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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|x                                                                   |  | Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 
|------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------
|                                                                    |  |                                                                                         
|For the quarterly period ended September 29, 2002                  
|                                                                   
|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                                    
|                                                                   
|Prandium, Inc.                                                     
|                                                                   
|(Exact name of registrant as specified in its charter)             
|                                                                    | 
|Delaware                                                            |  | 33-0197361                                                                              
|                                                                    |  |                                                                                         
|(State or other jurisdiction of incorporation or organization)      |  | (I.R.S. Employer Identification No.)                                                    
|                                                                    |  |                                                                                         
|2701 Alton Parkway, Irvine, California                              |  | 92606                                                                                   
|                                                                    |  |                                                                                         
|(Address of principal executive offices)                            |  | (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 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 November 8, 2002 the registrant had issued and outstanding 5,000,000 shares of common stock, $.01 par value per
share.

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PART I.  FINANCIAL INFORMATION

Item 1.  Financial
Statements

PRANDIUM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands)

|                                                                              |                                                                                                                                                                                                                                                                 | Successor Company September 29, 2002 |         | Predecessor Company December 30, 2001 |  
|----------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------- | ------------------------------------- | -
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              |                                                                                                                                                                                                                                                                 | (Unaudited)                          |         |                                       |  
|ASSETS                                                                        |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|Current assets:                                                               |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              | Cash and cash equivalents                                                                                                                                                                                                                                       |                                      | $       | 5,919                                 |  
|                                                                              | Restricted cash                                                                                                                                                                                                                                                 |                                      |         |                                      |  
|                                                                              | Receivables, net                                                                                                                                                                                                                                                |                                      |         | 1,724                                 |  
|                                                                              | Inventories                                                                                                                                                                                                                                                     |                                      |         | 1,624                                 |  
|                                                                              | Other current assets                                                                                                                                                                                                                                            |                                      |         | 2,861                                 |  
|                                                                              | Property held for sale                                                                                                                                                                                                                                          |                                      |         | 14,786                                |  
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              | Total current assets                                                                                                                                                                                                                                            |                                      |         | 26,914                                |  
|Property and equipment, net                                                   |                                                                                                                                                                                                                                                                 |                                      | 74,672  |                                       |  
|Other assets, net                                                             |                                                                                                                                                                                                                                                                 |                                      | 11,150  |                                       |  
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              |                                                                                                                                                                                                                                                                 | $                                    | 112,736 |                                       | $
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|Current liabilities:                                                          |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              | Current portion of long-term debt, including capitalized lease obligations                                                                                                                                                                                      |                                      | $       | 536                                   |  
|                                                                              | Accounts payable                                                                                                                                                                                                                                                |                                      |         | 4,840                                 |  
|                                                                              | Current portion of self-insurance reserves                                                                                                                                                                                                                      |                                      |         | 1,870                                 |  
|                                                                              | Other accrued liabilities                                                                                                                                                                                                                                       |                                      |         | 33,699                                |  
|                                                                              | Income taxes payable                                                                                                                                                                                                                                            |                                      |         | 3,338                                 |  
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              | Total current liabilities                                                                                                                                                                                                                                       |                                      |         | 44,283                                |  
|Self-insurance reserves                                                       |                                                                                                                                                                                                                                                                 |                                      | 5,828   |                                       |  
|Other long-term liabilities                                                   |                                                                                                                                                                                                                                                                 |                                      | 2,464   |                                       |  
|Long-term debt, including capitalized lease obligations, less current portion |                                                                                                                                                                                                                                                                 |                                      | 53,847  |                                       |  
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              | Total liabilities                                                                                                                                                                                                                                               |                                      |         | 106,422                               |  
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|Commitments and contingencies                                                 |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|Stockholders equity (deficit):                                               |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              | Common stock - authorized 9,000,000 shares, par value $.01 per share, 5,000,000 shares issued and outstanding on September 29, 2002 and authorized
300,000,000 shares, par value $.01 per share, 180,380,513 shares issued and outstanding on December 30, 2001 |                                      |         | 50                                    |  
|                                                                              | Additional paid-in capital                                                                                                                                                                                                                                      |                                      |         | 8,759                                 |  
|                                                                              | Accumulated deficit                                                                                                                                                                                                                                             |                                      |         | (2,495                                | )
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              | Total stockholders equity (deficit)                                                                                                                                                                                                                            |                                      |         | 6,314                                 |  
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              |                                                                                                                                                                                                                                                                 | $                                    | 112,736 |                                       | $
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  
|                                                                              |                                                                                                                                                                                                                                                                 |                                      |         |                                       |  

See accompanying notes to condensed consolidated financial statements

- 2 -



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PRANDIUM, INC.

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

|                                                               |                          | Successor Company                        |           | Predecessor Company                      |  
|-------------------------------------------------------------- | ------------------------ | ---------------------------------------- | --------- | ---------------------------------------- | -
|                                                               |                          |                                          |           |                                          |  
|                                                               |                          | For the Quarter Ended September 29, 2002 |           | For the Quarter Ended September 30, 2001 |  
|                                                               |                          |                                          |           |                                          |  
|Sales                                                          |                          | $                                        | 62,595    |                                          | $
|                                                               |                          |                                          |           |                                          |  
|Product costs                                                  |                          |                                          | 15,474    |                                          |  
|Payroll and related costs                                      |                          |                                          | 22,575    |                                          |  
|Occupancy and other operating expenses                         |                          |                                          | 18,115    |                                          |  
|Depreciation and amortization                                  |                          |                                          | 2,650     |                                          |  
|General and administrative expenses                            |                          |                                          | 3,259     |                                          |  
|Opening costs                                                  |                          |                                          |          |                                          |  
|Loss on disposition of properties, net                         |                          |                                          | 293       |                                          |  
|Provision for divestitures and write-down of long-lived assets |                          |                                          | 60        |                                          |  
|Restructuring costs                                            |                          |                                          |          |                                          |  
|                                                               |                          |                                          |           |                                          |  
|                                                               | Total costs and expenses |                                          |           | 62,426                                   |  
|                                                               |                          |                                          |           |                                          |  
|Operating income (loss)                                        |                          |                                          | 169       |                                          |  
|Interest expense, net                                          |                          |                                          | 2,815     |                                          |  
|Gain on extinguishment of debt                                 |                          |                                          | 189       |                                          |  
|                                                               |                          |                                          |           |                                          |  
|Loss before income tax provision                               |                          |                                          | (2,457    | )                                        |  
|Income tax provision                                           |                          |                                          | 38        |                                          |  
|                                                               |                          |                                          |           |                                          |  
|Net loss                                                       |                          | $                                        | (2,495    | )                                        | $
|                                                               |                          |                                          |           |                                          |  
|Net loss per share - basic and diluted                         |                          | $                                        | (0.50     | )                                        | $
|                                                               |                          |                                          |           |                                          |  
|Weighted average shares outstanding - basic and diluted        |                          |                                          | 5,000,000 |                                          |  
|                                                               |                          |                                          |           |                                          |  
|                                                               |                          |                                          |           |                                          |  

See accompanying notes to condensed consolidated financial statements

- 3 -



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PRANDIUM, INC.

