DARDEN RESTAURANTS INC (Form: 10-Q, Received: 04/04/2011 16:49:38)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 27, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

1-13666

Commission File Number

DARDEN RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)


Florida		59-3305930
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1000 Darden Center Drive, Orlando, Florida		32837
(Address of principal executive offices)		(Zip Code)

407-245-4000

(Registrant’s telephone number, including area code)

Not applicable (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

Number of shares of common stock outstanding as of March 15, 2011: 136,430,120 (excluding 150,386,006 shares held in our treasury).

DARDEN RESTAURANTS, INC.

TABLE OF CONTENTS


			Page
Part I -	Financial Information
	Item 1.	Financial Statements (Unaudited)		3
		Consolidated Statements of Earnings		3
		Consolidated Balance Sheets		4
		Consolidated Statements of Changes in Stockholders’ Equity and Accumulated Other Comprehensive Income (Loss)		5
		Consolidated Statements of Cash Flows		6
		Notes to Consolidated Financial Statements		7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27
	Item 4.	Controls and Procedures		27

Part II -	Other Information
	Item 1.	Legal Proceedings		28
	Item 1A.	Risk Factors		28
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		28
	Item 6.	Exhibits		29

Signature				30

Index to Exhibits				31

Cautionary Statement Regarding Forward-Looking Statements

Statements in this report regarding the expected net increase in the number of our restaurants, U.S. same-restaurant sales, total sales growth, diluted net earnings per share growth, and capital expenditures in fiscal 2011, and all other statements that are not historical facts, including without limitation statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of Darden Restaurants, Inc. and its subsidiaries that are preceded by, followed by or that include words such as “may,” “will,” “expect,” “intend,” “anticipate,” “continue,” “estimate,” “project,” “believe,” “plan” or similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This statement is included for purposes of complying with the safe harbor provisions of that Act. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements for any reason to reflect events or circumstances arising after such date. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. For further information regarding such forward-looking statements, risks and uncertainties, please see “Forward-Looking Statements” under Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report.

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(In millions, except per share data)

(Unaudited)


	Quarter Ended						Nine Months Ended
	February 27, 2011			February 28, 2010			February 27, 2011			February 28, 2010

Sales	$	1,976.8		$	1,874.0		$	5,509.8		$	5,249.3
Costs and expenses:
Cost of sales:
Food and beverage		571.3			539.3			1,573.5			1,510.9
Restaurant labor		621.2			613.0			1,771.9			1,744.7
Restaurant expenses		285.9			277.9			839.9			802.8

Total cost of sales, excluding restaurant depreciation and amortization of $74.5, $73.2, $219.0 and $212.4, respectively	$	1,478.4		$	1,430.2		$	4,185.3		$	4,058.4
Selling, general and administrative		194.8			169.5			555.9			510.7
Depreciation and amortization		80.5			78.1			235.2			224.8
Interest, net		24.0			20.8			72.1			69.0


Total costs and expenses	$	1,777.7		$	1,698.6		$	5,048.5		$	4,862.9


Earnings before income taxes		199.1			175.4			461.3			386.4
Income taxes		(47.4	)		(40.6	)		(120.5	)		(95.4	)

Earnings from continuing operations	$	151.7		$	134.8		$	340.8		$	291.0
Losses from discontinued operations, net of tax benefit of $0.3, $0.3, $1.2 and $1.3, respectively		(0.5	)		(0.5	)		(2.0	)		(2.1	)


Net earnings	$	151.2		$	134.3		$	338.8		$	288.9


Basic net earnings per share:
Earnings from continuing operations	$	1.11		$	0.97		$	2.48		$	2.09
Losses from discontinued operations		—			(0.01	)		(0.02	)		(0.01	)

Net earnings	$	1.11		$	0.96		$	2.46		$	2.08


Diluted net earnings per share:
Earnings from continuing operations	$	1.08		$	0.95		$	2.42		$	2.05
Losses from discontinued operations		—			(0.01	)		(0.02	)		(0.01	)

Net earnings	$	1.08		$	0.94		$	2.40		$	2.04


Average number of common shares outstanding:
Basic		136.4			139.3			137.5			139.0
Diluted		140.0			142.3			141.0			141.8

Dividends declared per common share	$	0.32		$	0.25		$	0.96		$	0.75

See accompanying notes to our unaudited consolidated financial statements.

DARDEN RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions)


	February 27, 2011			May 30, 2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	89.7		$	248.8
Receivables, net		72.3			53.2
Inventories		326.9			220.8
Prepaid income taxes		3.7			1.5
Prepaid expenses and other current assets		78.3			52.4
Deferred income taxes		127.8			101.8

Total current assets	$	698.7		$	678.5
Land, buildings and equipment, net of accumulated depreciation and amortization of $2,498.4 and $2,332.8, respectively		3,553.5			3,403.7
Goodwill		517.2			517.3
Trademarks		454.0			454.0
Other assets		191.4			193.9

Total assets	$	5,414.8		$	5,247.4


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	274.7		$	246.4
Short-term debt		64.0			—
Accrued payroll		161.3			161.8
Accrued income taxes		—			1.0
Other accrued taxes		66.5			62.0
Unearned revenues		229.6			167.2
Current portion of long-term debt		75.0			225.0
Other current liabilities		460.3			391.2

Total current liabilities	$	1,331.4		$	1,254.6
Long-term debt, less current portion		1,407.6			1,408.7
Deferred income taxes		323.9			268.6
Deferred rent		182.6			170.1
Obligations under capital leases, net of current installments		56.4			57.6
Other liabilities		189.4			193.8

Total liabilities	$	3,491.3		$	3,353.4

Stockholders’ equity:
Common stock and surplus	$	2,383.1		$	2,297.9
Retained earnings		2,828.2			2,621.9
Treasury stock		(3,216.7	)		(2,943.5	)
Accumulated other comprehensive income (loss)		(61.4	)		(71.1	)
Unearned compensation		(9.7	)		(11.2	)

Total stockholders’ equity	$	1,923.5		$	1,894.0

Total liabilities and stockholders’ equity	$	5,414.8		$	5,247.4

See accompanying notes to our unaudited consolidated financial statements.

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

For the nine months ended February 27, 2011 and February 28, 2010

(In millions)

(Unaudited)


	Common Stock And Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Unearned Compensation			Officer Notes Receivable			Total Stockholders’ Equity
Balance at May 30, 2010	$	2,297.9	$	2,621.9		$	(2,943.5	)	$	(71.1	)	$	(11.2	)	$	—		$	1,894.0
Comprehensive income:
Net earnings		—		338.8			—			—			—			—			338.8
Other comprehensive income (loss):
Foreign currency adjustment		—		—			—			1.7			—			—			1.7
Change in fair value of marketable securities, net of tax of $0.0		—		—			—			0.1			—			—			0.1
Change in fair value of derivatives, net of tax of $1.1		—		—			—			3.2			—			—			3.2
Amortization of unrecognized net actuarial loss, net of tax of $3.0		—		—			—			4.7			—			—			4.7

Total comprehensive income																			348.5
Cash dividends declared		—		(132.5	)		—			—			—			—			(132.5	)
Stock option exercises (1.8 shares)		42.4		—			1.8			—			—			—			44.2
Stock-based compensation		25.3		—			—			—			—			—			25.3
ESOP note receivable repayments		—		—			—			—			1.5			—			1.5
Income tax benefits credited to equity		12.7		—			—			—			—			—			12.7
Purchases of common stock for treasury (6.3 shares)		—		—			(275.9	)		—			—			—			(275.9	)
Issuance of treasury stock under Employee Stock Purchase Plan and other plans (0.2 shares)		4.8		—			0.9			—			—			—			5.7

Balance at February 27, 2011	$	2,383.1	$	2,828.2		$	(3,216.7	)	$	(61.4	)	$	(9.7	)	$	—		$	1,923.5


Balance at May 31, 2009	$	2,183.1	$	2,357.4		$	(2,864.2	)	$	(57.2	)	$	(13.0	)	$	(0.1	)	$	1,606.0
Comprehensive income:
Net earnings		—		288.9			—			—			—			—			288.9
Other comprehensive income (loss):
Foreign currency adjustment		—		—			—			1.3			—			—			1.3
Change in fair value of derivatives, net of tax of $0.1		—		—			—			3.5			—			—			3.5
Amortization of unrecognized net actuarial loss, net of tax of $0.3		—		—			—			1.5			—			—			1.5

Total comprehensive income																			295.2
Cash dividends declared		—		(104.7	)		—			—			—			—			(104.7	)
Stock option exercises (1.3 shares)		21.6		—			2.1			—			—			—			23.7
Stock-based compensation		24.8		—			—			—			—			—			24.8
ESOP note receivable repayments		—		—			—			—			1.2			—			1.2
Income tax benefits credited to equity		8.5		—			—			—			—			—			8.5
Purchases of common stock for treasury (0.5 shares)		—		—			(16.5	)		—			—			—			(16.5	)
Issuance of treasury stock under Employee Stock Purchase Plan and other plans (0.2 shares)		4.4		—			1.1			—			—			—			5.5
Repayment of officer notes		—		—			—			—			—			0.1			0.1

Balance at February 28, 2010	$	2,242.4	$	2,541.6		$	(2,877.5	)	$	(50.9	)	$	(11.8	)	$	—		$	1,843.8

See accompanying notes to our unaudited consolidated financial statements.

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Nine Months Ended
	February 27, 2011			February 28, 2010

Cash flows—operating activities
Net earnings	$	338.8		$	288.9
Losses from discontinued operations, net of tax benefit		2.0			2.1
Adjustments to reconcile net earnings from continuing operations to cash flows:
Depreciation and amortization		235.2			224.8
Asset impairment charges		4.3			3.9
Amortization of loan costs		2.2			2.5
Stock-based compensation expense		48.7			37.7
Change in current assets and liabilities		23.8			231.1
Contributions to pension and postretirement plans		(11.9	)		(1.1	)
Loss (gain) on disposal of land, buildings and equipment		4.8			(1.1	)
Change in cash surrender value of trust-owned life insurance		(12.6	)		(8.7	)
Deferred income taxes		28.2			(14.7	)
Change in deferred rent		13.2			11.3
Change in other liabilities		(16.8	)		(27.5	)
Income tax benefits from exercise of stock-based compensation credited to goodwill		0.2			0.5
Other, net		2.6			2.9

Net cash provided by operating activities of continuing operations	$	662.7		$	752.6


Cash flows—investing activities
Purchases of land, buildings and equipment		(390.1	)		(324.1	)
Proceeds from disposal of land, buildings and equipment		5.8			11.3
Purchases of marketable securities		(2.3	)		(15.5	)
Proceeds from sale of marketable securities		4.6			12.8
Increase in other assets		(8.5	)		(5.2	)

Net cash used in investing activities of continuing operations	$	(390.5	)	$	(320.7	)


Cash flows—financing activities
Proceeds from issuance of common stock		49.9			28.6
Dividends paid		(132.0	)		(104.7	)
Purchases of treasury stock		(275.9	)		(16.5	)
Income tax benefits credited to equity		12.7			8.5
Proceeds from issuance (repayments) of short-term debt, net		64.0			(150.0	)
ESOP note receivable repayment		1.5			1.2
Principal payments on capital leases		(1.0	)		(0.9	)
Repayment of long-term debt		(151.5	)		(1.2	)

Net cash used in financing activities of continuing operations	$	(432.3	)	$	(235.0	)


Cash flows—discontinued operations
Net cash used in operating activities of discontinued operations		(2.1	)		(1.0	)
Net cash provided by investing activities of discontinued operations		3.1			1.5

Net cash provided by discontinued operations	$	1.0		$	0.5


(Decrease) increase in cash and cash equivalents		(159.1	)		197.4
Cash and cash equivalents - beginning of period		248.8			62.9

Cash and cash equivalents - end of period	$	89.7		$	260.3


Cash flows from changes in current assets and liabilities
Receivables, net		(19.1	)		(18.9	)
Inventories		(106.1	)		28.9
Prepaid expenses and other current assets		(11.0	)		(8.2	)
Accounts payable		24.2			36.1
Accrued payroll		(0.5	)		19.3
Prepaid/accrued income taxes		(3.2	)		87.4
Other accrued taxes		4.5			6.0
Unearned revenues		62.4			52.0
Other current liabilities		72.6			28.5

Change in current assets and liabilities	$	23.8		$	231.1

See accompanying notes to our unaudited consolidated financial statements.

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1.

Basis of Presentation

Darden Restaurants, Inc. (we, our or the Company) owns and operates full-service dining restaurants in the United States and Canada under the trade names Red Lobster ^® , Olive Garden ^® , LongHorn Steakhouse ^® , The Capital Grille ^® , Bahama Breeze ^® , and Seasons 52 ^® . We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the quarter and nine months ended February 27, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending May 29, 2011.

These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 30, 2010. The accounting policies used in preparing these consolidated financial statements are the same as those described in our Form 10-K.

Unless otherwise noted, amounts and disclosures throughout the notes to consolidated financial statements relate to our continuing operations.

Note 2.

Supplemental Cash Flow Information


(in millions)	Nine Months Ended
	February 27, 2011		February 28, 2010
Interest paid, net of amounts capitalized	$	59.6	$	57.6
Income taxes paid, net of refunds		90.7		36.2

Note 3.

Stock-Based Compensation

We grant stock options for a fixed number of shares to certain employees and directors with an exercise price equal to the fair value of the shares at the date of grant. We also grant restricted stock, restricted stock units, and performance stock units with a fair value determined based on our closing stock price on the date of grant. In addition, we also grant cash settled stock units and cash settled performance stock units, which are classified as liabilities and are marked to market as of the end of each fiscal period.

