Darden Restaurants
Annual Report 2023

Plain-text annual report

Dear Fellow Shareholders: Fiscal 2023 was a strong year, and our performance highlights the effectiveness of our strategy as we pursued our mission to be financially successful through great people consistently delivering outstanding food, drinks and service in an inviting atmosphere, making every guest loyal. In addition to our Back-to-Basics Operating Philosophy driving strong execution in our restaurants, Darden’s Four Competitive Advantages of Significant Scale, Extensive Data & Insights, Rigorous Strategic Planning and a Results-Oriented Culture enabled our brands to compete more effectively and provide even greater value to our guests. Fiscal 2023 Results Despite a tough environment, we significantly outperformed the industry in same-restaurant sales and traffic, and met or exceeded the financial outlook we shared at the beginning of the fiscal year. Total sales grew 8.9% to $10.5 billion driven by same-restaurant sales growth of 6.8% and sales from 47 net new restaurants. This marked the first fiscal year in Darden’s history surpassing $10 billion in sales, and this strong top-line performance drove $1.6 billion in EBITDA1 from continuing operations. These results enabled us to achieve diluted net earnings per share growth of 8.1% to $8.00. Our strong operating model continued to generate substantial cash flows, which allowed us to invest in our business and maintain our history of returning significant cash to our shareholders. We returned more than $1 billion to shareholders in the form of dividends and share repurchases. The market responded positively to our performance, leading to a total shareholder return of 32.6% for the fiscal year. We have consistently delivered strong, long-term shareholder returns and we continue to believe that, over time, our 10%15% target for total shareholder return (TSR) remains appropriate. In fact, when we look at our performance over the last five years, we have been able to achieve annualized TSR of 15.8%. Additionally, since Darden was spun off from General Mills 28 years ago, the company has achieved an annualized TSR of 10% or greater over any 10 fiscal-year period. Our Winning Strategy The foundation for our success is rooted in our strategy. Our restaurant teams are able to execute at a high level by remaining focused on our Back-to-Basics Operating Philosophy anchored in food, service and atmosphere and brought to life through integrated marketing. 1 Represents a Non-GAAP measure. A reconciliation of GAAP to Non-GAAP numbers can be found at the end of this letter. Our brands drive execution through simplification and being brilliant with the basics, enabling our restaurant teams to create outstanding guest experiences. Never Ending Pasta Bowl During our second quarter, Olive Garden reintroduced their most popular limited time offer, Never Ending Pasta Bowl. Not only was this a great example of our Back-to-Basics Operating Philosophy at work, it was developed within the framework we use to evaluate all promotional activity. First, any promotional activity should elevate brand equity by bringing the brand’s competitive advantages to life. Second, it should be simple to execute, and, finally, it will not be at a deep discount. Never Ending Pasta Bowl lived up to this framework and ultimately exceeded expectations for the seven weeks it ran. Steak Master Series At LongHorn Steakhouse, one of the most important elements of the guest experience is a perfectly grilled steak, and the brand goes to extraordinary lengths to ensure their culinary team is brilliant with the basics when it comes to steaks grilled correctly. To further drive consistent execution, LongHorn recently completed the sixth Steak Master Series — their annual grilling competition and training program. Over the course of two months, thousands of culinary team members participated in a series of competitions that tested their knowledge at the grill, culminating with one ultimate champion  Kylie Hall from Farragut, Tenn. This highly engaging program drives LongHorn’s culture and reinforces its quality standards across the heart-of-house, resulting in a great steakhouse experience for our guests. Our Four Competitive Advantages At the Darden level, we continue to concentrate on strengthening and leveraging our four competitive advantages of Signifi iff cant Scale, ExEE tensive Data & Insigii htstt , Rigii orous Strategic Planninii g, and our Resultstt -Orirr ented CuCC lture. Signifi iff cant Scale Our Significant Scale creates deep relationships with our suppliers and creates cost advantages that a single brand would not be able to achieve on its own. Throughout the year, this was instrumental in enabling our teams to successfully manage through the highly unpredictable inflationary environment while continuing to underprice inflation over the long term. ExEE tensive Data & Insightstt We serve more than one million guests a day across our portfolio of brands spanning multiple segments of full-service dining, providing us with the opportunity to capture Extensive Data & Insights. By harnessing the scale and depth of this data, we can more accurately plan for our business by leveraging machine learning technology to inform sales forecasting, labor scheduling and inventory management. We are able to better understand our guests so we can reduce friction in their experience and market to them more effectively. Finally, we are able to optimize our menus and inform purchasing and pricing decisions based on guest insights and historical trends. Rigorous Strategic Planning We continue to deploy our Rigorous Strategic Planning process to help determine the unique advantages of each brand and their strategic role within the portfolio, to ensure our brands are focused on the right work. This process also provides a platform to continuously evaluate our portfolio mix, informing our acquisition strategy. Resultstt -Oriented Culture Our people are at the heart of our success, which is why we continuously work to strengthen our Results-Oriented Culture to earn the loyalty of our team members and guests. Our leaders work diligently to ensure that our restaurants are great places to work, resulting in retention rates that exceed industry averages. In addition, several of our brands were recognized this year as industry leaders in employment practices by Black Box Intelligence. Olive Garden, The Capital Grille and Seasons 52 were honored with the Employer of Choice Award, and LongHorn and Eddie V’s received the Best Practices Award. All four of our competitive advantages are unmatched in the full-service dining industry, allowing our brands to compete more effectively and provide even greater value for our guests. Our Newest Brand On May 3, 2023, we announced our intent to acquire Ruth’s Chris Steak House and subsequently completed the acquisition on June 14, 2023. We are thrilled to welcome this iconic brand to our portfolio. Ruth’s Chris has an impressive history of delivering elevated dining experiences to their loyal guests. Founded in 1965, they are known for their signature USDA Prime steaks served sizzling on 500-degree plates, New Orleans-inspired sides and an award-winning wine list. They currently have 155 locations around the globe, generating system-wide sales of more than $860 million. Whenever we consider adding to our portfolio, we use a set of criteria to evaluate a potential brand. It should be a full-service dining concept with broad guest appeal, have the ability to grow at a greater rate than the target included in our long-term framework, and be big enough to make an impact to our financial performance over time. To be an excellent fit, a brand must also strengthen our strategy by enhancing our scale, fitting our culture, and complementing our portfolio of iconic brands. Ruth’s Chris checks all these boxes. Just as our competitive advantages will benefit Ruth’s Chris, they will further amplify these advantages, which is critical to our success. Additionally, they are a great cultural fit — we share a similar Back-to-Basics Operating Philosophy, as well as the same passion for our people. Finally, Ruth’s Chris complements our portfolio — their differentiated brand allows us to capture a wider range of fine dining guest occasions that we are not competing for today. The integration of Ruth’s Chris is underway, and we have assembled an experienced team to manage this process in a way that does not significantly disrupt operations. As we look forward, we expect Ruth’s Chris will be accretive to our earnings per share by approximately 10 to 12 cents in fiscal 2024 and 20 to 25 cents in fiscal 2025. We anticipate total acquisition and integration related expenses of approximately $55 million, pre-tax. Nourish & Delight Everyone We Serve At Darden, we continue to work together in pursuit of our higher purpose — to Nourish & Delight Everyone We Serve. As a company that employs more than 190,000 team members, serves more than one million guests a day and has restaurants in all 50 states, we recognize the impact we can make in people’s lives. That is why we strive to nourish and delight our team members, guests and communities. Serving Our Team Members Our team members bring our brands to life each day. We are committed to nourishing and delighting them by investing in their success, providing pathways for growth and ensuring inclusive and diverse workplaces, helping us remain the employer of choice in our industry. Investing In ThTT eir Success We only succeed when our team members succeed, which is why we invest in them throughout their careers at Darden. This begins with ensuring that all our team members receive competitive pay. On average, hourly team members across all our brands earn more than $22 an hour, inclusive of income earned through gratuities. To continue strengthening our employment proposition, we invest in programs that help our team members be at their best. This includes access to a variety of health benefits so eligible team members can choose from a menu of options that best fit their needs and those of their family. This year, we invested an additional $8 million in subsidies to limit increases in medical premiums that our team members pay, and it marks the sixth consecutive year we have done so. We also continuously work to identify ways that help our team members grow. For many of our team members, English is not their first language. To help them succeed and grow their careers, we introduced a program called Fast Fluency to offer Spanish-speaking team members the chance to learn English for free. The Darden Foundation also debuted the Next Course Scholarship program to support our team members’ families by helping their children achieve their educational goals. As a result, nearly 100 children or dependents of Darden team members were awarded post- secondary scholarships worth $3,000 each. These team members represent more than 80 different restaurants across seven of our brands and 32 states. Pathwaysyy to Growth Our growth as a company is c having the right people in the With more than 1,900 locatio than 8,000 leadership positio restaurants, we offer significa for individuals to build their c contingent on e right roles. ons and more ons across our ant opportunity careers with us. Central to this is our commitm promoting from within our ra 2023, we promoted 2,043 Re Managers, 320 General Man Managing Partners and 15 D Operations from within. The training programs we have in members and leaders ensure continue fostering a strong p to meet the growth of our bu ment to anks. In fiscal estaurant agers or Directors of e extensive n place for team es we are able to ipeline of talent usiness. Ensuring an Inclusive and Diversrr e Culture At Darden, everyone is welcome to a seat at our table, and our commitment to inclusion and diversity remains as strong as it was when Bill Darden opened The Green Frog in 1938. Ensuring inclusive workplaces is at the very heart of Darden and our brands, and our efforts to advance workplace diversity reflect our belief that we are strengthened by a team with different perspectives, beliefs, cultures and ideas. To do this, we are focused on strengthening our pipeline of diverse leaders. Out of more than 2,300 restaurant leaders who were promoted from within in fiscal 2023, 837 Restaurant Managers, 99 General Managers or Managing Partners, and 5 Directors of Operations were People of Color. We continue to support our restaurant teams in the hiring and development of talent so our teams reflect the diversity of our industry and the communities we serve. You can learn more about how we nourish and delight our team members by visiting Darden.com/Our-Impact. Serving Our Guests In fiscal 2023, we served more than 410 million guests. Our restaurants serve as the backdrop for daily celebrations, milestone moments and occasions when guests simply want to leave the cooking to us. We take that responsibility seriously, which is why our teams strive to create extraordinary dining experiences every day. Their focus on executing at the highest level is especially apparent during holiday periods, and several of our brands achieved record-level performance on key dates this year. Olive Garden recorded their highest sales day and sales week in history during the week of Mother’s Day. Over the holiday season, LongHorn Steakhouse set new all-time weekly sales records, only to break them during Valentine’s week. The Capital Grille, Eddie V’s and Seasons 52 each enjoyed all-time daily sales records on Thanksgiving Day. Our internal guest satisfaction metrics are another leading indicator that we are creating great guest experiences. During the year, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House and Bahama Breeze each set new quarterly, all-time records in overall satisfaction, and our guest satisfaction scores remain exceptionally strong across our entire portfolio. In addition, several of our brands ranked number one among major casual dining brands in key measurement categories throughout the year within Technomic’s industry tracking tool. This included Olive Garden for Brand Image; LongHorn for Overall Experience, Food Quality and Service; and Cheddar’s Scratch Kitchen for Value, Atmosphere and Brand Fit & Loyalty. Each time our guests visit our restaurants, they trust us to provide a great experience, and exceeding their expectations is our passion. Serving Our Communities As the largest full-service restaurant company in the country, we are committed to making a positive impact in the communities we serve. While there are many ways to get involved, we are focused on making a difference on issues that we are best equipped to help address. This includes fighting hunger, sourcing food with care and helping protect our planet by pursuing continuous improvement over time through opportunities that align with business priorities. FiFF ghting Hunger According to the USDA, more than 34 million people in the United States are food insecure, and we are uniquely positioned to help. For 13 years, we have partnered with Feeding America on their efforts to fight hunger, which disproportionately impacts communities of color. Since 2010, we have donated $16.3 million to support their network of more than 200 food banks. As part of our support, we once again worked with Feeding America, and our partners, Penske Truck Leasing and Lineage Logistics, to help add 10 additional 26-foot refrigerated box trucks for mobile food pantry programs at 10 local food banks. These trucks are critical to increasing access to nutritious food in areas with higher levels of food insecurity, including communities of color. Over the course of three years, we have added a total of 35 trucks across 35 food banks in 18 states. This year also marks the 20th anniversary of our Harvest program. Since 1993, our restaurants have collected excess, nutritious food that was not served and prepared it for weekly donation to local nonprofit partners. Because of the scale of our footprint, this amounts to a substantial and immediate impact in our communities and helps divert food waste from landfills. This fiscal year, we donated 5.3 million pounds of food, which is equivalent to 4.4 million meals. Since the program began, we have donated more than 136 million pounds of food, amounting to more than 113 million meals. Sourcing Food with Care Great food served in our restaurants starts with high-quality ingredients, and our Food Principles outline our promise to guests on responsible sourcing, nutritional disclosure, food safety and animal welfare. Building on our Food Principles, Darden’s Animal Welfare Policy adopts an outcomes-based approach to continually ensure that animals are treated with respect and care in the process of providing nutritious food sourced through our supply chain. In 2019, we established an Animal Welfare Council consisting of leading academics and thought leaders with expertise in the care of animals in food supply chains. This group continues to support us in our efforts to improve animal welfare outcomes, which in turn helps drive engagement with our suppliers and industry groups. We also recognize that the food supply chain is interconnected with environmental resources and we have taken steps to better understand our footprint and how we can affect the most meaningful change. In fiscal 2023, we performed an assessment of our suppliers to evaluate how key commodities — including beef, palm oil, soy, cocoa, coffee, fiber and timber — impact deforestation. Our findings determined that more than 80% of these commodities showed little to no risk of contributing to deforestation or land-use conversion. We plan to continue engaging with our suppliers and making further improvements in this area. In addition, through the Darden Foundation, we provided a grant to the National Fish and Wildlife Foundation (NFWF) to help fund five conservation projects in the Rocky Mountain Rangelands. These initiatives will support restoration and improvements in grazing lands found within this vital ecosystem. Protecting Our Planet Darden is actively engaged on sustainability efforts within our operations so we can continue to be responsible stewards of the environment. This includes taking action on climate impacts from our operations, responsibly conserving energy and water, and managing food waste. In 2019, we began reporting on Scope 1 and 2 greenhouse gas emissions, and in fiscal 2022, we conducted an initial screening of Scope 3 emissions. In fiscal 2023, we performed a detailed, third- party verified Scope 3 emissions inventory for all relevant upstream and downstream sources. These findings are critical to developing a long-term strategy on how we can engage collaboratively with suppliers on solutions to environmental challenges. For details on our GHG emissions findings, visit Darden.com/Our-Impact. This strategy also consists of improving energy efficiency to help reduce operational costs and minimize climate impacts. At our Restaurant Support Center in Orlando, Fla., we operate a 1.1- megawatt solar array, which offsets approximately 15% of the building’s energy requirements. The building was also constructed according to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) standards and previously received LEED Gold certification. Finally, food waste is the largest single component of our waste stream, and we consistently take steps to reduce the amount of waste we send to landfills. In addition to strengthening our forecasting efforts to mitigate food loss, our Harvest program plays an important role in diverting food waste. Instead of discarding excess, unused food, restaurants donate it to local nonprofits so it can be used to fight hunger in the communities we serve. In fiscal 2023, 5.3 million pounds of food was diverted and donated to nonprofit organizations. As we continue to pursue our higher purpose, the addition of Ruth’s Chris gives us the opportunity to Nourish & Delight even more guests, more team members and more communities, and we look forward to making additional progress in the coming year. Our Best Days Are Ahead We are proud of the results we achieved in fiscal 2023, and we will continue to execute our proven strategy to drive growth and long-term shareholder value. We wish to thank our 190,000 team members for their outstanding dedication to being brilliant with the basics and creating exceptional dining experiences for our guests. We are also grateful to our Board of Directors for their commitment to providing strategic guidance and effective, transparent corporate governance. And we thank you, our fellow shareholders, for your investment and ongoing support of Darden. We will continue to work every day to uphold the trust you have placed in our company. Eugene I. Lee, Jr. Chairman Rick Cardenas President & Chief Executive Officer Forward-Looking Statements This letter contains forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to diffff er materially from those set forth in or implied by such forward-looking statements. Additional cautionary and other information with respect to these forward-looking statements is set forth in Item 1A of the Company’s Annual Report on Form 10-K under the heading “Risk Factors” which accompanies this letter. Non-GAAP Information The information in this letter includes financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”), such as EBITDA. The Company’s management uses this non-GAAP measure in its analysis of the Company’s performance and cash flow generation. The Company believes that the presentation of certain non-GAAP measures provides useful supplemental information that is essential to a proper understanding of the operating results of the Company’s businesses. This non-GAAP disclosure should not be viewed as a substitute for operating results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. EBITDA Reconciliation $ in millions Net Earnings from Continuing Operations Interest, Net Income Tax Expense Depreciation and Amortization EBITDA Fiscal 2023 $983 82 137 388 $1,590 [This Page Intentionally Left Blank] UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark One) ☒ ☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiff scal year ended May 28, 2023 OR TRARR NSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period frff om to Commission File Number: 1-13666 DARDEN RESTAURARR NTS, INC. (Exact name of Registrant as specififf ed in its charter) Florida (State or other jurisdiction of ation or organization) rr incorpor 59-3305930 (IRS Employer Identififf cation No.) 1000 Darden Center Drive, Orlando, Florida (Address of principal executive offff iff ces) 32837 (Zip Code) Registrant’s telephone number, including area code: (407) 245-4000 Securities registered pursuant to Section 12(b) of the Act: Title of each class g y Trading Symbol Common Stock, without par value DRI Name of each exchange on which registered g g New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defiff ned in RulRR e 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if Registrant is not required to fiff le reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark if the Registrant (1) has fiff led all reports required to be fiff led by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forff the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the Registrant has submitted electronically and posted on its corpor submitted and posted pursuant to RulRR e 405 of Regulation S-T during the preceding 12 months (or forff and post such fiff les). Yes ☒ No ☐ Indicate by check mark whether the Registrant is a large accelerated fiff ler, an accelerated fiff ler, a non-accelerated fiff ler, or a smaller reporting company. See defiff nition of “large accelerated fiff ler,” “accelerated fiff ler” and “smaller reporting company” in RulRR e 12b-2 of the Exchange Act. (Check one): ate Web site, if any, everyrr Interactive Data File required to be such shorter period that the Registrant was required to submit such shorter period that the Registrant was required to fiff le such reports), and (2) has been subject to such fiff ling requirements forff rr Large accelerated fiff ler Non-accelerated fiff ler ☒ ☐ (Do not check if a smaller reporting company) Accelerated fiff ler 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 forff fiff nancial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐ Indicate by check mark whether the registrant has fiff led a report on and attestation to its management’s assessment of the effff eff ctiveness of its internal control over fiff nancial reporting under Section 404(b) of the Sarbar nes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting fiff rm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the fiff nancial statements of the registrant included in the fiff ling reflff ect the correction of an error to previously issued fiff nancial statements. Yes ☐ No ☒ Indicate by check mark whether any of those error corrections are restatements that required a recoveryrr analysis of incentive-based compensation received by any of the registrant’s executive offff iff cers during the relevant recoveryrr period pursuant to §240.10D-1(b). Yes ☐ No ☒ complying with any new or revised Indicate by check mark whether the Registrant is a shell company (as defiff ned in RulRR e 12b-2 of the Act). Yes ☐ No ☒ The aggregate market value of Common Stock held by non-affff iff liates of the Registrant based on the closing price of $148.39 per share as reported on the New York Stock Exchange on November 25, 2022, was appr oximately: $18,011,600,000. a Number of shares of Common Stock outstanding as of May 28, 2023: 121,070,611. Portions of the Registrant’s Proxy Statement forff Commission no later than 120 days aftff er May 28, 2023, are incorpor rr ated by refeff rence into Part III of this Report. its Annual Meeting of Shareholders on September 20, 2023, to be fiff led with the Securities and Exchange DOCUMENTS INCORPORARR TED BY REFERENCE DARDEN RESTAURARR NAA TS, INC. FORM 10-K FISCAL YEAR ENDED MAY 28, 2023 TABLE OF CONTENTS Business PART I Item 1. Item 1A. Risk Factors Item 1B. Unresolved Staffff Comments Item 2. Properties Legal Proceedings Mine Safeff ty Disclosures Item 3. Item 4. PART II Item 5. Market forff Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Reserved Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 6. Item 7. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Financial Statements and Supplementaryrr Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9. Item 9A. Controls and Procedures Item 9B. Other Inforff mation PART III Item 10. Item 11. Item 12. Item 13. Item 14. PART IV Item 15. Directors, Executive Offff iff cers and Corpor Executive Compensation rr ate Governance Security Ownership of Certain Benefiff cial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services Exhibits and Financial Statement Schedules Signaturtt es Cautionary Statement Regarding Forward-Looking Statements Pageg 1 13 24 24 24 24 25 27 27 37 38 77 77 77 77 77 78 78 78 78 79 Statements set forff th in or incorprr orated into this report regarding the expected increase in sales frff om continuing operations, same-restaurant sales, the number of our restaurants, our annual effff eff ctive tax rate and capia tal expenditurtt es in fiff scal 2024, and all other statements that are not historical faff cts, including without limitation statements with respect to the fiff nancial condition, results of operations, plans, objectives, futff urt e perforff mance and business of Darden Restaurants, Inc. and its subsidiaries that are preceded by, folff lowed by or that include words such as “may,” “will,” “expect,” “intend,” “anticipate,” “continue,” “estimate,” “project,” “believe,” “plan,” “outlook” or similar expressions, are forff ward-looking statements within the meaning of the Private Securities Litigation Reforff m Act of 1995 and are included, along with this statement, forff provisions of that Act. Any forff ward-looking statements speak only as of the date on which such statements are made, and we any reason to reflff ect events or circumstances arising aftff er such date. By undertake no obligation to update such statements forff their naturt e, forff ward-looking statements involve risks and uncertainties that could cause actuat l results to diffff eff r materially frff om th in or implied by such forff ward-looking statements. In addition to the risks and uncertainties of ordinaryrr business those set forff obligations, and those described in inforff mation incorpor ated into this report, the forff ward-looking statements contained in this report are subject to the risks and uncertainties described in Item 1A below under the heading “Risk Factors.” es of complying with the safeff harbor rr purpos r rr [This Page Intentionally Left Blank] Item 1. BUSINESS Introduction PART I Darden Restaurants, Inc. is a fulff l-service restaurant company, and as of May 28, 2023, we owned and operated 1,914 restaurants through subsidiaries in the United States and Canada under the Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capia tal Grille®, Seasons 52®, Bahama Breeze®, Eddie V’s Prime Seafoodff Burger® trademarks. As of May 28, 2023, we also had 69 restaurants operated by independent third parties pursuant to area development and frff anchise agreements. The folff well as those operated under frff anchise agreements, as of May 28, 2023: lowing tabla e details the number of company-owned and operated restaurants, as ®, and The Capia tal Number of restaurants Olive Garden LongHorn Steakhouse Cheddar’s Scratch Kitchen Yard House (1) The Capital Grille Seasons 52 Bahama Breeze Eddie V’s The Capital Burger Owned and operated: United States Canada Total Franchised: United States (2) Latin America Asia Middle East The Caribbean Total 897 8 905 11 29 2 1 1 44 562 — 562 18 — — — — 18 180 — 180 4 — — — — 4 86 — 86 — — — — — — 62 — 62 — 2 — — — 2 44 — 44 — — — — — — 42 — 42 1 — — — — 1 29 — 29 — — — — — — 4 — 4 — — — — — — Total 1,906 8 1,914 34 31 2 1 1 69 (1) Includes two restaurants that are owned jointly by us and third parties, and managed by us. (2) Includes Puerto Rico and Guam. rr rr rr rr ation incorpor Darden Restaurants, Inc. is a Florida corpor ated in March 1995, and is the parent company of GMRI, Inc., ation. GMRI, Inc. and certain other of our subsidiaries own and operate our restaurants. GMRI, Inc. was also a Florida corpor originally incorpor ated in March 1968 as Red Lobster Inns of America, Inc. We were acquired by General Mills, Inc. in 1970 and became a separate publicly held company in 1995 when General Mills distributed all of our outstanding stock to the stockholders of General Mills. Our principal executive offff iff ces and restaurant support center are located at 1000 Darden Center Drive, Orlando, Florida 32837, telephone (407) 245-4000. Our corpor ate website address is www.darden.com. We make our reports on Forms 10- K, 10-Q and 8-K, Section 16 reports on Forms 3, 4 and 5, and all amendments to those reports availabla e frff ee of charge on our website the same day as the reports are fiff led with or furff nished to the Securities and Exchange Commission. Inforff mation on our website is not deemed to be incorpor ated by refeff rence into this Form 10-K. Unless the context indicates otherwise, all refeff rences to “Darden,” “the Company,” “we,” “our” or “us” include Darden Restaurants, Inc., GMRI, Inc. and our respective subsidiaries. rr rr On June 14, 2023, we completed our acquisition of RutRR h’s Hospitality Group, Inc., a Delaware corpor rr ation (RutRR h’s), forff $21.50 per share in cash. RutRR h’s is the owner, operator and frff anchisor of restaurants under the RutRR h’s Chris Steak House® trademark. As the acquisition was subsequent to our fiff scal year ended on May 28, 2023, there was no impact to our consolidated fiff nancial statements or operations. As of the closing, RutRR h’s Chris Steak House had 155 locations around the globe, including 81 company-owned or company-operated restaurants and 74 frff anchised restaurants. Because our acquisition of RutRR h’s was completed during the fiff rst quarter of fiff scal 2024, the description of the business throughout this Item 1 does not include a description of RutRR h’s Chris Steak House unless specififf cally refeff renced herein. We have a 52/53 week fiff scal year ending the last Sunday in May. Our fiff scal year 2023 ended May 28, 2023 and consisted of 52 weeks, fiff scal 2022 ended May 29, 2022 and consisted of 52 weeks, and fiff scal 2021 ended May 30, 2021 and consisted of 52 weeks. The folff lowing description of our business should be read in conjunction with the inforff mation in Part II of this report under the capta ion “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8 - Financial Statements and Supplementaryrr Data.” 1 COVID-19 Pandemic and Other Impacts to our Operating Environment During fiff scal 2022, increases in the number of cases of COVID-19 throughout the United States including the Omicron variant which signififf cantly impacted our restaurants in the third quarter, subjected some of our restaurants to other COVID-19- related restrictions such as mask and/or vaccine requirements forff team members, guests or both. Along with COVID-19, our operating results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflff ation on wages and other cost of goods sold; these events furff caused additional disrupt rr operating results as wage and cost inflff ation continue to exceed recent norms. ions in our product supply chain. During fiff scal 2023, these events have continued to impact our ther impacted the availabia lity of team members needed to staffff our restaurants and The ongoing effff orff ts to recover frff om the effff eff cts of the COVID-19 pandemic and its variants, along with other geopolitical and macroeconomic events could impact our restaurants through wage inflff ation, staffff iff ng challenges, product cost inflff ation and rr disrupt ions in the supply chain that impact our restaurants’ abia lity to obtain the products needed to support their operations. SSeggment Infforff matiion We manage our restaurant brands in North America as operating segments. The brands operate principally in the U.S. within l-service dining. We aggregate our operating segments into reportabla e segments based on a combination of the size, economic fulff characteristics and sub-segment of fulff Olive Garden, 2) LongHorn Steakhouse, 3) Fine Dining (which, as of the end of fiff scal 2023, includes The Capia tal Grille and Eddie V’s) and 4) Other Business (which includes Cheddar’s Scratch Kitchen, Yard House, Bahama Breeze, Seasons 52, The Capia tal Burger and results frff om our frff anchise operations). External sales are derived principally frff om food do not rely on any maja or customers as a source of sales and the customers and long-lived assets of our reportabla e segments are predominantly in the U.S. There were no material transactions among reportabla e segments. l-service dining within which each brand operates. We have four reportabla e segments: 1) and beverage sales, we ff ff Restaurant Brands Ollive Gardden Olive Garden is an internally-developed brand and iis thhe llarggest f lulff ll-ser ivice didi ini gng Italliian restaurant operator iin thhe U initedd States. Olliive Gardden offff eff rs a variety of Italian foods quality, and a broad selection of imported Italian wines. In 1982, Olive Garden opened its fiff rst restaurant in Orlando, Florida. ing frff esh ingredients presented simply with a focff us on flff avor and feff aturt ff Most dinner menu entrée prices range frff om $11.00 to $21.00, and most lunch menu entrée prices range frff om $9.00 to $11.00. The price of each entrée includes as much frff esh salad or soup and breadsticks as a guest desires. During fiff scal 2023, the average check per person (defiff ned as total sales divided by number of entrées sold) was appr beverages accounting forff a refllff ect gge gogra hiphi chihillddren’s menu. oximately $22.50, with alcoholic 5.3 percent of Olive Garden’s sales. Olive Garden maintains diffeff rent menus across iits tradde areas to c didiffff eff rences iin consumer prefeff rences, priices a dnd sellectiions, as wellll as a smallller portiionedd, llower-priicedd a e LL gongHorHH n Ste kakhhous kkk L gongHorn Steakhkhouse iis a f lulff ll-ser ivice steakhkhouse restaurant bbra dnd wiithh llocatiions priimariillyy iin thhe eastern U initedd States, operatii gng iin an atmos hphere iins ipiredd byby thhe Ameriican West. L gongHorn Steakhkhouse openedd iits fiiff rst restaurant iin 1981 a dnd we ac iquiredd L gongHorn Steakhkhouse iin Oct bober 2007 as part of thhe RARR RE Hospitality International, Inc. (RARR RE) acquisition. L gongHorn Steakhkhouse restaurants feff aturtt e a variietyy of menu iitems iincll diudi gng siiggnaturt e frff eshh steakks a dnd chihickken, as wellll as sallmon, shhriimp, riibbs, porkk chhops a dnd bburggers. Most dinner menu entrée prices range frff om $13.50 to $38.00, and most lunch menu entrée prices range frff om $9.00 to $12.00. The price of most entrées includes a side and/or salad and as much frff eshly baked bread as a guest desires. During fiff scal 2023, the average check per person was appr Steakhouse’s sales. LongHorn Steakhouse maintains diffff eff rent menus forff areas to reflff ect geographi chihillddren’s menu. c diffff eff rences in consumer prefeff rences, ppriices a dnd sellectiions, as wellll as a smallller portiionedd, llower-priicedd oximately $25.50, with alcoholic beverages accounting forff dinner and lunch and diffff eff rent menus across its trade 8.9 percent of LongHorn a a CheCC ddar’s Scratch KiKK tchen Cheddar’s Scratch Kitchen is a fulff l-service restaurant brand operating primarily in Texas and throughout the southern, mid- western and mid-Atlantic regions of the United States. The casual dining menu feff aturt es modern classics and American faff vorites cooked frff om scratch. Cheddar’s Scratch Kitchen opened its fiff rst restaurant in 1979 and we acquired Cheddar’s Scratch Kitchen in April 2017. 2 Most lunch and dinner menu entrée prices range frff om $8.00 to $23.00. During fiff scal 2023, the average check per person oximately $18.00, with alcoholic beverages accounting forff a was appr Scratch Kitchen feff aturtt es diffff eff rent menus across its trade areas to reflff ect geographi and selections, as wellll as a smallller portiionedd, llower-priicedd chihillddren’s menu. a 7.9 percent of Cheddar’s Scratch Kitchen’s sales. Cheddar’s c diffff eff rences in consumer prefeff rences, prices YarYY d HousHH e Yard House is a fulff classic rock and over 100 draftff beer offff eff rings. The American menu includes more than 100 chef driven items with a wide l-service restaurant brand operating in metropolitan areas across the United States and is known forff food, ff range of appe Yard House opened its fiff rst restaurant in 1996 and we acquired Yard House in August 2012. a tizers, snacks, burgers and steaks, street tacos, salads, sandwiches and a generous selection of vegetarian dishes. great Yard House design elements create a contemporary,rr menu entrée prices range frff om $10.00 to $48.00. During fiff scal 2023, the average check per person was appr with alcoholic beverages accounting forff of craftff beers across its trade areas to reflff ect geographi smaller portioned, lower-priced children’s menu. a 32.6 percent of Yard House’s sales. Yard House maintains diffff eff rent menus and selections c diffff eff rences in consumer prefeff rences, prices and selections, as well as a yet casual, “come as you are” environment. Most lunch and dinner oximately $34.50, a ThheTT CapiCC t lal Grilllle l Thhe Ca ipia tall Griilllle iis a fiiff ne didi ini gng restaurant bbra dnd wiithh llocatiions priimariillyy iin majja or metr ii gng rellaxedd elleggance a dnd stylyle. Thhe Ca ipia tall Griilllle openedd iits fiiff rst restaurant iin 1990 a dnd we ac opoliitan ciitiies iin thhe U initedd States fof the RARR RE acquisition. Natiionallllyy accllaiimedd forff inni gng wiine lliist offff eff rii gng over 350 sellectiions, personalliizedd ser ivice, a comforff iquiredd Thhe Ca ipia tall Griilllle iin ddryyrr agigi gng steakks on thhe premiises, thhe restaurants feff aturt e tablbla e cll bub-lliikke atmos hphere, a dnd premiiere feff aturt Oct bober 2007 as part an awardd-wii ppriivate didi ini gng rooms. Most didinner menu entrée priices range frff om $35.00 to $95.00 and most llunchh menu entrée rp ices range frff om $20.00 to $49.00. Duringg fiiff scall 2023, thhe averagge chheckk per person was appr percent of Thhe Ca ipia tall Griilllle’s salles. Thhe Ca ipia tall Griilllle offff eff rs didiffff eff rent menus forff refllff ect gge gogra hiphi c didiffff eff rences iin consumer prefeff rences, priices a dnd sellectiions. a a ioximately $97.00, with alc h l oholiic bbeveragges accountii gng f rorff didinner a dnd llunchh a dnd variies iits wiine lliist to 26.9 Seasons 52 Seasons 52 is an internally-developed fulff l-service restaurant brand with a casually sophisticated, frff esh grill and wine bar that offff eff rs a seasonally changing menu with all items under 595 calories. The menu includes an international collection of wines, feff aturt fiff rst restaurant in Orlando, Florida. ing 52 wines availabla e by the glass, along with exceptional signaturt e handcraftff ed cocktails. In 2003, Seasons 52 opened its Most llunchh a dnd didinner menu entrée priices ra gnge frff om $13.00 to $49.50. During fiff scal 2023, the average check per person 23.8 percent of Seasons 52’s sales. Seasons 52 maintains an oximately $49.50, with alcoholic beverages accounting forff was appr a all-day menu in addition to diffff eff rent seasonal offff eff rings, a pared-down lunch menu and a happy- hour menu. a BB hahama Breezee e Bahhama Breeze iis an iinternallllyy-ddevellopedd f lulff ll-ser ivice restaurant bbra dnd operatii gng priimariillyy iin thhe eastern U initedd States thhat offff eff rs gguests thhe feff ellii gng of a Cariibbbbean escapea didistiinctiive, Cariibbbbean-iins ipiredd frff eshh seaf dood, Breeze opened its fiff rst restaurant in Orlando, Florida. ff , wiithh f dood, ff chihickken a dnd steakks as wellll as hha dndcraftff edd tr ff ddrii knks a dnd atmos hphere f ound d iin thhe iislla dnds. Thhe menu feff aturt es iopicall cockktaiills. In 1996, Bahama Most lunch and dinner menu entrée prices range frff om $9.00 to $25.00. During fiff scal 2023, the average check per person was 21.8 percent of Bahama Breeze’s sales. Bahama Breeze maintains oximately $32.50, with alcoholic beverages accounting forff c diffff eff rences in consumer prefeff rences, prices and selections, as well as a appr a diffff eff rent menus across its trade areas to reflff ect geographi smaller portioned, lower-priced children’s menu. a EddiEE e V’s Eddie V’s is a fiff ne dining restaurant brand with locations in maja or metropolitan cities in the United States, with a sophisticated and contemporaryrr ambiance, feff aturtt feff aturt e an ever-changing array of seasonal seafood, perfeff ction. The atmosphere provides an alluring dining experience reminiscent of a modern day Gatsby, infusff experience with an irresistible vibe. Eddie V’s opened its fiff rst restaurant in 2000 and we acquired Eddie V’s in November 2011. ing live music trios nightly in the V Lounge. Dishes are artistically prepared and along with critically acclaimed prime steaks, hand cut and broiled to ing an indulgent ff 3 Most dinner menu entrée prices range frff om $38.00 to $107.00. During fiff scal 2023, the average check per person was oximately $114.50, with alcoholic beverages accounting forff dinner and varies its wine list to reflff ect geographi c diffff eff rences in consumer prefeff rences, prices and selections. 