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to operations of approximately $1,461 ($877 after tax) for lease reserves and termination costs in connection with these properties. 

Changes in the Company’s reserve for lease reserve and termi- nation costs are as follows: 

<img src='content_image/78063.jpg'>

## Note H—Notes Payable and Capitalized Lease Obligations 

A summary of notes payable and capitalized lease obligations is as follows: 

<img src='content_image/78066.jpg'>

The above notes are secured by the related property and equipment. 

In August 2001, Miami Subs entered into an agreement with a franchisee and a bank, which called for the assumption of a note payable by the franchisee and the repayment of an existing note receivable from the franchisee. The Company guarantees the fran- chisee’s note payable with the bank. The Company’s maximum obli- gation for loans funded by the lender was approximately $261 as of March 28, 2004. 

At March 28, 2004, the aggregate annual maturities of notes payable and capitalized lease obligations are as follows: 

<img src='content_image/78070.jpg'>

The Company maintains a $5,000 line of credit with its primary banking institution. Borrowings under the line of credit are intended to be used to meet the normal short-term working capital needs of the Company. The line of credit is not a commitment and, therefore, credit availability is subject to ongoing approval. The line of credit expires on October 1, 2004, and bears interest at the prime rate plus 1% (5.00% at March 28, 2004). There were no borrowings outstand- ing under this line of credit as of March 28, 2004. 

## Note I—Other Expense (Income), Net 

Included in other expense (income), in the accompanying con- solidated statements of operations is (i) $45 of lease termination expense in connection with two properties for the fiscal year ended March 28, 2004, (ii) $232 in lease reserves in connection with four vacant properties for the fiscal year ended March 30, 2003 and (iii) the reversal of a previous litigation accrual of ($210) for the fiscal year ended March 31, 2002. 

During the fiscal year ended March 31, 2002, the Company reversed an accrual of $210 related to its successful appeal of a previous award in an action entitled: Miami Subs Corporation or MIAMI S V. MURRAY FAMILY TRUST/KENNETH DASH PARTNERSHIP. In this case, the court found that Miami Subs breached a fiduciary duty it owed to defendants and awarded the Murray Family Trust $200. Both Miami Subs and defendants appealed the court's decision, and in November 1996, the appeal was argued before the Supreme Court of New Hampshire. In December 1997, the Supreme Court ruled in favor of Miami Subs, vacated the damage award, reversed the award of attorney fees and remanded to a trial court for a deter- mination of damages for the alleged breach of fiduciary duty to the Murray Family Trust. In May 1998, the trial court awarded the Murray Family Trust compensatory damages in the amount of $200, which Miami Subs accrued for. Miami Subs appealed the damage award, and in December 1999, the Supreme Court of New Hampshire heard the second appeal. On February 1, 2001, the Supreme Court of New Hampshire ruled in favor of Miami Subs and vacated the damage award. The plaintiff had the right to further appeal the reversal for a period of 90 days, until May 2, 2001. No further action was taken by the plaintiff and upon passage of the 90-day period the liti- gation award was reversed into income. 