The weighted-average fair value of stock options granted and the related assumptions used in the Black-Scholes option pricing model as of February 27, 2011 and February 28, 2010, were as follows:


	Stock Options Granted During the Nine Months Ended
	February 27, 2011			February 28, 2010
Weighted-average fair value	$	12.84		$	10.72
Risk-free interest rate		2.21	%		2.96	%
Expected volatility of stock		39.1	%		40.6	%
Dividend yield		3.01	%		2.84	%
Expected option life		6.7 years			6.6 years

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents a summary of our stock-based compensation activity for the nine months ended February 27, 2011:


(in millions)	Stock Options			Restricted Stock/ Restricted Stock Units			Darden Stock Units			Performance Stock Units
Outstanding beginning of period		13.9			0.8			1.6			0.9
Awards granted		1.5			—			0.6			0.3
Awards exercised		(1.8	)		(0.2	)		(0.2	)		(0.2	)
Awards forfeited		(0.1	)		—			—			—

Outstanding end of period		13.5			0.6			2.0			1.0

During the quarters and nine months ended February 27, 2011 and February 28, 2010, we recognized expense from stock-based compensation as follows:


(in millions)	Quarter Ended				Nine Months Ended
	February 27, 2011		February 28, 2010		February 27, 2011		February 28, 2010
Stock options	$	5.1	$	5.3	$	15.1	$	14.8
Restricted stock/restricted stock units		3.1		2.6		7.4		7.4
Darden stock units		2.9		5.0		11.1		9.3
Performance stock units		5.8		1.4		12.2		3.6
Employee stock purchase plan		0.6		0.4		1.5		1.3
Director compensation program/other		0.1		—		1.4		1.3

Total stock-based compensation expense	$	17.6	$	14.7	$	48.7	$	37.7

Note 4.

Income Taxes

The effective income tax rate for the quarter and nine months ended February 27, 2011 was 23.8 percent and 26.1 percent, respectively, compared to an effective income tax rate of 23.2 percent and 24.7 percent for the quarter and nine months ended February 28, 2010, respectively. The increase in the effective income tax rate during the third quarter and the first nine months of fiscal 2011 is primarily attributable to the impact in fiscal 2010 of the favorable resolution of prior-year tax matters expensed in prior years and due to an increase in earnings before income taxes.

Included in our remaining balance of unrecognized tax benefits is $2.4 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve months based on the outcome of examinations or as a result of the expiration of the statute of limitations for specific jurisdictions.

Note 5.

Long-Term Debt

We maintain a $750.0 million revolving credit facility under a Credit Agreement (Revolving Credit Agreement) dated September 20, 2007 with Bank of America, N.A. (BOA), as administrative agent, and the lenders (Revolving Credit Lenders) and other agents party thereto. The Revolving Credit Agreement is a senior unsecured credit commitment to the Company and contains customary representations, affirmative and negative covenants (including limitations on liens and subsidiary debt, and a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of default usual for credit facilities of this type. As of February 27, 2011, we were in compliance with the covenants under the Revolving Credit Agreement.

The Revolving Credit Agreement matures on September 20, 2012, and the proceeds may be used for commercial paper back-up, working capital and capital expenditures, the refinancing of certain indebtedness as well as general corporate purposes. The Revolving Credit Agreement also contains a sub-limit of $150.0 million for the issuance of letters of credit. The borrowings and letters of credit obtained under the Revolving Credit Agreement may be denominated in U.S. Dollars, Euro, Sterling, Yen, Canadian Dollars and each other currency approved by the Revolving Credit Lenders. The Company may elect to increase the commitments under the Revolving Credit Agreement by up to $250.0 million (to an aggregate amount of up to $1.0 billion), subject to the Company obtaining commitments from new and existing lenders for the additional amounts.

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Loans under the Revolving Credit Agreement bear interest at a rate of LIBOR plus a margin determined by reference to a ratings-based pricing grid, or the base rate (which is defined as the higher of the BOA prime rate or the Federal Funds rate plus 0.500 percent). Assuming a “BBB” equivalent credit rating level, the applicable margin under the Revolving Credit Agreement will be 0.350 percent. We may also request that loans under the Revolving Credit Agreement be made at interest rates offered by one or more of the Revolving Credit Lenders, which may vary from the LIBOR or base rate, for up to $100.0 million of borrowings. The Revolving Credit Agreement requires that we pay a facility fee on the total amount of such facility (ranging from 0.070 percent to 0.175 percent, based on our credit ratings) and, in the event that the outstanding amounts under the applicable Revolving Credit Agreement exceeds 50 percent of the aggregate commitments under such Revolving Credit Agreement, a utilization fee on the total amount outstanding under such facility (ranging from 0.050 percent to 0.150 percent, based on our credit ratings). As of February 27, 2011, we had no outstanding balances under the Revolving Credit Agreement. As of February 27, 2011, $64.0 million of commercial paper and $68.2 million of letters of credit were outstanding, which are backed by this facility. After consideration of borrowings currently outstanding and commercial paper and letters of credit backed by the Revolving Credit Agreement, as of February 27, 2011, we had $617.8 million of credit available under the Revolving Credit Agreement.

The interest rates on our $350.0 million 5.625 percent senior notes due October 2012, $500.0 million 6.200 percent senior notes due October 2017 and $300.0 million 6.800 percent senior notes due October 2037 (collectively, the New Senior Notes) are subject to adjustment from time to time if the debt rating assigned to such series of the New Senior Notes is downgraded below a certain rating level (or subsequently upgraded). The maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial interest rate. As of February 27, 2011, no adjustments to these interest rates had been made.

During the quarter ended August 29, 2010, we repaid, at maturity, our $150.0 million 4.875 percent senior notes due August 2010 with excess cash from operations. Our $75.0 million 7.450 percent medium-term notes due April 2011 are included in current liabilities as current portion of long-term debt. During fiscal 2012, we expect to issue unsecured debt securities that will effectively refinance both the notes that matured during the quarter ended August 29, 2010 and the notes due April 2011.

Note 6.

Net Earnings per Share

Outstanding stock options and restricted stock granted by us represent the only dilutive effect reflected in diluted weighted average shares outstanding. Options and restricted stock do not impact the numerator of the diluted net earnings per share computation. Restricted stock and options to purchase shares of common stock excluded from the calculation of diluted net earnings per share because the effect would have been anti-dilutive, are as follows:

(in millions)

Quarter Ended

Nine Months Ended

February 27,
2011

February 28,
2010

February 27,
2011

February 28,
2010

Anti-dilutive restricted stock and options

1.4

3.4

1.2

6.8

Note 7.

Stockholders’ Equity

Pursuant to the authorization of our Board of Directors to repurchase up to 187.4 million shares of our common stock in accordance with applicable securities laws, we have repurchased a total of 160.4 million shares of our common stock through February 27, 2011. Fiscal 2011 common stock repurchases are as follows:


(in millions)	Quarter Ended February 27, 2011				Nine Months Ended February 27, 2011
	Shares		Total Cost		Shares		Total Cost
Common stock repurchased		2.3	$	105.2		6.3	$	275.9

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 8.

Retirement Plans

Components of net periodic benefit cost are as follows:


(in millions)	Defined Benefit Plans						Postretirement Benefit Plan
	Quarter Ended						Quarter Ended
	February 27, 2011			February 28, 2010			February 27, 2011		February 28, 2010
Service cost	$	1.4		$	1.4		$	0.2	$	0.5
Interest cost		2.4			3.0			0.5		0.2
Expected return on plan assets		(4.0	)		(4.1	)		—		—
Unrecognized prior service cost		0.1			—			—		—
Recognized net actuarial loss		1.1			0.2			0.4		0.2

Net periodic benefit cost	$	1.0		$	0.5		$	1.1	$	0.9


(in millions)	Defined Benefit Plans						Postretirement Benefit Plan
	Nine Months Ended						Nine Months Ended
	February 27, 2011			February 28, 2010			February 27, 2011		February 28, 2010
Service cost	$	4.4		$	4.2		$	0.7	$	1.5
Interest cost		7.2			8.9			1.7		0.6
Expected return on plan assets		(12.1	)		(12.3	)		—		—
Unrecognized prior service cost		0.1			—			—		—
Recognized net actuarial loss		3.4			0.7			1.0		0.7

Net periodic benefit cost	$	3.0		$	1.5		$	3.4	$	2.8

Note 9.

Derivative Instruments and Hedging Activities

We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments as required by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 815, Derivatives and Hedging, and those utilized as economic hedges. We use financial and commodities derivatives to manage interest rate, compensation and commodities pricing and foreign currency exchange rate risks inherent in our business operations. To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise meet the cash flow hedge accounting criteria required by Topic 815 of the FASB ASC, changes in the derivatives’ fair value are not included in current earnings but are included in accumulated other comprehensive income (loss), net of tax. These changes in fair value will be reclassified into earnings at the time of the forecasted transaction. Ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period in which it occurs. To the extent our derivatives are effective in mitigating changes in fair value, and otherwise meet the fair value hedge accounting criteria required by Topic 815 of the FASB ASC, gains and losses in the derivatives’ fair 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 fair value of such contracts are recorded currently in earnings in the period in which they occur.

By using these instruments, we expose ourselves, from time to time, to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. We minimize this credit risk by entering into transactions with high quality counterparties. We currently do not have any provisions in our agreements with counterparties that would require either party to hold or post collateral in the event that the market value of the related derivative instrument exceeds a certain limit. As such, the maximum amount of loss due to counterparty credit risk we would incur at February 27, 2011, if counterparties to the derivative instruments failed completely to perform, would approximate the values of derivative instruments currently recognized as assets in our consolidated balance sheet. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices, or the market price of our common stock. We minimize this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The notional values of derivative contracts designated as hedging instruments and derivative contracts that are not designated as hedging instruments as of February 27, 2011 and May 30, 2010, are as follows:


	Notional Values
(in millions)	February 27, 2011		May 30, 2010
Derivative contracts designated as hedging instruments

Natural gas	$	6.7	$	3.2
Foreign currency		6.8		18.9
Interest rate locks		150.0		150.0
Interest rate swaps		425.0		375.0
Equity forwards		19.8		12.6

Derivative contracts not designated as hedging instruments

Natural gas	$	—	$	0.6
Other commodities		0.2		4.2
Equity forwards		17.6		12.8

We periodically enter into natural gas futures, swaps and option contracts (collectively “natural gas contracts”) to reduce the risk of variability in cash flows associated with fluctuations in the price of natural gas during the fiscal year. For a certain portion of our natural gas purchases, changes in the price we pay for natural gas is highly correlated with changes in the market price of natural gas. For these natural gas purchases, we designate natural gas contracts as cash flow hedging instruments. For the remaining portion of our natural gas purchases, changes in the price we pay for natural gas are not highly correlated with changes in the market price of natural gas, generally due to the timing of when changes in the market prices are reflected in the price we pay. For these natural gas purchases, we utilize natural gas contracts as economic hedges. Our natural gas contracts currently extend through September 2011.

We periodically enter into other commodity futures and swaps (typically for soybean oil, milk, diesel fuel and butter) to reduce the risk of fluctuations in the price we pay for these commodities, which are either used directly in our restaurants (i.e., class III milk contracts for cheese and soybean oil for salad dressing) or are components of the cost we pay for items used in our restaurants (i.e., diesel fuel contracts to mitigate risk related to diesel fuel surcharges charged by our distributors). Our other commodity futures and swap contracts currently extend through March 2011.

We periodically enter into foreign currency forward contracts to reduce the risk of fluctuations in exchange rates specifically related to forecasted transactions or payments made in a foreign currency either for commodities and items used directly in our restaurants or for forecasted payments of services. Our foreign currency forward contracts currently extend through August 2011.

At various times during fiscal 2008 and 2009, we entered into treasury-lock derivative instruments with $150.0 million of notional value to hedge a portion of the risk of changes in the benchmark interest rate associated with the expected issuance of long-term debt to refinance our $150.0 million 4.875 percent senior notes due August 2010 and our $75.0 million 7.450 percent medium-term notes due April 2011, as changes in the benchmark interest rate will cause variability in our forecasted interest payments. These derivative instruments are designated as cash flow hedges.

During the quarter ended August 29, 2010, we entered into forward-starting interest rate swap agreements with $200.0 million of notional value to hedge a portion of the risk of changes in the benchmark interest rate associated with the expected issuance of long-term debt to refinance our $350.0 million 5.625 percent senior notes due October 2012, as changes in the benchmark interest rate will cause variability in our forecasted interest payments. These derivative instruments are designated as cash flow hedges.

During fiscal 2010, we entered into interest rate swap agreements with $375.0 million of notional value to limit the risk of changes in fair value of our $150.0 million 4.875 percent senior notes due August 2010, $75.0 million 7.450 percent medium-term notes due April 2011, and a portion of the $350 million 5.625 percent senior notes due October 2012 attributable to changes in the benchmark interest rate, between now and maturity of the related debt. Concurrent with the maturity of the $150.0 million senior notes due August 2010, interest rate swap

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

agreements with a notional value of $150.0 million expired during the quarter ended August 29, 2010. Accordingly, as of February 27, 2011, the remaining notional value of these swap agreements was $225.0 million. The swap agreements effectively swap the fixed rate obligations for floating rate obligations, thereby mitigating changes in fair value of the related debt prior to maturity. The swap agreements were designated as fair value hedges of the related debt and met the requirements to be accounted for under the short-cut method, resulting in no ineffectiveness in the hedging relationship. During the quarters ended February 27, 2011 and February 28, 2010, $0.9 million and $1.1 million, respectively, was recorded as a reduction to interest expense related to the net swap settlements. During the nine months ended February 27, 2011 and February 28, 2010, $2.8 million and $2.6 million, respectively, was recorded as a reduction to interest expense related to the net swap settlements.

