50  Darden Restaurants On December 8, 2003, President Bush signed into law the  Medicare Prescription Drug Improvement and Modernization Act  of 2003 (the Act). The Act introduces a prescription drug benefit  beginning in 2006 under Medicare (Medicare Part D) as well as a  federal subsidy to sponsors of retiree health care benefit plans that  provide a benefit that is at least actuarially equivalent to Medicare  Part D. We have elected to defer accounting for the effects of the  Act until we are able to determine whether the benefits provided  under our postretirement benefit plan are actuarily equivalent to Medicare Part D. Therefore, our postretirement benefit obligation has  not been remeasured for the effects of the Act. We do not believe  the impact of the Act will be material to our results of operations,  financial position, or cash flows. deferred compensation plan totaled $88,569 and $69,653 at May 30,  2004, and May 25, 2003, respectively. These amounts are included  in other current liabilities. The defined contribution plan includes an Employee Stock  Ownership Plan (ESOP). This ESOP originally borrowed $50,000  from third parties, with guarantees by us, and borrowed $25,000  from us at a variable interest rate. The $50,000 third party loan  was refinanced in 1997 by a commercial bank’s loan to us and a  corresponding loan from us to the ESOP. Compensation expense  is recognized as contributions are accrued. In addition to match- ing plan participant contributions, our contributions to the plan are  also made to pay certain employee incentive bonuses. Fluctuations  in our stock price impact the amount of expense to be recognized.  Contributions to the plan, plus the dividends accumulated on allocated and unallocated shares held by the ESOP, are used to pay principal, interest, and expenses of the plan. As loan payments  are made, common stock is allocated to ESOP participants. In fiscal  2004, 2003, and 2002, the ESOP incurred interest expense of  $473, $697, and $1,258, respectively, and used dividends received  of $454, $1,002, and $735, respectively, and contributions received  from us of $4,093, $4,266, and $5,166, respectively, to pay princi- pal and interest on our debt. We have a defined contribution plan covering most employees age  21 and older. We match contributions for participants with at least  one year of service at up to six percent of compensation, based on our performance. The match ranges from a minimum of $0.25 to $1.20foreachdollarcontributedbytheparticipant.Theplanhadnet  assets of $390,461 at May 30, 2004, and $334,319 at May 25, 2003. Expense recognized in fiscal 2004, 2003, and 2002 was $2,666, $1,732,  and $1,593, respectively. Employees classified as “highly compen- sated” under the Internal Revenue Code are not eligible to participate  in this plan. Instead, highly compensated employees are eligible to  participate in a separate non-qualified deferred compensation plan. This plan allows eligible employees to defer the payment of all or  part of their annual salary and bonus, and provides for awards that  approximate the matching contributions and other amounts that  participants would have received had they been eligible to participate  in our defined contribution and defined benefit plans. Amounts  payable to highly compensated employees under the non-qualified  The ESOP shares we own are included in average common  shares outstanding for purposes of calculating net earnings per  share. At May 30, 2004, the ESOP’s debt to us had a balance of  $29,403 with a variable rate of interest of 1.43 percent; $12,503 of  the principal balance is due to be repaid no later than December  2007, with the remaining $16,900 due to be repaid no later than  December 2014. The number of our common shares within the  ESOP at May 30, 2004, approximated 10,699,000 shares, represent- ing 4,271,000 allocated shares, 6,000 committed-to-be-released  shares, and 6,422,000 suspense shares. Defined Contribution Plan Components of net periodic benefit cost (income) are as follows: Notes to  Consolidated Financial Statements Financial Review 2004 Defined Benefit Plans  Postretirement Benefit Plan 2004  2003  2002  2004  2003  2002 Service cost  $ 4,516  $ 3,732  $ 3,586  $ 626  $ 388  $291 Interest cost  7,076  7,088  7,145  919  648  500 Expected return on plan assets  (12,821)  (12,739)  (12,416)   –  –  – Amortization of unrecognized transition asset  –   –  (642)   –  –  – Amortization of unrecognized prior service cost  (348)  (348)  (456)  29  18  18 Recognized net actuarial loss  3,710  1,924  1,104  334  46  – Net periodic benefit cost (income)  $ 2,133  $ (343)  $ (1,679)  $1,908  $1,100  $809