8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report: December 19, 2013

(Date of earliest event reported)

DARDEN RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)

Commission File Number: 1-13666

Florida	59-3305930
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

1000 Darden Center Drive, Orlando, Florida 32837

(Address of principal executive offices, including zip code)

(407) 245-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

Darden Restaurants, Inc. (the “Company”) issued a news release dated December 19, 2013, entitled “Darden Restaurants Reports Second Quarter Diluted Net Earnings Per Share; Declares Its Quarterly Dividend; and Revises Diluted Net Earnings Per Share Outlook for the Full Fiscal Year,” a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 in this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On December 19, 2013, the Company announced that its Board of Directors (the “Board”) has approved a plan to separate the Red Lobster business.  If, as expected, the Red Lobster business is spun-off to the Company’s shareholders, Brad Richmond would step down as the Company’s Senior Vice President and Chief Financial Officer and would become the Chief Financial and Administrative Officer of Red Lobster upon completion of the spin-off. 

Item 7.01 Regulation FD Disclosure.

The Company issued a news release dated December 19, 2013, entitled “Darden Announces Comprehensive Plan to Enhance Shareholder Value,” announcing that the Board has approved a comprehensive plan to enhance shareholder value by, among other things, separating the Red Lobster business. The Company expects to execute a tax-free spin-off of Red Lobster, but no final decision has been made on the form of separation. The Board may also consider a sale of the Red Lobster  business.  A copy of the news release is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

The information in this Item 7.01 in this Current Report on Form 8-K, including Exhibit 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. The information in this Item 7.01 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference in any filing under the Securities Act  or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 8.01 Other Information.

On December 19, 2013, the Company announced that the Board has approved a plan to separate the Red Lobster business. Following such separation, Kim Lopdrup, currently the Company’s President, Specialty Restaurant Group and New Business, is expected to serve as Chief Executive Officer of Red Lobster.  Effective January 6, 2014, Mr. Lopdrup will become Chief Executive Officer-Elect, Red Lobster, and Harald Herrmann, currently President of Yard House, will assume the role of President of the Specialty Restaurant Group.  Salli Setta, who was appointed as President of Red Lobster in June, will continue in that role.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
99.1	News release dated December 19, 2013, entitled “Darden Restaurants Reports Second Quarter Diluted Net Earnings Per Share; Declares Its Quarterly Dividend; and Revises Diluted Net Earnings Per Share Outlook for the Full Fiscal Year.”
99.2	News release dated December 19, 2013, entitled “Darden Announces Comprehensive Plan to Enhance Shareholder Value.”

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SIGNATURES

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 hereunto duly authorized.

DARDEN RESTAURANTS, INC.
By:	/s/ C. Bradford Richmond
	C. Bradford Richmond
	Senior Vice President and Chief Financial Officer

Date: December 19, 2013

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EXHIBIT INDEX

Exhibit Number	Description of Exhibit
99.1	News release dated December 19, 2013, entitled “Darden Restaurants Reports Second Quarter Diluted Net Earnings Per Share; Declares Its Quarterly Dividend; and Revises Diluted Net Earnings Per Share Outlook for the Full Fiscal Year.”
99.2	News release dated December 19, 2013, entitled “Darden Announces Comprehensive Plan to Enhance Shareholder Value.”

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EX-99.1

Exhibit 99.1

Red Lobster Olive Garden LongHorn Steakhouse The Capital Grille

Bahama Breeze Seasons 52 Eddie V's Yard House

www.darden.com

NEWS/INFORMATION
	Corporate Relations
	P.O. Box 695011
	Orlando, FL 32869-5011

FOR RELEASE	Contacts:
December 19, 2013	(Analysts) Matthew Stroud	(407) 245-6458
7:05 AM ET	(Media) Bob McAdam	(407) 245-5366

DARDEN RESTAURANTS REPORTS SECOND QUARTER DILUTED NET EARNINGS PER SHARE; DECLARES ITS QUARTERLY DIVIDEND; AND REVISES DILUTED NET EARNINGS PER SHARE OUTLOOK FOR THE FULL FISCAL YEAR

ORLANDO, FL, Dec 19 - Darden Restaurants, Inc. (NYSE: DRI) today reported diluted net earnings per share and sales for the second quarter ended November 24, 2013.