We enter into equity forward contracts to hedge the risk of changes in future cash flows associated with the unvested, unrecognized Darden stock units. The equity forward contracts will be settled at the end of the vesting periods of their underlying Darden stock units, which range between four and five years. The contracts were initially designated as cash flow hedges to the extent the Darden stock units are unvested and, therefore, unrecognized as a liability in our financial statements. As of February 27, 2011, we were party to equity forward contracts that were indexed to 0.9 million shares of our common stock, at varying forward rates between $27.57 per share and $42.08 per share, extending through August 2015. The forward contracts can only be net settled in cash. As the Darden stock units vest, we will de-designate that portion of the equity forward contract that no longer qualifies for hedge accounting and changes in fair value associated with that portion of the equity forward contract will be recognized in current earnings. We periodically incur interest on the notional value of the contracts and receive dividends on the underlying shares. These amounts are recognized currently in earnings as they are incurred.

We entered into equity forward contracts to hedge the risk of changes in future cash flows associated with employee-directed investments in Darden stock within the non-qualified deferred compensation plan. The equity forward contracts are indexed to 0.2 million shares of our common stock at forward rates between $23.41 and $37.44 per share, can only be net settled in cash and expire between fiscal 2011 and 2013. We did not elect hedge accounting with the expectation that changes in the fair value of the equity forward contracts would offset changes in the fair value of the Darden stock investments in the non-qualified deferred compensation plan within selling, general and administrative expenses in our consolidated statements of earnings.

The fair value of our derivative contracts designated as hedging instruments and derivative contracts that are not designated as hedging instruments as of February 27, 2011 and May 30, 2010, are as follows:


	Balance Sheet Location		Derivative Assets				Derivative Liabilities
(in millions)	Balance Sheet Location		February 27, 2011		May 30, 2010		February 27, 2011			May 30, 2010
Derivative contracts designated as hedging instruments

Commodity contracts		(1)	$	—	$	—	$	(0.1	)	$	(0.6	)
Equity forwards		(1)		—		—		(1.1	)		(0.4	)
Interest rate related		(1)		9.0		3.4		(12.7	)		(10.5	)
Foreign currency forwards		(1)		0.4		1.1		(0.3	)		—

			$	9.4	$	4.5	$	(14.2	)	$	(11.5	)

Derivative contracts not designated as hedging instruments

Commodity contracts		(1)	$	—	$	—	$	—		$	—
Equity forwards		(1)		—		—		(1.1	)		(0.6	)

			$	—	$	—	$	(1.1	)	$	(0.6	)

Total derivative contracts			$	9.4	$	4.5	$	(15.3	)	$	(12.1	)

(1)	Derivative assets and liabilities are included in Receivables, net, Prepaid expenses and other current assets, and Other current liabilities, as applicable, on our consolidated balance sheets.

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The effects of derivative instruments in cash flow hedging relationships on the consolidated statements of earnings for the quarters and nine months ended February 27, 2011 and February 28, 2010 are as follows:


(in millions)	Amount of Gain (Loss) Recognized in AOCI (effective portion)						Location of Gain (Loss) Reclassified from AOCI to Earnings		Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion)					Location of Gain (Loss) Recognized in Earnings (ineffective portion)		(1) Amount of Gain (Loss) Recognized in Earnings (ineffective portion)
	Quarter Ended								Quarter Ended							Quarter Ended
Type of Derivative	February 27, 2011			February 28, 2010					February 27, 2011		February 28, 2010					February 27, 2011			February 28, 2010
Commodity	$	(0.3	)	$	(0.4	)		(2)	$	—	$	(0.3	)		(2)	$	—		$	—
Equity		(1.9	)		4.1			(3)		—		—			(3)		0.1			0.1
Interest rate		15.1			4.6			Interest, net		0.2		0.1			Interest, net		(0.5	)		—
Foreign currency		(0.3	)		0.3			(4)		0.6		0.5			(4)		—			—

	$	12.6		$	8.6				$	0.8	$	0.3				$	(0.4	)	$	0.1


(in millions)	Amount of Gain (Loss) Recognized in AOCI (effective portion)						Location of Gain (Loss) Reclassified from AOCI to Earnings		Amount of Gain (Loss) Reclassified from AOCI to Earnings (effective portion)						Location of Gain (Loss) Recognized in Earnings (ineffective portion)		(1) Amount of Gain (Loss) Recognized in Earnings (ineffective portion)
	Nine Months Ended								Nine Months Ended								Nine Months Ended
Type of Derivative	February 27, 2011			February 28, 2010					February 27, 2011			February 28, 2010					February 27, 2011			February 28, 2010
Commodity	$	(0.3	)	$	(1.2	)		(2)	$	(0.9	)	$	(3.0	)		(2)	$	—		$	—
Equity		1.6			3.3			(3)		—			—			(3)		0.2			0.2
Interest rate		3.8			(1.3	)		Interest, net		0.5			0.4			Interest, net		(0.8	)		—
Foreign currency		(0.3	)		0.9			(4)		0.7			0.6			(4)		—			—

	$	4.8		$	1.7				$	0.3		$	(2.0	)			$	(0.6	)	$	0.2

(1)

Generally, all of our derivative instruments designated as cash flow hedges have some level of ineffectiveness, which is recognized currently in earnings. However, as these amounts are generally nominal and our consolidated financial statements are presented “in millions,” these amounts will generally appear as zero in this tabular presentation.

(2)	Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is food and beverage costs and restaurant expenses, which are components of cost of sales.

(3)	Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is restaurant labor expenses, which is a component of cost of sales, and selling, general and administrative expenses.

(4)	Location of the gain (loss) reclassified from AOCI to earnings as well as the gain (loss) recognized in earnings for the ineffective portion of the hedge is food and beverage costs, which is a component of cost of sales, and selling, general and administrative expenses.

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The effects of derivative instruments in fair value hedging relationships on the consolidated statements of earnings for the quarters and nine months ended February 27, 2011 and February 28, 2010 are as follows:

(in millions)

Amount of Gain (Loss)
Recognized in Earnings on
Derivatives

Location of
Gain (Loss)
Recognized in
Earnings on
Derivatives

Hedged Item in
Fair Value Hedge
Relationship

Amount of Gain (Loss)
Recognized in Earnings on
Related Hedged Item

Location of
Gain (Loss)
Recognized in
Earnings on
Related
Hedged Item

Quarter Ended

February 27,
2011

February 28,
2010

February 27,
2011

February 28,
2010

Interest rate

(0.5

)

—

Interest, net

Fixed-rate debt

0.5

—

Interest, net

(in millions)

Amount of Gain (Loss)
Recognized in Earnings on
Derivatives

Location of
Gain (Loss)
Recognized in
Earnings on
Derivatives

Hedged Item in
Fair Value Hedge
Relationship

Amount of Gain (Loss)
Recognized in Earnings on
Related Hedged Item

Location of
Gain (Loss)
Recognized in
Earnings on
Related
Hedged Item

Nine Months Ended

February 27,
2011

February 28,
2010

February 27,
2011

February 28,
2010

Interest rate

0.4

4.0

Interest, net

Fixed-rate debt

(0.4

)

(4.0

)

Interest, net

The effects of derivatives not designated as hedging instruments on the consolidated statements of earnings for the quarters and nine months ended February 27, 2011 and February 28, 2010 are as follows:


	Location of Gain (Loss) Recognized in Earnings on Derivatives		Amount of Gain (Loss) Recognized in Earnings
			Quarter Ended						Nine Months Ended
			February 27,			February 28,			February 27,		February 28,
(in millions)			2011			2010			2011		2010
Commodity contracts		(1)	$	—		$	(0.1	)	$	—	$	(0.2	)
Equity forwards		(2)		(0.1	)		2.6			1.7		0.8
Equity forwards		Selling, General and Administrative		(0.3	)		1.9			1.7		1.1

			$	(0.4	)	$	4.4		$	3.4	$	1.7

(1)	Location of the gain (loss) recognized in earnings is food and beverage costs and restaurant expenses, which are components of cost of sales.

(2)	Location of the gain (loss) recognized in earnings is restaurant labor expenses, which is a component of cost of sales.

Based on the fair value of our derivative instruments designated as cash flow hedges as of February 27, 2011, we expect to reclassify $0.4 million of net gains on derivative instruments from accumulated other comprehensive income (loss) to earnings during the next twelve months based on the timing of our forecasted commodity purchases and maturity of equity forward and interest rate related instruments. However, the amounts ultimately realized in earnings will be dependent on the fair value of the contracts on the settlement dates.

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 10.

Fair Value Measurements

The fair values of cash equivalents, accounts receivable, accounts payable and short-term debt approximate their carrying amounts due to their short duration.

The following table summarizes the fair values of financial instruments measured at fair value on a recurring basis as reflected in our unaudited consolidated balance sheet as of February 27, 2011:


Items Measured at Fair Value
(in millions)			Fair value of assets (liabilities)			Quoted prices in active market for identical assets (liabilities) (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Fixed-income securities:
Corporate bonds	(1	)	$	15.6		$	—	$	15.6		$	—
U.S. Treasury securities	(2	)		8.5			8.5		—			—
Mortgage-backed securities	(1	)		4.3			—		4.3			—
Derivatives:
Commodities futures, swaps & options	(3	)		(0.1	)		—		(0.1	)		—
Equity forwards	(4	)		(2.2	)		—		(2.2	)		—
Interest rate locks & swaps	(5	)		(3.7	)		—		(3.7	)		—
Foreign currency forwards	(6	)		0.1			—		0.1			—

Total			$	22.5		$	8.5	$	14.0		$	—

(1)	The fair value of these securities is based on closing market prices of the investments when applicable, or, alternatively, valuations utilizing market data and other observable inputs, inclusive of the risk of nonperformance.

(2)	The fair value of our U.S. Treasury securities is based on closing market prices.

(3)	The fair value of our commodities futures, swaps and options is based on closing market prices of the contracts, inclusive of the risk of nonperformance.

(4)	The fair value of our equity forwards is based on closing market values of Darden stock, inclusive of the risk of nonperformance.

(5)	The fair value of our interest rate lock and swap agreements is based on current and expected market interest rates, inclusive of the risk of nonperformance.

(6)	The fair value of our foreign currency forward contracts is based on closing forward exchange market prices, inclusive of the risk of nonperformance.

The carrying value and fair value of long-term debt, including the amounts in current liabilities, as of February 27, 2011, was $1.48 billion and $1.61 billion, respectively. The carrying value and fair value of long-term debt, including the amounts in current liabilities, as of May 30, 2010, was $1.63 billion and $1.71 billion, respectively. The fair value of long-term debt is determined based on market prices or, if market prices are not available, the present value of the underlying cash flows discounted at our incremental borrowing rates.

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes the fair values of non-financial assets measured at fair value on a non-recurring basis as of February 27, 2011:


Items Measured at Fair Value
(in millions)			Fair value of assets		Quoted prices in active market for identical assets (liabilities) (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Long-lived assets held for disposal	(1	)	$	2.7	$	—	$	—	$	2.7
Long-lived assets held and used	(2	)		0.7		—		—		0.7

Total			$	3.4	$	—	$	—	$	3.4

(1)

In accordance with the provisions of ASC Topic 360, Property, Plant and Equipment, during the nine months ended February 27, 2011, long-lived assets held for disposal with a carrying amount of $4.7 were written down to their fair value of $2.7 million, based on a review of comparable assets, resulting in an impairment charge of $2.0 million, of which $1.6 was included in earnings from continuing operations and $0.4 million was included in losses from discontinued operations.

(2)

In accordance with the provisions of ASC Topic 360, Property, Plant and Equipment, during the nine months ended February 27, 2011, long-lived assets held and used with a carrying amount of $2.8 million were written down to their fair value of $0.7 million, based on a review of comparable assets, resulting in an impairment charge of $2.1 million, which was included in earnings from continuing operations.

Note 11.

Commitments and Contingencies

As collateral for performance on contracts and as credit guarantees to banks and insurers, we are contingently liable for guarantees of subsidiary obligations under standby letters of credit. As of February 27, 2011 and May 30, 2010, we had $96.4 million and $97.3 million, respectively, of standby letters of credit related to workers’ compensation and general liabilities accrued in our consolidated financial statements. As of February 27, 2011 and May 30, 2010, we had $18.0 million and $20.1 million, respectively, of standby letters of credit related to contractual operating lease obligations and other payments. All standby letters of credit are renewable annually.

As of February 27, 2011 and May 30, 2010, we had $7.7 million and $9.0 million, respectively, of guarantees associated with leased properties that have been assigned to third parties. These amounts represent the maximum potential amount of future payments under the guarantees. The fair value of these potential payments discounted at our pre-tax cost of capital as of February 27, 2011 and May 30, 2010, amounted to $5.6 million and $6.4 million, respectively. We did not accrue for the guarantees, as the likelihood of the third parties defaulting on the assignment agreements was deemed to be less than probable. In the event of default by a third party, the indemnity and default clauses in our assignment agreements govern our ability to recover from and pursue the third party for damages incurred as a result of its default. We do not hold any third-party assets as collateral related to these 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 from fiscal 2012 through fiscal 2021.

We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employees and others related to operational issues common to the restaurant industry, and can also involve infringement of, or challenges to, our trademarks. While the resolution of a lawsuit, proceeding or claim may have an impact on our financial results for the period in which it is resolved, we believe that the final disposition of the lawsuits, proceedings and claims in which we are currently involved, either individually or in the aggregate, will not have a material adverse effect on our financial position, results of operations or liquidity.

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 12.

