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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 30, 2007
 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 333-131004
 PERKINS & MARIE CALLENDERS INC.
  Delaware
    
    62-1254388(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)6075 Poplar Ave. Suite 800 Memphis, TN
    
    38119(Address of principal executive offices)
    
    (Zip Code)
 
  Name of each exchangeTitle of each class
    
    on which registered
 None
 None
 o þ
 o þ
 o þ
 þ
  Large accelerated filer o
    
    Accelerated filer
o
    
    Non-accelerated filer
þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
 Not Applicable
  Class: Common Stock, $.01 par value per share
    
    Outstanding as of December 30,
2007: 10,820 sharesDocuments incorporated by reference: None




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##### 



TABLE OF CONTENTS
 PART IItem 1. Business
    
    
    3Item 1a. Risk Factors
    
    
    6Item 1b. Unresolved Staff Comments
    
    
    12Item 2. Properties
    
    
    13Item 3. Legal Proceedings
    
    
    14Item 4. Submission of Matters to Vote of Security Holders
    
    
    14PART IIItem 5. Market for Registrants Common Equity and Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
    
    15Item 6. Selected Financial Data
    
    
    16Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 8. Financial Statements and Supplementary Data
    
    
    36Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    71Item 9A. Controls and Procedures
    
    
    71Item 9B. Other Information
    
    
    71PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    72Item 11. Executive Compensation
    
    
    74Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
    
    
    83Item 13. Certain Relationships and Related Transactions and Director Independence
    
    
    85Item 14. Principal Accounting Fees And Services
    
    
    86PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    87SIGNATURES
    
    
    89Ex-10.22 Grant Employment AgreementEx-10.23 Waiver No. 2 and Amendment No. 1 to the Amended & Restated Credit AgreementEx-31.1 Section 302 CertificationEx-31.2 Section 302 CertificationEx-32.1 Section 906 CertificationEx-32.2 Section 906 CertificationEx-31.1 Section 302 Certification of the CEOEx-31.2 Section 302 Certification of the CFOEx-32.1 Section 906 Certification of the CEOEx-32.2 Section 906 Certification of the CFO




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PART I
 
 Item 1. Business.
 General.
  Formation and History of Perkins & Marie Callenders Inc.
   Financial Statement Presentation.
 www.perkinsrestaurants.com and www.mcpies.com
 Operations.
   3




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4




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Design Development.
 System Development.
  Research and Development.
 Significant Franchisees.
  Significant Licensees.
 Territorial Rights.
 5




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Source of Materials.
 Patents, Trademarks and Other Intellectual Property.
 Competition.
 Employees.
 Regulation.
   Segment Information.
 
 Item 1a. Risk Factors.
 The impact of a decline in general economic conditions or changes in consumer preferences could
adversely affect our restaurant sales growth, cash flow and overall financial results.
   6




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We may not be able to compete successfully with other restaurants.
  Food-borne illness incidents, claims of food-borne illness and adverse publicity could adversely
affect our future operating performance.
   We depend upon frequent deliveries of food and other supplies and price increases by our suppliers
could harm our business.
   Our expansion plans present risks.
  
    
    find quality locations;
    
    reach acceptable agreements regarding the lease or purchase of locations;
    
    comply with applicable zoning, land use and environmental regulations;
    
    raise or have available an adequate amount of money for construction and opening costs;
 7




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
    
    timely hire, train and retain the skilled management and other employees necessary to
meet staffing needs;
    
    obtain, for an acceptable cost, required permits and approvals;
    
    efficiently manage the amount of time and money used to build and open each new
restaurant; and
    
    general economic conditions.
    Rises in interest rates could adversely affect our financial condition.
  Labor shortages could slow our growth and adversely impact existing restaurants.
  8




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Increased labor costs could adversely affect our future operating performance.
  Because all of our Perkins bakery products are produced at facilities in the same city, we are
vulnerable to natural disasters and similar disruptions.
   We depend on the services of key executives, the loss of whom may adversely affect our future
operating performance.
   The locations of our restaurants may cease to be attractive as demographic patterns change.
  Increased energy costs could negatively impact the cost structure of our business.
  9




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We may be locked into long-term and non-cancelable leases that we want to cancel, and may be unable
to renew leases that we want to extend at the end of their terms.
   Our controlling stockholder may take actions that conflict with the interests of others.
  The failure to enforce and maintain our intellectual property rights could adversely affect our
ability to maintain brand awareness.
   We may make acquisitions, which present additional risks.
  
    
    adverse short-term effects on our reported operating results;
    
    diversion of managements attention;
    
    difficulties assimilating and integrating the operations of the acquired company with our
own; and
    
    unanticipated liabilities or contingencies relating to the acquired company.
 10




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We are subject to extensive government regulations.
      Restaurant chains face the risk of litigation in connection with operations.
   11




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Item 1b. Unresolved Staff Comments.
  12




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Item 2. Properties
  Perkins Restaurants
    
    Marie Callenders RestaurantsCompany-
    
    
    
    
    
    
    
    
    
    Company-Operated
    
    Franchised
    
    Total
    
    Operated
    
    Franchised
    
    TotalArizona
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    7
    
    
    
    
    
    
    
    7Arkansas
    
    
    
    
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    California
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    38
    
    
    
    100Colorado
    
    
    8
    
    
    
    4
    
    
    
    12
    
    
    
    
    
    
    
    1
    
    
    
    1Delaware
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Florida
    
    
    43
    
    
    
    16
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    Georgia
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Idaho
    
    
    
    
    
    
    8
    
    
    
    8
    
    
    
    1
    
    
    
    
    
    
    
    1Illinois
    
    
    7
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    Indiana
    
    
    
    
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Iowa
    
    
    16
    
    
    
    4
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    Kansas
    
    
    3
    
    
    
    4
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    Kentucky
    
    
    
    
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Maryland
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Michigan
    
    
    7
    
    
    
    3
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    Minnesota
    
    
    39
    
    
    
    37
    
    
    
    76
    
    
    
    
    
    
    
    
    
    
    
    Missouri
    
    
    7
    
    
    
    1
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    Montana
    
    
    
    
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    Nebraska
    
    
    
    
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    Nevada
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    3
    
    
    
    7New Jersey
    
    
    
    
    
    
    17
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    New York
    
    
    
    
    
    
    15
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    North Carolina
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    North Dakota
    
    
    4
    
    
    
    4
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    Ohio
    
    
    
    
    
    
    40
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    Oklahoma
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    2Oregon
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    1
    
    
    
    5Pennsylvania
    
    
    6
    
    
    
    47
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    South Carolina
    
    
    
    
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    South Dakota
    
    
    
    
    
    
    10
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    Tennessee
    
    
    4
    
    
    
    11
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    Texas
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4Utah
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Virginia
    
    
    
    
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Washington
    
    
    
    
    
    
    6
    
    
    
    6
    
    
    
    3
    
    
    
    
    
    
    
    3West Virginia
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Wisconsin
    
    
    16
    
    
    
    27
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    Wyoming
    
    
    
    
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Canada
    
    
    
    
    
    
    17
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    Mexico
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Total
    
    
    162
    
    
    
    323
    
    
    
    485
    
    
    
    92
    
    
    
    44
    
    
    
    136
  13




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Number of Properties (1)Use
    
    Owned
    
    Leased
    
    TotalOffices and Manufacturing Facilities(2)
    
    
    1
    
    
    
    11
    
    
    
    12Perkins Restaurant and Bakery(3)
    
    
    
    
    
    
    162
    
    
    
    162Marie Callenders Restaurant and Bakery(4,5)
    
    
    
    
    
    
    92
    
    
    
    92
 
 (1)
    
    In addition to the properties noted in the schedule above, we lease twenty-two properties
which are subleased to others and we own two properties which are leased to others.(2)
    
    Our principal office is located in Memphis, Tennessee, and currently comprises approximately
50,000 square feet under a lease expiring on May 31, 2013, subject to a renewal by us for a
maximum of 60 months. We also lease an office which comprises approximately 6,300 square feet
in Mission Viejo, California, with a lease term through April 30, 2013 with no renewal
options. We also own a 25,149 square-foot manufacturing facility in Cincinnati, Ohio, lease
two other properties in Cincinnati, Ohio, consisting of 36,000 square feet and 120,000 square
feet, and lease one property in Corona, California, consisting of 29,600 square feet, for use
as manufacturing facilities.(3)
    
    The average term of the remaining leases is approximately 12 years, excluding renewal
options. The longest lease term will mature in approximately 20 years and the shortest lease
term will mature in less than 1 year, excluding renewal options.(4)
    
    Includes one Callenders Grill restaurant and the East Side Marios restaurant.(5)
    
    The average term of the remaining leases is approximately six years, excluding renewal
options. The longest lease term will mature in approximately 33 years and the shortest lease
term will mature in less than 1 year, excluding renewal options. 
 Item 3. Legal Proceedings.
  
 Item 4. Submission of Matters to Vote of Security Holders.
  14




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity and Related Stockholder Matters and Issuer
Purchases of Equity Securities.
         15




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Item 6. Selected Financial Data.
 
  2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Income Data:Revenues
    
    $
    587,886
    
    
    $
    594,190
    
    
    $
    321,473
    
    
    $
    228,760
    
    
    $
    227,455Net Loss
    
    $
    (16,335
    )
    
    $
    (9,372
    )
    
    $
    (15,231
    )
    
    $
    (16,318
    )
    
    $
    (12,441
    )Balance Sheet Data (at year end):Total assets
    
    $
    362,942
    
    
    $
    346,845
    
    
    $
    346,276
    
    
    $
    56,459
    
    
    $
    60,662Long-term debt and capital lease obligations (a)
    
    $
    309,996
    
    
    $
    292,628
    
    
    $
    300,077
    
    
    $
    105,114
    
    
    $
    101,273Distributions
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Statistical Data:Full service Restaurants in operation at end of year:Company-operated Perkins
    
    
    162
    
    
    
    155
    
    
    
    151
    
    
    
    
    
    
    
    Franchised Perkins (b)
    
    
    323
    
    
    
    322
    
    
    
    331
    
    
    
    
    
    
    
    Total Perkins
    
    
    485
    
    
    
    477
    
    
    
    482
    
    
    
    
    
    
    
    Company-operated Marie Callenders
    
    
    91
    
    
    
    91
    
    
    
    92
    
    
    
    93
    
    
    
    95Company-operated East Side Marios
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Franchised Marie Callenders
    
    
    44
    
    
    
    46
    
    
    
    47
    
    
    
    51
    
    
    
    54Total Marie Callenders
    
    
    136
    
    
    
    138
    
    
    
    140
    
    
    
    145
    
    
    
    150Average annual sales per company-operated Perkins restaurant
    
    $
    1,890
    
    
    $
    1,944
    
    
    $
    1,866
    
    
    $
    
    
    
    $
    Average annual royalties per franchised Perkins restaurant
    
    $
    64
    
    
    $
    66
    
    
    $
    64
    
    
    $
    
    
    
    $
    Average annual sales per company-operated Marie Callenders
restaurant
    
    $
    2,339
    
    
    $
    2,369
    
    
    $
    2,298
    
    
    $
    2,202
    
    
    $
    2,122Average annual royalties per franchised Marie Callenders
restaurant
    
    $
    102
    
    
    $
    105
    
    
    $
    107
    
    
    $
    102
    
    
    $
    98
 
 (a)
    
    Excluding current maturities of $9,464, $1,706, $3,311, $3,127 and $3,616, respectively.(b)
    
    Excludes one franchised Perkins Express. 16




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 GENERAL
  OUR COMPANY
         17




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OVERVIEW
      18




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19




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20




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SUBSEQUENT EVENTS
      21




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SYSTEM DEVELOPMENT
  RESULTS OF OPERATIONS
 Definition of
Common Control in Relation to FASB Statement No. 141
        22




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Percentage of Total RevenuesYear Ended
    
    
    Year Ended
    
    
    Year EndedDecember 30, 2007
    
    
    December 31, 2006
    
    
    December 25, 2005Restaurant operations
    
    
    86.9
    %
    
    
    86.2
    %
    
    
    89.9
    %Franchise operations
    
    
    4.4
    %
    
    
    4.5
    %
    
    
    3.3
    %Foxtail
    
    
    7.8
    %
    
    
    8.5
    %
    
    
    5.4
    %Other
    
    
    0.9
    %
    
    
    0.8
    %
    
    
    1.4
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  Consolidated Results
    
    Restaurant Operations
    
    Franchise Operations2007
    
    2006
    
    2005
    
    2007
    
    2006
    
    2005
    
    2007
    
    2006
    
    2005Food sales
    
    $
    576,816
    
    
    $
    581,424
    
    
    $
    319,429
    
    
    $
    510,863
    
    
    $
    512,104
    
    
    $
    288,972
    
    
    $
    
    
    
