pay many of our crew members hourly rates related to the applicable federal or state minimum wage (although all of our crew members make more than the minimum wage). Our
workers' compensation and health insurance costs have been and are subject to continued inflationary pressures.
for construction, taxes, repairs, maintenance and insurance are all subject to inflationary pressures and impact our occupancy costs.
some markets, inflation rates may be higher than the national average.
Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS 123R, which replaces the requirements under SFAS 123 and APB 25. The statement sets accounting
requirements for share-based compensation to employees, including employee stock option and purchase plans, and requires all share-based payments, including employee stock options, to be recognized in
the financial statements based on their fair value. It carried forward prior guidance on accounting for awards to non-employees. We adopted SFAS 123R during the first quarter of
2005 using the modified-prospective transition method. Results for prior periods will not be restated. Had we adopted SFAS 123R in prior periods, the impact would have approximated the impact
of SFAS 123 as described in note 1 of our consolidated financial statements and above in "Other Factors Affecting Our Results."
In October 2005, the FASB issued FSP 13-1, which requires rental costs associated with ground or building operating leases incurred during a construction period
to be recognized as rental expense. FSP 13-1 applies to reporting periods beginning after December 15, 2005. Retroactive application is permitted, but not required. Had
FSP 13-1 been effective in prior periods, we would have recognized additional costs of $1.8 million, $2.5 million and $3.6 million for the years ended
December 31, 2002, 2003 and 2004, respectively, and $2.7 million for the nine months ended September 30, 2005. We expect to incur higher pre-opening costs as a result of the
application of FSP 13-1 in future periods.