Application of New Accounting Standards

In January 2010, the FASB issued Accounting Standards Update (ASU) 2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements, which required additional disclosure of significant transfers in and out of instruments categorized as Level 1 and 2 in the Fair Value hierarchy. This update also clarified existing disclosure requirements by defining the level of disaggregation of instruments into classes as well as additional disclosure around the valuation techniques and inputs used to measure fair value. Additionally, for instruments categorized as Level 3 in the Fair Value hierarchy, the guidance required a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities. This update became effective for us in the fourth quarter of fiscal 2010 except for the disclosure on the roll forward of activities for Level 3 fair value measurements, which will become effective for us in the first quarter of fiscal 2012. Other than requiring additional disclosures, adoption of this new guidance will not have a significant impact on our consolidated financial statements.

Note 13.

Subsequent Event

On March 23, 2011, the Board of Directors declared a cash dividend of 32 cents per share to be paid May 2, 2011 to all shareholders of record as of the close of business on April 8, 2011.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The discussion and analysis below for the Company should be read in conjunction with the unaudited financial statements and the notes to such financial statements included elsewhere in this Form 10-Q. The discussion below contains forward looking statements which should be read in conjunction with “Forward-Looking Statements” included elsewhere in this Form 10-Q.

The following table sets forth selected operating data as a percent of sales for the periods indicated. All information is derived from the consolidated statements of earnings for the quarters and nine months ended February 27, 2011 and February 28, 2010.


	Quarter Ended						Nine Months Ended
	February 27, 2011			February 28, 2010			February 27, 2011			February 28, 2010

Sales		100.0	%		100.0	%		100.0	%		100.0	%
Costs and expenses:
Cost of sales:
Food and beverage		28.9			28.8			28.6			28.8
Restaurant labor		31.4			32.7			32.2			33.2
Restaurant expenses		14.5			14.8			15.2			15.3

Total cost of sales, excluding restaurant depreciation and amortization of 3.8%, 3.9%, 4.0% and 4.0%, respectively		74.8	%		76.3	%		76.0	%		77.3	%
Selling, general and administrative		9.8			9.0			10.0			9.7
Depreciation and amortization		4.1			4.2			4.3			4.3
Interest, net		1.2			1.1			1.3			1.3

Total costs and expenses		89.9	%		90.6	%		91.6	%		92.6	%


Earnings before income taxes		10.1			9.4			8.4			7.4
Income taxes		(2.4	)		(2.2	)		(2.2	)		(1.9	)

Earnings from continuing operations		7.7			7.2			6.2			5.5
Losses from discontinued operations		(0.1	)		—			(0.1	)		—

Net earnings		7.6	%		7.2	%		6.1	%		5.5	%

OVERVIEW OF OPERATIONS

Our sales from continuing operations were $1.98 billion and $5.51 billion for the third quarter and first nine months of fiscal 2011, respectively, compared to $1.87 billion and $5.25 billion for the third quarter and first nine months of fiscal 2010. The increases of 5.5 percent and 5.0 percent in sales for the third quarter and first nine months of fiscal 2011, respectively, were driven primarily by the addition of 66 net new restaurants since the third quarter of fiscal 2010 and blended U.S. same-restaurant sales increases for Olive Garden, Red Lobster and LongHorn Steakhouse of 0.9 percent and 1.1 percent for the third quarter and first nine months of fiscal 2011, respectively. For the third quarter of fiscal 2011, the increase in blended same-restaurant sales compares to an estimated increase of 0.1 percent for the Knapp-Track ™ benchmark of U.S. casual dining same-restaurant sales excluding Darden. For the third quarter of fiscal 2011, our net earnings from continuing operations were $151.7 million compared to $134.8 million for the third quarter of fiscal 2010, a 12.5 percent increase, and our diluted net earnings per share from continuing operations were $1.08 for the third quarter of fiscal 2011 compared to $0.95 for the third quarter of fiscal 2010, a 13.7 percent increase. For the first nine months of fiscal 2011, our net earnings from continuing operations were $340.8 million compared to $291.0 million for the first nine months of fiscal 2010, a 17.1 percent increase, and our diluted net earnings per share from continuing operations were $2.42 for the first nine months of fiscal 2011 compared to $2.05 for the first nine months of fiscal 2010, an 18.0 percent increase. The increases in net earnings from continuing operations and diluted net earnings per share from continuing operations for the third quarter of fiscal 2011 compared to the same period in the prior year were primarily due to increased

sales and lower restaurant labor expenses, restaurant expenses and depreciation and amortization expenses as a percent of sales, which were partially offset by higher food and beverage costs, selling, general and administrative expenses and interest expense as a percent of sales and a higher effective income tax rate. The increases in net earnings from continuing operations and diluted net earnings per share from continuing operations for the first nine months of fiscal 2011 compared to the same period in the prior year were primarily due to increased sales and lower food and beverage costs, restaurant labor and restaurant expenses as a percent of sales, which were partially offset by higher selling, general and administrative expenses as a percent of sales and a higher effective income tax rate.

SALES

Sales from continuing operations were $1.98 billion and $1.87 billion for the quarters ended February 27, 2011 and February 28, 2010, respectively. The 5.5 percent increase in sales for the third quarter of fiscal 2011 was driven by the addition of 66 net new restaurants since the third quarter of fiscal 2010 and a 0.9 percent blended U.S. same-restaurant sales increase for Olive Garden, Red Lobster and LongHorn Steakhouse. Olive Garden’s sales of $907.0 million for the third quarter of fiscal 2011 were 4.3 percent above last fiscal year’s third quarter, driven by revenue from 33 net new restaurants. U.S. same-restaurant sales for the third quarter of fiscal 2011 were flat compared to last fiscal year’s third quarter as a 1.2 percent increase in average check was offset by a 1.2 percent decrease in same-restaurant guest counts. Red Lobster’s sales of $662.9 million for the third quarter of fiscal 2011 were 1.2 percent above last fiscal year’s third quarter, driven by revenue from two net new restaurants and a 0.1 percent increase in U.S. same-restaurant sales. The increase in U.S. same-restaurant sales resulted from a 1.3 percent increase in average check partially offset by a 1.2 percent decrease in same-restaurant guest counts. LongHorn Steakhouse’s sales of $267.6 million for the third quarter of fiscal 2011 were 12.6 percent above last fiscal year’s third quarter, driven by revenue from 21 net new restaurants and a 6.1 percent increase in same-restaurant sales. The increase in same-restaurant sales resulted from a 4.4 percent increase in same-restaurant guest counts combined with a 1.7 percent increase in average check. In total, our remaining brands generated sales of $139.3 million for the third quarter of fiscal 2011, which were 25.0 percent above last fiscal year’s third quarter, primarily driven by four new restaurants at The Capital Grille, one new restaurant at Bahama Breeze and six new restaurants at Seasons 52. Additionally, sales growth reflected same-restaurant sales increases of 8.4 percent at The Capital Grille, 3.4 percent at Bahama Breeze and 4.2 percent at Seasons 52.

Sales from continuing operations were $5.51 billion and $5.25 billion for the nine months ended February 27, 2011 and February 28, 2010, respectively. The 5.0 percent increase in sales for the first nine months of fiscal 2011 was primarily due to the addition of 66 net new restaurants since the third quarter of fiscal 2010 and a 1.1 percent blended U.S. same-restaurant sales increase for Olive Garden, Red Lobster and LongHorn Steakhouse. Olive Garden’s sales of $2.61 billion for the first nine months of fiscal 2011 were 5.6 percent above the same period last fiscal year, driven primarily by revenue from 33 net new restaurants combined with a U.S. same-restaurant sales increase of 1.6 percent. The increase in U.S. same-restaurant sales resulted from a 2.0 percent increase in average check partially offset by a 0.4 percent decrease in same-restaurant guest counts. Red Lobster’s sales of $1.82 billion for the first nine months of fiscal 2011 were 0.2 percent below the same period last fiscal year, driven primarily by a 1.0 percent decrease in U.S. same-restaurant sales, partially offset by sales from two net new restaurants. The decrease in U.S. same-restaurant sales resulted primarily from a 3.1 percent decrease in same-restaurant guest counts, partially offset by a 2.1 percent increase in average check. LongHorn Steakhouse’s sales of $717.5 million for the first nine months of fiscal 2011 were 10.6 percent above the same period last fiscal year, driven primarily by revenue from 21 net new restaurants and a 5.1 percent increase in U.S. same-restaurant sales. The increase in U.S. same-restaurant sales resulted from a 2.8 percent increase in same-restaurant guest counts combined with a 2.3 percent increase in average check. In total, our remaining brands generated sales of $360.9 million for the first nine months of fiscal 2011, which were 18.9 percent above the same period last fiscal year, primarily driven by four new restaurants at The Capital Grille, one new restaurant at Bahama Breeze and six new restaurants at Seasons 52. Additionally, sales growth reflected same-restaurant sales increases of 5.7 percent at The Capital Grille, 2.3 percent at Bahama Breeze and 5.0 percent at Seasons 52.

Same-restaurant sales is a year-over-year comparison of each period’s sales volumes and is limited to restaurants open at least 16 months, including acquired restaurants, absent consideration of the date we acquired the restaurants.

COSTS AND EXPENSES

Quarter Ended February 27, 2011 Compared to Quarter Ended February 28, 2010

Total costs and expenses were $1.78 billion and $1.70 billion for the quarters ended February 27, 2011 and February 28, 2010, respectively. As a percent of sales, total costs and expenses decreased from 90.6 percent in the third quarter of fiscal 2010 to 89.9 percent in the third quarter of fiscal 2011.

Food and beverage costs were $571.3 million during the third quarter of fiscal 2011, an increase of $32.0 million, or 5.9 percent, from food and beverage costs of $539.3 million during the third quarter of fiscal 2010. As a percent of sales, food and beverage costs increased for the third quarter of fiscal 2011 compared to the third quarter of fiscal 2010, primarily as a result of higher seafood and other commodity costs and menu mix changes which were mostly offset by pricing. Restaurant labor costs were $621.2 million during the third quarter of fiscal 2011, an increase of $8.2 million, or 1.3 percent, from restaurant labor costs of $613.0 million during the third quarter of fiscal 2010. Restaurant labor costs, as a percent of sales, decreased primarily as a result of pricing, lower manager incentive compensation, increased employee productivity and a decrease in employee insurance claims costs. Restaurant expenses (which include utility, lease, property tax, maintenance, credit card, workers’ compensation, insurance, new restaurant pre-opening and other restaurant-level operating expenses) were $285.9 million during the third quarter of fiscal 2011, an increase of $8.0 million, or 2.9 percent, from restaurant expenses of $277.9 million during the third quarter of fiscal 2010. As a percent of sales, restaurant expenses decreased in the third quarter of fiscal 2011 primarily due to lower workers’ compensation expenses and pricing partially offset by higher credit card fees.

Selling, general and administrative expenses were $194.8 million during the third quarter of fiscal 2011, an increase of $25.3 million, or 14.9 percent, from selling, general and administrative expenses of $169.5 million during the third quarter of fiscal 2010. As a percent of sales, selling, general and administrative expenses increased for the third quarter of fiscal 2011 compared to the third quarter of fiscal 2010 primarily due to additional media efforts and higher media costs, higher compensation and travel expenses, and impairment charges related to a restaurant early lease cancellation, partially offset by sales leveraging.

Depreciation and amortization expense was $80.5 million during the third quarter of fiscal 2011, an increase of $2.4 million, or 3.1 percent, from depreciation and amortization expense of $78.1 million during the third quarter of fiscal 2010. As a percent of sales, depreciation and amortization expense decreased between the third quarter of fiscal 2011 and the third quarter of fiscal 2010 primarily due to sales leveraging, partially offset by an increase in depreciable assets related to new restaurants and remodel activities.

Net interest expense was $24.0 million during the third quarter of fiscal 2011, an increase of $3.2 million, or 15.4 percent, from net interest expense of $20.8 million during the third quarter of fiscal 2010. As a percent of sales, net interest expense increased between the third quarter of fiscal 2011 and the third quarter of fiscal 2010 primarily due to the impact in fiscal 2010 of the release of interest reserves associated with the favorable resolution of prior-year tax matters.

Nine Months Ended February 27, 2011 Compared to Nine Months Ended February 28, 2010

Total costs and expenses were $5.05 billion and $4.86 billion for the nine months ended February 27, 2011 and February 28, 2010, respectively. As a percent of sales, total costs and expenses decreased from 92.6 percent in the first nine months of fiscal 2010 to 91.6 percent in the first nine months of fiscal 2011.

Food and beverage costs were $1.57 billion during the first nine months of fiscal 2011, an increase of $62.6 million, or 4.1 percent, from food and beverage costs of $1.51 billion during the first nine months of fiscal 2010. As a percent of sales, food and beverage costs decreased in the first nine months of fiscal 2011 primarily as a result of pricing and lower seafood and other commodity costs. Restaurant labor costs were $1.77 billion during the first nine months of fiscal 2011, an increase of $27.2 million, or 1.6 percent, from restaurant labor costs of $1.74 billion during the first nine months of fiscal 2010. Restaurant labor costs, as a percent of sales, decreased primarily as a result of pricing, increased employee productivity, lower manager incentive compensation and decreased employee insurance claims costs, partially offset by higher unemployment taxes. Restaurant expenses (which include utility, lease, property tax, maintenance, credit card, workers’ compensation, insurance, new restaurant pre-opening and

other restaurant-level operating expenses) were $839.9 million during the first nine months of fiscal 2011, an increase of $37.1 million, or 4.6 percent, from restaurant expenses of $802.8 million during the first nine months of fiscal 2010. As a percent of sales, restaurant expenses decreased in the first nine months of fiscal 2011 primarily due to pricing and lower workers’ compensation expenses partially offset by higher credit card fees.