    $
    
    
    
    $
    Franchise and other revenue
    
    
    30,896
    
    
    
    31,448
    
    
    
    15,011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,982
    
    
    
    26,894
    
    
    
    10,463Intersegment revenue
    
    
    (19,826
    )
    
    
    (18,682
    )
    
    
    (12,967
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Revenues
    
    $
    587,886
    
    
    $
    594,190
    
    
    $
    321,473
    
    
    $
    510,863
    
    
    $
    512,104
    
    
    $
    288,972
    
    
    $
    25,982
    
    
    $
    26,894
    
    
    $$
    10,463Food cost
    
    
    28.5
    %
    
    
    28.4
    %
    
    
    29.4
    %
    
    
    27.1
    %
    
    
    27.1
    %
    
    
    29.5
    %
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aLabor and benefits
    
    
    32.2
    %
    
    
    31.2
    %
    
    
    31.1
    %
    
    
    35.3
    %
    
    
    34.5
    %
    
    
    33.3
    %
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aOperating expenses
    
    
    25.4
    %
    
    
    25.3
    %
    
    
    26.6
    %
    
    
    27.6
    %
    
    
    27.6
    %
    
    
    28.4
    %
    
    
    8.5
    %
    
    
    7.9
    %
    
    
    6.1
    %Segment Profit (Loss)
    
    $
    (16,335
    )
    
    $
    (9,372
    )
    
    $
    (15,231
    )
    
    $
    32,459
    
    
    $
    34,369
    
    
    $
    14,612
    
    
    $
    23,774
    
    
    $
    24,770
    
    
    $
    9,822
 Foxtail
    
    Other (a)2007
    
    2006
    
    2005
    
    2007
    
    2006
    
    2005Food sales
    
    $
    65,953
    
    
    $
    69,320
    
    
    $
    30,457
    
    
    $
    
    
    
    $
    
    
    
    $
    Franchise and other revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,914
    
    
    
    4,554
    
    
    
    4,548Intersegment revenue
    
    
    (19,826
    )
    
    
    (18,682
    )
    
    
    (12,967
    )
    
    
    
    
    
    
    
    
    
    
    Total Revenues
    
    $
    46,127
    
    
    $
    50,638
    
    
    $
    17,490
    
    
    $
    4,914
    
    
    $
    4,554
    
    
    $
    4,548Food cost
    
    
    60.9
    %
    
    
    56.9
    %
    
    
    58.3
    %
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aLabor and benefits
    
    
    13.1
    %
    
    
    12.3
    %
    
    
    11.8
    %
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aOperating expenses
    
    
    9.7
    %
    
    
    9.4
    %
    
    
    8.7
    %
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aSegment Profit (Loss)
    
    $
    3,687
    
    
    $
    8,255
    
    
    $
    4,891
    
    
    $
    (76,255
    )
    
    $
    (76,766
    )
    
    $
    (44,556
    )
 
 (a)
    
    Licensing revenue of approximately $4,564,000, $4,107,000 and $3,747,000 for fiscal 2007,
2006 and 2005, respectively, is included in the Other segment revenues. The Other segment loss
includes corporate general and administrative expenses, interest expense and other
non-operational expenses. For details of the other segment loss, see Note 17, Segment
Reporting in the Notes to Consolidated Financial Statements. Year Ended December 30, 2007 Compared to the Year Ended December 31, 2006
 Restaurant Operations Overview
  23




---



##### Table of Contents



Franchise Operations Overview
    Foxtail Overview
       24




---



##### Table of Contents



Food Cost
  Labor and Benefits Expenses
  Operating Expenses
  General and Administrative Expenses
  Transaction Costs
  Depreciation and Amortization
  25




---



##### Table of Contents



Interest, net
  Asset Impairments and Closed Store Expenses
  Gain on Extinguishment of Debt
  Taxes
     26




---



##### Table of Contents



Year Ended December 31, 2006 Compared to the Year Ended December 25, 2005
    Marie CallendersConsolidated Results
    
    Perkins Restaurants
    
    Restaurants
    
    Perkins Franchise2006
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005Food sales
    
    $
    581,424
    
    
    $
    319,429
    
    
    $
    295,762
    
    
    $
    73,508
    
    
    $
    216,342
    
    
    $
    215,464
    
    
    $
    
    
    
    $
    Franchise and other revenue
    
    
    31,448
    
    
    
    15,011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,052
    
    
    
    5,418Intersegment revenue
    
    
    (18,682
    )
    
    
    (12,967
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Revenues
    
    $
    594,190
    
    
    $
    321,473
    
    
    $
    295,762
    
    
    $
    73,508
    
    
    $
    216,342
    
    
    $
    215,464
    
    
    $
    22,052
    
    
    $
    5,418Food cost
    
    
    28.4
    %
    
    
    29.4
    %
    
    
    25.1
    %
    
    
    26.6
    %
    
    
    29.9
    %
    
    
    30.5
    %
    
    
    n/a
    
    
    
    n/aLabor and benefits
    
    
    31.2
    %
    
    
    31.1
    %
    
    
    36.3
    %
    
    
    36.4
    %
    
    
    32.1
    %
    
    
    32.2
    %
    
    
    n/a
    
    
    
    n/aOperating expenses
    
    
    25.3
    %
    
    
    26.6
    %
    
    
    25.9
    %
    
    
    26.9
    %
    
    
    30.0
    %
    
    
    29.0
    %
    
    
    9.6
    %
    
    
    11.8
    %Segment Profit (Loss)
    
    $
    (9,372
    )
    
    $
    (15,231
    )
    
    $
    25,149
    
    
    $
    4,624
    
    
    $
    9,220
    
    
    $
    9,988
    
    
    $
    19,929
    
    
    $
    4,778
 Marie CallendersFranchise
    
    Foxtail
    
    Other (a)2006
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005Food sales
    
    $
    
    
    
    $
    
    
    
    $
    69,320
    
    
    $
    30,457
    
    
    $
    
    
    
    $
    Franchise and other revenue
    
    
    4,842
    
    
    
    5,045
    
    
    
    
    
    
    
    
    
    
    
    4,554
    
    
    
    4,548Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    (18,682
    )
    
    
    (12,967
    )
    
    
    
    
    
    
    Total Revenues
    
    $
    4,842
    
    
    $
    5,045
    
    
    $
    50,638
    
    
    $
    17,490
    
    
    $
    4,554
    
    
    $
    4,548Food cost
    
    
    n/a
    
    
    
    n/a
    
    
    
    56.9
    %
    
    
    58.3
    %
    
    
    n/a
    
    
    
    n/aLabor and benefits
    
    
    n/a
    
    
    
    n/a
    
    
    
    12.3
    %
    
    
    11.8
    %
    
    
    n/a
    
    
    
    n/aOperating expenses
    
    
    n/a
    
    
    
    n/a
    
    
    
    9.4
    %
    
    
    8.7
    %
    
    
    n/a
    
    
    
    n/aSegment Profit (Loss)
    
    $
    4,841
    
    
    $
    5,044
    
    
    $
    8,255
    
    
    $
    4,891
    
    
    $
    (76,766
    )
    
    $
    (44,556
    )
 
 (a)
    
    Licensing revenue of approximately $4,107,000 and $3,747,000 for fiscal 2006 and 2005,
respectively, is included in the Other segment revenues. The Other segment loss includes
corporate general and administrative expenses, interest expense and other non-operational
expenses. For details of the other segment loss, see Note 17, Segment Reporting in the
Notes to Consolidated Financial Statements. Restaurant Segments Overview
   27




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##### Table of Contents



Foxtail Segment Overview
   Franchise Segments Overview
          28




---



##### Table of Contents



Food Cost
      Labor and Benefits Expenses
    Operating Expenses
   29




---



##### Table of Contents



General and Administrative Expenses
  Depreciation and Amortization
  Asset Impairments and Closed Store Expenses
  Gain on Extinguishment of Debt
  Interest, net
  Taxes
  CAPITAL RESOURCES AND LIQUIDITY
   30




---



##### Table of Contents



Working Capital and Cash Flows
   Year Ended
    
    Year Ended
    
    Year EndedDecember 30, 2007
    
    December 31, 2006
    
    December 25, 2005Cash flows provided by operating activities
    
    $
    15,479
    
    
    $
    15,233
    
    
    $
    18,325Cash flows used in investing activities
    
    
    (31,526
    )
    
    
    (18,013
    )
    
    
    (229,341
    )Cash flows provided by financing activities
    
    
    26,010
    
    
    
    7,861
    
    
    
    213,205
 Operating activities
  Investing activities
   31




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##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 30,
    
    
    December 31,
    
    
    December 25,2007
    
    
    2006
    
    
    2005New restaurants (including restaurants acquired from franchisees)
    
    $
    15,255
    
    
    $
    2,980
    
    
    $
    69Restaurant improvements
    
    
    8,675
    
    
    
    7,815
    
    
    
    6,263Remodeling and reimaging
    
    
    4,920
    
    
    
    6,963
    
    
    
    3,065Manufacturing
    
    
    1,476
    
    
    
    563
    
    
    
    383Other
    
    
    1,221
    
    
    
    1,241
    
    
    
    299Total Capital Expenditures
    
    $
    31,547
    
    
    $
    19,562
    
    
    $
    10,079
  Financing activities
  CASH CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
   Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    TotalContractual Obligations(1)10% Senior Notes
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    190,000
    
    
    $
    190,000Term Loan
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    93,750
    
    
    
    98,750Revolver
    
    
    8,000
    
    
    
    
    
    
    
    
    
    
    
    12,000
    
    
    
    
    
    
    
    
    
    
    
    20,000Capital lease obligations
    
    
    1,876
    
    
    
    1,843
    
    
    
    1,753
    
    
    
    1,538
    
    
    
    1,506
    
    
    
    38,465
    
    
    
    46,981Operating leases
    
    
    36,154
    
    
    
    34,283
    
    
    
    31,960
    
    
    
    28,565
    
    
    
    25,971
    
    
    
    251,866
    
    
    
    408,799Interest on indebtedness (2)
    
    
    30,478
    
    
    
    29,997
    
    
    
    29,896
    
    
    
    29,035
    
    
    
    28,554
    
    
    
    17,401
    
    
    
    165,361Purchase commitments (3)
    
    
    68,337
    
    
    
    5,058
    
    
    
    1,898
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    75,426Management fee (4)
    
    
    7,576
    
    
    
    5,576
    
    
    
    5,408
    
    
    
    3,576
    
    
    
    3,576
    
    
    
    
    
    
    
    25,712Total contractual obligations
    
    $
    153,421
    
    
    $
    77,757
    
    
    $
    71,915
    
    
    $
    75,847
    
    
    $
    60,607
    
    
    $
    591,482
    
    
    $
    1,031,029
 
 (1)
    
    In addition to the contractual obligations disclosed in this table, we have unrecognized tax
benefits that, based on uncertainties associated with the items, we are unable to make
reasonably reliable estimates of the period of potential cash settlements, if any, with taxing
authorities. (See Note 11 to our Consolidated Financial Statements.)(2)
    
    Represents interest expense using the interest rate of 10.0% on the $190,000,000 of 10%
Senior Notes, 10.11% on the $98,750,000 Term Loan and 9.50% on the Revolver.
Interest rates on the Term Loan and Revolver are based on the Credit
Agreement as amended subsequent to year-end. Excludes interest on capital lease obligations and fees on any letters of credit that may be
issued under our Credit Agreement.(3)
    
    Primarily represents commitments to purchase food products for the restaurant and
manufacturing segments.(4)
    
    The company is obligated for management fees due to CHI; however, as long as the Companys
current lending agreements are in place, the Company is limited as to the amount that can be
paid each year. 32




---



##### Table of Contents



RECENT ACCOUNTING PRONOUNCEMENTS
      
    
    Acquisition costs will be generally expensed as incurred;
    
    Assets that an acquirer does not intend to use will be recorded at fair value reflecting the assets highest and best use;
    
    Noncontrolling interests (formerly known as minority interests 
see Statement 160 discussion below) will be valued at fair value at
the acquisition date;
    
    Acquired contingent liabilities will be recorded at fair value at the
acquisition date and subsequently measured at either the higher of
such amount or the amount determined under existing guidance for
non-acquired contingencies;
    
    In-process research and development will be recorded at fair value as
an indefinite-lived intangible asset at the acquisition date;
    
    Restructuring costs associated with a business combination will be
generally expensed subsequent to the acquisition date; and
 33