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

|                                                                                               |                            | Successor Company                        |           | Predecessor Company |                                       
|---------------------------------------------------------------------------------------------- | -------------------------- | ---------------------------------------- | --------- | ------------------- | --------------------------------------
|                                                                                               |                            |                                          |           |                     |                                       
|                                                                                               |                            | For the Quarter Ended September 29, 2002 |           |                     | For the Six Months Ended June 30, 2002
|                                                                                               |                            |                                          |           |                     |                                       
|Sales                                                                                          |                            | $                                        | 62,595    |                     | $                                     
|                                                                                               |                            |                                          |           |                     |                                       
|Product costs                                                                                  |                            |                                          | 15,474    |                     |                                       
|Payroll and related costs                                                                      |                            |                                          | 22,575    |                     |                                       
|Occupancy and other operating expenses                                                         |                            |                                          | 18,115    |                     |                                       
|Depreciation and amortization                                                                  |                            |                                          | 2,650     |                     |                                       
|General and administrative expenses                                                            |                            |                                          | 3,259     |                     |                                       
|Opening costs                                                                                  |                            |                                          |          |                     |                                       
|Loss on disposition of properties, net                                                         |                            |                                          | 293       |                     |                                       
|Provision for divestitures and write-down of long-lived assets                                 |                            |                                          | 60        |                     |                                       
|Restructuring costs                                                                            |                            |                                          |          |                     |                                       
|                                                                                               |                            |                                          |           |                     |                                       
|                                                                                               | Total costs and expenses   |                                          |           | 62,426              |                                       
|                                                                                               |                            |                                          |           |                     |                                       
|Operating income (loss)                                                                        |                            |                                          | 169       |                     |                                       
|Interest expense, net (contractual interest of $14,846 for the six months ended June 30, 2002) |                            |                                          | 2,815     |                     |                                       
|Gain on extinguishment of debt                                                                 |                            |                                          | 189       |                     |                                       
|                                                                                               |                            |                                          |           |                     |                                       
|Income (loss) before reorganization items and income tax provision                             |                            |                                          | (2,457    | )                   |                                       
|Reorganization items:                                                                          |                            |                                          |           |                     |                                       
|                                                                                               | Professional fees          |                                          |           |                    |                                       
|                                                                                               | Fresh start adjustment     |                                          |           |                    |                                       
|                                                                                               |                            |                                          |           |                     |                                       
|                                                                                               | Total reorganization items |                                          |           |                    |                                       
|                                                                                               |                            |                                          |           |                     |                                       
|Income (loss) before income tax provision                                                      |                            |                                          | (2,457    | )                   |                                       
|Income tax provision                                                                           |                            |                                          | 38        |                     |                                       
|                                                                                               |                            |                                          |           |                     |                                       
|Net income (loss)                                                                              |                            | $                                        | (2,495    | )                   | $                                     
|                                                                                               |                            |                                          |           |                     |                                       
|Net income (loss) per share - basic and diluted                                                |                            | $                                        | (0.50     | )                   | $                                     
|                                                                                               |                            |                                          |           |                     |                                       
|Weighted average shares outstanding - basic and diluted                                        |                            |                                          | 5,000,000 |                     |                                       
|                                                                                               |                            |                                          |           |                     |                                       
|                                                                                               |                            |                                          |           |                     |                                       

See accompanying notes to condensed consolidated financial statements

- 4 -



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PRANDIUM, INC.

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

|                                                                                                   |                                                                                                                      | Successor Company                        |        | Predecessor Company                    |  
|-------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ------ | -------------------------------------- | -
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   |                                                                                                                      | For the Quarter Ended September 29, 2002 |        | For the Six Months Ended June 30, 2002 |  
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|Cash flows from operating activities:                                                              |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   | Cash received from customers, franchisees and licensees                                                              |                                          | $      | 63,194                                 |  
|                                                                                                   | Cash paid to suppliers and employees                                                                                 |                                          |        | (60,359                                | )
|                                                                                                   | Interest received (paid), net                                                                                        |                                          |        | (283                                   | )
|                                                                                                   | Opening costs                                                                                                        |                                          |        |                                       |  
|                                                                                                   | Restructuring costs                                                                                                  |                                          |        | (1,140                                 | )
|                                                                                                   | Income taxes paid                                                                                                    |                                          |        | (73                                    | )
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   | Net cash provided by (used in) operating activities before reorganization items                                      |                                          |        | 1,339                                  |  
|                                                                                                   | Reorganization items - professional fees                                                                             |                                          |        | (120                                   | )
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   | Net cash provided by (used in) operating activities                                                                  |                                          |        | 1,219                                  |  
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|Cash flows from investing activities:                                                              |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   | Proceeds from disposal of property and equipment                                                                     |                                          |        | 50                                     |  
|                                                                                                   | Proceeds from payments on notes receivable                                                                           |                                          |        | 456                                    |  
|                                                                                                   | Capital expenditures                                                                                                 |                                          |        | (534                                   | )
|                                                                                                   | Lease termination payments                                                                                           |                                          |        | (202                                   | )
|                                                                                                   | Other divestment expenditures                                                                                        |                                          |        | (447                                   | )
|                                                                                                   | Cash required for the El Torito Sale                                                                                 |                                          |        |                                       |  
|                                                                                                   | Decrease (increase) in restricted cash, net                                                                          |                                          |        | 521                                    |  
|                                                                                                   | Other                                                                                                                |                                          |        | (335                                   | )
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   | Net cash provided by (used in) investing activities                                                                  |                                          |        | (491                                   | )
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|Cash flows from financing activities:                                                              |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   | Payment of debt issuance costs                                                                                       |                                          |        | (137                                   | )
|                                                                                                   | Reductions of long-term debt, including capitalized lease obligations                                                |                                          |        | (780                                   | )
|                                                                                                   | Cash settlement of liabilities subject to compromise under reorganization proceedings                                |                                          |        |                                       |  
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   | Net cash used in financing activities                                                                                |                                          |        | (917                                   | )
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|Net decrease in cash and cash equivalents                                                          |                                                                                                                      |                                          | (189   | )                                      |  
|Cash and cash equivalents at beginning of period                                                   |                                                                                                                      |                                          | 6,108  |                                        |  
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|Cash and cash equivalents at end of period                                                         |                                                                                                                      | $                                        | 5,919  |                                        | $
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|Reconciliation of net income (loss) to net cash provided by (used in) operating activities:        |                                                                                                                      |                                          |        |                                        |  
|Net income (loss)                                                                                  |                                                                                                                      | $                                        | (2,495 | )                                      | $
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   | Depreciation and amortization                                                                                        |                                          |        | 2,650                                  |  
|                                                                                                   | Amortization of debt issuance costs and deferred gain                                                                |                                          |        | 61                                     |  
|                                                                                                   | Loss on disposition of properties                                                                                    |                                          |        | 293                                    |  
|                                                                                                   | Provision for divestitures and write-down of long-lived assets                                                       |                                          |        | 60                                     |  
|                                                                                                   | Accretion of interest on new notes                                                                                   |                                          |        | 999                                    |  
|                                                                                                   | Gain on extinguishment of debt                                                                                       |                                          |        | (189                                   | )
|                                                                                                   | Fresh start adjustment                                                                                               |                                          |        |                                       |  
|                                                                                                   | (Increase) decrease in receivables, inventories and other current assets                                             |                                          |        | 2,555                                  |  
|                                                                                                   | Increase (decrease) in accounts payable, self-insurance reserves, other accrued liabilities and income taxes payable |                                          |        | (2,715                                 | )
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   | Net cash provided by (used in) operating activities                                                                  |                                          | $      | 1,219                                  |  
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  
|                                                                                                   |                                                                                                                      |                                          |        |                                        |  

See accompanying notes to condensed consolidated financial statements

- 5 -



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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 September 29, 2002,
the Company operated 174 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) and the related transactions discussed 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 30, 2001 included
in the Companys Annual Report on Form 10-K for the fiscal year ended December 30, 2001 (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 as well as those adjustments required pursuant to the American Institute of Certified Public Accountants Statement of Position
90-7, Financial Reporting by Entities in Reorganization (SOP 90-7), necessary for a fair presentation of the results of the interim periods presented have been made.  The results of operations for the interim periods
ended September 29, 2002 and June 30, 2002 are not necessarily indicative of those for the full year.  As a result of the Companys fresh start reporting described below, the nine months ended September 29, 2002 has been presented as the
six months ended June 30, 2002 for the Predecessor Company and the quarter ended September 29, 2002 for the Successor Company.

The condensed consolidated financial statements of the Company relating to periods ended before July 2, 2002 were prepared on a going concern
basis that contemplated continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. As a result of the consummation of the Plan (as defined below) on July 2, 2002 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 are restated to the current value of the reorganized entity to approximate the Companys fair value at the date of
reorganization.

The Company has obtained an independent appraisal of the value of its long-term assets as of
the Closing (as defined below) of $82.8 million, the estimated effect of which it has utilized, together with adjustments of $229,000 to current assets, $(3,000) to other assets and $(848,000) to current liabilities, to implement fresh start
reporting. In addition, although the Notes (as defined below) have an initial face value of $59 million and have a stated interest rate of 12%, for financial reporting purposes

- 6
-



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the Notes were recorded at $52.8 million with an interest rate of 16.6% (which was considered the fair value interest rate for the Notes at the Closing).  The
allocation of the reorganization value to the Companys assets will be finalized in the near future.  The Company does not expect that the final allocation will require any adjustment that would have a material impact on its condensed
consolidated financial statements included herein.