Headlines for the quarter include:

• Second quarter diluted net earnings per share from continuing operations were 15 cents, a 42.3% decrease from the 26 cents per diluted share in the second quarter of last year. Net earnings from continuing operations in this year’s second quarter were $19.8 million, which compares to net earnings from continuing operations of $33.7 million in the second quarter last year.

• The Company estimates that diluted net earnings per share for the second quarter were adversely affected by approximately five cents including: (1) approximately two cents net of related benefits, due to severance and other costs associated with the support expense reduction efforts announced in September and (2) approximately three cents due to legal, financial advisory and other costs related to the strategic review and associated actions the Company announced earlier today.

• Second quarter total sales from continuing operations were $2.05 billion, a 4.6% increase from the $1.96 billion generated in the second quarter of last year. The increase reflects the operation of 99 net new restaurants compared to the second quarter last year and same restaurant-sales growth of 4.1% for the Company’s Specialty Restaurant Group, offset partially by a blended same-restaurant sales decline of 1.0% for Olive Garden, Red Lobster and LongHorn Steakhouse.

• In the second quarter, U.S. same-restaurant sales increased 5.0% at LongHorn Steakhouse, declined 0.6% at Olive Garden and declined 4.5% at Red Lobster. The Company estimates that a shift in the Thanksgiving holiday week favorably affected second quarter same-restaurants sales by approximately 90 basis points at its large brands. The Thanksgiving holiday week, traditionally a low sales period, was in the Company’s fiscal second quarter last year but shifted to its fiscal third quarter this year.

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• The Company announced that its current projection is for diluted net earnings per share for fiscal year 2014 to decline between 15% and 20% compared to fiscal year 2013. This reflects its expectation that the blended same-restaurant sales result for Olive Garden, Red Lobster and LongHorn Steakhouse for fiscal year 2014 will be below the previously anticipated level, due in large part to a meaningful adjustment downward in the Company’s same-restaurant sales forecast for Red Lobster.

• Darden’s Board of Directors also declared a quarterly dividend of 55 cents per share.

“Under industry conditions that remained weaker than we had hoped, LongHorn once again delivered competitively strong same-restaurant sales results and we had continued progress at Olive Garden on both an absolute basis and relative to casual dining benchmarks,” said Clarence Otis, Chairman and Chief Executive Officer of Darden. “Our Specialty Restaurant Group remained firmly on track as well. However, Red Lobster’s results were well below our expectations. More importantly, it is increasingly clear that Red Lobster’s competitive position and priorities have diverged in very significant ways from those of the rest of our business. The separation of Red Lobster and other changes we announced earlier today will better enable both Red Lobster and Darden excluding Red Lobster to take advantage of their distinct competitive circumstances and value creation opportunities. These are exciting steps forward that enhance our ability to create compelling long-term value for our shareholders.”

Operating Headlines

OLIVE GARDEN’S second quarter sales of $869 million were 2.4% higher than the prior year due to revenue from 25 net new restaurants, offset partially by its U.S. same-restaurant sales decline of 0.6%. For the quarter, on a percentage of sales basis, lower restaurant expenses and selling, general and administrative expenses offset an increase in food and beverage expenses, labor expenses and depreciation expense. This resulted in an increase for the quarter in both operating profit and operating profit as a percentage of sales.

RED LOBSTER’S second quarter sales of $561 million were 4.9% lower than the prior year, which reflected one less restaurant and the U.S. same-restaurant sales decline of 4.5%. For the quarter, on a percentage of sales basis, food and beverage expenses, restaurant labor expenses, restaurant expenses, and depreciation and amortization expenses were higher compared to the second quarter of last year, while selling, general and administrative expenses were lower. The net result is that operating profit and operating profit as a percentage of sales were below last year.