---



##### Table of Contents




    
    Changes in deferred tax asset valuation allowances and income tax
uncertainties after the acquisition date generally will affect income
tax expense.
   IMPACT OF INFLATION
  IMPACT OF GOVERNMENTAL REGULATION
  INFORMATION CONCERNING FORWARD LOOKING STATEMENTS
   
    
    competitive pressures and trends in the restaurant industry;
    
    prevailing prices and availability of food, supplies and labor;
    
    relationships with franchisees and financial health of franchisees;
    
    general economic conditions and demographic patterns;
    
    our substantial indebtedness;
    
    our ability to integrate acquisitions;
 34




---



##### Table of Contents




    
    our development and expansion plans; and
    
    statements covering our business strategy.
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
     35




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
 RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS
    36




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
     Accounting for Uncertainty in Income Taxes  an Interpretation of FASB
Statement No. 109
  
 37




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
      
 38




---



##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 30,
    
    
    December 31,
    
    
    December 25,2007
    
    
    2006
    
    
    2005REVENUES:Food sales
    
    $
    556,990
    
    
    $
    562,742
    
    
    $
    306,462Franchise and other revenue
    
    
    30,896
    
    
    
    31,448
    
    
    
    15,011Total Revenues
    
    
    587,886
    
    
    
    594,190
    
    
    
    321,473COSTS AND EXPENSES:Cost of sales (excluding depreciation shown below):Food cost
    
    
    158,708
    
    
    
    159,751
    
    
    
    90,095Labor and benefits
    
    
    189,307
    
    
    
    185,405
    
    
    
    99,841Operating expenses
    
    
    149,437
    
    
    
    150,102
    
    
    
    85,485General and administrative
    
    
    44,874
    
    
    
    48,188
    
    
    
    21,242Transaction costs
    
    
    1,013
    
    
    
    5,674
    
    
    
    867Depreciation and amortization
    
    
    24,822
    
    
    
    25,641
    
    
    
    11,594Interest, net
    
    
    31,180
    
    
    
    36,197
    
    
    
    26,362Asset impairments and closed store expenses
    
    
    2,463
    
    
    
    3,089
    
    
    
    611Gain on extinguishment of debt
    
    
    
    
    
    
    (12,642
    )
    
    
    (565
    )Other, net
    
    
    228
    
    
    
    1,509
    
    
    
    1,181Total Costs and Expenses
    
    
    602,032
    
    
    
    602,914
    
    
    
    336,713Loss before income taxes and minority interests
    
    
    (14,146
    )
    
    
    (8,724
    )
    
    
    (15,240
    )(Provision for) benefit from income taxes
    
    
    (1,482
    )
    
    
    (155
    )
    
    
    638Minority interests
    
    
    (707
    )
    
    
    (493
    )
    
    
    (629
    )NET LOSS
    
    $
    (16,335
    )
    
    $
    (9,372
    )
    
    $
    (15,231
    )
  39




---



##### Table of Contents



December 30, 2007
    
    
    December 31, 2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    19,032
    
    
    $
    9,069Restricted cash
    
    
    10,098
    
    
    
    11,193Receivables, less allowances for doubtful accounts of $1,542 and
$1,624 in 2007 and 2006, respectively
    
    
    17,221
    
    
    
    18,316Inventories
    
    
    13,239
    
    
    
    10,996Prepaid expenses and other current assets
    
    
    5,732
    
    
    
    4,824Total current assets
    
    
    65,322
    
    
    
    54,398PROPERTY AND EQUIPMENT, net of accumulated depreciation and
amortization of $109,441 and $96,458 in 2007 and 2006,
respectively
    
    
    99,311
    
    
    
    91,044INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS
    
    
    53
    
    
    
    238GOODWILL
    
    
    30,038
    
    
    
    30,038INTANGIBLE ASSETS, net of accumulated amortization of $17,494 and
$14,018 in 2007 and 2006, respectively
    
    
    153,316
    
    
    
    156,792DEFERRED INCOME TAXES
    
    
    242
    
    
    
    708OTHER ASSETS
    
    
    14,660
    
    
    
    13,627Total Assets
    
    $
    362,942
    
    
    $
    346,845LIABILITIES AND STOCKHOLDERS INVESTMENTCURRENT LIABILITIES:Accounts payable
    
    $
    25,559
    
    
    $
    22,799Accrued expenses
    
    
    52,621
    
    
    
    58,288Accrued income taxes
    
    
    
    
    
    
    75Franchise advertising contributions
    
    
    5,940
    
    
    
    5,392Current maturities of long-term debt and capital lease obligations
    
    
    9,464
    
    
    
    1,706Total current liabilities
    
    
    93,584
    
    
    
    88,260CAPITAL LEASE OBLIGATIONS, less current maturities
    
    
    11,987
    
    
    
    6,249LONG-TERM DEBT, less current maturities
    
    
    298,009
    
    
    
    286,379DEFERRED RENT
    
    
    13,467
    
    
    
    9,768OTHER LIABILITIES
    
    
    15,520
    
    
    
    11,785MINORITY INTEREST IN CONSOLIDATED PARTNERSHIPS
    
    
    333
    
    
    
    75STOCKHOLDERS INVESTMENT:Common stock, $.01 par value, 100,000 shares authorized,
10,820 issued and outstanding
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    137,923
    
    
    
    136,131Other comprehensive income
    
    
    86
    
    
    
    13Accumulated deficit
    
    
    (207,968
    )
    
    
    (191,816
    )Total stockholders investment
    
    
    (69,958
    )
    
    
    (55,671
    )Total Liabilities and Stockholders Investment
    
    $
    362,942
    
    
    $
    346,845
  40




---



##### Table of Contents



AccumulatedCapital in
    
    
    
    
    
    
    Additional
    
    
    Notes
    
    
    Other
    
    
    RetainedPreferred
    
    
    Common
    
    
    Excess of
    
    
    Treasury
    
    
    Paid-in
    
    
    Secured
    
    
    Comprehensive
    
    
    EarningsStock
    
    
    Stock
    
    
    Par Value
    
    
    Stock
    
    
    Capital
    
    
    By Stock
    
    
    Income
    
    
    (Deficit)
    
    
    TotalBalance at December 30,
2004
    
    
    63,277
    
    
    
    
    
    
    
    9,659
    
    
    
    (137
    )
    
    
    
    
    
    
    (1,205
    )
    
    
    
    
    
    
    (167,213
    )
    
    
    (95,619
    )Accrued interest on
notes secured by stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103
    )
    
    
    
    
    
    
    
    
    
    
    (103
    )Capital contribution
and business
combination
    
    
    (63,277
    )
    
    
    1
    
    
    
    (9,659
    )
    
    
    137
    
    
    
    123,907
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,109Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,231
    )
    
    
    (15,231
    )Currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,217
    )Balance at December 25,
2005
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    123,907
    
    
    
    (1,308
    )
    
    
    14
    
    
    
    (182,444
    )
    
    
    (59,830
    )Capital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,545
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,545Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,372
    )
    
    
    (9,372
    )Currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,373
    )Note forgiveness
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (321
    )
    
    
    1,308
    
    
    
    
    
    
    
    
    
    
    
    987Balance at December 31,
2006
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    136,131
    
    
    
    
    
    
    
    13
    
    
    
    (191,816
    )
    
    
    (55,671
    )Cumulative adjustment
for the adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183
    
    
    
    183Capital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,792
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,792Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,335
    )
    
    
    (16,335
    )Currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    73Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,262
    )Balance at December 30,
2007
    
    $
    
    
    
    $
    1
    
    
    $
    
    
    
    $
    
    
    
    $
    137,923
    
    
    $
    
    
    
    $
    86
    
    
    $
    (207,968
    )
    
    $
    (69,958
    )
  41




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##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 30,
    
    
    December 31,
    
    
    December 25,2007
    
    
    2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (16,335
    )
    
    $
    (9,372
    )
    
    $
    (15,231
    )Adjustments to reconcile net loss to net cash
provided by operating activities :Depreciation and amortization
    
    
    24,822
    
    
    
    25,641
    
    
    
    11,594Amortization of debt discount
    
    
    324
    
    
    
    321
    
    
    
    74Other non-cash income and expense items
    
    
    333
    
    
    
    6,690
    
    
    
    12,437Gain on extinguishment of debt
    
    
    
    
    
    
    (12,642
    )
    
    
    (565
    )Loss/(gain) on disposition of assets
    
    
    226
    
    
    
    665
    
    
    
    (704
    )Asset write-down
    
    
    2,237
    
    
    
    2,058
    
    
    
    1,315Minority interests
    
    
    707
    
    
    
    493
    
    
    
    629Equity in
net loss (income) of unconsolidated partnerships
    
    
    82
    
    
    
    73
    
    
    
    (54
    )Net changes in operating assets and liabilities
    
    
    3,083
    
    
    
    1,306
    
    
    
    8,830Total adjustments
    
    
    31,814
    
    
    
    24,605
    
    
    
    33,556Net cash provided by operating activities
    
    
    15,479
    
    
    
    15,233
    
    
    
    18,325CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (31,547
    )
    
    
    (19,562
    )
    
    
    (10,079
    )Acquisition of business, net of cash acquired of $4,270
    
    
    
    
    
    
    
    
    
    
    (220,621
    )Proceeds from sale of assets
    
    
    21
    
    
    
    1,549
    
    
    
    1,359Net cash used in investing activities
    
    
    (31,526
    )
    
    
    (18,013
    )
    
    
    (229,341
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (702
    )
    
    
    (895
    )
    
    
    (798
    )Lessor
financing
    
    
    6,107
    
    
    
    
    
    
    
    Proceeds from long-term debt
    
    
    1,950
    
    
    
    99,041
    
    
    
    187,429Payments on long-term debt
    
    
    (2,618
    )
    
    
    (99,567
    )
    
    
    (2,400
    )Proceeds from revolver
    
    
    75,100
    
    
    
    12,900
    
    
    
    2,600Payments on revolver
    
    
    (55,100
    )
    
    
    (12,900
    )
    
    
    (8,240
    )Debt issuance costs
    
    
    
    
    
    
    (2,720
    )
    
    
    (9,288
    )Distributions to minority partners
    
    
    (519
    )
    
    
    (543
    )
    
    
    (602
    )Accrued interest on notes secured by stock
    
    
    
    
    
    
    
    
    
    
    (103
    )Capital contribution
    
    
    1,792
    
    
    
    12,545
    
    
    
    44,607Net cash provided by financing activities
    
    
    26,010
    
    
    
    7,861
    
    
    
    213,205Net increase in cash and cash equivalents
    
    
    9,963
    
    
    
    5,081
    
    
    
    2,189CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    9,069
    
    
    
    3,988
    
    
    
    1,799Balance, end of year
    
    $
    19,032
    
    
    $
    9,069
    
    
    $
    3,988
  42




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##### Table of Contents



PERKINS & MARIE CALLENDERS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) ORGANIZATION:
             43




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##### Table of Contents



(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
               44




---



##### Table of Contents



YearsOwned:Land improvements
    
    
    3  20Buildings
    
    
    20  30Leasehold improvements
    
    
    3  20Equipment
    
    
    1  7Property under capital lease:Buildings
    
    
    20
          45




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46




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##### Table of Contents




    
    Acquisition costs will be generally expensed as incurred;
    
    Assets that an acquirer does not intend to use will be
recorded at fair value reflecting the assets highest and best use;
    
    Noncontrolling interests (formerly known as minority interests  see
Statement 160 discussion below) will be valued at fair value at the
acquisition date;
    
    Acquired contingent liabilities will be recorded at fair value at the
acquisition date and subsequently measured at either the higher of
such amount or the amount determined under existing guidance for
non-acquired contingencies;
    
    In-process research and development will be recorded at fair value as
an indefinite-lived intangible asset at the acquisition date;
    
    Restructuring costs associated with a business combination will be
generally expensed subsequent to the acquisition date; and
    
    Changes in deferred tax asset valuation allowances and income tax
uncertainties after the acquisition date generally will affect income
tax expense.
   47




---



##### Table of Contents



(3) ACQUISITION:
   Net Assets Acquired:Current assets
    
    $
    30,699Property and equipment, net
    
    
    62,826Other noncurrent assets
    
    
    26,284Intangible assets
    
    
    158,900Goodwill
    
    
    30,038Liabilities assumed
    
    
    (59,670
    )Net assets acquired
    
    $
    249,077
 (4) COMBINATION OF COMPANIES UNDER COMMON CONTROL:
     Year Ended(in thousands):
    
    December 25, 2005Net sales
    
    $
    591,060Loss before income taxes and minority interests
    
    
    (15,137
    )Net loss
    
    
    (15,766
    )
  48




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##### Table of Contents



(5) SUPPLEMENTAL CASH FLOW INFORMATION:
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 30,
    
