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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM
10-Q

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x

Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934



For the quarterly period ended March 30, 2003

OR

o

Transition report
pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934



For the transition period from _____________ to _____________

Commission file number 33-14051

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Prandium, Inc.

(Exact name of registrant as specified in its
charter)

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| | Delaware(State or other jurisdiction ofincorporation or organization) |  | 33-0197361(I.R.S. Employer Identification No.) | 
| | --------------------------------------------------------------------- |  | ---------------------------------------------- | 

| | 2701 Alton Parkway, Irvine, California(Address of principal executive offices) |  | 92606(Zip Code) | 
| | ------------------------------------------------------------------------------ |  | --------------- | 

Registrants telephone number, including area code: (949) 863-8500

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes o No x

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13
or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes x No o

As of May 9, 2003 the registrant had issued and outstanding 5,000,000 shares of common stock, $.01 par value per
share.

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PRANDIUM, INC.

CONDENSED CONSOLIDATED
BALANCE SHEETS($ in thousands)



|                                                                                                                                                         |  | Successor Company |        
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------
|                                                                                                                                                         |  |                   |        
|                                                                                                                                                         |  | March 30,2003     |        
|                                                                                                                                                         |  |                   |        
|                                                                                                                                                         |  | (Unaudited)       |        
|                                                                                                                                                         |  |                   |        
|ASSETS                                                                                                                                                   |  |                   |        
|                                                                                                                                                         |  |                   |        
|Current assets:                                                                                                                                          |  |                   |        
|Cash and cash equivalents                                                                                                                                |  | $                 | 7,356  
|Receivables, net                                                                                                                                         |  |                   | 1,851  
|Inventories                                                                                                                                              |  |                   | 1,538  
|Other current assets                                                                                                                                     |  |                   | 2,447  
|Property held for sale                                                                                                                                   |  |                   | 11,891 
|                                                                                                                                                         |  |                   |        
|Total current assets                                                                                                                                     |  |                   | 25,083 
|                                                                                                                                                         |  |                   |        
|Property and equipment, net                                                                                                                              |  |                   | 68,531 
|Other assets, net                                                                                                                                        |  |                   | 10,792 
|                                                                                                                                                         |  |                   |        
|                                                                                                                                                         |  | $                 | 104,406
|                                                                                                                                                         |  |                   |        
|                                                                                                                                                         |  |                   |        
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                                                           |  |                   |        
|                                                                                                                                                         |  |                   |        
|Current liabilities:                                                                                                                                     |  |                   |        
|Current portion of long-term debt, including capitalized lease obligations                                                                               |  | $                 | 388    
|Accounts payable                                                                                                                                         |  |                   | 4,739  
|Current portion of self-insurance reserves                                                                                                               |  |                   | 2,282  
|Other accrued liabilities                                                                                                                                |  |                   | 33,132 
|Income taxes payable                                                                                                                                     |  |                   | 1,070  
|                                                                                                                                                         |  |                   |        
|Total current liablities                                                                                                                                 |  |                   | 41,611 
|                                                                                                                                                         |  |                   |        
|Self-insurance reserves                                                                                                                                  |  |                   | 4,931  
|Other long-term liabilities                                                                                                                              |  |                   | 2,354  
|Long-term debt, including capitalized lease obligations, less current portion                                                                            |  |                   | 57,935 
|                                                                                                                                                         |  |                   |        
|Total liabilities                                                                                                                                        |  |                   | 106,831
|                                                                                                                                                         |  |                   |        
|                                                                                                                                                         |  |                   |        
|Commitments and contingencies                                                                                                                            |  |                   |        
|                                                                                                                                                         |  |                   |        
|Stockholders equity (deficit):                                                                                                                          |  |                   |        
|Preferred stock - authorized 1,000,000 shares, par value $.01 per share, no shares issued and
outstanding                                                |  |                   |       
|Common stock - authorized 9,000,000 shares, par value $.01 per share, 5,000,000 shares issued and outstanding on March 30, 2003 and
on December 29, 2002 |  |                   | 50     
|Additional paid-in capital                                                                                                                               |  |                   | 8,759  
|Accumulated deficit                                                                                                                                      |  |                   | (11,234
|                                                                                                                                                         |  |                   |        
|Total stockholders equity (deficit)                                                                                                                     |  |                   | (2,425 
|                                                                                                                                                         |  |                   |        
|                                                                                                                                                         |  | $                 | 104,406
|                                                                                                                                                         |  |                   |        

See accompanying notes to condensed consolidated financial statements

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PRANDIUM, INC.

CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS($ in thousands, except per share amounts)(Unaudited)



|                                                               |  | SuccessorCompany                  |           | PredecessorCompany                |  
|-------------------------------------------------------------- |  | --------------------------------- | --------- | --------------------------------- | -
|                                                               |  |                                   |           |                                   |  
|                                                               |  | For the QuarterEndedMarch 30,2003 |           | For the QuarterEndedMarch 31,2002 |  
|                                                               |  |                                   |           |                                   |  
|                                                               |  |                                   |           |                                   |  
|Sales                                                          |  | $                                 | 60,188    |                                   | $
|                                                               |  |                                   |           |                                   |  
|                                                               |  |                                   |           |                                   |  
|Product costs                                                  |  |                                   | 14,972    |                                   |  
|Payroll and related costs                                      |  |                                   | 21,209    |                                   |  
|Occupancy and other operating expenses                         |  |                                   | 17,254    |                                   |  
|Depreciation and amortization                                  |  |                                   | 2,688     |                                   |  
|General and administrative expenses                            |  |                                   | 3,446     |                                   |  
|Opening costs                                                  |  |                                   |          |                                   |  
|Loss on disposition of properties, net                         |  |                                   | 156       |                                   |  
|Provision for divestitures and write-down of long-lived assets |  |                                   | 347       |                                   |  
|Restructuring costs                                            |  |                                   | 2,418     |                                   |  
|                                                               |  |                                   |           |                                   |  
|                                                               |  |                                   |           |                                   |  
|Total costs and expenses                                       |  |                                   | 62,490    |                                   |  
|                                                               |  |                                   |           |                                   |  
|                                                               |  |                                   |           |                                   |  
|Operating loss                                                 |  |                                   | (2,302    | )                                 |  
|                                                               |  |                                   |           |                                   |  
|Interest expense, net                                          |  |                                   | 2,779     |                                   |  
|Gain on extinguishment of debt                                 |  |                                   | 141       |                                   |  
|                                                               |  |                                   |           |                                   |  
|                                                               |  |                                   |           |                                   |  
|Loss before income tax provision                               |  |                                   | (4,940    | )                                 |  
|                                                               |  |                                   |           |                                   |  
|Income tax provision                                           |  |                                   | 108       |                                   |  
|                                                               |  |                                   |           |                                   |  
|                                                               |  |                                   |           |                                   |  
|Net loss                                                       |  | $                                 | (5,048    | )                                 | $
|                                                               |  |                                   |           |                                   |  
|                                                               |  |                                   |           |                                   |  
|Net loss per share - basic and diluted                         |  | $                                 | (1.01     | )                                 | $
|                                                               |  |                                   |           |                                   |  
|                                                               |  |                                   |           |                                   |  
|Weighted average shares outstanding - basic and diluted        |  |                                   | 5,000,000 |                                   |  
|                                                               |  |                                   |           |                                   |  

See accompanying notes to condensed consolidated financial statements

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PRANDIUM, INC.

CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS($ in thousands)(Unaudited)