29.1 percent of Eddie V’s sales. Eddie V’s maintains diffff eff rent a appr menus forff a r TheTT CapiCC tal Burger The Capia tal Burger is an internally created, development-stage fulff l-service restaurant concept with locations primarily in maja or metropolitan cities in the United States that offff eff rs guests a luxe burger experience. The Capia tal Burger opened its fiff rst restaurant in 2018. The menu feff aturt es burgers made with a proprietaryrr beef blend, sandwiches and appe concept offff eff ring local craftff beers, a unique wine list and spiked shakes. Multiple items take frff om the parentage of The Capia tal Grille, like the signaturtt e Stoli Doli, a pineappl tizers. It is a bar-centric ed martini. e-infusff a a Most lunch and dinner menu entrée prices range frff om $17.00 to $39.00. During fiff scal 2023, the average check per person was appr a Burger maintains an all-day menu in addition to a happya oximately $34.00, with alcoholic beverages accounting forff hour menu. 30.5 percent of The Capia tal Burger’s sales. The Capia tal The folff lowing tabla e shows our restaurant growth over the last fiff ve years and lists the number of restaurants owned and operated by each of our brands and concept as of the end of the fiff scal years indicated and excludes RutRR h’s Chris Steak House since the inforff mation provided below is as of May 28, 2023. The tabla e excludes our restaurants operated by independent third parties pursuant to area development and frff anchise agreements. The fiff nal column in the tabla e lists our total sales frff om continuing operations forff the fiff scal years indicated. Fiscal Year 2019 Olive Garden 866 LongHorn Steakhouse 514 Cheddar’s Scratch Kitchen 161 Yard House 79 The Capital Grille 57 Seasons 52 44 Bahama Breeze 42 Eddie V’s 21 The Capital Burger 1 Total Restaurants 1,785 2020 2021 2022 2023 868 875 884 905 522 533 546 562 165 170 172 180 81 81 85 86 58 60 62 62 44 44 45 44 41 42 42 42 23 26 28 29 2 3 3 4 1,804 1,834 1,867 1,914 Total Sales (in millions) (1) $8,510.4 $7,806.9 $7,196.1 $9,630.0 $10,487.8 (1) During fiff scal 2020 and 2021, many of our locations experienced restrictions on operations, including the abia lity to have dine- in operations and were subject to vaccine and/or mask mandates as a result of the COVID-19 pandemic. Strategy We believe that capaa bla e operators of strong multi-unit brands have the opportuni t ty to increase their share of the restaurant s fulff l-service. All of our restaurants faff ll within the fulff l-service segment. Generally, the restaurant industryrr industry’rr faff st casual, and fulff many independent operators and small chains. We believe we have strong brands, and that the breadth and depth of our l-service restaurant industry.rr This collective capaa bia lity is the product of experience and expertise sets us apaa investments over many years in areas that are critical to success in our business, including restaurant operations excellence, brand management excellence, supply chain, talent management and inforff mation technology, among other things. is considered to be comprised of three segments: quick service, l-service segment, which is highly frff agmented and includes rt in the fulff Our operating philosophy remains focff used on strengthening the core operational funda an outstanding guest experience rooted in culinaryrr Darden enabla es each brand to reach its fulff uniqueness and competitive advantages. Additionally, our brands can capia talize on data driven insights to deliver customized one- to-one customer relationship marketing. We hold ourselves accountabla e forff achieve our commitments to all of our stakeholders. l potential by leveraging its scale, insights, and experience in a way that protects operating our restaurants with a sense of urgency to mentals of the business by providing innovation, attentive service, engaging atmosphere, and integrated marketing. ff 4 Recent and Planned Restaurant Growth During fiff scal 2023, we added 47 net new company-owned restaurants in the United States. Our fiff scal 2023 actuat l restaurant openings and closings, fiff scal 2024 projected openings, and appr by brand (4), are shown below: a oximate capia tal investment, square foot ff age and dining capaa city, Actual - Fiscal 2023 Projected - Fiscal 2024 (4) Pro-Forma New Restaurants (4) Olive Garden LongHorn Steakhouse Cheddar’s Scratch Kitchen Yard House The Capia tal Grille Seasons 52 Bahama Breeze Eddie V’s Totals Restaurant Openings 22 18 10 2 2 1 — 1 56 Restaurant Closings 1 2 2 1 2 2 — — 10 New Restaurant Openings 18-22 15-18 4-5 2-3 2-4 0-1 1-2 2-3 46-53 Capia tal Investment Range (1) (in millions) - - - - - - - - $5.8 $4.6 $5.3 $9.2 $10.0 $7.2 $7.0 $10.0 $4.0 $3.3 $4.0 $7.0 $8.5 $6.0 $5.6 $8.5 Approximate Square Feet (2) 7,700 5,700 6,000 11,000 10,000 9,000 9,000 10,000 Approximate Dining Seats (3) 250 180 210 360 320 250 350 320 (1) Includes cash investments forff building, equipment, furff niturt e and other construcrr tion costs; excludes internal capia talized overhead, pre-opening expenses, tenant allowance and futff urt e lease obligations. Olive Garden, LongHorn Steakhouse and Cheddar’s Scratch Kitchen capia tal investments are based on costs associated with land-only leases; Yard House, The Capia tal Grille, Seasons 52, Bahama Breeze and Eddie V’s capia tal investments are based on ground and building leases. Actuat l costs can varyrr signififf cantly depending on the specififf c location. (2) Includes all space under the roof,ff including the coolers and frff eezers; based on primaryrr prototypes. (3) Includes bar dining seats and patio seating, but excludes bar stools. (4) The Capia tal Burger is a development-stage concept with limited pro-forff ma inforff mation, and as such, it is excluded frff om this oximately 3-4 RutRR h’s Chris Steak House restaurants during fiff scal 2024 which is capta urt ed in a tabla e. We project opening appr . the total projected new restaurant openings above a While our objective is to continue to expand all of our restaurant brands, the actuatt fiff scal 2024 will depend on many faff ctors, including our abia lity to recruirr l number of openings forff each of our t and train restaurant management and hourly opriate sites, negotiate acceptabla e purchase or lease terms, obtain necessaryrr local governmental permits, and brands forff a personnel, locate appr tion. complete construcrr We consider location to be a critical faff ctor in determining a restaurant’s long-term success, and we devote signififf cant effff orff t to the site selection process. Prior to entering a market, we conduct a thorough studyt placement of restaurants. Our site selection process incorpor faff ctors include trade area demographi cs, such as target population density and household income levels; competitive inflff uences in the trade area; the site’s visibility, accessibility and traffff iff c volume; and proximity to activity centers such as shopping malls, hotel/ ove each restaurant site prior motel complexes, offff iff ces and universities. Members of senior management evaluate, inspect and appr to its acquisition. Construcrr acquired and permits are obtained. ates a variety of analytical techniques to evaluate key faff ctors. These ting and opening a new restaurant typically takes appr oximately 250 days on average aftff er the site is to determine the optimal number and a a a rr We systematically review the perforff mance of our restaurants to ensure that each one meets our standards. When a restaurant faff lls below minimum standards, we conduct a thorough analysis to determine the causes, and implement operational and marketing plans to improve that restaurant’s perforff mance. If perforff mance does not improve to acceptabla e levels, the restaurant is evaluated forff changes in trade areas, the expiration of lease agreements, or site concerns. Accordingly, we continue to evaluate our site locations in order to minimize the risk of futff urt e closures or asset impairment charges. relocation, closing or conversion to one of our other brands. Permanent closures are typically due to economic 5 Restaurant Operations We believe that high-quality restaurant management is critical to our long-term success. Our restaurant management turt e varies by brand and restaurant size. We issue detailed operations manuals covering all aspects of restaurant operations, and beverage manuals which detail the preparation procedures of our recipes. The restaurant management teams the day-to-day operation of each restaurant and forff ensuring compliance with our operating standards. strucrr as well as foodff are responsible forff The management strucrr turt es below describe our restaurant operations during the normal and fulff ly operational conditions that were in place at the end of fiff scal 2023. Since the recoveryrr restaurants have returt ned to pre-pandemic levels. frff om the COVID-19 pandemic, the staffff iff ng levels at many of our Each Olive Garden restaurant is led by a General Manager, and each LongHorn Steakhouse and Cheddar’s Scratch Kitchen restaurant is led by a Managing Partner. Each also has three to six additional managers, depending on the operating complexity and sales volume of the restaurant. In addition, each restaurant typically employs between 35 to 200 hourly team members, most of whom work part-time. Restaurant General Managers or Managing Partners report to a Director of Operations who is responsible forff Operations who is responsible foff r between 80 and 120 restaurants. Restaurants are visited regularly by operations management, including offff iff cer level executives, to help ensure strict adherence to all aspects of our standards and to solicit feff edback on opportuni oximately fiff ve to eleven restaurants. Each Director of Operations reports to a Senior Vice President of improvement. ties forff a appr t Each Yard House and Bahama Breeze restaurant is led by a General Manager, and each The Capia tal Grille, Seasons 52, Eddie V’s and The Capia tal Burger restaurant is led by a Managing Partner. Each also has three to ten additional managers. Each Yard House, The Capia tal Grille, Seasons 52 and Eddie V’s restaurant has one executive chef and one to two sous chefsff . The Capia tal Burger restaurant has one sous chef and each Bahama Breeze restaurant has one to three culinaryrr managers. In addition, each restaurant typically employs between 60 to 200 hourly team members, most of whom work part-time. The General Manager or Managing Partner of each restaurant reports directly to a Director of Operations, who has operational responsibility forff appr a executives, to help ensure strict adherence to all aspects of our standards and to solicit feff edback on opportuni improvement. oximately three to eleven restaurants. Restaurants are visited regularly by operations management, including offff iff cer level ties forff t Our Learning and Development team in partnership with each brand’s training leader, together with senior operations developing and maintaining our operations training programs. These effff orff executives, is responsible forff twelve-week training program foff r management trainees and continuing development programs forff emphasis of the training and development programs varies by restaurant brand, but includes inclusive leadership, restaurant business management and culinaryrr skills. We also use a highly strucrr deploying training teams experienced in all aspects of restaurant operations. The opening training teams typically begin work one and a half weeks prior to opening and remain at the new restaurant forff up to three weeks aftff er the opening. They are re-deployed a as appr opriate to enabla e a smooth transition to the restaurant’s operating staffff .ff turt ed training program to open new restaurants, including all levels of leadership. The ts include an eight to We maintain perforff mance measurement and incentive compensation programs forff our management-level team members. We believe that our leadership position, strong results-oriented culturt e and various short-term and long-term incentive programs, including stock-based compensation, enhances our abia lity to attract and retain highly motivated restaurant managers. Quality Assurance Our Total Quality Department helps ensure that all restaurants provide safeff , high-quality food ff in a clean and safeff environment. Through rigorous supplier and risk-based product evaluations, we purchase only products that meet or exceed our product specififf cations. We rely on independent third parties to inspect and evaluate our suppliers and distributors. Suppliers that produce “high-risk” products are subject to a food ing practices and operate with comprehensive Hazard Analysis and Critical Control Point (HACCP) maintain sound manufaff cturt safeff ty programs and risk-based preventative controls adopted by the U.S. Food and Drugrr Administration. These programs food ff ying scientififf cally-based controls to analyze hazards, borne illnesses by appl focff us on preventing hazards that could cause food- identifyff and monitor critical control points, and establa ish corrective actions when monitoring shows that a critical limit has not been met. safeff ty evaluation by Darden personnel at least annually. We require our suppliers to a ff ff Third party auditors inspect each restaurant regularly throughout the year to assess food ff safeff ty and sanitation practices. Our total quality team verififf es the appl a ication of preventative controls through on-site support visits ensuring an effff eff ctive and robust 6 safeff ty system. Total quality managers provide support to operations staffff with education and training in foodff food ff sanitation. The team also serves as a liaison to regulatoryrr agencies on issues relating to foodff safeff ty. safeff ty and Purchasing and Distribution Our abia lity to ensure a consistent supply of safeff , high-quality foodff and supplies at competitive prices to all of our restaurant brands depends on reliabla e sources of procurement. Our purchasing staffff sources, negotiates and purchases foodff frff om more than 1,500 suppliers whose products originate in more than 35 countries. Suppliers must meet our requirements and strict quality control standards in the development, harvest, catch and production of food products. Competitive bids, long-term contracts and strategic supplier relationships are routinely used to manage availabia lity and cost of products. and supplies ff We believe that our signififf cant scale is a competitive advantage and our purchasing team leverages this purchasing products capaa bia lity. Our purchasing staffff travels routinely within the United States and internationally to source top-quality foodff at competitive prices. We actively engage with and monitor our suppliers, both in person and remotely, including hosting virtuatt l visits and audits. We believe that we have establa ished excellent long-term relationships with key suppliers and usually source our product directly frff om producers (not brokers or middlemen). We actively support several national minority supplier organizations to ensure that we incorpor ate women- and minority-owned businesses in our purchasing decisions. rr We have entered into long-term agreements with multiple third-party national distribution companies to deliver foodff and supplies to our restaurants. Under these arrangements we maintain ownership of the foodff subsidiaryrr Darden Direct Distribution, Inc. (Darden Direct). This inventoryrr wholly or primarily dedicated to Darden where practical to do so. Because of the relatively rapia d turtt nover of perishabla e food products, inventories in the restaurants have a modest aggregate dollar value in relation to sales. is stored in distribution company warehouses that are and supplies inventoryrr through our ff We continue to drive automation of our supply chain by collabor ating with our suppliers, logistics partners and distributors to improve optimization with inforff mation visibility and other technological advances. These and other terms of Darden Direct’s long-term supply agreements furff driving effff iff ciencies in our operations. ther enabla e our purchasing staffff to integrate demand forff ecasts into our purchasing operations, a Advertising and Marketing Integrated marketing is a key element of our strategy, and our scale enabla es us to be a leading advertiser in the fulff l-service dining segment of the restaurant industry.rr Olive Garden leverages the effff iff ciency of national advertising, on both traditional and streaming television, supplemented with additional targeted digital media investments. LongHorn Steakhouse uses digital advertising to build engagement and loyalty by market. Cheddar’s Scratch Kitchen, Yard House, The Capia tal Grille, Seasons 52, Bahama Breeze, Eddie V’s and The Capia tal Burger do not use television advertising, but rely on local and digital marketing. Our of consumers and we use advertising and marketing to build awareness and strengthen our restaurants appe brands’ relevance. We implement periodic promotions, as appr overall profiff tabia lity. We also rely on outdoor billboard and email advertising, as well as radio, digital coupons, search engine marketing and social media such as Facebook® and Instagram®, as appr developed and consistently use sophisticated consumer marketing research techniques to monitor guest satisfaff ction and evolving ff food opriate, to increase frff equency of guest visits while maintaining opriate, to attract, engage and retain our guests. We have service trends and marketplt ace dynamics. al to a broad spectrumrr a a a In fiff scal 2023, we continued a multi-year effff orff t to implement new technology platforff ms that allow us to digitally engage with our guests and team members and strengthen our marketing and analytics capaa bia lities in an increasingly connected society. We also continued making improvements to our online and mobile ordering and payment systems across all of our brands. In addition, we continued working on developing sophisticated customer relationship management programs, data analytics and data-driven marketing appr io of prefeff rences and brand loyalty. brands. This enabla es us to tailor our messaging and offff eff rings depending on guest visit history,rr oaches to effff eff ctively and effff iff ciently target our existing and potential guests across our portfolff a Human Capital We prioritize our team members through our People Strategy that includes four ff strategic imperatives: • Hire - Attract and select diverse team members that reflff ect our values and are committed to our results-oriented • culturt e; Train - Teach team members to perforff m in today’s environment and develop the skills to meet tomorrow’s needs; 7 • • Reward - Invest in compelling programs that recognize team members when goals are achieved and furff motivate our culturt e of winning; and Retain - Keep team members engaged and motivated, ready to deliver results and grow their careers. ther We closely track and assess a variety of metrics that help us to evaluate our perforff mance on each of these imperatives. HiHH re. We are committed to attracting, engaging, developing and retaining a workforff ce that mirrors the diversity of our guests and the communities in which we operate. We track a variety of workforff ce statistics to help us understand the gender, racial and ethnic diversity of our team members. Key team member statistics as of the end of fiff scal 2023 included the folff lowing: Total team members (hourly and salaried) Total number of hourly team members Percent of hourly team members – feff male Percent of hourly team members – members of racial or ethnic minority Total number of new hires of hourly team members during fiff scal 2023 Percent of hourly new hires – feff male Percent of hourly new hires – members of racial or ethnic minority 187,384 177,164 58% 55% 182,882 57% 57% In addition to the gender, racial and ethnic diversity of our workforff ce, our team members are also veryrr diverse in age; we employ members of fiff ve generations of the United States population: Traditionalists, Babya Boomers, Generation X, Millennials and Centennials. We provide our EEO-1 report and additional details about our inclusion and diversity programs on our website at www.darden.com. a TrTT ain. We succeed because of our people, and with our success come rewards, recognition and great opportuni t ties forff our team members. We regularly invest in our team members’ careers by providing the tools they need to succeed in their current roles, to grow personally and profeff ssionally, and to deliver exceptional experiences to our guests each day. With thousands of leadership positions across our restaurants, we provide a pathway and training forff thousands of individuals across the countryrr advance frff om entry-rr Training program were internal promotions and 100% of the new General Managers or Managing Partners were internal promotions. level jobs into management roles. In fiff scal 2023, 81% of the participants in our restaurant Manager In to Reward. We believe that we provide working conditions and pay and benefiff ts that compare faff vorabla y with those of our competitors. Most team members, other than restaurant management and corpor offff eff r our team members flff exible work schedules and competitive pay and benefiff ts, including paid sick leave and access to frff ee counseling through our employee assistance program forff ate management, are paid on an hourly basis. We team members and their faff milies. rr We regularly review our pay and benefiff ts programs to identifyff and implement enhancements to the ways we reward our team members. In Januaryrr 2022, we announced that each hourly restaurant team member company-wide would earn a minimum hourly wage of at least $12 per hour, inclusive of tip income. Also in Januaryrr 2022, we began a new "First Rewards” program to provide a phantom stock grant worth $10,000 to newly promoted General Managers and Managing Partners, numbering appr oximately 300 annually, to reward these high-perforff ming leaders and provide immediate alignment between their a compensation and shareholder value creation. Further, in fiff scal 2023, the Darden Restaurants Foundation introduced the Next Course Scholarship program forff children and dependents of our team members and in its inaugural year, the program awarded scholarships worth $3,000 each to nearly 100 children or dependents of Darden team members. In Januaryrr 2023, we introduced a new benefiff t forff restaurant team members called Fast Fluency – which offff eff rs Spanish-speaking team members the chance to learn frff ee. English forff None of our team members are covered by a collective bargaining agreement. We consider our team member relations to be good, with our employee engagement levels nearly double the United States average, as recently surveyed by Gallup, Inc. Consistent with our core values of respect, caring and teamwork, in fiff scal 1999 we establa ished a program called Darden Dimes to help feff llow Darden team members in need. Darden Dimes provides short-term fiff nancial grants to team members experiencing fiff nancial need caused by unexpected emergencies or catastrophic naturt al disasters. Participating team members 8 donate as little as 10 cents frff om each paycheck to the Darden Dimes fund, 2023. ff which raised and granted over $2.0 million in fiff scal Retain. As a fulff l-service restaurant company, foodff is always top of mind, but our team members make the diffff eff rence: they are at the heart of everytrr hing we do. We believe the guest experience can never exceed the team member experience, so we strive tering an environment of respect and inclusion, where diversity of thought and to hire the best individuals and retain them by fosff background is valued and everyorr int t oftff en puts us in a position to offff eff r our restaurant team members jobs in their current roles when personal circumstances require relocation. ty to develop and grow their careers. In addition, our geographi ne has the opportuni ff c foot prt a Darden’s consolidated turt nover rate forff hourly team members during fiff scal 2023 was 93%, one of the lowest rates in the restaurant industry.rr Each of our brands experienced a turt nover rate during fiff scal 2023 that was lower than the most recent relevant casual dining or fiff ne dining turt nover rate forff IntelligenceTM. Darden’s consolidated restaurant management turt nover rate of 19% was also signififf cantly lower than the broader restaurant industryrr benchmark. Our executive leadership (vice president and above experience with Darden, while our restaurant General Managers and Managing Partners have an average of 14 years of experience with us. their segment of the industryrr as reported in The People ReportTM by Black Box ) has an average of over 17 years of a Inforff mation Technology and Cybersecurity We strive forff leadership in the restaurant business by using technology as a competitive advantage and as an enabla er of our strategy. We have implemented technology-enabla ed business solutions to improve fiff nancial control, cost management, guest service and employee effff eff ctiveness, as well as enabla e e-commerce. These solutions are designed to be used across restaurant brands, yet are flff exible enough to meet the unique needs of each restaurant brand. Our strategy is to fulff drive operational effff iff ciencies and enabla e restaurant teams to focff us on restaurant operations excellence. Restaurant hardware and softff ware support forff all of our restaurant brands is provided or coordinated frff om the restaurant support center faff cility in Orlando, Florida. Our data center contains suffff iff cient computing power to process inforff mation frff om all restaurants quickly and effff iff ciently. We leverage public cloud computing where appr processed in a secure environment to protect both our data and the physical computing assets. We guard against business interrupt rr disaster recoveryrr plan annually and providing on-site power backup. We periodically engage third parties to perforff m cybersecurity audits utilizing the National Instituttt e of Standards and Technology frff amework. We also engage third parties to conduct security reviews of our network, processes and systems on a regular basis. We use internally developed proprietaryrr softff ware, cloud-based softff ware as a service (SaaS), as well as purchased softff ware, with proven, non-proprietaryrr hardware. ion by maintaining a disaster recoveryrr plan, which includes storing critical business inforff mation offff -ff site, testing the opriate to enhance our capaa bia lities and to leverage scale. Our inforff mation is ly integrate systems to a All of our brands share a secure, robust digital platforff m with online ordering and other guest-faff cing capaa bia lities. We also have deployed mobile appl specialty restaurant brands. We successfulff to invest in these platforff ms and appl a a ications with online ordering and other feff aturt es forff all of our casual dining brands and forff most of our ly leverage these digital capaa bia lities to address evolving guest needs. We will continue ications to enhance the guest experience. We maintain a robust system of data protection and cybersecurity resources, technology and processes. We regularly evaluate new and emerging risks and ever-changing legal and compliance requirements. We make strategic investments to address these risks and compliance requirements to keep Company, guest and team member data secure. We monitor risks of sensitive inforff mation compromise at our business partners where relevant and reevaluate these risks on a periodic basis. We also perforff m annual and ongoing cybersecurity awareness training forff In addition, we provide annual credit card handling training folff members that handle guest credit cards. our restaurant management and restaurant support center team members. lowing Payment Card Industryrr (PCI) guidelines to all team Our management believes that our current systems and practice of implementing regular updates positions us well to support current needs and futff urt e growth. We use a strategic inforff mation systems multi-year planning process that involves senior management and is integrated into our overall business planning. We provide data protection and cybersecurity reports to the Audit Committee of the Company’s Board of Directors on a quarterly basis and periodically to the fulff Inforff mation systems projects are prioritized based upon strategic, fiff nancial, regulatory,rr risk and other business advantage criteria. l Board of Directors. Competition The restaurant industryrr location, personnel, brand, attractiveness of faff cilities, availabia lity of carryout is intensely competitive with respect to the type and quality of food, and home delivery,rr ff rr price, service, restaurant internet and mobile ordering 9 capaa bia lities and effff eff ctiveness of advertising and marketing. The restaurant business is oftff en affff eff cted by changes in consumer c trends; traffff iff c patterns; the type, number and location of a tastes; national, regional or local economic conditions; demographi competing restaurants; and consumers’ discretionaryrr purchasing power. We compete within each market with national and regional chains and locally-owned restaurants forff guests, management and hourly personnel and suitabla e real estate sites. In addition, expanding product offff eff rings at faff st casual and quick-service restaurants and the convenience of home deliveryrr services, together with negative economic conditions, could cause consumers to choose less expensive alternatives or reduce the frff equency of their restaurant visits. We expect intense competition to continue in all of these areas. Other faff ctors pertaining to our competitive position in the industryrr are addressed under the sections entitled “Purchasing and Distribution,” “Advertising and Marketing” and “Inforff mation Technology and Cybersecurity” in this Item 1 and in our Risk Factors in Item 1A of this Form 10-K. Trademarks and Service Marks We regard our Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capia tal Grille®, ®, The Capia tal Burger®, RutRR h’s Chris Steak House®, Darden® and Seasons 52®, Bahama Breeze®, Eddie V’s Prime Seafood Darden Restaurants® service marks, and other service marks and trademarks related to our restaurant businesses, as having signififf cant value and as being important to our marketing effff orff marks and trademarks and to vigorously oppose any infrff ingement of them. Generally, with appr registration of our service marks and trademarks will continue indefiff nitely. ts. Our policy is to pursue registration of our important service opriate renewal and use, the a ff Franchises, Joint Ventures and New Business Development As of May 28, 2023, we operated 1,914 restaurants through subsidiaries in the United States and Canada. We own all of those locations, except forff control the joint venturt es’ use of our service marks and the joint venturt es pay management feff es to us, which are not material to our consolidated fiff nancial statements. 2 restaurants managed by us and owned by joint venturt es in which we hold a maja ority ownership. We As of May 28, 2023, frff anchisees operated 34 frff anchised restaurants in the United States and 35 frff anchised restaurants outside of the United States. We have area development, frff anchise and/or license agreements in place with unaffff iff liated operators to develop and operate Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, The Capia tal Grille and Bahama Breeze restaurants in the folff lowing regions: United States (including Puerto Rico and Guam), • • Mexico, • • • • Central and South America (Brazil, Costa Rica, Ecuador, El Salvador and Panama), Philippines, Aruba , and rr Saudi Arabia a. The open and operating frff anchised restaurants are all reflff ected in the tabla e under the “Introduction” section of this Item 1. We do not have an ownership interest in any of these frff anchisees, but we receive feff es under the area development and frff anchise agreements and royalty income under the frff anchise or license agreements. The amount of income we derive frff om our frff anchise arrangements is not material to our consolidated fiff nancial statements. We license the sales and distribution of several items including Olive Garden salad dressings, salad croutons and seasoning through various channels including wholesale distribution chains and maja or groceryrr chains. The amount of income we derive frff om these licensing arrangements is not material to our consolidated fiff nancial statements. Seasonality Our sales volumes have historically flff uctuat ted seasonally. Typically, our average sales per restaurant are highest in the lowed by the summer, and lowest in the faff ll. Holidays, changes in the economy, severe weather and similar winter and spring, folff conditions may impact sales volumes seasonally in some operating regions. Because of the historical seasonality of our business and these other faff ctors, results forff l the fulff fiff scal year. any fiff scal quarter are not necessarily indicative of the results that may be achieved forff 10 Government Regulation We are subject to various feff deral, state, local and international laws affff eff cting our business. Each of our restaurants must comply with licensing requirements and regulations by a number of governmental authorities, which include health, safeff ty and fiff re agencies in the state or municipality in which the restaurant is located. The development and operation of restaurants depend on selecting and acquiring suitabla e sites, which are subject to zoning, land use, environmental, traffff iff c and other regulations. To date, we have not been signififf cantly affff eff cted by any diffff iff culty, delay or faff ilure to obtain required licenses or appr ovals. a During fiff scal 2023, 11.2 percent of our sales were attributabla e to the sale of alcoholic beverages. Regulations governing their sale require licensure by each site (in most cases, on an annual basis), and licenses may be revoked or suspended forff cause at any time. These regulations relate to many aspects of restaurant operation, including the minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing, inventoryrr control and handling, and storage and dispensing of alcoholic beverages. As a result of the impact of the COVID-19 pandemic on restaurants, many states have modififf ed their regulations to permit To Go sales of alcoholic beverages, and in some locations we now offff eff r a variety of alcoholic beverages, including in bottles, frff om draftff and mixed drinks To Go. The faff ilure of a restaurant to obtain or retain these alcoholic beverage licenses or to comply with regulations governing the sale of alcoholic beverages would adversely affff eff ct the restaurant’s operations. We also are subject in certain states to “dram shop” statutt es, which generally provide an injured party with recourse against an establa ishment that serves alcoholic beverages to an intoxicated person who then causes injuryrr liabia lity coverage as part of our comprehensive general liabia lity insurance. to himself or a third party. We carryrr liquor We also are subject to feff deral and state minimum wage laws and other laws governing such matters as overtime, tip credits, working conditions, paid leave, safeff ty standards, and hiring and employment practices. Since 1995, Darden has had a Tip Rate Alternative Commitment (TRARR C) agreement with the Internal Revenue Service ts in each restaurant to increase the reporting ied across all of our brands. Compliance with TRARR C requirements (IRS). TRARR C requirements, which include increased educational and other effff orff compliance of employees with respect to cash tips, are appl reduces the likelihood of potential employer-only FICA tax assessments related to cash tips that are unreported by employees at Darden’s covered units. Consistent with our long-standing agreement with the IRS, we work proactively with IRS personnel a responsible forff 2023, the IRS issued a proposed revenue procedure that would establa ish the Service Industryrr Tip Compliance Agreement (SITCA) program and eliminate TRARR C. We are working closely with the IRS as it fiff nalizes its guidance. opriate steps to continue to meet our TRARR C obligations. In tip compliance to ensure that we are taking the appr a We are subject to feff deral and state environmental regulations, but these rulrr es have not had a material effff eff ct on our operations. During fiff scal 2023, there were no material capia tal expenditurt es forff expenditurt es forff e are anticipated. this purpos rr environmental control faff cilities and no material Our faff cilities must comply with the appl a icabla e requirements of the Americans with Disabia lities Act of 1990 (ADA) and related state accessibility statuttt es. Under the ADA and related state laws, we must provide equivalent service to disabla ed persons and make reasonabla e accommodation forff ting or undertaking signififf cant remodeling of our restaurants, we must make those faff cilities accessible. their employment, and when construcrr We are subject to feff deral and state regulations relating to employer-provided health insurance, but these rulrr es have not had a material effff eff ct on our operations. We are subject to laws and regulations relating to the preparation and sale of food, ff including regulations regarding product safeff ty, nutritional content and menu labea salt and allergen content. ling. We are subject to laws and regulations requiring disclosure of calorie, faff t, trans faff t, We are subject to laws relating to inforff mation security, privacy, cashless payments and consumer credit, protection and frff aud. An increasing number of governments and industryrr groups worldwide have establa ished data privacy laws and standards forff the protection of personal inforff mation, including social security numbers, fiff nancial inforff mation (including credit card numbers), and health inforff mation. As a merchant and service provider of point-of-ff sale services, we are also subject to the Payment Card Industryrr Data Security Standard issued by the Payment Card Industryrr Council (PCI DSS). We are subject to anti-corrupt rr ion laws in the United States and in the international jurisdictions where we do business, Practices Act. We are also subject to a variety of international laws relating to frff anchising and l property in the various countries across the world where we are engaged in frff anchising our restaurant rr including the Foreign Corrupt licensing of intellectuatt brands. See Item 1A “Risk Factors” below forff a discussion of risks relating to feff deral, state and local regulation of our business, including in the areas of data privacy and environmental matters. 