The 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 are viewed to be similar to those of the Company, 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 the reorganization value was also based upon a number of estimates and assumptions that are inherently subject to significant uncertainties and contingencies beyond the control of the Company.  For example, the five-year cash
flow projections used as a factor in determining the reorganization value were based on estimates and assumptions about circumstances and events that have not yet taken place.  Such estimates and assumptions are inherently subject to
significant economic and competitive uncertainties beyond the control of the Company including, but not limited to, those with respect to the future course of the Companys business activity.  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.

The accumulated deficit of the Predecessor Company was eliminated as required by fresh start reporting.  For financial reporting
purposes, the effective date of the Reorganization Case is deemed to be the close of business on June 30, 2002; therefore certain transactions occurring after June 30, 2002 but on or before July 2, 2002 are reflected in the condensed consolidated
financial statements as if they had occurred on June 30, 2002.  As a result, the condensed consolidated statement of operations for the six months ended June 30, 2002 reflects the effects of the forgiveness of debt ($191.4 million) resulting
from confirmation of the Plan and the effects of the adjustments to restate assets and liabilities ($9.9 million) to reflect the reorganization value of the Company.  As such, the condensed consolidated balance sheet of the Company as of
September 29, 2002 and the accompanying condensed consolidated statement of operations for the quarter then ended 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 balance sheet as of December 30, 2001 and the condensed consolidated statements of operations for the periods ended June 30, 2002 and September 30, 2001 represent that of the
Predecessor Company.

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

- 7 -



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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.

Under the Plan, the FRI-MRD 14% Senior Secured Discount Notes
(the 14% FRI-MRD Notes) were exchanged at a discount for $18 million in cash, and the FRI-MRD 15% Senior Discount Notes (the 15% FRI-MRD Notes and together with the 14% FRI-MRD Notes, the Old FRI-MRD 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).  The Notes have substantially similar terms as the 15% FRI-MRD Notes
except that the Notes (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 14 location Hamburger Hamlet restaurant chain (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, depending on how quickly the prepayment is made.  The Notes are secured by the stock of the subsidiary operating the Hamburger Hamlet Chain.

Also under the Plan, Prandiums 9 3/4% Senior Notes (the 9 3/4% Prandium Notes) were cancelled in exchange for 5,000,000
shares of the new common stock of Prandium, and stock options to purchase up to an additional 444,445 shares at an exercise price of $1.90 per share were granted to certain members of management.  Prandiums 10 7/8% Senior Subordinated
Discount Notes (the 10 7/8% Prandium Notes and together with the 9 3/4% Prandium Notes, the Prandium Notes) were cancelled without receiving any consideration.  The old common stock of Prandium was also cancelled without
receiving any consideration.

In accordance with the Plan, at the Closing the Company, among other things, entered
into a note agreement (the Note Agreement) governing the Notes, revised Prandiums charter and bylaws and the charter of FRI-MRD, entered into the Credit Facility with Foothill to replace the old secured credit facility (the
Old Credit Facility) with Foothill and designated four members of Prandiums five-member board of directors.  Under the Plan, the investment representative of certain of the holders of the Notes (the Representative)
has the right to initially designate one individual to the currently vacant position on the board of directors of Prandium. The Representatives right to nominate one individual for election to the board of directors continues until the Notes
are paid in full pursuant to the Plan and a nominating agreement entered into with Prandium and certain of Prandiums common stockholders.  As of November 8, 2002, the Representative had not yet designated a director.

The Plan did not involve any of Prandiums or FRI-MRDs operating subsidiaries.  The claims of employees, general
unsecured creditors (other than noteholders) and secured creditors, other than holders of the 14% FRI-MRD Notes, were not impaired under the Plan.

- 8 -



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4.     Sale of Hamburger Hamlet
Restaurants.     On May 10, 2002, the Company entered into an agreement (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 has given the Company notice that it does not believe that the Companys termination notice is effective.  The Company and the purchaser are continuing to discuss the
matter and as of the filing date of this report, no other action has been taken by either side.  Since a sale of the Hamburger Hamlet Chain is contemplated by the Companys capital restructuring strategy, the Company continues to explore
and develop opportunities to sell the Hamburger Hamlet Chain. As called for in the Note Agreement, the proceeds of any sale of the Hamburger Hamlet Chain will 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.  In accordance with this provision, $566,000 for the second quarter of 2002 and
$425,000 for the third quarter of 2002, was used to prepay $747,000 and $551,000, respectively, principal amount of 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 value of $14,786,000 and
classified as property held for sale in the accompanying condensed consolidated balance sheet.  This amount reflects an additional write-down of $1,058,000 recorded in the quarter ended March 31, 2002 to recognize the terms of the Hamlet
Agreement.  During the second quarter of 2002, the Company recorded a provision for divestitures of $467,000 related to the sale of the Hamburger Hamlet Chain.  During the third quarter of 2002, the Company recorded an additional provision
for divestitures of $60,000 related to the sale of the Hamburger Hamlet Chain.

The Hamburger Hamlet Chain generated
sales of $22,936,000 and $24,582,000 for the nine months ended September 29, 2002 and September 30, 2001, respectively, and related operating income of $2,228,000 and $2,763,000 for the same periods, respectively.  Such operating income
includes charges for allocated general and administrative expenses of $447,000 and $559,000 for the nine months ended September 29, 2002 and September 30, 2001, respectively.

5.     Strategic Divestment Programs.     During the fiscal years 1999, 2000
and 2001, the Company designated three, ten and four non-strategic Koo Koo Roo restaurants for divestment (the KKR Strategic Divestment Program), respectively.  In conjunction with the KKR Strategic Divestment Program, for such
periods, the Company recorded provisions for divestitures of $904,000, $4,510,000 and $814,000, respectively.  On a cumulative basis, these provisions consisted of (i) $3,429,000 for the write-down to net realizable value of the property and
equipment associated with such restaurants and (ii) $2,799,000 for costs associated with lease terminations, subsidized leases, brokerage fees and other divestment costs.  During 2001, the Company also recorded a provision for severance costs
of $189,000 associated with certain restaurant managers in connection with the restaurants to be divested.  During 2000, two of the restaurants designated in 1999 were subleased and a third restaurants lease was terminated.  Of the
ten restaurants designated in 2000, nine were divested or closed during 2001, and one was closed during the first quarter of 2002.  Of the four restaurants designated in 2001, one was divested in the fourth quarter of 2001, and three were
divested or closed

- 9 -



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during the first quarter of 2002.  For the years ended December 30, 2001, December 31, 2000 and December 26, 1999, the Company paid (i) $138,000, $0 and $0,
respectively, for severance costs associated with certain restaurant and regional managers who were terminated in connection with the restaurants divested and (ii) $947,000, $135,000 and $0, respectively, for net costs associated with lease
terminations, subsidized subleases, brokerage fees and other divestment costs.  During the first nine months of 2002, the Company paid $47,000 for severance costs and $211,000 for lease terminations. During the first nine months of 2002,
restaurants still in operation under the KKR Strategic Divestment Program had sales of $352,000 and restaurant- level operating losses of $232,000.  The Company has identified one additional Koo Koo Roo restaurant for divestment.  During
the first nine months of 2002, this restaurant had sales of $573,000 and restaurant-level operating losses of $149,000.  An additional provision for divestitures could be required in the fourth quarter of 2002 after management reviews its
options with respect to this restaurant.