|                                                                                                          |  | SuccessorCompany                  |         | PredecessorCompany                |  
|--------------------------------------------------------------------------------------------------------- |  | --------------------------------- | ------- | --------------------------------- | -
|                                                                                                          |  |                                   |         |                                   |  
|                                                                                                          |  | For theQuarter EndedMarch 30,2003 |         | For theQuarter EndedMarch 31,2002 |  
|                                                                                                          |  |                                   |         |                                   |  
|Cash flows from operating activities:                                                                     |  |                                   |         |                                   |  
|Cash received from customer, franchisees and licensees                                                    |  | $                                 | 59,990  |                                   | $
|Cash paid to suppliers and employees                                                                      |  |                                   | (57,579 | )                                 |  
|Interest paid, net                                                                                        |  |                                   | (285    | )                                 |  
|Opening costs                                                                                             |  |                                   |        |                                   |  
|Restructuring costs                                                                                       |  |                                   | (1,245  | )                                 |  
|Income taxes paid                                                                                         |  |                                   | (38     | )                                 |  
|                                                                                                          |  |                                   |         |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Net cash provided by operating activities                                                                 |  |                                   | 843     |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Cash flows from investing activities:                                                                     |  |                                   |         |                                   |  
|Proceeds from disposal of property and equipment                                                          |  |                                   | 1,750   |                                   |  
|Proceeds from payments on notes receivable                                                                |  |                                   | 173     |                                   |  
|Capital expenditures                                                                                      |  |                                   | (364    | )                                 |  
|Lease termination payments                                                                                |  |                                   | (134    | )                                 |  
|Other divestment expenditures                                                                             |  |                                   | (570    | )                                 |  
|Cash required for the El Torito Sale                                                                      |  |                                   |        |                                   |  
|Decrease in restricted cash, net                                                                          |  |                                   |        |                                   |  
|Other                                                                                                     |  |                                   | (372    | )                                 |  
|                                                                                                          |  |                                   |         |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Net cash provided by (used in) investing activities                                                       |  |                                   | 483     |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Cash flows from financing activities:                                                                     |  |                                   |         |                                   |  
|Payment of debt issuance costs                                                                            |  |                                   |        |                                   |  
|Reductions of long-term debt, including capitalized lease obligations                                     |  |                                   | (540    | )                                 |  
|                                                                                                          |  |                                   |         |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Net cash used in financing activities                                                                     |  |                                   | (540    | )                                 |  
|                                                                                                          |  |                                   |         |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Net increase in cash and cash equivalents                                                                 |  |                                   | 786     |                                   |  
|Cash and cash equivalents at beginning of period                                                          |  |                                   | 6,570   |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Cash and cash equivalents at end of period                                                                |  | $                                 | 7,356   |                                   | $
|                                                                                                          |  |                                   |         |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Reconciliation of net loss to net cash provided by operating activities:                                  |  |                                   |         |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Net loss                                                                                                  |  | $                                 | (5,048  | )                                 | $
|Adjustments to reconcile net loss to net cash provided by operating activities:                           |  |                                   |         |                                   |  
|Depreciation and amortization                                                                             |  |                                   | 2,688   |                                   |  
|Amortization of debt issuance costs and deferred gain                                                     |  |                                   | 62      |                                   |  
|Loss on disposition of properties                                                                         |  |                                   | 156     |                                   |  
|Provision for divestitures and write-down of long-lived assets                                            |  |                                   | 347     |                                   |  
|Accretion of interest on new notes                                                                        |  |                                   | 2,231   |                                   |  
|Gain on extinguishment of debt                                                                            |  |                                   | (141    | )                                 |  
|(Increase) decrease in receivables, inventories and other current assets                                  |  |                                   | (47     | )                                 |  
|Increase in accounts payable, self-insurance reserves, other accrued liabilities and income taxes
payable |  |                                   | 595     |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Total adjustments                                                                                         |  |                                   | 5,891   |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|                                                                                                          |  |                                   |         |                                   |  
|Net cash provided by operating activities                                                                 |  | $                                 | 843     |                                   | $
|                                                                                                          |  |                                   |         |                                   |  

See accompanying notes to condensed consolidated financial statements





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PRANDIUM, INC.

NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

1.

Company. Prandium, Inc. (Prandium and together with its subsidiaries, the Company),
was incorporated in Delaware in 1986. Prandium, through its subsidiaries, is primarily engaged in the operation of restaurants in the full-service and fast-casual segments. At March 30, 2003, the Company operated 170 restaurants in 21 states,
approximately 66% of which are located in California, Ohio, Pennsylvania, Indiana and Michigan, and franchised and licensed 8 restaurants outside the United States.

For the purpose of information presented in the condensed consolidated financial statements, Predecessor Company refers to the Company with respect to information relating to the periods ended prior to July 2, 2002 and
Successor Company refers to the Company with respect to information relating to the periods beginning on or after July 2, 2002, giving effect to the Plan (as defined below).

2.

Financial Statements.
The Condensed Consolidated Financial Statements in this Form 10-Q have been prepared in accordance with Securities and Exchange Commission Regulation S-X. Reference is made to the Notes to the Consolidated Financial Statements for the Fiscal Year
Ended December 29, 2002 included in the Companys Annual Report on Form 10-K for the fiscal year ended December 29, 2002 (the Form 10-K) for information with respect to the Companys significant accounting and
financial reporting policies, as well as other pertinent information. The Company believes that all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented have been
made. The results of operations for the quarter ended March 30, 2003 are not necessarily indicative of those for the full year.

As a result of the
consummation of the Plan (as defined below) on July 2, 2002 and pursuant to the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in Reorganization, the Company qualified for
fresh start reporting as of July 2, 2002. Under fresh start reporting, all assets and liabilities were restated to the current value of the reorganized entity to approximate the Companys fair value at the date of reorganization. As such, the
condensed consolidated balance sheets of the Company as of March 30, 2003 and December 29, 2002 and the accompanying condensed consolidated statement of operations for the quarter ended March 30, 2003 represent, in effect, that of a new entity with
assets, liabilities and a capital structure having carrying values not comparable with prior periods. The accompanying condensed consolidated statement of operations for the quarter ended March 31, 2002 represents that of the Predecessor Company.

As permitted by Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, the Company measures stock-based
employee compensation cost for financial statement purposes using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and its related interpretations.
Accordingly, compensation cost for the stock option grants to employees is

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measured as the excess of the quoted market price of the Companys common stock at the grant date over the amount the employee must pay for the stock.
For the quarter ended March 30, 2003 and the quarter ended March 31, 2002, 262,000 shares and 16,570,000 shares, respectively, relating to the possible exercise of outstanding stock options were not included in the computation of net loss per common
share as their effect would have been anti-dilutive.

Pro forma net loss and net loss per common share were determined as if the Company had accounted for its
employee stock options under the fair value method of SFAS 123 and are presented in the table below ($ in thousands, except per share amounts):



|                                                          |  | SuccessorCompany                   |        | PredecessorCompany                 |  
|--------------------------------------------------------- |  | ---------------------------------- | ------ | ---------------------------------- | -
|                                                          |  |                                    |        |                                    |  
|                                                          |  | For the QuarterEndedMarch 30, 2003 |        | For the QuarterEndedMarch 31, 2002 |  
|                                                          |  |                                    |        |                                    |  
|                                                          |  |                                    |        |                                    |  
|Net loss as reported                                      |  | $                                  | (5,048 | )                                  | $
|Net loss  pro forma                                      |  |                                    | (5,048 | )                                  |  
|Net loss per common share as reported  basic and diluted |  |                                    | (1.01  | )                                  |  
|Net loss per common share  pro forma  basic and diluted |  |                                    | (1.01  | )                                  |  

There were no stock options granted during the first quarter of 2003 and first
quarter of 2002. In addition, the total valuation of stock options granted during the third and fourth quarters of 2002 was less than $1,000. Consequently, the pro forma net loss is equal to that presented in the consolidated statements of
operations for the all periods presented. These pro forma disclosures are not necessarily indicative of anticipated future disclosures. The fair value for these options was estimated at the date of grant using an options pricing model. The model was
designed to estimate the fair value of exchange traded options which, unlike employee stock options, can be traded at any time and are fully transferable. In addition, such models require the input of highly subjective assumptions, including the
expected volatility of the stock price. Therefore, in managements opinion, the existing models do not provide a reliable single measure of the value of employee stock options. The following weighted average assumptions were used to estimate
the fair value of these options:

|                                    |  | December 29, 2002 | 
|----------------------------------- |  | ----------------- | 
|                                    |  |                   | 
|                                    |  |                   | 
|Expected dividend yield             |  | 0%                | 
|Expected stock price volatility     |  | 9.65%             | 
|Risk free interest rate             |  | 2.76%             | 
|Expected life of options (in years) |  | 10                | 

As noted above, no stock options
were issued during the first quarter of 2003 and first quarter of 2002. Therefore, an option pricing model was not run for these periods.

3.

Reorganization Plan and Going Concern Matters. On May 6, 2002, following receipt of sufficient votes from
their debtholders approving a pre-packaged Chapter 11 plan of

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reorganization (the Plan), Prandium and its subsidiary, FRI-MRD Corporation (FRI-MRD), each filed cases (together, the
Reorganization Case) seeking confirmation of the Plan in the United States Bankruptcy Court for the Central District of California, Santa Ana division (the Bankruptcy Court). The Reorganization Case was entitled In re
Prandium, Inc. and FRI-MRD Corporation, Case No. SA-02-13529 (RA) (Jointly Administered).The Bankruptcy Court subsequently confirmed the Plan on June 20, 2002. The Plan was consummated (the
Closing) on July 2, 2002 (the Closing Date) when all material conditions to the Plan, including entering into a new secured credit facility (the Credit Facility) with Foothill Capital Corporation
(Foothill), were completed.

The Company has experienced comparable restaurant sales declines in each of its concepts since the Closing Date.
These sales declines have resulted in operating performance that is significantly lower than projections included as part of the Plan. As a result of this operating performance, the Company has supplemented its cash flow from operations with
borrowings under the Credit Facility. The sales declines and depressed operating performance have continued through the first quarter of 2003. Should the Companys operating results not improve and the Company be unable to meet its financial
covenants or, if necessary, obtain waivers or amendments to the Credit Facility, the Companys financial condition and results of operations could be materially adversely affected. These matters raise substantial doubt about the Companys
ability to continue as a going concern.