11 Sustainability The sustainabia lity of our foodff sources and restaurant operations is a key component of providing great service and foodff to our guests. During fiff scal 2023, we remained focff used on our climate strategy, restaurant sustainabia lity metrics and Darden’s Animal Welfaff re Council. We will continue to adapta and strategic priorities in the near term across the enterprrr oach with development or enhancement of integrated we source to the operation of our restaurants. our sustainabia lity appr ise, frff om the foodff a Darden manages energy and water conservation within our restaurant operations and engages with our supply chain partners on sustainabia lity topics including climate, deforff estation and animal welfaff re. In fiff scal 2023, Darden expanded its assessment and disclosure of environmental metrics in our operations and extended value chain. Additional environmental indicators, including energy and water consumption, waste generation and diversion, as well as Scope 3 greenhouse gas emissions, are reported on our website at www.darden.com/our-impact/communities/sustainability. reenhouse Gas (GHG) Emissions(1) Fiscal Year Ended (in metric tons CO2e) Average Per Restaurant (2) Total - Scope 1 and 2 May 29, 2022 412 769,811(4) May 30, 2021 373(3) 683,294 May 31, 2020 424 774,200 (1) GHG reporting is forff the fiff scal year preceding the year of this report and is not availabla e forff owned and operated restaurants only. Franchises are accounted forff the current fiff nancial reporting in our Scope 3 period. Above emissions are forff inventory.rr (2) Per restaurant Intensity Ratio includes only Scope 1 and 2 totals (as defiff ned in the Corpor rr ate Accounting and Reporting Standard of the GHG Protocol) divided by the total number of restaurants. (3) Fiscal 2021 emissions reductions resulted frff om business impacts of the COVID-19 pandemic during fiff scal 2021. (4) APEX Companies, LLC. provided a statement of third-party verififf cation to a limited assurance level forff stated fiff scal year 2022 in accordance with ISO Standard 14064-3 Second edition 2019-4 on greenhouse gases- Part 3: a the above values forff Specififf cation with guidance forff the verififf cation and validation of GHG statements. We shared Darden’s Food Principles in 2016 to outline our commitment to guests in areas of sustainabla e sourcing, ff safeff ty and animal welfaff re. Darden’s Food Principles connect each of these strategic business effff orff ts in nutritional disclosure, food a guest-centered platforff m, including sourcing and ingredient commitments to our guests. We have set commitments related to the folff crate-frff ee pork. We continue to work with our supplier partners to make progress toward these commitments and we provide annual updates on our effff orff attributes: animal welfaff re, chickens raised without medically-important antibiotics, cage-frff ee eggs and gestation ts in the Sustainabia lity section of our website, www.darden.com. lowing foodff Building on our Food Principles, Darden establa ished an Animal Welfaff re Policy that adopts an outcomes-based appr a oach to continue to ensure high level of care forff Animal Welfaff re Council consisting of leading academics and thought leaders with expertise in the care of animals in food chains. The Council advises and supports the Company on our effff orff oach to animal welfaff re, frff om supplier collabor based appr supply chain. To implement this policy, we establa ished an ts to advance strategy and implementation of an outcomes- ations to reporting improvements. faff rm animals in the foodff a a ff supply More inforff mation about date is availabla e at www.darden.com. a our sustainabia lity strategy, our commitment to our guests on Food Principles and our progress to Darden Foundation and Community Affff aiff rs We are recognized forff a culturtt e that rewards caring forff and responding to people. That defiff nes service forff Darden. The Darden Restaurants, Inc. Foundation (the Foundation) works to bring this spirit of service to lifeff of charitabla e organizations across the countryrr and support forff does this by focff using its philanthropic effff orff and work. In addition, team members at our Restaurant Support Center are eligible forff a appr oved community service activities during scheduled work hours. ts on programs that enhance the communities where our team members and guests live 16 hours per calendar year of paid time forff the volunteer involvement of our team members. The Foundation through its philanthropic support In fiff scal 2023, the Foundation awarded appr a oximately $4.2 million in grants to national organizations as well as local nonprofiff ts including Second Harvest Food Bank of Central Florida and the Heart of Florida United Way. These organizations 12 provide service to the public through hunger relief,ff community engagement, disaster preparedness and the promotion of career opportuni ties in the culinaryrr industry.rr t The Foundation continued to invest in mobile foodff pantryrr programs through its long-standing partnership with Feeding America. In fiff scal 2023, the Foundation awarded a $2.0 million grant to help fund Feeding America increase access to nutritious foodff serve a high percentage of people of color. The most recent donation marks a total of $16.3 million that the Foundation and Darden have contributed to the Feeding America network since 2010. 10 additional refrff igerated box trucrr ks to help banks that are under-resourced and and address transportation needs at foodff ff Our support of Feeding America and the fiff ght against hunger goes hand-in-hand with our Darden Harvest program, which delivering frff esh and healthy food to people who need it. Each day, our restaurants collect began in 2003 as a mechanism forff donation to local surplrr us, wholesome foodff nonprofiff t feff eding partners. In fiff scal 2023, Darden contributed appr the equivalent of more a than 4.4 million meals provided to people in need across the communities served by our restaurants. As an added benefiff t of the Darden Harvest program, we are abla e to divert millions of pounds of surplrr us foodff that is not served to guests and, rather than discarding the food, oximately 5.3 million pounds of food, frff om waste streams everyrr year. they prepare it forff ff ff ff In fiff scal 2023, as part of Darden’s continued commitment to inclusion and diversity, the Foundation donated an additional $500,000 to Boys & Girls Clubs of America to support the development and implementation of programming that will help youth embrace diversity and combat racial discrimination. The Youth forff Unity curriculum will provide meaningfulff solutions to address social injustice and racial inequity and help fosff advocates forff ter the next generation of leaders, problem-solvers and , action-oriented change. The Foundation’s fundi ng helps support the National Restaurant Association Educational Foundation’s ProStart program, a ff national high school program that introduces stude curriculum on topics ranging frff om culinaryrr $250,000 also supports the Restaurant Ready program to engage and encourage disconnected young people to pursue a path to employment and improve their quality of lifeff . nts to the restaurant industryrr and provides them with an industry-rr driven techniques to management skills. The Foundation’s fiff scal 2023 contribution of t We are also a proud member of the American Red Cross’ Annual Disaster Giving Program, which enabla es the Red Cross to respond to the needs of individuals and faff milies impacted by disasters anywhere in the United States. In fiff scal 2023, the Foundation provided $500,000 to the American Red Cross forff meals to feff ed fiff rst responders and victims of naturt al disasters. The Foundation also provided $250,000 to nonprofiff t organizations such as Volunteer Florida Foundation to support Hurricane Ian relief and recoveryrr effff orff the program. In addition to fiff nancial support, our restaurants donate ts. In fiff scal 2023, the Foundation launched the Next Course Scholarship program to help the children or dependents of Darden team members reach their educational goals. The Foundation has partnered with Scholarship America to administer the initiative, which provided scholarships forff post-secondaryrr education to children or dependents of eligible fulff team members forff awarded scholarships worth $3,000 each. These team members represent more than 80 diffff eff rent restaurants across seven of our brands and 32 states. the 2023-24 academic year. As a result, nearly 100 children or dependents of Darden team members were l-time and part-time Darden More inforff mation about the Foundation and its effff orff business is availabla e on our website at www.darden.com. a ts to enhance the quality of lifeff in the communities where we do Item 1A. RISK FACTORS Various risks and uncertainties could affff eff ct our business. Any of the risks described below or elsewhere in this report or our other fiff lings with the Securities and Exchange Commission could have a material impact on our business, fiff nancial condition or results of operations. It is not possible to predict or identifyff all risk faff ctors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. 13 Risks Relating to Inflff ation and Macroeconomic Disruption p g lii ure tott address cost pressures,s inii cludinii g risii inii g coststt forff A faiff restautt comprm ess our margir nii s and adversrr elyll affff eff ct our salell s and resultll stt of operatitt ons. rantstt ,s and a faiff commoditii itt es,s labor ll lii ure tott efe fff eff ctitt velyll delill ver cost management actitt vitii itt es and achieve economies of scalell inii purchasinii g couldll ,r healtll htt care and utitt lii ill tii itt es used by our a , health care, utilities, fueff l and other related costs over which we may have little control. We have Our results of operations depend signififf cantly on our abia lity to anticipate and react to changes in the price and availabia lity of ingredients, labor our restaurants are subject to changes in the price and availabia lity of foodff cheese, butter and produce. The introduction of or changes to tariffff sff on imported foodff food, ff experienced and continue to experience inflff ationaryrr conditions with respect to most or all of these costs during fiff scal 2023. Operating margins forff pork, chicken, seafood, produce and seafood, will continue to be abla e to anticipate and react to changing foodff menu prices, and a faff ilure to do so could adversely affff eff ct our operating results. We attempt to leverage our size to achieve economies of scale in purchasing, but there can be no assurances that we can always do so effff eff ctively. We are also subject to the general risks of inflff ation. products, such as could increase our costs and possibly impact the supply of those products. We cannot predict whether we costs by adjusting our purchasing practices, menu offff eff rings, and commodities, including beef,ff ff ff Increases in minimum wage, health care and other benefiff t costs may have a material adverse effff eff ct on our labor operate in many states and localities where the minimum wage is signififf cantly higher than the feff deral minimum wage. The market forff Increases in minimum wage and market pressure may also result in increases in the wage rates paid forff positions. Many states and localities are also passing laws regulating employment practices and working conditions which could have a material adverse effff eff ct on our labor in the United States is competitive and has resulted in pressure on wages and may continue to do so in the futff urt e. non-minimum wage costs in those areas. costs. We a labor a a Our restaurants’ operating margins are also affff eff cted by flff uctuat tions in the price of utilities such as electricity and naturt al ions to the availabia lity of gas, electric, water or other utilities, whether due to aging infrff astrucrr gas, whether as a result of inflff ation or otherwise, on which the restaurants depend forff interrupt rr fiff re, animal damage, trees, digging accidents, geopolitical impacts or other reasons largely out of our control, may adversely affff eff ct our operations. Our inabia lity to anticipate and respond effff eff ctively to an adverse change in any of these faff ctors could have a signififf cant adverse effff eff ct on our sales and results of operations. their energy supply. In addition, turt e, weather conditions, CeCC rtaitt nii economic and businii ess facff imii pacm tstt on thtt e restautt tortt inii cludinii g unemplm oyll ment,tt energr ygg prices and inii tett rest ratett s thtt at are larll ger behavior and our resultll stt of operatitt ons. srr and thtt eirii rant inii dustrtt yr and othtt er general macroeconomic facff srr tortt lyll beye ond our contrtt ol may adversrr elyll affff eff ct consumer Our business results depend on a number of industry-rr specififf c and general economic faff ctors, many of which are beyond our l-service dining sector of the restaurant industryrr control. The fulff local economic conditions, seasonal flff uctuat including changes in consumer tastes and dietaryrr habia ts, and the level of consumer acceptance of our restaurant brands. The perforff mance of individual restaurants may also be adversely affff eff cted by faff ctors such as demographi c trends, severe weather a including hurricanes, traffff iff c patterns and the type, number and location of competing restaurants. tion of sales volumes, consumer spending patterns and consumer prefeff rences, is affff eff cted by changes in international, national, regional and General economic conditions, including slow global recoveryrr frff om the economic downturtt ns related to the COVID-19 a the strength or pace of economic recovery,rr pandemic, geopolitical conditions and uncertainty about our results of operations and may continue to do so. Economic recession, a protracted economic slowdown, a worsening economy, increased unemployment, increased energy prices, rising interest rates, a downgrade of the U.S. government’s long- tariffff sff on important U.S. imports and exports or other industry-rr wide cost pressures term credit rating, imposition of retaliatoryrr have affff eff cted and can continue to affff eff ct consumer behavior and spending forff sales and earnings. Economic uncertainty has caused and may continue to cause guests to make feff wer discretionaryrr purchases, and any signififf cant decrease in our guest traffff iff c or average profiff t per transaction will negatively impact our fiff nancial perforff mance. ther, and In addition, if gasoline, naturt al gas, electricity and other energy costs remain at the current elevated levels or increase furff credit card, home mortgage and other borrowing costs increase with rising interest rates, our guests may have lower disposabla e income and reduce the frff equency of their dining occasions, may spend less on each dining occasion or may choose more inexpensive restaurants. restaurant dining occasions and lead to a decline in have also adversely affff eff cted Furthermore, we cannot predict the effff eff cts that actuat l or threatened armed conflff icts, including the ongoing armed conflff ict in the Ukraine, terrorist attacks, effff orff systems forff turt e, such as the electrical grid and telecommunications systems, could have on our operations, the economy or consumer confiff dence generally. Any of these events could affff eff ct consumer spending patterns or result in increased costs forff ts to combat terrorism, heightened security requirements, or a faff ilure to protect inforff mation us due to security measures. critical infrff astrucrr 14 Unfaff vorabla e changes in the above a faff ctors or in other business and economic conditions affff eff cting our guests could increase our costs, reduce traffff iff c in some or all of our restaurants or impose practical limits on pricing, any of which could lower our profit margins and have a material adverse effff eff ct on our sales, fiff nancial condition and results of operations. Risks Related to Human Capitalp ThTT e inii abilii ill tii ytt imii pacm t our abilii ill tii ytt tott achieve our operatitt nii g, growthtt and fiff nii anciali objectitt ves. tott hirii e,e trtt ainii , reward and retaitt nii restautt rant tett am membersrr and detett rmrr inii e and mainii taitt nii adequatett staftt fff iff nii g may Our long-term growth depends substantially on our abia lity to recruirr t and retain high-quality team members to work in and manage our restaurants. Adequate staffff iff ng and retention of qualififf ed restaurant team members is a critical faff ctor impacting our guests’ experience in our restaurants. Maintaining adequate staffff iff ng in our existing restaurants and hiring and training staffff forff our new restaurants requires precise workforff ce planning which has been complicated by the tight labor States and on consumer prefeff rences. The market forff competitive wages, benefiff ts and workplace conditions to maintain our most qualififf ed team members. A shortage of qualififf ed candidates who meet all legal citizenship or work authorization requirements, faff ilure to recruirr timely manner or higher than expected turt nover levels all could affff eff ct our abia lity to open new restaurants, grow sales at existing restaurants or meet our labor dissatisfaff ction could lead to poor guest satisfaff ction, higher turt nover, litigation and unionization which could jeopardize our abia lity to meet our growth targets or impact our results of operations. cost objectives. An inabia lity to adequately monitor and proactively respond to team member the most qualififf ed talent continues to be competitive and we must provide t and retain new team members in a market in the United a a lii ure tott recruitii ,tt developll A faiff imii pacm t our strtt atett gie c dirii ectitt on and jeopardizii e our abilii ill tii ytt and retaitt nii efe fff eff ctitt ve lell adersrr or thtt e losll s or shortage tt of peff rsrr onnel witii htt keye capacitii itt es and skilii lll sll couldll tott meet our businii ess perfr orff mrr ance expe ee ctattt itt ons and growthtt tartt ger tstt . Our futff urt e growth depends substantially on the contributions and abia lities of key executives and other leadership team members. We must continue to recruirr objectives and support our projected growth. Unplanned changes in senior management could expose us to signififf cant changes in strategic direction and initiatives. A faff ilure to maintain appr excellence (adequate resources, innovative skill sets and expectations) and build adequate bench strength required forff loss of key skill sets could jeopardize our abia lity to meet our business perforff mance expectations and growth targets. t, retain and motivate management team members in order to achieve our current business city and capaa bia lity to support leadership opriate organizational capaa growth or a a WeWW may be subject tott inii creased labor ll and inii surance coststt . a minimum wage. Labor Our restaurant operations are subject to United States and Canadian feff deral, state and local laws governing such matters as minimum wages, working conditions, overtime and tip credits. As feff deral, state and local minimum wage rates increase, we may need to increase not only the wages of our minimum wage employees, but also the wages paid to employees at wage rates that are shortages, increased employee turt nover and health care and other benefiff t or working condition above a costs. These increased costs could, in turt n, lead us to regulations also have increased and may continue to increase our labor increase our menu prices which could impact our sales. Conversely, if competitive pressures or other faff ctors prevent us frff om offff sff etting increased labor we pay forff liabia lity) may increase at any time, thereby furff under our workers’ compensation and general liabia lity insurance, forff which we carryrr high per-claim deductibles, may also increase at any time, thereby furff the potential to negatively impact the cost of premiums and the magnitude our insurance (including workers’ compensation, general liabia lity, property, health, and directors’ and offff iff cers’ costs by increases in menu prices, our profiff tabia lity may decline. In addition, the current premiums that ther increasing our costs. Further, the decreased availabia lity of property and liabia lity insurance has ther increasing our costs. The dollar amount of claims that we actuat of uninsured losses. lly experience a a t yty Risks Relating to Health and Safeff t g HeHH altll htt concerns arisii inii g frff om food- on our businii ess. ff relatll ett d pandemics,s outbrtt eaks of fff lff u, virii uses or othtt er disii eases may have an adversrr e efe fff eff ct The United States and other countries have experienced, or may experience in the futff urtt e, outbrt eaks of virusrr es, such as the or disease is food- borne, or perceived to be food- that caused COVID-19, norovirusrr ff products and cause our guests to eat less of a product, or could reduce public confiff dence in foodff , avian flff u or “SARS,” “MERS,” H1N1 or “swine flff u,” or other diseases. To borne, futff urt e outbrt eaks may adversely affff eff ct the price and novel coronavirusrr the extent that a virusrr availabia lity of certain foodff the consumption of chicken, handling and/or public assembly. For example, public concern over avian flff u may cause feff ar about eggs and other products derived frff om poultry.rr The inabia lity to serve poultry-rr based products would restrict our abia lity to provide a variety of menu items to our guests. If we change a restaurant menu in response to such concerns, we may lose guests who do not prefeff r the new menu, and we may not be abla e to attract a suffff iff cient new guest base to produce the sales needed to make the restaurant profiff tabla e. We also may have diffff eff rent or additional competitors forff and may not be abla e to successfulff our intended guests as a result of such a change is transmitted by human contact or respiratoryrr ly compete against such competitors. If a virusrr a ff 15 transmission, our employees or guests could become infeff cted, or could choose, or be advised, to avoid gathering in public places, any of which could adversely affff eff ct our restaurant guest traffff iff c and our abia lity to adequately staffff our restaurants, receive ate level. We also could be adversely affff eff cted if the World Health deliveries on a timely basis or perforff m func Organization and/or The United States Centers forff Disease Control were to restrict travel to affff eff cted geographi c areas where we source our products, thus possibly impacting the continuity of supply. Additionally, jurisdictions in which we have restaurants may impose mandatoryrr closures, seek voluntaryrr closures or impose restrictions on operations. Even if such measures are not or other disease does not spread signififf cantly, the perceived risk of infeff ction or signififf cant health risk implemented and a virusrr may cause guests to choose other alternatives to dining out in our restaurants which may adversely affff eff ct our business. tions at the corpor a rr ff lii ure tott mainii taitt nii A faiff our businii ess. ff food safeff tytt thtt roughu out thtt e supplu yll chainii and food- ff borne ilii lll nll ess concernrr s may have an adversrr e efe fff eff ct on Food safeff ty is a top priority, and we dedicate substantial resources to ensuring that our guests enjoy safeff , quality food ff products. Even with strong preventative interventions and controls, foodff suppliers or distributors and, as a result, be out of our control and require prompt action to mitigate impact. In addition, regardless safeff ty of the source or cause, any report of food- tampering or contamination at one of our restaurants could adversely affff eff ct the reputation of our brands and issues including food have a negative impact on our sales. Even instances of food- contamination occurring solely at restaurants of our competitors could result in negative publicity about service industryrr generally and adversely impact our sales. The occurrence of food- affff eff cted ingredients, resulting in higher costs and lower margins. safeff ty issues could also adversely affff eff ct the price and availabia lity of safeff ty issues could be caused at the source or by food borne illnesses such as E. coli, hepatitis A, norovirusrr or salmonella, or other foodff borne illnesses or food borne illness, foodff tampering or food the foodff a ff ff ff ff ff ff ff y Risks Relating to Inforff mation Technology and Privacy gy g WeWW relyll heavilii yll on inii fn orff mrr atitt on tett chnology tott mainii taitt nii a contitt nii uous and secure cyc ber netwtt ork,rr tott efe fff eff ctitt velyll operatett our businii ess and/or// our abilii ill tii ytt ll frff ee frff om matett riali resultll inii thtt e losll faiff s of respes inii our operatitt ons,s and inii sufu fff iff cient guest or emplm oyll or a faiff lii ure,e inii tett rruptu itt on or securitii ytt breach, couldll harmrr inii g tett chnology ee facff ll lii ure ctett d relatll itt onshipsii witii htt our gueststt or emplm oyll ees. We rely heavily on inforff mation systems across our operations, including forff e-commerce, marketing programs, employee engagement, management of our supply chain, the point-of-ff sale processing system in our restaurants, and various other processes and transactions. Our abia lity to effff eff ctively manage our business and coordinate the production, distribution and sale of our city of these systems. In addition, we must effff eff ctively respond products depends signififf cantly on the reliabia lity, security and capaa ions, faff ilures or other perforff mance issues with guest to changing guest expectations and new technological developments. Disrupt faff cing technology systems could impair the benefiff ts that they provide to our business and negatively affff eff ct our relationship with our guests. The faff ilure of these systems to operate effff eff ctively, problems with transitioning to upgraded or replacement systems, a material network breach in the security of these systems as a result of a cyber attack, phishing attack, ransomware attack or any other faff ilure to maintain a continuous and secure cyber network could result in substantial harm or inconvenience to the l property, trade secrets or sensitive Company, our team members or guests. This could include the theftff of our intellectuat fiff nancial inforff mation. Some of these essential business processes that are dependent on technology are outsourced to third parties. While we make effff orff breaches or faff ilures caused by these outsourced providers will not occur. ts to ensure that our providers are observing proper standards and controls, we cannot guarantee that rr Any such faff ilures or disrupt rr ions may cause delays in guest service, reduce effff iff ciency in our operations, require signififf cant capia tal investments to remediate the problem, result in customer, employee or advertiser dissatisfaff ction or otherwise result in negative publicity that could harm our reputation. We could also be subjected to litigation, regulatoryrr imposition of penalties. As inforff mation security laws and regulations change and cyber risks evolve, we may incur additional costs to ensure we remain in compliance and protect guest, employee and Company inforff mation. investigations or the WeWW may inii cur inii creased coststt comprm omisii ed, we couldll be subject tott governrr ment enfn orff tott complm yll witii htt privacyc and datatt protett ctitt on lawll cement actitt ons,s privatett s and, ifi we faiff lii i lill tii itt gat itt on and adversrr e publill citii ytt .yy tott complm yll or our sys stett ms are We receive and maintain certain personal, fiff nancial and other inforff mation about a suppliers. In addition, certain of our vendors receive and maintain certain personal, fiff nancial and other inforff mation about employees and customers. The use and handling, including security, of this inforff mation is regulated by evolving and increasingly demanding data privacy laws and regulations in various jurisdictions, as well as by certain third-party contracts and industryrr standards. Complying with newly developed laws and regulations, which are subject to change and uncertain interprrr etations and may be inconsistent frff om jurisdiction to jurisdiction, may lead to a decline in guest engagement or cause us to incur substantial costs or modififf cations to our operations or business practices to comply. In addition, if our security and inforff mation systems are compromised as a result of data corrupt ion or loss, cyber attack or a network security incident, or if our employees or vendors faff il to comply with these laws and regulations or faff il to meet industryrr standards and this inforff mation is obtained by unauthorized rr our customers, employees, vendors and our a 16 a persons or used inappr opriately, it could result in liabia lities and penalties and could damage our reputation, cause interrupt normal business perforff mance, cause us to incur substantial costs and result in a loss of customer confiff dence, which could adversely affff eff ct our results of operations and fiff nancial condition. Additionally, we could be subject to litigation and government enforff cement actions as a result of any such faff ilure. ion of rr Risks Relating to the Acquisition of Ruth’s q g ThTT e inii abilii ill tii ytt growthtt , cost savinii gs and othtt er benefe iff tii stt we expe tott successfs uff llll yll ee inii tett gre atett Ruthtt ’s’ ChCC risii StSS ett ak HouHH se inii tott our businii ess couldll harmrr our abilii ill tii ytt tott achieve thtt e salell s ct tott be ablell tott realill zii e inii thtt e Ruthtt ’s’ ChCC risii StSS ett ak HouHH se operatitt ons. On June 14, 2023, we completed our acquisition of RutRR h’s, owner, operator and frff anchisor of RutRR h’s Chris Steak House restaurants. Our integration of the RutRR h’s Chris Steak House business into our operations is a complex and time-consuming process that may not be successfulff House with our operations may include, among others: retaining and integrating management and other key employees and frff anchisees; integrating inforff mation, communications and other systems; and managing the growth of the combined company. ly combining the business of RutRR h’s Chris Steak . The primaryrr areas of focff us forff successfulff Even if we successfulff ly integrate the business of RutRR h’s Chris Steak House into our operations, there can be no assurance that we will realize the anticipated benefiff ts. We acquired RutRR h’s Chris Steak House with the expectation that the acquisition would result in various benefiff ts forff ties and signififf cant synergies frff om increased effff iff ciency in purchasing, distribution and other restaurant and corpor competition and/or deterioration in business conditions may limit our abia lity to expand this business. As such, we may not be abla e to realize the synergies, goodwill, business opportuni the combined company including, among others, business and growth opportuni ties and growth prospects anticipated in connection with the acquisition. ate support. Increased rr t t Risks Related to the Restaurant Industryy WeWW are subject tott a number of risii ks relatll inii cludinii g inii imii migri atitt on requirii ementstt and taxe imii pacm t our cost strtt ucture,e operatitt onal efe fff iff ciencies and taltt ell nt availii abi thtt e areas of envirii onmentaltt matttt ett rsrr ,s minii imii um wage,e emplm oyll s,s and an inii sufu fff iff cient or inii efe fff eff ctitt ve respons lii ill tii ytt .yy ll tt ee benefe iff tii regue se tott latll lell gie sii latll latll itt ons,s unionizii atitt on, menu labe itt on or government regue itt on of our businii ess,s ll lill nii g, itt on may latll itt nii g tott publill c polill cyc changes and feff deral,ll stattt ett and locll al regue The restaurant industryrr is subject to extensive feff deral, state, local and international laws and regulations. The development and operation of restaurants depends to a signififf cant extent on the selection and acquisition of suitabla e sites, which are subject to building, zoning, land use, environmental, traffff iff c and other regulations and requirements. We are subject to licensing and regulation by state and local authorities relating to health, sanitation, safeff ty and fiff re standards and the sale of alcoholic beverages. We are subject to laws and regulations relating to the preparation and sale of food, including regulations regarding product safeff ty, nutritional content and menu labea working conditions. These laws cover minimum wage rates, wage and hour practices, labor workplace safeff ty, and immigration, among others. The myriad of laws and regulations being passed at the state and local level creates unique challenges forff requirements. We must continue to monitor and adapta regulations. ff ling. We are subject to feff deral, state, and local laws governing employment practices and our employment practices to comply with these various laws and a multi-state employer as diffff eff rent standards appl y to diffff eff rent locations, sometimes with conflff icting relations, paid and faff mily leave, a a We also are subject to feff deral and state laws which prohibit discrimination and other laws regulating the design and operation of faff cilities, such as the ADA. Compliance with these laws and regulations can be costly and increase our exposure to litigation and governmental proceedings, and a faff ilure or perceived faff ilure to comply with these laws could result in negative publicity that could harm our reputation. New or changing laws and regulations relating to union organizing rights and activities may impact our operations at the restaurant level and increase our labor costs. a We are subject to a variety of feff deral, state and local laws and regulations relating to the use, storage, discharge, emission and disposal of hazardous materials. There also has been increasing focff us by United States and overseas governmental authorities on other environmental matters, such as climate change, the reduction of greenhouse gases and water consumption. This increased focff us may lead to new initiatives directed at regulating a yet to be specififf ed array of environmental matters. Legislative, regulatoryrr or other effff orff raw materials, taxes, transportation and utilities, which could decrease our operating profiff ts and necessitate futff urt e investments in faff cilities and equipment. ts to combat climate change or other environmental concerns could result in futff urt e increases in the cost of We are subject to laws relating to inforff mation security, cashless payments and consumer credit, protection and fraud. Compliance with these laws and regulations can be costly, and any faff ilure or perceived faff ilure to comply with these laws or any breach of our systems could harm our reputation or lead to litigation, which could adversely affff eff ct our fiff nancial condition or results of operations. 17 The impact of current laws and regulations, the effff eff ct of futff urtt e changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or futff urtt e laws and regulations, or an insuffff iff cient or ineffff eff ctive response to signififf cant regulatoryrr or public policy issues, could negatively impact our cost strucrr turt e, operational effff iff ciencies and talent availabia lity, and thereforff e have an adverse effff eff ct on our results of operations. Failure to comply with the laws and regulatoryrr administrative enforff cement actions, fiff nes and civil and criminal liabia lity. Compliance with these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings. requirements of feff deral, state and local authorities could result in, among other things, revocation of required licenses, e inii tett nse compem titt tii itt on, and ifi we have an inii sufu fff iff cient focff us on compem titt tii itt on and thtt e consumer lanll dscape,e our businii ess,s WeWW facff fiff nii anciali conditii itt on and resultll stt of operatitt ons couldll be adversrr elyll affff eff ctett d. The fulff l-service dining sector of the restaurant industryrr is intensely competitive with respect to pricing, service, location, ff and there are many well-establa ished competitors. We personnel, take-out and deliveryrr options and type and quality of food, compete within each market with national and regional restaurant chains and locally-owned restaurants. We also faff ce growing competition as a result of the trend toward convergence in grocery,rr deli and restaurant services, particularly in the supermarket industryrr which offff eff rs “convenient meals” in the forff m of improved entrées, side dishes or meal preparation kits frff om the deli or prepared foods location of restaurants, type of brand, quality and effff iff ciency of service, attractiveness of faff cilities and effff eff ctiveness of advertising and marketing programs are also important faff ctors. We anticipate that intense competition will continue with respect to all of these faff ctors. If we are unabla e to continue to compete effff eff ctively, our business, fiff nancial condition and results of operations could be adversely affff eff cted. sections. We compete primarily on the quality, variety and value perception of menu items. The number and ff WeWW are subject tott changes inii consumer prefe eff rences thtt at may adversrr elyll affff eff ct demand forff ff food at our restautt rantstt . Consumers are continually changing health and dietaryrr prefeff rences. As a result, our diverse portfolff io of restaurant brands a are continually challenged to evolve our menu offff eff rings to appe brand character and retaining popular menu items. During periods of high public health risk such as the COVID-19 pandemic, many consumers choose to order foodff health issues cause these prefeff rences to increase, we may need to furff changes. New inforff mation or changes in dietary,rr nutritional, allergen or health guidelines or environmental or sustainabia lity concerns, whether issued by government agencies, academic studi t groups of consumers to select foff ods other than those that are offff eff red by our restaurants. If we faff il to anticipate changing trends or other consumer prefeff rences, our business, fiff nancial condition and results of operations could be adversely affff eff cted. al to these changing customer prefeff rences, while maintaining our es, advocacy organizations or similar groups, may cause some rather than dining in at fulff ther adapta our offff eff rings to respond to these additional l-service restaurants. If other futff urt e public To Go or forff deliveryrr Our inii abilii ill tii ytt or faiff matett riali adversrr e imii pacm t on our businii ess. lii ure tott recognizii e,e respons d tott and efe fff eff ctitt velyll manage thtt e accelell ratett d imii pacm t of sociali media couldll have a The prolifeff ration and utilization of existing and innovative social media platforff ms allows individuals and businesses access to a broad audience of consumers and other interested persons. Many social media platforff ms immediately publish the content their subscribers and participants post, oftff en without fiff lters or checks on accuracy of the content posted. Inforff mation posted on such platforff ms at any time may be adverse to our interests or may be inaccurate, each of which may harm our perforff mance, prospects, or business. The harm may be immediate without affff orff ding us an opportuni inforff mation online could harm our business, prospects, fiff nancial condition, and results of operations, regardless of the inforff mation’s accuracy. redress or correction. The dissemination of ty forff t ts, we rely on social media platforff ms and search engine marketing to attract and retain guests. We also continue to Our competitors are constantly expanding their use of social media and new social media platforff ms are rapia dly being developed, potentially making more traditional social media platforff ms obsolete. As a result, we need to continuously innovate and develop our social media strategies in order to maintain broad appe marketing effff orff invest in other digital marketing initiatives that allow us to reach our guests across multiple digital channels and build their awareness of,ff engagement with, and loyalty to our brands. These initiatives may not be successfulff without the benefiff t of higher revenues, increased employee engagement or brand recognition. In addition, a variety of risks are associated with the use of social media, including the improper disclosure of proprietaryrr inforff mation, negative comments about us, exposure of personally identififf abla e inforff mation, frff aud, or out-of-ff date inforff mation. The inappr vehicles by our guests or employees could increase our costs, lead to litigation or result in negative publicity that could damage our reputation. al with guests and brand relevance. As part of our , resulting in expenses incurred opriate use of social media a a a 18 A faiff markerr lii ure tott identitt fi yff and exeee cutett inii novatitt ve markerr titt nii g and guest relatll itt onshipii tactt titt cs,s inii efe fff eff ctitt ve or imii prm oper use of othtt er titt nii g inii itii itt ati itt ves,s and inii creased advertitt sii inii g and markerr titt nii g coststt couldll adversrr elyll affff eff ct our resultll stt of operatitt ons. If our competitors increase their spending on advertising and promotions, if our advertising, media or marketing expenses increase, if our advertising and promotions become less effff eff ctive than those of our competitors, or if we do not adequately leverage technology and data analytic capaa bia lities needed to generate concise competitive insight, we could experience a material adverse effff eff ct on our results of operations. A faff ilure to suffff iff ciently innovate, develop guest relationship initiatives, or maintain adequate and effff eff ctive advertising could inhibit our abia lity to maintain brand relevance and drive increased sales. As part of our marketing effff orff These initiatives may not be successfulff faff ilure to recognize, respond to and effff eff ctively manage the accelerated impact of social media could have a material adverse impact on our business.” ts, we rely on social media platforff ms and search engine marketing to attract and retain guests. under the heading: “Our inabia lity or , and pose a variety of other risks, as discussed above a ClCC ill mii atett change,e adversrr e weathtt er conditii itt ons and natural disii astett rsrr couldll adversrr elyll affff eff ct our restautt operatitt ons. rant salell s or resultll stt of The long-term effff eff cts of climate change and global warming will result in more severe, volatile weather or extended droughts, which could increase the frff equency and duration of weather impacts on our operations. Adverse weather conditions have in the past and may continue to impact guest traffff iff c at our restaurants, cause the temporaryrr underutrr seating and, in more severe cases such as hurricanes, tornadoes, wildfiff res or other naturt al disasters, cause property damage and temporaryrr closures, sometimes forff change and government regulation relating to climate change, including regulation of greenhouse gas emissions, could result in construcrr rr interrupt tion delays and increased costs, interrupt ions in the supply or increases to the costs of foodff prolonged periods, which could negatively impact our restaurant sales or costs. Climate ions to the availabia lity or increases in the cost of utilities, and shortages or items and other supplies. ilization of outdoor patio rr gy Risks Relating to Our Business Model and Strategy g A majoritii ytt of our restautt thtt at we may not be ablell may want tott extee ett nd at thtt e end of thtt eirii rantstt are operatett d inii tott cancel ifi we want tott closll e a restautt tett rmrr s. lell ased propertitt es and as a resultll ,tt we are