LONGHORN STEAKHOUSE’S second quarter sales of $320 million were 16.5% higher than the prior year, driven by revenue from 46 net new restaurants and its U.S. same-restaurant sales increase of 5.0%. For the quarter, on a percentage of sales basis, lower food and beverage expenses, restaurant expenses and depreciation and amortization expenses offset an increase in labor expenses. This resulted in an increase for the quarter in both operating profit and operating profit as a percentage of sales.

THE SPECIALTY RESTAURANT GROUP’S second quarter sales of $291 million were 20.6% higher than the prior year, driven by same-restaurant sales increases of 6.7% at The Capital Grille, 6.2% at Bahama Breeze, 5.7% at Eddie V’s, 1.2% at Yard House and 1.2% at Seasons 52. Sales growth for the Group also reflected revenue from four new restaurants at The Capital Grille, four at Bahama Breeze, ten at Seasons 52, two at Eddie V’s and seven at Yard House.

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Fiscal 2014 September, October and November U.S. Same-Restaurant Sales Results

Darden reported U.S. same-restaurant sales for the fiscal months of September, October and November as follows:

Olive Garden	September	October	November *
Same-Restaurant Sales	-2.6%	-0.1%	1.5%
Same-Restaurant Traffic	-3.0%	-0.3%	1.0%
Pricing	1.8%	1.4%	1.3%
Menu-mix	-1.3%	-1.2%	-0.7%

Red Lobster	September	October	November *
Same-Restaurant Sales	-4.5%	-4.3%	-4.6%
Same-Restaurant Traffic	-5.8%	-9.9%	-7.3%
Pricing	1.2%	1.4%	1.5%
Menu-mix	0.0%	4.2%	1.1%

LongHorn Steakhouse	September	October	November *
Same-Restaurant Sales	2.9%	5.2%	6.8%
Same-Restaurant Traffic	-0.1%	4.2%	2.3%
Pricing	2.4%	2.4%	2.4%
Menu-mix	0.6%	-1.3%	2.1%

* Note: Fiscal November same-restaurant sales results were favorably affected by approximately 290 basis points due to the Thanksgiving week shifting from fiscal November last year into fiscal December this year.

Other Actions

Darden’s Board of Directors declared a quarterly cash dividend of 55 cents per share on the Company’s outstanding common stock. The dividend is payable on February 3, 2014 to shareholders of record at the close of business on January 10, 2014.

Fiscal 2014 Financial Outlook

Darden currently expects diluted net earnings per share for fiscal year 2014 to decline between 15% and 20% compared to fiscal 2013. These expectations reflect the Company’s projection that combined U.S. same-restaurant sales growth for Red Lobster, Olive Garden and LongHorn Steakhouse this fiscal year will be -1% to -2%. This is below the 0% to 2% the Company anticipated previously, with the change in expectations due largely to a meaningful downward adjustment in the forecast of same-restaurant sales results at Red Lobster. The Company believes the adjustment is appropriate given Red Lobster’s first and second quarter results and the potential effect of efforts during the second half of the year to complete the spin-off of the brand. Current earnings expectations for the year also reflect the opening of approximately 75 net new restaurants, five fewer restaurants than previously anticipated, the net impact of the September support expense reduction efforts, as well as the legal, financial advisory and other costs incurred in the second quarter in connection with the Company’s strategic review and related actions. The earnings forecast for fiscal year 2014 does not include costs the Company is likely to incur in the third and fourth quarters in connection with the separation of Red Lobster and other strategic actions announced today.

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Darden Restaurants, Inc., (NYSE: DRI), the world’s largest full-service restaurant company, owns and operates more than 2,100 restaurants that generate over $8.5 billion in annual sales. Headquartered in Orlando, Fla., and employing more than 200,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2013, Darden was named to the FORTUNE “100 Best Companies to Work For” list for the third year in a row and is the only full-service restaurant company to ever appear on the list. Our restaurant brands - Red Lobster, Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V’s and Yard House - reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Forward-looking statements in this news release regarding our expected earnings per share and U.S. same-restaurant sales for the fiscal year, new restaurant growth and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.  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 to reflect events or circumstances arising after such date. We wish to caution investors not to place undue reliance on any such forward-looking statements.  By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve the strategic plan to enhance shareholder value including the separation of Red Lobster, the high costs in connection with a spin-off which may not be recouped if the spin-off is not consummated, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, failure to successfully integrate the Yard House business and the additional indebtedness incurred to finance the Yard House acquisition, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V’s, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

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DARDEN RESTAURANTS, INC.