Selling, general and administrative expenses were $555.9 million during the first nine months of fiscal 2011, an increase of $45.2 million, or 8.9 percent, from selling, general and administrative expenses of $510.7 million during the first nine months of fiscal 2010. As a percent of sales, selling, general and administrative expenses increased for the first nine months of fiscal 2011 compared to the first nine months of fiscal 2010 primarily due to higher media expenses and compensation expenses partially offset by sales leveraging.

Depreciation and amortization expense was $235.2 million during the first nine months of fiscal 2011, an increase of $10.4 million, or 4.6 percent, from depreciation and amortization expense of $224.8 million during the first nine months of fiscal 2010. As a percent of sales, depreciation and amortization expense was flat for the first nine months of fiscal 2011 compared to the first nine months of fiscal 2010 as sales leveraging was offset by the increase in depreciable assets related to new restaurants and remodel activities.

Net interest expense was $72.1 million during the first nine months of fiscal 2011, an increase of $3.1 million, or 4.5 percent, from interest expense of $69.0 million during the first nine months of fiscal 2010. As a percent of sales, net interest expense was flat for the first nine months of fiscal 2011 compared to the first nine months of fiscal 2010.

INCOME TAXES

The effective income tax rate for the quarter and nine months ended February 27, 2011 was 23.8 percent and 26.1 percent, respectively, compared to an effective income tax rate of 23.2 percent and 24.7 percent for the quarter and nine months ended February 28, 2010, respectively. The increase in the effective income tax rate during the third quarter and for the first nine months of fiscal 2011 is primarily attributable to the impact in fiscal 2010 of the favorable resolution of prior-year tax matters expensed in prior years and due to an increase in earnings before income taxes.

NET EARNINGS AND NET EARNINGS PER SHARE FROM CONTINUING OPERATIONS

For the third quarter of fiscal 2011, our net earnings from continuing operations were $151.7 million compared to $134.8 million in the third quarter of fiscal 2010, a 12.5 percent increase, and our diluted net earnings per share from continuing operations were $1.08 compared to $0.95 in the third quarter of fiscal 2010, a 13.7 percent increase. At Olive Garden , lower restaurant labor and restaurant expenses as a percent of sales were partially offset by increased food and beverage costs, selling, general and administrative expenses and depreciation expenses as a percent of sales. As a result, operating profit, as a percent of sales, increased for Olive Garden in the third quarter of fiscal 2011, compared to the third quarter of fiscal 2010. At Red Lobster, lower restaurant labor and restaurant expenses as a percent of sales were partially offset by increased food and beverage costs, selling, general and administrative expenses and depreciation expenses as a percent of sales. As a result, operating profit, as a percent of sales, increased for Red Lobster in the third quarter of fiscal 2011, compared to the third quarter of fiscal 2010. At LongHorn Steakhouse, lower food and beverage costs, restaurant labor and depreciation expenses as a percent of sales were partially offset by increased restaurant expenses and selling, general and administrative expenses as a percent of sales. As a result, operating profit, as a percent of sales, increased for LongHorn Steakhouse in the third quarter of fiscal 2011, compared to the third quarter of fiscal 2010.

For the first nine months of fiscal 2011, our net earnings from continuing operations were $340.8 million compared to $291.0 million in the first nine months of fiscal 2010, a 17.1 percent increase, and our diluted net earnings per share from continuing operations were $2.42 compared to $2.05 in the first nine months of fiscal 2010, an 18.0 percent increase. At Olive Garden , lower restaurant labor, restaurant expenses and depreciation expenses as a percent of sales were partially offset by increased food and beverage costs and selling, general and administrative expenses as a percent of sales. As a result, operating profit, as a percent of sales, increased for Olive Garden for the first nine months of fiscal 2011 compared to the first nine months of fiscal 2010. At Red Lobster, lower food and beverage costs, restaurant labor and restaurant expenses as a percent of sales were partially offset by increased selling, general and administrative expenses, and depreciation expenses as a percent of sales. As a result, operating

profit, as a percent of sales, increased for Red Lobster for the first nine months of fiscal 2011 compared to the first nine months of fiscal 2010. At LongHorn Steakhouse, lower food and beverage costs, restaurant labor and depreciation expenses as a percent of sales were partially offset by increased restaurant expenses and selling, general and administrative expenses as a percent of sales. As a result, operating profit, as a percent of sales, increased for LongHorn Steakhouse for the first nine months of fiscal 2011, compared to the first nine months of fiscal 2010.

SEASONALITY

Our sales volumes fluctuate seasonally. During fiscal 2010 and 2008, our average sales per restaurant were highest in the winter and spring, followed by the summer, and lowest in the fall. During 2009, our average sales per restaurant were highest in the summer and spring, followed by the winter, and lowest in the fall. Holidays, changes in the economy, severe weather and similar conditions may impact sales volumes seasonally in some operating regions. Because of the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

NUMBER OF RESTAURANTS

The following table details the number of restaurants currently reported in continuing operations that were open at the end of the third quarter of fiscal 2011, compared with the number open at the end of fiscal 2010 and the end of the third quarter of fiscal 2010.


	February 27, 2011		May 30, 2010		February 28, 2010
Red Lobster – USA		666		666		664
Red Lobster – Canada		28		28		28

Total		694		694		692


Olive Garden – USA		737		717		704
Olive Garden – Canada		6		6		6

Total		743		723		710


LongHorn Steakhouse		347		331		326
The Capital Grille		44		40		40
Bahama Breeze		25		25		24
Seasons 52		15		11		9
Other		—		—		1

Total		1,868		1,824		1,802

LIQUIDITY AND CAPITAL RESOURCES

Cash flows generated from operating activities provide us with a significant source of liquidity, which we use to finance the purchases of land, buildings and equipment, to pay dividends and to repurchase shares of our common stock. Since substantially all of our sales are for cash and cash equivalents and accounts payable are generally due in five to 30 days, we are able to carry current liabilities in excess of current assets. In addition to cash flows from operations, we use a combination of long-term and short-term borrowings to fund our capital needs.

We currently manage our business and financial ratios to maintain an investment grade bond rating, which has historically allowed flexible access to financing at reasonable costs. Currently, our publicly issued long-term debt carries “Baa2” (Moody’s Investors Service), “BBB” (Standard & Poor’s) and “BBB” (Fitch) ratings. Our commercial paper has ratings of “P-2” (Moody’s Investors Service), “A-2” (Standard & Poor’s) and “F-2” (Fitch). These ratings are as of the date of the filing of this Form 10-Q 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 future 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.

Our revolving credit facility and our commercial paper program serve as our primary source of short-term financing. Accordingly, we maintain a $750.0 million revolving credit facility under a Credit Agreement (Revolving

Credit Agreement) dated September 20, 2007 with Bank of America, N.A. (BOA), as administrative agent, and the lenders (Revolving Credit Lenders) and other agents party thereto. The Revolving Credit Agreement is a senior unsecured credit commitment to the Company and contains customary representations, affirmative and negative covenants (including limitations on liens and subsidiary debt, and a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of default usual for credit facilities of this type. As of February 27, 2011, we were in compliance with all covenants under the Revolving Credit Agreement. Additional information regarding terms and conditions of the Revolving Credit Agreement is incorporated by reference from Note 5 to our unaudited consolidated financial statements in Part I, Item 1 of this report.

As of February 27, 2011, we had no outstanding balances under the Revolving Credit Agreement. As of February 27, 2011, $64.0 million of commercial paper and $68.2 million of letters of credit were outstanding, which are backed by this facility. After consideration of borrowings currently outstanding and commercial paper and letters of credit backed by the Revolving Credit Agreement, as of February 27, 2011, we had $617.8 million of credit available under the Revolving Credit Agreement.

As of February 27, 2011, our long-term debt consisted principally of:

•

$350.0 million of unsecured 5.625 percent senior notes due in October 2012;

•

$100.0 million of unsecured 7.125 percent debentures due in February 2016;

•

$500.0 million of unsecured 6.200 percent senior notes due in October 2017;

•

$150.0 million of unsecured 6.000 percent senior notes due in August 2035;

•

$300.0 million of unsecured 6.800 percent senior notes due in October 2037; and

•

An unsecured, variable rate $8.3 million commercial bank loan due in December 2018 that is used to support two loans from us to the Employee Stock Ownership Plan (ESOP) portion of the Darden Savings Plan.

We also have $75.0 million of unsecured 7.450 percent medium-term notes due in April 2011 included in current liabilities as current portion of long-term debt. During the quarter ended August 29, 2010, we repaid, at maturity, our $150.0 million 4.875 percent senior notes due August 2010 with excess cash from operations. During fiscal 2012, we expect to issue unsecured debt securities that will effectively refinance both the notes that matured during the quarter ended August 29, 2010 and the notes due April 2011.

The interest rates on our $350.0 million senior notes due October 2012, $500.0 million senior notes due October 2017 and $300.0 million senior notes due October 2037 are subject to adjustment from time to time if the debt rating assigned to such series of notes is downgraded below a certain rating level (or subsequently upgraded). The maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial interest rate. As of February 27, 2011, no adjustments to these interest rates had been made.

From time to time we enter into interest rate derivative instruments. See Note 9 to our unaudited consolidated financial statements in Part I, Item 1 of this report, which is incorporated by reference.

A summary of our contractual obligations and commercial commitments as of February 27, 2011 is as follows:


(in millions)	*Payments Due by Period*
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Short-term debt	$	64.0	$	64.0	$	—	$	—	$	—
Long-term debt ⁽¹⁾		2,549.8		166.7		509.0		237.8		1,636.3
Operating leases		801.8		134.2		233.6		176.2		257.8
Purchase obligations ⁽²⁾		725.2		661.0		64.1		0.1		—
Capital lease obligations ⁽³⁾		101.0		5.0		10.5		11.1		74.4
Benefit obligations ⁽⁴⁾		317.6		37.0		69.3		69.5		141.8
Unrecognized income tax benefits ⁽⁵⁾		27.9		3.0		22.1		2.8		—

Total contractual obligations	$	4,587.3	$	1,070.9	$	908.6	$	497.5	$	2,110.3


(in millions)	*Amount of Commitment Expiration per Period*
Other Commercial Commitments	Total Amounts Committed		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Standby letters of credit ⁽⁶⁾	$	114.4	$	114.4	$	—	$	—	$	—
Guarantees ⁽⁷⁾		7.7		1.4		2.6		2.2		1.5

Total commercial commitments	$	122.1	$	115.8	$	2.6	$	2.2	$	1.5

(1)	Includes interest payments associated with existing long-term debt, including the current portion. Variable-rate interest payments associated with the ESOP loan were estimated based on an average interest rate of 2.5 percent. Excludes issuance discount of $4.5 million.

(2)	Includes commitments for food and beverage items, supplies, capital projects and other miscellaneous commitments.

(3)	Capital lease obligations include imputed interest of $43.3 million over the life of the obligations.

(4)	Includes expected contributions associated with our defined benefit plans and payments associated with our postretirement benefit plan and our non-qualified deferred compensation plan through fiscal 2020.

(5)	Includes interest on unrecognized income tax benefits of $3.5 million, $0.6 million of which relates to contingencies expected to be resolved within one year.

(6)

Includes letters of credit for $96.4 million of workers’ compensation and general liabilities accrued in our consolidated financial statements, $68.2 million of which are backed by our Revolving Credit Agreement, letters of credit for $1.4 million of lease payments included in the contractual operating lease obligation payments noted above and other letters of credit totaling $16.6 million.

(7)	Consists solely of guarantees associated with leased properties that have been assigned to third parties. We are not aware of any non-performance under these arrangements that would result in our having to perform in accordance with the terms of the guarantees.

Our Board of Directors has authorized us to repurchase up to an aggregate of 187.4 million shares of our common stock. During the quarter and nine months ended February 27, 2011, we repurchased 2.3 million and 6.3 million shares of our common stock, respectively, compared to 0.4 million and 0.5 million shares for the quarter and nine months ended February 28, 2010, respectively. As of February 27, 2011, we have repurchased a total of 160.4 million shares of our common stock. The repurchased common stock is reflected as a reduction of stockholders’ equity.

We may from time to time repurchase our outstanding debt in privately negotiated transactions. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements and other factors.

Net cash flows provided by operating activities of continuing operations decreased to $662.7 million for the first nine months of fiscal 2011, from $752.6 million for the first nine months of fiscal 2010. The decrease was primarily due to the timing of inventory purchases and overall product demand, and higher income tax payments during the first nine months of 2011, partially offset by an increase in net earnings.

Net cash flows used in investing activities of continuing operations increased to $390.5 million for the first nine months of fiscal 2011, from $320.7 million for the first nine months of fiscal 2010, and included capital expenditures incurred principally for building new restaurants, remodeling existing restaurants, replacing equipment and technology initiatives. Capital expenditures were $390.1 million for the first nine months of fiscal 2011, compared to $324.1 million for the first nine months of fiscal 2010. The increased expenditures for the first nine months of fiscal 2011 resulted primarily from an increase in remodel activity and new restaurant construction during fiscal 2011.

Net cash flows used in financing activities of continuing operations increased to $432.3 million for the first nine months of fiscal 2011, from $235.0 million for the first nine months of fiscal 2010. Purchases of treasury stock were $275.9 million during the first nine months of fiscal 2011, an increase from purchases of $16.5 million during the first nine months of fiscal 2010. Net cash flows used in financing activities also included $132.0 million in dividends paid for the first nine months of fiscal 2011, compared to $104.7 million in dividends paid for the first nine months of fiscal 2010. On June 22, 2010, the Board of Directors approved an increase in the quarterly dividend to $0.32 per share, which indicates an annual dividend of $1.28 per share in fiscal 2011. In fiscal 2010, we paid quarterly dividends of $0.25 per share. Additionally, net cash flows used in financing activities for the first nine months of fiscal 2011 included the repayment of $151.5 million of long-term debt as compared to $1.2 million in the first nine months of fiscal 2010. The increases in net cash used in financing activities were partially offset by proceeds from the issuance of short-term debt of $64.0 million in fiscal 2011, as compared to repayments of short-term debt of $150.0 million during fiscal 2010.