commitii ttt ett d tott lonll g-tett rmrr lell ase oblill gat itt ons i rant locll atitt on and we may be unablell tott renew thtt e lell ases thtt at we As of May 28, 2023, 1,839 of our 1,914 restaurants operating in the United States and Canada operate in leased locations some period of time. If we close a restaurant in a leased location, we may remain a icabla e lease, which would include, among other things, payment of the base the balance of the lease term. Additionally, the potential losses associated with our inabia lity to cancel leases may result in and the leases are generally non-cancellabla e forff committed to perforff m our obligations under the appl rent forff our keeping open restaurant locations that are perforff ming signififf cantly below targeted levels. As a result, ongoing lease rforff ming restaurant locations could impair our results of operations. In addition, at the end of the obligations at closed or underperr lease term and expiration of all renewal periods, we may be unabla e to renew the lease without substantial additional cost, if at all. As a result, we may be required to close or relocate a restaurant, which could subject us to construcrr tion and other costs and risks that may have an adverse effff eff ct on our operating perforff mance. lii ure tott exeee Our inii abilii ill tii ytt or faiff hurricane or manmade disii astett r,rr at our corpor cutett on a comprm ehensive businii ess contitt nii uitii ytt planll ilii ill tii ytt couldll have a matett riali facff atett rr folff lll owll inii g a major natural disii astett r such as a lll yll adversrr e imii pacm t on our businii ess. Many of our corpor rr ate systems and processes and corpor rr ate support forff our restaurant operations are centralized at one Florida location. We have disaster recoveryrr procedures and business continuity plans in place to address most events of a crisis naturt e, including hurricanes and other naturt al or manmade disasters, and back up and offff -ff site locations forff and other forff ms of data and inforff mation. However, if we are unabla e to fulff experience delays in recoveryrr of data, inabia lity to perforff m vital corpor compliance, faff ilures to adequately support fiff eld operations and other breakdowns in normal communication and operating procedures that could have a material adverse effff eff ct on our fiff nancial condition, results of operations and exposure to administrative and other legal claims. ly implement our disaster recoveryrr plans, we may tions, tardiness in required reporting and ff ate func recoveryrr of electronic rr WeWW m yay llosll e s lalell s or iinii cur iinii creasedd coststt fff dood ff andd othhtt er pr doductstt ffrff om our thhtt iirii dd partyytt venddorsrr andd su lpplu iiffii our restautt ee rantstt expe iilll ersrr . riience shhort gage tt s,s ddell yayll s or iinii tett rruptu iitt ons iinii thhtt e ddelliilll veryyr ofof u We hhave a lliimiitedd numbber of su lppl iiers a dnd didistriibbutors forff certaiin of our pr doducts a dnd ser ivices. Shhortagges, ddellayys or iions iin thhe s iinterrupt rr suchh as hhurriicanes, tornaddoes, fllff thhe shihi lupplyy of f doodff doods, ddrought iitems a dnd othher s l oughts, wiilldfdfiifff res a dnd earthhquakkes; macroeconomiic c di uppliies to our restaurants mayy bbe causedd byby severe weathher; naturtt all didisasters iions to rr iissues suchh as iincreasedd costs or workker shhortagges or othher operatiionall didisrupt onditiions res lultii gng iin didisrupt rr ippi gng a dnd transportatiion ii dndustriies; llabbor a iions 19 luppliiers, ve dndors or othher ser ivice pr iovidders; thhe iinabibia lliityy of our ve dndors or ser ivice pr iions hhave iincreasedd some of our costs a dnd lliimiitedd thhe avaiillabibia lliityy of certaiin pr doducts forff at our s onditiions, bobtaiin credidit or remaiin s lolvent; or othher c dionditiions bbeyond c di addversellyy affff eff ct thhe avaiillabibia lliityy, qualliityy a dnd cost of thhe iitems we buybuy a dnd thhe operatiions of our restaurants. S didisrupt rr to ddo so. If we iincrease menu priices as a res lult of iincreasedd f doodff mayy neggatiivellyy iimpact our salles. If we temporariillyy cllose a restaurant or remove restaurant mayy experiience a siignignifiiff cant redductiion iin salles ddurii gng thhe tiime affff eff ctedd byby thhe shhortagge or thhereaftff er as a res lult of our gguests chhangingi gng thheiir didi ini gng hhabibia ts. iovidders to managge addverse bbusiiness louldd l our restaurants a dnd mayy contiinue costs or remove menu iitems ddue to shhortagges, suchh responses yond our contr lol. Suchh shhortagges, ddellayys or iinterrupt popular iitems frff om a restaurant’s menu, thhat rr upplyy chhaiin iions c l lii ure tott drive bothtt Our faiff openinii g new restautt short-tt tett rmrr and lonll g-tett rmrr tt profiff tii abl ell salell s growthtt thtt roughu brand relell vance,e operatitt nii g excee rantstt of exiee sii titt nii g brands,s and acquirii inii g new restautt rant brands couldll resultll inii poor fiff nii anciali ellll ell nce,e perfr orff mrr ance.ee As part of our business strategy, we intend to drive profiff tabla e sales growth by increasing same-restaurant sales at existing restaurants, continuing to expand our current portfolff profiff tabla y. This strategy involves numerous risks, and we may not be abla e to achieve our growth objectives. io of restaurant brands, and acquiring additional brands that can be expanded At existing brands, we may not be abla e to maintain brand relevance and restaurant operating excellence to achieve sustainabla e same-restaurant sales growth and warrant new unit growth. Existing brand short-term sales growth could be impacted if we are unabla e to drive near term guest count and sales growth, and long-term sales growth could be impacted if we faff il to extend our existing brands in ways that are relevant to our guests. A faff ilure to innovate and extend our existing brands in ways that are relevant to guests and occasions in order to generate sustainabla e same-restaurant traffff iff c growth and produce non- ties, insuffff iff cient focff us on our competition, or faff ilure to adequately address declines traditional sales and earnings growth opportuni in the casual dining industry,rr could have an adverse effff eff ct on our results of operations. In addition, we may not be abla e to support sustained new unit growth or open all of our planned new restaurants, and the new restaurants that we open may not be profiff tabla e or as profiff tabla e as our existing restaurants. New restaurants typically experience an adjustment period beforff e sales levels and operating margins normalize, and even sales at successfulff contribution to profiff tabia lity in their initial months of operation. The opening of new restaurants can also have an adverse effff eff ct on guest counts and sales levels at existing restaurants. newly-opened restaurants generally do not make a signififf cant t The abia lity to open and profiff tabla y operate restaurants is subject to various risks, such as the identififf cation and availabia lity of a a requirements, the availabia lity of necessaryrr contractors and subcontractors, the abia lity to meet construcrr suitabla e and economically viabla e locations, the negotiation of acceptabla e lease or purchase terms forff obtain all required governmental permits (including zoning appr with other regulatoryrr schedules and budgets, the abia lity to manage union activities such as picketing or hand billing which could delay construcrr increases in labor changes in patterns or severity of weather or other acts of God that could result in construcrr results of one or more restaurants forff personnel and general economic and business conditions. At each potential location, we compete with other restaurants and retail businesses forff resources. If we are unabla e to successfulff earnings in futff urtt e periods. new locations, the need to ovals and liquor licenses) on a timely basis, the need to comply tion tion, tion contractors, management personnel, hourly employees and other ly manage these risks, we could faff ce increased costs and lower than anticipated sales and an indeterminate amount of time, our abia lity to hire and train qualififf ed management ions, the availabia lity of fiff nancing at acceptabla e rates and terms, and building material costs, supply chain disrupt desirabla e development sites, construcrr tion delays and adversely affff eff ct the rr We also may not be abla e to identifyff and successfulff ly acquire and integrate additional brands that are as profiff tabla e as our existing restaurants or that provide potential forff furff ther growth. A lacll k of availii abi restautt ll rantstt may adversrr elyll affff eff ct our salell s and resultll stt of operatitt ons. ell lii ill tii ytt of suitii abl tt locll atitt ons forff new restautt rantstt or a declill nii e inii thtt e qualill tii ytt of thtt e locll atitt ons of our current The success of our restaurants depends in large part on their locations. As demographi c and economic patterns change, current locations may not continue to be attractive or profiff tabla e. Possible declines in neighborhoods where our restaurants are located or adverse economic conditions in areas surrounding those neighborhoods could result in reduced sales in those locations. In addition, desirabla e locations forff the relocation of existing restaurants may not be availabla e at an acceptabla e cost when we identifyff a particular opportuni these events could have a signififf cant adverse effff eff ct on our sales and results of operations. a new restaurant or relocation. The occurrence of one or more of new restaurant openings or forff ty forff a t ee WeWW may expe relocll atitt nii g and remodelill nii g of exiee sii titt nii g restautt er-rr thtt an-antitt cipat rience highi ii ett d coststt or delayll s associatett d witii htt thtt e openinii g of new restautt rantstt or witii htt thtt e closll inii g,gg rantstt ,s which may adversrr elyll affff eff ct our resultll stt of operatitt ons. Our sales and expenses can be impacted signififf cantly by the number and timing of the opening of new restaurants and the closing, relocating and remodeling of existing restaurants. We incur substantial pre-opening expenses each time we open a new 20 restaurant and other expenses when we close, relocate or remodel existing restaurants. The expenses of opening, closing, relocating or remodeling any of our restaurants may be higher than anticipated. Increases in the time to procure or shortages of construcrr restaurants. An increase in such expenses or delays in the timeline to complete construcrr results of operations. and materials and capia tal equipment, or permitting delays, may impact the time it takes to open new tion could have an adverse effff eff ct on our a tion labor WeWW facff e a varietytt of risii ks associati ett d witii htt doinii g businii ess witii htt frff anchisii ees and lill censees. Certain of our domestic and all of our international locations other than in Canada are operated by frff anchisees or licensees. We believe that we have selected high-caliber operating partners and frff anchisees with signififf cant experience in restaurant operations, and we are providing them with training and support. However, the probabia lity of opening, ultimate success and quality of any frff anchise or licensed restaurant rests principally with the frff anchisee or licensee. If the frff anchisee or licensee does not successfulff ly open and operate its restaurants in a manner consistent with our standards, or guests have negative experiences due to issues with foodff business. quality or operational execution, our brand values could suffff eff r, which could have an adverse effff eff ct on our WeWW facff e a varietytt of risii ks associatett d witii htt doinii g businii ess witii htt businii ess partntt ersrr and vendorsrr inii forff eigni markerr tstt . We are making effff orff ts to expand our brands overseas through licensing and frff anchising relationships. There is no assurance that international operations will be profiff tabla e or that international growth will continue. Our international operations are subject to all of the same risks associated with our domestic operations, as well as a number of additional risks. These include, among other things, international economic and political conditions, forff eign currency flff uctuat prefeff rences. In addition, expansion into international markets could create risks to our brands and reputation. tions, and diffff eff ring culturt es and consumer We also are subject to governmental regulations throughout the world that impact the way we do business with our international frff anchisees and vendors. These include antitrusrr customs regulations and other international trade regulations, the USA Patriot Act, the Foreign Corrupt appl icabla e local law. Failure to comply with any such legal requirements could subject us to monetaryrr a sanctions, which could harm our business, results of operations and fiff nancial condition. rr t and tax requirements, anti-boycott regulations, import/tt export/tt Practices Act, and liabia lities and other itt lii ill tii ytt VolVV atll thtt e markerr inii prices may cause volatll t value of derivatitt ves we may use tott hedge expos ee inii our gross margir nii s and net earninii gs. itt lii ill tii ytt ures tott t flff uctuatitt ons inii commoditii ytt and broader markerr We use or may use derivatives to hedge price risk forff some of our principal ingredient, labor a and energy costs, including but not limited to coffff eff e, butter, wheat, soybean oil, pork, beef,ff diesel fueff l, gasoline and naturt al gas. Changes in the values of these derivatives may be recorded in earnings currently, resulting in volatility in both gross margin and net earnings. These gains and losses are reported as a component of cost of sales in our Consolidated Statements of Earnings included in our consolidated fiff nancial statements. itt lii ill tii ytt VolVV atll equitii ytt -based compem nsatitt on awards. thtt e UnUU itii ett d StSS attt ett s equitii ytt markerr inii tstt affff eff ctstt our abilii ill tii ytt tott efe fff iff cientltt yll hedge expos ee ures tott our markerr t risii k relatll ett d tott The equity markets in the United States have experienced recent periods of volatility due to the impacts of the COVID-19 pandemic, macroeconomic conditions, geopolitical concerns and the unpredictabia lity of the recoveryrr of the United States economy as a result of these faff ctors. Market volatility has contributed to and may continue to contribute to flff uctuatt tions in the Company’s stock price. We have equity hedges in place to protect the Company frff om exposure to market risk related to futff uret payout of equity-based compensation awards. However, because these hedges also net settle on a cash basis quarterly, we have been and may in the futff urt e be required to make cash payments at those quarterly settlement dates and the amounts of those payments are diffff iff cult to predict during periods of extreme volatility in the equity markets. These cash payments may ultimately be offff sff et by payments to us frff om the hedge counterparr hedges fiff nally fulff rties or reductions in expected payouts to employees when those equity ly settle and the related equity awards pay out. FaiFF lii ure tott protett ct our service marksrr or othtt er inii tett llll ell ctual propertytt couldll harmrr our businii ess. We regard our Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capia tal Grille®, ®, RutRR h’s Chris Steak House®, The Capia tal Burger ®, Darden® and Seasons 52®, Bahama Breeze®, Eddie V’s Prime Seafoodff Darden Restaurants® service marks, and other service marks and trademarks related to our restaurant businesses, as having signififf cant value and being important to our marketing effff orff copyrights, patents, trademarks, service marks and other common law rights, such as trade secret and unfaff ir competition laws, to protect our restaurants and services frff om infrff ingement. We have registered certain trademarks and service marks in the United States and forff eign jurisdictions. However, we are aware of names and marks identical or similar to our service marks being used ts. We rely on a combination of protections provided by contracts, 21 a frff om time to time by other persons. Although our policy is to oppose any such infrff ingement, furff uses or other misappr business. In addition, effff eff ctive intellectuatt to open or frff anchise a restaurant. Although we believe we have taken appr there can be no assurance that these protections will be adequate, and defeff nding or enforff cing our service marks and other intellectuat opriation of our trademarks or service marks could diminish the value of our brands and adversely affff eff ct our in which we have or intend l property protection may not be availabla e in everyrr countryrr a l property could result in the expenditurt e of signififf cant resources. opriate measures to protect our intellectuat ther or unknown unauthorized l property, General Risks itt on, inii cludinii g allll ell gat e itt ons of ilii lll ell gal e ,ll unfn aiff rii or inii consisii tett nt emplm oyll ment practitt ces,s may adversrr elyll affff eff ct our businii ess,s Litii itt gat i fiff nii anciali conditii itt on and resultll stt of operatitt ons. tampering, foodff safeff ty issues including poor food (including obesity); other personal injury;rr contamination, and adverse health effff eff cts frff om consumption of various foodff Our business is subject to the risk of litigation by employees, guests, suppliers, business partners, shareholders, government agencies or others through private actions, class actions, administrative proceedings, regulatoryrr actions or other litigation. These actions and proceedings may involve allegations of illegal, unfaff ir or inconsistent employment practices, including wage and hour violations and employment discrimination; guest discrimination; foodff illness, foodff foods ff an establa ishment that serves alcoholic beverages to an intoxicated party who then causes injuryrr trademark infrff ingement; violation of the feff deral securities laws; or other concerns. The outcome of litigation, particularly class action lawsuits and regulatoryrr actions, is diffff iff cult to assess or quantify.ff veryrr substantial periods of time. The cost to defeff nd litigation may be signififf cant. There may also be adverse publicity associated with litigation that could decrease guest acceptance of our brands, regardless of whether the allegations are valid or we ultimately are found ff employment practices, forff adversely affff eff ct our business, fiff nancial condition and results of operations. liabla e. Litigation could impact our operations in other ways as well. Allegations of illegal, unfaff ir or inconsistent example, could adversely affff eff ct employee acquisition and retention. As a result, litigation may violation of “dram shop” laws (providing an injured party with recourse against of the potential loss relating to such lawsuits may remain unknown forff Plaintiffff sff in these types of lawsuits may seek recoveryrr of large or indeterminate amounts, and the magnitude to himself or a third party); quality, food- borne products or high-calorie ff ff t UnUU fn avff orablell publill citii ytt ,yy or a faiff our guest countstt and salell s. lii ure tott respons d efe fff eff ctitt velyll tott adversrr e publill citii ytt ,yy couldll harmrr our repuee tattt itt on and adversrr elyll imii pacm t The good reputation of our restaurant brands is a key faff ctor in the success of our business. Actuatt l or alleged incidents at any of our restaurants could result in negative publicity that could harm our brands. Even incidents occurring at restaurants operated by our competitors or in the supply chain generally could result in negative publicity that could harm the restaurant industryrr overall and, indirectly, our own brands. Negative publicity may result frff om allegations of illegal, unfaff ir or inconsistent employment practices, employee dissatisfaff ction, guest discrimination, illness, injury,rr or any of the other matters discussed above that could give rise to litigation. Regardless of whether the allegations or complaints are valid, unfaff vorabla e publicity relating to a limited number of our restaurants, or to only a single restaurant, could adversely affff eff ct public perception of the entire brand. Negative publicity also may result frff om health concerns including food government or industryrr products, environmental disasters, crime incidents, data security breaches, fiff ndings concerning food scandals involving our employees, or operational problems at our restaurants, all of which could make our brands and menu aling to our guests and negatively impact our guest counts and sales. Adverse publicity and its effff eff ct on overall offff eff rings less appe consumer perceptions of our brands, or our faff ilure to respond effff eff ctively to adverse publicity, could have a material adverse effff eff ct on our business. outbrt eaks, publication of safeff ty and flff u or virusrr a a ff ff Disii ruptu itt ons inii and cost of creditii .tt thtt e fiff nii anciali and creditii markerr tstt may adversrr elyll imii pacm t consumer spes ndinii g patttt ett rns and affff eff ct thtt e availii abi ll lii ill tii ytt rr Our abia lity to make scheduled payments or to refiff nance our debt and to obtain fiff nancing forff ate and commercial purpos es will depend on our operating and fiff nancial perforff mance, which in turt n is subject to prevailing corpor rr economic conditions and to fiff nancial, business and other faff ctors beyond our control. Turmoil in global credit markets could adversely impact the availabia lity of credit already arranged, and the availabia lity and cost of credit in the futff urt e. There can be no assurances that we will be abla e to arrange credit on terms we believe are acceptabla e or that permit us to fiff nance our business with historical margins. A lack of credit could have an adverse impact on certain of our suppliers, landlords and other tenants in retail ions in centers in which we are located. If these issues occur, they could negatively affff eff ct our fiff nancial results. Any new disrupt the fiff nancial markets may also adversely affff eff ct the U.S. and world economy, which could negatively impact consumer spending patterns. acquisitions or other general rr 22 ImII paim rii mrr ent of thtt e carryr inii g value of our goodwilii lll or othtt er inii tantt resultll stt of operatitt ons. gibli ell assetstt couldll adversrr elyll affff eff ct our fiff nii anciali conditii itt on and Goodwill represents the diffff eff rence between the purchase price of acquired companies and the related faff ir values of net assets acquired. A signififf cant amount of judgment is involved in determining if an indication of impairment of goodwill exists. Factors may include, among others: a signififf cant decline in our expected futff urtt e cash flff ows; a sustained, signififf cant decline in our stock price and market capia talization; a signififf cant adverse change in legal faff ctors or in the business climate; unanticipated competition; the testing forff recoverabia lity of a signififf cant asset group within a reporting unit; and slower growth rates. Any adverse change in these faff ctors could have a signififf cant impact on the recoverabia lity of these assets and negatively affff eff ct our fiff nancial condition and results of operations. We compute the amount of impairment by comparing the faff ir value of the reporting unit with the carryirr ng amount of that reporting unit. We are required to record a non-cash impairment charge if the testing perforff med indicates that goodwill has been impaired. We evaluate the usefulff lives of our other intangible assets, primarily the LongHorn Steakhouse®, Cheddar’s Scratch ® trademarks, to determine if they are defiff nite or Kitchen®, The Capia tal Grille®, Yard House® and Eddie V’s Prime Seafood indefiff nite-lived. Reaching a determination on usefulff effff eff cts of obsolescence, demand, competition, other economic faff ctors (such as the stabia lity of the industry,rr legislative action that results in an uncertain or changing regulatoryrr environment, and expected changes in distribution channels), the level of required maintenance expenditurt es, and the expected lives of other related groups of assets. requires signififf cant judgments and assumptions regarding the futff urtt e lifeff ff As with goodwill, we test our indefiff nite-lived intangible assets (primarily trademarks) forff impairment annually and whenever events or changes in circumstances indicate that their carryirr ng value may not be recoverabla e. We cannot accurately predict the amount and timing of any impairments of these or other assets. Should the value of goodwill or other intangible assets become impaired, there could be an adverse effff eff ct on our fiff nancial condition and results of operations. ChCC anges inii taxtt lawll s and unantitt cipat ett d taxtt ii lill abilii ill tii itt es couldll adversrr elyll affff eff ct our fiff nii anciali resultll stt . We are primarily subject to income and other taxes in the United States. Our effff eff ctive income tax rate and other taxes in the futff urt e could be adversely affff eff cted by a number of faff ctors, including changes in the valuation of defeff rred tax assets and liabia lities, changes in tax laws or other legislative changes and the outcome of income tax audits. Although we believe our tax estimates are reasonabla e, the fiff nal determination of tax audits could be materially diffff eff rent frff om our historical income tax provisions and accruarr ls. The results of a tax audit could have a material effff eff ct on our results of operations or cash flff ows in the period or periods forff which that determination is made. In addition, our effff eff ctive income tax rate and our results may be impacted by our abia lity to realize defeff rred tax benefiff ts and by any increases or decreases of our valuation allowances appl assets. ied to our existing defeff rred tax a FaiFF lii ure of our inii tett rnal contrtt olsll over fiff nii anciali ctett d operatitt nii g resultll stt ,s affff eff ct our repor ee unexpe ee titt nii g and fuff ture changes inii accountitt nii g stantt repor ee tett d resultll stt of operatitt ons or othtt erwisii e harmrr dards may cause adversrr e our businii ess and fiff nii ancial resultll stt . Our management is responsible forff establa ishing and maintaining effff eff ctive internal control over fiff nancial reporting. Internal rr es in accordance with accounting principles generally accepted in the United States. Because of its inherent control over fiff nancial reporting is a process to provide reasonabla e assurance regarding the reliabia lity of fiff nancial reporting forff external purpos limitations, internal control over fiff nancial reporting is not intended to provide absa olute assurance that we would prevent or detect a misstatement of our fiff nancial statements or frff aud. Our growth and acquisition of other restaurant companies with procedures not identical to our own could place signififf cant additional pressure on our system of internal control over fiff nancial reporting. Any faff ilure to maintain an effff eff ctive system of internal control over fiff nancial reporting could limit our abia lity to report our fiff nancial results accurately and timely or to detect and prevent frff aud. A signififf cant fiff nancial reporting faff ilure or material weakness in internal control over fiff nancial reporting could cause a loss of investor confiff dence and decline in the market price of our common stock, increase our costs, lead to litigation or result in negative publicity that could damage our reputation. A change in accounting standards can have a signififf cant effff eff ct on our reported results and may affff eff ct our reporting of transactions beforff e the change is effff eff ctive. New pronouncements and varyirr ng interprrr etations of pronouncements have occurred and may occur in the futff urtt e. Changes to existing accounting rulrr es or the appl adversely affff eff ct our reported fiff nancial results. Additionally, our assumptions, estimates and judgments related to complex accounting matters could signififf cantly affff eff ct our fiff nancial results. Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interprrr etations with regard to a wide range of matters that are relevant to our business, including but not limited to, revenue recognition, faff ir value of investments, impairment of long-lived assets, leases and related economic transactions, derivatives, pension and post-retirement benefiff ts, intangibles, self-ff insurance, income taxes, property and equipment, unclaimed property laws and litigation, and stock-based compensation are highly complex and involve many subjective assumptions, estimates and judgments by us. Changes in these rulrr es or their interprrr etation or ication of current accounting practices may a 23 changes in underlying assumptions, estimates or judgments by us could signififf cantly change our reported or expected fiff nancial perforff mance. Item 1B. UNRESOLVED STAFF COMMENTS None. Item 2. PROPERTIES Restaurant Properties – Continuing Operations As of May 28, 2023, we operated 1,914 restaurants. Our company-owned restaurants are located in all 50 of the United States, Washington D.C. and Canada. Of these 1,914 company-owned restaurants, 75 were located on owned sites and 1,839 lows: were located on leased sites. The leases are classififf ed as folff Land-Only Leases (we own buildings and equipment) Ground and Building Leases Space/In-Line/Other Leases Total 962 661 216 1,839 We also lease our Restaurant Support Center which is located in Orlando, Florida. Item 3. LEGAL PROCEEDINGS See the discussion of legal proceedings contained in the third paragrapha of Note 15 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report). Item 4. MINE SAFETY DISCLOSURES a Not appl icabla e. 24 PART II Item 5. MARKET FOR REGISTRARR NT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market [and Dividend] Inforff mation The principal United States market on which our common shares are traded is the New York Stock Exchange, where our shares are traded under the symbol DRI. As of June 30, 2023, there were appr oximately 8,213 holders of record of our common shares. The number of registered holders does not include holders who are benefiff cial owners but whose shares are held in street name by brokers and other nominees. a We have not sold any equity securities during the last fiff scal year that were not registered under the Securities Act of 1933, as amended. We have a historyrr of paying cash dividends. Any futff urt e dividend payments remain subject to the discretion of our Board of Directors. Share Repurchases Since commencing our common share repurchase program in December 1995, we have repurchased a total of 207.7 million shares through May 28, 2023 under authorizations frff om our Board of Directors. The tabla e below provides inforff mation concerning our repurchase of shares of our common stock during the quarter ended May 28, 2023: (Dollars in millions, except per share data) Total Number of Shares Purchased (1) (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (3) Februarr ryrr 27, 2023 through April 2, 2023 237,715 $147.23 237,715 April 3, 2023 through Apri1 30, 2023 2,004 $151.93 May 1, 2023 through May 28, 2023 — — 2,004 — Quarter-to-Date 239,719 $147.27 239,719 $652.2 $651.9 $651.9 $651.9 (1) All of the shares purchased during the quarter ended May 28, 2023 were purchased as part of our repurchase program. On June 22, 2022, our Board of Directors authorized a new share repurchase program under which we may repurchase up to $1.0 billion of our outstanding common stock. This repurchase program, which was announced publicly in a press release issued on June 23, 2022, does not have an expiration and replaces the existing share repurchase authorization. (2) The number of shares purchased includes shares withheld forff taxes on vesting of restricted stock, shares delivered or deemed the exercise price of options, and shares reacquired pursuant to tax to be delivered to us on tender of stock in payment forff withholding on option exercises. These shares are included as part of our repurchase program and deplete the repurchase authority granted by our Board. The number of shares repurchased excludes shares we reacquired pursuant to forff restricted stock. feff iturt e of (3) Repurchases are subject to prevailing market prices, may be made in open market or private transactions, and may occur or be discontinued at any time. There can be no assurance that we will repurchase any additional shares. 25 Comparison of Five-Year Total Return Company/Index Indexed Returns May 2018 May 2019 May 2020 May 2021 May 2022 May 2023 Darden Restaurants, Inc. S&P 500 Stock Index S&P Composite 1500 Restaurant Sub-Index $ $ $ 100.00 100.00 100.00 $ $ $ 140.46 105.95 126.24 $ $ $ 91.92 116.47 126.09 $ $ $ 173.35 163.42 176.64 $ $ $ 157.33 163.95 160.94 $ $ $ 208.64 168.68 197.37 Darden Restaurants, Inc. S&P 500 Stock Index S&P Composite 1500 Restaurant Sub-Index $275 $250 $225 $200 $175 $150 $125 $100 $75 May - 18 May - 19 May - 20 May - 21 May - 22 May - 23 The annual changes forff the fiff ve-year period shown in the grapha on this page are based on the assumption that $100 had been invested in Darden Restaurants, Inc. common stock, the S&P 500 Stock Index and the S&P Composite 1500 Restaurant Sub- Index on May 27, 2018, and that all dividends were reinvested. The cumulative dollar returtt ns shown on the grapha value that such investments would have had forff each period indicated. represent the 26 Item 6. RESERVR ED Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERARR TIONS This discussion and analysis below forff Darden Restaurants, Inc. (Darden, the Company, we, us or our) should be read in conjunction with our consolidated fiff nancial statements and related fiff nancial statement notes included in Part II of this report under the capta ion “Item 8 - Financial Statements and Supplementaryrr Data.” We operate on a 52/53-week fiff scal year, which ends on the last Sunday in May. Fiscal 2023, which ended May 28, 2023, and fiff scal 2022, which ended May 29, 2022, each consisted of 52 weeks. OVERVR IEW OF OPERARR TIONS Our business operates in the fulff l-service dining segment of the restaurant industry.rr At May 28, 2023, we operated 1,914 restaurants through subsidiaries in the United States and Canada under the Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capia tal Grille®, Seasons 52®, Bahama Breeze®, Eddie V’s Prime Seafoodff Burger® trademarks. We own and operate all of our restaurants in the United States and Canada, except forff restaurants managed by us and 34 frff anchised restaurants. We also have 35 frff anchised restaurants in operation located in Latin America, Asia, the Middle East and the Caribbean. All intercompany balances and transactions have been eliminated in consolidation. 2 joint venturt e ®, and The Capia tal COCC VIVV DII -19 PanPP demic and Othtt er ImII pacm tstt tott our OpeOO ratitt nii g EnEE virii onment During fiff scal 2022, increases in the number of cases of COVID-19 throughout the United States including the Omicron variant which signififf cantly impacted our restaurants in the third quarter, subjected some of our restaurants to COVID-19-related restrictions such as mask and/or vaccine requirements forff team members, guests or both. Along with COVID-19, our operating results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflff ation on wages and other cost of goods sold; these events furff additional disrupt ther impacted the availabia lity of team members needed to staffff our restaurants and caused ions in our product supply chain. rr The ongoing effff orff ts to recover frff om the effff eff cts of the COVID-19 pandemic and its variants, along with other geopolitical and macroeconomic events, could impact our restaurants through wage inflff ation, staffff iff ng challenges, product cost inflff ation and rr disrupt ions in the supply chain that impact our restaurants’ abia lity to obtain the products needed to support their operations. FiFF sii cal 2023 FiFF nii anciali HiHH ghi lill ghi tstt Total sales increased 8.9 percent to $10.49 billion in fiff scal 2023 frff om $9.63 billion in fiff scal 2022 driven by a blended same-restaurant sales increase of 6.8 percent and sales frff om 47 net new restaurants. Reported diluted net earnings per share frff om continuing operations increased to $8.00 in fiff scal 2023 frff om $7.40 in fiff scal 2022, a 8.1 percent increase. Net earnings frff om continuing operations increased to $983.5 million in fiff scal 2023 frff om $954.7 million in fiff scal 2022, a 3.0 percent increase. Net loss frff om discontinued operations decreased to $1.6 million ($0.01 per diluted share) in fiff scal 2023, from $1.9 million ($0.01 per diluted share) in fiff scal 2022. When combined with results frff om continuing operations, our diluted net earnings per share was $7.99 forff fiff scal 2023 and $7.39 forff fiff scal 2022. • • • • Outltt ookll On June 14, 2023, we completed our acquisition of RutRR h’s, a Delaware corpor rr ation, forff $21.50 per share in cash. RutRR h’s is the owner, operator and frff anchisor of RutRR h’s Chris Steak House restaurants. We expect fiff scal 2024 sales frff om continuing operations to increase between 9.5 percent and 10.5 percent, driven by the addition of the RutRR h’s Chris Steak House restaurants to our portfolff percent, and sales frff om appr percent to 12.5 percent and we expect capia tal expenditurt es incurred to build new restaurants, remodel and maintain existing restaurants and technology initiatives to be between $550 million and $600 million. oximately 50 new restaurant openings. In fiff scal 2024, we expect our annual effff eff ctive tax rate to be 12 io, Darden same-restaurant sales growth of 2.5 percent to 3.5 a 27 RESULTS OF OPERARR TIONS FOR FISCAL 2023 AND 2022 To faff cilitate review of our results of operations, the folff lowing tabla e sets forff th our fiff nancial results forff the periods indicated. All inforff mation is derived frff om the consolidated statements of earnings forff 2022: the fiff scal years ended May 28, 2023 and May 29, (in millions) Sales Costs and expenses: Food and beverage Restaurant labor Restaurant expenses a Marketing expenses General and administrative expenses Depreciation and amortization Impairments and disposal of assets, net Total operating costs and expenses Operating income Interest, net Earnings beforff e income taxes Income tax expense (1) Earnings frff om continuing operations Losses frff om discontinued operations, net of tax g Net earnings (1) Effff eff ctive tax rate . NM- Percentage change not considered meaningfulff iscal Year Ended Percent Change May 28, 2023 May 29, 2022 2023 v. 2022 $ 10,487.8 $ 9,630.0 8.9% 3,355.9 3,346.3 1,702.2 118.3 386.1 387.8 (10.6) 9,286.0 1,201.8 81.3 1,120.5 137.0 983.5 (1.6) 981.9 $ $ $ $ $ 2,943.6 3,108.8 1,582.6 93.2 373.2 368.4 (2.0) 8,467.8 1,162.2 68.7 1,093.5 138.8 954.7 (1.9) 952.8 $ $ $ $ $ 12.2 % 12.7 % 14.0% 7.6% 7.6% 26.9% 3.5% 5.3% NM 9.7% 3.4% 18.3% 2.5% (1.3)% 3.0% (15.8)% 3.1% 28 The folff lowing tabla e details the number of company-owned restaurants currently reported in continuing operations, compared with the number open at the end of fiff scal 2022: Olive Garden LongHorn Steakhouse Cheddar’s Scratch Kitchen Yard House The Capia tal Grille Seasons 52 Bahama Breeze Eddie V’s The Capia tal Burger Total SALES May 28, 2023 May 29, 2022 884 546 172 85 62 45 42 28 3 1,867 905 562 180 86 62 44 42 29 4 1,914 The folff lowing tabla e presents our company-owned restaurant sales, U.S. same-restaurant sales (SRS) and average annual sales per restaurant by segment forff the periods indicated: Sales Fiscal Year Ended Average Annual Sales per Restaurant (2) Fiscal Year Ended (in millions) Olive Garden LongHorn Steakhouse Fine Dining Other Business May 28, 2023 May 29, 2022 4,503.9 $ 2,374.3 $ 776.2 $ 1,975.6 $ 9,630.0 $ 4,877.8 2,612.3 830.8 2,166.9 10,487.8 $ $ $ $ $ Percent Change SRS (1) 8.3 % 10.0 % 7.0 % 9.7 % 6.7 % 7.4 % 5.7 % 7.0 % May 28, 2023 May 29, 2022 5.1 $ 4.4 $ 8.8 $ 5.7 $ 5.5 4.7 9.2 6.0 $ $ $ $ (1) Same-restaurant sales is a year-over-year comparison of each period’s sales volumes forff a 52-week year and is limited to restaurants that have been open, and operated by Darden, forff at least 16 months. (2) Average annual sales are calculated as sales divided by total restaurant operating weeks multiplied by 52 weeks; excludes frff anchise locations. Olive Garden’s sales increase foff r fiff scal 2023 was primarily driven by a U.S. same-restaurant sales increase combined with revenue frff om new restaurants. The increase in U.S. same-restaurant sales in fiff scal 2023 resulted frff om an 8.4 percent increase in average check, partially offff sff et by a 1.6 percent decrease in same-restaurant guest counts. LongHorn Steakhouse’s sales increase forff fiff scal 2023 was driven by a same-restaurant sales increase combined with revenue frff om new restaurants. The increase in same-restaurant sales in fiff scal 2023 resulted frff om a 1.2 percent increase in same-restaurant guest counts combined with a 6.1 percent increase in average check. Fine Dining’s sales increase forff fiff scal 2023 was driven by a same-restaurant sales increase combined with revenue frff om new restaurants. The increase in same-restaurant sales in fiff scal 2023 resulted frff om a 0.5 percent increase in same-restaurant guest counts combined with a 5.1 percent increase in average check. Other Business’s sales increase forff fiff scal 2023 was driven by a same-restaurant sales increase combined with revenue frff om new restaurants. The increase in same-restaurant sales in fiff scal 2023 resulted frff om a 0.6 percent increase in same-restaurant guest counts combined with a 6.4 percent increase in average check. COSTS AND EXPENSES The folff lowing tabla e sets forff th selected operating data as a percent of sales frff om continuing operations forff the periods the fiff scal years ended May 28, 2023 indicated. This inforff mation is derived frff om the consolidated statements of earnings forff and May 29, 2022. 