    
    December 31,
    
    
    December 25,2007
    
    
    2006
    
    
    2005(Increase) Decrease in:Receivables
    
    $
    1,470
    
    
    $
    (1,941
    )
    
    $
    (2,877
    )Inventories
    
    
    (2,218
    )
    
    
    332
    
    
    
    426Prepaid expenses and other current assets
    
    
    (904
    )
    
    
    1,509
    
    
    
    10,374Other assets
    
    
    (467
    )
    
    
    (447
    )
    
    
    8,308Increase (Decrease) in:Accounts payable
    
    
    2,642
    
    
    
    985
    
    
    
    941Accrued expenses
    
    
    (2,516
    )
    
    
    3,313
    
    
    
    (14,334
    )Other liabilities
    
    
    5,076
    
    
    
    (2,445
    )
    
    
    5,992$
    3,083
    
    
    $
    1,306
    
    
    $
    8,830
  Year Ended
    
    Year Ended
    
    Year EndedDecember 30,
    
    December 31,
    
    December 25,2007
    
    2006
    
    2005Cash paid for interest
    
    $
    29,186
    
    
    $
    26,308
    
    
    $
    7,225Income taxes paid
    
    
    1,044
    
    
    
    1,389
    
    
    
    4,405Income tax refunds received
    
    
    954
    
    
    
    605
    
    
    
    6
  49




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##### Table of Contents



(6) PROPERTY AND EQUIPMENT:
  December 30,
    
    
    December 31,2007
    
    
    2006Owned:Land and land improvements
    
    $
    1,951
    
    
    $
    1,641Buildings
    
    
    5,738
    
    
    
    6,021Leasehold improvements
    
    
    80,056
    
    
    
    62,691Equipment
    
    
    110,210
    
    
    
    104,150Construction in progress
    
    
    1,856
    
    
    
    3,942199,811
    
    
    
    178,445Less  accumulated depreciation and amortization
    
    
    (106,316
    )
    
    
    (92,661
    )93,495
    
    
    
    85,784Property under capital lease:Leasehold
improvements
    
    
    7,822
    
    
    
    9,057Less  accumulated amortization
    
    
    (3,056
    )
    
    
    (3,797
    )4,766
    
    
    
    5,260Assets held for sale, net of accumulated depreciation
    
    
    1,050
    
    
    
    Property and Equipment, net
    
    $
    99,311
    
    
    $
    91,044
 (7) LEASES:
   Lease ObligationsCapital
    
    
    Operating2008
    
    $
    1,876
    
    
    $
    36,1542009
    
    
    1,843
    
    
    
    34,2832010
    
    
    1,753
    
    
    
    31,9602011
    
    
    1,538
    
    
    
    28,5652012
    
    
    1,506
    
    
    
    25,971Thereafter
    
    
    38,465
    
    
    
    251,866Total minimum lease payments
    
    
    46,981
    
    
    $
    408,799Less:Amounts representing interest (3.3%-24.57%)
    
    
    (34,546
    )Capital lease obligations
    
    $
    12,435
 50




---



##### Table of Contents



Lessor
    
    
    Sublessor2008
    
    $
    145
    
    
    $
    1,7182009
    
    
    151
    
    
    
    1,5032010
    
    
    152
    
    
    
    1,1272011
    
    
    115
    
    
    
    8882012
    
    
    77
    
    
    
    565Thereafter
    
    
    97
    
    
    
    1,601Total minimum lease rentals
    
    $
    737
    
    
    $
    7,402
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 30,
    
    
    December 31,
    
    
    December 25,2007
    
    
    2006
    
    
    2005Minimum rentals
    
    $
    41,269
    
    
    $
    39,017
    
    
    $
    21,793Contingent rentals
    
    
    1,566
    
    
    
    1,764
    
    
    
    1,122Less  sublease rentals
    
    
    (715
    )
    
    
    (966
    )
    
    
    (795
    )$
    42,120
    
    
    $
    39,815
    
    
    $
    22,120
  (8) GOODWILL AND INTANGIBLE ASSETS:
  Restaurant
    
    
    Franchise
    
    
    
    
    
    
    TotalOperations
    
    
    Operations
    
    
    Foxtail
    
    
    CompanyBalance as of December 25, 2005
    
    $
    14,228
    
    
    $
    26,815
    
    
    $
    2,406
    
    
    $
    43,449Purchase accounting adjustments
    
    
    (4,392
    )
    
    
    (8,277
    )
    
    
    (742
    )
    
    
    (13,411
    )Balance as of December 31, 2006
    
    
    9,836
    
    
    
    18,538
    
    
    
    1,664
    
    
    
    30,038Adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as of December 30, 2007
    
    $
    9,836
    
    
    $
    18,538
    
    
    $
    1,664
    
    
    $
    30,038
   December 30,
    
    
    December 31,2007
    
    
    2006Amortizing intangible assets:Franchise agreements
    
    $
    35,000
    
    
    $
    35,000Customer relationships
    
    
    13,300
    
    
    
    13,300Acquired franchise rights
    
    
    11,076
    
    
    
    11,076Design prototype
    
    
    834
    
    
    
    834Subtotal
    
    
    60,210
    
    
    
    60,210Less  accumulated amortization
    
    
    (17,494
    )
    
    
    (14,018
    )Total amortizing intangible assets
    
    
    42,716
    
    
    
    46,192Nonamortizing intangible asset:Tradename
    
    
    110,600
    
    
    
    110,600Total intangible assets
    
    $
    153,316
    
    
    $
    156,792
 51




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##### Table of Contents



EstimatedAmortization Expense2008
    
    $
    2,5272009
    
    
    2,4122010
    
    
    2,3102011
    
    
    2,2242012
    
    
    2,132
 (9) ACCRUED EXPENSES:
  December 30,
    
    
    December 31,2007
    
    
    2006Payroll and related benefits
    
    $
    16,016
    
    
    $
    18,209Property, real estate and sales taxes
    
    
    4,325
    
    
    
    4,692Insurance
    
    
    1,539
    
    
    
    5,086Gift cards and gift certificates
    
    
    7,099
    
    
    
    8,233Advertising
    
    
    937
    
    
    
    1,262Interest
    
    
    6,310
    
    
    
    6,085Management fees
    
    
    4,065
    
    
    
    2,210Other
    
    
    12,330
    
    
    
    12,511$
    52,621
    
    
    $
    58,288
 (10) LONG-TERM DEBT:
  December 30,
    
    
    December 31,2007
    
    
    200610% Senior Notes, due October 1, 2013, net of discount of $1,878 and $2,175, respectively
    
    $
    188,123
    
    
    $
    187,825Revolver, due May 3, 2011
    
    
    20,000
    
    
    
    Term Loan, due May 3, 2013
    
    
    98,750
    
    
    
    99,500Promissory Note, due January 2011
    
    
    100
    
    
    
    Other
    
    
    54
    
    
    
    69307,027
    
    
    
    287,394Less current maturities
    
    
    (9,018
    )
    
    
    (1,015
    )$
    298,009
    
    
    $
    286,379
   52




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##### Table of Contents



1.
    
    The Company would, at the time of such Restricted Payments and after giving pro forma effect
thereto as if such Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of additional indebtedness
pursuant to the fixed charge coverage ratio tests as defined in the indenture.
 2.
    
    Such Restricted Payment, together with the aggregate amount of all other Restricted Payments
made by the Company after September 21, 2005, is less than the sum, without duplication, of
(i) 50% of the consolidated net income of the Company for the period from the beginning of the
first full fiscal quarter commencing after the date of the indenture to the end of the
Companys most recent ended fiscal quarter for which internal financial statements are
available at the time of the Restricted Payment; (ii) 100% of the aggregate net proceeds
received by the Company since the date of the indenture as a contribution to its equity
capital or from the sale of equity interests of the Company or from the conversion of
interests or debt securities that have been converted to equity interests; and (iii) to the
extent that any Restricted Investment, as defined, that was made after the date of the
indenture is sold for cash, the lesser of (a) the cash return of capital or (b) the aggregate
amount of such restricted investment that was treated as a Restricted Payment when made.
  53




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##### Table of Contents



Amount2008
    
    $
    9,0182009
    
    
    1,0182010
    
    
    1,0182011
    
    
    13,1002012
    
    
    1,000Thereafter
    
    
    281,873$
    307,027
  (11) INCOME TAXES
   December 30,
    
    
    December 31,
    
    
    December 25,2007
    
    
    2006
    
    
    2005Current:Federal
    
    $
    (1,274
    )
    
    $
    (588
    )
    
    $
    (101
    )State and local
    
    
    258
    
    
    
    (275
    )
    
    
    (86
    )(1,016
    )
    
    
    (863
    )
    
    
    (187
    )Deferred:Federal
    
    
    (248
    )
    
    
    490
    
    
    
    749State and local
    
    
    (218
    )
    
    
    218
    
    
    
    76(466
    )
    
    
    708
    
    
    
    825$
    (1,482
    )
    
    $
    (155
    )
    
    $
    638
  December 30,
    
    December 31,
    
    December 25,2007
    
    2006
    
    2005Federal
    
    
    (34.0
    )%
    
    
    (34.0
    )%
    
    
    (35.0
    )%Federal income tax credits and addbacks
    
    
    (1.2
    )%
    
    
    (21.3
    )%
    
    
    (6.5
    )%State income taxes, net of Federal taxes
    
    
    1.2
    %
    
    
    0.6
    %
    
    
    0.0
    %Changes in
FIN 48 / FAS 5 items
    
    
    6.1
    %
    
    
    (2.1
    )%
    
    
    0.0
    %Nondeductible interest, expenses, other, net
    
    
    (0.9
    )%
    
    
    2.2
    %
    
    
    11.3
    %Federal and state valuation allowances
    
    
    39.3
    %
    
    
    56.3
    %
    
    
    26.0
    %10.5
    %
    
    
    1.7
    %
    
    
    (4.2
    )%
 54




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##### Table of Contents



December 30,
    
    
    December 31,2007
    
    
    2006Deferred tax assets:Net operating loss carryforwards
    
    $
    13,290
    
    
    $
    14,678Accrued expenses not currently deductible
    
    
    12,526
    
    
    
    10,515Tax credit carryforwards
    
    
    4,561
    
    
    
    6,269Property, equipment, and improvements  tax basis in excess of book basis
    
    
    12,002
    
    
    
    8,694Capital leases
    
    
    1,115
    
    
    
    659Total deferred tax assets
    
    
    43,494
    
    
    
    40,815Less valuation allowance
    
    
    (25,581
    )
    
    
    (21,111
    )17,913
    
    
    
    19,704Deferred tax liabilities:Investment in unconsolidated partnerships
    
    
    (20
    )
    
    
    (88
    )Intangible assets  book basis in excess of tax basis
    
    
    (17,651
    )
    
    
    (18,908
    )(17,671
    )
    
    
    (18,996
    )Net deferred tax assets
    
    $
    242
    
    
    $
    708
        55




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##### Table of Contents



Balance at adoption, January 1, 2007
    
    $
    5,126Additions for tax positions of prior years
    
    
    1,480Reductions for tax positions of prior years
    
    
    (699
    )Additions for tax positions of current period
    
    
    Reductions due to settlements
    
    
    Reductions for lapse of statute of limitations
    
    
    (183
    )Balance at December 30, 2007
    
    $
    5,724
    (12) RELATED PARTY TRANSACTIONS:
     56




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##### Table of Contents



(13) OTHER COMMITMENTS AND CONTINGENCIES:
      (14) LONG-TERM INCENTIVE PLANS:
    57




---



##### Table of Contents



(15) EMPLOYEE BENEFITS:
    (16) EMPLOYEE SUBSCRIPTION AGREEMENTS AND STRIP SUBSCRIPTION AGREEMENTS:
       58




---



##### Table of Contents



Unvested
    
    VestedClass C Units as of December 31, 2006
    
    
    
    
    
    
    Granted
    
    
    116,715
    
    
    
    Purchased
    
    
    
    
    
    
    17,673Vested
    
    
    
    
    
    
    Forfeited
    
    
    (3,990
    )
    
    
    Class C Units as of December 30, 2007
    
    
    112,725
    
    
    
    17,673
  Class A Units outstanding as of December 31, 2006
    
    
    1,104,589Purchased
    
    
    17,673Class A Units outstanding as of December 30, 2007
    
    
    1,122,262
 (17) SEGMENT REPORTING:
   59




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##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 30, 2007
    
    
    December 31, 2006
    
    
    December 25, 2005RevenueRestaurant operations
    
    $
    510,863
    
    
    $
    512,104
    
    
    $
    288,972Franchise operations
    
    
    25,982
    
    
    