NUMBER OF COMPANY-OWNED RESTAURANTS

11/24/13		11/25/12
678	Red Lobster USA	679
27	Red Lobster Canada	27
705	Total Red Lobster	706
828	Olive Garden USA	803
6	Olive Garden Canada	6
834	Total Olive Garden	809
445	LongHorn Steakhouse	399
52	The Capital Grille	48
36	Bahama Breeze	32
35	Seasons 52	25
13	Eddie V's	11
48	Yard House	41
6	Other	4
2,174	Total Restaurants	2,075

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DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(In millions, except per share data)

(Unaudited)

	Three Months Ended						Six Months Ended
	11/24/2013			11/25/2012			11/24/2013			11/25/2012
Sales	$	2,049.9		$	1,960.0		$	4,208.4		$	3,994.8
Costs and expenses:
Cost of sales:
Food and beverage	642.8			607.5			1,301.8			1,226.3
Restaurant labor	678.0			635.7			1,366.9			1,262.5
Restaurant expenses	349.3			325.5			702.7			629.7
Total cost of sales (1)	$	1,670.1		$	1,568.7		$	3,371.4		$	3,118.5
Selling, general and administrative	221.1			216.1			451.2			434.2
Depreciation and amortization	107.7			99.2			213.4			191.8
Interest, net	32.9			32.9			65.6			60.8
Total costs and expenses	$	2,031.8		$	1,916.9		$	4,101.6		$	3,805.3
Earnings before income taxes	18.1			43.1			106.8			189.5
Income taxes	(1.7		)	9.4			16.7			44.7
Earnings from continuing operations	$	19.8		$	33.7		$	90.1		$	144.8
Losses from discontinued operations, net of tax benefit of $0.0, $0.1, $0.1 and $0.3, respectively	—			(0.1		)	(0.1		)	(0.4		)
Net earnings	$	19.8		$	33.6		$	90.0		$	144.4
Basic net earnings per share:
Earnings from continuing operations	$	0.15		$	0.26		$	0.69		$	1.13
Losses from discontinued operations	—			—			—			(0.01		)
Net earnings	$	0.15		$	0.26		$	0.69		$	1.12
Diluted net earnings per share:
Earnings from continuing operations	$	0.15		$	0.26		$	0.68		$	1.10
Losses from discontinued operations	—			—			—			—
Net earnings	$	0.15		$	0.26		$	0.68		$	1.10
Average number of common shares outstanding:
Basic	130.6			128.8			130.4			128.5
Diluted	132.8			131.7			132.7			131.4
(1) Excludes restaurant depreciation and amortization as follows:	$	102.2		$	94.1		$	202.6		$	181.5

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DARDEN RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions)

	11/24/2013			5/26/2013
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	84.6		$	88.2
Receivables, net	83.0			85.4
Inventories	418.0			356.9
Prepaid income taxes	12.4			6.4
Prepaid expenses and other current assets	80.6			83.4
Deferred income taxes	155.7			144.6
Total current assets	$	834.3		$	764.9
Land, buildings and equipment, net	4,521.8			4,391.1
Goodwill	907.7			908.3
Trademarks	574.6			573.8
Other assets	318.9			298.8
Total assets	$	7,157.3		$	6,936.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	365.1		$	296.5
Short-term debt	324.2			164.5
Accrued payroll	145.6			150.5
Accrued income taxes	22.4			16.5
Other accrued taxes	59.0			67.6
Unearned revenues	248.4			270.5
Current portion of long-term debt	15.0			—
Other current liabilities	466.8			450.3
Total current liabilities	$	1,646.5		$	1,416.4
Long-term debt, less current portion	2,480.1			2,496.2
Deferred income taxes	345.6			356.4
Deferred rent	246.3			230.5
Obligations under capital leases, net of current installments	53.2			52.5
Other liabilities	326.4			325.4
Total liabilities	$	5,098.1		$	4,877.4
Stockholders’ equity:
Common stock and surplus	$	1,255.7		$	1,207.6
Retained earnings	944.7			998.9
Treasury stock	(7.8		)	(8.1		)
Accumulated other comprehensive income (loss)	(127.9		)	(132.8		)
Unearned compensation	(5.5		)	(6.1		)
Total stockholders’ equity	$	2,059.2		$	2,059.5
Total liabilities and stockholders’ equity	$	7,157.3		$	6,936.9