29 Sales Costs and expenses: a Food and beverage Restaurant labor Restaurant expenses Marketing expenses General and administrative expenses Depreciation and amortization Impairments and disposal of assets, net Total operating costs and expenses Operating income Interest, net Earnings beforff e income taxes Income tax expense (benefiff t) Earnings frff om continuing operations Fiscal Year Ended May 28, 2023 May 29, 2022 100.0 % 100.0 % 32.0 31.9 16.2 1.1 3.7 3.7 (0.1) 88.5 % 11.5 % 0.8 10.7 % 1.3 9.4 % 30.6 32.3 16.4 1.0 3.9 3.8 — 87.9 % 12.1 % 0.7 11.4 % 1.4 9.9 % Total operating costs and expenses frff om continuing operations were $9.29 billion in fiff scal 2023 and $8.47 billion in fiff scal 2022. FiFF sii cal 2023 ComCC parm ed to FiFF sii cal 2022: • • • a costs decreased as a percent of sales primarily due to a 1.5% impact frff om sales leverage and a 1.2% Food and beverage costs increased as a percent of sales primarily due to a 3.0% impact frff om inflff ation and a 0.8% impact frff om menu mix, partially offff sff et by a 2.3% impact frff om pricing and other changes. Restaurant labor impact frff om increased productivity, partially offff sff et by a 2.3% impact frff om inflff ation. Restaurant expenses decreased as a percent of sales primarily due to a 1.0% impact frff om pricing leverage, partially offff sff et by a 0.3% impact frff om utility cost inflff ation, 0.2% impact frff om repairs and maintenance inflff ation, and 0.3% of inflff ation on other restaurant expenses. • Marketing expenses increased as a percent of sales primarily due to increased marketing and media. • • • General and administrative expenses decreased as a percent of sales primarily due to a 0.3% impact frff om sales leverage. Depreciation and amortization expenses decreased as a percent of sales primarily due to sales leverage. Impairments and disposal of assets, net decreased as a percent of sales primarily due to gains recognized on the sale of fiff ve properties. INCOME TAXES The effff eff ctive income tax rates forff fiff scal 2023 and 2022 forff continuing operations were 12.2 percent and 12.7 percent, respectively. During fiff scal 2023, we had income tax expense of $137.0 million on earnings beforff e income tax of $1.12 billion compared to income tax expense of $138.8 million on earnings beforff e income taxes of $1.09 billion in fiff scal 2022. This change was primarily driven by the impact of feff deral tax credits. The Inflff ation Reduction Act (IRARR ) was enacted on August 16, 2022. The IRARR includes provisions imposing a 1 percent excise tax on share repurchases that occur aftff er December 31, 2022 and introduces a 15 percent corpor tax (CAMT) on adjusted fiff nancial statement income. The IRARR excise tax and the CAMT are immaterial to our fiff nancial statements. ate alternative minimum rr NET EARNINGS AND NET EARNINGS PER SHARE FROM CONTINUING OPERARR TIONS Net earnings frff om continuing operations forff fiff scal 2023 were $983.5 million ($8.00 per diluted share) compared with net earnings frff om continuing operations forff fiff scal 2022 of $954.7 million ($7.40 per diluted share). 30 2023 vs 2022 (110) BP (110) BP (220) BP (130) BP and beverage Net earnings frff om continuing operations forff fiff scal 2023 increased 3.0 percent and diluted net earnings per share frff om continuing operations increased 8.1 percent compared with fiff scal 2022. LOSS FROM DISCONTINUED OPERARR TIONS On an aftff er-tax basis, results frff om discontinued operations forff fiff scal 2023 were a net loss of $1.6 million ($0.01 per diluted share) compared with a net loss forff fiff scal 2022 of $1.9 million ($0.01 per diluted share). SEGMENT RESULTS We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capia tal Grille, Seasons 52, Bahama Breeze, Eddie V’s and The Capia tal Burger in the U.S. and Canada as operating segments. We aggregate our operating segments into reportabla e segments based on a combination of the size, economic characteristics and sub- segment of fulff LongHorn Steakhouse, (3) Fine Dining and (4) Other Business. See Note 5 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report) forff l-service dining within which each brand operates. Our four reportabla e segments are: (1) Olive Garden, (2) ther details. furff ff Our management uses segment profiff t as the measure forff assessing perforff mance of our segments. The folff lowing tabla e presents segment profiff t margin forff the periods indicated: Fiscal Year Ended Change Segment Olive Garden LongHorn Steakhouse Fine Dining Other Business May 28, 2023 May 29, 2022 21.0% 16.5% 19.1% 13.9% 22.1% 17.6% 21.3% 15.2% The decrease in the Olive Garden segment profiff t margin forff and marketing costs, offff sff et by lower restaurant expenses, restaurant labor LongHorn Steakhouse segment profiff t margin forff offff sff et by lower restaurant labor fiff scal 2023 was driven primarily by higher foodff positive same-restaurant sales. The decrease in the Other Business segment profiff t margin forff a higher foodff and beverage costs and restaurant labor and beverage costs, restaurant labor a a a , partially offff sff et by positive same-restaurant sales. and beverage costs, partially and positive same-restaurant sales. The decrease in the Fine Dining segment profiff t margin forff fiff scal 2023 was driven primarily by higher foodff fiff scal 2023 was driven primarily by higher foodff , and restaurant expenses, partially offff sff et by , and positive same-restaurant sales. The decrease in the fiff scal 2023 was driven primarily by RESULTS OF OPERARR TIONS FOR FISCAL 2022 COMPARED TO FISCAL 2021 For a comparison of our results of operations forff the fiff scal years ended May 29, 2022 and May 30, 2021, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K forff the fiff scal year ended May 29, 2022, fiff led with the SEC on July 22, 2022. SEASONALITY Our sales volumes have historically flff uctuat ted seasonally. Typically, our average sales per restaurant are highest in the lowed by the summer, and lowest in the faff ll. Holidays, changes in the economy, severe weather and similar winter and spring, folff conditions may impact sales volumes seasonally in some operating regions. Because of the historical seasonality of our business and these other faff ctors, results forff l the fulff fiff scal year. any fiff scal quarter are not necessarily indicative of the results that may be achieved forff IMPACT OF INFLATION We attempt to minimize the annual effff eff cts of inflff ation through appr a opriate planning, operating practices and menu price increases. We are currently operating in a period of higher than usual inflff ation, led by foodff Food and beverage inflff ation is principally due to increased costs incurred by our vendors related to higher labor packaging, and raw materials costs. Some of the impacts of the inflff ation have been offff sff et by menu price increases and other adjustments made during the year. Whether we are abla e and/or choose to continue to offff sff et the effff eff cts of inflff ation will determine to what extent, if any, inflff ation affff eff cts our restaurant profiff tabia lity in futff urt e periods. and beverage cost and labor , transportation, inflff ation. a a 31 CRITICAL ACCOUNTING ESTIMATES We prepare our consolidated fiff nancial statements in conforff mity with U.S. generally accepted accounting principles. The preparation of these fiff nancial statements requires us to make estimates and assumptions that affff eff ct the reported amounts of assets and liabia lities and disclosure of contingent assets and liabia lities at the date of the fiff nancial statements and the reported amounts of sales and expenses during the reporting period. Actuat l results could diffff eff r frff om those estimates. Our signififf cant accounting policies are more fulff (Part II, Item 8 of this report). Judgments and uncertainties affff eff cting the appl diffff eff rent amounts being reported under diffff eff rent conditions or using diffff eff rent assumptions. We consider the folff to be most critical in understanding the judgments that are involved in preparing our consolidated fiff nancial statements. a lowing estimates ly described in Note 1 of the Notes to Consolidated Financial Statements ication of those policies may result in materially Leases We evaluate our leases at their inception to estimate their expected term, which commences on the date when we have the right to control the use of the leased property and includes the non-cancelabla e base term plus all option periods we are reasonabla y certain to exercise. Our judgment in determining the appr evaluation of:ff opriate expected term and discount rate forff each lease affff eff cts our a • • • The classififf cation and accounting forff The rent holidays and escalation in payments that are included in the calculation of the lease liabia lity and related right-of-ff use asset; and leases as operating versus fiff nance; The term over which leasehold improvements forff each restaurant faff cility are amortized. These judgments may produce materially diffff eff rent amounts of lease liabia lities and right-of-ff use assets recognized on our consolidated balance sheets, as well as depreciation, amortization, interest and rent expense recognized in our consolidated statements of earnings if diffff eff rent discount rates and expected lease terms were used. ValVV uatitt on of Long-L- ived Assetstt Land, buildings and equipment, operating lease right-of-ff use assets and certain other assets, including defiff nite-lived intangible assets, are reviewed foff r impairment whenever events or changes in circumstances indicate that the carryirr ng amount of an asset may not be recoverabla e. A signififf cant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a signififf cant decline in our expected futff urtt e cash flff ows; changes in expected usefulff the usage or operating perforff mance. Any adverse change in these faff ctors could have a signififf cant impact on the recoverabia lity of these assets and could have a material impact on our consolidated fiff nancial statements. Based on a review of operating results forff each of our restaurants, given the current operating environment, the amount of net book value associated with lower perforff ming restaurants that would be deemed at risk forff lifeff ; unanticipated competition; slower growth rates, ongoing maintenance and improvements of the assets, or changes in impairment is not material to our consolidated fiff nancial statements. ValVV uatitt on and Recoverabilii ill tii ytt of Goodw GG ilii lll and TrTT ademarksrr We have nine reporting units, six of which have goodwill and seven of which have trademarks. Goodwill and trademarks are not subject to amortization and goodwill has been assigned to reporting units forff reporting units are our restaurant brands. A signififf cant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a signififf cant decline in our expected futff urt e cash flff ows; a sustained, signififf cant decline in our stock price and market capia talization; a signififf cant adverse change in legal faff ctors or in the business climate; unanticipated competition; the testing forff recoverabia lity of a signififf cant asset group within a reporting unit; and slower growth rates. Any adverse change in these faff ctors could have a signififf cant impact on the recoverabia lity of these assets and could have a material impact on our consolidated fiff nancial statements. We review our goodwill and trademarks forff annually, as of the fiff rst day of our four th fiff scal quarter, or more frff equently if indicators of impairment exist. es of impairment testing. The impairment rr purpos ff We estimate the faff ir value of each reporting unit using the best inforff mation availabla e, including market inforff mation (also a a oach estimates faff ir value by appl oach) and discounted cash flff ow projections (also refeff rred to as the income appr refeff rred to as the market appr appr a multiples are derived frff om observabla e market data of comparabla e publicly traded companies with similar operating and investment characteristics of the reporting units. The income appr oach uses a reporting unit’s projection of estimated operating cash flff ows which are based on a combination of historical and current trends, organic growth expectations, and residual growth rate assumptions. These cash flff ows are discounted using a weighted-average cost of capia tal (WACC) that reflff ects current market conditions. We recognize a goodwill impairment loss when the faff ir value of the reporting unit is less than its carryirr ng value. ying sales or cash flff ow multiples to the reporting unit’s operating perforff mance. The oach). A market a a We estimate the faff ir value of trademarks using the relief-ff frff om-royalty method, which requires assumptions related to projected sales frff om the reporting unit’s projection of estimated operating cash flff ows; assumed royalty rates that could be payabla e 32 if we did not own the trademarks; and a discount rate based on an adjusted estimated WACC forff an impairment loss when the estimated faff ir value of the trademark is less than its carryirr ng value. each business unit. We recognize We perforff med our annual impairment test of our goodwill and trademarks as of Februarr ryrr 27, 2023 which was the fiff rst day ryrr 27, 2023, no impairment of goodwill or trademarks was indicated based on our th quarter. As of Februarr of our fiff scal 2023 four testing. ff If our assessment resulted in an impairment of our assets, including goodwill or trademarks, our fiff nancial position and results of operations would be adversely affff eff cted and our leverage ratio forff (Revolving Credit Agreement) would increase. A leverage ratio exceeding the maximum permitted under our Revolving Credit Agreement would be a defaff ult under our Revolving Credit Agreement. At May 28, 2023, additional write-downs of goodwill, other indefiff nite-lived intangible assets, or any other assets in excess of appr cause our leverage ratio to exceed the permitted maximum. As our leverage ratio is determined on a quarterly basis, and due to the seasonal naturt e of our business, a lesser amount of impairment in futff urt e quarters could cause our leverage ratio to exceed the permitted maximum. oximately $1.01 billion would have been required to es of our revolving credit agreement rr purpos a UnUU earned Revenues Unearned revenues primarily represent our liabia lity forff giftff cards that have been sold but not yet redeemed. The estimated value of giftff cards expected to remain unused is recognized over the expected period of redemption as the remaining giftff card values are redeemed, generally over a period of 12 years. Utilizing this method, we estimate both the amount of breakage and the time period of redemption. If actuatt frff om the amounts recorded. We update our estimates of our redemption period and our breakage rate periodically and appl rate to giftff card redemptions on a prospective basis. Changing our breakage-rate estimates by 50 basis points would have resulted in an adjustment in our breakage income of appr l giftff card breakage income may diffff eff r oximately $3.3 million forff l redemption patterns varyrr frff om our estimates, actuatt fiff scal 2023. y that a a s InII come TaxeTT We estimate certain components of our provision forff depreciation and amortization expense allowabla e forff employee tip income, effff eff ctive rates forff annual effff eff ctive income tax rate as additional inforff mation on outcomes or events becomes availabla e. tax purpos state and local income taxes and the tax deductibility of certain other items. We adjust our income taxes. These estimates include, among other items, rr es, allowabla e tax credits forff items such as taxes paid on reported Assessment of uncertain tax positions requires judgments relating to the amounts, timing and likelihood of resolution. As described in Note 12 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report), the $23.0 million balance of unrecognized tax benefiff ts at May 28, 2023, includes $7.8 million related to tax positions forff which it is reasonabla y possible that the total amounts could change during the next 12 months based on the outcome of examinations. Of the $7.8 million, $5.7 million relates to items that would impact our effff eff ctive income tax rate. LIQUIDITY AND CAPITAL RESOURCES Typically, cash flff ows generated frff om operating activities are our principal source of liquidity, which we use to fiff nance capia tal expenditurtt es forff and to repurchase shares of our common stock. Since substantially all of our sales are forff payabla e are generally paid in 5 to 90 days, we are typically abla e to carryrr current liabia lities in excess of current assets. new restaurants and to remodel and maintain existing restaurants, to pay dividends to our shareholders cash and cash equivalents, and accounts We currently manage our business and fiff nancial ratios to target an investment-grade bond rating, which has historically allowed flff exible access to fiff nancing at reasonabla e costs. Our publicly issued long-term debt currently carries the folff lowing ratings: • Moody’s Investors Service “Baa2”; Standard & Poor’s “BBB”; and • Fitch “BBB”. • Our commercial papea r has ratings of:ff • Moody’s Investors Service “P-2”; Standard & Poor’s “A-2”; and • Fitch “F-2”. • These ratings are as of the date of the fiff ling of this report and have been obtained with the understanding that Moody’s Investors Service, Standard & Poor’s and Fitch will continue to monitor our credit and make futff urt e adjustments to these ratings to the extent warranted. The ratings are not a recommendation to buy, sell or hold our securities, may be changed, superseded or withdrawn at any time and should be evaluated independently of any other rating. 33 On September 10, 2021, we entered into a $1 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 is a senior unsecured credit commitment to the Company and contains customaryrr negative covenants (including limitations on liens and subsidiaryrr debt and a maximum consolidated lease adjusted total debt to total capia talization ratio of 0.75 to 1.00) and events of defaff ult usual forff Agreement replaced our prior $750.0 million revolving credit agreement, dated as of October 27, 2017 and amended as of March 25, 2020. As of May 28, 2023, we had no outstanding balances and we were in compliance with all covenants under the Revolving Credit Agreement. credit faff cilities of this type. The Revolving Credit representations and affff iff rmative and The Revolving Credit Agreement maturt es on September 10, 2026, and the proceeds may be used forff working capia tal and es. During fiff scal capia tal expenditurtt es, the refiff nancing of certain indebtedness, certain acquisitions and general corpor 2023, loans under the Revolving Credit Agreement bore interest at a rate of LIBOR plus a margin determined by refeff rence to a ratings-based pricing grid (Applicabla e Margin), or the base rate (which is defiff ned as the highest of the BOA prime rate, the Federal Funds rate plus 0.500 percent, and the Eurodollar Rate plus 1.00 percent) plus the Applicabla e Margin. Assuming a “BBB” equivalent credit rating level, the Applicabla e Margin under the Revolving Credit Agreement would have been 1.000 percent forff LIBOR loans and 0.000 percent forff base rate loans. ate purpos rr rr a icabla e to borrowings under the Credit Agreement with a Term SOFR-based interest rate in advance of the Effff eff ctive May 31, 2023, we entered into an amendment to the Revolving Credit Agreement (the “Amendment”.) Pursuant to the terms of the Amendment, the Company, the administrative agent and the lenders have agreed to replace the LIBOR-based interest rate appl cessation of LIBOR, and make certain other conforff ming changes. All other material terms and conditions of the Credit Agreement were unchanged. Effff eff ctive May 31, 2023, loans under the Revolving Credit Agreement bear interest at a rate of (a) Term SOFR (which is defiff ned, forff Days prior to the commencement of such interest period with a term equivalent to such interest period) plus a Term SOFR adjustment of 0.10 percent plus the relevant margin determined by refeff rence to a ratings-based pricing grid (Applicabla e Margin), or (b) the base rate (which is defiff ned as the highest of the BOA prime rate, the Federal Funds rate plus 0.500 percent, and the Term SOFR plus 1.00 percent) plus the relevant Applicabla e Margin. Assuming a “BBB” equivalent credit rating level, the Applicabla e Margin under the Revolving Credit Agreement will be 1.00 percent forff Term SOFR loans and 0.00 percent forff rate loans. icabla e interest period, as the Term SOFR Screen Rate two U.S. Government Securities Business a the appl base Also on May 31, 2023, the Company entered into a senior unsecured $600 million 3-year Term Loan Credit Agreement (Term Loan Agreement) 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 Credit Agreement, as amended. The Term Loan Agreement provided forff borrowing on any business day up to 90 days aftff er May 31, 2023, and maturt es on the third anniversaryrr of the fundi thereunder, June 14, 2023. ng date ff a single On June 14, 2023, we completed the acquisition of RutRR h’s. We borrowed $600 million under the Term Loan Agreement to a portion of the appr oximately $715 million in consideration paid in connection with our acquisition of RutRR h’s. a ff fund As of May 28, 2023, our outstanding long-term debt consisted principally of:ff • • • • $500.0 million of unsecured 3.850 percent senior notes due in May 2027; $96.3 million of unsecured 6.000 percent senior notes due in August 2035; $42.8 million of unsecured 6.800 percent senior notes due in October 2037; and $300.0 million of unsecured 4.550 percent senior notes due in Februarr ryrr 2048. The interest rate on our $42.8 million 6.800 percent senior notes due October 2037 is subject to adjustment frff om 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 interest rate. As of May 28, 2023, no such adjustments are made to this rate. the initial interest rate and the interest rate cannot be reduced below the initial a Through our shelf registration statement on fiff le with the SEC, depending on conditions prevailing in the public capia tal markets, we may frff om time to time issue equity securities or unsecured debt securities in one or more series, which may consist of notes, debenturt es or other evidences of indebtedness in one or more offff eff rings. From time to time, we or our affff iff liates, may repurchase our outstanding debt in privately negotiated transactions, open- market transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractuatt l restrictions and other faff ctors. The amounts involved may be material. 34 From time to time, we enter into interest rate derivative instrumrr ents to manage interest rate risk inherent in our operations. See Note 7 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report). A summaryrr of our contractuat l obligations and commercial commitments at May 28, 2023, is as folff lows: (in millions) Contractual Obligations Long-term debt (1) Leases (2) Purchase obligations (3) Benefiff t obligations (4) Unrecognized income tax benefiff ts (5) Total contractuatt g l obligations (in millions) Other Commercial Commitments Standby letters of credit (6) Guarantees (7) Total commercial commitments Payments Due by Period Less Than 1 Year $ 41.6 441.3 654.7 32.5 9.6 $ 1,179.7 1-3 Years 3-5 Years $ 83.2 836.6 41.1 68.3 3.6 $ 1,032.8 $ 563.9 720.6 1.9 73.2 12.4 $ 1,372.0 More Than 5 Years $ 783.0 1,040.6 — 209.7 — $ 2,033.3 Amount of Commitment Expiration per Period Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Total $ 1,471.7 3,039.1 697.7 383.7 25.6 $ 5,617.8 Total Amounts Committed $ $ 100.6 82.0 182.6 $ $ 100.6 28.5 129.1 $ $ — $ — $ 35.9 35.9 $ 13.3 13.3 $ — 4.3 4.3 (1) Includes interest payments associated with existing long-term debt. Excludes discount and issuance costs of $8.8 million. (2) Includes non-cancelabla e futff urtt e operating lease and fiff nance lease commitments. (3) Includes commitments forff miscellaneous items. ff food and beverage items and supplies, capia tal projects, inforff mation technology and other (4) Includes expected contributions associated with our supplemental defiff ned benefiff t pension plan and payments associated with our postretirement benefiff t plan and our non-qualififf ed defeff rred compensation plan through fiff scal 2033. (5) Includes interest on unrecognized income tax benefiff ts of $2.7 million, $1.8 million of which relates to contingencies expected to be resolved within one year. (6) Includes letters of credit forff $85.3 million of workers’ compensation and general liabia lities accruerr d in our consolidated fiff nancial statements and letters of credit forff $15.2 million of surety bonds related to other payments. (7) Consists solely of guarantees associated with leased properties that have been assigned to third parties and are primarily related to the disposition of Red Lobster in fiff scal 2015. 35 Our adjusted debt to adjusted total capia tal ratio was 62 percent and 61 percent as of May 28, 2023 and May 29, 2022, l lease guarantees in our adjusted debt to adjusted total capia tal ratio reported to shareholders, as we believe its inclusion turt e that we target frff om period to period and because it is consistent with the calculation respectively. Based on these ratios, we believe our fiff nancial condition is strong. We include the lease-debt equivalent and contractuat better represents the optimal capia tal strucrr of the covenant under our Revolving Credit Agreement. For fiff scal 2023 and fiff scal 2022, the lease-debt equivalent includes 6.00 times the total annual minimum rent forff consolidated lease obligations of $424.3 million and $409.8 million, respectively. The composition of our capia tal strucrr turt e is shown in the folff lowing tabla e: (in millions, except ratios) CAPITAL STRURR CTURE Long-term debt, excluding unamortized discount and issuance costs and faff ir value hedge Total debt Stockholders’ equity Total capia tal CALCULATION OF ADJUSTED CAPITAL Total debt Lease-debt equivalent Guarantees Adjusted debt Stockholders’ equity j Adjusted total capia tal CAPITAL STRURR CTURE RARR TIOS Debt to total capia tal ratio Adjusted debt to adjusted total capia tal ratio May 28, 2023 May 29, 2022 939.1 939.1 2,201.5 3,140.6 939.1 2,545.8 82.0 3,566.9 2,201.5 5,768.4 $ $ $ $ $ 939.1 939.1 2,198.2 3,137.3 939.1 2,459.0 101.0 3,499.1 2,198.2 5,697.3 $ $ $ $ $ 30 % 62 % 30 % 61 % Net cash flff ows provided by operating activities frff om continuing operations were $1.55 billion and $1.26 billion in fiff scal 2023 and 2022, respectively. Net cash flff ows provided by operating activities include net earnings frff om continuing operations of $983.5 million in fiff scal 2023 and $954.7 million in fiff scal 2022. Net cash flff ows provided by operating activities frff om continuing operations increased in fiff scal 2023 primarily due to changes in working capia tal and higher net earnings frff om continuing operations. Net cash flff ows used in investing activities frff om continuing operations were $568.4 million and $389.0 million in fiff scal 2023 and 2022, respectively. Capia tal expenditut res incurred principally forff building new restaurants, remodeling existing restaurants, replacing equipment, and technology initiatives were $564.9 million in fiff scal 2023, compared to $376.9 million in fiscal 2022. Net cash flff ows used in fiff nancing activities frff om continuing operations were $1.03 billion and $1.61 billion in fiff scal 2023 and 2022, respectively. Net cash flff ows used in fiff nancing activities in fiff scal 2023 included dividend payments of $589.8 million and share repurchases of $458.7 million, partially offff sff et by proceeds frff om the exercise of employee stock options. Net cash flff ows used in fiff nancing activities in fiff scal 2022 included dividend payments of $563.0 million and share repurchases of $1.07 billion, partially offff sff et by proceeds frff om the exercise of employee stock options. Our defiff ned benefiff t and other postretirement benefiff t costs and liabia lities are determined using various actuat rial assumptions and methodologies prescribed under Financial Accounting Standards Board Accounting Standards Codififf cation Topic 715, Compensation - Retirement Benefiff ts and Topic 712, Compensation - Nonretirement Postemployment Benefiff ts. We expect to oximately $1.6 million to our contribute appr postretirement benefiff t plan during fiff scal 2024. oximately $0.4 million to our supplemental defiff ned benefiff t pension plan and appr a a We are not aware of any trends or events that would materially affff eff ct our capia tal requirements or liquidity. We believe that our internal cash-generating capaa bia lities, the potential issuance of equity or unsecured debt securities under our shelf registration statement and short-term commercial papea our capia tal expenditurtt es, debt maturt r or drawings under our Revolving Credit Agreement should be suffff iff cient to fiff nance ities and other operating activities through fiff scal 2024. 36 OFF-BALANCE SHEET ARRARR NGEMENTS We are not a party to any offff -ff balance sheet arrangements that have, or are reasonabla y likely to have, a current or futff urtt e material effff eff ct on our fiff nancial condition, changes in fiff nancial condition, sales or expenses, results of operations, liquidity, capia tal expenditurt es or capia tal resources. FINANCIAL CONDITION Our total current assets were $997.7 million at May 28, 2023, compared with $1.18 billion at May 29, 2022. The decrease was primarily due to decreases in prepaid income taxes and cash and cash equivalents. Our total current liabia lities were $1.94 billion at May 28, 2023 and $1.85 billion at May 29, 2022. The increase was primarily due to increases in accounts payabla e and other current liabia lities. APPLICATION OF NEW ACCOUNTING STANDARDS See Note 1 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report) forff a discussion of recently issued accounting standards. Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to a variety of market risks, including flff uctuat tions in interest rates, forff eign currency exchange rates, compensation and commodity prices. To manage this exposure, we periodically enter into interest rate, forff eign currency exchange instrumrr Notes to Consolidated Financial Statements (Part II, Item 8 of this report). ents, equity forff ward and commodity derivative instrumrr es. See Notes 1 and 7 of the other than trading purpos ents forff rr We use the variance/covariance method to measure value at risk, over time horizons ranging frff om one week to one year, at ents and flff oating rate debt interest rate exposures were appr the 95 percent confiff dence level. At May 28, 2023, our potential losses in futff urt e net earnings resulting frff om changes in equity oximately $75.0 million over a period of forff wards, commodity instrumrr one year. The value at risk frff om an increase in the faff ir value of all of our long-term fiff xed-rate debt, over a period of one year, was appr oximately $79.7 million. The faff ir value of our long-term fiff xed-rate debt outstanding as of May 28, 2023, averaged $857.3 a million, with a high of $893.7 million and a low of $798.0 million during fiff scal 2023. Our interest rate risk management objective opriate mix of variabla e and fiff xed-rate is to limit the impact of interest rate changes on earnings and cash flff ows by targeting an appr debt. a a 37 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARYRR DATA INDEX TO CONSOLIDATED FINANAA CIAL STATEMENTS Report of Management Responsibilities Management’s Report on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm (KPMG LLP, Orlando, FL, Auditor Firm ID: 185) Consolidated Statements of Earnings forff Consolidated Statements of Comprehensive Income forff 2021 Consolidated Balance Sheets at May 28, 2023 and May 29, 2022 Consolidated Statements of Changes in Stockholders’ Equity forff 30, 2021 Consolidated Statements of Cash Flows forff Notes to Consolidated Financial Statements the fiff scal years ended May 28, 2023, May 29, 2022 and May 30, 2021 the fiff scal years ended May 28, 2023, May 29, 2022 and May 30, the fiff scal years ended May 28, 2023, May 29, 2022 and May the fiff scal years ended May 28, 2023, May 29, 2022 and May 30, 2021 Page 39 39 40 41 43 44 45 46 47 49 38 REPORT OF MANAGEMENT’S RESPONSIBILITIES The management of Darden Restaurants, Inc. is responsible forff the faff irness and accuracy of the consolidated fiff nancial statements. The consolidated fiff nancial statements have been prepared in accordance with U.S. generally accepted accounting principles, using management’s best estimates and judgments where appr is consistent with our consolidated fiff nancial statements. opriate. The fiff nancial inforff mation throughout this report a Management has establa ished a system of internal controls over fiff nancial reporting that provides reasonabla e assurance that assets are adequately safeff guarded and transactions are recorded accurately, in all material respects, in accordance with management’s authorization. Our internal controls provide forff documented policies regarding utilization of our assets and proper fiff nancial reporting. These forff mally stated and regularly communicated policies set high standards of ethical conduct forff independently evaluates the adequacy of the design and operating effff eff ctiveness of these internal controls. all employees. We also maintain a strong audit program that opriate segregation of duties and responsibilities and there are a appr The Audit Committee of the Board of Directors meets at least quarterly to determine that management, internal auditors and the independent registered public accounting fiff rm are properly discharging their duties regarding internal control and fiff nancial reporting. Management, internal auditors and the independent registered public accounting fiff rm have fulff l and frff ee access to the Audit Committee at any time. KPMG LLP, an independent registered public accounting fiff rm, is retained to audit our consolidated fiff nancial statements and the effff eff ctiveness of our internal control over fiff nancial reporting. Their reports folff low. MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible forff establa ishing and maintaining adequate internal control over fiff nancial reporting (as defiff ned in RulRR e 13a-15(f)ff under the Securities Exchange Act of 1934, as amended). The Company’s internal control over fiff nancial reporting is designed to provide reasonabla e assurance to the Company’s management and Board of Directors regarding the preparation and faff ir presentation of published fiff nancial statements. Because of its inherent limitations, internal control over fiff nancial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effff eff ctiveness to futff urt e periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effff eff ctiveness of the Company’s internal control over fiff nancial reporting as of May 28, 2023. In th by the Committee of Sponsoring Organizations of the Treadway . Management has concluded that, as of May 28, 2023, making this assessment, management used the criteria set forff Commission (COSO) in IntII ernal ContCC rtt ol - IntII egre ated FrFF ameworkrr (2013) the Company’s internal control over fiff nancial reporting was effff eff ctive based on these criteria. (( The Company’s independent registered public accounting fiff rm KPMG LLP, has issued an audit report on the effff eff ctiveness of our internal control over fiff nancial reporting, which folff lows. /s/ Ricardo Cardenas Ricardo Cardenas President and ChiCC efe ExEE ecutive OfO fff iff cer 39 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Darden Restaurants, Inc.: OpiO nion on IntII ernal ContCC rtt ol Over FiFF nancial Repor e ting We have audited Darden Restaurants, Inc. and subsidiaries' (the Company) internal control over fiff nancial reporting as of May 28, 2023, based on criteria establa ished in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effff eff ctive internal control over fiff nancial reporting as of May 28, 2023, based on criteria establa ished in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of May 28, 2023 and May 29, 2022, the related consolidated statements of earnings, comprehensive income, changes in stockholders’ equity, and cash flff ows forff year period ended May 28, 2023, and the related notes (collectively, the consolidated fiff nancial statements), and our report dated July 21, 2023 expressed an unqualififf ed opinion on those consolidated fiff nancial statements. each of the years in the three- Basisii forff OpiO nion The Company’s management is responsible forff maintaining effff eff ctive internal control over fiff nancial reporting and forff assessment of the effff eff ctiveness of internal control over fiff nancial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over fiff nancial reporting based on our audit. We are a public accounting fiff rm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. feff deral securities laws and the appl icabla e rulrr es and regulations of the Securities and Exchange Commission and the PCAOB. its a We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perforff m the audit to obtain reasonabla e assurance about whether effff eff ctive internal control over fiff nancial reporting was maintained in all material respects. Our audit of internal control over fiff nancial reporting included obtaining an understanding of internal control over fiff nancial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effff eff ctiveness of internal control based on the assessed risk. Our audit also included perforff ming such other procedures as we in the circumstances. We believe that our audit provides a reasonabla e basis forff considered necessaryrr our opinion. a Defe iff nition and Limitations of IntII ernal ContCC rtt ol Over FiFF nancial Repor e ting A company’s internal control over fiff nancial reporting is a process designed to provide reasonabla e assurance regarding the reliabia lity of fiff nancial reporting and the preparation of fiff nancial statements forff accepted accounting principles. A company’s internal control over fiff nancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonabla e detail, accurately and faff irly reflff ect the transactions and dispositions of the assets of the company; (2) provide reasonabla e assurance that transactions are recorded as necessaryrr fiff nancial statements in accordance with generally accepted accounting principles, and that receipts and expenditurt es of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonabla e assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effff eff ct on the fiff nancial statements. es in accordance with generally to permit preparation of external purpos rr Because of its inherent limitations, internal control over fiff nancial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effff eff ctiveness to futff urt e periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Orlando, Florida July 21, 2023 40 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Darden Restaurants, Inc.: OpiO nion on thet ConsCC olidated FiFF nancial Statementstt We have audited the accompanying consolidated balance sheets of Darden Restaurants, Inc. and subsidiaries (the Company) as of May 28, 2023 and May 29, 2022, the related consolidated statements of earnings, comprehensive income, changes in stockholders’ equity, and cash flff ows forff each of the years in the three-year period ended May 28, 2023, and the related notes (collectively, the consolidated fiff nancial statements). In our opinion, the consolidated fiff nancial statements present faff irly, in all material respects, the fiff nancial position of the Company as of May 28, 2023 and May 29, 2022, and the results of its operations and its cash flff ows forff each of the years in the three-year period ended May 28, 2023, in conforff mity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over fiff nancial reporting as of May 28, 2023, based on criteria establa ished in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated July 21, 2023 expressed an unqualififf ed opinion on the effff eff ctiveness of the Company’s internal control over fiff nancial reporting. Basisii forff OpiO nion These consolidated fiff nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated fiff nancial statements based on our audits. We are a public accounting fiff rm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. feff deral securities laws and the appl icabla e rulrr es and regulations of the Securities and Exchange Commission and the PCAOB. a We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perforff m a whether the consolidated fiff nancial statements are frff ee of material misstatement, the audit to obtain reasonabla e assurance about whether due to error or frff aud. Our audits included perforff ming procedures to assess the risks of material misstatement of the consolidated fiff nancial statements, whether due to error or frff aud, and perforff ming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated fiff nancial statements. Our audits also included evaluating the accounting principles used and signififf cant estimates made by management, as well as evaluating the overall presentation of the consolidated fiff nancial statements. We believe that our audits provide a reasonabla e basis forff our opinion. CrCC itical Audit MatMM ter The critical audit matter communicated below is a matter arising frff om the current period audit of the consolidated fiff nancial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated fiff nancial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated fiff nancial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Evaluation of long-lived assetstt forff impaim rment As discussed in Notes 1, 4, and 10 to the consolidated fiff nancial statements, land, buildings and equipment, net and operating lease right-of-ff use assets were $7.1 billion as of May 28, 2023. The Company tests forff circumstances indicate that the carryirr ng amount of an asset group may not be recoverabla e. Such indicators may include, among others: a signififf cant decline in expected futff urt e cash flff ows and changes in the expected usefulff intent and abia lity to hold its asset groups forff a period that recovers their carryirr ng value. impairment whenever events or changes in lifeff which relates to the Company’s We identififf ed the evaluation of indicators of potential long-lived assets impairment as a critical audit matter. Subjective auditor judgment was required to evaluate certain assumptions in the Company’s analysis, including expected futff urt e cash flff ows and the expected usefulff lifeff . Adverse changes in these assumptions could have a signififf cant impact on whether an indicator has been identififf ed and could have a material impact on the Company’s consolidated fiff nancial statements. 