Financial Review 2004 Notes to  Consolidated Financial Statements of debt in fiscal 2006. To the extent the swaps are effective in offset- ting the variability of the hedged cash flows, changes in the fair value  of the swaps are not included in current earnings but are reported as  other comprehensive income. The accumulated gain or loss at the  swap settlement date will be amortized into earnings as an adjustment  to interest expense over the same period in which the related interest  costs on the new debt issuance are recognized in earnings. The fair  value of the swaps at May 30, 2004 was a gain of $698 and is included  in accumulated other comprehensive income (loss) at May 30, 2004.  No amounts were recognized in earnings during fiscal 2004. We had interest rate swaps with a notional amount of $200,000,  which we used to convert variable rates on our long-term debt to  fixed rates effective May 30, 1995. We received the one-month  commercial paper interest rate and paid fixed-rate interest ranging  from 7.51 percent to 7.89 percent. The interest rate swaps were  settled during January 1996 at a cost to us of $27,670. This cost  is being recognized as an adjustment to interest expense over the  term of our 10-year, 6.375 percent notes and 20-year, 7.125 percent  debentures (see Note 7).  reported as other comprehensive income. These changes in fair  value are subsequently reclassified into earnings when the natural  gas and coffee are purchased and used by us in our operations.  Net gains (losses) of $(439) and $941 related to these derivatives  were recognized in earnings during fiscal 2004 and 2003, respec- tively. The fair value of these contracts was a net gain of $106 at  May 30, 2004, and is expected to be reclassified from accumulated  other comprehensive income (loss) into food and beverage costs  or restaurant expenses during the next 12 months. To the extent  these derivatives are not effective, changes in their fair value are  immediately recognized in current earnings. Outstanding deriva- tives are included in other current assets or other current liabilities. At May 30, 2004, the maximum length of time over which we  are hedging our exposure to the variability in future natural gas cash  flows is 12 months. At May 30, 2004, we are not hedging our expo- sure to the variability in future coffee cash flows. No gains or losses  were reclassified into earnings during fiscal 2004 or 2003 as a result  of the discontinuance of natural gas and coffee cash flow hedges. During fiscal 2002, we entered into a treasury interest rate lock  agreement (treasury lock) to hedge the risk that the cost of a future  issuance of fixed-rate debt may be adversely affected by interest rate  fluctuations. The treasury lock, which had a $75,000 notional prin- cipal amount of indebtedness, was used to hedge a portion of the  interest payments associated with $150,000 of debt subsequently  issued in March 2002. The treasury lock was settled at the time of  the related debt issuance with a net gain of $267 being recognized  in other comprehensive income. The net gain on the treasury lock is  being amortized into earnings as an adjustment to interest expense  over the same period in which the related interest costs on the new  debt issuance are being recognized in earnings. Amortization of  $53, $53, and $14 was recognized in earnings as an adjustment to  interest expense during fiscal 2004, 2003, and 2002, respectively.  It is expected that $53 of this gain will be recognized in earnings as  an adjustment to interest expense during the next 12 months. During fiscal 2004, we entered into interest rate swap agreements  (swaps) to hedge the risk of changes in interest rates on the cost of a  future issuance of fixed-rate debt. The swaps, which have a $75,000  notional principal amount of indebtedness, will be used to hedge a  portion of the interest payments associated with a forecasted issuance  Darden Restaurants  45 Interest Rate Lock Agreement Interest Rate Swaps 10 Treasury Stock Our Board of Directors has authorized us to  repurchase up to 115.4 million shares of our  common stock. In fiscal 2004, 2003, and  2002, we purchased treasury stock totaling $235,462, $213,311,  and $208,578, respectively. At May 30, 2004, a total of 109.2  million shares have been repurchased under the authorization.  The repurchased common stock is reflected as a reduction of  stockholders’ equity. STOCKHOLDERS’ EQUITY FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS 9 The fair values of cash equivalents, accounts receivable,  accounts payable, and short-term debt approximate  their carrying amounts due to their short duration. The carrying value and fair value of long-term debt  at May 30, 2004, was $653,349 and $700,383, respectively. The  carrying value and fair value of long-term debt at May 25, 2003,  was $658,086 and $740,130, respectively. The fair value of long- term debt is determined based on market prices or, if market prices  are not available, the present value of the underlying cash flows  discounted at our incremental borrowing rates.