The accompanying condensed consolidated financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The report of the Companys independent auditors
on the consolidated financial statements for the year ended December 29, 2002 included an explanatory paragraph stating that there was substantial doubt as to the Companys ability to continue as a going concern. The Companys continuation
as a going concern is dependent on its ability to generate sufficient cash flow to meet its obligations on a timely basis, to comply with the terms of its financing agreements and ultimately to attain profitable operations.

In response to the Companys financial condition and results of operations, on February 26, 2003, the Company appointed two members of the turnaround firm, Alvarez &
Marsal, Inc. (A&M), to key management positions. The Company appointed Hugh G. Hilton to the position of Interim Chief Executive Officer and President and Timothy Matthew Klein to the position of Interim Chief Operating Officer.
Mr. Hilton reports directly to the Board of Directors and oversees all day-to-day operations, including marketing and restaurant operations. Mr. Klein reports directly to Mr. Hilton.

The Company entered into an agreement (the Services Agreement) on February 26, 2003 with A&M regarding the provision of interim management services by Messrs. Hilton and Klein
(the Officers) to the Company and its Board of Directors. Under the terms of the Services Agreement, A&M will make available to the Company the services of the Officers and one additional professional to assist in the performance of
services by the Officers. The Officers activities in connection with the Services Agreement have included the following (i) identification and execution of cost reduction and operational improvement opportunities; (ii) identification and
execution of revenue improvement opportunities; (iii) development and implementation of both short-term

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turnaround and long-term stabilization and growth strategies for the Companys restaurant concepts; and (iv) leadership in other strategic alternatives.
The Services Agreement will continue until terminated, and may be terminated by either party upon 30 days written notice to the other party. The Officers are employees of A&M, will remain employees of A&M during the time that they act as
officers of the Company, and A&M will be responsible for the Officers compensation and employee benefits during the term of the Services Agreement. A&M will be compensated for the services of the Officers partially in cash and
partially in shares of a new series of preferred stock to be issued by the Company. During the term of the Services Agreement, the Company will pay A&M a fixed monthly fee of $165,000, subject to annual adjustment, and shall reimburse A&M
for reasonable out-of-pocket expenses. Subject to certain conditions, the Company will also issue to A&M up to 213,000 shares of a new series of preferred stock (the Shares). The Shares shall be payable as follows: 200,000 Shares on
March 1, 2004 and 13,000 Shares on June 1, 2004. All or a portion of the Shares may be issued to A&M earlier upon the occurrence of certain events set forth in the Services Agreement. Each Share will be convertible into 10 shares of the
Companys common stock, will have piggyback registration rights and will not be entitled to receive dividends. Each of the Shares will have one vote, voting together with the common stock as a single class. The Shares will have a standard
non-participating liquidation preference upon liquidation of the Companys assets or a sale of the Company.

4.

Sale of Hamburger Hamlet Restaurants. On May 10, 2002, the Company entered into an agreement (the Hamlet
Agreement) to sell 14 Hamburger Hamlet restaurants (the Hamburger Hamlet Chain). On August 9, 2002, the Company terminated the Hamlet Agreement in accordance with its terms. The purchaser under the Hamlet Agreement provided the
Company notice that it did not believe that the Companys termination notice was effective. The Company and the purchaser have continued to discuss the matter, including the negotiation of a potential new transaction with a subsidiary of the
purchaser, but the parties have not been able to reach acceptable terms and no other action has been taken by either side and no new written agreement to sell the Hamburger Hamlet Chain to any party exists. As called for in the note agreement (the
Note Agreement) covering the new FRI-MRD 12% Senior Secured Notes (the Notes), the proceeds of any sale of the Hamburger Hamlet Chain would be used to prepay the Notes in accordance with the terms of the Note Agreement. Prior
to a sale of the Hamburger Hamlet Chain, the Note Agreement requires that the excess cash flow generated by the Hamburger Hamlet Chain be used to prepay the Notes. There can be no assurance that a sale will be successfully completed. A prior
agreement to sell the Hamburger Hamlet Chain to a different party was entered into on October 23, 2001 and terminated on February 6, 2002 in accordance with its terms.

The assets and liabilities of the Hamburger Hamlet Chain have been written down to their estimated net realizable fair value of $11,891,000 and classified as property held for sale in the accompanying condensed
consolidated balance sheets. During the first quarter of 2003, the Company recorded a provision for divestitures of $165,000 related to the sale of the Hamburger Hamlet Chain.

The Hamburger Hamlet Chain generated sales of $7,537,000 and $7,902,000 for the quarters ended March 30, 2003 and March 31, 2002, respectively, and related operating income of $574,000 and $813,000 for the same periods,
respectively. Such operating income includes charges for allocated general and administrative expenses of $170,000 and $185,000 for the quarters ended March 30, 2003 and March 31, 2002, respectively.

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5.

Strategic
Divestment Programs and Restructuring Accruals. During the first quarter of 2003, no Koo Koo Roo restaurants were added to the Koo Koo Roo strategic divestment program. During the first quarter of 2003, the Company paid
$0 for severance and lease termination costs. The one restaurant remaining in the Koo Koo Roo strategic divestment program had sales of $161,000 and restaurant level operating losses of $57,000 during the first quarter of 2003.

During the first quarter of 2003, no Chi-Chis restaurants were added to the Chi-Chis strategic divestment program. During the first quarter of 2003, the Company
recorded a provision for divestitures of $176,000 for lease termination and other divestment costs and $6,000 for severance costs. The Company paid $4,000 for severance and $134,000 for lease termination costs during the first quarter of 2003. The
thirteen restaurants still in operation under the Chi-Chis strategic divestment program had sales of $2,664,000 and restaurant level operating losses of $368,000 during the first quarter of 2003.

On December 30, 2002, Mr. Kevin S. Relyea, the Companys then Chairman, Chief Executive Officer and President, resigned all his positions with the Company. The Company entered into a
Severance Agreement and General Release with Mr. Relyea. In connection with the Severance Agreement, the Company recorded a $961,000 provision for severance and related costs in January 2003, and such provision is included in restructuring
costs in the condensed consolidated statement of operations. On March 6, 2003, as one of the first initiatives under the A&M engagement, 30 divisional and corporate support positions were eliminated. These eliminations included several executive
positions. In connection with these eliminations, the Company recorded a provision for severance and outplacement fees of $718,000 in March 2003, and such provision is included in restructuring costs in the condensed consolidated statement of
operations. During the first quarter of 2003, the Company recorded an additional provision of $202,000 for other severance and related costs. During the first quarter of 2003, the Company paid $228,000 and $21,000 for severance and outplacement
costs, respectively.

6.

Stock
Options.   On July 2, 2002, certain officers and employees of the Company were granted stock options to purchase 444,070 shares under the Prandium, Inc. 2002 Stock Incentive Plan. The stock options granted
vest 25% on the date of the grant and 25% on each of the first three anniversaries of such date of grant. The stock options have a ten-year term. Concurrently, the old common stock of Prandium and the old stock option plans were canceled. Options to
purchase common stock are generally granted at the fair market value of the Companys stock on date of grant. Under the 2002 Stock Incentive Plan, 293,742 shares of common stock were available for future stock option grants at March 30, 2003.

A summary of the status of the Companys plans as of March 30, 2003 and December 29, 2002 and changes during the periods then ended is presented
below:

- 9 -



---



|                                     |  | March 30, 2003   |   | December 29, 2002             |     
|------------------------------------ |  | ---------------- | - | ----------------------------- | ----
|                                     |  |                  |   |                               |     
|                                     |  | Numberof Options |   | Weighted-AverageExercicePrice |     
|                                     |  |                  |   |                               |     
|Outstanding at beginning of period   |  | 435,969          |   | $                             | 1.90
|Granted                              |  |                 |   |                               |    
|Cancelled                            |  | (174,155         | ) |                               | 1.90
|                                     |  |                  |   |                               |     
|Outstanding at end of period         |  | 261,814          |   | $                             | 1.90
|                                     |  |                  |   |                               |     
|Options exercisable at end of period |  | 80,340           |   |                               |     
|                                     |  |                  |   |                               |     

There were no stock options granted during the first quarter of 2003. Options
granted to 238 employees during 2002 represented approximately 8.9% of the weighted average common shares outstanding. There were no options exercised during the periods presented.



|                       |  | Options Outstanding March 30, 2003 |  | Options Exercisable March 30, 2003    | 
|---------------------- |  | ---------------------------------- |  | ------------------------------------- | 
|                       |  |                                    |  |                                       | 
|Range ofExercisePrices |  | Number ofOptions                   |  | Weighted-AverageRemainingLife
(Years) | 
|                       |  |                                    |  |                                       | 
|All at $1.90           |  | 261,814                            |  | 9.26                                  | 
|                       |  |                                    |  |                                       | 

7.