41 The folff lowing are the primaryrr procedures we perforff med to address this critical audit matter. We evaluated the design and tested the operating effff eff ctiveness of certain internal controls over the Company’s long-lived asset impairment process, including controls over the identififf cation of indicators of impairment and the assumptions listed above . For certain asset groups, we compared the expected futff urt e cash flff ows used by the Company in its evaluation of indicators of potential long-lived asset impairment to historical results. We evaluated the expected usefulff documents, such as real estate meeting minutes and other documents to assess the Company’s plans to dispose or close asset groups. We corroborated the Company’s plans with others in the organization who are responsible forff disposition and closure activities. certain asset groups by inspecting underlying , and have authority over, lifeff forff a /s/ KPMG LLP We have served as the Company’s auditor since 1996. Orlando, Florida July 21, 2023 42 DARDEN RESTAURARR NTS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In millions, except per share data) Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 7,196.1 $ 10,487.8 9,630.0 $ $ 3,355.9 3,346.3 1,702.2 118.3 386.1 387.8 (10.6) 9,286.0 1,201.8 81.3 — 1,120.5 137.0 983.5 (1.6) 981.9 8.07 (0.01) 8.06 8.00 (0.01) 7.99 121.9 122.9 $ $ $ $ $ $ $ $ $ 2,943.6 3,108.8 1,582.6 93.2 373.2 368.4 (2.0) 8,467.8 1,162.2 68.7 — 1,093.5 138.8 954.7 (1.9) 952.8 7.47 (0.01) 7.46 7.40 (0.01) 7.39 127.8 129.0 $ $ $ $ $ $ $ $ $ 2,072.1 2,286.3 1,344.2 91.1 396.2 350.9 6.6 6,547.4 648.7 63.5 8.7 576.5 (55.9) 632.4 (3.1) 629.3 4.85 (0.02) 4.83 4.80 (0.03) 4.77 130.4 131.8 $ $ $ $ $ $ $ $ $ Sales Costs and expenses: a Food and beverage Restaurant labor Restaurant expenses Marketing expenses General and administrative expenses Depreciation and amortization Impairments and disposal of assets, net Total operating costs and expenses Operating income Interest, net Other (income) expense, net Earnings beforff e income taxes Income tax expense (benefiff t) Earnings frff om continuing operations Losses frff om discontinued operations, net of tax benefiff t of $0.8, $0.2 and $3.2, respectively g Net earnings Basic net earnings per share: Earnings frff om continuing operations Losses frff om discontinued operations g Net earnings Diluted net earnings per share: Earnings frff om continuing operations Losses frff om discontinued operations g Net earnings Average number of common shares outstanding: Basic Diluted See accompanying notes to consolidated fiff nancial statements. 43 DARDEN RESTAURARR NTS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Fiscal Year Ended Net earnings May 28, 2023 May 29, 2022 May 30, 2021 629.3 $ 981.9 952.8 $ $ Foreign currency adjustment Change in faff ir value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $(1.5), $0.2 and $0.4, respectively (0.3) 4.3 (0.4) (8.3) Net unamortized gain (loss) arising during period, including amortization of unrecognized net actuat respectively rial loss, net of taxes of $0.4, $0.9 and $1.5, Other comprehensive income (loss) Total comprehensive income 1.1 5.1 987.0 $ $ 2.6 (6.1) $ $ 946.7 $ $ 0.7 16.5 4.6 21.8 651.1 See accompanying notes to consolidated fiff nancial statements. 44 DARDEN RESTAURARR NTS, INC. CONSOLIDATED BALANCE SHEETS (In millions) ASSETS Current assets: Cash and cash equivalents Receivabla es, net Inventories Prepaid income taxes Prepaid expenses and other current assets Total current assets Land, buildings and equipment, net Operating lease right-of-ff use assets Goodwill Trademarks Other assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabia lities: Accounts payabla e Accruerr d payroll Accruerr d income taxes Other accruerr d taxes Unearned revenues Other current liabia lities Total current liabia lities Long-term debt Defeff rred income taxes Operating lease liabia lities - non-current Other liabia lities Total liabia lities Stockholders’ equity: Common stock and surplrr us, no par value. Authorized 500.0 shares; issued 121.1 and 123.9 shares, respectively; outstanding 121.1 and 123.9 shares, respectively Prefeff rred stock, no par value. Authorized 25.0 shares; none issued and outstanding Retained earnings (defiff cit) Accumulated other comprehensive income (loss) Total stockholders’ equity y Total liabia lities and stockholders’ equity See accompanying notes to consolidated fiff nancial statements. 45 May 28, 2023 May 29, 2022 $ 367.8 $ $ $ 80.2 287.9 107.3 154.5 997.7 3,725.1 3,373.9 1,037.4 806.3 301.1 420.6 72.0 270.6 274.8 141.4 1,179.4 3,356.0 3,465.1 1,037.4 806.3 291.6 $ 10,241.5 $ 10,135.8 $ 426.2 $ 173.0 7.8 65.9 512.0 752.5 1,937.4 884.9 142.2 3,667.6 1,407.9 8,040.0 2,230.8 — (32.5) 3.2 2,201.5 10,241.5 $ $ $ $ $ $ $ $ 366.9 181.5 32.1 64.5 498.0 704.5 1,847.5 901.0 201.1 3,755.8 1,232.2 7,937.6 2,226.0 — (25.9) (1.9) 2,198.2 10,135.8 DARDEN RESTAURARR NTS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (In millions, except per share data) Common Stock And Surplr us Shares Amount Retained Earnings (Defiff cit) Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity 129.9 $ 2,205.3 $ 143.5 $ (17.6) $ 2,331.2 — — — 0.7 — (0.4) 0.6 — — — — 36.6 39.8 (6.3) 9.6 1.6 629.3 — (203.9) — — (39.1) — (7.5) 130.8 $ 2,286.6 $ 522.3 $ — — — 0.5 — — — — 29.7 33.6 952.8 — (565.4) — — (7.6) (135.7) (935.6) 0.1 0.1 10.5 1.3 — — — 21.8 — — — — — — 4.2 — (6.1) — — — — — — 629.3 21.8 (203.9) 36.6 39.8 (45.4) 9.6 (5.9) $ 2,813.1 952.8 (6.1) (565.4) 29.7 33.6 (1,071.3) 10.5 1.3 123.9 $ 2,226.0 $ (25.9) $ (1.9) $ 2,198.2 — — — 0.4 — (3.5) 0.3 — — — — 24.2 32.7 (64.3) 11.2 1.0 981.9 — (594.1) — — (394.4) — — — 5.1 — — — — — — 981.9 5.1 (594.1) 24.2 32.7 (458.7) 11.2 1.0 121.1 $ 2,230.8 $ (32.5) $ 3.2 $ 2,201.5 Balances at May 31, 2020 Net earnings Other comprehensive income Dividends declared ($1.55 per share) Stock option exercises Stock-based compensation Repurchases of common stock Issuance of stock under Employee Stock Purchase Plan and other plans Other Balances at May 30, 2021 Net earnings Other comprehensive income Dividends declared ($4.40 per share) Stock option exercises Stock-based compensation Repurchases of common stock Issuance of stock under Employee Stock Purchase Plan and other plans Other Balances at May 29, 2022 Net earnings Other comprehensive income Dividends declared ($4.84 per share) Stock option exercises Stock-based compensation Repurchases of common stock Issuance of stock under Employee Stock Purchase Plan and other plans Other Balances at May 28, 2023 y See accompanying notes to consolidated fiff nancial statements. 46 DARDEN RESTAURARR NTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Cash flff ows - operating activities Net earnings Losses frff om discontinued operations, net of tax Adjustments to reconcile net earnings (loss) frff om continuing operations to cash flff ows: Depreciation and amortization Impairments and disposal of assets, net Stock-based compensation expense Change in current assets and liabia lities Contributions to pension and postretirement plans Defeff rred income taxes Change in other assets and liabia lities Other, net Net cash provided by operating activities of continuing operations Cash flff ows - investing activities Purchases of land, buildings and equipment Proceeds frff om disposal of land, buildings and equipment Purchases of capia talized softff ware and other assets Other, net Net cash used in investing activities of continuing operations Cash flff ows - fiff nancing activities Net proceeds frff om issuance of common stock Dividends paid Repurchases of common stock Repayments of short-term debt Proceeds frff om issuance of short-term debt Principal payments on fiff nance leases Other, net Net cash used in fiff nancing activities of continuing operations Cash flff ows - discontinued operations Net cash provided by (used in) operating activities of discontinued operations Net cash provided by (used in) discontinued operations (Decrease) increase in cash and cash equivalents Cash and cash equivalents - beginning of year Cash and cash equivalents - end of year y May 28, 2023 iscal Year Ended May 29, 2022 May 30, 2021 $ 981.9 1.6 $ 952.8 1.9 629.3 3.1 387.8 (10.6) 67.5 175.7 (2.1) (59.5) 9.0 1.5 1,552.8 $ (564.9) 25.4 (29.4) 0.5 (568.4) $ 35.4 (589.8) (458.7) (427.0) 427.0 (19.8) (0.2) (1,033.1) $ (7.2) (7.2) $ (55.9) 472.1 416.2 $ 368.4 (2.0) 60.5 (96.7) (2.2) (23.7) (7.4) 13.0 1,264.6 $ (376.9) 10.1 (25.6) 3.4 (389.0) $ 40.2 (563.0) (1,071.3) — — (12.9) (2.7) (1,609.7) $ (8.5) (8.5) $ (742.6) 1,214.7 472.1 $ 350.9 6.6 72.4 (25.9) (1.8) 169.2 23.0 (33.3) 1,193.5 (254.9) 5.4 (15.4) 1.2 (263.7) 46.2 (202.6) (45.4) (270.0) — (7.1) — (478.9) 0.5 0.5 451.4 763.3 1,214.7 $ $ $ $ $ $ Reconciliation of cash, cash equivalents, and restricted cash: Cash and cash equivalents Restricted cash included in prepaid and other current assets Total cash, cash equivalents, and restricted cash shown in the statement of cash flff ows May 28, 2023 367.8 48.4 416.2 $ $ May 29, 2022 420.6 51.5 472.1 $ $ May 30, 2021 1,214.7 — 1,214.7 $ $ 47 DARDEN RESTAURARR NTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In millions) Cash flff ows frff om changes in current assets and liabia lities Receivabla es, net Inventories Prepaid expenses and other current assets Accounts payabla e Accruer d payroll Prepaid/accruer d income taxes Other accruer d taxes Unearned revenues Other current liabia lities Change in current assets and liabia lities g See accompanying notes to consolidated fiff nancial statements. May 28, 2023 Fiscal Year Ended May 29, 2022 May 30, 2021 $ $ (8.2) $ (17.3) (24.5) 40.9 (8.4) 143.3 1.3 14.0 34.6 175.7 $ (3.9) $ (79.8) (22.6) 43.2 4.1 58.5 4.1 23.8 (124.1) (96.7) $ (18.4) 16.1 3.1 48.9 27.4 (289.1) 17.1 6.2 162.8 (25.9) 48 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARYRR OF SIGNIFICANT ACCOUNTING POLICIES Basisii of PrPP esentattt itt on The accompanying consolidated fiff nancial statements include the operations of Darden Restaurants, Inc. and its wholly owned subsidiaries (Darden, the Company, we, us or our). We own and operate the Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capia tal Grille®, Seasons 52®, Bahama Breeze®, Eddie V’s Prime Seafood ® and The Capia tal Burger® restaurant brands located in the United States and Canada. Through subsidiaries, we own and operate all of our restaurants in the United States and Canada, except forff restaurants. We also have 35 frff anchised restaurants in operation located in Latin America, the Caribbean, Asia, and the Middle East. All signififf cant intercompany balances and transactions have been eliminated in consolidation. 2 joint venturt e restaurants managed by us and 34 frff anchised ff On June 14, 2023, we completed our acquisition of RutRR h’s Hospitality Group, Inc., a Delaware corpor rr ation (RutRR h’s), forff $21.50 per share in cash. RutRR h’s is the owner, operator and frff anchisor of RutRR h’s Chris Steak House restaurants. As the acquisition was subsequent to our fiff scal year ended on May 28, 2023, there was no impact to our fiff nancial statements or operations forff Steak House. fiff scal year 2023. The accompanying consolidated fiff nancial statements do not include any results of RutRR h’s Chris For fiff scal 2023, 2022 and 2021, all gains and losses on disposition, impairment charges and disposal costs, along with the sales, costs and expenses and income taxes attributabla e to discontinued locations, have been aggregated in a single capta ion entitled “Losses frff om discontinued operations, net of tax benefiff t” in our consolidated statements of earnings forff all periods presented. COCC VIVV DII -19 PanPP demic and Othtt er ImII pacm tstt tott our OpeOO ratitt nii g EnEE virii onment During fiff scal 2022, increases in the number of cases of COVID-19 throughout the United States including the Omicron variant which signififf cantly impacted our restaurants in the third quarter, subjected some of our restaurants to COVID-19-related team members, guests or both. Along with COVID-19, our operating restrictions such as mask and/or vaccine requirements forff results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflff ation on wages and other cost of goods sold; these events furff additional disrupt ther impacted the availabia lity of team members needed to staffff our restaurants and caused ions in our product supply chain. rr The ongoing effff orff ts to recover frff om the effff eff cts of the COVID-19 pandemic and its variants, along with other geopolitical and macroeconomic events, could impact our restaurants through wage inflff ation, staffff iff ng challenges, product cost inflff ation and rr disrupt ions in the supply chain that impact our restaurants’ abia lity to obtain the products needed to support their operations. Unless otherwise noted, amounts and disclosures throughout these notes to consolidated fiff nancial statements relate to our continuing operations. We have reclassififf ed certain amounts in prior-period fiff nancial statements to conforff m to the current period’s presentation. FiFF sii cal YeYY ar We operate on a 52/53-week fiff scal year, which ends on the last Sunday in May. Fiscal 2023, which ended May 28, 2023, consisted of 52 weeks. Fiscal 2022, which ended May 29, 2022, consisted of 52 weeks and fiff scal 2021, which ended May 30, 2021, consisted of 52 weeks. UsUU e of EsEE titt mii atett s We prepare our consolidated fiff nancial statements in conforff mity with U.S. generally accepted accounting principles (GAAP). The preparation of these fiff nancial statements requires us to make estimates and assumptions that affff eff ct the reported amounts of assets and liabia lities and disclosure of contingent assets and liabia lities at the date of the fiff nancial statements, and the reported amounts of sales and expenses during the reporting period. Actuatt l results could diffff eff r frff om those estimates. CasCC h and CasCC h Equivalell ntstt Cash equivalents include highly liquid investments such as bank deposits and money market funds ity of three months or less. Amounts receivabla e frff om credit card companies are also considered cash equivalents because maturt they are both short term and highly liquid in naturt e and are typically converted to cash within three days of the sales transaction. that have an original ff 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The components of cash and cash equivalents are as folff lows: (in millions) Short-term investments Credit card receivabla es Depositoryrr accounts Total cash and cash equivalents May 28, 2023 May 29, 2022 246.0 $ 185.6 $ 142.3 39.9 367.8 $ 133.1 41.5 420.6 $ As of May 28, 2023, and May 29, 2022, we had cash and cash equivalent accounts in excess of insured limits. We manage ions and monitoring the credit quality of those fiff nancial ions that hold our cash and cash equivalents. We had restricted cash of $48.4 million and $51.5 million as of May 28, 2023 a standby letter of credit. Restricted cash is included in the credit risk of our positions through utilizing multiple fiff nancial instituttt instituttt and May 29, 2022, respectively, which represents cash held as security forff Prepaid Expenses and Other Current Assets on the balance sheet. See Note 15, Commitments and Contingencies. Receivablell s,s NeNN t Receivabla es, net of the allowance forff doubtfulff accounts, represent their estimated net realizabla e value. Provisions forff doubtfulff offff when they are deemed uncollectible. See Note 11 forff accounts are recorded based on historical collection experience and the age of the receivabla es. Receivabla es are written additional inforff mation. InII ventortt ies Inventories consist of foodff and beverages and are valued at the lower of weighted-average cost or net realizabla e value. Land, Builii dill nii gs and Equipmii ent,tt NeNN t Land, buildings and equipment are recorded at cost less accumulated depreciation. Building components are depreciated lives ranging frff om 3 to 30 years using the straight-line method. Leasehold improvements, which are over estimated usefulff reflff ected on our consolidated balance sheets as a component of buildings in land, buildings and equipment, net, are amortized over the lesser of the expected lease term or the estimated usefulff Equipment is depreciated over estimated usefulff forff additional inforff mation. Gains and losses on the disposal of land, buildings and equipment are included in impairments and disposal of assets, net, while the write-offff of net book value associated with the replacement of equipment in the normal course of business is recorded as a component of restaurant expenses in our accompanying consolidated statements of earnings. Depreciation and amortization expense frff om continuing operations associated with buildings and equipment and losses on replacement of equipment were as folff lives ranging frff om 2 to 20 years also using the straight-line method. See Note 4 lives of the related assets using the straight-line method. lows: (in millions) Depreciation and amortization on buildings and equipment Losses on replacement of equipment Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 $ 367.4 $ 346.7 $ 2.2 2.1 323.5 2.6 CapiCC tii altt ill zii ed SofSS tff wtt are CosCC tstt and Othtt er Defe iff nii itii ett -L- ived InII tantt Capia talized softff ware, which is a component of other assets, is recorded at cost less accumulated amortization. Capia talized giblell s softff ware is amortized using the straight-line method over estimated usefulff softff ware and related accumulated amortization was as folff lows: lives ranging frff om 1 to 10 years. The cost of capia talized (in millions) Capia talized softff ware Accumulated amortization Capia talized softff ware, net of accumulated amortization May 28, 2023 May 29, 2022 $ $ 263.8 (196.8) 67.0 $ $ 250.2 (190.7) 59.5 50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) We have other defiff nite-lived intangible assets, including assets related to the value of reacquired frff anchise rights resulting frff om our acquisitions that are included as a component of other assets and defiff nite-lived intangible liabia lities related to the value of below-market agreements resulting frff om our acquisitions that are included in other liabia lities on our consolidated balance sheets. Defiff nite-lived intangibles are amortized on a straight-line basis over estimated usefulff lows: related accumulated amortization was as folff lives of 1 to 20 years. The cost and (in millions) Defiff nite-lived intangible assets Accumulated amortization Defiff nite-lived intangible assets, net of accumulated amortization May 28, 2023 May 29, 2022 23.8 $ $ (10.5) 13.3 23.8 (12.5) 11.3 $ $ Defiff nite-lived intangible liabia lities Accumulated amortization Defiff nite-lived intangible liabia lities, net of accumulated amortization $ $ (3.0) $ 1.8 (1.2) $ (3.0) 1.5 (1.5) Amortization expense frff om continuing operations associated with capia talized softff ware and other defiff nite-lived intangibles included in depreciation and amortization in our accompanying consolidated statements of earnings was as folff lows: (in millions) Amortization expense - capia talized softff ware Amortization expense - other defiff nite-lived intangibles Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 $ $ 18.6 1.8 $ 19.7 2.0 25.4 2.0 Based on the net book values of our defiff nite-lived intangible assets and liabia lities at May 28, 2023, we expect amortization of capia talized softff ware and other defiff nite-lived intangible assets will be appr through 2028. a oximately $22.9 million annually forff fiff scal 2024 TrTT ust-tt Owned Lifi eff InII surance We have a trusrr t that purchased lifeff insurance or TOLI). The trusrr lifeff portion of our obligations under our non-qualififf ed defeff rred compensation plan. The cash surrender value forff included in other assets, while changes in cash surrender values are included in general and administrative expenses. t-owned insurance policies covering certain of our offff iff cers and other key employees (trusrr t is the owner and sole benefiff ciaryrr of the TOLI policies. The policies were purchased to offff sff et a each policy is Liquii or Licenses The costs of obtaining non-transfeff rabla e liquor licenses that are directly issued by local government agencies forff nominal feff es are expensed as incurred. The costs of purchasing transfeff rabla e liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capia talized as indefiff nite-lived intangible assets and included in other assets. Liquor licenses are reviewed forff carryirr ng amount may not be recoverabla e. Annual liquor license renewal feff es are expensed over the renewal term. impairment annually or more frff equently if events or changes in circumstances indicate that the G Goodw ilii lll and InII tantt gibli ell Assetstt Our goodwill and trademark balances are allocated as folff lows: (in millions) Olive Garden LongHorn Steakhouse Cheddar’s Scratch Kitchen Yard House The Capia tal Grille Seasons 52 Eddie V’s Total Goodwill Trademarks $ May 28, 2023 30.2 49.3 165.1 $ May 29, 2022 30.2 49.3 165.1 $ May 28, 2023 0.7 307.8 230.1 $ May 29, 2022 0.7 307.8 230.1 369.2 401.6 — 22.0 369.2 401.6 — 22.0 109.3 147.4 0.5 10.5 $ 1,037.4 $ 1,037.4 $ 806.3 $ 109.3 147.4 0.5 10.5 806.3 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) We have nine reporting units, six of which have goodwill and seven of which have trademarks. Goodwill and trademarks are not subject to amortization and goodwill has been assigned to reporting units forff reporting units are our restaurant brands. A signififf cant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a signififf cant decline in our expected futff urt e cash flff ows; a sustained, signififf cant decline in our stock price and market capia talization; a signififf cant adverse change in legal faff ctors or in the recoverabia lity of a signififf cant asset group within a reporting unit; and business climate; unanticipated competition; the testing forff slower growth rates. Any adverse change in these faff ctors could have a signififf cant impact on the recoverabia lity of these assets and could have a material impact on our consolidated fiff nancial statements. We review our goodwill and trademarks forff annually, as of the fiff rst day of our four th fiff scal quarter, or more frff equently if indicators of impairment exist. es of impairment testing. The impairment rr purpos ff We estimate the faff ir value of each reporting unit using the best inforff mation availabla e, including market inforff mation (also a a oach estimates faff ir value by appl oach) and discounted cash flff ow projections (also refeff rred to as the income appr refeff rred to as the market appr appr a multiples are derived frff om observabla e market data of comparabla e publicly traded companies with similar operating and oach uses a reporting unit’s projection of estimated operating investment characteristics of the reporting units. The income appr cash flff ows which are based on a combination of historical and current trends, organic growth expectations, and residual growth rate assumptions. These cash flff ows are discounted using a weighted-average cost of capia tal (WACC) that reflff ects current market conditions. We recognize a goodwill impairment loss when the faff ir value of the reporting unit is less than its carryirr ng value. ying sales or cash flff ow multiples to the reporting unit’s operating perforff mance. The oach). A market a a We estimate the faff ir value of trademarks using the relief-ff frff om-royalty method, which requires assumptions related to projected sales frff om the reporting unit’s projection of estimated operating cash flff ows; assumed royalty rates that could be payabla e if we did not own the trademarks; and a discount rate based on an adjusted estimated WACC forff each business unit. We recognize an impairment loss when the estimated faff ir value of the trademark is less than its carryirr ng value. We perforff med our annual impairment test of our goodwill and trademarks as of Februarr ryrr 27, 2023 which was the fiff rst day ryrr 27, 2023, no impairment of goodwill or trademarks was indicated based on our th quarter. As of Februarr of our fiff scal 2023 four testing. ff ImII paim rii mrr ent or Disii pos s al of Long-L- ived Assetstt Land, buildings and equipment, operating lease right-of-ff use assets and certain other assets, including defiff nite-lived intangible assets, are reviewed foff r impairment whenever events or changes in circumstances indicate that the carryirr ng amount of an asset may not be recoverabla e. Recoverabia lity of assets to be held and used is measured by a comparison of the carryirr ng amount of the assets to the futff urt e undiscounted net cash flff ows expected to be generated by the assets. Identififf abla e cash flff ows are measured at the lowest level forff which they are largely independent of the cash flff ows of other groups of assets and liabia lities, generally at the restaurant level. If such assets are determined to be impaired, the recognized impairment is measured by the amount by which the carryirr ng amount of the assets exceeds their faff ir value. Fair value is generally determined based on appr aisals, sales prices of comparabla e assets or discounted futff urt e net cash flff ows expected to be generated by the assets. Restaurant sites and certain other assets to be disposed of are reported at the lower of their carryirr ng amount or faff ir value, less estimated costs to sell, and are included in assets held forff other faff ctors, the requirement that the likelihood of disposing of these assets within one year is probabla e. Assets not meeting the “held forff sale” criteria remain in land, buildings and equipment until their disposal is probabla e within one year. sale on our consolidated balance sheets when certain criteria are met. These criteria include, among a We account forff exit or disposal activities, including restaurant closures, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codififf cation (ASC) Topic 420, Exit or Disposal Cost Obligations. Such costs include the cost of disposing of the assets as well as other faff cility-related expenses frff om previously closed restaurants. These costs are additional inforff mation. For restaurants operated under non-cancellabla e leases, on generally expensed as incurred. See Note 3 forff the date we commit to a plan to either abaa ndon the related right-of-ff use (ROU) asset or sublease the underlying asset, we evaluate the ROU asset forff potential impairment and determine the go-forff ward accounting based on the requirements in FASB ASC Topic 842, Leases. InII surance Accrualsll Through the use of insurance program deductibles and self-ff insurance, we retain a signififf cant portion of expected losses under our workers’ compensation and general liabia lity programs. Accruerr d liabia lities have been recorded based on our estimates of the anticipated ultimate costs to settle all claims, both reported and not yet reported. Revenue Recognitii itt on Sales, as presented in our consolidated statements of earnings, represents foodff and beverage product sold and is presented net of discounts, coupons, employee meals and complimentaryrr meals. Revenue frff om restaurant sales is recognized when foodff and 52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) beverage products are sold. Revenue is presented net of sales tax. Sales taxes collected frff om customers are included in other accruerr d taxes on our consolidated balance sheets until the taxes are remitted to governmental authorities. Franchise royalties, which are a percentage of net sales of frff anchised restaurants, are recognized in the period the related sales occur. Revenue frff om area development and frff anchise feff es are recognized as the perforff mance obligations are satisfiff ed over the term of the frff anchise agreement, which is generally 10 years. Advertising contributions, which are a percentage of net sales of frff anchised restaurants, are recognized in the period the related sales occur. Additionally, frff anchisee purchases of our inventoryrr through our distribution network are recognized as revenue in the period the purchases are made. Revenue frff om the sale of consumer packaged goods includes ongoing royalty feff es based on a percentage of licensed retail product sales and is recognized upon the sale of product by our licensed manufaff cturt ers to retail outlets. UnUU earnrr ed Revenues Unearned revenues primarily represent our liabia lity forff giftff cards that have been sold but not yet redeemed. We recognize sales frff om our giftff cards when the giftff card is redeemed by the customer. Although there are no expiration dates or dormancy feff es our giftff cards, based on our analysis of our historical giftff card redemption patterns, we can reasonabla y estimate the amount of forff giftff cards forff which redemption is remote, which is refeff rred to as “breakage.” We recognize breakage within sales forff giftff card amounts in proportion to actuat The estimated value of giftff cards expected to remain unused is recognized over the expected period of redemption as the remaining giftff card values are redeemed, generally over a period of 12 years. Utilizing this method, we estimate both the amount of breakage and the time period of redemption. If actuatt income may diffff eff r frff om the amounts recorded. We update our estimates of our redemption period and our breakage rate periodically and appl to unearned revenues and are recognized over a period that appr l giftff card redemptions, which is also refeff rred to as the “redemption recognition” method. y that rate prospectively to giftff card redemptions. Discounts forff giftff cards sold by third parties are recorded oximates redemption patterns. l redemption patterns varyrr frff om our estimates, actuatt l giftff card breakage unused a a FoodFF and Beverage CosCC tstt Food and beverage costs include inventory,rr warehousing, related purchasing and distribution costs, and gains and losses on certain commodity derivative contracts. Vendor allowances received in connection with the purchase of a vendor’s products are recognized as a reduction of the related foodff and beverage costs as earned. For certain contracts, advance payments are made by the vendors based on estimates of volume to be purchased frff om the vendors and the terms of the agreement. As we make purchases frff om the vendors each period, we recognize the pro rata portion of allowances earned as a reduction of foodff beverage costs forff agreements. Vendor agreements are generally forff long-term liabia lities. Amounts expected to be earned within one year are recorded as current liabia lities. a period of one year or more and payments received are initially recorded as that period. Diffff eff rences between estimated and actuat l purchases are settled in accordance with the terms of the and s InII come TaxeTT We provide forff feff deral and state income taxes currently payabla e as well as forff those defeff rred because of temporaryrr fiff nancial statement purpos diffff eff rences between reporting income and expenses forff credits are recorded as a reduction of income taxes. Defeff rred tax assets and liabia lities are recognized forff consequences attributabla e to diffff eff rences between the fiff nancial statement carryirr ng amounts of existing assets and liabia lities and y to taxabla e their respective tax bases. Defeff rred tax assets and liabia lities are measured using enacted tax rates expected to appl income in the years in which those temporaryrr diffff eff rences are expected to be recovered or settled. The effff eff ct on defeff rred tax assets and liabia lities of a change in tax rates is recognized in earnings in the period that includes the enactment date. Interest recognized on reserves forff corresponding liabia lity forff sheets. Penalties, when incurred, are recognized in general and administrative expenses. uncertain tax positions is included in income tax expense in our consolidated statements of earnings. A accruerr d interest is included as a component of other current liabia lities on our consolidated balance es. Federal income tax es versus tax purpos the futff urt e tax a rr rr FASB ASC Topic 740, Income Taxes, requires that a position taken or expected to be taken in a tax returt n be recognized (or derecognized) in the fiff nancial statements when it is more likely than not (i.e., a likelihood of more than 50 percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount additional inforff mation. of benefiff t that is greater than 50 percent likely of being realized upon ultimate settlement. See Note 12 forff Derivatitt ve InII strtt umentstt and HeHH dginii g Actitt vitii itt es ents forff We enter into derivative instrumrr es only, including derivatives designated as hedging rr ents as required by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. We use instrumrr fiff nancial and commodities derivatives to manage interest rate, compensation and commodities pricing risks inherent in our business operations. Our use of derivative instrumrr . These instrumrr commodity swapsa transactions (cash flff ow hedges). However, we do at times enter into instrumrr turtt ed as hedges of the variabia lity of cash flff ows related to forecasted ents is currently limited to interest rate hedges, equity forff ward contracts and ents designated as faff ir value hedges to reduce our risk management purpos ents are generally strucrr 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) es, where changes in the cash flff ows or faff ir value of the derivative are not expected to offff sff et changes in cash flff ows or faff ir exposure to changes in faff ir value of the related hedged item. We do not enter into derivative instrumrr rr purpos value of the hedged item. However, we have entered into equity forff wards to economically hedge changes in the faff ir value of employee investments in our non-qualififf ed defeff rred compensation plan. All derivatives are recognized on the balance sheet at faff ir value. For those derivative instrumrr entered into, we document all relationships between hedging instrumrr objective and strategy forff cash flff ow hedges to specififf c assets and liabia lities on the consolidated balance sheet or to specififf c forff ecasted transactions. We also forff mally assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effff eff ctive in offff sff etting changes in cash flff ows of hedged items. ents forff which we intend to elect hedge accounting, on the date the derivative contract is ents and hedged items, as well as our risk-management undertaking the various hedge transactions. This process includes linking all derivatives designated as trading or speculative ents forff To the extent our derivatives are effff eff ctive in offff sff etting the variabia lity of the hedged cash flff ows, and otherwise meet the cash flff ow hedge accounting criteria required by FASB ASC Topic 815, changes in the derivatives’ faff ir value are not included in current earnings but are included in accumulated other comprehensive income (loss), net of tax. These changes in faff ir value will be reclassififf ed into earnings at the time of the forff ecasted transaction. Ineffff eff ctiveness measured in the hedging relationship is recorded currently in earnings in the period in which it occurs. To the extent our derivatives are effff eff ctive in mitigating changes in faff ir value, and otherwise meet the faff ir value hedge accounting criteria required by FASB ASC Topic 815, gains and losses in the derivatives’ faff ir value are included in current earnings, as are the gains and losses of the related hedged item. To the extent the hedge accounting criteria are not met, the derivative contracts are utilized as economic hedges, and changes in the faff ir value of such contracts are recorded currently in earnings in the period in which they occur. Cash flff ows related to derivatives are included in operating activities. See Note 7 forff additional inforff mation. Leases The maja ority of our restaurant locations, as well as our restaurant support center, are subject to a lease. We evaluate our leases at the commencement of the lease to determine the classififf cation as an operating or fiff nance lease. Upon adoption of FASB ASC Topic 842, we recognized operating and fiff nance lease liabia lities based on the present value of minimum lease payments over the remaining expected lease term and corresponding right-of-ff use assets. We recognize lease expense related to operating leases on a straight-line basis. Amortization expense and interest expense related to fiff nance leases are included in depreciation and amortization and interest, net, respectively, in our consolidated statements of earnings. Sale-leasebacks are transactions through which we sell assets (such as restaurant properties) at faff ir value and subsequently lease them back. The resulting leases qualifyff and are accounted forff retention of the “sold” assets within land, buildings and equipment with a fiff nance lease liabia lity equal to the amount of proceeds received recorded as a component of other liabia lities on our consolidated balance sheets. as operating leases. Failed sale-leaseback transactions are generally classififf ed as fiff nance leases and result in Within the provisions of certain of our leases, there are rent holidays and escalations in payments over the base lease term, as well as renewal periods. The effff eff cts of the holidays and escalations have been reflff ected in lease expense on a straight-line basis forff operating leases over the expected lease term. The lease term commences on the date when we have the right to control the use of the leased property, which is typically beforff e lease payments are due under the terms of the lease. Many of our leases have renewal periods totaling 5 to 20 years, exercisabla e at our option, and require payment of property taxes, insurance and maintenance costs in addition to the lease payments. At lease inception, we include option periods that we are reasonabla y certain to exercise as faff ilure to renew the lease would impose an economic penalty either frff om the loss of our investment in leasehold improvements or futff urt e cash flff ows frff om operating the restaurant. The consolidated fiff nancial statements reflff ect the same lease term forff amortizing leasehold improvements as we use to determine fiff nance versus operating lease classififf cations. Variabla e lease expense is generally based on sales levels and is accruerr d at the point in time we determine that it is probabla e that such sales levels will be achieved. Landlord allowances are recorded as an adjustment to the right-of-ff use assets. Gains and losses on sale-leaseback transactions are recognized immediately. We elected the practical expedient to not separate lease and non-lease components forff real estate leases entered into aftff er adoption. See Note 10 forff additional inforff mation. PrPP e-OpeOO ninii g ExpeEE nses Non-capia tal expenditurt es associated with opening new restaurants are expensed as incurred. These costs are reported as restaurant expenses in our consolidated statements of earnings. Advertitt sii inii g Production costs of commercials are expensed in the fiff scal period the advertising is fiff rst aired while the costs of programming and other advertising, promotion and marketing programs are expensed as incurred. These costs are reported as marketing expenses in our consolidated statements of earnings. 