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DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Six Months Ended
	11/24/2013			11/25/2012
Cash flows—operating activities
Net earnings	$	90.0		$	144.4
Losses from discontinued operations, net of tax benefit	0.1			0.4
Adjustments to reconcile net earnings from continuing operations to cash flows:
Depreciation and amortization	213.4			191.8
Stock-based compensation expense	31.3			28.7
Change in current assets and liabilities and other, net	(31.7		)	(97.7		)
Net cash provided by operating activities of continuing operations	$	303.1		$	267.6
Cash flows—investing activities
Purchases of land, buildings and equipment	(344.0		)	(355.2		)
Proceeds from disposal of land, buildings and equipment	3.2			—
Cash used in business acquisitions, net of cash acquired	—			(578.4		)
Increase in other assets	(12.5		)	(15.8		)
Net cash used in investing activities of continuing operations	$	(353.3	)	$	(949.4	)
Cash flows—financing activities
Proceeds from issuance of common stock	27.2			37.4
Income tax benefits credited to equity	5.3			8.3
Dividends paid	(143.3		)	(128.5		)
Repurchases of common stock	(0.5		)	(52.3		)
ESOP note receivable repayment	0.6			0.9
Proceeds from issuance of short-term debt, net	159.7			113.4
Repayment of long-term debt	—			(350.9		)
Proceeds from issuance of long-term debt	—			1,050.0
Payment of debt issuance costs	(1.3		)	(7.3		)
Principal payments on capital leases	(1.0		)	(0.8		)
Net cash provided by financing activities of continuing operations	$	46.7		$	670.2
Cash flows—discontinued operations
Net cash used in operating activities of discontinued operations	(0.1		)	(0.2		)
Net cash provided by investing activities of discontinued operations	—			2.7
Net cash (used in) provided by discontinued operations	$	(0.1	)	$	2.5
Decrease in cash and cash equivalents	(3.6		)	(9.1		)
Cash and cash equivalents - beginning of period	88.2			70.5
Cash and cash equivalents - end of period	$	84.6		$	61.4

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EX-99.2

Exhibit 99.2

Red Lobster Olive Garden LongHorn Steakhouse The Capital Grille

Bahama Breeze Seasons 52 Eddie V's Yard House

www.darden.com

NEWS/INFORMATION
	Corporate Relations
	P.O. Box 695011
	Orlando, FL 32869-5011

FOR RELEASE	Contacts:
December 19, 2013	(Analysts) Matthew Stroud	(407) 245-6458
7:00 AM ET	(Media) Bob McAdam	(407) 245-5366

DARDEN ANNOUNCES COMPREHENSIVE PLAN TO ENHANCE SHAREHOLDER VALUE

Plan Includes Separating the Company’s Red Lobster Business, Reducing New Unit Growth, Suspending Acquisitions, Increasing Operating Support Cost Savings, and Refining Senior Management Compensation and Incentive Programs

Orlando, FL - December 19, 2013 - Darden Restaurants, Inc. (NYSE: DRI) announced today that its Board of Directors has approved a comprehensive plan to enhance shareholder value, address changing industry dynamics in the casual dining sector and leverage the benefits of the Company's position as the premier casual dining restaurant company. The elements of this comprehensive plan include the following:

• Separate the company’s Red Lobster business: Although no final decision has been made on the form of the separation, the Company expects to execute a tax-free spin-off of Red Lobster to its shareholders, but may also consider a sale of the Red Lobster business.