Segment Information. The Company operates exclusively in the food-service industry. Substantially all revenues
result from the sale of menu products at restaurants operated by the Company. The Companys reportable segments are based on restaurant operating divisions. The Koo Koo Roo Division includes the operations of Koo Koo Roo and Hamburger Hamlet
restaurants. Operating income (loss) includes the operating results before interest. The corporate component of sales, depreciation and amortization and operating income (loss) represents operating results of certain other restaurants, as well as
corporate general and administrative expenses. Corporate assets include corporate cash, restricted cash, investments, receivables, asset portions of financing instruments and certain other restaurants. As a result of the impact of the Plan on the
Companys capital structure and the Companys adoption of fresh start reporting, certain key elements of segment reporting since the Closing Date are not comparable to those prior to the Closing Date. The value of the total assets is based
on an independent appraisal performed in connection with the determination of the Companys reorganization value in connection with fresh start reporting.

- 10
-



---



|                                    |  | For the Quarters Ended      |       
|----------------------------------- |  | --------------------------- | ------
|                                    |  |                             |       
|                                    |  | March 30,2003               |       
|                                    |  |                             |       
|                                    |  | (Unaudited)($ in thousands) |       
|Sales                               |  |                             |       
|Chi-Chis Division                  |  | $                           | 43,656
|Koo Koo Roo Division                |  |                             | 15,864
|Corporate                           |  |                             | 668   
|                                    |  |                             |       
|Total Sales                         |  | $                           | 60,188
|                                    |  |                             |       
|                                    |  |                             |       
|Depreciation and Amortization       |  |                             |       
|Chi-Chis Division                  |  | $                           | 1,913 
|Koo Koo Roo Division                |  |                             | 436   
|Corporate                           |  |                             | 339   
|                                    |  |                             |       
|Total Depreciation and Amortization |  | $                           | 2,688 
|                                    |  |                             |       
|                                    |  |                             |       
|Operating Income (Loss)             |  |                             |       
|Chi-Chis Division                  |  | $                           | 292   
|Koo Koo Roo Division                |  |                             | 183   
|Corporate                           |  |                             | (2,777
|                                    |  |                             |       
|Total Operating Income (Loss)       |  | $                           | (2,302
|                                    |  |                             |       
|                                    |  |                             |       
|Interest Expense, net               |  |                             |       
|Chi-Chis Division                  |  | $                           | 154   
|Koo Koo Roo Division                |  |                             | 55    
|Corporate                           |  |                             | 2,570 
|                                    |  |                             |       
|Total Interest Expense, net         |  | $                           | 2,779 
|                                    |  |                             |       
|                                    |  |                             |       
|Capital Expenditures                |  |                             |       
|Chi-Chis Division                  |  | $                           | 308   
|Koo Koo Roo Division                |  |                             | 51    
|Corporate                           |  |                             | 5     
|                                    |  |                             |       
|Total Capital Expenditures          |  | $                           | 364   
|                                    |  |                             |       



|                     |  | March 30,2003    |         | December 29,2002 |  
|-------------------- |  | ---------------- | ------- | ---------------- | -
|                     |  |                  |         |                  |  
|                     |  | (Unaudited)      |         |                  |  
|                     |  | ($ in thousands) |        
|Total Assets         |  |                  |         |                  |  
|Chi-Chis Division   |  | $                | 68,193  |                  | $
|Koo Koo Roo Division |  |                  | 21,932  |                  |  
|Corporate            |  |                  | 14,281  |                  |  
|                     |  |                  |         |                  |  
|Total Assets         |  | $                | 104,406 |                  | $
|                     |  |                  |         |                  |  

- 11 -



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Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

Certain information and statements included in this
Managements Discussion and Analysis of Financial Condition and Results of Operations, including, without limitation, statements containing the words believes, anticipates, expects, intends,
plans, estimates and words of similar import, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks and uncertainties
that could cause actual results of the Company or the restaurant industry to differ materially from expected results expressed or implied by such forward-looking statements. Although it is not possible to itemize all of the factors and specific
events that could affect the outlook of a restaurant company operating in a competitive environment, factors that could significantly impact expected results include:



the ability of the Company to reverse its trend of declining comparable restaurant sales;



the ability of the Company to generate sufficient
operating cash flow or cash flow from other sources to meet its obligations on a timely basis and to comply with the terms of its new financing agreements;



the availability of adequate working capital;



the development of successful marketing strategies for
each of the Companys concepts;



the
ability of the Company to sell the Hamburger Hamlet Chain on acceptable terms;



the effect of national and regional economic conditions;



competitive products and pricing;



changes in legislation;



demographic changes;



the ability to attract and retain qualified personnel;



changes in business strategy or development or divestment plans;



business disruptions;



changes in consumer preferences, tastes and eating
habits;



increases in food and labor
costs; and

- 12 -



---



increases in
utility or fuel costs and the impact of potential utility interruptions.

The Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

The following should
be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations presented in the Form 10-K.

Critical
Accounting Policies

The Companys financial condition and results of operations are necessarily impacted by the methods, assumptions and estimates
used in the application of critical accounting policies. The following accounting policies are particularly important to the financial condition or results of operations of the Company, and require estimates or other judgments of matters inherently
uncertain. Changes in the estimates or other judgments included within these accounting policies could result in a significant change to the information presented in the condensed consolidated financial statements.

Fresh Start Reporting.As a result of the confirmation of the Plan and pursuant to SOP 90-7, the Company qualified for
fresh start reporting as of July 2, 2002. Under fresh start reporting, all assets and liabilities were restated to the current value of the reorganized entity to approximate the Companys fair value at the date of reorganization. The fresh
start reporting reorganization value of $8.8 million was determined by considering many factors and various valuation methods, including a discounted cash flow analysis using projected five-year financial information, selected publicly traded
company market multiples of certain companies whose operating businesses were viewed to be similar to the Companys operating business, and other applicable ratios and valuation techniques believed by the Company and its financial advisors to
be representative of the Companys business and industry. The determination of reorganization value and the appraisal of the Companys long-term assets in connection with the adoption of fresh start reporting both required estimates and
judgments of matters inherently uncertain. Different assumptions and estimates could have resulted in different results from those reflected in the condensed consolidated financial statements.Any
difference between the Companys cash flow projections and actual results following the consummation of the Plan will not alter the determination of the fresh start reorganization equity value because the determination of the reorganization
value is not contingent upon the Company achieving the projected results or meeting any of the other factors considered by the Company. Accordingly, there can be no assurance that the values reflected in the reorganization value will be realized,
and actual results could vary materially. Moreover, the value of the Companys common stock may, and currently does, differ materially from the reorganization value.

Impairment of Long-Lived Assets.The Company reviews long-lived assets for impairment in accordance with FASB Statement No. 144, Accounting for
Impairment or Disposal of Long-Lived Assets, when events or circumstances indicate that the carrying amounts may not be recoverable. Assets subject to this review, and for which impairments have been recorded in 2003 or prior years, include
property, plant and equipment and costs in excess of net assets of business acquired.

- 13 -



---

In determining asset impairments, management must make significant judgments and estimates to calculate the fair value of an asset. Fair
value is developed through consideration of several valuation methods including comparison of similar recent sales transactions and discounted cash flow. Discounted cash flow is calculated by estimating future cash flow streams, applying appropriate
discount rates to determine the present values of the cash flow streams, and then assessing the probability of the various cash flow scenarios. The impairment is then recorded based on the excess of the carrying value of the asset over fair
value.

Changes in assumptions and estimates included within the impairment reviews could result in significantly different results than those discussed below
in Results of Operations and recorded in the condensed consolidated financial statements.

Insurance Reserves. Insurance
liabilities and reserves are accounted for based on actuarial estimates of the amount of loss inherent in that periods claims, including losses for claims that have not yet been reported. These estimates rely on actuarial calculations of
ultimate loss experience for similar historical events and an estimate of incurred but not reported claims. The Companys insurance reserves totaled $7,213,000 at March 30, 2003. Management continually evaluates the potential for changes in
loss estimates, both positive and negative, and uses the results of these evaluations to adjust recorded provisions and reserves.

Divestment
Reserves.The Company makes decisions to close restaurants based on their cash flows and anticipated future profitability. Prior to the adoption of FASB Statement No. 146, Accounting for
Costs Associated with Exit or Disposal Activities (SFAS 146) losses on disposition of properties were recognized when a commitment to divest a restaurant property was made by the Company and included estimated carrying costs
through the expected disposal date. As a result of the adoption of SFAS 146, effective January 1, 2003, future losses on disposition of properties will be recognized when incurred. These divestment charges represent a liability for the net present
value of any remaining lease obligations, including executory costs, after the expected closure dates, net of estimated sublease income, if any. These estimates of future costs often require significant judgments and estimates by management and
could be materially affected by factors such as the Companys ability to secure subleases and the Companys success at negotiating early termination agreements with lessors. While management believes the current estimates of future
liabilities are adequate, it is possible that future events could require the Company to make significant adjustments for revisions to these estimates.

As
used herein, comparable restaurants means restaurants operated by the Company for at least eighteen months and that continued in operation through the end of the first quarter of 2003.