54 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) StSS octt k-B- ased ComCC pem nsatitt on We recognize the cost of employee service received in exchange forff awards of equity instrumrr ents based on the grant date feff iturtt es, on a straight-line basis over the awards granted. We utilize the Black-Scholes option pricing model to estimate the faff ir value of stock faff ir value of those awards. We recognize compensation expense, net of estimated forff employee service period forff option awards. The dividend yield has been estimated based upon our historical results and expectations forff rates. The expected volatility was determined using historical stock prices. The risk-frff ee interest rate was the rate availabla e on a zero coupon U.S. government obligations with a term appr estimated based on the exercise historyrr of previous grants, taking into consideration the remaining contractuatt outstanding awards. We utilize a Monte Carlo simulation to estimate the faff ir value of our market-based equity-settled perforff mance awards. The dividend yield assumes reinvestment of dividends. The expected volatility was determined using historical stock prices. The risk-frff ee interest rate was the rate availabla e on zero coupon U.S. government obligations with a term appr a outstanding awards. See Note 14 forff oximating the expected lifeff of each grant. The expected lifeff was estimated based on the perforff mance measurement period forff oximating the expected lifeff of each grant. The expected lifeff was changes in dividend ther inforff mation. l period forff furff NeNN t Earninii gs per ShSS are Basic net earnings per share are computed by dividing net earnings by the weighted-average number of common shares the reporting period. Diluted net earnings per share reflff ect the potential dilution that could occur if securities or outstanding forff other contracts to issue common stock were exercised or converted into common stock. Outstanding stock options, restricted stock units and equity-settled perforff mance stock units granted by us represent the only dilutive effff eff ct reflff ected in diluted weighted- average shares outstanding. These stock-based compensation instrumrr per share computation. ents do not impact the numerator of the diluted net earnings The folff lowing tabla e presents the computation of basic and diluted net earnings per common share: (in millions, except per share data) Earnings frff om continuing operations Losses frff om discontinued operations Net earnings Weighted average common shares outstanding – Basic Effff eff ct of dilutive stock-based compensation Weighted average common shares outstanding – Diluted Basic net earnings per share: Earnings frff om continuing operations Losses frff om discontinued operations Net earnings Diluted net earnings per share: Earnings frff om continuing operations Losses frff om discontinued operations Net earnings Fiscal Year Ended May 28, 2023 983.5 $ (1.6) May 29, 2022 954.7 $ (1.9) May 30, 2021 632.4 $ (3.1) $ $ $ $ $ 981.9 121.9 1.0 122.9 8.07 (0.01) 8.06 8.00 (0.01) 7.99 $ $ $ $ $ 952.8 127.8 1.2 129.0 7.47 (0.01) 7.46 7.40 (0.01) 7.39 $ $ $ $ $ 629.3 130.4 1.4 131.8 4.85 (0.02) 4.83 4.80 (0.03) 4.77 Stock options, restricted stock units and equity-settled perforff mance stock units excluded frff om the calculation of diluted net earnings per share because the effff eff ct would have been anti-dilutive, are as folff lows: (in millions) Anti-dilutive stock-based compensation awards ForFF eigni CuCC rrencyc Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 0.3 0.1 0.7 ff The Canadian dollar is the func our Canadian restaurant operations. Assets and liabia lities denominated in forff eign currencies are translated into U.S. dollars using the exchange rates in effff eff ct at the balance sheet date. Results of operations are translated using the average exchange rates prevailing throughout the period. Translation gains and losses are reported as a separate component of other comprehensive income (loss). Aggregate cumulative translation gains (losses) were $4.5 million and $4.8 million at May 28, 2023 and May 29, 2022, respectively. Net gains (losses) frff om forff eign currency transactions recognized in tional currency forff 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) our consolidated statements of earnings were $0.0 million, $0.0 million and $0.6 million forff respectively. fiff scal 2023, 2022 and 2021, Recentltt yll Adoptett d Accountitt nii g StSS antt dards In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), which requires annual disclosures that increase the transparency of transactions involving government grants, including (i) inforff mation about transactions and related accounting policy used to account forff statement affff eff cted by these transactions including amounts appl a transactions, including commitments and contingencies. The guidance is effff eff ctive forff annual periods beginning aftff er December 15, 2021. The Company adopted this guidance in the fiff rst quarter of fiff scal 2023. The adoption did not have a material impact on our fiff nancial statements. the transactions; (ii) the line items on the balance sheet and income icabla e to each line; and (iii) signififf cant terms and conditions of the the naturtt e of the a NOTE 2 - REVENUE RECOGNITION Defeff rred revenue liabia lities frff om contracts with customers included on our accompanying consolidated balance sheets is comprised of the folff lowing: (in millions) Unearned revenues Defeff rred giftff card revenue Defeff rred giftff card discounts Other Total Other liabilities Defeff rred frff anchise feff es - non-current The folff lowing tabla e presents a rollforff ward of defeff rred giftff card revenue: (in millions) Beginning balance Activations Redemptions and breakage g Ending balance May 28, 2023 May 29, 2022 $ $ $ 537.0 (25.5) 0.5 512.0 $ $ 521.1 (23.5) 0.4 498.0 2.7 $ 2.8 Twelve Months Ended May 28, 2023 May 29, 2022 $ $ $ 521.1 701.3 (685.4) 537.0 $ 494.3 673.3 (646.5) 521.1 NOTE 3 –IMPAIRMENTS AND DISPOSAL OF ASSETS, NET Impairments and disposal of assets, net, in our accompanying consolidated statements of earnings are comprised of the folff lowing: (in millions) Restaurant impairments Disposal (gains) losses Other Impairments and disposal of assets, net Fiscal Year Ended $ May 28, 2023 May 29, 2022 May 30, 2021 5.3 $ (2.1) 3.4 6.6 2.4 (15.1) 2.1 (10.6) $ 6.8 (4.8) (4.0) (2.0) $ $ $ Restaurant impairments forff fiff scal 2023 were primarily related to (i) one underperr rforff ming restaurant whose projected cash flff ows were not suffff iff cient to cover its respective carryirr ng values and (ii) four fiff scal 2022 were primarily related to one underperr respective carryirr ng values and two underperr impairments forff fiff scal 2021 were primarily related to four underperr ff ff rforff ming restaurants. rforff ming restaurant whose projected cash flff ows were not suffff iff cient to cover its rforff ming restaurants that were permanently closed during 2022. Restaurant restaurant closures. Restaurant impairments forff 56 Disposal gains forff fiff scal 2023, 2022 and 2021 are primarily related to sale of properties, sale-leasebacks, disposal of closed locations, and the sale of liquor licenses. Other impacts forff fiff scal 2023 were primarily related to cancelled projects. Other impacts forff fiff scal 2022 were primarily related to the termination of lease liabia lities in excess of the related right-of-ff use assets. Other impairment charges forff were primarily related to softff ware and lease right-of-ff use asset impairments. fiff scal 2021 Impairment charges were measured based on the amount by which the carryirr ng amount of these assets exceeded their faff ir aisals or sales prices of comparabla e assets and estimates of discounted value. Fair value is generally determined based on appr futff urt e cash flff ows (see Note 8). These amounts are included in impairments and disposal of assets, net as a component of earnings frff om continuing operations in the accompanying consolidated statements of earnings. a NOTE 4 - LAND, BUILDINGS AND EQUIPMENT, NET The components of land, buildings and equipment, net, are as folff lows: (in millions) Land Buildings Equipment Assets under fiff nance leases Construcrr tion in progress Total land, buildings and equipment Less accumulated depreciation and amortization Less amortization associated with assets under fiff nance leases Land, buildings and equipment, net g NOTE 5 - SEGMENT INFORMATION May 28, 2023 May 29, 2022 126.2 $ $ 3,389.3 1,916.9 134.0 3,655.5 2,094.5 1,062.4 200.7 908.5 156.0 $ $ 7,147.1 $ 6,496.9 (3,317.7) (104.3) (3,070.5) (70.4) 3,725.1 $ 3,356.0 We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capia tal Grille, Seasons 52, Bahama Breeze, Eddie V’s and The Capia tal Burger in North America as operating segments. The brands operate principally in the U.S. within fulff based on a combination of the size, economic characteristics and sub-segment of fulff operates. We have four reportabla e segments: (1) Olive Garden, (2) LongHorn Steakhouse, (3) Fine Dining and (4) Other Business. l-service dining. We aggregate our operating segments into reportabla e segments l-service dining within which each brand ff 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 fiff ne-dining sub-segment of fulff and includes the results of our company-owned The Capia tal 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 Capia tal Burger restaurants in the U.S and results frff om our frff anchise operations. l-service dining External sales are derived principally frff om foodff and beverage sales. We do not rely on any maja or customers as a source of sales, and the customers and long-lived assets of our reportabla e segments are predominantly in the U.S. There were no material transactions among reportabla e segments. Our management uses segment profiff t as the measure forff assessing perforff mance of our segments. Segment profiff t includes ff rr ate level forff and beverage costs, restaurant labor revenues and expenses directly attributabla e to restaurant-level results of operations (sometimes refeff rred to as restaurant-level earnings). These expenses include food costs, restaurant expenses and marketing expenses (collectively, restaurant and marketing expenses). Non-cash lease-related expenses frff om our operating segments are allocated to the corpor Additionally, our lease-related right-of-ff use assets are not managed or evaluated at the operating segment level, but rather at the corpor rr $9.0 million, and $28.9 million, respectively, of costs net of retention credits associated with the CARES Act, related to special team member and manager bonuses as well as emergency and furff at the corpor restaurant expenses (which is a component of segment profiff t) and depreciation and amortization. ate level. For fiff scal 2023, 2022, and 2021, restaurant and marketing expenses included appr ate level as they are costs forff which our operating segments are not being evaluated. restaurant employees due to COVID-19, reflff ected oximately $0.2 million, lough pay forff a a rr 57 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In the fiff rst quarter of fiff scal 2022, we changed our internal management reporting to include The Capia tal Burger in the Other Business segment. Previously, The Capia tal Burger was included in the Fine Dining segment due to its adjacency with The Capia tal Grille brand and overall immateriality. Fiscal 2021 fiff gures have been restated forff comparabia lity. The folff lowing tabla es reconcile our segment results to our consolidated results reported in accordance with GAAP: (in millions) At May 28, 2023 and forff the year ended Sales Restaurant and marketing expenses Segment profiff t Depreciation and amortization Impairments and disposal of assets, net Segment assets Purchases of land, buildings and equipment (in millions) At May 29, 2022 and forff the year ended Sales Restaurant and marketing expenses Segment profiff t Depreciation and amortization Impairments and disposal of assets, net Segment assets Purchases of land, buildings and equipment (in millions) At May 30, 2021 and forff the year ended Sales Restaurant and marketing expenses Segment profiff t Depreciation and amortization $ $ $ $ $ $ $ $ $ Olive Garden LongHorn Steakhouse Fine Dining Other Business rr Corpor ate Consolidated 4,877.8 $ 3,852.0 1,025.8 $ 2,612.3 $ 2,181.4 430.9 $ 830.8 $ 672.3 158.5 $ 2,166.9 $ 1,866.3 300.6 $ — $ (49.3) 49.3 $ 10,487.8 8,522.7 1,965.1 146.5 $ 67.7 $ 35.6 $ 96.8 $ 41.2 $ 387.8 — 2,835.5 252.5 (3.3) 1,978.3 114.0 — 1,345.4 57.2 — 2,968.9 119.6 (7.3) 1,113.4 21.6 (10.6) 10,241.5 564.9 Olive Garden LongHorn Steakhouse Fine Dining Other Business rr Corpor ate Consolidated 4,503.9 $ 3,510.2 2,374.3 $ 1,955.9 993.7 $ 418.4 $ 776.2 $ 611.2 165.0 $ 1,975.6 $ 1,675.4 — $ (24.5) 300.2 $ 24.5 $ 9,630.0 7,728.2 1,901.8 141.0 $ 64.7 $ 33.7 $ 98.1 $ 30.9 $ 368.4 4.9 2,718.0 154.5 0.1 1,911.0 91.0 — 1,300.0 42.2 1.6 2,922.9 86.8 (8.6) 1,283.9 2.4 (2.0) 10,135.8 376.9 Olive Garden LongHorn Steakhouse Fine Dining Other Business rr Corpor ate Consolidated 3,593.4 $ 2,760.5 1,810.4 $ 1,486.9 443.2 $ 363.0 1,349.1 $ 1,156.1 832.9 $ 323.5 $ 80.2 $ 193.0 $ — $ 27.2 (27.2) $ 7,196.1 5,793.7 1,402.4 350.9 6.6 254.9 142.1 $ 65.9 $ 30.9 $ 97.6 $ 14.4 $ Impairments and disposal of assets, net Purchases of land, buildings and equipment 0.1 106.5 0.3 43.4 — 39.6 3.9 62.1 2.3 3.3 58 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Reconciliation of segment profiff t to earnings frff om continuing operations beforff e income taxes: (in millions) Segment profiff t Less general and administrative expenses Less depreciation and amortization Less impairments and disposal of assets, net Less interest, net Less other (income) expense, net Earnings beforff e income taxes g NOTE 6 - DEBT The components of long-term debt are as folff lows: (in millions) 3.850% senior notes due May 2027 6.000% senior notes due August 2035 6.800% senior notes due October 2037 4.550% senior notes due Februarr ryrr 2048 Total long-term debt Fair value hedge Less unamortized discount and issuance costs Total long-term debt less unamortized discount and issuance costs g $ $ Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 1,402.4 $ (396.2) (350.9) (6.6) (63.5) (8.7) 576.5 1,965.1 (386.1) (387.8) 10.6 (81.3) — 1,120.5 1,901.8 (373.2) (368.4) 2.0 (68.7) — 1,093.5 $ $ $ May 28, 2023 May 29, 2022 500.0 $ $ 500.0 96.3 42.8 300.0 939.1 (45.4) (8.8) 884.9 $ $ 96.3 42.8 300.0 939.1 (28.0) (10.1) 901.0 $ $ The aggregate contractuatt l maturt ities of long-term debt forff each of the fiff ve fiff scal years subsequent to May 28, 2023, and thereaftff er are as folff lows: (in millions) Fiscal Year Debt repayments 2024 2025 2026 2027 2028 Thereaftff er $ — $ — $ — $ 500.0 $ — $ 439.1 On September 10, 2021, we entered into a $1 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 is a senior unsecured credit commitment to the Company and contains customaryrr negative covenants (including limitations on liens and subsidiaryrr debt and a maximum consolidated lease adjusted total debt to total capia talization ratio of 0.75 to 1.00) and events of defaff ult usual forff Agreement replaced our prior $750.0 million revolving credit agreement, dated as of October 27, 2017 and amended as of March 25, 2020. As of May 28, 2023, we had no outstanding balances. credit faff cilities of this type. The Revolving Credit representations and affff iff rmative and The Revolving Credit Agreement maturt es on September 10, 2026, and the proceeds may be used forff working capia tal and es. During fiscal capia tal expenditurtt es, the refiff nancing of certain indebtedness, certain acquisitions and general corpor year 2023, loans under the Revolving Credit Agreement bore interest at a rate of LIBOR plus a margin determined by refeff rence to a ratings-based pricing grid (Applicabla e Margin), or the base rate (which is defiff ned as the highest of the BOA prime rate, the Federal Funds rate plus 0.500 percent, and the Eurodollar Rate plus 1.000 percent) plus the Applicabla e Margin. Assuming a “BBB” equivalent credit rating level, the Applicabla e Margin under the Revolving Credit Agreement would have been 1.000 percent forff LIBOR loans and 0.000 percent forff base rate loans. ate purpos rr rr Subsequent to the end of fiff scal year 2023, effff eff ctive May 31, 2023, we entered into an amendment to the Revolving Credit Agreement. Pursuant to the terms of the amendment, the Company, the administrative agent and the lenders have agreed to replace the LIBOR-based interest rate appl icabla e to borrowings under the Credit Agreement with a Term SOFR-based interest rate in advance of the cessation of LIBOR, and make certain other conforff ming changes. All other material terms and conditions of the Credit Agreement were unchanged. Effff eff ctive May 31, 2023, loans under the Revolving Credit Agreement bear interest at a rate of (a)Term SOFR (which is defiff ned, forff icabla e interest period, as the Term SOFR Screen Rate two U.S. Government a the appl a 59 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Securities Business Days prior to the commencement of such interest period with a term equivalent to such interest period) plus a Term SOFR adjustment of 0.10 percent plus the relevant margin determined by refeff rence to a ratings-based pricing grid (Applicabla e Margin), or (b) the base rate (which is defiff ned as the highest of the BOA prime rate, the Federal Funds rate plus 0.500 percent, and the Term SOFR plus 1.00 percent) plus the relevant Applicabla e Margin. Assuming a “BBB” equivalent credit rating level, the Applicabla e Margin under the Revolving Credit Agreement will be 1.00 percent forff Term SOFR loans and 0.000 percent forff base rate loans. Also subsequent to the end of fiff scal year 2023, on May 31, 2023, the Company entered into a senior unsecured $600 million 3-year Term Loan Credit Agreement (Term Loan Agreement) 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 Credit Agreement, as amended. The Term Loan Agreement provided forff anniversaryrr of the fundi portion of the consideration paid in connection with the acquisition of RutRR h’s. a single borrowing on any business day up to 90 days aftff er May 31, 2023, and maturt es on the third a ng date thereunder, June 14, 2023. We borrowed $600 million under the Term Loan Agreement to fundff ff The interest rate on our $42.8 million 6.800 percent senior notes due October 2037 is subject to adjustment fromff 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 interest rate. As of May 28, 2023, no such adjustments are made to this rate. the initial interest rate and the interest rate cannot be reduced below the initial a NOTE 7 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES We enter into derivative instrumrr es only, including derivatives designated as hedging ents as provided by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. We use instrumrr fiff nancial derivatives to manage interest rate, commodity and compensation risks inherent in our business operations. Cash flff ows related to derivatives are included in operating activities. risk management purpos ents forff rr By using these instrumrr ents, we expose ourselves, frff om time to time, to credit risk and market risk. Credit risk is the faff ilure rty to perforff m under the terms of the derivative contract. When the faff ir value of a derivative contract is positive, of the counterparr the counterparr quality counterparr ent that results frff om a change in interest rates, commodity prices, or the market price of our common stock. We minimize this market risk by establa ishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. rties. Market risk is the adverse effff eff ct on the value of a fiff nancial instrumrr us. We minimize this credit risk by entering into transactions with high rty owes us, which creates credit risk forff We designate commodity contracts and equity forff ward contracts as cash flff ow hedging instrumrr ents. Our interest rate swapa agreements are designated as faff ir value hedges of the related debt. Further, we entered into equity forff ward contracts to hedge the risk of changes in futff urt e cash flff ows associated with recognized, employee-directed investments in our common stock within the non-qualififf ed defeff rred compensation plan. We did not elect hedge accounting with the expectation that changes in the faff ir value of the equity forff ward contracts would offff sff et changes in the faff ir value of our common stock investments in the non-qualififf ed defeff rred compensation plan. 60 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The notional and faff ir values of our derivative contracts are as folff lows: (in millions, except per share data) Equity Forwards Designated Not designated Total equity forff wards (2) Commodity contracts Designated Not designated Total commodity contracts (3) Interest rate related Designated Not designated Total interest rate related Total derivative contracts Number of Shares Outstanding Weighted- Average Per Share Forward Rates Notional Values May 28, 2023 0.2 0.5 $ $ 125.80 124.96 $ $ 29.8 67.4 N/A N/A N/A N/A N/A $ N/A $ 27.0 — N/A $ 300.0 N/A Fair Values Derivative Assets (1) May 29, May 28, 2022 2023 Derivative Liabia lities (1) May 28, 2023 May 29, 2022 $ $ $ $ $ $ $ 2.2 5.1 7.3 $ $ $ — — $ — $ — $ — $ — — — $ 0.6 — 0.6 $ $ — $ — $ — $ $ — — $ 5.6 — 5.6 45.4 $ $ $ — $ $ 45.4 7.3 $ 0.6 $ 51.0 $ 0.1 0.2 0.3 — — — 28.0 — 28.0 28.3 (1) Derivative assets and liabia lities are included in receivabla es, net, and other current liabia lities, as appl a icabla e, on our consolidated balance sheets. (2) Designated and undesignated equity forff wards extend through July 2026 and April 2027, respectively. (3) Commodity contracts extend through June 2024. The effff eff cts of derivative instrumrr ents in cash flff ow hedging relationships in the consolidated statements of earnings are as folff lows: (in millions) Equity (1) Commodity (2) Interest rate (3) Total Amount of Gain (Loss) Recognized in AOCI Fiscal Year Ended Amount of Gain (Loss) Reclassififf ed frff om AOCI to Earnings Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 May 28, 2023 May 29, 2022 May 30, 2021 $ $ $ 8.0 (9.2) — (1.2) $ (7.9) $ 2.4 — (5.5) $ 16.9 0.8 — 17.7 $ $ (0.8) $ (3.1) (0.1) (4.0) $ $ 0.8 1.9 (0.1) 2.6 $ 1.6 (0.7) (0.1) 0.8 (1) Location of the gain (loss) reclassififf ed frff om AOCI to earnings is general and administrative expenses. (2) Location of the gain (loss) reclassififf ed frff om AOCI to earnings is foodff and beverage costs and restaurant expenses. (3) Location of the gain (loss) reclassififf ed frff om AOCI to earnings is interest, net. 61 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The effff eff cts of derivative instrumrr ents in faff ir value hedging relationships in the consolidated statements of earnings are as folff lows: Amount of Gain (Loss) Recognized in Earnings on Derivatives Fiscal Year Ended Amount of Gain (Loss) Recognized in Earnings on Related Hedged Item Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 May 28, 2023 May 29, 2022 May 30, 2021 $ (17.4) $ (27.8) $ (0.2) $ 17.4 $ 27.8 $ 0.2 (in millions) Interest rate (1)(2) (1) Location of the gain (loss) recognized in earnings on derivatives and related hedged item is interest, net. (2) Hedged item in faff ir value hedge relationship is debt. The effff eff cts of derivatives not designated as hedging instrumrr ents in the consolidated statements of earnings are as folff lows: (in millions) Location of Gain (Loss) Recognized in Earnings on Derivatives Food and beverage costs and restaurant expenses General and administrative expenses Total Amount of Gain (Loss) Recognized in Earnings Fiscal Year Ended May 29, 2022 May 30, 2021 May 28, 2023 $ $ — $ 18.3 18.3 $ — $ (3.6) (3.6) $ 0.1 32.7 32.8 Based on the faff ir value of our derivative instrumrr reclassifyff $5.4 million of net losses on derivative instrumrr during the next 12 months based on the maturt ultimately realized in earnings will be dependent on the faff ir value of the contracts on the settlement dates. ents designated as cash flff ow hedges as of May 28, 2023, we expect to ity of equity forff ward, commodity, and interest rate contracts. However, the amounts ents frff om accumulated other comprehensive income (loss) to earnings NOTE 8 – FAIR VALUE MEASUREMENTS The faff ir values of cash equivalents, receivabla es, net, accounts payabla e and short-term debt appr a oximate their carryirr ng amounts due to their short duration. The folff lowing tabla es summarize the faff ir values of fiff nancial instrumrr ents measured at faff ir value on a recurring basis at May 28, 2023 and May 29, 2022: Items Measured at Fair Value at May 28, 2023 (in millions) Derivatives: Quoted Prices in Active Market forff Identical Assets (Liabia lities) (Level 1) Signififf cant Other Observabla e Inputs (Level 2) Signififf cant Unobservabla e Inputs (Level 3) Fair Value of Assets (Liabia lities) Commodities futff urt es, swapsa & options Equity forff wards Interest rate swapsa Total (1) (2) (3) $ $ (5.6) $ 7.3 (45.4) (43.7) $ — $ — — — $ (5.6) $ 7.3 (45.4) (43.7) $ — — — — 62 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Items Measured at Fair Value at May 29, 2022 Quoted Prices in Active Market forff Identical Assets (Liabia lities) (Level 1) Signififf cant Other Observabla e Inputs (Level 2) Signififf cant Unobservabla e Inputs (Level 3) Fair Value of Assets (Liabia lities) (in millions) Derivatives: Commodities futff urt es, swapsa & options Equity forff wards Interest rate swapsa Total (1) (2) (3) $ $ $ 0.6 (0.3) (28.0) (27.7) $ — $ — — — $ $ 0.6 (0.3) (28.0) (27.7) $ — — — — (1) The faff ir value of our commodities futff urtt es, swapsa and options is based on closing market prices of the contracts, inclusive of the risk of nonperforff mance. (2) The faff ir value of equity forff wards is based on the closing market value of Darden stock, inclusive of the risk of nonperforff mance. (3) The faff ir value of our interest rate swapa agreements is based on current and expected market interest rates, inclusive of the risk of nonperforff mance. The carryirr ng value and faff ir value of long-term debt, as of May 28, 2023, was $884.9 million and $857.0 million, respectively. The carryirr ng value and faff ir value of long-term debt as of May 29, 2022, was $901.0 million and $896.9 million, respectively. The faff ir value of long-term debt, which is classififf ed as Level 2 in the faff ir value hierarchy, is determined based on market prices or, if market prices are not availabla e, the present value of the underlying cash flff ows discounted at our incremental borrowing rates. The faff ir value of non-fiff nancial assets measured at faff ir value on a non-recurring basis, classififf ed as Level 2 in the faff ir value hierarchy, is generally determined based on third-party market appr a May 28, 2023 and May 29, 2022, adjustments to the faff ir values of non-fiff nancial assets measured at faff ir value on a non-recurring basis, classififf ed as Level 2, were not material. aisals which includes market data forff similar assets. As of The faff ir value of non-fiff nancial assets measured at faff ir value on a non-recurring basis, classififf ed as Level 3 in the faff ir value a aisals, sales prices of comparabla e assets, or estimates of discounted futff urt e cash flff ows. As of hierarchy, is determined based on appr May 28, 2023, long-lived assets held and used with a carryirr ng amount of $10.0 million, primarily related to one underperr rforff ming restaurant, were determined to have a faff ir value of $8.4 million resulting in an impairment charge of $1.6 million. As of May 29, 2022, long-lived assets held and used with a carryirr ng amount of $4.9 million, primarily related to one underperr were determined to have a faff ir value of $0.9 million resulting in an impairment charge of $4.0 million. rforff ming restaurant, NOTE 9 - STOCKHOLDERS’ EQUITY ShSS are Repuee rchase PrPP ogram All of the shares purchased during the fiff scal year ended May 28, 2023 were purchased as part of our repurchase program authorized by our Board of Directors. On June 22, 2022, our Board of Directors authorized a share repurchase program under which we may repurchase up to $1.0 billion of our outstanding common stock. This repurchase program does not have an expiration and replaces the existing share repurchase authorization. ShSS are Retitt rii ementstt As of May 28, 2023, of the 207.7 million cumulative shares repurchased under the current and previous authorizations, 196.4 million shares were retired and restored to authorized but unissued shares of common stock and there are no remaining treasuryrr shares. We expect that all shares of common stock acquired in the futff urt e will also be retired and restored to authorized but unissued shares of common stock. 63 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Accumulatll ett d Othtt er ComCC prm ehensive InII come (L(( oss)s The components of accumulated other comprehensive income (loss), net of tax, are as folff lows: (in millions) Balances at May 30, 2021 Gain (loss) Reclassififf cation realized in net earnings Balances at May 29, 2022 Gain (loss) Reclassififf cation realized in net earnings Balances at May 28, 2023 y Foreign Currency Translation Adjustment 5.2 $ (0.4) — 4.8 (0.3) — 4.5 $ $ $ Unrealized Gains (Losses) on Derivatives 7.9 $ (6.1) (2.2) (0.4) $ 1.1 3.2 3.9 $ $ $ Benefiff t Plan Funding Position Accumulated Other Comprehensive Income (Loss) 4.2 (4.1) (2.0) (1.9) 1.5 3.6 3.2 (8.9) $ 2.4 0.2 (6.3) $ 0.7 0.4 (5.2) $ The folff lowing tabla e presents the amounts and line items in our consolidated statements of earnings where other adjustments reclassififf ed frff om AOCI into net earnings were recorded: (in millions) AOCI Components Derivatives Commodity contracts Equity contracts Interest rate contracts (in millions) AOCI Components Benefiff t plan fundi ff Pension/pos // ng position tretirement plans- actuat rial losses Recognized net actuat rial gain - other plans Location of Gain (Loss) Recognized in Earnings Fiscal Year Ended May 28, 2023 May 29, 2022 (1) (2) (3) Total beforff e tax Tax benefiff t (expense) Net of tax Location of Gain (Loss) Recognized in Earnings (4) (5) Total beforff e tax Tax benefiff t (expense) Net of tax $ $ $ $ $ $ (3.1) $ (0.8) (0.1) (4.0) $ 0.8 (3.2) $ 1.9 0.8 (0.1) 2.6 (0.4) 2.2 Fiscal Year Ended May 28, 2023 May 29, 2022 (0.1) $ (0.7) (0.8) $ 0.4 (0.4) $ (0.5) (0.6) (1.1) 0.9 (0.2) (1) Primarily included in foodff (2) Included in general and administrative expenses. See Note 7 forff (3) Included in interest, net, on our consolidated statements of earnings. (4) Included in the computation of net periodic benefiff t costs - pension and postretirement plans, which is a component of other and beverage costs and restaurant expenses. See Note 7 forff additional details. additional details. (income) expense, net, restaurant labor a expenses and general and administrative expenses. See Note 13 forff (5) Included in the computation of net periodic benefiff t costs - other plans, which is a component of restaurant labor additional details. , and general a and administrative expenses. 64 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 10 – LEASES The components of lease expense forff ended May 28, 2023 and May 29, 2022 are as folff lows: continuing operations in the consolidated statements of earnings forff the fiscal years (in millions) Operating lease expense Finance lease expense Amortization of leased assets Interest on lease liabia lities Variabla e lease expense Total lease expense May 28, 2023 May 29, 2022 377.9 $ 372.0 41.2 44.3 22.6 486.0 $ 29.6 32.3 17.0 450.9 $ $ The components of lease assets and liabia lities on the consolidated balance sheet as of May 28, 2023 and May 29, 2022 are as folff lows: (in millions) Operating lease right-of-ff use assets Finance lease right-of-ff use assets Total lease assets, net Operating lease liabia lities - current Finance lease liabia lities - current Operating lease liabia lities - non-current Finance lease liabia lities - non-current Total lease liabia lities Balance Sheet Classififf cation May 28, 2023 May 29, 2022 Operating lease right-of-ff use assets Land, buildings and equipment, net Other current liabia lities Other current liabia lities Operating lease liabia lities - non-current Other liabia lities $ $ $ $ 3,373.9 $ 958.1 4,332.0 $ 182.5 $ 13.5 3,667.6 1,172.6 5,036.2 $ 3,465.1 838.1 4,303.2 185.8 16.6 3,755.8 1,018.6 4,976.8 Supplemental cash flff ow inforff mation related to leases forff the fiff scal years ended May 28, 2023 and May 29, 2022: (in millions) Cash paid forff amounts included in the measurement of lease liabia lities Operating cash flff ows frff om operating leases Operating cash flff ows frff om fiff nance leases Financing cash flff ows frff om fiff nance leases Right-of-ff use assets obtained in exchange forff Right-of-ff use assets obtained in exchange forff Net change in right-of-ff use assets mainly due to lease modififf cations resulting in reclassififf cation of leases frff om operating to fiff nance new operating lease liabia lities new fiff nance lease liabia lities May 28, 2023 May 29, 2022 $ 367.6 $ 44.3 19.8 131.5 75.1 86.3 374.6 32.3 12.9 26.0 187.8 171.9 65 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The weighted-average remaining lease terms and discount rates as of May 28, 2023 and May 29, 2022 are as folff lows: (in millions) Weighted-Average Remaining Lease Term (Years) Operating leases Finance leases Weighted-Average Discount Rate (1) Operating leases Finance leases May 28, 2023 May 29, 2022 15.2 22.5 4.3 % 4.2 % 15.4 22.6 4.2 % 3.9 % (1) We cannot determine the interest rate implicit in our leases. Thereforff e, the discount rate represents our incremental the risk premium attributed to our corpor borrowing rate and is determined based on the risk-frff ee rate, adjusted forff credit rating forff a secured or collateralized instrumrr ent. rr ate The annual maturt ities of our lease liabia lities as of May 28, 2023 are as folff lows: (in millions) Fiscal Year 2024 2025 2026 2027 2028 Thereaftff er Total futff urtt e lease commitments (1) Less imputed interest Present value of lease liabia lities (2) Operating Leases Finance Leases 378.7 385.8 388.9 392.3 383.3 72.7 74.3 76.1 77.5 79.0 3,534.5 5,463.5 (1,613.4) 3,850.1 $ $ $ $ 1,527.2 1,906.8 (720.7) 1,186.1 (1) Of the $5,463.5 million of total futff urt e operating lease commitments and $1,906.8 million of total futff urt e fiff nance lease commitments, $2,376.5 million and $662.6 million, respectively, are non-cancelabla e. (2) Excludes appr a not yet commenced. oximately $107.6 million of net present value of lease payments related to 25 real estate leases signed, but 66 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 11 - ADDITIONAL FINANCIAL INFORMATION The tabla es below provide additional fiff nancial inforff mation related to our consolidated fiff nancial statements: May 28, 2023 May 29, 2022 $ $ $ $ $ 40.9 39.6 (0.3) 80.2 $ 252.4 96.8 42.1 42.5 16.0 196.0 106.7 752.5 $ $ 39.5 32.8 (0.3) 72.0 249.5 80.4 42.5 36.5 12.2 202.5 80.9 704.5 Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 $ $ $ 50.2 44.3 (5.4) (7.8) $ 40.9 32.3 (2.6) (1.9) 81.3 $ 68.7 $ 47.5 20.9 (3.2) (1.7) 63.5 Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 $ $ $ 82.4 47.4 66.7 $ $ $ 65.0 102.6 48.2 $ $ $ 62.5 62.5 29.1 Balance Sheets (in millions) Receivables, net Giftff card sales Miscellaneous Allowance forff Total doubtfulff accounts Other Current Liabilities Non-qualififf ed defeff rred compensation plan Sales and other taxes Insurance-related Employee benefiff ts Accruerr d interest Lease liabia lities - current Miscellaneous Total Statements of Earnings (in millions) Interest, net Interest expense Imputed interest on fiff nance leases Capia talized interest Interest income Total Statements of Cash Flows (in millions) : Cash paid during the fiff scal year forff Interest, net of amounts capia talized Income taxes, net of refunds ff Non-cash investing and fiff nancing activities: Increase in land, buildings and equipment through accruerr d purchases 67 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 12 - INCOME TAXES Total income tax expense (benefiff t) was allocated as folff lows: Fiscal Year Ended (in millions) Earnings frff om continuing operations Loss frff om discontinued operations Total consolidated income tax expense (benefiff t) May 28, 2023 May 29, 2022 May 30, 2021 (55.9) $ (3.2) (59.1) 137.0 (0.8) 136.2 138.8 (0.2) 138.6 $ $ $ $ $ The components of earnings frff om continuing operations beforff e income taxes and the provision forff lows: as folff income taxes thereon are (in millions) Earnings frff om continuing operations beforff e income taxes: U.S. Foreign Earnings frff om continuing operations beforff e income taxes Income taxes: Current: Federal State and local Foreign Total current Defeff rred (principally U.S.): Federal State and local Total defeff rred Total income tax expense (benefiff t) Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 $ $ $ $ $ $ $ 1,117.3 3.2 1,120.5 $ $ 1,089.5 4.0 1,093.5 165.9 $ 25.6 1.6 90.7 72.7 1.4 193.1 $ 164.8 $ $ $ $ $ (69.2) $ 13.1 (56.1) $ 137.0 $ 10.3 (36.3) (26.0) $ 138.8 $ 575.1 1.4 576.5 (226.9) 5.3 (0.2) (221.8) 151.9 14.0 165.9 (55.9) The effff eff ctive income tax rates forff fiff scal 2023 and 2022 forff continuing operations were 12.2 percent and 12.7 percent, respectively. During fiff scal 2023, we had income tax expense of $137.0 million on earnings beforff e income tax of $1.12 billion compared to income tax expense of $138.8 million on earnings beforff e income taxes of $1.09 billion in fiff scal 2022. This change was primarily driven by the impact of feff deral tax credits. The Inflff ation Reduction Act (IRARR ) was enacted on August 16, 2022. The IRARR includes provisions imposing a 1 percent excise tax on share repurchases that occur aftff er December 31, 2022 and introduces a 15 percent corpor tax (CAMT) on adjusted fiff nancial statement income. The IRARR excise tax and the CAMT are immaterial to our fiff nancial statements. ate alternative minimum rr 68 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The folff lowing tabla e is a reconciliation of the U.S. statuttt oryrr operations included in the accompanying consolidated statements of earnings: income tax rate to the effff eff ctive income tax rate frff om continuing rate U.S. statutt oryrr State and local income taxes, net of feff deral tax benefiff ts Benefiff t of feff deral income tax credits Stock-based compensation tax benefiff t Federal net operating loss Other, net Effff eff ctive income tax rate Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 21.0 % 2.7 (11.1) (1.9) (20.6) 0.2 (9.7)% 21.0 % 3.1 (10.4) (0.9) — (0.6) 12.2 % 21.0 % 2.5 (9.8) (0.9) — (0.1) 12.7 % As of May 28, 2023, we had estimated current prepaid state and feff deral income taxes of $12.8 million and $94.5 million, respectively, which is included on our accompanying consolidated balance sheets as prepaid income taxes and estimated current state and feff deral income taxes payabla e of $4.2 million and $3.6 million, respectively, which is included on our accompanying consolidated balance sheets as accruerr d income taxes. As of May 28, 2023, we had unrecognized tax benefiff ts of $23.0 million, which represents the aggregate tax effff eff ct of the diffff eff rences between tax returt n positions and benefiff ts recognized in our consolidated fiff nancial statements, all of which would faff vorabla y affff eff ct the effff eff ctive tax rate if resolved in our faff vor. Included in the balance of unrecognized tax benefiff ts at May 28, 2023, is $7.8 million related to tax positions forff which it is reasonabla y possible that the total amounts could change during the next 12 months based on the outcome of examinations. Of the $7.8 million, $5.7 million relates to items that would impact our effff eff ctive income tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefiff ts folff lows: (in millions) Balances at May 29, 2022 Additions related to current-year tax positions Reductions related to prior-year tax positions Net reductions due to settlements with taxing authorities Reductions to tax positions due to statutt e expiration Balances at May 28, 2023 y $ $ 22.2 5.2 — (1.9) (2.5) 23.0 Interest included in income tax expense in our consolidated statements of earnings is as folff lows: (in millions) Interest recorded on unrecognized tax benefiff ts Interest recorded on income tax receivabla es Total (Benefiff t) Expense Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 $ $ $ $ 2.2 (6.8) $ (4.6) $ $ 1.3 (3.1) $ (1.8) $ 0.7 — 0.7 At May 28, 2023, we had $2.7 million accruerr d forff the payment of interest associated with unrecognized tax benefiff ts. rr For U.S. feff deral income tax purpos es, we participate in the IRS’s Compliance Assurance Process (CAP), whereby our U.S. feff deral income tax returtt ns are reviewed by the IRS both prior to and aftff er their fiff ling. Income tax returtt ns are subject to audit by state and local governments, generally years aftff er the returtt ns are fiff led. These returtt ns could be subject to material adjustments or diffff eff ring interprrr etations of the tax laws. The maja or jurisdictions in which the Company fiff les income tax returt ns include the U.S. feff deral jurisdiction, Canada, and all states in the U.S. that have an income tax. With a feff w exceptions, the Company is no longer subject to U.S. feff deral income tax examinations by tax authorities forff income tax examinations by tax authorities forff years beforff e fiff scal 2022, and state and local, or non-U.S. years beforff e fiff scal 2018. 