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LETTER TO SHAREHOLDERS continued

We made tremendous progress in executing our strategy in fiscal 2000. We’ve set our sights high and recognize there is much more work to be done. We are energized by the challenge. Here’s how we see the future unfolding for Darden Restaurants.

THE GROWTH OPPORTUNITY
Casual dining sales totaled more than $44 billion in calendar 1999, a 7.0% increase over calendar 1998. Darden’s $3.7 billion in sales in fiscal 2000 represents just over 8% of the industry total, making Darden the largest casual dining restaurant company in the world. Casual dining is projected to grow at a compound annual rate of 6% to 8% over the next 10 years, which is consistent with the 6.9% compound annual growth the segment experienced from 1990 through 1999. At this expected growth rate, the casual dining segment will double in size within 10 years.

The factors driving casual dining are truly powerful. Leading the way is the generation of baby boomers entering their peak casual dining years, with increased dining-out frequency due to higher disposable incomes, more leisure time and less interest in cooking.

Adding to the growth expectations for casual dining is the increasing participation of women in the workforce, which boosts family income, results in more meals away from home (especially lunch) and contributes to the declining time for and interest in cooking.

Finally, hectic schedules for people of all ages result in dramatic lifestyle changes. Consumers place a premium on the service, convenience and social reconnection time they can receive from casual dining. Casual dining has become more than an occasional indulgence for a few. It has become a frequent necessity for many. And these consumers are more demanding than ever, seeking bolder flavors, interesting preparations and skilled, individualized service.

We intend to capture the tremendous opportunity ahead of us and increase our share of the casual dining industry. We plan to do this while delivering total returns to our shareholders that rank among the best in our industry.

DARDEN’S GROWTH STRATEGY
Darden is uniquely positioned to capitalize on the growth opportunity casual dining offers. We are the only company in casual dining with two well-established top-tier restaurant concepts, each with sales exceeding $1.5 billion. I believe we have the deepest, most seasoned management team in the industry. And we have one of the strongest financial positions in casual dining, with the strongest cash flow and an investment grade credit profile that offers flexible, cost-effective access to capital to fund our growth. These leadership and financial resources provide a terrific platform for sustaining and growing Darden well into the future.

Our growth strategy starts with keeping our core concepts - Red Lobster and Olive Garden - fresh and vibrant. We will reinvest in these businesses to sustain same-restaurant sales growth, and we will expand them, adding meaningfully to our new restaurant growth. By growing Red Lobster and Olive Garden, we expect to generate much of the cash flow needed to fund new restaurant growth at emerging concepts like Bahama Breeze, to develop potential new concepts like Smokey Bones and to acquire or internally create other concepts with strong consumer appeal.