• Reduce unit growth, lower capital expenditures and forgo acquisitions: The reduction in new unit expansion will come primarily from suspending new unit growth at Olive Garden and more limited new unit growth at LongHorn Steakhouse, with new unit growth at the Specialty Restaurant Group continuing at a pace modestly below this year’s level. The reduced unit growth will lower capital spending by at least $100 million annually. In addition, given the strength of the Company’s brand portfolio post separation, the Company has determined to forgo acquisitions of additional brands for the foreseeable future.

• Increase cost savings: Through aggressive operating support cost management, the Company now expects the cost reduction efforts announced in September to result in savings of at least $60 million annually beginning in its fiscal year 2015, which starts May 26, 2014. This represents a $10 million increase over the $50 million previously projected. The Company will continue to focus on enhanced cost efficiencies as it moves through the separation process.

• Increase return of capital to shareholders: The increased cash flow from reductions in capital spending and operating support expenses will be redirected to support dividends, share repurchase and strengthening of the Company’s credit profile. Consistent with its long-standing commitment to return capital to shareholders, Darden has returned over $1.3 billion to shareholders through share

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repurchases and dividends over the past three years. The Company expects to announce additional details on its share repurchase program as the separation plans are finalized. It is the Company’s intention that, on a combined basis, Darden and Red Lobster will maintain Darden’s current quarterly dividend of $0.55 per share following the separation.

• Refine compensation and incentive programs: To ensure strong alignment behind the Company’s strategic direction, the Company’s Board of Directors intends to refine compensation and incentive programs for senior management to more directly emphasize same-restaurant sales growth and free cash flow.

“Darden is the market leader in full-service dining because of the passionate commitment, collective capabilities and hard work of generations of employees. We are also the leader because we regularly and rigorously review our business and strategic direction, and take decisive action when market conditions change,” said Clarence Otis, Darden’s Chairman and CEO. “Our industry is in a period of significant change, with relatively low levels of consumer demand in each of the past several years for restaurants generally, and for casual dining in particular, as well as additional unexpected softness since June. Even with challenging industry conditions, however, companies that have outstanding assets and excellent teams can continue to create compelling value provided they are strongly aligned behind the right priorities.”

“After thorough and extensive consideration, we have decided that the actions announced today best position us to enhance value for our shareholders. These are clearly exciting steps for everyone in our company,” continued Otis. “The most significant step, of course, is the decision to separate Red Lobster. While we are highly confident the future is bright for both Red Lobster and Darden excluding Red Lobster, we also recognize that the operating priorities, capital requirements, sales and earnings growth prospects, and volatility profiles of the two parts of the business are increasingly divergent. By establishing two independent companies, a separation will better enable the management teams of each company to focus their exclusive attention on their distinct value creation opportunities.”

Red Lobster Separation

Red Lobster is an iconic American casual dining brand and is the largest full service dining seafood specialty restaurant operator in North America with 705 restaurants in the United States and Canada. Red Lobster had annual sales of approximately $2.6 billion in fiscal year 2013. As consumer demand dynamics have changed, Red Lobster’s priorities and operating support requirements have come to differ meaningfully from those of Darden’s other brands, which are having greater success increasing appeal among consumers outside their core guest profiles. As a separate company, Red Lobster will have greater freedom to pursue marketing and operating strategies that are more tailored to the needs of those consumers who fit its core guest profile. In addition, compensation and incentives for Red Lobster’s management teams will be more closely aligned with its performance.

Kim Lopdrup, currently Darden’s President, Specialty Restaurant Group and New Business, has been selected to serve as Chief Executive Officer of Red Lobster following the separation. As Lopdrup shifts his focus to support the Red Lobster separation, Harald Herrmann, currently President of Yard House, will assume the role of President of the Specialty Restaurant Group in January. Salli Setta, who was appointed as President of Red Lobster in July, will continue in that role. If, as expected, the form of a separation for Red Lobster is a spin-off, Brad Richmond, who has been Senior Vice President and Chief Financial Officer of Darden since 2006, will become Chief Financial and Administrative Officer of Red Lobster upon completion of the transaction. Darden has begun the process of identifying its Board of Directors, and identifying a potential successor to Mr. Richmond.

