could differ from  the assumptions used. A quarter percentage point change in the defined benefit plans' discount rate and the expected long-term rate of return on plan assets would increase or decrease earnings before income taxes by $0.8 million and $0.4 million, respectively. A quarter percentage point change in our postretire- ment benefit plan discount rate would increase or decrease earnings before income taxes by $0.1 million. A one percentage point increase in the health care cost trend rates would have increased the accumulated postretirement benefit obligation (APBO) by $4 mil- lion at May 30, 2004, and the aggregate of the service cost and interest cost components of net periodic postretirement benefit cost by $0.3 million for fiscal 2004. A one percentage point decrease in the health care cost trend rates would have decreased the APBO by $3 million at May 30, 2004, and the aggregate of the service cost and interest cost components of net periodic postretirement benefit cost by $0.3 million for fiscal 2004. These changes in assumptions would not significantly impact our funding requirements. 

We are not aware of any trends or  events that would materially affect our capital requirements or liquidity. We believe that our internal cash-generating capabilities, borrowings available under our shelf registration for unsecured debt securities, and short-term commercial paper program should be sufficient to finance our capi- tal expenditures, stock repurchase program, and other operating activities through fiscal 2005. 

## OFF-BALANCE SHEET ARRANGEMENTS 

We are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. 

## FINANCIAL CONDITION 

Our current assets totaled $346 million at May 30,2004, compared to $326 million at May 25, 2003. The increase resulted primarily from increases in inventories of $25 million that resulted from oppor- tunistic product purchases made during fiscal 2004. 

Our current liabilities were $683 million at May 30,2004, compared to $640 million at May 25, 2003. At May 30, 2004, $15 million of s hort-term debt was outstanding under our commercial paper 

program, which was used to fund current operations and capital expenditures. Accrued payroll of $103 m illion at May 30, 2004, increased from $86 million at May 25, 2003, principally due to higher incentive compensation earned in fiscal 2004. Other cur- rent liabilities of $228 million at May 30, 2004, increased from $202 million at May 25, 2003, principally due to a $19 million increase in liabilities associated with our non-qualified deferred compensation plan and a $7 million increase in sales tax payable as a result of higher fourth quarter sales in fiscal 2004. Accrued income taxes of $49 million at May 30, 2004, decreased from $68 million at May 25, 2003, principally due to timing of income tax payments made and changes in temporary differences included in the deferred tax balances associated with current income tax deductions for certain land, buildings, and equipment. The $ 19 million decrease in accrued income taxes is offset by the related increase in net non- current deferred income tax liabilities at May 30, 2004. 

## QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

We are exposed to a variety of market risks, including fluctuations in interest rates, foreign currency exchange rates, and commodity prices. To manage this exposure, we periodically enter into inter- est rate, foreign currency exchange, and commodity instruments for other than trading purposes (see Notes 1 and 8 of the Notes to Consolidated Financial Statements). 

We use the variance/covariance method to measure value at risk, over time horizons ranging from one week to one year, at the 95 percent confidence level. At May 30, 2004, our potential losses in future net earnings resulting from changes in foreign currency exchange rate instruments, commodity instruments, and floating rate debt interest rate exposures were approximately $2 million over a period of one year (including the impact of the interest rate swap agreements discussed in Note 8 to the Notes to Consolidated Financial Statements). The value at risk from an increase in the fair value of all of our long-term fixed rate debt, over a period of one year, was approximately $22 million. The fair value of our long- term fixed rate debt during fiscal 2004 averaged $690 million, with a high of $714 million and a low of $669 million. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows by targeting an appropriate mix of variable and fixed rate debt. 