Liquidity and Capital Resources

Liquidity

Cash needs are being funded by available cash balances and cash provided by operating activities, supplemented by borrowings under the Credit Facility. In addition, during the first quarter of 2003, cash was further supplemented by $1.7
million in proceeds from the sale of a Chi-Chis restaurant property. As described below, the Company filed a Reorganization Case to confirm the

- 14 -



---

Plan with the Bankruptcy Court. The Plan was confirmed by the Bankruptcy Court on June 20, 2002 and consummated on July 2, 2002. The Company has experienced
comparable restaurant sales declines in each of its concepts since the Closing Date. These sales declines have resulted in operating performance that is significantly lower than projections included as part of the Plan. As a result of this operating
performance, the Company has supplemented its cash flow from operations with borrowings under the Credit Facility. The sales declines and depressed operating performance have continued through the first quarter of 2003. Should the Companys
operating results not improve and the Company be unable to meet its financial covenants or, if necessary, obtain waivers or amendments to the Credit Facility, the Companys financial condition and results of operations could be materially
adversely affected. These matters raise substantial doubt about the Companys ability to continue as a going concern.

Statement of Cash Flows.For the quarter ended March 30, 2003, net cash provided by operating activities was $0.8 million compared to $0.9 million provided by operating activities for the same period in 2002. This $0.1 million change was primarily
due to the $0.7 million increase in cash received from customers, franchisees and licensees net of cash paid to suppliers and employers, offset by the $0.6 million increase in restructuring cost payments and the $0.2 million increase in interest
paid. For the first quarter of 2003, net cash provided by investing activities was $0.5 million compared to $33,000 used in investing activities for the same period in 2002. This $0.5 million change was primarily due to a $1.7 million increase in
proceeds from disposal of property and equipment and a $1.1 million decrease in lease termination payments, partially offset by a $2.4 million change in restricted cash activity. For the first quarter of 2003, net cash used in financing activities
was $0.5 million compared to $0.4 million used in financing activities for the same period in 2002. This change was due to additional long-term debt reductions of $0.2 million in 2003.

EBITDA.For the first quarter of 2003, the Company reported EBITDA (defined as earnings (loss) before opening costs, loss (gain) on disposition of properties, provision for divestitures and
write-down of long-lived assets, restructuring costs, reorganization items, interest, taxes, depreciation and amortization) of $3.3 million, compared to $2.5 million in the same period of 2002. The $0.8 million increase was composed of (i) a $0.5
million increase in the EBITDA attributable to the Chi-Chis restaurants; (ii) a $0.3 million increase in the EBITDA attributable to the Koo Koo Roo restaurants; and (iii) a $0.2 million increase in EBITDA attributable to the other restaurants,
offset by a $0.2 million decrease in the EBITDA attributable to the Hamburger Hamlet Chain.

The Company has included information concerning EBITDA herein
because it understands that such information is used by certain investors as one measure of an issuers historical ability to service debt. EBITDA should not be considered as an alternative to, or more meaningful than, operating income (loss)
as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. Furthermore, other companies may compute EBITDA differently, and therefore, EBITDA amounts among companies may not be comparable.

A reconciliation of cash flow provided by operating activities to EBITDA (as defined) follows ($ in thousands):

- 15 -



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|                                                     |  | For the Quarters Ended |       
|---------------------------------------------------- |  | ---------------------- | ------
|                                                     |  |                        |       
|                                                     |  | March 30,2003          |       
|                                                     |  |                        |       
|                                                     |  |                        |       
|Cash flow provided by (used in) operating activities |  | $                      | 843   
|                                                     |  |                        |       
|Reconciling items:                                   |  |                        |       
|Opening costs                                        |  |                        |      
|Restructuring costs                                  |  |                        | 2,418 
|Interest expense, net                                |  |                        | 2,779 
|Tax provision                                        |  |                        | 108   
|Amortization of debt issuance costs                  |  |                        | (62   
|Accretion of interest                                |  |                        | (2,231
|Increase (decrease) in current assets                |  |                        | 47    
|Increase in current liabilities                      |  |                        | (595  
|                                                     |  |                        |       
|                                                     |  |                        |       
|EBITDA                                               |  | $                      | 3,307 
|                                                     |  |                        |       

Working Capital Deficiency. The Company normally operates
with a working capital deficiency because:



restaurant operations are conducted primarily on a cash (and cash equivalent) basis with a low level of accounts receivable;



rapid turnover allows a limited investment in inventories; and



cash from sales is applied to the payment of related
accounts payable for food, beverages and supplies which are generally purchased on trade credit terms.

The Company had a working capital deficiency of $16.5
million on March 30, 2003. This amount includes property held for sale of approximately $11.9 million.

The following represents a list of the Companys
contractual obligations and commitments, including interest on the Notes that is payable-in-kind at the Companys option ($ in thousands):



|                                                        |  | Payments Due by Period |        
|------------------------------------------------------- |  | ---------------------- | -------
|                                                        |  |                        |        
|                                                        |  |                        |        
|                                                        |  |                        |        
|                                                        |  | Total                  |        
|                                                        |  |                        |        
|                                                        |  |                        |        
|Long-term debt, including capitalized lease obligations |  | $                      | 78,724 
|Operating leases                                        |  |                        | 113,106
|                                                        |  |                        |        
|Total contractual cash obligations                      |  | $                      | 191,830
|                                                        |  |                        |        



- 16 -



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The Company currently has a substantial portfolio of subleased and assigned properties. Because the ability of any particular sub-lessee
or assignee to satisfy its obligations under any subleased or assigned lease depends on its ability to generate sufficient revenues in the acquired restaurant, there can be no assurance that the Company will not incur significant and unplanned costs
in connection with such leases. The Companys maximum theoretical future exposure at March 30, 2003, computed as the sum of all remaining lease payments through the expiration dates of the respective leases, was $35,339,000. Approximately
$22,400,000 of this amount, related to subleased properties, is included in the $113,106,000 of total operating lease payments in the preceding table of payments due by period. The remaining $12,939,000 of this amount is for assigned properties. The
maximum theoretical future exposure does not take into consideration any mitigating measures the Company could take to reduce this exposure in the event of default, including re-leasing the locations, or terminating the lease by negotiating a lump
sum payment to the landlord less than the sum of all remaining future rents.

On July 2, 2002, Prandium, FRI-MRD, Chi-Chis, Inc.
(Chi-Chis), Koo Koo Roo, Inc. (KKR), and certain of their subsidiaries became guarantors of the Credit Facility with Foothill. The term of the guarantee is four years. However, the Credit Facility is subject to early
termination on January 1, 2005 if, on or before January 1, 2005, the maturity date of the Notes (as defined below) has not been extended to October 2, 2006 or later. The maximum potential amount of future payment the guarantors could be required to
make under the guarantee is $15,000,000, assuming that the Company borrowed the full amounts available under the revolver and letter of credit components of the Credit Facility. At May 9, 2003, approximately $9.7 million of letters of credit and $1
million of working capital borrowings were outstanding under the Credit Facility.

In addition, Chi-Chis, is a guarantor on six operating leases for
Chi-Chis restaurants operated by various subsidiaries of Chi-Chis. FRI-MRD and KKR are guarantors on operating leases for seven restaurants and one restaurant, respectively, which have been subleased to other parties. The terms of these
guarantees run through the lease term for each property. The maximum potential aggregate amount of future payment that could be required to be made under these guarantees is $4,615,000. Of this amount, $2,229,000 is included in the $35,339,000 of
maximum theoretical future exposure noted above and $2,386,000 is included in the $113,106,000 of total operating lease payments in the table of payments due by period above.

Debt Restructuring.

1.

Reorganization Plan. On May 6, 2002, following receipt of sufficient votes from their debtholders approving
the Plan, Prandium and FRI-MRD filed the joint Reorganization Case seeking confirmation of the Plan with the Bankruptcy Court. The Bankruptcy Court subsequently confirmed the Plan on June 20, 2002. The Plans Closing was on July 2, 2002 when
all material conditions to the Plan, including entering into the Credit Facility with Foothill, were completed.

2.

Credit Facility. On July 2, 2002, the Company entered into the four-year Credit Facility to provide for the
ongoing working capital needs of the Company. The Credit Facility includes anniversary fee provisions which call for payments of $150,000 at the first year anniversary, $300,000 at the second year anniversary and $450,000 at the third year
anniversary, respectively. In addition, the Credit Facility is subject to early termination on January 1, 2005 if, on or before

- 17 -



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January 1, 2005, the maturity date of the Notes (or any refinancing of the Notes) has not been extended to October 2, 2006 or later. The Credit Facility
provides for up to $4 million in revolving cash borrowings and up to $15 million in letters of credit (less the outstanding amount of revolving cash balances). In addition, any borrowings are subject to restrictions based on a borrowing base
calculation in the Credit Facility. The Credit Facility is secured by substantially all of the real and personal property of the Company and contains customary restrictive covenants, including the maintenance of certain financial ratios. Among other
things, the covenants restrict the Companys ability to incur debt, pay dividends on or redeem capital stock, make certain types of investments, make dispositions of assets and engage in mergers and consolidations. In addition, a change in
ownership of 30% or more of the Companys common stock, with certain permitted exceptions, is prohibited. The Company was in compliance with all covenants, including financial ratios, at March 30, 2003.

