Management's Discussion and Analysis of Fi n an c i al Condition and Results of Operations Financial Review 2004 LIQUIDITY AND CAPITAL RESOURCES  28  Darden Restaurants  Cash flows generated from operating activities provide us with a  significant source of liquidity. Since substantially all 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 manage our business and our financial ratios to maintain  an investment grade bond rating, which allows flexible access  to financing at reasonable costs. Currently, our publicly issued  long-term debt carries "Baal" (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 this annual report and have been obtained with the under-  standing that Moody's Investors Service, Standard & Poor's, and  Fitch will continue to monitor our credit and make future adjust-  ments to these ratings to the extent warranted. The ratings may  be changed, superseded, or withdrawn at any time. Our commercial paper program serves as our primary source of short-  term financing. At May 30, 2004, $ 15 million was outstanding under  the program. To support our commercial paper program, we have a  credit facility under a Credit Agreem ent dated October 17, 2003,  as amended, with a consortium of banks, including Wachovia Bank,  N.A., as administrative agent, under which we can borrow up to  $400 million. The credit facility allows us to borrow at interest rates  based on a spread over (i) LIBOR or (ii) a base rate that is the higher  of the prime rate, or one-half of one percent above the federal funds  rate, at our option. The interest rate spread over LIBOR is determined  b y our debt rating. The credit facility expires on October 17, 2008,  At May 30,2004, our long-term debt consisted principally of:  (l)$150millionof unsecured 8.3 75 percent senior notes due in  September 2005, (2) $ 150 million of unsecured 6.375 percent notes  due in February 2006, (3) $150 million of unsecured 5.75 percent  medium-term notes due in March 2007, (4) $75 million of unsecured  7.45 percent medium-term notes due in April 2011, (5) $ 100 mil-  lion of unsecured 7.125 percent debentures due in February 2016,  and (6) an unsecured, variable rate, $29 million commercial bank  loan due in December 2018 that supports two loans from  us to  the Employee Stock Ownership Plan portion of the Darden Savings  Plan. Through a shelf registration  on file with the Securities and  Exchange Commission (SEC), we may issue up to an additional  $ 125 million of unsecured debt securities from  time to time. The debt  securities may bear interest at either fixed or floating rates, and may  have maturity dates of nine months or more after issuance. and contains various restrictive covenants, including a leverage  test that requires us to maintain a ratio of consolidated total debt  to consolidated total capitalization of less than 0.55 to 1.00 and a  limitation of $25 million on priority debt, subject to certain excep-  tions. The credit facility does not, however, contain a prohibition on  borrowing in the event of a ratings downgrade or a material adverse  change in and of itself. None of these covenants are expected to  impact our liquidity or capital resources. At May 30, 2004, we were  in compliance with all covenants under the Credit Agreement.