    26,894
    
    
    
    10,463Foxtail
    
    
    65,953
    
    
    
    69,320
    
    
    
    30,457Intersegment revenue
    
    
    (19,826
    )
    
    
    (18,682
    )
    
    
    (12,967
    )Other
    
    
    4,914
    
    
    
    4,554
    
    
    
    4,548Total
    
    $
    587,886
    
    
    $
    594,190
    
    
    $
    321,473Interest Expense, netRestaurant operations
    
    $
    
    
    
    $
    
    
    
    $
    Franchise operations
    
    
    
    
    
    
    
    
    
    
    Foxtail
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    31,180
    
    
    
    36,197
    
    
    
    26,362Total
    
    $
    31,180
    
    
    $
    36,197
    
    
    $
    26,362Depreciation and
amortizationRestaurant operations
    
    $
    18,913
    
    
    $
    20,402
    
    
    $
    10,683Franchise operations
    
    
    
    
    
    
    
    
    
    
    Foxtail
    
    
    1,576
    
    
    
    1,659
    
    
    
    464Other
    
    
    4,333
    
    
    
    3,580
    
    
    
    447Total
    
    $
    24,822
    
    
    $
    25,641
    
    
    $
    11,594Segment net income (loss)Restaurant operations
    
    $
    32,459
    
    
    $
    34,369
    
    
    $
    14,612Franchise operations
    
    
    23,774
    
    
    
    24,770
    
    
    
    9,822Foxtail
    
    
    3,687
    
    
    
    8,255
    
    
    
    4,891Other
    
    
    (76,255
    )
    
    
    (76,766
    )
    
    
    (44,556
    )Total
    
    $
    (16,335
    )
    
    $
    (9,372
    )
    
    $
    (15,231
    )
 December 30, 2007
    
    
    December 31, 2006Segment assetsRestaurant operations
    
    $
    140,848
    
    
    $
    130,539Franchise operations
    
    
    121,199
    
    
    
    123,778Foxtail
    
    
    42,329
    
    
    
    41,715Other
    
    
    58,566
    
    
    
    50,813Total
    
    $
    362,942
    
    
    $
    346,845GoodwillRestaurant operations
    
    $
    9,836
    
    
    $
    9,836Franchise operations
    
    
    18,538
    
    
    
    18,538Foxtail
    
    
    1,664
    
    
    
    1,664Other
    
    
    
    
    
    
    Total
    
    $
    30,038
    
    
    $
    30,038
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 30, 2007
    
    
    December 31, 2006
    
    
    December 25, 2005Capital ExpendituresRestaurant operations
    
    $
    29,095
    
    
    $
    18,073
    
    
    $
    9,464Franchise operations
    
    
    
    
    
    
    
    
    
    
    Foxtail
    
    
    1,476
    
    
    
    563
    
    
    
    383Other
    
    
    976
    
    
    
    926
    
    
    
    232Total
    
    $
    31,547
    
    
    $
    19,562
    
    
    $
    10,079
  60




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##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 30, 2007
    
    
    December 31, 2006
    
    
    December 25, 2005General and administrative expenses
    
    $
    39,393
    
    
    $
    43,176
    
    
    $
    18,993Depreciation and amortization expenses
    
    
    4,333
    
    
    
    3,580
    
    
    
    447Interest expense, net
    
    
    31,180
    
    
    
    36,197
    
    
    
    26,362(Gain) loss on disposition of assets, net
    
    
    226
    
    
    
    670
    
    
    
    (704
    )Asset write-down
    
    
    2,237
    
    
    
    2,058
    
    
    
    1,315Lease termination
    
    
    
    
    
    
    366
    
    
    
    Transaction costs
    
    
    1,013
    
    
    
    5,674
    
    
    
    867Provision for (benefit from) income taxes
    
    
    1,482
    
    
    
    155
    
    
    
    (638
    )Minority interest
    
    
    707
    
    
    
    493
    
    
    
    629Gain on early extinguishment of debt
    
    
    
    
    
    
    (12,642
    )
    
    
    (565
    )Licensing revenue
    
    
    (4,564
    )
    
    
    (4,107
    )
    
    
    (3,747
    )Other
    
    
    248
    
    
    
    1,146
    
    
    
    1,597$
    76,255
    
    
    $
    76,766
    
    
    $
    44,556
 61




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##### Table of Contents



(18) CONDENSED CONSOLIDATED FINANCIAL INFORMATION
   Consolidating statement of operations for the year ended December 30, 2007 (in thousands):
 Guarantors
    
    
    Non-
    
    
    
    
    
    ConsolidatedPMCI
    
    
    WRG
    
    
    Other
    
    
    Guarantors
    
    
    Eliminations
    
    
    PMCIRevenueFood sales
    
    $
    336,820
    
    
    $
    189,614
    
    
    $
    
    
    
    $
    30,556
    
    
    $
    
    
    
    $
    556,990Franchise and other revenue
    
    
    21,323
    
    
    
    9,573
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,896Total revenues
    
    
    358,143
    
    
    
    199,187
    
    
    
    
    
    
    
    30,556
    
    
    
    
    
    
    
    587,886Cost and expenses (excluding
depreciation shown below):Food cost
    
    
    94,986
    
    
    
    55,260
    
    
    
    
    
    
    
    8,462
    
    
    
    
    
    
    
    158,708Labor and benefits
    
    
    114,846
    
    
    
    64,562
    
    
    
    
    
    
    
    9,899
    
    
    
    
    
    
    
    189,307Operating expenses
    
    
    86,731
    
    
    
    52,659
    
    
    
    
    
    
    
    10,047
    
    
    
    
    
    
    
    149,437General and administrative
    
    
    39,152
    
    
    
    5,722
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,874Transaction costs
    
    
    772
    
    
    
    241
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,013Depreciation and amortization
    
    
    17,610
    
    
    
    5,939
    
    
    
    
    
    
    
    1,273
    
    
    
    
    
    
    
    24,822Interest, net
    
    
    30,127
    
    
    
    1,053
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,180Asset
impairments and closed store expenses
    
    
    (178
    )
    
    
    2,612
    
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    2,463Other, net
    
    
    (122
    )
    
    
    350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    228Total costs and expenses
    
    
    383,924
    
    
    
    188,398
    
    
    
    
    
    
    
    29,710
    
    
    
    
    
    
    
    602,032(Loss) income before income taxes
and minority interests
    
    
    (25,781
    )
    
    
    10,789
    
    
    
    
    
    
    
    846
    
    
    
    
    
    
    
    (14,146
    )Provision for income taxes
    
    
    (1,482
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,482
    )Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (707
    )
    
    
    
    
    
    
    (707
    )Equity in earnings of subsidiaries
    
    
    10,928
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,928
    )
    
    
    NET (LOSS) INCOME
    
    $
    (16,335
    )
    
    $
    10,789
    
    
    $
    
    
    
    $
    139
    
    
    $
    (10,928
    )
    
    $
    (16,335
    )
 62




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##### Table of Contents



Consolidating statement of operations for the year ended December 31, 2006 (in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    
    PMCM
    
    
    WRG
    
    
    Other
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    PMCIRevenueFood sales
    
    $
    258,945
    
    
    $
    82,667
    
    
    $
    190,346
    
    
    $
    
    
    
    $
    30,784
    
    
    $
    
    
    
    $
    562,742Franchise and other revenue
    
    
    13,731
    
    
    
    15,189
    
    
    
    9,396
    
    
    
    15
    
    
    
    
    
    
    
    (6,883
    )
    
    
    31,448Total revenues
    
    
    272,676
    
    
    
    97,856
    
    
    
    199,742
    
    
    
    15
    
    
    
    30,784
    
    
    
    (6,883
    )
    
    
    594,190Cost and expenses (excluding
depreciation shown below):Food cost
    
    
    76,676
    
    
    
    18,904
    
    
    
    55,629
    
    
    
    
    
    
    
    8,542
    
    
    
    
    
    
    
    159,751Labor and benefits
    
    
    84,608
    
    
    
    29,908
    
    
    
    61,765
    
    
    
    
    
    
    
    9,124
    
    
    
    
    
    
    
    185,405Operating expenses
    
    
    59,569
    
    
    
    27,064
    
    
    
    55,842
    
    
    
    15
    
    
    
    10,920
    
    
    
    (3,308
    )
    
    
    150,102General and administrative
    
    
    36,427
    
    
    
    3,585
    
    
    
    11,751
    
    
    
    
    
    
    
    
    
    
    
    (3,575
    )
    
    
    48,188Transaction costs
    
    
    3,545
    
    
    
    
    
    
    
    2,129
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,674Depreciation and amortization
    
    
    14,418
    
    
    
    3,290
    
    
    
    6,583
    
    
    
    
    
    
    
    1,350
    
    
    
    
    
    
    
    25,641Interest, net
    
    
    26,882
    
    
    
    (697
    )
    
    
    10,005
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    36,197Asset
impairments and closed store expenses
    
    
    1,569
    
    
    
    
    
    
    
    1,495
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    3,089Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (12,642
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,642
    )Other, net
    
    
    (143
    )
    
    
    (35
    )
    
    
    1,687
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,509Total costs and expenses
    
    
    303,551
    
    
    
    82,019
    
    
    
    194,244
    
    
    
    15
    
    
    
    29,968
    
    
    
    (6,883
    )
    
    
    602,914(Loss) income before income taxes
and minority interests
    
    
    (30,875
    )
    
    
    15,837
    
    
    
    5,498
    
    
    
    
    
    
    
    816
    
    
    
    
    
    
    
    (8,724
    )Benefit from (provision for)
income taxes
    
    
    5,427
    
    
    
    (5,582
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (155
    )Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (493
    )
    
    
    
    
    
    
    (493
    )Equity in earnings of subsidiaries
    
    
    16,076
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,076
    )
    
    
    NET (LOSS) INCOME
    
    $
    (9,372
    )
    
    $
    10,255
    
    
    $
    5,498
    
    
    $
    
    
    
    $
    323
    
    
    $
    (16,076
    )
    
    $
    (9,372
    )
 63




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##### Table of Contents



Consolidating statement of operations for the year ended December 25, 2005 (in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    
    PMCM
    
    
    WRG
    
    
    Other
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    PMCIRevenueFood sales
    
    $
    66,461
    
    
    $
    20,667
    
    
    $
    186,828
    
    
    $
    
    
    
    $
    32,506
    
    
    $
    
    
    
    $
    306,462Franchise and other revenue
    
    
    2,779
    
    
    
    3,735
    
    
    
    9,593
    
    
    
    206
    
    
    
    
    
    
    
    (1,302
    )
    
    
    15,011Total revenues
    
    
    69,240
    
    
    
    24,402
    
    
    
    196,421
    
    
    
    206
    
    
    
    32,506
    
    
    
    (1,302
    )
    
    
    321,473Cost and expenses (excluding
depreciation shown below):Food cost
    
    
    21,104
    
    
    
    4,863
    
    
    
    54,732
    
    
    
    
    
    
    
    9,396
    
    
    
    
    
    
    
    90,095Labor and benefits
    
    
    20,901
    
    
    
    8,001
    
    
    
    61,118
    
    
    
    
    
    
    
    9,821
    
    
    
    
    
    
    
    99,841Operating expenses
    
    
    15,651
    
    
    
    6,590
    
    
    
    52,760
    
    
    
    206
    
    
    
    11,108
    
    
    
    (830
    )
    
    
    85,485General and administrative
    
    
    8,216
    
    
    
    489
    
    
    
    13,009
    
    
    
    
    
    
    
    
    
    
    
    (472
    )
    
    
    21,242Transaction costs
    
    
    867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    867Depreciation and amortization
    
    
    3,025
    
    
    
    564
    
    
    
    6,743
    
    
    
    
    
    
    
    1,262
    
    
    
    
    
    
    
    11,594Interest, net
    
    
    5,624
    
    
    
    (128
    )
    
    
    20,864
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    26,362Asset impairment (recovery)
    
    
    (892
    )
    
    
    
    
    
    
    1,381
    
    
    
    
    
    
    
    122
    
    
    
    
    
    
    
    611Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (565
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (565
    )Other, net
    
    
    (105
    )
    
    
    
    
    
    
    1,286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,181Total costs and expenses
    
    
    74,391
    
    
    
    20,379
    
    
    
    211,328
    
    
    
    206
    
    
    
    31,711
    
    
    
    (1,302
    )
    
    
    336,713(Loss) income before income
taxes and minority interests
    
    
    (5,151
    )
    
    
    4,023
    
    
    
    (14,907
    )
    
    
    