69 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The tax effff eff cts of temporaryrr diffff eff rences that give rise to defeff rred tax assets and liabia lities are as folff lows: (in millions) May 28, 2023 May 29, 2022 Accruerr d liabia lities Compensation and employee benefiff ts Lease liabia lities Net operating loss, credit and charitabla e contribution carryfrr orff wards Other Gross defeff rred tax assets Valuation allowance Defeff rred tax assets, net of valuation allowance Trademarks and other acquisition related intangibles Buildings and equipment Capia talized softff ware and other assets Lease assets Other Gross defeff rred tax liabia lities Net defeff rred tax liabia lities $ $ $ $ $ $ $ $ 117.2 122.8 1,248.5 77.5 4.3 1,570.3 (21.1) 1,549.2 (184.2) (337.7) (26.0) (1,129.5) (14.0) (1,691.4) $ (142.2) $ 80.0 123.6 1,227.3 121.0 6.3 1,558.2 (20.8) 1,537.4 (178.7) (402.1) (23.5) (1,120.4) (13.8) (1,738.5) (201.1) We have defeff rred tax assets of $33.2 million reflff ecting the benefiff t of state loss carryfrr orff wards, beforff e feff deral benefiff t and valuation allowance, which expire at various dates between fiff scal 2024 and fiff scal 2042. We have defeff rred tax assets of $12.9 million of feff deral and $47.7 million state tax credits, beforff e feff deral benefiff t and valuation allowance, which expire at various dates between fiff scal 2024 and fiff scal 2043. We have taken current and potential futff urt e expirations into consideration when evaluating the need forff valuation allowances against these defeff rred tax assets. A valuation allowance forff some portion or all of the defeff rred tax assets will not be realized. Realization is dependent upon the generation of futff urtt e taxabla e income or the reversal of defeff rred tax liabia lities during the periods in which those temporaryrr diffff eff rences become deductible. We consider the scheduled reversal of defeff rred tax liabia lities, projected futff urt e taxabla e income and tax planning strategies in making this assessment. Based upon the level of historical taxabla e income and projections forff futff urt e taxabla e income over the periods in which our defeff rred tax assets are deductible, we believe it is more likely than not that we will realize the benefiff ts of these deductible diffff eff rences, net of the existing valuation allowances at May 28, 2023. defeff rred tax assets is provided when it is more likely than not that NOTE 13 - RETIREMENT PLANS Defe iff nii ed Benefe iff tii PlPP anll s and PosPP trtt etitt rii ement Benefe iff tii PlPP anll We sponsor a non-contributoryrr postretirement benefiff t plan that provides health care benefiff ts to certain eligible salaried retirees as a subsidy credit to a health care reimbursement account. This benefiff t is not impacted by futff urt e changes in health care cost trend rates. We also sponsor a supplemental defiff ned benefiff t pension plan, which is an unfunde ff d nonqualififf ed plan separate frff om our terminated primaryrr pension plan which was settled in fiff scal 2020. The supplemental plan is frff ozen and thereforff e no longer accruirr ng benefiff ts forff participants. Fundings related to the defiff ned benefiff t pension plans and postretirement benefiff t plan, which are funde ff d on a pay-as-you-go basis, were as folff lows: Fiscal Year Ended (in millions) Defiff ned benefiff t pension plans fundi ff ng Postretirement benefiff t plan fundi ff ng May 28, 2023 May 29, 2022 May 30, 2021 0.4 $ 0.4 0.4 $ $ 1.7 1.8 1.4 70 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) We expect to contribute appr a million to our postretirement benefiff t plan during fiff scal 2024. oximately $0.4 million to our remaining defiff ned benefiff t pension plan and appr a oximately $1.6 We are required to recognize the over- or under-funde of the plans as an asset or liabia lity as measured by the diffff eff rence between the faff ir value of the plan assets and the benefiff t obligation and any unrecognized prior service costs and actuat rial gains and losses as a component of accumulated other comprehensive income (loss), net of tax. d statust ff The folff of the plans as of May 28, 2023 and May 29, 2022: statust d lowing provides a reconciliation of the changes in the plan benefiff t obligation, faff ir value of plan assets and the funde ff (in millions) Change in Benefiff t Obligation: Benefiff t obligation at beginning of period Interest cost Benefiff ts paid Actuatt rial (gain) loss Benefiff t obligation at end of period g Change in Plan Assets: Fair value at beginning of period Employer contributions Benefiff ts paid Fair value at end of period ff Unfunde d statustt at end of period Defiff ned Benefiff t Plans Postretirement Benefiff t Plan May 28, 2023 May 29, 2022 May 28, 2023 May 29, 2022 $ $ $ $ $ 4.1 0.1 (0.5) — 3.7 $ $ — $ 0.4 (0.4) — $ (3.7) $ 4.8 0.1 (0.4) (0.4) 4.1 $ $ — $ 0.4 (0.4) — $ 18.0 0.7 (1.7) (1.6) 15.4 $ $ — $ 1.7 (1.7) — $ 22.4 0.4 (1.8) (3.0) 18.0 — 1.8 (1.8) — (4.1) $ (15.4) $ (18.0) The folff lowing is a detail of the balance sheet components of each of our plans and a reconciliation of the amounts included in accumulated other comprehensive income (loss): (in millions) Components of the Consolidated Balance Sheets: Current liabia lities Noncurrent liabia lities g Net amounts recognized Amounts Recognized in Accumulated Other Comprehensive Income (Loss), net of tax: Net actuat rial gain (loss) Net amounts recognized g Defiff ned Benefiff t Plans Postretirement Benefiff t Plan May 28, 2023 May 29, 2022 May 28, 2023 May 29, 2022 $ $ $ 0.4 3.3 3.7 $ $ — $ 4.0 4.0 $ 1.6 13.8 15.4 $ $ (1.1) (1.1) $ (1.2) (1.2) $ — — $ 1.9 16.1 18.0 (1.2) (1.2) The folff lowing is a summaryrr of our accumulated and projected benefiff t obligations forff our defiff ned benefiff t plans: (in millions) Accumulated benefiff t obligation forff Pension plans with accumulated benefiff t obligations in excess of plan assets: all defiff ned benefiff t plans Accumulated benefiff t obligation Projected benefiff t obligations forff assets all plans with projected benefiff t obligations in excess of plan 71 May 28, 2023 May 29, 2022 4.0 $ 3.7 $ 3.7 3.7 4.0 4.0 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The folff lowing tabla e presents the weighted-average assumptions used to determine benefiff t obligations and net expense: Defiff ned Benefiff t Plans Postretirement Benefiff t Plan May 28, 2023 May 29, 2022 May 28, 2023 May 29, 2022 Weighted-average assumptions used to determine benefiff t obligations (1) Discount rate 4.87 % 4.32 % 5.07 % 4.51 % Weighted-average assumptions used to determine net expense (2) Discount rate 4.32 % 2.46 % 4.51 % 2.86 % (1) Determined as of the end of fiff scal year. (2) Determined as of the beginning of fiff scal year. We set the discount rate assumption annually forff each of the plans at their valuation dates to reflff ect the yield of high-quality fiff xed-income debt instrumrr assumption as of fiff scal year end, we selected the most recent Pri-2012 mortality tabla es and MP-2021 mortality improvement scale to measure the benefiff t obligations. ity of the plan benefiff ts. Additionally, forff ents, with lives that appr oximate the maturtt our mortality a Components of net periodic benefiff t cost included in earnings are as folff lows: (in millions) Service cost Interest cost Amortization of unrecognized prior service cost Recognized net actuatt rial loss Net pension and postretirement cost (benefiff t) Defiff ned Benefiff t Plans Fiscal Year Ended May 29, 2022 May 30, 2021 May 28, 2023 Postretirement Benefiff t Plan Fiscal Year Ended May 29, 2022 May 28, 2023 May 30, 2021 $ $ — $ — $ — $ — $ — $ 0.1 — 0.1 0.2 $ 0.1 — 0.1 0.2 $ 0.1 — 0.1 0.2 $ 0.7 — — 0.7 $ 0.4 — 0.4 0.8 $ — 0.6 (0.3) 1.9 2.2 The amortization of the net actuatt rial loss component of our fiff scal 2024 net periodic benefiff t cost forff the remaining defiff ned benefiff t plan and postretirement benefiff t plan is expected to be appr a oximately $0.1 million and $0.0 million, respectively. The folff lowing benefiff t payments are expected to be paid between fiff scal 2024 and fiff scal 2033: (in millions) 2024 2025 2026 2027 2028 2029-2033 Defiff ned Benefiff t Plan Postretirement Benefiff t Plan $ $ 0.4 0.4 0.4 0.4 0.4 1.6 1.6 1.6 1.5 1.4 1.3 5.4 Defe iff nii ed ConCC trtt ibui titt on PlPP anll We have a defiff ned contribution (401(k)) plan (Darden Savings Plan) covering most employees age 18 and older. We match a profiff t sharing contribution forff participants with at least one year of service up to 6 percent of compensation, based on our perforff mance. The contributions forff each dollar contributed by the participant. The Darden Savings Plan also match ranges frff om a minimum of $0.25 to $1.20 forff eligible participants equal to 1.5 percent of the participant’s compensation. The provides forff Darden Savings Plan had net assets of $1.2 billion at May 28, 2023, and $1.1 billion at May 29, 2022. Expense recognized in fiff scal 2023, 2022 and 2021 was $37.7 million, $49.0 million and $14.4 million, respectively. Employees classififf ed as “highly compensated” under the IRC are not eligible to participate in the Darden Savings Plan. Instead, highly compensated employees are eligible to participate in a separate non-qualififf ed defeff rred compensation (FlexComp) plan. The FlexComp plan allows eligible employees to defeff r the payment of part of their annual salaryrr and all or part of their annual bonus and provides forff awards that 72 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) appr oximate the matching contributions that participants would have received had they been eligible to participate in the Darden a Savings Plan, as well as an additional retirement contribution amount. Amounts payabla e to highly compensated employees under the FlexComp plan totaled $252.4 million and $249.5 million at May 28, 2023 and May 29, 2022, respectively. These amounts are included in other current liabia lities on our accompanying consolidated balance sheets. NOTE 14 - STOCK-BASED COMPENSATION In September 2015, our shareholders appr a oved the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (2015 Plan). All ther equity grants oval are made under the 2015 Plan. No furff equity grants subject to FASB ASC Topic 718 aftff er the date of appr a aftff er that date are permitted under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, the RARR RE Hospitality International, Inc. Amended and Restated 2002 Long-Term Incentive Plan or any other prior stock option and/or stock grant plans (collectively, the Prior Plans). The 2015 Plan and the Prior Plans are administered by the Compensation Committee of the Board of Directors. The 2015 Plan provides forff the issuance of up to 7.6 million common shares in connection with the granting of non- qualififf ed stock options, restricted stock, restricted stock units (RSUs), perforff mance-based restricted stock units (PRSUs) and other stock-based awards such as Darden stock units to employees, consultants and non-employee directors. As of May 28, 2023, appr a vest and be exercised in accordance with their terms. oximately 0.1 million shares may be issued under outstanding awards that were granted under the Prior Plans and may still Stock-based compensation expense included in continuing operations was as folff lows: (in millions) Stock options Restricted stock units Darden stock units Equity-settled perforff mance-based restricted stock units Employee stock purchase plan Director compensation program/other Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 $ 6.3 $ 6.6 $ 7.4 34.8 14.3 2.8 1.9 7.5 26.9 15.3 2.7 1.5 8.6 9.5 32.6 17.9 2.5 1.3 72.4 Total $ 67.5 $ 60.5 $ Excess income tax benefiff ts related to the exercise of stock options and vesting of other equity-settled stock-based compensation recognized in income tax expense frff om continuing operations was as folff lows: (in millions) Income tax benefiff ts Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 $ 6.5 $ 11.9 $ 14.0 The weighted-average faff ir value of non-qualififf ed stock options and the related assumptions used in the Black-Scholes model to record stock-based compensation are as folff lows: Weighted-average faff ir value Dividend yield Expected volatility of stock Risk-frff ee interest rate Expected option lifeff (in years) Granted in Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 $ 36.20 $ 41.02 $ 20.07 3.8 % 42.0 % 2.8 % 5.9 3.2 % 39.6 % 0.9 % 6.3 3.0 % 37.3 % 0.4 % 6.4 Weighted-average exercise price per share $ 121.47 $ 148.20 $ 78.84 73 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The folff lowing tabla e presents a summaryrr of our stock option activity as of and forff the year ended May 28, 2023: Outstanding beginning of period Options granted Options exercised Options canceled Outstanding end of period Exercisabla e Options (in millions) 1.81 0.18 (0.37) — 1.62 0.91 Weighted- Average Exercise Price Per Share $89.97 121.47 65.18 — $99.04 $89.40 Weighted-Average Remaining l Lifeff Contractuat (Yrs) 5.75 5.79 4.29 Aggregate Intrinsic Value (in millions) $68.8 $100.6 $64.9 The total intrinsic value of options exercised during fiff scal 2023, 2022 and 2021 was $29.7 million, $41.5 million and $57.3 million, respectively. Cash received frff om option exercises during fiff scal 2023, 2022 and 2021 was $24.2 million, $29.7 million and $36.6 million, respectively. Stock options generally vest over 4 years and have a maximum contractuat l period of 10 years frff om the date of grant. We settle employee stock option exercises with authorized but unissued shares of Darden common stock. As of May 28, 2023, there was $4.8 million of unrecognized compensation cost related to unvested stock options granted under our stock plans. This cost is expected to be recognized over a weighted-average period of 2.3 years. The total faff ir value of stock options that vested during fiff scal 2023 was $6.3 million. Restricted stock and RSUs are granted at a value equal to the market price of our common stock on the date of grant, and are amortized over their service periods which generally range frff om one to three years. Restrictions with regard to restricted stock and RSUs lapsa e at the end of their service periods at which time employees receive unrestricted shares of Darden stock. The folff lowing tabla e presents a summaryrr of our RSU activity as of and forff the fiff scal year ended May 28, 2023: Outstanding beginning of period Shares granted Shares vested Shares canceled Outstanding end of period Shares (in millions) 0.25 Weighted-Average Grant Date Fair Value Per Share $107.00 0.08 (0.05) — 0.28 127.39 122.80 — $109.70 As of May 28, 2023, there was $6.7 million of unrecognized compensation cost related to unvested RSUs granted under our stock plans. This cost is expected to be recognized over a weighted-average period of 1.8 years. The total faff ir value of RSUs that vested during fiff scal 2023, 2022 and 2021 was $6.6 million, $7.0 million and $10.6 million, respectively. Darden stock units are granted at a value equal to the market price of our common stock on the date of grant and will be settled in cash at the end of their vesting periods, which typically range frff om three to fiff ve years, at the then market price of our common stock. Compensation expense is measured based on the market price of our common stock each period, is amortized over the vesting period and the vested portion is carried as a liabia lity on our accompanying consolidated balance sheets. We also enter into equity forff ward contracts to hedge the risk of changes in futff urt e cash flff ows associated with the unvested Darden stock units granted (see Note 7 forff additional inforff mation). 74 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The folff lowing tabla e presents a summaryrr of our Darden stock unit activity as of and forff the fiff scal year ended May 28, 2023: (All units settled in cash) Outstanding beginning of period Units granted Units vested Units canceled Outstanding end of period Units (in millions) Weighted-Average Fair Value Per Unit 0.82 0.21 (0.16) (0.06) 0.81 $126.04 123.33 121.56 119.13 $161.28 As of May 28, 2023, our total Darden stock unit liabia lity was $79.2 million, including $22.9 million recorded in other current liabia lities and $56.3 million recorded in other liabia lities on our consolidated balance sheets. As of May 29, 2022, our total Darden stock unit liabia lity was $55.5 million, including $17.6 million recorded in other current liabia lities and $37.9 million recorded in other liabia lities on our consolidated balance sheets. Based on the value of our common stock as of May 28, 2023, there was $34.5 million of unrecognized compensation cost related to Darden stock units granted under our incentive plans. This cost is expected to be recognized over a weighted-average period of 2.1 years but the amount that vests is ultimately dependent on the value of Darden stock at the vesting date. The total faff ir value of Darden stock units that vested during fiff scal 2023 was $19.3 million. Relative total shareholder returt n PRSUs are equity-settled awards that vest over the service period which ranges frff om three th years, and the number of units that actuatt ff to four in the award agreement. The awards vest based on the achievement of market-based targets, are measured based on estimated faff ir value as of the date of grant using a Monte Carlo simulation, and are amortized over the service period. Additionally, under special circumstances, Darden grants equity-settled PRSUs which are earned based on specififf c perforff mance criteria. These PRSUs are measured based on a value equal to the market price of our common stock on the date of grant, and are amortized over the service periods which generally range frff om two to six years. lly vest is determined based on the achievement of perforff mance criteria set forff The weighted-average grant date faff ir value of equity-settled PRSUs and the related assumptions used in the Monte Carlo simulation to record stock-based compensation are as folff lows: Dividend yield (1) Expected volatility of stock Risk-frff ee interest rate Expected option lifeff (in years) Weighted-average grant date faff ir value per unit (1) Assumes a reinvestment of dividends. Granted in Fiscal Year Ended May 28, 2023 May 29, 2022 May 30, 2021 0.0 % 55.5 % 2.9 % 2.8 0.0 % 53.4 % 0.4 % 2.8 0.0 % 50.5 % 0.1 % 2.8 $ 137.73 $ 172.34 $ 83.46 75 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The folff lowing tabla e presents a summaryrr of our equity-settled PRSU activity as of and forff the fiff scal year ended May 28, 2023: Outstanding beginning of period Units granted Units granted perforff mance impact Units vested Units canceled Outstanding end of period Units (in millions) 0.41 0.10 (0.04) (0.11) — 0.36 Weighted-Average Grant Date Fair Value Per Unit $114.10 121.47 115.97 107.04 — $123.45 As of May 28, 2023, there was $9.4 million of unrecognized compensation cost related to unvested equity-settled PRSUs granted under our stock plans. This cost is expected to be recognized over a weighted-average period of 2.2 years. The total faff ir value of equity-settled PRSUs that vested during fiff scal 2023 was $13.3 million. We maintain an Employee Stock Purchase Plan to provide eligible employees who have completed one year of service t an opportuni (excluding certain employees who are employed less than fulff subsidiary)rr certain limitations. Under the plan, up to an aggregate of 6.2 million shares are availabla e forff price that is 85.0 percent of the faff ir market value of our common stock on either the fiff rst or last trading day of each calendar quarter, whichever is lower. Cash received frff om employees pursuant to the plan during fiff scal 2023, 2022 and 2021 was $11.2 million, $10.5 million and $9.6 million, respectively. ty to invest up to $5.0 thousand per calendar quarter to purchase shares of our common stock, subject to purchase by employees at a purchase l time or own 5 percent or more of our capia tal stock or that of any NOTE 15 - COMMITMENTS AND CONTINGENCIES As collateral forff perforff mance on contracts and as credit guarantees to banks and insurers, we were contingently liabla e forff guarantees of subsidiaryrr obligations under standby letters of credit. At May 28, 2023 and May 29, 2022, we had $85.3 million and $104.8 million, respectively, of standby letters of credit related to workers’ compensation and general liabia lities accruerr d in our consolidated fiff nancial statements. At May 28, 2023 and May 29, 2022, we had $15.2 million and $18.8 million, respectively, of surety bonds related to other payments. Most surety bonds are renewabla e annually. At May 28, 2023 and May 29, 2022, we had $82.0 million and $101.0 million, respectively, of guarantees associated with leased properties that have been assigned to third parties. These amounts represent the maximum potential amount of futff urt e payments under the guarantees. The faff ir value of the maximum potential payments discounted at our weighted-average cost of capia tal at May 28, 2023 and May 29, 2022, amounted to $68.4 million and $83.6 million, respectively. In the event of defaff ult by a third party, the indemnity and defaff ult clauses in our assignment agreements govern our abia lity to recover frff om and pursue the third party forff assignment agreements, except to the extent that the assignment allows us to repossess the building and personal property. These guarantees expire over their respective lease terms, which range frff om fiff scal 2024 through fiff scal 2034. damages incurred as a result of its defaff ult. We do not hold any third-party assets as collateral related to these We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinaryrr course of our business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims frff om guests, employees and others related to operational issues common to the restaurant industry,rr and can also involve infrff ingement of,ff or challenges to, our trademarks. While the resolution of a lawsuit, proceeding or claim may have an impact on our fiff nancial the period in which it is resolved, we believe that the fiff nal disposition of the lawsuits, proceedings and claims in which results forff we are currently involved, either individually or in the aggregate, will not have a material adverse effff eff ct on our fiff nancial position, results of operations or liquidity. NOTE 16 - OTHER SUBSEQUENT EVENT On June 21, 2023, the Board of Directors declared a cash dividend of $1.31 per share to be paid August 1, 2023 to all shareholders of record as of the close of business on July 10, 2023. 76 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in or disagreements with accountants on accounting and fiff nancial disclosure requiring disclosure under this Item. Item 9A. CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including our Chief Executive Offff iff cer and our Chief Financial Offff iff cer, we evaluated the effff eff ctiveness of the design and operation of our disclosure controls and procedures (as defiff ned in RulRR e 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act) as of May 28, 2023, the end of the period covered by this report. Based on that evaluation, the Chief Executive Offff iff cer and Chief Financial Offff iff cer concluded that our disclosure controls and procedures were effff eff ctive as of May 28, 2023. During the fiff scal quarter ended May 28, 2023, there were no changes in our internal control over fiff nancial reporting (as defiff ned in RulRR e 13a-15(f)ff under the Exchange Act) that have materially affff eff cted, or are reasonabla y likely to materially affff eff ct, our internal control over fiff nancial reporting. The annual report of our management on internal control over fiff nancial reporting, and the audit report of KPMG LLP, our independent registered public accounting fiff rm, regarding our internal control over fiff nancial reporting are included in this Annual Report under the capta ion “Item 8 - Financial Statements and Supplementaryrr Data.” Item 9B. OTHER INFORMATION None. PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORARR TE GOVERNANCE The inforff mation contained in the sections entitled “Executive Offff iff cers of the Registrant,” “Proposal 1 – Election of Nine Directors From the Named Director Nominees,” “Meetings of the Board of Directors and Its Committees” and “Corpor Governance and Board Administration” in our defiff nitive Proxy Statement forff rr incorpor ate our 2023 Annual Meeting of Shareholders is ated herein by refeff rence. rr All of our employees are subject to Darden’s Code of Conduct (Employee Code of Conduct). We also have a Code of Ethics forff CEO and Senior Financial Offff iff cers (CEO and Senior Financial Offff iff cer Code of Ethics) that highlights specififf c responsibilities of our CEO and senior fiff nancial offff iff cers. We also have a Code of Business Conduct and Ethics forff members of the Board of Directors (the Board Code of Conduct, and together with the Employee Code of Conduct and the CEO and Senior Financial Offff iff cer Code of Ethics, our Codes of Business Conduct and Ethics). These documents are posted on our internet website at www.darden.com and are availabla e in print frff ee of charge to any shareholder who requests them. We will disclose any amendments to or waivers of these Codes of Business Conduct and Ethics forff Offff iff cers on our website. directors, executive offff iff cers or Senior Financial We also have adopted a set of Corpor rr ate Governance Guidelines and charters forff all of our Board committees: the Audit Committee, which was establa ished in accordance with Section 5(a)(58)(A) of the Exchange Act, Compensation Committee, Nominating and Governance Committee and Finance Committee. The Corpor are availabla e on our website at www.darden.com under the Investors - Governance taba and in print frff ee of charge to any shareholder who requests them. Written requests forff and committee charters should be addressed to Darden Restaurants, Inc., 1000 Darden Center Drive, Orlando, Florida 32837, Attention: Corpor our Code of Business Conduct and Ethics, Corpor ate Governance Guidelines and committee charters ate Governance Guidelines ate Secretary.rr rr rr rr Item 11. EXECUTIVE COMPENSATION The inforff mation contained in the sections entitled “Director Compensation,” “Executive Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Compensation Committee Interlocks and Insider Participation” and “Corpor Shareholders is incorpor ate Governance and Board Administration” in our defiff nitive Proxy Statement forff our 2023 Annual Meeting of ated herein by refeff rence. rr rr 77 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The inforff mation contained in the sections entitled “Stock Ownership of Principal Shareholders,” “Stock Ownership of Management” and “Equity Compensation Plan Inforff mation” in our defiff nitive Proxy Statement forff Shareholders is incorpor ated herein by refeff rence. rr our 2023 Annual Meeting of Item 13. CERTAIN RELATIONSHIPS AND RELATED TRARR NSACTIONS, AND DIRECTOR INDEPENDENCE The inforff mation contained in the sections entitled “Meetings of the Board of Directors and Its Committees” and “Corpor ate rr our 2023 Annual Meeting of Shareholders is Governance and Board Administration” in our defiff nitive Proxy Statement forff rr incorpor ated herein by refeff rence. Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVR ICES The inforff mation contained in the section entitled “Independent Registered Public Accounting Firm Fees and Services” in our defiff nitive Proxy Statement forff our 2023 Annual Meeting of Shareholders is incorpor rr ated herein by refeff rence. Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Documents fiff led as part of this report: 1. Financial Statements: PART IV All fiff nancial statements. See Index to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. 2. Financial Statement Schedules: a Not appl icabla e. 3. Exhibits: The exhibits listed in the accompanying Exhibit Index are fiff led as part of this Form 10-K and incorpor rr ated herein by refeff rence. Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain instrumrr of our long-term debt are not fiff led, and in lieu thereof,ff we agree to furff nish copies thereof to the Securities and Exchange Commission upon request. The Exhibit Index specififf cally identififf es with an asterisk each management contract or compensatoryrr plan or arrangement required to be fiff led as an exhibit to this Form 10-K. We will furff nish copies of any exhibit listed on the Exhibit Index upon request upon the payment of a reasonabla e feff e to cover our expenses in furff nishing such exhibits. ents defiff ning the rights of holders of certain 78 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES Date: July 21, 2023 DARDEN RESTAURAR NAA TS, INC. By: /s/ Ricardo Cardenas Ricardo Cardenas, President and Chief Executive Offff iff cer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the folff lowing persons on behalf of the Registrant and in the capaa cities and on the dates indicated. Signaturtt e g /s/ Ricardo Cardenas Ricardo Cardenas /s/ Raja esh Vennam Raja esh Vennam /s/ John W. Madonna John W. Madonna /s/ Margaret Shan Atkins* Margaret Shan Atkins /s/ Juliana L. Chugg* Juliana L. Chugg /s/ James P. Fogarty* James P. Fogarty /s/ Cynthia T. Jamison* Cynthia T. Jamison /s/ Eugene I. Lee, Jr.* Eugene I. Lee, Jr. /s/ Nana Mensah* Nana Mensah /s/ William S. Simon* William S. Simon /s/ Charles M. Sonsteby* Charles M. Sonsteby /s/ Timothy J. Wilmott* Timothy J. Wilmott *By: /s/ Anthony G. Morrow Anthony G. Morrow, Attorney-In-Fact July 21, 2023 Title Director, President and Chief Executive Offff iff cer (Principal executive offff iff cer) Date July 21, 2023 Senior Vice President, Chief Financial Offff iff cer (Principal fiff nancial offff iff cer) July 21, 2023 Senior Vice President, Corpor (Principal accounting offff iff cer) rr ate Controller July 21, 2023 Director Director Director Director Director and Chairman Director Director Director Director 79 Exhibit Number 3.1 3.2 4.1 4.2 4.3 4.4 4.5 4.6 4.7 *10.1 *10.2 *10.3 *10.4 *10.5 *10.6 *10.7 EXHIBIT INDEX Title Amended and Restated Articles of Incorpor 3.1 to our Current Report on Form 8-K fiff led July 5, 2016). rr ation effff eff ctive June 29, 2016 (incorpor rr ated by refeff rence to Exhibit Bylaws as amended effff eff ctive June 24, 2020 (incorpor Form 8-K fiff led June 25, 2020). rr ated by refeff rence to Exhibit 3.1 to our Current Report on Indenturt e dated as of Januaryrr 1, 1996, between Darden Restaurants, Inc. and Computershare Trusrr National Association, as successor Trusrr rr Statement on Form S-3 (Commission File No. 333-146582) fiff led October 9, 2007). ated by refeff rence to Exhibit 4.1 to our Registration tee (incorpor t Company, Offff iff cers’ Certififf cate and Authentication Order, dated August 9, 2005, forff (which includes the forff m of Note) issued pursuant to the Indenturt e dated as of Januaryrr 1, 1996, between Darden Restaurants, Inc. and Computershare Trusrr tee rr (incorpor ated by refeff rence to Exhibit 4.1 to our Current Report on Form 8-K fiff led August 11, 2005). t Company, National Association, as successor Trusrr the 6.000% Senior Notes due 2035 Offff iff cers’ Certififf cate and Authentication Order, dated October 10, 2007, forff 2037 (which includes the forff m of Note) issued pursuant to the Indenturt e dated as of Januaryrr 1, 1996, between Darden Restaurants, Inc. and Computershare Trusrr rr (incorpor t Company, National Association, as successor Trusrr ated by refeff rence to Exhibit 4.3 to our Current Report on Form 8-K fiff led October 16, 2007). the 6.800% Senior Notes due tee Offff iff cers’ Certififf cate and Authentication Order dated April 18, 2017 forff (which includes the forff m of Note) issued pursuant to the Indenturt e dated as of Januaryrr 1, 1996, between Darden Restaurants, Inc. and Computershare Trusrr tee rr (incorpor 2017). ated by refeff rence to Exhibit 4.1 to our Amendment to Current Report on Form 8-K/KK A fiff led April 18, t Company, National Association, as successor Trusrr the 3.850% Senior Notes due 2027 First Supplemental Indenturt e dated as of Februarr between Darden Restaurants, Inc. and Computershare Trusrr Trusrr tee (incorpor rr ryrr 20, 2018 to the Indenturt e dated as of Januaryrr 1, 1996, t Company, National Association, as successor ated by refeff rence to Exhibit 4.1 to our Current Report on Form 8-K fiff led Februarr ryrr 22, 2018). Offff iff cers’ Certififf cate and Authentication Order dated Februarr (which includes the forff m of Note) issued pursuant to the Indenturt e dated as of Januaryrr 1, 1996, as amended and supplemented by the First Supplemental Indenturt e dated as of Februarr t Company, National Association, as successor Trusrr Restaurants, Inc. and Computershare Trusrr by refeff rence to Exhibit 4.1 to our Amendment to Current Report on Form 8-K/KK A fiff led Februarr ryrr 20, 2018 between Darden tee (incorpor ryrr 22, 2018). the 4.550% Senior Notes due 2048 ryrr 22, 2018 forff rr ated Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorpor May 26, 2019). ated by refeff rence to Exhibit 4.7 to our Annual Report on Form 10-K forff the fiff scal year ended rr Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorpor our Current Report on Form 8-K fiff led September 20, 2013). rr ated by refeff rence to Exhibit 10 to Form of Non-Qualififf ed Stock Option Award Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorpor forff ated by refeff rence to Exhibit 10(o) to our Annual Report on Form 10-K the fiff scal year ended May 31, 2009). rr Form of annual Non-employee Director Restricted Stock Units Award Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorpor Annual Report on Form 10-K forff the fiff scal year ended May 31, 2015). ated by refeff rence to Exhibit 10(mm) to our rr Form of initial Non-employee Director Restricted Stock Units Award Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorpor Annual Report on Form 10-K forff the fiff scal year ended May 31, 2015). ated by refeff rence to Exhibit 10(nn) to our rr Form of quarterly Non-employee Director Restricted Stock Units Award Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorpor Annual Report on Form 10-K forff the fiff scal year ended May 31, 2015). ated by refeff rence to Exhibit 10(oo) to our rr Form of annual Non-employee Director Stock Option Award Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorpor ated by refeff rence to Exhibit 10(pp) to our Annual Report on Form 10-K forff the fiff scal year ended May 31, 2015). rr Form of initial Non-employee Director Stock Option Award Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorpor Form 10-K forff ated by refeff rence to Exhibit 10(qq) to our Annual Report on the fiff scal year ended May 31, 2015). rr 80 *10.8 *10.9 *10.10 *10.11 *10.12 *10.13 *10.14 *10.15 *10.16 *10.17 *10.18 *10.19 *10.20 *10.21 *10.22 *10.23 *10.24 *10.25 *10.26 Form of Change in Control Agreement (incorpor Form 10-K forff the fiff scal year ended May 31, 2015). rr ated by refeff rence to Exhibit 10(rr) to our Annual Report on Form of Non-Qualififf ed Stock Option Agreement under the Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended (incorpor fiff scal quarter ended August 30, 2015). ated by refeff rence to Exhibit 10.12 to our Quarterly Report on Form 10-Q forff rr the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor Current Report on Form 8-K fiff led September 22, 2015). rr ated by refeff rence to Exhibit 10.1 to our Form of Nonqualififf ed Stock Option Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor quarter ended August 30, 2015). ated by refeff rence to Exhibit 10.13 to our Quarterly Report on Form 10-Q forff rr the fiff scal Form of Restricted Stock Unit Award Agreement forff Non-Employee Directors (Quarterly Grant in Lieu of Cash Retainer) under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor Exhibit 10.14 to our Quarterly Report on Form 10-Q forff the fiff scal quarter ended August 30, 2015). ated by refeff rence to rr Form of Restricted Stock Unit Award Agreement forff Non-Employee Directors under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor Form 10-Q forff ated by refeff rence to Exhibit 10.15 to our Quarterly Report on the fiff scal quarter ended August 30, 2015). rr Form of Nonqualififf ed Stock Option Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor year ended May 29, 2016). ated by refeff rence to Exhibit 10.54 to our Annual Report on Form 10-K forff the fiff scal rr Form of Restricted Stock Unit Award Agreement forff Non-Employee Directors under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor ated by refeff rence to Exhibit 10.58 to our Annual Report on Form 10-K forff the fiff scal year ended May 29, 2016). rr Form of Nonqualififf ed Stock Option Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor year ended May 28, 2017). ated by refeff rence to Exhibit 10.40 to our Annual Report on Form 10-K forff the fiff scal rr Form of Restricted Stock Unit Award Agreement forff Non-Employee Directors under the Darden Restaurants, ated by refeff rence to Exhibit 10.44 to our Annual Report on Form Inc. 2015 Omnibus Incentive Plan (incorpor 10-K forff the fiff scal year ended May 28, 2017). rr Amendment to Darden Restaurants, Inc. 2015 Omnibus Incentive Plan, adopted May 23, 2018 (incorpor by refeff rence to Exhibit 10.34 to our Annual Report on Form 10-K forff the fiff scal year ended May 27, 2018). ated rr RARR RE Hospitality International, Inc. Defeff rred Compensation Plan, as amended and restated effff eff ctive as of Januaryrr 1, 2009 (incorpor year ended May 27, 2018). ated by refeff rence to Exhibit 10.36 to our Annual Report on Form 10-K forff rr the fiff scal Amendment to the RARR RE Hospitality Management [sic], Inc. Defeff rred Compensation Plan, effff eff ctive July 28, 2014 (incorpor the fiff scal year ended May 27, 2018). ated by refeff rence to Exhibit 10.37 to our Annual Report on Form 10-K forff rr Form of Perforff mance Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015 ated by refeff rence to Exhibit 10.34 to our Annual Report on Form 10-K forff Omnibus Incentive Plan (incorpor the fiff scal year ended May 26, 2019). rr Form of Perforff mance Stock Unit Award Agreement forff Eugene I. Lee, Jr., under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor ated by refeff rence to Exhibit 10.35 to our Annual Report on Form 10-K the fiff scal year ended May 26, 2019). forff rr Form of Restricted Stock Unit Award Agreement forff Eugene I. Lee, Jr., under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor the fiff scal year ended May 26, 2019). forff ated by refeff rence to Exhibit 10.36 to our Annual Report on Form 10-K rr Form of Nonqualififf ed Stock Option Award Agreement forff Eugene I. Lee, Jr., under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor ated by refeff rence to Exhibit 10.37 to our Annual Report on Form 10-K forff the fiff scal year ended May 26, 2019). rr Amended and Restated Darden Restaurants, Inc. Benefiff ts Trusrr and between Darden Restaurants, Inc. and Wells Fargo Bank, National Association (incorpor the fiff scal year ended May 26, 2019). to Exhibit 10.38 to our Annual Report on Form 10-K forff t Agreement, dated as of October 1, 2017, by ated by refeff rence rr Amended and Restated RARR RE Hospitality International, Inc. Defeff rred Compensation Plan Trusrr dated as of October 1, 2017, by and between Darden Restaurants, Inc. and Wells Fargo Bank, National Association (incorpor year ended May 26, 2019). ated by refeff rence to Exhibit 10.39 to our Annual Report on Form 10-K forff rr the fiff scal t Agreement, 81 *10.27 *10.28 *10.29 *10.30 *10.31 *10.32 *10.33 *10.34 *10.35 *10.36 10.37 *10.38 10.39 10.40 10.41 21 23 24 31(a) 31(b) 32(a) 32(b) Second Amendment to the RARR RE Hospitality International, Inc. Defeff rred Compensation Plan (as amended and restated effff eff ctive Januaryrr 1, 2009), effff eff ctive as of June 1, 2019 (incorpor 10.42 to our Annual Report on Form 10-K forff the fiff scal year ended May 26, 2019). ated by refeff rence to Exhibit rr Form of Perforff mance Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor ated by refeff rence to Exhibit 10.43 to our Annual Report on Form 10-K forff the fiff scal year ended May 31, 2020). rr Form of Nonqualififf ed Stock Option Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor year ended May 31, 2020). ated by refeff rence to Exhibit 10.44 to our Annual Report on Form 10-K forff the fiff scal rr Form of Restricted Stock Unit Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus Incentive the fiff scal year ended Plan (incorpor May 31, 2020). ated by refeff rence to Exhibit 10.45 to our Annual Report on Form 10-K forff rr Form of Restricted Stock Award Agreement under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor the fiff scal year ended May rr 31, 2020). ated by refeff rence to Exhibit 10.46 to our Annual Report on Form 10-K forff Form of Perforff mance Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor fiff scal quarter ended August 30, 2020). ated by refeff rence to Exhibit 10.47 to our Quarterly Report on Form 10-Q forff rr Form of Perforff mance Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor ated by refeff rence to Exhibit 10.43 to our Annual Report on Form 10-K forff the fiff scal year ended May 30, 2021). rr Form of Perforff mance Stock Unit Award Agreement forff Eugene I. Lee, Jr., under the Darden Restaurants, Inc. ated by refeff rence to Exhibit 10.44 to our Annual Report on Form 10-K 2015 Omnibus Incentive Plan (incorpor the fiff scal year ended May 30, 2021). forff rr Darden Restaurants, Inc. Annual Incentive Plan, amended and restated effff eff ctive as of May 31, 2021 (incorpor rr 30, 2021). ated by refeff rence to Exhibit 10.45 to our Annual Report on Form 10-K forff the fiff scal year ended May Darden Restaurants, Inc. Amended and Restated FlexComp Plan, amended and restated as of June 1, 2021 (incorpor rr 29, 2022). ated by refeff rence to Exhibit 10.39 to our Annual Report on Form 10-K forff the fiff scal year ended May Credit Agreement, dated as of September 10, 2021, among Darden Restaurants, Inc., certain lenders party thereto and Bank of America, N.A., as administrative agent (incorpor Current Report on Form 8-K fiff led September 13, 2021). ated by refeff rence to Exhibit 10.1 to our rr Form of Restricted Stock Unit Award Agreement (United States) under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan (incorpor the fiff scal year ended May 29, 2022). ated by refeff rence to Exhibit 10.41 to our Annual Report on Form 10-K forff rr Agreement and Plan of Merger, dated as of May 2, 2023, by and among Darden Restaurants, Inc., RubyRR Acquisition Corpor Current Report on Form 8-K fiff led May 3, 2023). ation and RutRR h’s Hospitality Group, Inc. (incorpor ated by refeff rence to Exhibit 2.1 to our rr rr Amendment No. 1 to the Revolving Credit Agreement among Darden Restaurants, Inc., certain lenders party thereto and Bank of America, N.A., as administrative agent, dated as of May 31, 2023 (incorpor refeff rence to Exhibit 10.1 to our Current Report on Form 8-K fiff led June 1, 2023). ated by rr Term Loan Agreement among Darden Restaurants, Inc., certain lenders party thereto and Bank of America, N.A., as administrative agent, dated as of May 31, 2023 (incorpor Current Report on Form 8-K fiff led June 1, 2023). ated by refeff rence to Exhibit 10.2 to our rr Subsidiaries of Darden Restaurants, Inc. Consent of Independent Registered Public Accounting Firm. Power of Attorney. Certififf cation of Chief Executive Offff iff cer pursuant to Section 302 of the Sarbar nes-Oxley Act of 2002. Certififf cation of Chief Financial Offff iff cer pursuant to Section 302 of the Sarbar nes-Oxley Act of 2002. Certififf cation of Chief Executive Offff iff cer pursuant to Section 906 of the Sarbar nes-Oxley Act of 2002. Certififf cation of Chief Financial Offff iff cer pursuant to Section 906 of the Sarbar nes-Oxley Act of 2002. 101.INS XBRL Instance Document 101.SCH XBRL Schema Document 82 101.CAL XBRL Calculation Linkbase Document 101.DEF XBRL Defiff nition Linkbase Document 101.LAB XBRL Labea l Linkbase Document 101.PRE XBRL Presentation Linkbase Document * Items marked with an asterisk are management contracts or compensatoryrr plans or arrangements required to be fiff led as an exhibit pursuant to Item 15 of Form 10-K and Item 601(b)(10)(iii)(A) of Regulation S-K. 83 [This Page Intentionally Left Blank] 

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