,667.6 
Finance lease liabilities - non-currentOther liabilities1,294.7 1,172.6 
Total lease liabilities$5,275.5 $5,036.2 
Supplemental Cash Flow Information
Cash paid for interest and income taxes were as follows:
Nine Months Ended
(in millions)February 25, 2024February 26, 2023
Interest, net of amounts capitalized$97.6 $64.3 
Income taxes, net of refunds86.6 (29.5)
Non-cash investing and financing activities were as follows:Nine Months Ended
(in millions)February 25, 2024February 26, 2023
Increase in land, buildings and equipment through accrued purchases$44.8 $82.1 
Right-of-use assets obtained in exchange for new operating lease liabilities (1)
333.2 131.5 
Right-of-use assets obtained in exchange for new finance lease liabilities70.2 41.5 
Net change in right-of-use assets mainly due to lease modifications resulting in reclassification of leases from operating to finance23.2 53.1 
(1) Right-of-use assets obtained in fiscal 2024 includes $301.6 million from the acquisition of Ruth’s Chris.
We had restricted cash of $24.2 million as of February 25, 2024 and $48.4 million as of May 28, 2023, which represents cash held as security for a standby letter of credit. Restricted cash is included in Prepaid Expenses and Other Current Assets on our consolidated balance sheet. See Note 13, Commitments and Contingencies, for further details around standby letters of credit.
Note 5. Income Taxes
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.
Included in our remaining balance of unrecognized tax benefits is $8.3 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve months based on the outcome of examinations or as a result of the expiration of the statute of limitations for specific jurisdictions.
13

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 introduced 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 nine months ended February 25, 2024.
Note 6. Net Earnings per Share
Outstanding stock options, restricted stock and equity-settled performance stock units granted by us represent the only dilutive effect reflected in diluted weighted average shares outstanding, none of which impact the numerator of the diluted net earnings per share computation. Stock options, restricted stock and equity-settled performance stock units excluded from the calculation of diluted net earnings per share because the effect would have been anti-dilutive, were as follows: 
Three Months EndedNine Months Ended
(in millions)February 25,
2024
February 26,
2023
February 25,
2024
February 26,
2023
Anti-dilutive stock-based compensation awards0.1 0.1 0.1 0.3 
Note 7. Segment Information
We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, Ruth’s Chris, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s, and The Capital Burger in North America as operating segments. The brands operate principally in the U.S. within full-service dining. We aggregate our operating segments into reportable segments based on a combination of the size, economic characteristics and sub-segment of full-service dining within which each brand operates. We have four reportable segments: (1) Olive Garden, (2) LongHorn Steakhouse, (3) Fine Dining and (4) Other Business.
The Olive Garden segment includes the results of our company-owned Olive Garden restaurants in the U.S. and Canada. The LongHorn Steakhouse segment includes the results of our company-owned LongHorn Steakhouse restaurants in the U.S. The Fine Dining segment aggregates our premium brands that operate within the fine-dining sub-segment of full-service dining and includes the results of our company-owned Ruth’s Chris, The Capital Grille and Eddie V’s restaurants in the U.S. The Other Business segment aggregates our remaining brands and includes the results of our company-owned Cheddar’s Scratch Kitchen, Yard House, Seasons 52, Bahama Breeze and The Capital Burger restaurants in the U.S. and results from our franchise operations.
External sales are derived principally from food and beverage sales. We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our reportable segments are predominantly in the U.S. There were no material transactions among reportable segments.
Our management uses segment profit as the measure for assessing performance of our segments. Segment profit includes revenues and expenses directly attributable to restaurant-level results of operations (sometimes referred to as restaurant-level earnings). These expenses include food and beverage costs, restaurant labor costs, restaurant expenses and marketing expenses (collectively “restaurant and marketing expenses”). Non-cash lease-related expenses included in restaurant expenses (which is a component of segment profit) and lease-related depreciation and amortization are reported at the corporate level as these are expenses for which our operating segments are not being evaluated. Additionally, our lease-related right-of-use assets are not managed or evaluated at the operating segment level, but rather at the corporate level.
14

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP.
(in millions)Olive GardenLongHorn Steakhouse
Fine Dining1
Other BusinessCorporateConsolidated
For the three months ended February 25, 2024
Sales$1,310.2 $730.7 $372.9 $561.0 $ $2,974.8 
Restaurant and marketing expenses1,015.5 594.1 291.5 477.3 (17.5)2,360.9 
Segment profit$294.7 $136.6 $81.4 $83.7 $17.5 $613.9 
Depreciation and amortization$43.2 $19.5 $16.9 $26.2 $12.1 $117.9 
Impairments and disposal of assets, net    0.4 0.4 
1 Includes Ruth’s Chris results for the quarter.
(in millions)Olive GardenLongHorn Steakhouse
Fine Dining1
Other BusinessCorporateConsolidated
For the nine months ended February 25, 2024
Sales$3,789.5 $2,043.5 $964.4 $1,635.3 $ $8,432.7 
Restaurant and marketing expenses2,970.0 1,677.7 786.7 1,400.8 (48.8)6,786.4 
Segment profit$819.5 $365.8 $177.7 $234.5 $48.8 $1,646.3 
Depreciation and amortization$123.2 $56.0 $49.1 $76.7 $35.2 $340.2 
Impairments and disposal of assets, net0.2 0.1   10.7 11.0 
Purchases of land, buildings and equipment198.6 102.7 80.9 73.2 5.4 460.8 
1 Results of operations includes Ruth’s Chris from the date of acquisition forward.
15

