1. General

Accounting Policies – Refer to the Company’s audited financial statements (including footnotes) for the fiscal year ended May 26, 2011, contained in the Company’s Form 10-K Annual Report for such year, for a description of the Company’s accounting policies.

Basis of Presentation – The consolidated financial statements for the 13 weeks ended August 25, 2011 and August 26, 2010 have been prepared by the Company without audit. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary to present fairly the unaudited interim financial information at August 25, 2011, and for all periods presented, have been made. The results of operations during the interim periods are not necessarily indicative of the results of operations for the entire year or other interim periods.

Restricted Cash – Included in cash and cash equivalents as of August 25, 2011 and May 26, 2011 is restricted cash of $5,492,000 and $5,310,000, respectively, related to capital expenditure reserve funds, sinking funds, operating reserves and replacement reserves. Restricted cash is not considered a cash and cash equivalent for purposes of the statement of cash flows. As such, the change in restricted cash is reported as an investing activity in the consolidated statement of cash flows for the period ended August 25, 2011. The change in restricted cash for the period ended August 26, 2010 was not material.

Depreciation and Amortization – Depreciation and amortization of property and equipment are provided using the straight-line method over the shorter of the estimated useful lives of the assets or any related lease terms. Depreciation expense totaled $8,750,000 and $8,158,000 for the 13 weeks ended August 25, 2011 and August 26, 2010, respectively.

Comprehensive Income – Total comprehensive income for the 13 weeks ended August 25, 2011 and August 26, 2010 was $12,460,000 and $10,073,000, respectively.

Accumulated other comprehensive loss consists of the following, all presented net of tax:

	August 25, 2011			May 26, 2011
	(in thousands)
Unrealized gain on available for sale investments	$	67		$	101
Unrecognized loss on terminated interest rate swap agreement		(109	)		(126	)
Net unrecognized actuarial loss for pension obligation		(2,540	)		(2,540	)
	$	(2,582	)	$	(2,565	)

Earnings Per Share – Net earnings per share (EPS) of Common Stock and Class B Common Stock is computed using the two-class method. Basic net earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding less any non-vested stock. Diluted net earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options and non-vested stock using the treasury method. Convertible Class B Common Stock is reflected on an if-converted basis. The computation of the diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock, while the diluted net earnings per share of Class B Common Stock does not assume the conversion of those shares.

Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of Class B Common Stock. As such, the undistributed earnings for each period are allocated based on the proportionate share of entitled cash dividends. The computation of diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock and, as such, the undistributed earnings are equal to net earnings for that computation.

The following table illustrates the computation of Common Stock and Class B Common Stock basic and diluted earnings per share for net earnings and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:

	13 Weeks Ended August 25, 2011		13 Weeks Ended August 26, 2010
	(in thousands, except per share data)
Numerator:
Net earnings	$	12,477	$	10,020
Denominator:
Denominator for basic EPS		29,643		29,548
Effect of dilutive employee stock options and non-vested stock		26		45
Denominator for diluted EPS		29,669		29,593
Net earnings per share – basic:
Common Stock	$	0.43	$	0.35
Class B Common Stock	$	0.40	$	0.32
Net earnings per share – diluted:
Common Stock	$	0.42	$	0.34
Class B Common Stock	$	0.40	$	0.32

Fair Value Measurements – Certain financial assets and liabilities are recorded at fair value in the financial statements. Some are measured on a recurring basis while others are measured on a non-recurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. A fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.

The Company’s assets and liabilities measured at fair value are classified in one of the following categories:

Level 1 – Assets or liabilities for which fair value is based on quoted prices in active markets for identical instruments as of the reporting date. At August 25, 2011 and May 26, 2011, the Company’s $316,000 and $372,000, respectively, of available for sale securities were valued using Level 1 pricing inputs and were included in other current assets.

Level 2 – Assets or liabilities for which fair value is based on pricing inputs that were either directly or indirectly observable as of the reporting date. At August 25, 2011 and May 26, 2011, none of the Company’s assets or liabilities were valued using Level 2 pricing inputs.

Level 3 – Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. At August 25, 2011 and May 26, 2011, none of the Company’s assets or liabilities were valued using Level 3 pricing inputs.

Defined Benefit Plan – The components of the net periodic pension cost of the Company’s unfunded nonqualified, defined-benefit plan are as follows:

	13 Weeks Ended August 25, 2011		13 Weeks Ended August 26, 2010
	(in thousands)
Service cost	$	157	$	150
Interest cost		295		299
Net amortization of prior service cost, transition obligation and actuarial loss		30		27
Net periodic pension cost	$	482	$	476