We are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity, capital expenditures or capital resources. We are not aware of any trends or events that would materially affect our capital requirements or liquidity. We believe that our Revolving Credit Agreement and internal cash generating capabilities will be sufficient to finance our ongoing capital expenditures, dividends, stock repurchase program and other operating activities through fiscal 2011.

It is possible that changes in circumstances, existing as of our annual impairment test on the first day of the fourth quarter of fiscal 2010 or at other times in the future, or in the numerous estimates associated with management’s judgments, assumptions and estimates made in assessing the fair value of our goodwill and other indefinite-lived intangible assets, could result in an impairment charge of a portion or all of these assets. If we recorded an impairment charge, our financial position and results of operations would be adversely affected and our leverage ratio for purposes of our credit agreement would increase. If such leverage ratio were to exceed the maximum permitted under our credit agreement, we would be in default under our credit agreement. As of February 27, 2011, a write down of goodwill, other indefinite-lived intangible assets, or any other assets in excess of approximately $1.13 billion, on an after-tax basis, would have been required to cause our leverage ratio to exceed the permitted maximum. Due to the seasonal nature of our business, a lesser amount of impairment in future quarters could cause our leverage ratio to exceed the permitted maximum.

FINANCIAL CONDITION

Our current assets totaled $698.7 million as of February 27, 2011, compared to $678.5 million as of May 30, 2010. Increases in receivables, net, inventories, prepaid income taxes, prepaid expenses and other current assets and deferred income taxes were partially offset by a decrease in cash and cash equivalents resulting from the repayment of our $150.0 million August 2010 senior notes.

Our current liabilities totaled $1.33 billion as of February 27, 2011, compared to $1.25 billion as of May 30, 2010. Short-term debt increased $64.0 million, primarily due to our use of short-term financing to repurchase shares of our common stock. Unearned revenues increased $62.4 million, primarily due to seasonal fluctuations in sales and redemptions of our gift cards. Other current liabilities increased $69.1 million, primarily as a result of an increase in fair value of our deferred compensation plan. These increases were partially offset by the decrease in current portion of long-term debt due to the repayment of our $150.0 million August 2010 senior notes during the first quarter of fiscal 2011.

CRITICAL ACCOUNTING POLICIES

We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. We have discussed the development, selection and disclosure of those estimates with the Audit Committee. Our critical accounting policies have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year ended May 30, 2010.

APPLICATION OF NEW ACCOUNTING STANDARDS

Information regarding application of new accounting standards is incorporated by reference from Note 12 to our unaudited consolidated financial statements in Part I, Item 1 of this report.

FORWARD-LOOKING STATEMENTS

Statements set forth in or incorporated into this report regarding the expected net increase in the number of our restaurants, U.S. same-restaurant sales, total sales growth, diluted net earnings per share growth, and capital expenditures in fiscal 2011, and all other statements that are not historical facts, including without limitation statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of Darden Restaurants, Inc. and its subsidiaries that are preceded by, followed by or that include words such as “may,” “will,” “expect,” “intend,” “anticipate,” “continue,” “estimate,” “project,” “believe,” “plan” or similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This statement is included for purposes of complying with the safe harbor provisions of that Act. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements for any reason to reflect events or circumstances arising after such date. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. In addition to the risks and uncertainties of ordinary business obligations, and those described in information incorporated into this report, the forward-looking statements contained in this report are subject to the risks and uncertainties described in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended May 30, 2010, which are summarized as follows:

•

Food safety and food-borne illness concerns throughout the supply chain;

•

Litigation, including allegations of illegal, unfair or inconsistent employment practices, by employees, guests, suppliers, shareholders or others, regardless of whether the allegations made against us are valid or we are ultimately found liable;

•

Unfavorable publicity, or a failure to respond effectively to adverse publicity, relating to food safety or other concerns that could harm our reputation;

•

Federal, state and local regulation of our business, including laws and regulations relating to food safety, minimum wage and other labor issues including unionization, health care reform, menu labeling, building and zoning requirements, zoning, land use and environmental laws including climate change regulations, and liquor laws;

•

Labor and insurance costs, including increased labor costs as a result of federal and state-mandated increases in minimum wage rates and increased insurance costs as a result of increases in our current insurance premiums;

•

A material information technology failure, inadequacy, interruption or breach of security;

•

The health concerns arising from food-related pandemics, outbreaks of flu viruses or other diseases;

•

The intensely competitive nature of the restaurant industry, especially pricing, service, location, personnel and type and quality of food;

•

Factors impacting our ability to drive sufficient profitable sales growth through brand relevance, operating excellence, opening new restaurants and developing or acquiring new dining brands, including lower-than-expected sales of newly-opened restaurants and acquisition risks;

•

The impact of the substantial indebtedness we incurred in connection with the acquisition of RARE;

•

Our plans to expand newer brands like Bahama Breeze and Seasons 52 that have not yet proven their long-term viability may not be successful and could require us to make substantial further investments in these brands and result in losses and impairments;

•

A lack of suitable new restaurant locations or a decline in the quality of the locations of our current restaurants;

•

Higher-than-anticipated costs to open, close, relocate or remodel restaurants;

•

Increased advertising and marketing costs;

•

A failure to develop and recruit effective leaders or the loss of key personnel;

•

The price and availability of key food products, ingredients and utilities used by our restaurants and a failure to achieve economies of scale in purchasing;

•

The impact of shortages or interruptions in the delivery of food and other products from third party vendors and suppliers;

•

The impact of volatility in the market value of derivatives we use to hedge commodity prices;

•

Economic and business factors specific to the restaurant industry and other general macroeconomic factors including unemployment, energy prices and interest rates, severe weather conditions including hurricanes, and public safety conditions, including actual or threatened armed conflicts or terrorist attacks;

•

The impact of disruptions in the financial markets, including the availability and cost of credit and an increase in pension plan expenses;

•

The negative effect of a possible impairment in the carrying value of our goodwill or other intangible assets; and

•

A failure of our internal control over financial reporting;

Any of the risks described above or elsewhere in this report or our other filings with the SEC could have a material impact on our business, financial condition or results of operations. It is not possible to predict or identify all risk factors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. Therefore, the above is not intended to be a complete discussion of all potential risks or uncertainties.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to a variety of market risks, including fluctuations in interest rates, foreign currency exchange rates, compensation and commodity prices. To manage this exposure, we periodically enter into interest rate, foreign currency exchange rate, equity forward and commodity instruments for other than trading purposes (see Note 9 to our unaudited consolidated financial statements in Part I, Item 1 of this report).

We use the variance/covariance method to measure value at risk, over time horizons ranging from one week to one year, at the 95 percent confidence level. As of February 27, 2011, our potential losses in future net earnings resulting from changes in floating rate debt interest rate, interest rate instrument, foreign currency exchange rate, equity forwards and commodity instrument exposures were approximately $53.9 million over a period of one year. The value at risk from an increase in the fair value of all of our long-term fixed rate debt, over a period of one year, was approximately $121.6 million. The fair value of our long-term fixed rate debt, including the amounts included in current liabilities, during the first nine months of fiscal 2011 averaged $1.63 billion, with a high of $1.77 billion and a low of $1.55 billion. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows by targeting an appropriate mix of variable and fixed rate debt.

Item 4.

Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of February 27, 2011, the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of February 27, 2011.

During the fiscal quarter ended February 27, 2011, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

See the discussion of legal proceedings contained in the third paragraph of Note 11 to our unaudited consolidated financial statements in Part I, Item 1 of this report, which is incorporated herein by reference.

Item 1A.

Risk Factors

There have been no material changes from the risk factors disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended May 30, 2010.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The table below provides information concerning our repurchase of shares of our common stock during the quarter ended February 27, 2011. Since commencing repurchases in December 1995, we have repurchased a total of 160.4 million shares through February 27, 2011 under authorizations from our Board of Directors to repurchase an aggregate of 187.4 million shares.


	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (2)
November 29, 2010 through January 2, 2011		663,269	$	46.87		663,269		28,628,552
January 3, 2011 through January 30, 2011		1,603,678	$	46.20		1,603,678		27,024,874
January 31, 2011 through February 27, 2011		1,363	$	48.10		1,363		27,023,511

Total		2,268,310	$	46.40		2,268,310		27,023,511

(1)

All of the shares purchased during the quarter ended February 27, 2011 were purchased as part of our repurchase program. On December 17, 2010, our Board of Directors approved an additional share repurchase authorization of 25.0 million shares which was announced publicly in a press release issued on December 20, 2010, bringing the total shares authorized to be repurchased to 187.4 million shares. There is no expiration date for our program. The number of shares purchased includes shares withheld for taxes on vesting of restricted stock, shares delivered or deemed to be delivered to us on tender of stock in payment for the exercise price of options, and shares reacquired pursuant to tax 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 forfeiture of restricted stock.

(2)	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 shares.

Item 6.

Exhibits


Exhibit No.		Exhibit Title

*10		Amended and Restated Darden Restaurants, Inc. Benefits Trust Agreement dated as of March 23, 2011 between us and Wells Fargo Bank, National Association.

12		Computation of Ratio of Consolidated Earnings to Fixed Charges.

31(a)		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31(b)		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32(a)		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32(b)		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Schema Document

101.CAL		XBRL Calculation Linkbase Document

101.DEF		XBRL Definition Linkbase Document

101.LAB		XBRL Label Linkbase Document

101.PRE		XBRL Presentation Linkbase Document

*	Items marked with an asterisk are management contracts or compensatory plans or arrangements required to be filed as an exhibit pursuant to Item 15 of Form 10-K and Item 601(b)(10)(iii)(A) of Regulation S-K.

SIGNATURE

Pursuant to the requirements 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.


	DARDEN RESTAURANTS, INC.

Dated: April 4, 2011	By:	/s/ C. Bradford Richmond
		C. Bradford Richmond
		Senior Vice President and Chief Financial Officer
		(Principal financial officer)

INDEX TO EXHIBITS


Exhibit Number		Exhibit Title

*10		Amended and Restated Darden Restaurants, Inc. Benefits Trust Agreement dated as of March 23, 2011 between us and Wells Fargo Bank, National Association.

12		Computation of Ratio of Consolidated Earnings to Fixed Charges.

31(a)		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31(b)		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32(a)		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32(b)		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Schema Document

101.CAL		XBRL Calculation Linkbase Document

101.DEF		XBRL Definition Linkbase Document

101.LAB		XBRL Label Linkbase Document

101.PRE		XBRL Presentation Linkbase Document

*	Items marked with an asterisk are management contracts or compensatory plans or arrangements required to be filed as an exhibit pursuant to Item 15 of Form 10-K and Item 601(b)(10)(iii)(A) of Regulation S-K.

Exhibit 10

AMENDED AND RESTATED

DARDEN RESTAURANTS, INC.

BENEFITS TRUST AGREEMENT

This AMENDED AND RESTATED BENEFITS TRUST AGREEMENT (“Trust Agreement”) entered into as of March 23, 2011, is between Darden Restaurants, Inc., (the “Grantor”) and Wells Fargo Bank, National Association, as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association, as trustee (the “Trustee”).

WHEREAS, Grantor and Trustee entered into that certain Darden Restaurants, Inc. Benefits Trust Agreement dated October 3, 1995, as amended by Amendment No. 1 to the Darden Restaurants, Inc. Benefits Trust Agreement dated December 19, 2008 (the “Original Trust Agreement”); and

WHEREAS, Grantor and Trustee now desire to amend and restate the Original Trust Agreement as provided herein.

NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties agree to amend and restate the Original Agreement as follows:

1. Purpose. The purpose of this trust (the “Trust”), is to provide a trust account to (a) hold assets of the Grantor as a reserve for the discharge of the Grantor’s obligations to certain individuals (the “Beneficiaries”) entitled to receive cash settlements and/or benefits under the Management Continuity Agreement(s) of Darden Restaurants, Inc. (“Darden”), and any other supplemental benefits plan or deferred compensation plan that the Grantor so designates in writing to the Trustee from time to time including those plans designated in Exhibit A attached hereto and made a part hereof (the “Plans”), and (b) invest, reinvest, disburse and distribute those assets and the earnings thereon as provided hereunder and in the Plans.

2. Trust Corpus. The Grantor hereby transfers to the Trustee and the Trustee hereby accepts and agrees to hold, in trust, the sum of Ten Dollars ($10.00) plus such cash and/or property, if any, transferred to the Trustee by the Grantor or on behalf of the Grantor pursuant to obligations incurred under any or all of the Plans and the earnings thereon, and such cash and/or property, together with the earnings thereon and together with any other cash or property received by the Trustee pursuant to Section 5(b) of this Trust Agreement, shall constitute the trust estate and shall be held, managed and distributed as hereinafter provided. The Grantor shall execute any and all instruments necessary to vest the Trustee with full title to the property hereby transferred.

3. Grantor Trust. The Trust is intended to be a trust of which the Grantor is treated as the owner for federal income tax purposes in accordance with the provisions of Sections 671 through 679 of the Internal Revenue Code of 1986, as amended (the “Code”). If the Trustee, in its sole discretion, deems it necessary or advisable for the Grantor

and/or the Trustee to undertake or refrain from undertaking any actions (including, but not limited to, making or refraining from making any elections or filings) in order to ensure that the Grantor is at all times treated as the owner of the Trust for federal income tax purposes, the Grantor and/or the Trustee will undertake or refrain from undertaking (as the case may be) such actions. The Grantor hereby irrevocably authorizes the Trustee to be its attorney-in-fact for the purpose of performing any act which the Trustee, in its sole discretion, deems necessary or advisable in order to accomplish the purposes and the intent of this Section 3. Grantor shall indemnify and hold Trustee harmless in acting or refraining from acting in accordance with the provisions of this Section 3.

