we gather sales data daily and regularly analyze the guest traffic  counts and the mix of menu items sold to assist in developing menu  pricing, product offerings, and prom otional strategies. We view  guest traffic counts as an indication of the long-term  health of a  concept, while increases in average check and menu mix may con-  tribute more significantly to near-term profitability. We continually  focus on balancing our pricing and product offerings with other  initiatives to generate sustainable growth in sam e-restaurant sales. Incremental same-restaurant sales increases make a significant  contribution to our profitability . Many restaurant-level expenses  are relatively fixed in nature and do not vary  with sales volumes.  Therefore, same-restaurant sales increases can improve our profit-  ability. We define same-restaurants as restaurants that have been  open at least 16 months. New restaurants experience an adjustment  period before sales levels and operating m argins normalize, and  sales at newly opened restaurants generally do not make a signif-  icant contribution to profitability  in their initial months of opera-  tion. Our sales and expenses can be impacted significantly by the  number and timing of the opening of new restaurants, and the closing,  relocation, and remodeling of existing restaurants. Pre-opening  expenses each period reflect the costs associated with opening new  restaurants in current and future periods . There are significant risks and challenges that could im pact our oper-  ations and ability to increase sales and earnings. The casual dining  restaurant industry is highly competitive and sensitive to economic  turns, trends in lifestyles and fluctuating costs. Operating m argins for  our concepts are susceptible to changes in the price of com modities,  including seafood, beef, pork, chicken, cheese, produce, natural gas,  and other energy supplies. Other risks and uncertainties include the  price and availability of labor, insurance and media,- possible unfavor-  able publicity relating to food safety  or other concerns,- government  regulation and litigation,- and factors that could im pact our growth  plans, including the availability of suitable restaurant locations, con-  struction cost increases, construction delays, and other factors. The following table sets forth selected operating data as a per-  centage of sales for the 53-week period ended May  30, 2004, and  t he 52-week periods ended May 25, 2003, and May 26, 2002.  Red Lobster sales of $2.44 billion were 0.1 percent above last y ear.  U.S. same-restaurant sales for Red Lobster decreased 3.5 percent  due to a 6.5 percent decrease in same-restaurant guest counts,  offset partially by a 3.0 percent increase in average check. Average  annual sales per restaurant for Red Lobster were $3.6 m illion in  fiscal 2004 (on a 52-week basis). Sales were $5.00 billion in fiscal 2004, $4.65 billion in fiscal 2003,  and $4.37 billion in fiscal 2002. The 7.5% increase in company-  wide sales for fiscal 2004 was prim arily due to a net increase of 54  company-owned restaurants since fiscal 2003, sam e-restaurant sales  increases at Olive Garden, and the additional operating week in  fiscal 2004. These sales increases were partially offset by decreased  same-restaurant sales at Red Lobster. After adj usting for $90 million  of sales contributed by the additional operating week, total sales  would have been $4.91 billion for fiscal 2004 on a 52-week basis,  a 5.5 percent increase from fiscal 2003. All information is derived from the consolidated statements of  Darden Restaurants  23 RESULTS OF OPERATIONS FOR FISCAL 2004,2003  AND 2002 SALES  2003 2002 100.0% 100,0% Sales Costs and expenses: Cost of sales: Food and beverage 31.1 31.7 Restaurant labor 31.9 31.5 Restaurant expenses 15.1 14,4 Total cost of sales, excluding restaurant depreciation and amortization of 3.9%, 3.8%, and 3.6%, respectively 78.1% 776% Selling, general, and administrative 9,3 9.5 Depreciation and amortization 4.1 3.8 Interest, net 0.9 0.9 Asset impairment and restructuring charges (credits), net 0.1 (0,1) Total costs and expenses 92.5% 91.7% Earnings before income taxes 75 8.3 Income taxes 2.5 2.9 5.0% 5.4% Net earnings Financial Review 2004