Approximately $9.8 million of letters of credit were outstanding under the Credit Facility as of March 30, 2003 with approximately $9.7 million outstanding as of May 9, 2003. Such outstanding letters
of credit, in large part, provide security for future amounts payable under the Companys workers compensation insurance program and under Kevin S. Relyeas Severance Agreement. Working capital borrowings in the amount of $1.0
million were outstanding under the Credit Facility as of March 30, 2003 and as of May 9, 2003.

3.

FRI-MRD and Prandium Notes. Under the Plan, the FRI-MRD 14% Senior Secured Discount Notes were exchanged at a
discount for $18 million in cash, and the FRI-MRD 15% Senior Discount Notes were exchanged at a discount for a combination of $12 million in cash and new FRI-MRD 12% Senior Secured Notes with an initial face value of $59 million (the
Notes). Also under the Plan, Prandiums 9 3/4% Senior Notes were cancelled in exchange for all 5,000,000 shares of the new common stock of Prandium. Prandiums 10
7/8% Senior Subordinated Discount Notes were cancelled without receiving any consideration. The old common stock of Prandium was also cancelled without receiving any
consideration.

The Notes, among other things, (i) mature on January 31, 2005, (ii) have an interest rate of 12% that is payable-in-kind at the Companys
option, (iii) include capital expenditure restrictions on the Hamburger Hamlet Chain, (iv) require that free cash flow generated by the Hamburger Hamlet Chain prior to a sale of the restaurants, and the proceeds of any sale of the Hamburger Hamlet
Chain, be applied to prepay the Notes and (v) contain additional limitations on indebtedness and capital expenditures. In addition, while no cash interest payments are required on the Notes, prepayments are encouraged by an extra reduction in
principal of up to 33.33% of the prepaid amount through December 31, 2002, 17.65% of the prepaid amount through December 31, 2003 and 11.11% of the prepaid amount through September 30, 2004, depending on how quickly the prepayment is
made.

Hamburger Hamlet Sale. On May 10, 2002, the Company entered into the Hamlet Agreement to sell the Hamburger Hamlet Chain. On
August 9, 2002, the Company terminated the Hamlet Agreement in accordance with its terms. The purchaser under the Hamlet Agreement provided the Company notice that it did not believe that the Companys termination notice was effective. The
Company and the purchaser have continued to discuss the matter, including the negotiation of a potential new transaction with a subsidiary of the purchaser, but the parties have not

- 18 -



---

been able to reach acceptable terms and no other action has been taken by either side and no new written agreement to sell the Hamburger Hamlet Chain to any
party exists. As called for in the Note Agreement, the proceeds of any sale of the Hamburger Hamlet Chain would be used to prepay the Notes in accordance with the terms of the Note Agreement. Prior to a sale of the Hamburger Hamlet Chain, the Note
Agreement requires that the excess cash flow generated by the Hamburger Hamlet Chain be used to prepay the Notes. There can be no assurance that a sale will be successfully completed. A prior agreement to sell the Hamburger Hamlet Chain to a
different party was entered into on October 23, 2001 and terminated on February 6, 2002 in accordance with its terms.

Capital Resources

Net cash provided by investing activities was $0.5 million for the first quarter of 2003, including $0.4 million used for capital expenditures, as compared to net cash used in
investing activities of $33,000 for the same period in 2002. The $0.5 million change in net cash provided by (used in) investing activities for the first quarter of 2003 was primarily due to a $1.7 million increase in proceeds from disposal of
property and equipment and a $1.1 million decrease in lease termination payments, partially offset by a $2.4 million change in restricted cash activity.

Capital expenditures of up to approximately $4.3 million have been identified for fiscal 2003, primarily related to maintaining existing open and operating restaurants. Actual capital expenditures for fiscal 2003 will be dependent on
restrictions under the Companys debt instruments and the availability of the required funds.

Results of Operations

As a result of the consummation of the Plan and the Companys emergence from bankruptcy, the results of operations since the Closing Date are not comparable to those prior to the Closing Date.
For certain key operating elements of the statement of operations, however, the following analysis of a comparison of 2003s operations of the Successor Company to 2002s operations of the Predecessor Company is provided. Where there is a
lack of comparability of results, such as for depreciation and amortization and interest expense, that fact is noted.

The Companys total sales of
$60,188,000 for the first quarter of 2003 decreased by $7,707,000 or 11.4% as compared to the same period in 2002. The decrease was the result of declines in comparable restaurant sales for Chi-Chis, Koo Koo Roo and Hamburger Hamlet and sales
decreases for restaurants sold or closed. The breakdown of the sales decrease for the first quarter of 2003 is shown in the following table.



|                                                  |  | Change inFirst QuarterSales |       
|------------------------------------------------- |  | --------------------------- | ------
|                                                  |  |                             |       
|                                                  |  | ($ in thousands)            |       
|                                                  |  |                             |       
|Decrease in Sales of Comparable Restaurants       |  | $                           | (4,907
|Decrease in Sales from Restaurants Sold or Closed |  |                             | (2,800
|                                                  |  |                             |       
|                                                  |  | $                           | (7,707
|                                                  |  |                             |       

- 19 -



---

Overall, sales for comparable restaurants were $59,499,000 for the first quarter of 2003, a $4,907,000 or 7.6% decline from the same
period in 2002. As is shown in the following table, this decline resulted from decreased sales in all concepts. The decreased sales during the first quarter of 2003 were worsened by an overall weakness in the economy, the impact of the war in Iraq
on restaurant patronage and inclement weather in the Midwestern and Northeastern markets in January and February. While the impact of the economic weakness and the war in Iraq cannot be quantified, the Company estimates that approximately 1.0
percentage point of the 7.6% comparable sales decline was related to bad weather. On the other hand, sales were positively impacted by a mismatch in the timing of the Easter holiday which occurred in the first quarter of 2002, but in the second
quarter in 2003.



|                            |  | ComparableSales Decrease |       
|--------------------------- |  | ------------------------ | ------
|                            |  |                          |       
|                            |  | Amount                   |       
|                            |  |                          |       
|                            |  | ($ in thousands)         |       
|                            |  |                          |       
|Comparable Chi-Chis        |  | $                        | (3,614
|Comparable Koo Koo Roo      |  |                          | (928  
|Comparable Hamburger Hamlet |  |                          | (365  
|                            |  |                          |       
|Total                       |  | $                        | (4,907
|                            |  |                          |       

Product costs of $14,972,000 for the first quarter of 2003 decreased $2,294,000
or 13.3% compared to the same period in 2002. Product costs as a percentage of sales decreased 0.5 percentage point from 25.4% in 2002 to 24.9% in 2003. The primary cause of the decrease in the percentage of sales and amount was favorable commodity
costs versus 2002, particularly in chicken, dairy and produce. The remainder of the amount decrease was related to the sales declines from comparable and closed restaurants.

Payroll and related costs of $21,209,000 decreased $3,279,000 or 13.4% for the first quarter of 2003 as compared to the first quarter of 2002. As a percentage of sales, payroll and related costs were 35.2% in the first
quarter of 2003, 0.9 percentage point lower than the same period in 2002. The primary drivers of the percentage of sales decrease and the amount decrease were improved workers compensation and health insurance expenses. The remainder of the
amount decrease was related to the sales declines from comparable and closed restaurants.

The Company is subject to federal and state laws governing matters
such as minimum wages, overtime and other working conditions. Approximately 44% of the Companys employees are paid at rates related to the minimum wage. Therefore, increases in the minimum wage or decreases in the allowable tip credit (tip
credits reduce the minimum wage that must be paid to tipped employees in certain states) increase the Companys labor costs. This is especially true in California, where there is no tip credit. The federal minimum wage is $5.15. In California,
the states minimum wage was increased to $6.75 on January 1, 2002. No increases to the $5.15 federal minimum wage are currently scheduled for 2003. In response to previous minimum wage increases, the Company has implemented various menu price
increases.

- 20 -



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Occupancy and other operating expenses were $17,254,000 for the first quarter of 2003, $1,668,000 or 8.8% lower than the same period in
2002. As a percentage of sales, occupancy and other operating expenses were 28.7% in 2003, 0.8 percentage point higher than 2002. The primary reasons for the increased percentage of sales were (i) higher utilities expense, particularly natural gas
for Chi-Chis, because of the colder winter and (ii) increased property insurance and general liability rates, partially offset by a decision to stop advertising on television for Chi-Chis, which also contributed to the amount decrease.
The remainder of the amount decrease was related to closed restaurants.

Depreciation and amortization of $2,688,000 for the first quarter of 2003 decreased
by $335,000 or 11.1% as compared to same period of 2002 due to the impact of the 20 restaurants sold or closed since the beginning of 2002, the reduced depreciable basis from the impairment write-down of certain long-lived assets and the adoption of
fresh start accounting.