    
    
    
    795
    
    
    
    
    
    
    
    (15,240
    )Benefit from (provision for)
income taxes
    
    
    2,082
    
    
    
    (1,432
    )
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    638Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (629
    )
    
    
    
    
    
    
    (629
    )Equity in earnings (loss) of
subsidiaries
    
    
    (12,162
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,162
    
    
    
    NET (LOSS) INCOME
    
    $
    (15,231
    )
    
    $
    2,591
    
    
    $
    (14,919
    )
    
    $
    
    
    
    $
    166
    
    
    $
    12,162
    
    
    $
    (15,231
    )
 64




---



##### Table of Contents



Consolidating balance sheet as of December 30, 2007 (in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    
    WRG
    
    
    Other
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    PMCICURRENT ASSETS:Cash and cash equivalents
    
    $
    19,391
    
    
    $
    428
    
    
    $
    
    
    
    $
    (787
    )
    
    $
    
    
    
    $
    19,032Restricted cash
    
    
    10,098
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,098Trade receivables, less
allowance for doubtful
accounts
    
    
    12,000
    
    
    
    5,180
    
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    17,221Inventories
    
    
    8,108
    
    
    
    4,839
    
    
    
    
    
    
    
    292
    
    
    
    
    
    
    
    13,239Prepaid expenses and other
current assets
    
    
    5,053
    
    
    
    679
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,732Total current assets
    
    
    54,650
    
    
    
    11,126
    
    
    
    
    
    
    
    (454
    )
    
    
    
    
    
    
    65,322PROPERTY AND EQUIPMENT, net
    
    
    66,956
    
    
    
    29,530
    
    
    
    
    
    
    
    2,825
    
    
    
    
    
    
    
    99,311INVESTMENTS IN
UNCONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    53GOODWILL
    
    
    30,038
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,038INTANGIBLE ASSETS, net
    
    
    153,077
    
    
    
    239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153,316INVESTMENTS IN SUBSIDIARIES
    
    
    (92,739
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,739
    
    
    
    DUE FROM SUBSIDIARIES
    
    
    89,283
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (89,283
    )
    
    
    DEFERRED INCOME TAXES
    
    
    242
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    242OTHER ASSETS
    
    
    12,777
    
    
    
    (497
    )
    
    
    
    
    
    
    2,380
    
    
    
    
    
    
    
    14,660$
    314,284
    
    
    $
    40,441
    
    
    $
    
    
    
    $
    4,761
    
    
    $
    3,456
    
    
    $
    362,942CURRENT LIABILITIES:Accounts payable
    
    $
    16,369
    
    
    $
    8,420
    
    
    $
    
    
    
    $
    770
    
    
    $
    
    
    
    $
    25,559Accrued expenses
    
    
    33,569
    
    
    
    17,221
    
    
    
    
    
    
    
    1,831
    
    
    
    
    
    
    
    52,621Franchise advertising
contributions
    
    
    5,940
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,940Current
maturities of long-term debt and capital
lease obligations
    
    
    9,134
    
    
    
    330
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,46465,012
    
    
    
    25,971
    
    
    
    
    
    
    
    2,601
    
    
    
    
    
    
    
    93,584CAPITAL LEASE OBLIGATIONS,
less current maturities
    
    
    6,147
    
    
    
    5,840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,987LONG-TERM DEBT, less
current maturities
    
    
    297,972
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298,009DEFERRED RENT
    
    
    7,827
    
    
    
    5,556
    
    
    
    
    
    
    
    84
    
    
    
    
    
    
    
    13,467OTHER LIABILITIES
    
    
    7,284
    
    
    
    8,235
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    15,520DUE TO PARENT
    
    
    
    
    
    
    92,192
    
    
    
    
    
    
    
    (2,909
    )
    
    
    (89,283
    )
    
    
    MINORITY INTERESTS IN
CONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333
    
    
    
    
    
    
    
    333STOCKHOLDERS INVESTMENT:Common Stock
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Preferred Stock
    
    
    
    
    
    
    63,277
    
    
    
    
    
    
    
    
    
    
    
    (63,277
    )
    
    
    Capital in excess of par
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    9,515
    
    
    
    (9,338
    )
    
    
    Additional paid-in capital
    
    
    137,923
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,923Treasury stock
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    Other comprehensive income
    
    
    86
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86Accumulated (deficit) earnings
    
    
    (207,968
    )
    
    
    (160,353
    )
    
    
    
    
    
    
    (4,864
    )
    
    
    165,217
    
    
    
    (207,968
    )(69,958
    )
    
    
    (97,390
    )
    
    
    
    
    
    
    4,651
    
    
    
    92,739
    
    
    
    (69,958
    )$
    314,284
    
    
    $
    40,441
    
    
    $
    
    
    
    $
    4,761
    
    
    $
    3,456
    
    
    $
    362,942
 65




---



##### Table of Contents



Consolidating balance sheet as of December 31, 2006 (in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    
    PMCM
    
    
    WRG
    
    
    Other
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    PMCICURRENT ASSETS:Cash and cash equivalents
    
    $
    3,132
    
    
    $
    201
    
    
    $
    7,158
    
    
    $
    
    
    
    $
    (1,422
    )
    
    $
    
    
    
    $
    9,069Restricted cash
    
    
    4,209
    
    
    
    6,984
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,193Trade receivables, less allowance for
doubtful accounts
    
    
    12,662
    
    
    
    43
    
    
    
    5,576
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    18,316Inventories
    
    
    6,364
    
    
    
    481
    
    
    
    3,882
    
    
    
    
    
    
    
    269
    
    
    
    
    
    
    
    10,996Prepaid expenses and other current assets
    
    
    3,781
    
    
    
    316
    
    
    
    693
    
    
    
    
    
    
    
    34
    
    
    
    
    
    
    
    4,824Total current assets
    
    
    30,148
    
    
    
    8,025
    
    
    
    17,309
    
    
    
    
    
    
    
    (1,084
    )
    
    
    
    
    
    
    54,398PROPERTY AND EQUIPMENT, net
    
    
    44,762
    
    
    
    10,885
    
    
    
    32,755
    
    
    
    
    
    
    
    2,642
    
    
    
    
    
    
    
    91,044INVESTMENTS
IN UNCONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    
    
    
    
    228
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    238GOODWILL
    
    
    30,038
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,038INTANGIBLE ASSETS, net
    
    
    45,885
    
    
    
    110,600
    
    
    
    307
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156,792INVESTMENTS IN SUBSIDIARIES
    
    
    31,105
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,105
    )
    
    
    DUE FROM PMCI
    
    
    
    
    
    
    14,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,494
    )
    
    
    DUE FROM SUBSIDIARIES
    
    
    105,884
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105,884
    )
    
    
    DEFERRED INCOME TAXES
    
    
    708
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    708OTHER ASSETS
    
    
    11,560
    
    
    
    
    
    
    
    (1,008
    )
    
    
    
    
    
    
    3,075
    
    
    
    
    
    
    
    13,627$
    300,090
    
    
    $
    144,004
    
    
    $
    49,591
    
    
    $
    
    
    
    $
    4,643
    
    
    $
    (151,483
    )
    
    $
    346,845CURRENT LIABILITIES:Accounts payable
    
    $
    10,756
    
    
    $
    2,310
    
    
    $
    8,324
    
    
    $
    
    
    
    $
    1,409
    
    
    $
    
    
    
    $
    22,799Accrued expenses
    
    
    28,455
    
    
    
    7,547
    
    
    
    20,707
    
    
    
    
    
    
    
    1,579
    
    
    
    
    
    
    
    58,288Accrued income taxes
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75Franchise advertising contributions
    
    
    5,392
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,392Current
maturities of long-term debt and
capital lease obligations
    
    
    1,166
    
    
    
    
    
    
    
    540
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,70645,844
    
    
    
    9,857
    
    
    
    29,571
    
    
    
    
    
    
    
    2,988
    
    
    
    
    
    
    
    88,260CAPITAL LEASE OBLIGATIONS, less current
maturities
    
    
    94
    
    
    
    
    
    
    
    6,155
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,249LONG-TERM DEBT, less current maturities
    
    
    286,325
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    286,379DEFERRED RENT
    
    
    5,384
    
    
    
    
    
    
    
    4,164
    
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    9,768OTHER LIABILITIES
    
    
    4,095
    
    
    
    
    
    
    
    7,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,785DUE TO PMCM / PMCR
    
    
    14,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,494
    )
    
    
    DUE TO PARENT
    
    
    
    
    
    
    
    
    
    
    108,974
    
    
    
    10
    
    
    
    (3,100
    )
    
    
    (105,884
    )
    
    
    MINORITY INTERESTS IN CONSOLIDATED
PARTNERSHIPS
    
    
    (475
    )
    
    
    
    
    
    
    423
    
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    75STOCKHOLDERS INVESTMENT:Common Stock
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    1Preferred Stock
    
    
    
    
    
    
    
    
    
    
    63,277
    
    
    
    
    
    
    
    
    
    
    
    (63,277
    )
    
    
    Capital in excess of par
    
    
    
    
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    9,515
    
    
    
    (9,338
    )
    
    
    Additional paid-in capital
    
    
    136,131
    
    
    
    121,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (121,300
    )
    
    
    136,131Treasury stock
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    Other comprehensive income
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Accumulated (deficit) earnings
    
    
    (191,816
    )
    
    
    12,846
    
    
    
    (170,403
    )
    
    
    (10
    )
    
    
    (5,107
    )
    
    
    162,674
    
    
    
    (191,816
    )(55,671
    )
    
    
    134,147
    
    
    
    (107,440
    )
    
    
    (10
    )
    
    
    4,408
    
    
    
    (31,105
    )
    
    
    (55,671
    )$
    300,090
    
    
    $
    144,004
    
    
    $
    49,591
    
    
    $
    
    
    
    $
    4,643
    
    
    $
    (151,483
    )
    
    $
    346,845
 66




---



##### Table of Contents



Consolidating
statement of cash flows for the year ended December 30, 2007 (in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    
    WRG
    
    
    Other
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    PMCICASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (16,335
    )
    
    $
    10,789
    
    
    $
    
    
    
    $
    139
    
    
    $
    (10,928
    )
    
    $
    (16,335
    )Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:Equity in the earnings of subsidiaries
    
    
    (10,928
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,928
    
    
    
    Depreciation and amortization
    
    
    17,610
    
    
    
    5,939
    
    
    
    
    
    
    
    1,273
    
    
    
    
    
    
    
    24,822Amortization
of debt discount
    
    
    324
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    324Other non-cash income and expense items
    
    
    265
    
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333(Gain) loss on disposition of assets
    
    
    (605
    )
    
    
    831
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    226Asset write-down
    
    
    427
    
    
    
    1,781
    
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    2,237Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    707
    
    
    
    
    
    
    
    707Equity in net (income) loss of unconsolidated
partnerships
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82Net changes in operating assets and liabilities
    
    
    6,373
    
    
    
    (2,815
    )
    
    
    
    
    
    
    (475
    )
    
    
    
    
    
    
    3,083Total adjustments
    
    
    13,466
    
    
    
    5,886
    
    
    
    
    
    
    
    1,534
    
    
    
    10,928
    
    
    
    31,814Net cash (used in) provided by operating activities
    
    
    (2,869
    )
    
    
    16,675
    
    
    
    
    
    
    
    1,673
    
    
    
    
    
    
    
    15,479CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (25,794
    )
    
    
    (5,095
    )
    
    
    
    
    
    
    (658
    )
    
    
    
    
    
    
    (31,547
    )Proceeds
from sale of assets
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21Net cash used in investing activities
    
    
    (25,794
    )
    
    
    (5,074
    )
    
    
    
    
    
    
    (658
    )
    
    
    
    
    
    
    (31,526
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (177
    )
    
    
    (525
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (702
    )Lessor
financing
    
    
    6,107
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,107Proceeds from long-term debt
    
    
    1,950
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,950Payments on long-term debt
    
    
    (2,600
    )
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,618
    )Proceeds from revolver
    
    
    75,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,100Payments on revolver
    
    
    (55,100
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,100
    )Intercompany financing
    
    
    17,649
    
    
    
    (17,788
    )
    
    
    
    
    
    
    139
    
    
    
    
    
    
    
    Distributions to minority partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (519
    )
    
    
    
    
    
    
    (519
    )Capital contribution
    
    
    1,792
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,792Net cash provided by (used in) financing activities
    
    
    44,721
    
    
    
    (18,331
    )
    
    
    
    
    
    
    (380
    )
    
    
    
    
    
    
    26,010Net increase (decrease) in cash and cash equivalents
    
    
    16,058
    
    
    
    (6,730
    )
    
