Red Lobster 2004 Annual Report Download - page 29

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A summary of our contractual obligations and commercial commitments at May 30, 2004, is as follows (in thousands):
1) Excludes issuance discount of $1,054.
2) Includes commitments for food and beverage items and supplies, capital projects, and other miscellaneous commitments.
3) Includes letters of credit for $72,480 of workers' compensation and general liabilities accrued in our consolidated financial statements; also includes letters of
credit for $7,635
of lease payments included in contractual operating lease obligation payments noted above.
4) Consists solely of guarantees associated with sub-leased properties. We are not aware of any non-performance under these sub-lease arrangements that would
result in us
having to perform in accordance with the terms of the guarantees.
As disclosed in Exhibit 12 to our Annual Report on Form 10-K, our
fixed-charge coverage ratio, which measures the number of times
each year that we earn enough to cover our fixed charges, amounted
to 5.8 times and 6.0 times for the fiscal years ended May 30, 2004
and May 25, 2003, respectively. Our adjusted debt to adjusted total
capital ratio (which includes 6.25 times the total annual restaurant
minimum rent ($56.5 million and $48.1 million for the fiscal years
ended May 30,2004 and May 25,2003, respectively) and 3.00 times
the total annual restaurant equipment minimum rent ($. 1 million and
$5.7 million for the fiscal years ended May 30, 2004 and May 25,
2003, respectively) as components of adjusted debt and adjusted
total capital) was 45 percent at May 30, 2004 and May 25, 2003.
We use the lease-debt equivalent in our adjusted debt to adjusted
total capital ratio as we believe its inclusion better represents the
optimal capital structure that we target from period to period.
Based on these ratios, we believe our financial condition is strong. The
composition of our capital structure is shown in the following table.
Financial Review 2004
Darden Restaurants 29