In the fourth quarter of 1998, 48 non-strategic Chi-Chis restaurants
were designated for divestment (the CC Strategic Divestment Program).  In conjunction with the CC Strategic Divestment Program, the Company recorded a provision for divestitures of $22,884,000, including divestment reserves of
$12,256,000.  During the fourth quarter of 1999, the Company determined that it would not be able to satisfactorily negotiate lease terminations or subleases for 20 operating restaurants of the 48 Chi-Chis restaurants designated for
divestment.  As a result, these 20 restaurants were removed from the CC Strategic Divestment Program, and $1,048,000 previously recorded in conjunction with the provision for divestitures was reversed during the fourth quarter of 1999. 
After this reversal, the eight restaurants remaining in the CC Strategic Divestment Program were divested during 2000.  In the fourth quarter of 2001, sixteen additional Chi-Chis restaurants were designated for divestment.  The
Company recorded a provision for divestitures of $2,736,000. This provision consisted of (i) $2,386,000 for the write-down to net realizable value of the property and equipment associated with such restaurants and (ii) $350,000 for costs associated
with lease terminations, subsidized leases, brokerage fees and other divestment costs.  In December 2001, the Company recorded an additional provision for divestitures of $2,029,000 for costs associated with lease terminations, subsidized
leases, brokerage fees and other divestment costs.  For the years ended December 30, 2001, December 31, 2000 and December 26, 1999, the Company paid (i) $33,000, $225,000 and $287,000, respectively, for severance costs associated with certain
restaurant and regional managers who were terminated in connection with the restaurants divested and (ii) $1,681,000, $2,124,000 and $1,913,000, respectively, for net costs associated with lease terminations, subsidized subleases, brokerage fees and
other divestment costs.  During the first quarter of 2002, the Company recorded an additional provision of $695,000 consisting of (i) $250,000 for the write-off of a liquor license and (ii) $445,000 for lease terminations and other divestment
costs. During the second quarter of 2002, the Company recorded a provision of $82,000 for lease terminations, other divestment costs and the write-down of property and equipment to net realizable value.  During the first nine months of 2002,
the Company paid $110,000 for severance costs and $1,245,000 for lease terminations.  During the first nine months of 2002, restaurants still in operation under the CC Strategic Divestment Program had sales of $9,227,000 and restaurant-level
operating losses of $1,352,000.  Of the properties remaining in the Chi-Chis Strategic Divestment Program from 2001, the Company has determined that three of the restaurants will be operated until their leases expire due to their short
remaining lease lives.  In addition, the Company has identified two additional Chi-Chis restaurants for divestment.  During the first nine months of 2002, these restaurants had sales of $1,109,000 and restaurant-level operating
losses of $139,000.  An additional provision for divestitures could be required in the fourth quarter of 2002 after management reviews its options with respect to

- 10 -



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these restaurants.

In the second
quarter of 2001, the Company announced an organizational restructuring that resulted in the elimination of approximately 40 positions in the Companys support center.  The Company recorded a provision of $1,607,000 for severance and
outplacement services and the amount was included in restructuring costs on the 2001 consolidated statement of operations.  For the year ended December 30, 2001, a total of $1,521,000 was paid for severance and outplacement services. During the
first nine months of 2002, the Company paid $17,000 for outplacement services.

6.     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 information presented for the nine months ended September 29, 2002 is composed of one quarter of Successor Company operations plus six months of Predecessor Company operations. The value of
the total assets is based on an independent appraisal recently performed in connection with the determination of the Companys reorganization value in connection with fresh start reporting.  The allocation of the value among the
Companys divisions will be finalized in the near future.  The Company does not expect that the final allocation will require any adjustment that would have a material impact on the condensed consolidated financial statements included
herein.

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|                              |                                     | For the Quarters Ended       |   | For the Nine Months Ended |  
|----------------------------- | ----------------------------------- | ---------------------------- | - | ------------------------- | -
|                              |                                     |                              |   |                           |  
|                              |                                     | September 29, 2002           |   | September 30, 2001        |  
|                              |                                     |                              |   |                           |  
|                              |                                     | (Unaudited) ($ in thousands) |  
|Sales                         |                                     |                              |   |                           |  
|                              | Chi-Chis Division                  |                              | $ | 45,525                    |  
|                              | Koo Koo Roo Division                |                              |   | 16,320                    |  
|                              | Corporate                           |                              |   | 750                       |  
|                              |                                     |                              |   |                           |  
|                              | Total Sales                         |                              | $ | 62,595                    |  
|                              |                                     |                              |   |                           |  
|Depreciation and Amortization |                                     |                              |   |                           |  
|                              | Chi-Chis Division                  |                              | $ | 1,870                     |  
|                              | Koo Koo Roo Division                |                              |   | 448                       |  
|                              | Corporate                           |                              |   | 332                       |  
|                              |                                     |                              |   |                           |  
|                              | Total Depreciation and Amortization |                              | $ | 2,650                     |  
|                              |                                     |                              |   |                           |  
|Operating Income (Loss)       |                                     |                              |   |                           |  
|                              | Chi-Chis Division                  |                              | $ | 104                       |  
|                              | Koo Koo Roo Division                |                              |   | 478                       |  
|                              | Corporate                           |                              |   | (413                      | )
|                              |                                     |                              |   |                           |  
|                              | Total Operating Income (Loss)       |                              | $ | 169                       |  
|                              |                                     |                              |   |                           |  
|Interest Expense, net         |                                     |                              |   |                           |  
|                              | Chi-Chis Division                  |                              | $ | 158                       |  
|                              | Koo Koo Roo Division                |                              |   | 49                        |  
|                              | Corporate                           |                              |   | 2,608                     |  
|                              |                                     |                              |   |                           |  
|                              | Total Interest Expense, net         |                              | $ | 2,815                     |  
|                              |                                     |                              |   |                           |  
|Capital Expenditures          |                                     |                              |   |                           |  
|                              | Chi-Chis Division                  |                              | $ | 412                       |  
|                              | Koo Koo Roo Division                |                              |   | 87                        |  
|                              | Corporate                           |                              |   | 35                        |  
|                              |                                     |                              |   |                           |  
|                              | Total Capital Expenditures          |                              | $ | 534                       |  
|                              |                                     |                              |   |                           |  
|                              |                                     |                              |   |                           |  
|                              |                                     | September 29, 2002           |   | December 30, 2001         |  
|                              |                                     |                              |   |                           |  
|                              |                                     | (Unaudited)                  |   |                           |  
|                              |                                     | ($ in thousands)             |  
|Total Assets                  |                                     |                              |   |                           |  
|                              | Chi-Chis Division                  |                              | $ | 73,368                    |  
|                              | Koo Koo Roo Division                |                              |   | 25,497                    |  
|                              | Corporate                           |                              |   | 13,871                    |  
|                              |                                     |                              |   |                           |  
|                              | Total Assets                        |                              | $ | 112,736                   |  
|                              |                                     |                              |   |                           |  
|                              |                                     |                              |   |                           |  

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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 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                                                                                                                                                                       
|  |  |                                                                                                                                                                                                              
| |  | increases in utility costs and the impact of potential utility interruptions.                                                                                                                                

- 13 -



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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.

1.     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 are 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 are 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.

2.     Impairment of Long-Lived Assets.The Company reviews long-lived assets for
impairment 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 2002 or prior years, include property, plant and equipment and costs in
excess of net assets of business acquired.

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.

3.     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 $7,698,000 at September 29, 2002.  Management continually

- 14
-



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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.

4.     Divestment Reserves.The Company makes
decisions to close restaurants based on their cash flows and anticipated future profitability.  Losses on disposition of properties are recognized when a  commitment to divest a restaurant property is made by the Company and include
estimated carrying costs through the expected disposal date.   This policy may change upon the adoption of Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146) (see Recent
Accounting Pronouncements).  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 third quarter of 2002.

Liquidity and Capital Resources

A.   Liquidity

Cash needs are being funded by available cash balances and cash provided by operating activities and can be supplemented by borrowings under
the Credit Facility (currently limited to $2.0 million of cash borrowings). As described below, the Company filed a Reorganization Case to confirm the 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s continuing viability will be dependent upon its ability 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 or to be able to renegotiate such obligations and terms.

Sales for
comparable restaurants have declined in 2002 as compared to 2001 for each of the Companys restaurant concepts.  In spite of this issue, the Company has reported an improvement in operating income (loss) and EBITDA during the first nine
months of 2002 as compared to the same period for 2001 due to various reductions in costs.  If sales for comparable restaurants do not improve in the future, cost reductions may not be available to continue to offset the impact of declining
sales and a reduction in operating cash flow could result.  This could cause a risk to the Companys ability to comply with the terms of its financing agreements, including financial ratios.

Statement of Cash Flows.  For the nine months ended September 29, 2002, net cash provided by operating activities was $1.1 million
compared to $7.2 million used in operating activities for the same period in 2001.  This $8.3 million change was primarily due to the $8.4 million increase in cash received from customers, franchisees and licensees net of cash paid to suppliers
and employers.  For the first nine months of 2002, net cash provided by investing activities was $8.4 million compared to $18.0 million

- 15 -



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used in investing activities for the same period in 2001.  This $26.4 million change was primarily due to a $2.2 million decrease in capital expenditures and a $22.4
million change in restricted cash activity (net cash collateral increase of $9.4 million in 2001 and net cash collateral and escrow release of $12.9 million in 2002). For the first nine months of 2002, net cash used in financing activities was $31.6
million compared to $1.1 million used in financing activities for the same period in 2001.  This change was primarily due to the payment of $30.0 million to the holders of the Old FRI-MRD Notes in accordance with the Plan.