    
    
    
    
    
    635
    
    
    
    
    
    
    
    9,963CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    3,333
    
    
    
    7,158
    
    
    
    
    
    
    
    (1,422
    )
    
    
    
    
    
    
    9,069Balance, end of year
    
    $
    19,391
    
    
    $
    428
    
    
    $
    
    
    
    $
    (787
    )
    
    $
    
    
    
    $
    19,032
 67




---



##### Table of Contents



Consolidating
statement of cash flows for the year ended December 31, 2006 (in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    
    PMCM
    
    
    WRG
    
    
    Other
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    PMCICASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (9,372
    )
    
    $
    10,255
    
    
    $
    5,498
    
    
    $
    
    
    
    $
    323
    
    
    $
    (16,076
    )
    
    $
    (9,372
    )Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:Equity in the earnings of subsidiaries
    
    
    (16,076
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,076
    
    
    
    Depreciation and amortization
    
    
    14,418
    
    
    
    3,290
    
    
    
    6,925
    
    
    
    
    
    
    
    1,008
    
    
    
    
    
    
    
    25,641Amortization
of debt discount
    
    
    321
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321Other non-cash income and expense items
    
    
    (91
    )
    
    
    
    
    
    
    6,781
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,690Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (12,642
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,642
    )(Gain) loss on disposition of assets
    
    
    635
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    665Asset write-down
    
    
    568
    
    
    
    
    
    
    
    1,457
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    2,058Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    493
    
    
    
    
    
    
    
    493Equity in net loss of unconsolidated
partnerships
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73Net changes in operating assets and liabilities
    
    
    3,355
    
    
    
    (1
    )
    
    
    (3,479
    )
    
    
    23
    
    
    
    1,408
    
    
    
    
    
    
    
    1,306Total adjustments
    
    
    3,130
    
    
    
    3,289
    
    
    
    (858
    )
    
    
    23
    
    
    
    2,945
    
    
    
    16,076
    
    
    
    24,605Net cash (used in) provided by operating activities
    
    
    (6,242
    )
    
    
    13,544
    
    
    
    4,640
    
    
    
    23
    
    
    
    3,268
    
    
    
    
    
    
    
    15,233CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (3,211
    )
    
    
    (7,568
    )
    
    
    (7,542
    )
    
    
    
    
    
    
    (1,241
    )
    
    
    
    
    
    
    (19,562
    )Proceeds
from sale of assets
    
    
    1,536
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,549Intercompany activities
    
    
    78,510
    
    
    
    (78,510
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    76,835
    
    
    
    (86,078
    )
    
    
    (7,529
    )
    
    
    
    
    
    
    (1,241
    )
    
    
    
    
    
    
    (18,013
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease
obligations
    
    
    (277
    )
    
    
    
    
    
    
    (618
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (895
    )Proceeds from long-term debt
    
    
    97,500
    
    
    
    
    
    
    
    1,541
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,041Payments on long-term debt
    
    
    
    
    
    
    
    
    
    
    (99,567
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (99,567
    )Proceeds from revolver
    
    
    12,900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,900Payments on revolver
    
    
    (10,900
    )
    
    
    
    
    
    
    (2,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,900
    )Intercompany financing
    
    
    (106,932
    )
    
    
    
    
    
    
    108,082
    
    
    
    
    
    
    
    (1,150
    )
    
    
    
    
    
    
    Debt issuance costs
    
    
    (2,720
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,720
    )Distributions to minority partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (543
    )
    
    
    
    
    
    
    (543
    )Capital contribution
    
    
    (58,623
    )
    
    
    71,168
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,545Net cash (used in) provided by financing activities
    
    
    (69,052
    )
    
    
    71,168
    
    
    
    7,438
    
    
    
    
    
    
    
    (1,693
    )
    
    
    
    
    
    
    7,861Net increase (decrease) in cash and cash equivalents
    
    
    1,541
    
    
    
    (1,366
    )
    
    
    4,549
    
    
    
    23
    
    
    
    334
    
    
    
    
    
    
    
    5,081CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    1,591
    
    
    
    1,567
    
    
    
    2,609
    
    
    
    (23
    )
    
    
    (1,756
    )
    
    
    
    
    
    
    3,988Balance, end of year
    
    $
    3,132
    
    
    $
    201
    
    
    $
    7,158
    
    
    $
    
    
    
    $
    (1,422
    )
    
    $
    
    
    
    $
    9,069
 68




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##### Table of Contents



Consolidating
statement of cash flows for the year ended December 25, 2005 (in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    
    PMCM
    
    
    WRG
    
    
    Other
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    PMCICASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (15,231
    )
    
    $
    2,591
    
    
    $
    (14,919
    )
    
    $
    
    
    
    $
    166
    
    
    $
    12,162
    
    
    $
    (15,231
    )Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities:Equity in the earnings of subsidiaries
    
    
    12,162
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,162
    )
    
    
    Depreciation and amortization
    
    
    3,025
    
    
    
    564
    
    
    
    6,743
    
    
    
    
    
    
    
    1,262
    
    
    
    
    
    
    
    11,594Amortization
of debt discount
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74Other non-cash income and expense items
    
    
    75
    
    
    
    
    
    
    
    12,362
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,437Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (565
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (565
    )(Gain) loss on disposition of assets
    
    
    (904
    )
    
    
    
    
    
    
    201
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (704
    )Asset write-down
    
    
    12
    
    
    
    
    
    
    
    1,179
    
    
    
    
    
    
    
    124
    
    
    
    
    
    
    
    1,315Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    629
    
    
    
    
    
    
    
    629Equity in income of unconsolidated
partnerships
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )Net changes in operating assets and liabilities
    
    
    3,993
    
    
    
    608
    
    
    
    7,625
    
    
    
    13
    
    
    
    (3,409
    )
    
    
    
    
    
    
    8,830Total adjustments
    
    
    18,437
    
    
    
    1,172
    
    
    
    27,491
    
    
    
    13
    
    
    
    (1,395
    )
    
    
    (12,162
    )
    
    
    33,556Net cash provided by (used in) operating activities
    
    
    3,206
    
    
    
    3,763
    
    
    
    12,572
    
    
    
    13
    
    
    
    (1,229
    )
    
    
    
    
    
    
    18,325CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (3,002
    )
    
    
    (248
    )
    
    
    (9,286
    )
    
    
    
    
    
    
    2,457
    
    
    
    
    
    
    
    (10,079
    )Acquisition
of business, net of cash acquired of $4,270
    
    
    (220,753
    )
    
    
    169
    
    
    
    
    
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    (220,621
    )Proceeds
from sale of assets
    
    
    1,353
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,359Intercompany activities
    
    
    2,116
    
    
    
    (2,117
    )
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Net cash (used in) provided by investing activities
    
    
    (220,286
    )
    
    
    (2,196
    )
    
    
    (9,280
    )
    
    
    (36
    )
    
    
    2,457
    
    
    
    
    
    
    
    (229,341
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease
obligations
    
    
    (77
    )
    
    
    
    
    
    
    (721
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (798
    )Proceeds from long-term debt
    
    
    187,429
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    187,429Payments on long-term debt
    
    
    
    
    
    
    
    
    
    
    (2,400
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,400
    )Proceeds from revolver
    
    
    2,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,600Payments on revolver
    
    
    (6,600
    )
    
    
    
    
    
    
    (1,640
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,240
    )Intercompany financing
    
    
    
    
    
    
    
    
    
    
    2,091
    
    
    
    
    
    
    
    (2,091
    )
    
    
    
    
    
    
    Debt issuance costs
    
    
    (9,288
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,288
    )Distributions to minority partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (602
    )
    
    
    
    
    
    
    (602
    )Accrued interest on notes secured by stock
    
    
    
    
    
    
    
    
    
    
    (103
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103
    )Capital contribution
    
    
    44,607
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,607Net cash provided by (used in) financing activities
    
    
    218,671
    
    
    
    
    
    
    
    (2,773
    )
    
    
    
    
    
    
    (2,693
    )
    
    
    
    
    
    
    213,205Net increase (decrease) in cash and cash equivalents
    
    
    1,591
    
    
    
    1,567
    
    
    
    519
    
    
    
    (23
    )
    
    
    (1,465
    )
    
    
    
    
    
    
    2,189CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    
    
    
    
    
    
    
    
    2,090
    
    
    
    
    
    
    
    (291
    )
    
    
    
    
    
    
    1,799Balance, end of year
    
    $
    1,591
    
    
    $
    1,567
    
    
    $
    2,609
    
    
    $
    (23
    )
    
    $
    (1,756
    )
    
    $
    
    
    
    $
    3,988
 69




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##### Table of Contents



(19) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
  (a)2007
    
    Revenues
    
    
    Gross Profit
    
    
    Net Loss1st Quarter
    
    $
    178,286
    
    
    $
    28,548
    
    
    $
    (2,749
    )2nd Quarter
    
    
    130,110
    
    
    
    21,787
    
    
    
    (2,723
    )3rd Quarter
    
    
    131,312
    
    
    
    18,540
    
    
    
    (4,345
    )4th Quarter
    
    
    148,178
    
    
    
    21,559
    
    
    
    (6,518
    )$
    587,886
    
    
    $
    90,434
    
    
    $
    (16,335
    )
 (a)
    
    
    Net2006
    
    Revenues
    
    
    Gross Profit
    
    
    Income(Loss)1st Quarter
    
    $
    169,646
    
    
    $
    27,078
    
    
    $
    (5,224
    )2nd Quarter
    
    
    136,910
    
    
    
    23,360
    
    
    
    3,7963rd Quarter
    
    
    134,237
    
    
    
    19,586
    
    
    
    (7,854
    )4th Quarter
    
    
    153,397
    
    
    
    28,908
    
    
    
    (90
    )$
    594,190
    
    
    $
    98,932
    
    
    $
    (9,372
    )
 
 (a)
    
    Gross profit represents total revenues less food cost, labor and benefits and operating
expenses. 70




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A Controls and Procedures.
    
 Item 9B Other Information.
  71




---



##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
 (a) Directors and Executive Officers of the Registrant
  Name
    
    Age
    
    Position with PMCIJoseph F. Trungale
    
    
    66
    
    
    Director, President and Chief Executive OfficerJames W. Stryker
    
    
    61
    
    
    Executive Vice President and Chief Financial OfficerCharles A. Conine
    
    
    56
    
    
    Executive Vice President, Human Resources & AdministrationPete M. Pascuzzi
    
    
    56
    
    
    Senior Vice President, Corporate Restaurant Operations
 Joseph F. Trungale
  James W. Stryker
   Charles A. Conine
  Pete M. Pascuzzi
  72




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##### Table of Contents



(b) Code of Ethics
 www.perkinsrestaurants.com
 (c) Audit Committee
  73




---



##### Table of Contents



Item 11. Executive Compensation.
 Compensation Discussion and Analysis
       Benchmarking of Base Compensation
  74




---



##### Table of Contents



Cash Bonuses under Our Non-Equity Incentive Plan
     Nonqualified Deferred Compensation Plan and Supplemental Executive Retirement Plan
   Severance and Change in Control Payments
   75




---



##### Table of Contents



Other Benefits
  Compensation Committee Report
   
 76




---



##### Table of Contents



Executive Compensation Tables
  Summary Compensation Table
 Change inPension ValueandNonqualifiedNon-Equity
    
    DeferredStock
    
    Incentive Plan
    
    Compensation
    
    All OtherSalary
    
    Awards
    
    Compensation
    
    Earnings
    
    Compensation
    
    TotalName and Principal Position
    
    Year
    
    (1)
    
    (2)
    
    (3)
    
    (4)
    
    (5)
    
    (6)Joseph F. Trungale
    
    
    2007
    
    
    $
    615,020
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    50,756
    
    
    $
    665,776President and Chief Executive Officer
    
    
    2006
    
    
    $
    566,539
    
    
    $
    
    
    
    $
    446,250
    
    
    $
    
    
    
    $
    51,536
    
    
    $
    1,064,325James W. Stryker
    
    
    2007
    
    
    $
    317,042
    
    
    $
    
    
    
    $
    
    
    
    $
    4,283
    
    
    $
    44,496
    
    
    $
    365,821Executive Vice President, Chief Financial Officer
    
    
    2006
    
    
    $
    304,111
    
    
    $
    
    
    
    $
    144,585
    
    
    $
    14,364
    
    
    $
    36,959
    
    
    $
    500,019James F. Barrasso
    
    
    2007
    
    
    $
    255,000
    
    
    $
    
    
    
    $
    
    
    
    $
    2,671
    
    
    $
    42,283
    
    
    $
    299,954Former Executive Vice President, Food Service
Development
    
    
    2006
    
    
    $
    277,276
    
    
    $
    
    
    