General and administrative expenses for the first quarter of 2003 were $3,446,000, $1,225,000 or 26.2% lower than the same period in
2002. As a percentage of sales, general and administrative expenses were 5.7% in 2003, 1.2 percentage points lower than 2002. Structural reductions primarily in the Companys support center generated approximately $1.1 million of savings or
approximately 89% of the total variance, for the first quarter of 2003 when compared to the same period of 2002.

The Company reported a loss on disposition
of properties of $156,000 for the first quarter of 2003 compared to a loss of $141,000 for the same period of 2002.

During the first quarter of 2003, the
Company recorded a provision for divestitures of $347,000 compared to $2,207,000 for the same period in 2002. The provision for divestitures in 2003 was comprised of (i) $176,000 for lease termination and other divestment costs, (ii) $6,000 for
severance costs and (iii) $165,000 related to the sale of the Hamburger Hamlet Chain. The provision for divestitures in 2002 was primarily composed of (i) $250,000 for the write-off of a liquor license; (ii) $445,000 for lease terminations and other
divestment costs; and (iii) $1.5 million related to the sale of the Hamburger Hamlet Chain.

The Company reported restructuring costs of $2,418,000 during the
first quarter of 2003. These costs were primarily related to severance provisions related to the organizational restructuring of the Companys support center and amounts paid to A&M in connection with their turnaround services.

Interest expense, net of $2,779,000 for the first quarter of 2003 decreased by $4,694,000 or 62.8% as compared to 2002 primarily resulting from reduced interest expense
due to the filing of the Reorganization Case on May 6, 2002.

The Company recorded a gain on extinguishment of debt of $141,000 during the first quarter of
2003 related to the prepayment of the Notes from excess cash flow generated by the Hamburger Hamlet Chain.

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Recent Accounting Pronouncements

The FASB issued
Statement No. 143, Accounting for Asset Retirement Obligations (SFAS 143), in September 2001. SFAS 143 is effective for fiscal years beginning after June 15, 2002 and addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company adopted this standard for fiscal 2003 with no initial impact on the Companys financial position, results of
operations or liquidity.

In July 2002, the FASB issued Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities
(SFAS 146). SFAS 146 requires the recognition of costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by SFAS 146 include
lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operations, plant closing or other exit or disposal activities. SFAS 146 is effective prospectively for exit or disposal activities
initiated after December 31, 2002, with earlier adoption encouraged. The Company adopted this standard for fiscal 2003, and the initial adoption did not have a material impact on the Companys financial position, results of operations or
liquidity.

In November 2002, the FASB issued Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others (Interpretation 45), an interpretation of FASB Statements No. 5, 57 and 107 and rescission of FASB Interpretation No. 34. Interpretation 45 elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value
of the obligation undertaken in issuing the guarantee. Interpretation 45s initial recognition and initial measurement provisions are effective on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure
requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company adopted the disclosure requirements of Interpretation 45 effective December 29, 2002 and has not entered into any guarantees
since December 29, 2002.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (Interpretation
46), an interpretation of ARB No. 51. Interpretation 46 addresses consolidation by business enterprises of variable interest entities. Interpretation 46 applies immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that date. It applies in the first year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that
it acquired before February 1, 2003. The Company believes it has no variable interest entities to which Interpretation 46 would apply.

Seasonality

The Company, as a whole, does not experience significant seasonal fluctuations in sales. However, the Companys sales tend to be slightly greater during the spring and
summer months.

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Selected Division Operating Data

The following
table sets forth certain information regarding (i) the Company and (ii) its ongoing Chi-Chis restaurants, Koo Koo Roo restaurants and Hamburger Hamlet restaurants and other operating restaurants. At March 30, 2003, the Company operated 126
full-service Chi-Chis restaurants, 29 fast-casual Koo Koo Roo restaurants, 14 full-service Hamburger Hamlet restaurants and one other restaurant. No distinction is made in the table for Predecessor or Successor operations, since the
application of fresh start accounting has no impact on the information presented.

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|                                                              |  | For the Quarters Ended                        |       
|------------------------------------------------------------- |  | --------------------------------------------- | ------
|                                                              |  |                                               |       
|                                                              |  | March 30,2003                                 |       
|                                                              |  |                                               |       
|                                                              |  | ($ in thousands, except average check amount) |       
|Chi-Chis Restaurant Division                                 |  |                                               |       
|Restaurants Open at End of Period:                            |  |                                               |       
|Owned/operated                                                |  |                                               | 126   
|Franchised and Licensed                                       |  |                                               | 8     
|Sales                                                         |  | $                                             | 43,656
|Restaurant Level Cashflow (a)                                 |  |                                               | 5,048 
|Divisional EBITDA (b)                                         |  |                                               | 2,495 
|Percentage decrease in comparable restaurant sales            |  |                                               | (7.6  
|Average check (excluding alcoholic beverage sales)            |  | $                                             | 11.47 
|                                                              |  |                                               |       
|Koo Koo Roo Restaurants (c)                                   |  |                                               |       
|Restaurants Open at End of Period:                            |  |                                               |       
|Owned/operated                                                |  |                                               | 29    
|Franchised and Licensed                                       |  |                                               |      
|Sales                                                         |  | $                                             | 8,327 
|Restaurant Level Cashflow (a)                                 |  |                                               | 779   
|Divisional EBITDA (b)                                         |  |                                               | 238   
|Percentage decrease in comparable restaurant sales            |  |                                               | (10.0 
|Average transaction                                           |  | $                                             | 10.13 
|                                                              |  |                                               |       
|Hamburger Hamlet Restaurants (c)                              |  |                                               |       
|Restaurants Open at End of Period:                            |  |                                               |       
|Owned/operated                                                |  |                                               | 14    
|Franchised and Licensed                                       |  |                                               |      
|Sales                                                         |  | $                                             | 7,537 
|Restaurant Level Cashflow (a)                                 |  |                                               | 840   
|Divisional EBITDA (b)                                         |  |                                               | 574   
|Percentage increase (decrease) in comparable restaurant sales |  |                                               | (4.6  
|Average check (excluding alcoholic beverage sales)            |  | $                                             | 10.40 
|                                                              |  |                                               |       
|Other Operating Restaurants                                   |  |                                               |       
|Restaurants Open at End of Period:                            |  |                                               |       
|Owned operated                                                |  |                                               | 1     
|Franchised and Licensed                                       |  |                                               |      
|Sales                                                         |  | $                                             | 668   
|Restaurant Level Cashflow (a)                                 |  |                                               | 86    
|Divisional EBITDA (b)                                         |  |                                               | 56    
|                                                              |  |                                               |       
|Total Company                                                 |  |                                               |       
|Restaurants Open at End of Period:                            |  |                                               |       
|Owned/operated                                                |  |                                               | 170   
|Franchised and Licensed                                       |  |                                               | 8     
|Sales                                                         |  | $                                             | 60,188
|EBITDA (d)                                                    |  |                                               | 3,307 

(a)

Restaurant Level Cashflow with respect to any operating division represents Divisional EBITDA (as defined below) before general and administrative expenses and any net franchise profit or miscellaneous income (expense) reported by the
respective division.

(b)

Divisional EBITDA with respect to any operating
division is defined as earnings (loss) before opening costs, gain (loss) on disposition of properties, interest, taxes, depreciation and amortization. Corporate general and administrative expenses that would have been allocated to the El Torito
Division prior to the sale of that division were charged to Other Operating Restaurants in 2001 so as not to distort the year-over-year comparisons of the Chi-Chis, Koo Koo Roo and Hamburger Hamlet restaurants.

(c)

During fiscal 2001, Koo Koo Roo and Hamburger Hamlet shared certain divisional support
functions, the cost of which was absorbed by Koo Koo Roo.

(d)

EBITDA is
defined as earnings (loss) before opening costs, gain (loss) on disposition of properties, gain on sale of division, provision for divestitures and write-down of long-lived assets, restructuring costs, reorganization items, interest, taxes,
depreciation and amortization and gain on extinguishment of debt. The Company has included information concerning EBITDA herein because it understands that such information is used by certain investors as one measure of an issuers historical
ability to service debt. EBITDA should not be considered an alternative to, or more meaningful than, operating income (loss) as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. Furthermore,
other companies may compute EBITDA differently, and therefore, EBITDA amounts among companies may not be comparable. See reconciliation of cash flow provided by operating activities to EBITDA (as defined) on page 16.

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Item 3.

Quantitative and
Qualitative Disclosure about Market Risk

Interest Rate Risk

The
Companys primary exposure to financial market risks is the impact that interest rate changes could have on the Credit Facility, under which $1 million in working capital borrowings were outstanding as of March 30, 2003 and May 9, 2003.
Borrowings under the Credit Facility bear interest at the prime rate as announced by Wells Fargo Bank plus 4.25 percentage points. A hypothetical increase of 100 basis points in short-term interest rates would result in an increase of approximately
$10,000 in annual pretax losses. The estimated increase is based upon the outstanding balance of the Credit Facility, and assuming no change in the volume, index or composition of debt, at May 9, 2003.