4. Irrevocability of Trust. The Trust shall be irrevocable and may not be altered or amended in any substantive respect, or revoked or terminated by the Grantor in whole or in part, without the express written consent of a majority of the Beneficiaries of the Trust; provided, however, that the Trust may be amended, as may be necessary either (i) to obtain a favorable ruling from the Internal Revenue Service with respect to the tax consequences of the establishment and settlement of the Trust, or (ii) to make nonsubstantive changes, which have no effect upon the amount of any Beneficiary’s benefits, the time of receipt of benefits, the identity of any recipient of benefits, or the reversion of any assets to the Grantor prior to the Trustee’s satisfaction of all the Trustee’s obligations hereunder; provided, further, that in the event of a “Change of Control” the Trust may not be altered or amended in any substantive respect, or revoked or terminated by the Grantor’s successor unless a majority of the Beneficiaries, determined as of the day before such Change in Control, agree in writing to such an alteration, amendment, revocation or termination. For the purpose of this Benefits Trust Agreement, a “Change of Control” shall mean an event required to be reported in response to Item 5.01 of the Current Report of a Form 8-K of the Grantor, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 (the “Exchange Act”); provided that, without limitation, such a “Change of Control” shall be deemed to have occurred if: (i) a third person, including a “group” as defined in Section 13(d)(3) of the Exchange Act, becomes the beneficial owner, directly or indirectly, of 15% or more of the combined voting power of the Grantor’s outstanding voting securities ordinarily having the right to vote for the election of directors of the Grantor; or (ii) individuals who constitute the Board of Directors of the Grantor as of the date hereof (the “Incumbent Board”) cease for any reason to constitute at least two-thirds thereof, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Grantor’s stockholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board shall be, for purposes of this clause (ii), considered as though such persons were a member of the Incumbent Board. The Grantor shall give Trustee notice of a Change of Control and Trustee may rely on such notice if given in accordance with Section 14(a) of this Trust Agreement. Trustee shall have no duty to inquire whether a Change of Control has occurred.

5. Investment of Trust Assets.

(a) Until the Trustee has distributed all of the assets of the Trust in accordance with the terms hereof, Grantor shall have the sole power and responsibility for the

investment of the Trust assets, and Trustee shall comply with written directions from the Grantor; provided, however, that if there is a Change of Control, the Trust’s investment objectives, guidelines, restrictions or directions may not be changed by the Grantor’s successor unless a majority of the Beneficiaries, determined as of the day before such Change of Control, agree, in writing, to such a change. The Trustee shall have no responsibility to review, initiate action, or make recommendations regarding the investment of Trust assets. Prior to issuing any such directions, the Grantor shall certify to the Trustee the person(s) who have the authority to issue such directions.

(b) In the administration of the Trust, the Trustee shall have the following powers; however, all powers regarding the investment of the Trust assets shall be exercised solely pursuant to direction of the Grantor:

(1) To hold assets of any kind, including shares of any registered investment company, whether or not the Trustee or any of its affiliates provides investment advice or other services to such company and receives compensation for the services provided;

(2) To sell, exchange, assign, transfer, and convey any security or property held in the Trust, at public or private sale, at such time and price and upon such terms and conditions (including credit) as directed;

(3) To invest and reinvest assets of the Trust (including accumulated income) as directed;

(4) To vote, tender, or exercise any right appurtenant to any stock or securities held in the Trust as directed;

(5) To consent to and participate in any plan for the liquidation, reorganization, consolidation, merger or any similar action of any corporation, any security of which is held in the Trust as directed;

(6) To sell or exercise any “rights” issued on any securities held in the Trust as directed;

(7) To cause all or any part of the assets of the Trust to be held in the name of the Trustee (which instance need not disclose its fiduciary capacity) or, as permitted by laws, in the name of any nominee, and to acquire for the Trust any investment in bearer form, but the books and records of the Trust shall at all times show that all such investments are part of the Trust and Trustee shall hold evidence of title to all such investments;

(8) To make such distributions in accordance with the provisions of this Trust Agreement;

(9) To hold a portion of the Trust for the ordinary administration and for the disbursement of funds in cash, without liability for interest thereon for such period of time as necessary, notwithstanding that the Trustee or an affiliate of the Trustee may

benefit directly or indirectly from such uninvested amounts. It is acknowledged that the Trustee’s handling of such amounts is consistent with usual and customary banking and fiduciary practices, and any earnings realized by the Trustee or its affiliates will be compensation for its bank services in addition to its regular fees; and

(10) To invest in deposit products of the Trustee or its affiliates, or other bank or similar financial institution, subject to the rules and regulations governing such deposits, and without regard to the amount of such deposit, as directed.

Notwithstanding anything to the contrary herein, the Trustee is expressly prohibited from exercising any powers vested in it primarily for the benefit of the Grantor rather than for the benefit of the Beneficiaries. The Trustee shall not have the power to purchase, exchange, or otherwise deal with or dispose of the assets of the Trust for less than adequate and full consideration in money or money’s worth.

6. Distribution of Trust Assets.

(a) Subject to the provisions of paragraph (b) below, at such time as a Beneficiary is entitled to a payment under any of the Plans, the Beneficiary shall be entitled to receive from the Trust (i) an amount in cash equal to the amount to which the Beneficiary is entitled under the Plan or Plans at such time, less (ii) any payments previously made to the Beneficiary by the Grantor with respect to such amount pursuant to the terms of the Plans. The commencement of payments from the Trust shall be conditioned on the Trustee’s prior receipt of a written instrument from the Beneficiary in a form satisfactory to the Trustee containing representations as to (A) the amount to which the Beneficiary is entitled under the Plans, (B) the fact that the Beneficiary has requested the payment of such amount from the Grantor pursuant to the terms of the Plans, (C) the amount, if any, the Beneficiary has received from the Grantor under the Plans with respect to such amount, and (D) the amount to be paid to the Beneficiary by the Trust (i.e., the difference between (A) and (C) above). The Trustee shall make provision for the reporting and withholding of federal and state taxes (other than FICA, FUTA or local taxes) that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plans and shall pay such amounts withheld to the appropriate taxing authorities. Notwithstanding the foregoing, the Grantor must direct the Trustee if any tax withholding is required on a payment subject to state/local taxes in a state/locality other than the state/locality in which the participant currently resides (“Non-resident taxes”). If applicable, the Grantor shall direct the Trustee to remit any FICA, FUTA or local taxes with respect to the benefit payments to the Grantor and the Grantor shall have the responsibility for determining, reporting and paying the FICA, FUTA or local taxes to the appropriate taxing authorities. The Grantor shall indemnify and hold harmless the Trustee from any and all liability to which the Trustee may become subject due to the Grantor’s failure to properly withhold and remit FICA, FUTA or local taxes in connection with payments from the Trust, or for failure to direct the Trustee regarding withholding on any payment subject to Non-resident taxes. All payments to a Beneficiary from the Trust shall be made in accordance with the provisions of the applicable Plan and any applicable requirements of Section 409A of the Code. Grantor shall indemnify and hold Trustee harmless in making any payment in accordance with the provisions of this paragraph.

(b) The Trustee shall make or commence payment to the Beneficiary in accordance with the Beneficiary’s representations not later than 20 business days after its receipt thereof; provided, however, that before the Trustee makes or commences any such payment and not later than 7 business days after its receipt of the Beneficiary’s representations, the Trustee will request in writing the Grantor’s agreement that the Beneficiary’s representations are accurate with respect to the amount, fact, and time of payment to the Beneficiary. The Trustee shall enclose with such request a copy of the Beneficiary’s representations and written advice to the Grantor that it must respond to the Trustee’s request on or before the 20th day (which date shall be set forth in such written advice) after the Beneficiary furnished such representations to the Trustee. If the Grantor, in a writing delivered to the Trustee, agrees with the Beneficiary’s representations in all respects, or if the Grantor does not respond to the Trustee’s request by the 20th day deadline, the Trustee shall make payment in accordance with the Beneficiary’s representations. If the Grantor advises the Trustee in writing on or before the 20th day deadline that it does not agree with any or all of the Beneficiary’s representations, the Trustee immediately shall take whatever steps it in its sole discretion, deems appropriate, including, but not limited to, make payment of any uncontested amount, as well as a review of the notice furnished by the Grantor to attempt to resolve the difference(s) between the Grantor and the Beneficiary. If, however, the Trustee is unable to resolve such difference(s) to its satisfaction within 60 business days after its receipt of the Beneficiary’s representations, the Trustee shall make payment at such time and in such form and manner as is allowed under the Plans as of the date first stated above and as the Trustee, in its sole discretion, selects as applicable to such amounts and in accordance with Section 409A of the Code. Grantor shall indemnify and hold Trustee harmless in making or refraining from making any payment in accordance with the provisions of this paragraph.

(c) Notwithstanding any other provision of the Trust Agreement to the contrary, the Trustee shall make payments hereunder to Beneficiaries before such payments are otherwise due under the provisions of paragraph (b) above and after a Change of Control if it is directed by the Grantor acting in good faith, based on a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his delegate, or a decision by a court of competent jurisdiction involving a Beneficiary, or a closing agreement made under Code Section 7121 that is approved by the Internal Revenue Service and involves a Beneficiary, that (i) any Plan fails to meet the requirements of Section 409A of the Code, including without limitation 409A(b), and (ii) a Beneficiary has recognized or will recognize income for federal income tax purposes with respect to amounts that are or will be payable to the Beneficiary under the Plans; provided, however, that the accelerated payment of any amounts hereunder that are subject to Code Section 409A shall only be made to the extent the Plan fails to meet the requirements of Code Section 409A and the regulations thereunder and the amount of any such payment shall not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code Section 409A and the regulations thereunder.

(d) The Grantor may make payment of benefits directly to a Beneficiary as they become due under the terms of the Plans, and may request reimbursement for such payments upon presentation of appropriate evidence of payment to the Trustee. Grantor shall notify the Trustee of its decision to make payments of benefits directly prior to the time amounts are

payable to Beneficiaries. In addition, if the principal of the Trust and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plans, Grantor shall make the balance of each payment as it falls due. The Trustee shall notify the Grantor where principal and earnings are not sufficient. The Trustee shall not be liable for the inadequacy of the Trust to pay all amounts due under the Plans.

(e) Unless (contemporaneously with the Beneficiary’s submission of the written instrument referred to in paragraph (a) hereof) a Beneficiary furnishes documentation in form and substance satisfactory to the Trustee that no withholding is required with respect to a payment to be made to the Beneficiary from the Trust, the Trustee may deduct from any such payment any federal, state or local taxes required by law to be withheld by the Trustee.

(f) The Trustee shall provide the Grantor with written confirmation of the fact and time of any commencement of payments hereunder within 10 business days after any payments commence to a beneficiary. The Grantor shall notify the Trustee in the same manner of any payments it commences to make to a Beneficiary pursuant to the Plans.

(g) Grantor shall indemnify and hold Trustee harmless in making or refraining from making any payment or any calculations in accordance with the provisions of this Section 6, in particular but not limited to (i) making payments to one Beneficiary before payments are made to other Beneficiaries, and (ii) making payments without determination of whether there are sufficient assets in the Trust to satisfy the known or unknown claims of all of the Beneficiaries.

7. Termination of the Trust and Reversion of Trust Assets. The Trust shall terminate upon the first to occur of (i) the payment by the Grantor of all amounts due the Beneficiaries under each of the Plans and the receipt by the Trustee of a release to that effect from each of the Beneficiaries with respect to payments made to the Beneficiaries or (ii) the twenty-first anniversary of the death of the last survivor of the Beneficiaries who are in being on the date of the execution of this Trust Agreement. Upon termination of the Trust, any and all assets remaining in the Trust, after the payment to the Beneficiaries of all amounts to which they are entitled and after payment of the expenses and compensation in Sections 10 and 15(i) of this Trust Agreement, shall revert to the Grantor and the Trustee shall promptly take such action as shall be necessary to transfer any such assets to the Grantor. Notwithstanding the above, the Grantor shall be obligated to take whatever steps are necessary to ensure that the Trust is not terminated for a period of five (5) years following a Change of Control, such steps to include, but not being limited to, the transfer to the Trustee of cash or other assets pursuant to the provisions of Section 5(b) hereof.

8. Responsibility of Trustee. The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by the Grantor which is contemplated by and consistent with the terms of this Trust, and Grantor shall indemnify and hold harmless the Trustee, its officers, employees, and agents from and against all liabilities,

losses, and claims (including reasonable attorney’s fees and cost of defense) for actions taken or omitted by the Trustee in accordance with the terms of this Trust. In the event of a dispute between the Grantor and the Trustee, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. In a dispute between the Trust and the Grantor, the Trustee may only pay or settle a claim asserted against the Trust by the Grantor if it is compelled to do so by a final order of a court of competent jurisdiction.

(a) If the Trustee undertakes or defends any litigation arising in connection with this Trust, the Grantor agrees to promptly indemnify the Trustee against the Trustee’s costs, expenses and liabilities (including without limitation attorney’s fees and expenses) relating thereto and to be primarily liable for such payments and any costs incurred by Trustee in receiving such amounts from Grantor.

(b) The Trustee may consult with legal counsel (who may also be counsel for the Grantor generally) with respect to any of its duties or obligations hereunder, and the Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder. The Grantor shall promptly pay the expenses for services by such individuals or entities and any costs incurred by Trustee in receiving such amounts from Grantor.