EBITDA.  For the first nine months of 2002, the Company reported EBITDA (defined as earnings (loss) before opening costs,
gain (loss) on disposition of properties, provision for divestitures and write-down of long-lived assets, restructuring costs, reorganization items, interest, taxes, depreciation and amortization) of $10.0 million, compared to $1.8 million in the
same period of 2001. The $8.3 million increase was primarily composed of (i) a $4.0 million increase in the EBITDA attributable to the Chi-Chis restaurants; (ii) a $1.8 million increase in the EBITDA attributable to the Koo Koo Roo
restaurants; (iii) a $535,000 decrease in the EBITDA attributable to the Hamburger Hamlet Chain; and (iv) $3.0 million of previously unallocated general and administrative expenses that have been eliminated.

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 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.

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 $17.4 million on September 29, 2002.  This amount is net of
property held for sale of approximately $14.8 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):

- 16 -



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|                                                        |                                    | Payments Due by Period |        
|------------------------------------------------------- | ---------------------------------- | ---------------------- | -------
|                                                        |                                    |                        |        
|                                                        |                                    |                        |        
|                                                       
|                                                        |                                    | Total                  |        
|                                                        |                                    |                        |        
|Long-term debt, including capitalized lease obligations |                                    | $                      | 79,301 
|Operating leases                                        |                                    |                        | 115,280
|                                                        |                                    |                        |        
|                                                        | Total contractual cash obligations |                        | $      
|                                                        |                                    |                        |        
|                                                        |                                    |                        |        

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.

Under the Plan, the 14% FRI-MRD Notes were exchanged at a discount for $18 million in cash, and the 15% FRI-MRD Notes were exchanged at a
discount for a combination of $12 million in cash and Notes with an initial face value of $59 million having substantially similar terms as the 15% FRI-MRD Notes except that the replacement notes (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 Hamburger Hamlet sale, be applied to prepay the Notes and (v) contain additional limitations on indebtedness and capital expenditures.  In addition, while no cash interest payments will be required on the
Notes, prepayments are encouraged by an extra reduction in principal of up to 33.33% of the prepaid amount, depending on how quickly the prepayment is made.  The Notes are secured by the stock of the subsidiary operating the Hamburger Hamlet
Chain.

Also under the Plan, the 9 3/4% Prandium Notes were cancelled in exchange for 5,000,000 shares of the new
common stock of Prandium, and stock options to purchase up to an additional 444,445 shares at an exercise price of $1.90 per share were granted to certain members of management. The 10 7/8% Prandium Notes were cancelled without receiving any
consideration. The old common stock of Prandium was also cancelled without receiving any consideration.

In
accordance with the Plan, at the Closing the Company, among other things, entered into the Note Agreement, revised Prandiums charter and bylaws and the charter of FRI-MRD, entered into the Credit Facility with Foothill to replace the Old
Credit Facility with Foothill, and designated four of Prandiums five-member board of directors.  Under the Plan, the Representative has the right to initially designate one individual to the currently vacant position on the board of
directors of Prandium.  The Representatives right to nominate one individual for election to the board of directors continues until the Notes are paid in full pursuant to the Plan and a nominating agreement entered into with Prandium and
certain of Prandiums common stockholders. As of November 8, 2002, the Representative had not yet designated a director.

- 17 -



---

The Plan did not involve any of Prandiums or FRI-MRDs operating
subsidiaries.  The claims of employees, general unsecured creditors (other than noteholders) and secured creditors, other than holders of the 14% FRI-MRD Notes, were not impaired under the Plan.

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 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 replaces the Old Credit Facility and 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).  The Credit Facility currently includes a $2 million reserve against both the revolving cash borrowings and letter of credit limits that prohibits the Company from borrowing the full amounts available under the revolver and letter of
credit components of the Credit Facility. The $2 million reserve will be released in $1 million increments at each of the 180 and 270 day anniversaries of the Closing Date. 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 financial ratios at September 29, 2002.

Approximately $10.0 million of letters of credit were outstanding under the Credit Facility as of September 29, 2002 with approximately $9.9
million outstanding as of November 8, 2002.  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
employment agreement.   No working capital borrowings were outstanding under the Credit Facility as of September 29, 2002 with $1 million outstanding as of  November 8, 2002.

3.   FRI-MRD and Prandium Notes.   As described above, under the Plan, the 14% FRI-MRD Notes were
exchanged at a discount for cash, and the 15% FRI-MRD Notes were exchanged at a discount for a combination of cash and Notes.  Also under the Plan, the 9 3/4% Prandium Notes were cancelled in exchange for 5,000,000 shares of the new common
stock of Prandium, and the 10 7/8% Prandium Notes were 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, depending on how quickly the prepayment is
made.

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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 has given the Company notice that it does not believe that the
Companys termination notice is effective.  The Company and the purchaser are continuing to discuss the matter and as of the filing date of this report, no other action has been taken by either side.  Since a sale of the Hamburger
Hamlet Chain is contemplated by the Companys capital restructuring strategy, the Company continues to explore and develop opportunities to sell the Hamburger Hamlet Chain.  As called for in the Note Agreement, the proceeds of any sale of
the Hamburger Hamlet Chain will 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.  In accordance with this provision, $566,000 for the second quarter of 2002 and $425,000 for the third quarter of 2002, was used to prepay $747,000 and $551,000, respectively, principal amount of 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.

Other.   The State of Delaware sent the Company a notice dated July 29, 2002
that requested compliance with Delawares escheat (unclaimed property) laws.  The Company and certain of its subsidiaries have entered into voluntary disclosure agreements with Delaware which will allow the Company to file unclaimed
property reports for the years 1991 through 1996, plus the current report for 1997, on March 1, 2003.  Reports for years prior to 1991 and any penalties and interest will be waived.  The Company has identified approximately $126,000 which
is due to Delaware but continues to research its records for any further amounts due.  This amount plus additional amounts potentially due to other states by the Company or on behalf of certain divested businesses are accrued in the
Companys condensed consolidated balance sheet.

The State of California has passed a new law regarding
self-insured disability plans which calls for the segregation of employee withholding funds that a company maintains for the payment of future disability claims.  The Company and legal counsel are currently exploring the effect, if any, this
new law might have with respect to the approximate balance of $2.9 million of accrued withholding funds that the Company currently maintains.

B.   Capital Expenditures

Net cash provided by investing activities was $8.4 million for the first nine months of 2002, including $1.6 million used for capital
expenditures, as compared to net cash used in investing activities of $18.0 million for the same period in 2001.  The $26.4 million change in net cash provided by (used in) investing activities for the first nine months of 2002 was primarily
due to a $2.2 million decrease in capital expenditures and a $22.4 million change in restricted cash activity primarily due to the consummation of the Plan.

Capital expenditures of up to approximately $2.7 million have now been identified for fiscal 2002, primarily related to maintaining existing
open and operating restaurants. Actual capital expenditures for fiscal 2002 will be dependent on restrictions under the Companys debt instruments and the availability of the required funds.

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Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 141, Business Combinations
(SFAS 141), and Statement No. 142, Goodwill and Other Intangible Assets (SFAS 142).  SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30,
2001.  SFAS 141 also specifies criteria for intangible assets acquired in a purchase method business combination to meet in order to be recognized and reported apart from goodwill.  SFAS 142 requires that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with the provisions of SFAS 142.  SFAS 142 also requires that intangible assets with definite useful lives be amortized
over their respective estimated useful lives to their estimated residual values and reviewed for impairment in accordance with Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets  (SFAS
144).

The Company was required to adopt the provisions of SFAS 141 effective July 1, 2001 and the provisions
of SFAS 142 effective January 1, 2002. As a result of the anticipated sale of the Hamburger Hamlet Chain and the classification of the net realizable value of Hamburger Hamlets assets and liabilities as property held for sale, the Company no
longer had goodwill or intangible assets to analyze in connection with the adoption of SFAS 142.  Accordingly, the adoption of this statement did not have a material impact on the Companys condensed consolidated financial statements.

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.  Management does not believe that the adoption of this standard will have any impact on the Companys financial position, results of operations or liquidity.

The FASB issued SFAS 144 in October 2001.  SFAS 144 is effective for fiscal years beginning after December 15, 2001, addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and effectively supersedes Statement No. 121, Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of. The Company was
required to adopt the provisions of SFAS 144 effective January 1, 2002.  The adoption of this standard did not have a material impact on the Companys condensed consolidated financial statements.