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“This is a thrilling opportunity to build on the very strong market position Red Lobster has established over the past 46 years,” said Lopdrup. “As a stand-alone company, we will be free to focus in a more single-minded manner on the many current and prospective guests who find what Red Lobster brings to the marketplace highly relevant. A priority will be highlighting and evolving signature attributes of the Red Lobster dining experience. A spin-off will also allow us to target our efforts and investments on value-creation opportunities that may be material to a stand-alone Red Lobster but not to Darden overall.”

Lopdrup served as President of Red Lobster from 2004 to 2011.In that capacity, heled a comprehensive revitalization of the brand that resulted in significant improvements in guest satisfaction and profitability. Prior to leading Red Lobster, Lopdrup helped lead turnarounds in sales and guest satisfaction at Burger King and, separately, in the international operations of Allied Domecq Quick Service Restaurants (now Dunkin’ Brands).

Richmond is a seasoned finance executive with more than 30 years of broad financial and business experience. He joined Darden in 1982 and was a member of the team that completed the spin-off of Darden from General Mills in 1995. He served as Red Lobster’s Senior Vice President, Controller and Strategic Planning from 2003 to 2005, helping to strengthen operating discipline and achieve restaurant efficiencies that enabled growth of the brand.

Darden Excluding Red Lobster

“At our other brands, we are working to increase visits from those who love what we offer today, while also attracting new guests who have other expectations,” Otis continued. “To achieve this broader reach, we are fundamentally reshaping and enhancing the experiences we provide, and making needed investments in new, shared marketing, technology and operational capabilities. By separating a business whose strategy and operational requirements diverge substantially from those of our other brands, we will be able to more aggressively and effectively pursue these initiatives and create value for our shareholders.”

Following the separation of Red Lobster, together with the other actions announced today, Darden expects that its financial dynamics will be meaningfully different. In particular, the Company believes it will be able to achieve higher and more consistent same-restaurant sales and new restaurant sales growth, higher and more consistent earnings per share growth, and generate significant free cash flow that is returned to shareholders though dividends and share repurchase.

Separation Plans and Timing

The completion of the spin-off will be subject to certain customary conditions, including final approval by the Darden Board of Directors, confirmation of the tax-free nature of the transaction, and the effectiveness of a registration statement that will be filed with the Securities and Exchange Commission, including information about the separation, distribution and related matters. The contemplated separation will not require a shareholder vote. While Darden expects any separation transaction to close in early fiscal 2015, which begins May 26, 2014, there can be no assurance that any transaction will ultimately occur.

Advisors

Darden has engaged Goldman, Sachs & Co. as its financial advisor and Latham & Watkins as its legal counsel in connection with today’s announcement. Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Darden’s Board of Directors.

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Conference Call and Webcast

Darden will host an investor call regarding the announcement today, December 19, at 8:30 AM EST. A live webcast of the conference call, along with the related slide presentation, may be accessed at www.darden.com and clicking on the “Investors” tab or http://www.videonewswire.com/event.asp?id=97382. A replay of the conference call via the Company’s website will be available approximately two hours after the call’s conclusion. A telephone replay may be accessed approximately two hours after the call’s conclusion through January 19, 2014, by dialing 888-566-0705.

Forward-looking statements in this news release regarding our expected earnings per share and U.S. same-restaurant sales for the fiscal year, new restaurant growth and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.  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 to reflect events or circumstances arising after such date. We wish to caution investors not to place undue reliance on any such forward-looking statements.  By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve the strategic plan to enhance shareholder value including the separation of Red Lobster, the high costs in connection with a spin-off which may not be recouped if the spin-off is not consummated, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, failure to successfully integrate the Yard House business and the additional indebtedness incurred to finance the Yard House acquisition, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V’s, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

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