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in millions)Olive GardenLongHorn SteakhouseFine DiningOther BusinessCorporateConsolidated
For the three months ended February 26, 2023
Sales$1,301.2 $695.5 $235.6 $553.9 $ $2,786.2 
Restaurant and marketing expenses1,008.2 574.3 184.3 476.1 (13.2)2,229.7 
Segment profit$293.0 $121.2 $51.3 $77.8 $13.2 $556.5 
Depreciation and amortization$37.2 $17.2 $9.1 $24.5 $10.3 $98.3 
Impairments and disposal of assets, net (3.3) (0.1)4.7 1.3 
(in millions)Olive GardenLongHorn SteakhouseFine DiningOther BusinessCorporateConsolidated
For the nine months ended February 26, 2023
Sales$3,608.6 $1,900.6 $621.0 $1,588.6 $ $7,718.8 
Restaurant and marketing expenses2,880.6 1,601.8 500.8 1,379.5 (35.2)6,327.5 
Segment profit$728.0 $298.8 $120.2 $209.1 $35.2 $1,391.3 
Depreciation and amortization$109.3 $50.5 $27.0 $73.4 $30.5 $290.7 
Impairments and disposal of assets, net (3.3) (0.1)(9.0)(12.4)
Purchases of land, buildings and equipment183.2 77.8 40.2 93.0 16.3 410.5 
A reconciliation of segment profit to earnings from continuing operations before income taxes is below.
Three Months EndedNine Months Ended
(in millions)February 25, 2024February 26, 2023February 25, 2024February 26, 2023
Segment profit$613.9 $556.5 $1,646.3 $1,391.3 
Less general and administrative expenses(108.2)(107.0)(376.3)(285.7)
Less depreciation and amortization(117.9)(98.3)(340.2)(290.7)
Less impairments and disposal of assets, net(0.4)(1.3)(11.0)12.4 
Less interest, net(36.5)(19.6)(103.3)(59.2)
Earnings from continuing operations before income taxes$350.9 $330.3 $815.5 $768.1 
16

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 8. Impairments and Disposal of Assets, Net
Impairments and disposal of assets, net, in our accompanying consolidated statements of earnings were comprised of the following:
Three Months EndedNine Months Ended
(in millions)February 25, 2024February 26, 2023February 25, 2024February 26, 2023
Restaurant impairments$ $1.5 $0.3 $1.5 
Disposal (gains) losses (2.3)9.8 (16.0)
Other0.4 2.1 0.9 2.1 
Impairments and disposal of assets, net$0.4 $1.3 $11.0 $(12.4)
Restaurant impairments and disposal (gains) losses for the nine months ended February 25, 2024 were related to the decision to close five locations, sale of properties and the write-off of acquired Ruth’s Chris assets. Restaurant impairments for the quarter and nine months ended February 26, 2023 were related to (i) one underperforming restaurant with projected cash flows insufficient to cover its respective carrying values and (ii) three restaurant closures. Disposal gains for the quarter and nine months ended February 26, 2023 were primarily related to the sale of properties. Other impacts for the quarter and nine months ended February 25, 2024 related to right-of-use asset adjustments on early lease terminations, the write-off of capitalized software costs, and liquor license impairment. Other impacts for the quarter and nine months ended February 26, 2023 related to costs associated with cancelled projects.
Note 9. Stockholders’ Equity

Accumulated Other Comprehensive Income (Loss) (AOCI)
The components of AOCI, net of tax, for the quarter and nine months ended February 25, 2024 were as follows:
(in millions)Foreign Currency Translation AdjustmentUnrealized Gains (Losses) on DerivativesBenefit Plan Funding PositionAccumulated Other Comprehensive Income (Loss)
Balance at November 26, 2023$4.5 $27.8 $(4.9)$27.4 
Gain (loss)0.1 0.8  0.9 
Reclassification realized in net earnings 1.2 0.2 1.4 
Balance at February 25, 2024$4.6 $29.8 $(4.7)$29.7 
Balance at May 28, 2023$4.5 $3.9 $(5.2)$3.2 
Gain (loss)0.1 24.0  24.1 
Reclassification realized in net earnings 1.9 0.5 2.4 
Balance at February 25, 2024$4.6 $29.8 $(4.7)$29.7 