In April 2002, the FASB issued Statement No. 145, Rescission of the FASB Statements No.4, 44 and 64, Amendment of FASB Statement No. 13,
and Technical Corrections (SFAS 145). SFAS 145 eliminates the requirements to classify gains and losses from the extinguishment of indebtedness as extraordinary, requires certain lease modifications to be treated the same as a
sale-leaseback transaction, and makes other non-substantive technical corrections to existing pronouncements.  SFAS 145 is effective for fiscal years beginning after May 15, 2002, with earlier adoption encouraged.  The Company adopted SFAS
145 effective in the third quarter of 2002 and as such has classified all gains on extinguishment of indebtedness on and after the Closing Date as non-extraordinary items.

In July 2002, the FASB issued 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

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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. 
As the provisions of SFAS 146 are required to be applied prospectively after the adoption date, management cannot determine the potential effects that adoption of SFAS 146 will have on the Companys consolidated financial statements.

In October 2002, the FASB issued Statement No. 147, Acquisitions of Certain Financial Institutions (SFAS
147).  SFAS 147 provides guidance on the accounting for the acquisition of a financial institution and is not applicable to the Companys operations.

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 2002s operations (one quarter of
Successor Company plus six months of Predecessor Company) to 2001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 $62,595,000 for the third quarter of 2002 decreased by $8,269,000
or 11.7% as compared to the same period in 2001.  For the first nine months of 2002, total Company sales of $197,984,000 decreased by $23,390,000 or 10.6% as compared to the same period in 2001. These decreases were the result of  (i)
declines in comparable restaurant sales for Chi-Chis, Koo Koo Roo and Hamburger Hamlet for both the third quarter and first nine months of 2002 and (ii) sales decreases attributable to the 30 restaurants sold or closed during the period
beginning January 1, 2001 and ending September 29, 2002, partially offset by an increase in new restaurant sales for Koo Koo Roo for the first nine months of 2002.  The breakdown of the sales decreases for the third quarter and first nine
months of 2002 is shown in the following table:

|                                                  |       | Change in Third Quarter 2002 Sales |        |        | Change in First Nine Months 2002 Sales |        
|------------------------------------------------- | ----- | ---------------------------------- | ------ | ------ | -------------------------------------- | -------
|                                                  |       |                                    |        |        |                                        |        
|                                                  |       | ($ in thousands)                   |       
|Decrease in Sales of Comparable Restaurants       |       | $                                  | (5,023 | )      | $                                      | (12,598
|Decrease in Sales from Restaurants Closed or Sold |       |                                    | (3,201 | )      |                                        | (10,940
|Sales from New Restaurant                         |       |                                    | (45    | )      |                                        | 148    
|                                                  |       |                                    |        |        |                                        |        
|                                                  | Total |                                    | $      | (8,269 | )                                      | $      
|                                                  |       |                                    |        |        |                                        |        
|                                                  |       |                                    |        |        |                                        |        

Overall, sales for comparable restaurants were $61,498,000 for the third quarter of 2002, a

- 21 -



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$5,023,000 or 7.6% decline from the same period in 2001.  For the first nine months of 2002, sales of comparable restaurants of $192,575,000 decreased by $12,598,000 or
6.1% as compared to the same period in 2001.  As shown in the following table, these declines resulted from decreased sales in comparable Chi-Chis, Koo Koo Roo and Hamburger Hamlet restaurants for both the third quarter and first nine
months of 2002.

|                            |       | Change in Third Quarter 2002 Sales |        | Change in First Nine Months 2002 Sales |  
|--------------------------- | ----- | ---------------------------------- | ------ | -------------------------------------- | -
|                            |       |                                    |        |                                       
|                            |       | Amount                             |        | Percent                                |  
|                            |       |                                    |        |                                        |  
|                            |       | ($ in thousands)                   |       
|Comparable Chi-Chis        |       | $                                  | (3,484 | )                                      |  
|Comparable Koo Koo Roo      |       |                                    | (768   | )                                      |  
|Comparable Hamburger Hamlet |       |                                    | (771   | )                                      |  
|                            |       |                                    |        |                                        |  
|                            | Total |                                    | $      | (5,023                                 | )
|                            |       |                                    |        |                                        |  

As noted above,
sales for comparable restaurants have declined in 2002 as compared to 2001 for each of the Companys restaurant concepts.  In spite of this issue, the Company has reported an improvement in operating income (loss) and EBITDA during the
first nine months of 2002 as compared to the same period for 2001 due to various reductions in costs which are described in the following paragraphs.  If sales for comparable restaurants do not improve in the future, cost reductions may not be
available to continue to offset the impact of declining sales and a reduction in operating cash flow could result.  This could cause a risk to the Companys ability to comply with the terms of its financing agreements.

Product costs of $15,474,000 for the third quarter of 2002 decreased $3,061,000 or 16.5% as compared to the same period in 2001. 
For the first nine months of 2002, product costs of $49,324,000 decreased by $9,518,000 or 16.2% as compared to the same period in 2001.  Product costs as a percentage of sales for the third quarter of 2002 decreased 1.5 percentage points from
26.2% in 2001 to 24.7% in 2002.  For the first nine months of 2002, product costs as a percentage of sales decreased 1.7 percentage points from 26.6% in 2001 to 24.9% in 2002.  The product costs decreases were related to favorable
commodity pricing in almost all areas with the exception of beef, which is unfavorable as the result of changing to a more expensive cut of beef for Chi-Chis fajitas. Additional decreases were the result of sales declines in comparable and
closed restaurants.

Payroll and related costs of $22,575,000 decreased $2,691,000 or 10.7% for the third quarter of
2002 as compared to the third quarter of 2001.  For the first nine months of 2002, payroll and related costs of $70,723,000 decreased $8,659,000 or 10.9% as compared to the same period in 2001.  As a percentage of sales, payroll and
related costs were 36.1% in the third quarter of 2002, 0.4 percentage point higher than the same period in 2001.  For the first nine months of 2002, payroll and related costs were 35.7% of sales, 0.2 percentage point lower than the same period
in 2001.  The payroll and related costs decrease for the nine month period was the result of improved scheduling efficiencies in the restaurants and sales declines from comparable and closed restaurants.

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The Company is subject to Federal and state laws governing matters such as minimum wages,
overtime and other working conditions.  Approximately half 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. In October 2000, the California Industrial Welfare
Commission voted to increase the states minimum wage by 50¢ to $6.25 on January 1, 2001 and another 50¢ increase to $6.75 on January 1, 2002.  No increases to the $5.15 Federal minimum wage are currently scheduled for
2002.  In response to previous minimum wage increases, the Company has implemented various menu price increases.  Each of the Companys concepts raised prices in early 2001 and again in the second quarter of 2002.

Occupancy and other operating expenses were $18,115,000 for the third quarter of 2002, $1,707,000 or 8.6% lower than the same period in
2001.  For the first nine months of 2002, occupancy and other operating expenses of $55,893,000 decreased by $8,719,000 or 13.5% as compared to the same period in 2001.  As a percentage of sales, occupancy and other operating expenses were
28.9% in the third quarter of 2002, 0.9 percentage point higher than the same period in 2001. For the first nine months of 2002, occupancy and other operating expenses were 28.2% as a percentage of sales, 1.0 percentage point lower than the same
period in 2001.  The decrease for the nine month period was the result of reduced advertising expenses in Chi-Chis and Koo Koo Roo for the first six months of 2002, lower utilities expense, particularly natural gas for Chi-Chis, and
lower operating expenses, offset by an increase in the cost of general liability insurance.

Depreciation and
amortization reported since the Closing Date is not comparable to depreciation and amortization reported prior to the Closing Date.  Depreciation and amortization for the quarter ended September 29, 2002 has been estimated based on an
independent appraisal obtained by the Company for the value of its long-term assets as of the Closing.  The effect of the appraisal on depreciation and amortization will be finalized in the near future.  The Company does not expect that
the final effect will require any adjustment that would have a material impact on the consolidated financial statements included herein.