(c) The Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly provided otherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. The Trustee shall not be liable for the failure or omission of any insurance company for any reason to pay any benefits or furnish any services under the policies or contracts. Grantor shall have the sole responsibility to determine whether any insured under any insurance policy held in the Trust is deceased.

(d) However, notwithstanding the provision of Section 8(c) above, the Trustee may loan to Grantor the proceeds of any borrowing against an insurance policy held as an asset of the Trust.

(e) Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, with the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.

9. Resignation of Trustee and Appointment of Successor Trustee. The Trustee shall have the right to resign upon 30 days’ advance written notice to the Grantor, during which time the Grantor shall appoint a “Qualified Successor Trustee.” If no Qualified Successor Trustee accepts such appointment, the resigning Trustee shall petition a court of competent jurisdiction for the appointment of a “Qualified Successor Trustee.” For this purpose, a “Qualified

Successor Trustee” may be an individual or a corporation but may not be the Grantor, any entity or person who would be a “related or subordinate party” to the Grantor within the meaning of Section 672(c) of the Code or a corporation that would be a member of an “affiliated group” of corporations including the Grantor within the meaning of Section 1504(a) of the Code if the words “80 percent” wherever they appear in that section were replaced by the words “50 percent.” Upon the written acceptance by the Qualified Successor Trustee of the trust and upon approval of the resigning Trustee’s final account by those entitled thereto, the resigning Trustee shall be discharged.

10. Trustee Compensation. The Trustee shall be entitled to receive as compensation for its services hereunder the compensation (a) as negotiated and agreed to by the Grantor and the Trustee, or (b) if not negotiated or if the parties are unable to reach agreement, as allowed a trustee under the laws of the State of Minnesota in effect at the time such compensation is payable. Such compensation shall be paid by the Grantor; provided, however, that to the extent such compensation is not paid by the Grantor, subject to the provisions of Section 15(i) hereof, it shall be charged against and paid from the Trust and the Grantor shall reimburse the Trust for any such payment made from the Trust within 30 days of its receipt from the Trustee of written notice of such payment.

11. Trustee’s Consent to Act and Indemnification of the Trustee. The Trustee hereby grants and consents to act as Trustee hereunder. The Grantor agrees to indemnify the Trustee and hold it harmless from and against all claims, liabilities, legal fees and expenses that may be asserted against it, otherwise than on account of the Trustee’s own negligence or willful misconduct (as found by a final judgment of a court of competent jurisdiction) by reason of the Trustee’s taking or refraining from taking any action in connection with the Trust, whether or not the Trustee is a party to a legal proceeding or otherwise.

12. Prohibition Against Assignment. No Beneficiary shall have any preferred claim on, or any beneficial ownership interest in, any assets of the Trust before such assets are paid to the Beneficiary as provided in Section 6, and all rights created under the Trust and the Plans shall be unsecured contractual rights of the Beneficiary against the Grantor. No part of, or claim against, the assets of the Trust may be assigned, anticipated, alienated, encumbered, garnished, attached or in any other manner disposed of by any of the Beneficiaries, and no such part or claim shall be subject to any legal process or claims of creditors of any of the Beneficiaries.

13. Annual Accounting. The Trustee shall keep accurate and detailed accounts of all investments, receipts and disbursements and other transactions hereunder, and, within ninety days following the close of each calendar year, and within ninety days after the Trustee’s resignation or termination of the Trust as provided herein, the Trustee shall render a written account of its administration of the Trust to the Grantor by submitting a record of receipts, investments, disbursements, distributions, gains, losses, assets on hand at the end of accounting period and other pertinent information, including a description of all securities and investments purchased and sold during such calendar year. Written approval of an account shall, as to all matters shown in the account, be binding upon the Grantor and

shall forever release and discharge the Trustee from any liability or accountability. The Grantor will be deemed to have given written approval if the Grantor does not object in writing to the Trustee within ninety days (90) after the date of receipt of such account from the Trustee. The Trustee shall be entitled at any time to institute an action in a court of competent jurisdiction for a judicial settlement of its account.

14. Notices. Any notice or instructions required under any of the provisions of this Trust Agreement shall be deemed effectively given only if such notice meets the following requirements:

(a) Notice of a Change of Control pursuant to Section 4 of this Trust Agreement shall be in writing and signed as to the Grantor by any Board-elected officer. For this purpose, Grantor shall provide Trustee with a current list of Board-elected officers, together with specimen copies of their signatures, within twenty days of the date this trust Agreement is executed, and shall update such list in the event of any change. Trustee may rely exclusively on the latest list that it has received to determine who is authorized to give notice under this Section 14(a), regardless of the date it was last updated, and Grantor shall indemnify and hold Trustee harmless for any action taken or not taken in reliance on such list. In the event Trustee receives notice of a Change of Control, Trustee may, in its sole discretion, request written confirmation of such notice from the Grantor, with or without attestation by the Secretary or an Assistant Secretary of the Grantor.

(b) Subject to the notice requirements of Section 14(a) and any notice given in connection with receipt by the Trustee of any cash or property in accordance with Section 8(a), any notice or instructions required under any provisions of this Trust Agreement shall be in writing and signed, as to Grantor, by either the Chairman, President or Treasurer and attested by the Secretary or an Assistant Secretary and as to the Trustee, by an authorized officer, and is delivered personally or by certified or registered mail, return receipt requested and postage prepaid, addressed to the addresses as set forth below of the parties hereto. The addresses of the parties are as follows:

(i)

The Grantor:

Darden Restaurants, Inc.

1000 Darden Center Drive

Orlando, FL 32837

Attention: General Counsel

(ii)

The Trustee:

Wells Fargo Bank, National Association

Institutional Retirement and Trust

MAC G0147-056

360 Interstate North Pwy, Suite 585

Atlanta, Ga. 30328

Attention: Monique Etheridge, Relationship Manager

For purposes of this Section 14, the Trustee shall treat any facsimile notice or instructions received by telecopy as if it were an originally executed notice or instructions if it otherwise meets the requirements of Section 14(a) or 14(b), as the case may be.

15. Miscellaneous Provisions.

(a) This Trust Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota applicable to contracts made and to be performed therein and the Trustee shall not be required to account in any court other than one of the courts of such state.

(b) All section headings herein have been inserted for convenience of reference only and shall in no way modify, restrict or affect the meaning or interpretation of any of the terms or provisions of this Trust Agreement.

(c) This Trust Agreement is intended as a complete and exclusive statement of the agreement of the parties hereto, supersedes all previous agreements or understandings among them and may not be modified or terminated orally.

(d) The term “Trustee” shall include any successor Trustee.

(e) If a Trustee or Custodian hereunder is a bank or trust company, any corporation resulting from any merger, consolidation or conversion to which such bank or trust company may be a party, or any corporation otherwise succeeding generally to all or substantially all of the assets or business of such bank or trust company, shall be the successor to it as Trustee or custodian hereunder, as the case may be without the execution of any instrument or any further action on the part of any party hereto.

(f) If any provision of this Trust Agreement shall be invalid and unenforceable, the remaining provisions hereof shall subsist and be carried into effect.

(g) The Plans are by this reference expressly incorporated herein and made a part hereof with the same force and effect as if fully set forth at length.

(h) The assets of the Trust shall be subject only to the claims of the Grantor’s general creditors in the event of the Grantor’s bankruptcy or insolvency. The Grantor shall be considered “bankrupt” or “insolvent” if the Grantor is (A) unable to pay its debts when due or (B) engaged as a debtor in a proceeding under the Bankruptcy Code, 11 U.S.C. Section 101 et seq. The Board of Directors and the chief executive officer of the Grantor must notify the Trustee of the Grantor’s bankruptcy or insolvency within three (3) business days following the occurrence of such event. Upon receipt of such a notice, or, upon receipt of a written allegation from a person or entity claiming to be a creditor of the grantor that the Grantor is bankrupt or insolvent, the Trustee shall discontinue payments to Beneficiaries. The Trustee shall, as soon as practicable after receipt of such notice or written allegation, or such other information as it deems appropriate, that the Grantor is

bankrupt or insolvent. If the Trustee determines, based on such notice, written allegation, or such other information as it deems appropriate, that the Grantor is bankrupt or insolvent, the Trustee shall hold the assets of the Trust for the benefit of the Grantor’s general creditors, and deliver any undistributed assets to satisfy the claims of such creditors a court of competent jurisdiction may direct. The Trustee shall resume payments to Beneficiaries only after it has determined that the Grantor is not bankrupt or insolvent, or is no longer bankrupt or insolvent (if the Trustee determined that the Grantor was bankrupt or insolvent), or pursuant to an order of a court of competent jurisdiction. Unless the Trustee has actual knowledge of the Grantor’s bankruptcy or insolvency, the Trustee shall have no duty to inquire whether the Grantor is bankrupt or insolvent. The Trustee may in all events rely on such evidence concerning the Grantor’s solvency as may be furnished to the Trustee which gives the Trustee a reasonable basis for making a determination concerning the Grantor’s solvency.

If the Trustee discontinues payment of benefits from the Trust pursuant to this Section 15(h) and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments which would have been made to each Beneficiary (together with interest) during the period of such discontinuance, less the aggregate amount of payments made to the Beneficiary by the Grantor in lieu of the payments provided for hereunder during any such period of discontinuance.

(i) Any and all taxes, expenses (including, but not limited to, the Trustee’s compensation) and costs of litigation relating to or concerning the adoption, administration and termination of the Trust shall be borne and promptly paid by the Grantor; provided, however, that, to the extent such taxes, expenses and costs relating to the Trust are due and owing and are not paid by the Grantor, they shall be charged against and paid from the Trust, and the Grantor shall reimburse the Trust for any such payment made from the Trust within 30 days of its receipt from the Trustee of written notice of such payment.

(j) Any reference hereunder to a Beneficiary shall expressly be deemed to include, where relevant, the beneficiaries of a Beneficiary duly appointed under the terms of the Plans. A Beneficiary shall cease to have such status once any and all amounts due such Beneficiary under the Plans have been satisfied.

(k) Any reference hereunder to the Grantor shall expressly be deemed to include the Grantor’s successor and assigns.

(l) Whenever used herein, and to the extent appropriate, the masculine, feminine or neuter gender shall include the other two genders, the singular shall include the plural and the plural shall include the singular.

IN WITNESS WHEREOF, the parties have executed this Trust Agreement as of the date first set forth above.


Attest:		DARDEN RESTAURANTS, INC.

By:	/s/ Douglas E. Wentz	By:	/s/ William R. White, III
Name:	Douglas E. Wentz	Name:	William R. White, III
Title:	Assistant Secretary	Title:	Senior Vice President and Treasurer

Attest:		WELLS FARGO BANK, NATIONAL ASSOCIATION

By:	/s/ A. Jacob Vogelsang	By:	/s/ Monique Etheridge
Name:	A. Jacob Vogelsang	Name:	Monique Etheridge
Title:	Vice President	Title:	Vice President

Exhibit A

of the

Amended and Restated

Darden Restaurants, Inc. Benefits Trust Agreement

dated March 23, 2011

The Amended and Restated Darden Restaurants, Inc. Benefits Trust Agreement of March 23, 2011, is for the benefit of the following Plans and any other supplemental benefits plan or deferred compensation plan the Grantor so designates in writing to the Trustee from time to time:

1.	Management Continuity Agreements entered into or to be entered into between Darden Restaurants, Inc. and various of its executives.

2.	Darden Restaurants, Inc. FlexComp Plan

3.	Supplemental Pension Plan of Darden Restaurants, Inc.

4.	General Mills Restaurants, Inc. Bridge Period Benefit Plan

5.	General Mills Restaurants, Inc. Bridge Period Retirement Plan

Exhibit 12

DARDEN RESTAURANTS, INC.

COMPUTATION OF RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES

(Dollar amounts in millions)

(Unaudited)


	Quarter Ended						Nine Months Ended
	February 27, 2011			February 28, 2010			February 27, 2011			February 28, 2010

Consolidated earnings from continuing operations before income taxes	$	199.1		$	175.4		$	461.3		$	386.4
Plus fixed charges:
Gross interest expense ⁽¹⁾		25.0			22.5			75.0			73.8
40% of restaurant and equipment minimum rent expense		12.2			11.3			35.8			33.2

Total fixed charges		37.2			33.8			110.8			107.0
Less capitalized interest		(0.8	)		(1.2	)		(2.2	)		(3.8	)


Consolidated earnings from continuing operations before income taxes available to cover fixed charges	$	235.5		$	208.0		$	569.9		$	489.6


Ratio of consolidated earnings from continuing operations to fixed charges		6.3			6.2			5.1			4.6

(1)	Gross interest expense includes interest recognized in connection with our unrecognized income tax benefits.

Exhibit 31(a)

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Clarence Otis, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Darden Restaurants, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 4, 2011

/s/ Clarence Otis, Jr.

Clarence Otis, Jr.

Chairman and Chief Executive Officer

Exhibit 31(b)

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, C. Bradford Richmond, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Darden Restaurants, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 4, 2011

/s/ C. Bradford Richmond

C. Bradford Richmond

Senior Vice President and

Chief Financial Officer

Exhibit 32(a)

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Darden Restaurants, Inc. (“Company”) on Form 10-Q for the quarter ended February 27, 2011, as filed with the Securities and Exchange Commission (“Report”), I, Clarence Otis, Jr., Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

April 4, 2011

/s/ Clarence Otis, Jr.

Clarence Otis, Jr.

Chairman and Chief Executive Officer

Exhibit 32(b)

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Darden Restaurants, Inc. (“Company”) on Form 10-Q for the quarter ended February 27, 2011, as filed with the Securities and Exchange Commission (“Report”), I, C. Bradford Richmond, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

April 4, 2011

/s/ C. Bradford Richmond

C. Bradford Richmond

Senior Vice President and

Chief Financial Officer

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company