17

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The components of AOCI, net of tax, for the quarter and nine months ended February 26, 2023 were as follows:
(in millions)Foreign Currency Translation AdjustmentUnrealized Gains (Losses) on DerivativesBenefit Plan Funding PositionAccumulated Other Comprehensive Income (Loss)
Balance at November 27, 2022$4.6 $7.4 $(6.0)$6.0 
Gain (loss)(0.1)(7.8) (7.9)
Reclassification realized in net earnings 1.9 0.1 2.0 
Balance at February 26, 2023$4.5 $1.5 $(5.9)$0.1 
Balances at May 29, 2022$4.8 $(0.4)$(6.3)$(1.9)
Gain (loss)(0.3)(0.2) (0.5)
Reclassification realized in net earnings 2.1 0.4 2.5 
Balance at February 26, 2023$4.5 $1.5 $(5.9)$0.1 

The following table presents the amounts and line items in our consolidated statements of earnings where adjustments reclassified from AOCI into net earnings were recorded.
Amount Reclassified from AOCI into Net Earnings
Three Months EndedNine Months Ended
(in millions)
AOCI Components
Location of Gain (Loss) Recognized in EarningsFebruary 25,
2024
February 26,
2023
February 25,
2024
February 26,
2023
Derivatives
Commodity contracts
(1)$(2.5)$(2.3)$(5.6)$(1.5)
Equity contracts
(2)  1.3 (0.8)
Interest rate contracts
(3)0.9  1.3 (0.1)
Total before tax$(1.6)$(2.3)$(3.0)$(2.4)
Tax benefit0.4 0.4 1.1 0.3 
Net of tax$(1.2)$(1.9)$(1.9)$(2.1)
Benefit plan funding position
Recognized net actuarial loss - pension/postretirement plans
(4)$ $ $(0.1)$(0.1)
Recognized net actuarial gain (loss) - other plans
(4)(0.2)(0.2)(0.5)(0.5)
Total before tax$(0.2)$(0.2)$(0.6)$(0.6)
Tax benefit 0.1 0.1 0.2 
Net of tax$(0.2)$(0.1)$(0.5)$(0.4)
(1)Primarily included in food and beverage costs and restaurant expenses. See Note 11 for additional details.
(2)Included in general and administrative expenses. See Note 11 for additional details.
(3)Included in interest, net on our consolidated statement of earnings.
(4)Included in the computation of net periodic benefit costs, which is a component of general and administrative expenses.
Note 10. Stock-Based Compensation
We grant stock options for a fixed number of shares to certain employees with an exercise price equal to the fair value of the shares at the date of grant. We also grant restricted stock, restricted stock units and performance stock units with a fair value
18

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
generally determined based on our closing stock price on the date of grant. In addition, we grant cash-settled stock units (Darden stock units) which are classified as liabilities and are marked to market as of the end of each period.
The weighted-average fair value of non-qualified stock options and the related assumptions used in the Black-Scholes option pricing model for options granted during the periods presented, were as follows:
Nine Months Ended
 February 25, 2024February 26, 2023
Weighted-average fair value$55.56$36.20
Dividend yield3.4 %3.8 %
Expected volatility of stock42.2 %42.0 %
Risk-free interest rate4.0 %2.8 %
Expected option life (in years)5.95.9
Weighted-average exercise price per share$169.02$121.47


The weighted-average grant date fair value of market-based performance stock units and the related assumptions used in the Monte Carlo simulation to record stock-based compensation for units granted during the periods presented, were as follows:
Nine Months Ended
February 25, 2024February 26, 2023
Dividend yield (1)0.0 %0.0 %
Expected volatility of stock32.3 %55.5 %
Risk-free interest rate4.5 %2.9 %
Expected life (in years)2.92.8
Weighted-average grant date fair value per unit$217.11$137.73
(1)Assumes a reinvestment of dividends.
The following table presents a summary of our stock-based compensation activity for the nine months ended February 25, 2024.
(in millions)Stock
Options
Restricted
Stock/
Restricted
Stock
Units
Equity-Settled
Performance
Stock Units
Cash-Settled Darden
Stock
Units
Outstanding beginning of period1.62 0.28 0.36 0.81 
Awards granted0.13 0.07 0.16 0.16 
Awards exercised/vested(0.35)(0.10)(0.16)(0.17)
Awards forfeited   (0.03)
Outstanding end of period1.40 0.25 0.36 0.77 
19

DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We recognized expense from stock-based compensation as follows: 
Three Months EndedNine Months Ended
(in millions)February 25,
2024
February 26,
2023
February 25,
2024
February 26,
2023
Stock options$0.9 $1.5 $5.9 $5.6 
Restricted stock/restricted stock units1.4 1.7 7.2 6.3 
Equity-settled performance stock units1.4 3.5 14.0 12.4 
Cash-settled Darden stock units9.1 6.3 26.8 24.8 
Employee stock purchase plan