6. Commitments and Contingencies:

We lease all of our restaurant locations under operating leases, with primary terms ranging from 10 to 20 years. The restaurant leases typically include land and building shells, require contingent rent above the minimum lease payments based on a percentage of sales ranging from 3.5% to 10%, and require various expenses incidental to the use of the property. Most leases have renewal options. We have always exercised our renewal options in the past. We also lease certain restaurant and bakery equipment under operating lease agreements.

The aggregate minimum annual lease payments under operating leases (including those for five restaurants with executed leases as of December 30, 2003 that are planned for fiscal 2004 openings) are as follows (in thousands):

2004	$	28,832
2005		30,143
2006		30,775
2007		30,694
2008		30,717
Thereafter		397,233
Total minimum lease commitments	$	548,394

Rent expenses charged to operations on all operating leases were as follows (in thousands):

	Fiscal 2003			Fiscal 2002			Fiscal 2001
Base rent	$	23,139		$	17,358		$	13,355
Contingent rent		17,654			16,426			15,006
Other charges		9,829			7,795			6,299
Total	$	50,622		$	41,579		$	34,660

With respect to the five potential restaurant locations with executed leases as of December 30, 2003 that are currently planned for openings in fiscal 2004, we have estimated construction commitments (leasehold improvements and fixtures and equipment), net of agreed-upon landlord construction contributions, totaling approximately $28 million.

As credit guarantees to insurers, the Company is contingently liable under standby letters of credit issued under the Credit Facility. As of December 30, 2003, the Company had $11.5 million of standby letters of credit related to self-insurance liabilities accrued in the Company's Consolidated Financial Statements. All standby letters of credit are renewable annually.

We are self-insured for a significant portion of our risks and associated liabilities with respect to workers' compensation, general liability and employee health benefits. The Company maintains stop-loss coverage with third party insurers to limit its total exposure for each of these risks. The accrued liabilities associated with these risks is based on our estimate of the ultimate costs to settle known claims as well as claims incurred but not yet reported to us (“IBNR claims”) as of the balance sheet date. Our estimated liabilities are not discounted and are based on information provided by our insurance brokers and insurers, combined with our judgments regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices.

In December 2002, two former hourly restaurant employees in California filed a lawsuit against the Company alleging violations of California labor laws with respect to providing meal and rest breaks. The lawsuit seeks unspecified amounts of penalties and other monetary payments on behalf of the plaintiffs and other purported class members. Discovery is currently continuing in this matter. The Company intends to vigorously defend its position. Although the outcome cannot be ascertained at this time, the Company does not believe that its disposition would have a material adverse effect on the Company's financial position, results of operations or liquidity.

In October 2003, an hourly restaurant employee in California filed a lawsuit against the Company alleging violations of California labor laws with respect to the providing of meal and rest breaks and improper deductions, among other claims. The lawsuit seeks unspecified amounts of penalties and other monetary payments on behalf of the plaintiff and other purported class members. Discovery is currently continuing in this matter. The Company intends to vigorously defend its position. Although the outcome cannot be ascertained at this time, the Company does not believe that its disposition would have a material adverse effect on the Company's financial position, results of operations or liquidity.

The Attorney General of the State of California (State Attorney General) filed lawsuits on or about April 10, 2003 in the Los Angeles Superior Court against the Company, as well as several other restaurant chains, alleging that the defendants violated the provisions of an initiative statute known as “Proposition 65” and California Business and Professions Code Section 17203 by offering for sale certain types of fish allegedly containing mercury and mercury compounds without providing the warnings required by Proposition 65. The Company is currently in settlement negotiations with the State Attorney General's office. The Company believes that the resolution of this matter would not have a material adverse effect on the Company's financial position, results of operations or liquidity. The Company continues to implement interim notices under Proposition 65 in order to mitigate the possibility of additional liability to the Company while the settlement of all remaining issues is pending.

We are also subject to other private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business. Such claims typically involve claims from guests, employees and others related to operational issues common to the foodservice industry. A number of such claims may exist at any given time. From time to time, we are also involved in lawsuits with respect to contractual disputes and infringements of, or challenges to, our registered trademarks. We believe that the final disposition of such lawsuits and claims will not have a material adverse effect on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, proceedings and claims.

We have severance and employment agreements with certain of our executive officers that provide for payments to those officers in the event of termination of their employment as a result of a change in control of the Company or without cause, as defined in those agreements. Aggregate payments totaling approximately $3.4 million would have been required by those agreements had all such officers terminated their employment for those reasons as of December 30, 2003.