Financial Review 2004 Selling, general, and administrative expenses increased $40 mil-  lion, or 9.4 percent, from $432 million to $472 million in fiscal  2004 compared to fiscal 2003. Selling, general, and administrative  expenses increased $15 million, or 3.5 percent, from $417million  to $432 million in fiscal 2003 compared to fiscal 2002. As a percent  of sales, selling, general, and administrative expenses increased  in fiscal 2004 primarily due to increased employee benefit costs,  an increase in the amount contributed to the Darden Restaurants,  Inc. Foundation, and an increase in litigation related costs, which  were only partially offset by the favorable impact of higher sales  volumes. As a percent of sales, selling, general, and administrative  expenses in fiscal 2003 were less than fiscal 2002 primarily as a  result of decreased bonus costs and the favorable impact of higher  sales volumes, which were partially offset by increased marketing  expense incurred in response to the challenging economic and  competitive environment. Depreciation and amortization expense increased $ 19 million,  or 9.8 percent, from $ 191 million to $210 million in fiscal 2004  compared to fiscal 2003. Depreciation and amortization expense  increased $25 million, or 15.3 percent, from $166 million to  $191 million in fiscal 2003 compared to fiscal 2002. As a percent  of sales, depreciation and amortization increased in fiscal 2004 and  2003 primarily as a result of new restaurant and remodel activities,  which were only partially offset by the favorable impact of higher  sales volumes. Net interest expense increased $1 million, or 2.5 percent, from  $43 million to $44 million in fiscal 2004 compared to fiscal 2003.  Net interest expense increased $6 million, or 16.4 percent, from  $37 million to $43 million in fiscal 2003 compared to fiscal 2002.  As a percent of sales, net interest expense in fiscal 2004 was compa-  rable to fiscal 2003, reflecting lower interest income in fiscal 2004,  offset by the favorable impact of higher sales volumes. As a per-  cent of sales, net interest expense in fiscal 2003 was comparable  to fiscal 2002 primarily because increased interest expense associ-  ated with higher average debt levels in fiscal 2003 was offset by the  favorable impact of higher sales volumes. After a comprehensive analysis performed during the fourth quarter  of fiscal 2004 that examined restaurants not meeting our minimum  r eturn-on-investment thresholds and other operating performance  INCOME TAXES  The effective income tax rates for fiscal 2004, 2003, and 2002 were  31.9 percent, 33.2 percent, and 34.6 percent, respectively. The  rate decrease in fiscal 2004 and fiscal 2003 was primarily a result  of favorable resolutions of prior year tax matters and an increase in  FICA tax credits for employee-reported tips. criteria, we recorded a $36.5 million pre-tax ($22.4 million after-  tax) charge for long-lived asset impairments associated with the  closing of six Bahama Breeze restaurants and the write-down of  the carrying value of four othe r Bahama Breeze restaurants, one  Olive Garden restaurant, and one Red Lobster restaurant, which  continued to operate. We also recorded a $ 1.1 million pre-tax  ($0.7 million after-tax) restructuring charge primarily related  to severance payments made to certain restaurant employees and  exit costs associated with the closing of the six Bahama Breeze  restaurants. During fiscal 2004, certain changes were made at  Bahama Breeze to improve its sales, financial performance, and  overall long-term potential, including the addition of lunch at m ost  restaurants and introduction of a new dinner menu. The decision  to close certain Bahama Breeze restaurants and write down the  carrying value of others was based on our on-going review of  each individual restaurant's performance against our expectations  and their ability to successfully im plement these changes. Based on  our review of the other 28 Bahama Breeze restaurants, we believe  their locations and ability to execute these and future initiatives will  minimize the likelihood that additional impairment charges will  be required. The write-down of the carrying value of one Olive  Garden restaurant and one Red Lobster restaurant was a result of  less-than-optimal locations. We will continue to evaluate all of our  locations to minimize the risk of future asset impairment charges.  In addition to the fiscal 2004 fourth quarter action, we recognized  asset impairment charges in the amount of $5.7 million and  $4.9 million in fiscal 2004 and 2003, respectively, related to the  relocation and rebuilding of certain restaurants. Asset impairment  credits related to the sale of assets that were previously impaired  amounted to $1.4 million and $0.6 million in fiscal 2004 and 2003,  respectively. Pre-tax restructuring credits of $0.4 million and  $2.6 million were recorded in fiscal 2003 and 2002, respectively.  The credits resulted from lower than projected costs of lease ter-  minations in connection with our fiscal 1997 restructuring. All fiscal  1997 restructuring actions were completed as of May 25,2003. Darden Restaurants  25