During fiscal 2002, the Company recorded an approximate $11.0 million charge to restaurant expenses
stemming from an agreement reached with the California Department of Labor Standards Enforcement
("DLSE"). The DLSE's primary allegation involved the Company's documentation policies related to breaks
provided to employees. The Company believes it has been in substantial compliance with the California labor
laws related to employee breaks and other employee related matters, but was unable to document all issues to
the DLSE's satisfaction. The Company agreed to the settlement to avoid a potentially costly and protracted
litigation.
The Company is engaged in various legal proceedings and has certain unresolved claims pending. The
ultimate liability, if any, for the aggregate amounts claimed cannot be determined at this time. However,
management of the Company, based upon consultation with legal counsel, is of the opinion that there are no
matters pending or threatened which are expected to have a material adverse effect, individually or in the
aggregate, on the Company's consolidated financial condition or results of operations.
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