General and administrative expenses for the third quarter of 2002 were $3,259,000, $1,810,000 or 35.7% lower than the same period in
2001.  For the first nine months of 2002, general and administrative expenses were $12,024,000, $4,760,000 or 28.4% lower than the first nine months of 2001.  As a percentage of sales, general and administrative expenses were 5.2% in the
third quarter of 2002, 2.0 percentage points lower than the same period in 2001 and were 6.1% in the first nine months of 2002, 1.5 percentage points lower than the first nine months of 2001.  Structural reductions in the Companys support
center implemented in 2001 generated approximately $900,000 of savings in the third quarter of 2002 and $3.0 million of savings in the first nine months of 2002. Additional cost savings measures have been introduced subsequently in 2002 and, with
corporate bonus accrual reversals of approximately $680,000 in the third quarter of 2002 due to operating results running behind bonus targets, were responsible for the remainder of the period-over-period savings.

Opening costs are incurred in connection with the opening or remodeling of a restaurant and are principally related to stocking the restaurant
and training its staff.  There were no opening costs in the third quarter of 2002 and only $1,000 in the first nine months of 2002 as no new restaurants or remodels

- 23
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were opened in 2002.  Opening costs for the third quarter and first nine months of 2001 were $130,000 and $237,000, respectively.

The Company reported a loss on disposition of properties of $293,000 in the third quarter of 2002 as compared to a loss of $330,000 for the
third quarter of 2001.  For the first nine months of 2002, the Company reported a loss on disposition of properties of $947,000 as compared to a loss on disposition of properties of $1,101,000 for the same period in 2001.

In the third quarter and first nine months of 2002, the Company recorded provisions for divestitures and write-down of long-lived
assets of $60,000 and $2,817,000, respectively.  In the third quarter and first nine months of 2001, the Company recorded provisions for divestitures and write-down of long-lived assets of $9,228,000 and $9,417,000, respectively. The provisions
for divestitures in 2002 were primarily composed of (i) $250,000 for the write-off of a liquor license; (ii) $481,000 for lease terminations; and (iii) $2.1 million related to the proposed sale of the Hamburger Hamlet Chain.  The provisions for
divestitures in 2001 were primarily composed of (i) a write-down of $8,149,000 related to the planned sale of the Hamburger Hamlet Chain and (ii) the write-down of $1,079,000 related to the sale of another restaurant property.

For the first nine months of 2002, the Company reported restructuring costs of $2,316,000 as compared to $3,075,000 for the same period
of 2001.  In 2002, these costs are primarily related to amounts paid to legal and financial advisors in connection with the Companys restructuring, including a $750,000 success fee earned by the Companys financial advisor in the
second quarter of 2002.  In 2001, these costs also included accrued severance and related costs due to an organizational restructuring.

Interest expense, net reported since the Closing Date is not comparable to interest expense, net reported prior to the Closing
Date.   Interest expense, net for the quarter ended September 29, 2002 primarily represents interest on the Notes as adjusted to impute interest at a rate of 16.6%, that was considered the fair value interest for the Notes at the
Closing.

The Company recorded a gain on extinguishment of debt of $191,385,000 in connection with the Closing and
an additional gain of $189,000 in the third quarter of 2002 related to a prepayment of the Notes from excess cash flow generated by the Hamburger Hamlet Chain.

The Company reported reorganization items of $9,214,000 in connection with the Closing.  The reorganization items include a fresh start
adjustment of $9,883,000, reduced by legal and professional fees incurred during the pendency of the Reorganization Case.

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; (ii) its ongoing Chi-Chis restaurants, Koo Koo Roo
restaurants and Hamburger Hamlet restaurants (both acquired on October 30, 1998) and other operating restaurants; and (iii) the El Torito restaurant division divested on June 28, 2000. At September 29, 2002, the Company operated 130 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                        |        | For the Nine Months Ended |  
|------------------------------------------------------------- | ----------------------- | --------------------------------------------- | ------ | ------------------------- | -
|                                                              |                         |                                               |        |                           |  
|                                                              |                         | Sept. 29, 2002                                |        | Sept. 30, 2001            |  
|                                                              |                         |                                               |        |                           |  
|                                                              |                         | ($ in thousands, except average check amount) |       
|Chi-Chis Restaurant Division                                 |                         |                                               |        |                           |  
|Restaurants Open at End of Period:                            |                         |                                               |        |                           |  
|                                                              | Owned/operated          |                                               |        | 130                       |  
|                                                              | Franchised and Licensed |                                               |        | 8                         |  
|Sales                                                         |                         | $                                             | 45,525 |                           | $
|Restaurant Level Cashflow (a)                                 |                         |                                               | 4,428  |                           |  
|Divisional EBITDA (b)                                         |                         |                                               | 2,194  |                           |  
|Percentage increase (decrease) in comparable restaurant sales |                         |                                               | (7.1   | )%                        |  
|Average check (excluding alcoholic beverage sales)            |                         | $                                             | 11.57  |                           | $
|Koo Koo  Roo Restaurants (c)                                  |                         |                                               |        |                           |  
|Restaurants Open at End of Period:                            |                         |                                               |        |                           |  
|                                                              | Owned/operated          |                                               |        | 29                        |  
|                                                              | Franchised and Licensed |                                               |        |                          |  
|Sales                                                         |                         | $                                             | 9,097  |                           | $
|Restaurant Level Cashflow (a)                                 |                         |                                               | 1,063  |                           |  
|Divisional EBITDA (b)                                         |                         |                                               | 376    |                           |  
|Percentage decrease in comparable restaurant sales            |                         |                                               | (8.0   | )%                        |  
|Average transaction                                           |                         | $                                             | 9.95   |                           | $
|Hamburger Hamlet Restaurants (c)                              |                         |                                               |        |                           |  
|Restaurants Open at End of Period:                            |                         |                                               |        |                           |  
|                                                              | Owned/operated          |                                               |        | 14                        |  
|                                                              | Franchised and Licensed |                                               |        |                          |  
|Sales                                                         |                         | $                                             | 7,223  |                           | $
|Restaurant Level Cashflow (a)                                 |                         |                                               | 842    |                           |  
|Divisional EBITDA (b)                                         |                         |                                               | 638    |                           |  
|Percentage increase (decrease) in comparable restaurant sales |                         |                                               | (9.6   | )%                        |  
|Average check (including alcoholic beverage sales)            |                         | $                                             | 11.81  |                           | $
|Other Operating Restaurants                                   |                         |                                               |        |                           |  
|Restaurants Open at End of Period:                            |                         |                                               |        |                           |  
|                                                              | Owned operated          |                                               |        | 1                         |  
|                                                              | Franchised and Licensed |                                               |        |                          |  
|Sales                                                         |                         | $                                             | 750    |                           | $
|Restaurant Level Cashflow (a)                                 |                         |                                               | 98     |                           |  
|Divisional EBITDA (b)                                         |                         |                                               | 37     |                           |  
|Ongoing Operations                                            |                         |                                               |        |                           |  
|Restaurants Open at End of Period:                            |                         |                                               |        |                           |  
|                                                              | Owned/operated          |                                               |        | 174                       |  
|                                                              | Franchised and Licensed |                                               |        | 8                         |  
|Sales                                                         |                         | $                                             | 62,595 |                           | $
|Restaurant Level Cashflow (a)                                 |                         |                                               | 6,431  |                           |  
|Divisional EBITDA (b)                                         |                         |                                               | 3,245  |                           |  
|Divested Operations (d)                                       |                         |                                               |        |                           |  
|Restaurants Open at End of Period:                            |                         |                                               |        |                           |  
|                                                              | Owned/operated          |                                               |        |                          |  
|                                                              | Franchised and Licensed |                                               |        |                          |  
|Sales                                                         |                         | $                                             |       |                           | $
|Restaurant Level Cashflow (a)                                 |                         |                                               |       |                           |  
|Divisional EBITDA (b)                                         |                         |                                               |       |                           |  
|Total Company                                                 |                         |                                               |        |                           |  
|Restaurants Open at End of Period:                            |                         |                                               |        |                           |  
|                                                              | Owned/operated          |                                               |        | 174                       |  
|                                                              | Franchised and Licensed |                                               |        | 8                         |  
|Sales                                                         |                         | $                                             | 62,595 |                           | $
|EBITDA (e)                                                    |                         |                                               | 3,172  |                           |  



|(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 and the second half of 2000 so as not to
distort the year-over-year comparisons of the Chichis, Koo Koo Roo and Hamburger Hamlet restaurants.                                                                                                                                                                                                                                                                                                                                
|(c) | During fiscal 2001 and 2000, Koo Koo Roo and Hamburger Hamlet shared certain divisional support functions, the cost of which was absorbed by Koo Koo Roo.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(d) | Divested Operations represents the results of the El Torito Division until it was divested on June 28, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(e) | 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 extraordinary items.  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.