The Company purchases certain commodities such as beef, chicken, cheese and cooking oil. Purchases of these commodities are generally based on vendor agreements, which often contain contractual
features that limit the price paid by establishing price floors or caps. As commodity price aberrations are generally short-term in nature and have not historically had a significant impact on operating performance, financial instruments are not
used directly by the Company to hedge commodity price risk. However, the Company may authorize certain vendors to utilize the commodity futures markets as a means of establishing price caps for certain commodities.

Item 4.

Controls and Procedures

The term disclosure controls and procedures is defined in Rules 12a-14(c) and 15d-14(c) of the Securities and Exchange Act of 1934 (the Exchange Act). These
rules refer to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported
within required time periods. The Companys Interim Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Companys disclosure controls and procedures as of a date within 90 days before the filing of
this quarterly report (the Evaluation Date), and, they have concluded that, as of the Evaluation Date, such controls and procedures were effective in ensuring that required information will be disclosed on a timely basis in the
Companys reports filed or submitted under the Exchange Act.

Disclosure controls and procedures, no matter how well designed and implemented, can provide
only reasonable assurance of achieving an entitys disclosure objectives. The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in
decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors or mistakes or intentional circumvention of the established process.

There were no significant changes in the Companys internal controls or in other factors that could significantly affect internal controls, known to the Interim Chief Executive Officer or the
Chief Financial Officer, subsequent to the Evaluation Date.

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PART II. OTHER INFORMATION

Item
1.Legal Proceedings

The Company is involved in various litigation matters incidental to
its business. The Company does not believe that any of the existing claims or actionswill have a material adverse effect upon the consolidated financial position or results of operations of the Company.

Item 2.Changes in Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior
Securities

None.

Item 4.Submission of Matters to a Vote of Security Holders

None.

Item 5.Other Information

None.

Item 6.Exhibits and Reports on Form 8-K

(a)

Exhibits



|2   (a) | Stock Purchase Agreement dated as of May 10, 2002, by and among FRI-MRD Corporation, the Company and Latin Intellectual Properties, Inc. (Filed as Exhibit 2(d) to the
Companys Form 10-Q filed with the SEC on May 15, 2002.)                  
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                  
|2   (b) | Prandium and FRI-MRDs Joint Reorganization Plan, dated May 6, 2002, filed with the United States Bankruptcy Court for the Central District of California. (Filed as
Exhibit 99.2 to the Companys Form 8-K filed with the SEC on June 24, 2002.)
|        |                                                                                                                                                                                                                                                  
|3   (a) | Seventh Restated Certificate of Incorporation of Prandium. (Filed as Exhibit 4.1 to the Companys Form S-8 filed with the SEC on July 3, 2002.)                                                                                                  
|        |                                                                                                                                                                                                                                                  
|3   (b) | Third Amended and Restated Bylaws of Prandium. (Filed as Exhibit 4.2 to the Companys Form S-8 filed with the SEC on July 3, 2002.)                                                                                                              

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|4   (a)  | Note Agreement Dated as of July 2, 2002 Re: Up to $80,000,000 FRI-MRD Corporation Senior Secured Notes Due January 31, 2005. (Filed as Exhibit 4(k) to the
Companys Form 10-Q filed with the SEC on August 14, 2002.)                                                                                                                                                                                 
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                                                                                                        
|10   (a) | Offering Memorandum and Disclosure Statement describing Prandium and FRI-MRD Corporations Chapter 11 Plan of Reorganization dated April 1, 2002 (including Prandium and
FRI-MRD Corporations Chapter 11 Plan of Reorganization and all exhibits thereto, except for filings under the Securities Act of 1934). (Filed as Exhibit 99.2 to the Companys Form 8-K filed with the SEC on April 9, 2002.)
|         |                                                                                                                                                                                                                                                                                                                                                                                                        
|10   (b) | First Supplement, dated April 5, 2002, to Offering Memorandum and Disclosure Statement describing Prandium and FRI-MRD Corporations Chapter 11 Plan of Reorganization
dated April 1, 2002. (Filed as Exhibit 99.3 to the Companys Form 8-K filed with the SEC on April 9, 2002.)                                                                                                                     
|         |                                                                                                                                                                                                                                                                                                                                                                                                        
|10   (c) | Order (1) Confirming Prandium and FRI-MRDs Joint Reorganization Plan; and (2) Granting Related Relief by order of the United States Bankruptcy Court for the Central
District of California, dated June 20, 2002. (Filed as Exhibit 99.1 to the Companys Form 8-K filed with the SEC on June 24, 2002.)                                                                                              
|         |                                                                                                                                                                                                                                                                                                                                                                                                        
|10   (d) | Prandium, Inc. 2002 Stock Incentive Plan (Filed as Exhibit 99.1 to the Companys Form S-8 filed with the SEC on July 3, 2002.)                                                                                                                                                                                                                                                                         
|         |                                                                                                                                                                                                                                                                                                                                                                                                        
|10   (e) | Loan and Security Agreement by and among Prandium, FRI-MRD Corporation, Chi-Chis, Inc., Koo Koo Roo, Inc., certain of their subsidiaries and Foothill Capital
Corporation, dated as of July 2, 2002. (Filed as Exhibit 10(g) to the Companys Form 10-Q filed with the SEC on August 14, 2002.)                                                                                                       
|         |                                                                                                                                                                                                                                                                                                                                                                                                        
|10   (f) | Nominating Agreement, dated July 2, 2002, by and between Prandium and MacKay Shields LLC. (Filed as Exhibit 10(h) to the Companys Form 10-Q filed with the SEC on
August 14, 2002.)                                                                                                                                                                                                                   
|         |                                                                                                                                                                                                                                                                                                                                                                                                        
|10   (g) | Severance Agreement and General and Special Release of All Claims, dated as of December 30, 2002, by and among Kevin S. Relyea and the Company, Chi-Chis, Inc. and Koo
Koo Roo, Inc. (Filed as Exhibit 10 (o) to the Companys Form 10-K filed with the SEC on March 31, 2003.)                                                                                                                       
|         |                                                                                                                                                                                                                                                                                                                                                                                                        
|10   (h) | Amended and Restated Indemnity Agreement, dated as of December 30, 2002, by and between Kevin S. Relyea and the Company. (Filed as Exhibit 10 (p) to the Companys Form
10-K filed with the SEC on March 31, 2003.)                                                                                                                                                                                    

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|10   (i) | Letter of Engagement, dated as of February 26, 2003, by and between Alvarez & Marsal, Inc. and the Company. (Filed as Exhibit 10.1 to the Companys Form 8s-K filed
with the SEC on February 26, 2003.)
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                        
|*99      | Certification of the Chief Executive Officer and Chief Financial Officer.                                                                                                                              

______________

*Filed herewith.

(b)Reports on Form 8-K.

On January 3, 2003, the Company filed a report on Form 8-K announcing the resignation of Kevin S. Relyea as a director and Chairman of the Board, President and Chief Executive Officer of the Company.

On February 26, 2003, the Company filed a report on Form 8-K announcing that two members of the turnaround firm, Alvarez & Marsal, Inc., had been appointed to key management positions. The
Company entered into an agreement with A&M regarding the provision of interim management services.

- 28 -



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SIGNATURE

Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



| |  | Prandium, Inc.(Registrant)
| |  | --------------------------
| |  | By:                       
| |  |                           
| |  |                           



Date: May 14, 2003

- 29 -



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CERTIFICATION

I, Hugh G. Hilton,
certify that:

1.

I have reviewed this
quarterly report on Form 10-Q of Prandium, Inc.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of

a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrants other certifying officers and I
are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a.

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b.

evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and

c.

presented in this quarterly report
our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrants other certifying officers and I have disclosed, based on our most recent

evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):

a.

all significant deficiencies in the design or operation of internal controls which
could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and

b.

any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal controls; and

- 30 -



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6.

The
registrants other certifying officers and I have indicated in this quarterly report

whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|Date: May 14, 2003                                                                      |  |  | 
|--------------------------------------------------------------------------------------- |  |  | 
|/S/ HUGHG. HILTON                                                                       |  |  | 
|                                                                                        |  |  | 
|Hugh G. HiltonInterim President andChief Executive Officer(Principal Executive Officer) |  |  | 



- 31 -



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CERTIFICATION

I, Robert T.
Trebing, Jr., certify that:

1.

I have
reviewed this quarterly report on Form 10-Q of Prandium, Inc.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and
other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly
report;

4.

The registrants other
certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a.

designed such disclosure controls and procedures to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b.

evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation Date); and

c.

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;

5.

The registrants other
certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):

a.

all significant deficiencies in the design or operation of internal controls which
could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and

b.

any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal controls; and

- 32 -



---

6.

The registrants
other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|Date: May 14, 2003                                                                                                     |  |  | 
|---------------------------------------------------------------------------------------------------------------------- |  |  | 
|/S/ ROBERTT.TREBING,Jr.                                                                                                |  |  | 
|                                                                                                                       |  |  | 
|Robert T. Trebing, Jr.Executive Vice President and Chief Financial Officer(Principal Financial
and Accounting Officer) |  |  | 



- 33 -