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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 had on the Old Credit Facility and could have on the Credit Facility, under which no working capital borrowings were outstanding as of September 29, 2002 and $1 million in working capital borrowings were outstanding as of November
8, 2002.  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 November 8, 2002.

Item 4.     Controls and Procedures

|(a) |  | Evaluation of Disclosure Controls and Procedures.  The term disclosure controls and procedures is defined in Rules 13a-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 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.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(b) |  | Changes in Internal Controls.  The Company maintains a system of internal accounting controls that is designed to provide reasonable assurance that the Companys books and
records accurately reflect the Companys transactions and that the Companys established policies and procedures are carefully followed.  Since the Evaluation Date, there have been no significant changes to the Companys internal
controls or in other factors that could significantly affect the Companys internal controls, and management has not identified any significant deficiencies or material weaknesses in the Companys internal controls.                                                                                                                                                                                                                                                                                                                                                                          

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PART II.  OTHER INFORMATION

Item 1.     Legal Proceedings

On January 26, 2001, a purported stockholder of Prandium initiated a stockholder derivative suit against the
Company and Kevin S. Relyea, in the Superior Court of the State of California for the County of Orange, seeking, among other things, compensatory damages, a constructive trust, punitive damages and attorneys fees.  The suit arose out of
the sale by AIF II, L.P. on December 29, 2000, of  95,831,997 shares of Prandiums common stock to Mr. Relyea for a cash purchase price of $15,000.  Mr. Relyea is Prandiums Chief Executive Officer and President.  The suit
alleged that Mr. Relyea improperly usurped the stock purchase opportunity from the Company and also alleged constructive fraud.

On February 13, 2001, a similar stockholder derivative suit was filed in the Superior Court of the State of California for the County of
Orange by another purported stockholder against the Company and Mr. Relyea.  This suit arose out of the same set of facts as the suit filed on January 26, 2001 and sought similar damages and fees.  On April 25, 2001, the court ruled that
the two cases were related and would proceed before the same judge.  However, on June 28, 2001, the court in the case filed on February 13, 2001 granted the plaintiffs request to dismiss his complaint without prejudice.  While the
Company and Mr. Relyea believe that there exist valid defenses to each of the claims asserted, it was determined that a potentially successful defense of the suit would likely be more expensive than settlement.

The Company, Mr. Relyea, and the plaintiff in the suit filed on January 26, 2001 executed a Stipulated Settlement of Derivative Claims, under
which Mr. Relyea agreed to certain restrictions on the sale of the block of Prandiums stock purchased on December 29, 2000. Without admitting liability, the Company and Mr. Relyea agreed not to oppose an application for attorneys fees by
plaintiffs counsel of $99,000 as part of the settlement. On March 14, 2002, the Board of Directors voted to approve the Stipulated Settlement of Derivative Claims, with Mr. Relyea abstaining from voting.  The plaintiff subsequently filed
a Motion to Approve Settlement of Action and for an Award of Attorneys Fees.  The Superior Court held a hearing on this motion on April 9, 2002 and entered a Notice of Entry of Judgment and Final Judgment approving the Stipulated
Settlement of Derivative Claims and the award of attorneys fees.  The cost of the settlement was covered by insurance.  In accordance with the Stipulated Settlement of Derivative Claims, the block of Prandiums stock purchased
by Mr. Relyea on December 29, 2000, together with the remainder of Prandiums old common stock was cancelled without consideration on July 2, 2002 pursuant to the Plan.  On July 22, 2002, the Superior Court granted a request to dismiss the
January 26, 2001 suit with prejudice.

Information about these legal procedings was also included in the Company's
Form 10-Q filed for the quarterly period ended March 31, 2002 and the Form 10-Q filed for the quarterly period ended June 30, 2002.

See Managements Discussion and Analysis of Financial Condition and Results of Operations  Liquidity and Capital Resources
 Debt Restructuring  1.  Reorganization Plan for a discussion of the Reorganization Case.

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

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Item 2.     Changes in Securities and Use of Proceeds

None.

Item 3.     Defaults Upon Senior Securities

Prandium failed to pay the interest and principal that came due February 1, 2001, August 1, 2001 and February 1, 2002 with respect to the Prandium Notes. In addition,
FRI-MRD failed to pay the interest and principal due January 31, 2001, July 31, 2001 and January 24, 2002 with respect to the Old FRI-MRD Notes. Under the terms of the note agreements governing the Old FRI-MRD Notes and the indentures governing the
Prandium Notes, these non-payments became "Events of Default" and the holders of all such debt became entitled to certain rights, including the right to accelerate the debt. The defaults continued until July 2, 2002. As of the date of
filing this report, there are no unpaid principal and interest amounts on the Prandium Notes and Old FRI-MRD Notes because such notes were all cancelled as a result of the consummation of the Plan on July 2, 2002.

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 March 27, 2000, by and among Prandium, FRI-MRD Corporation and Acapulco Acquisition Corp. (Filed as Exhibit 2(b) to the Companys Form 10-K
filed with the SEC on March 29, 2000.)                                                      
| | ---------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |            |                                                                                                                                                                                                                                                                              
| | 2      (b) | Amendment No. 1 to Stock Purchase Agreement dated as of June 28, 2000, by and among Prandium, FRI-MRD Corporation and Acapulco Acquisition Corp. (Filed as Exhibit 2.2 to the
Companys Form 8-K filed with the SEC on July 5, 2000.)                                        
| |            |                                                                                                                                                                                                                                                                              
| | 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.)                                                                                                                                         
| |            |                                                                                                                                                                                                                                                                              
| | 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

- 29 -



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| |           | 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 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.)                                                         
| |           |                                                                                                                                                                                                                                                                                                            
| | 10    (e) | 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    (f) | 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    (g) | 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.)                                                                                                                      
| |           |                                                                                                                                                                                                                                                                                                            
| | *99       | Certification of the Chief Executive Officer and Chief Financial Officer.                                                                                                                                                                                                                                  
| |           |                                                                                                                                                                                                                                                                                                            

---

| | (b)     Reports on Form 8-K.
| | ----------------------------
| |                             
| | None.                       

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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:                                                                                                                                  
| |                                                                                                                                      
| | Robert T. Trebing, Jr. Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial
Officer)

Date:  November 13, 2002

CERTIFICATION

I, Kevin S. Relyea, 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;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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---

| | 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 recentevaluation, 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                                                                                                                                        

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:  November 13, 2002

|/s/ KEVIN S. RELYEA                                                                           | 
|--------------------------------------------------------------------------------------------- | 
|                                                                                              | 
|Kevin S. Relyea Chairman, President and Chief Executive Officer (Principal Executive Officer) | 

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;

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---

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                                                                                                                                        

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:  November 13, 2002

|/s/ ROBERT T. TREBING, JR.                                                                                               | 
|------------------------------------------------------------------------------------------------------------------------ | 
|                                                                                                                         | 
|Robert T. Trebing, Jr. Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | 

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Exhibit Index

| | 2  | (a) | Stock Purchase Agreement dated as of March 27, 2000, by and among Prandium, FRI-MRD Corporation and Acapulco Acquisition Corp. (Filed as Exhibit 2(b) to the Companys Form 10-K
filed with the SEC on March 29, 2000.)                                                                                                                                                                                 
| | -- | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |     |                                                                                                                                                                                                                                                                                                                                                                                                         
| | 2  | (b) | Amendment No. 1 to Stock Purchase Agreement dated as of June 28, 2000, by and among Prandium, FRI-MRD Corporation and Acapulco Acquisition Corp. (Filed as Exhibit 2.2 to the
Companys Form 8-K filed with the SEC on July 5, 2000.)                                                                                                                                                                   
| |    |     |                                                                                                                                                                                                                                                                                                                                                                                                         
| | 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.)                                                                                                                                                                                                                                                                    
| |    |     |                                                                                                                                                                                                                                                                                                                                                                                                         
| | 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.)                                                                                             

- 34 -



---

| | 10  | (d) | 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.)                                               
| | --- | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |     |                                                                                                                                                                                                                                                                                                  
| | 10  | (e) | 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  | (f) | 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  | (g) | 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.)                                                                                                            
| |     |     |                                                                                                                                                                                                                                                                                                  
| | *99 |     | Certification of the Chief Executive Officer and Chief Financial Officer.                                                                                                                                                                                                                        

---

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