    $
    119,340
    
    
    $
    
    
    
    $
    35,961
    
    
    $
    432,577Charles A. Conine
    
    
    2007
    
    
    $
    236,089
    
    
    $
    
    
    
    $
    
    
    
    $
    15,195
    
    
    $
    52,205
    
    
    $
    303,489Executive Vice President, Human Resources and
Administration
    
    
    2006
    
    
    $
    224,722
    
    
    $
    
    
    
    $
    107,865
    
    
    $
    2,305
    
    
    $
    237,520
    
    
    $
    572,412Pete M. Pascuzzi
    
    
    2007
    
    
    $
    230,360
    
    
    $
    
    
    
    $
    
    
    
    $
    416
    
    
    $
    35,511
    
    
    $
    266,287Senior Vice President, Corporate Restaurant Operations
    
    
    2006
    
    
    $
    202,115
    
    
    $
    
    
    
    $
    80,325
    
    
    $
    
    
    
    $
    27,523
    
    
    $
    309,963Phillip Ratner
    
    
    2007
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    570,814
    
    
    $
    570,814Former President and Chief Executive Officer, WRG
    
    
    2006
    
    
    $
    357,156
    
    
    $
    
    
    
    $
    123,234
    
    
    $
    2,987
    
    
    $
    193,786
    
    
    $
    677,163
 
 (1)
    
    The amounts in this column include any salary contributed by the named executive officer to
our nonqualified deferred compensation and 401(k) plans. In May 2007, our compensation
committee approved annual base compensation for these executive officers as follows: Mr.
Trungale  $625,000; Mr. Stryker  $328,000; Mr. Barrasso  $260,000; Mr. Conine  $244,000;
Mr. Pascuzzi  $234,000.(2)
    
    On April 1, 2007, pursuant to strip subscription agreements, 17,673 Class A Units and 17,673
Class C Units were sold to certain of the companys executives at $100.00 per unit and $0.01 per unit, respectively. This transaction
is described more fully in Note 16 to the consolidated financial statements, Employee
Subscription Agreements and Strip Subscription Agreements and Item 12, Security Ownership of
Certain Beneficial Owners and Managements and Related Stockholder Matters.(3)
    
    The amounts in this column represent total performance-based bonuses earned for services
rendered during 2007 and 2006, respectively. No bonuses were paid to the executive officers
based on the actual financial results of the Company for fiscal 2007. Bonuses were earned
during 2006 and were based entirely on our financial performance and the executive officers
performance against his or her specified individual objectives; these bonus amounts were paid
in 2007 for 2006 bonus amounts. For Mr. Ratner the bonus shown was prorated in accordance with
the terms of his employment agreement.(4)
    
    Amounts represent Nonqualified Deferred Compensation Plan earnings.(5)
    
    See table below for detail of amounts in this column.(6)
    
    The dollar value in this column for each named executive officer represents the sum of all
compensation reflected in the preceding columns. 77




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##### Table of Contents



All Other Compensation
 NQDCLoan
    
    
    
    
    
    Medical
    
    401(k)
    
    Matching
    
    Legal
    
    SeveranceVehicle
    
    
    
    
    
    Relocation
    
    Forgiveness
    
    Life Insurance
    
    Insurance
    
    Matching
    
    Contributions
    
    Fees
    
    PaymentsYear
    
    Allowance
    
    Club Dues
    
    (1) (2)
    
    (3)
    
    Premiums
    
    Premiums
    
    Contributions
    
    (4)
    
    (5)
    
    (6)
    
    TotalJoseph F. Trungale
    
    
    2007
    
    
    $
    9,600
    
    
    $
    6,897
    
    
    $
    
    
    
    $
    
    
    
    $
    8,625
    
    
    $
    25,634
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    50,7562006
    
    
    $
    9,600
    
    
    $
    6,336
    
    
    $
    
    
    
    $
    
    
    
    $
    8,625
    
    
    $
    26,420
    
    
    $
    
    
    
    $
    
    
    
    $
    555
    
    
    $
    
    
    
    $
    51,536James W. Stryker
    
    
    2007
    
    
    $
    11,800
    
    
    $
    1,223
    
    
    $
    
    
    
    $
    
    
    
    $
    7,849
    
    
    $
    16,729
    
    
    $
    145
    
    
    $
    6,750
    
    
    $
    
    
    
    $
    
    
    
    $
    44,4962006
    
    
    $
    11,104
    
    
    $
    696
    
    
    $
    
    
    
    $
    
    
    
    $
    7,826
    
    
    $
    7,185
    
    
    $
    1,234
    
    
    $
    8,359
    
    
    $
    555
    
    
    $
    
    
    
    $
    36,959James F. Barrasso
    
    
    2007
    
    
    $
    9,600
    
    
    $
    6,350
    
    
    $
    
    
    
    $
    
    
    
    $
    5,468
    
    
    $
    14,015
    
    
    $
    100
    
    
    $
    6,750
    
    
    $
    
    
    
    $
    
    
    
    $
    42,2832006
    
    
    $
    9,600
    
    
    $
    6,074
    
    
    $
    
    
    
    $
    
    
    
    $
    5,468
    
    
    $
    14,164
    
    
    $
    100
    
    
    $
    
    
    
    $
    555
    
    
    $
    
    
    
    $
    35,961Charles A. Conine
    
    
    2007
    
    
    $
    11,800
    
    
    $
    1,223
    
    
    $
    16,736
    
    
    $
    
    
    
    $
    5,440
    
    
    $
    10,133
    
    
    $
    123
    
    
    $
    6,750
    
    
    $
    
    
    
    $
    
    
    
    $
    52,2052006
    
    
    $
    11,104
    
    
    $
    618
    
    
    $
    109,953
    
    
    $
    90,455
    
    
    $
    5,423
    
    
    $
    2,522
    
    
    $
    554
    
    
    $
    16,336
    
    
    $
    555
    
    
    $
    
    
    
    $
    237,520Pete M. Pascuzzi
    
    
    2007
    
    
    $
    9,600
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,422
    
    
    $
    16,149
    
    
    $
    
    
    
    $
    4,340
    
    
    $
    
    
    
    $
    
    
    
    $
    35,5112006
    
    
    $
    8,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,000
    
    
    $
    14,523
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    27,523Phillip Ratner
    
    
    2007
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    570,814
    
    
    $
    570,8142006
    
    
    $
    13,000
    
    
    $
    
    
    
    $
    23,160
    
    
    $
    
    
    
    $
    3,780
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    153,846
    
    
    $
    193,786
 
 (1)
    
    In connection with his relocation to Memphis, TN, the Company incurred various relocation
payments on behalf of Mr. Conine, including non-recurring closing costs on the sale of his
primary residence, temporary housing in Memphis, and the cost of transferring his household
goods and vehicle.(2)
    
    The relocation payment to Mr. Ratner equals the total of his mortgage differential
reimbursement received during his 2006 employment with the Company prior to the Combination as
discussed in the section entitled Severance and Change in Control Payments.(3)
    
    In connection with the Combination, a loan outstanding to Mr. Conine was forgiven in exchange
for the surrender of WRG securities pledged as security for the loan.(4)
    
    Amounts represent contributions made by the Company and are discussed in the Nonqualified
Deferred Compensation section. 2006 amounts include a discretionary contribution equal to
$6,542 for Mr. Stryker and $14,438 for Mr. Conine. These amounts were awarded in early 2007
based on account balances as of December 31, 2006.(5)
    
    For 2006, legal fees totaling $2,220 in the aggregate were paid on behalf of our executive
officers for advice rendered in connection with their employment agreements.(6)
    
    2007 Severance amounts include $13,000 for a vehicle allowance and $17,369 for relocation
related to Mr. Ratners mortgage
differential reimbursement as discussed in the section entitled Severance and Change in
Control Payments. These amounts are
paid in addition to Mr. Ratners salary continuation amounts. Pension Benefits
   78




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##### Table of Contents



Pension Benefits2007
 Number of Years
    
    Present Value of
    
    Payments DuringName
    
    Plan Name
    
    Credited Service
    
    Accumulated Benefit
    
    Last Fiscal YearJoseph F. Trungale
    
    SERP I
    
    
    3
    
    
    $
    62,740
    
    
    $
    0James W. Stryker
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    James F. Barrasso
    
    SERP I
    
    
    3
    
    
    $
    22,027
    
    
    $
    0Charles A. Conine
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pete M. Pascuzzi
    
    SERP I
    
    
    3
    
    
    $
    19,274
    
    
    $
    0Phillip Ratner
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Nonqualified Deferred Compensation
  Nonqualified Deferred Compensation2007
 Executive
    
    Registrant
    
    AggregateContributions in
    
    Contributions in
    
    Earnings in Last
    
    
    
    
    
    Aggregate BalanceLast Fiscal Year
    
    Last Fiscal Year
    
    Fiscal Year
    
    Aggregate
    
    at Last Fiscal YearName
    
    (1)
    
    (2)
    
    (3)
    
    Withdrawals/Distributions
    
    EndJoseph F. Trungale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    James W. Stryker
    
    $
    33,876
    
    
    $
    6,750
    
    
    $
    4,283
    
    
    
    
    
    
    $
    127,599James F. Barrasso
    
    $
    42,335
    
    
    $
    6,750
    
    
    $
    2,671
    
    
    
    
    
    
    $
    51,756Charles A. Conine
    
    $
    55,274
    
    
    $
    6,750
    
    
    $
    15,195
    
    
    
    
    
    
    $
    257,710Pete M. Pascuzzi
    
    $
    11,098
    
    
    $
    4,340
    
    
    $
    416
    
    
    
    
    
    
    $
    15,854Phillip Ratner
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    40,054
    
    
    
    
 
 (1)
    
    Amounts represent deferred salary and are reflected as such in the Salary column of the
Summary Compensation Table.(2)
    
    Amounts represent contributions made by the Company and are reflected as such in the All
Other Compensation column of the Summary Compensation Table, as well as in the NQDC Matching
Contributions column of the All Other Compensation Table.(3)
    
    Amounts are also reflected in the Change in Pension Value and Nonqualified Deferred
Compensation Earnings column of the Summary Compensation Table.    79




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##### Table of Contents



Severance and Change in Control Agreements
       80




---



##### Table of Contents



Salary
    
    BenefitsName
    
    (1)
    
    (2)Individuals with 24 months continuation:Joseph F. Trungale
    
    $
    1,250,000
    
    
    $
    47,356Phillip Ratner
    
    
    1,000,000
    
    
    
    8,218Individuals with 12 months continuation:James W. Stryker
    
    
    328,000
    
    
    
    15,410James F. Barrasso
    
    
    260,000
    
    
    
    12,624Charles A. Conine
    
    
    244,000
    
    
    
    8,550
 
 (1)
    
    Reflects 24 months of continued salary in the cases of Mr. Trungale and Mr. Ratner and 12
months of continued salary in the cases of Mr. Stryker, Mr. Barrasso and Mr. Conine. As of
December 30, 2007, Mr. Ratner, whose employment with WRG was terminated in September 2006, had
received $694,291 of the total potential salary payment shown.(2)
    
    Reflects 24 months of continued health (medical, dental and vision) and life insurance in the
cases of Mr. Trungale and Mr. Ratner and 12 months of continued health (medical, dental and
vision) and life insurance in the cases of Mr. Stryker, Mr. Conine and Mr. Barrasso. Employment Agreements
  Joseph F. Trungale
  James W. Stryker
  James F. Barrasso
   Charles A. Conine
  81




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##### Table of Contents



Employee Benefit Plans
 401(k) Plan
  Director Compensation
   Change inPension ValueandNonqualifiedNon-Equity
    
    DeferredFees Earned or
    
    
    
    
    
    Option
    
    Incentive Plan
    
    Compensation
    
    All OtherName and Principal Position
    
    Paid in Cash
    
    Stock Awards
    
    Awards
    
    Compensation
    
    Earnings
    
    Compensation
    
    TotalAllen J. Bernstein, Non-Executive
Chairman
    
    $
    200,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    200,000Zane Tankel, Director
    
    $
    20,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,000Lee Cohn, Director
    
    $
    20,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,000Dr. John J. Connolly, Director
    
    $
    35,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    35,000
 82




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##### Table of Contents



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
 (a) Security ownership of certain beneficial owners.
  
    
    Each person who is known by us to beneficially own 5% or more of P&MC Holding LLCs
outstanding equity;
    
    Each member of P&MC Holding LLCs board of directors;
    
    Each of our executive officers named in the executive compensation table; and
    
    All members of P&MC Holding LLCs board of directors and our executive officers as a
group.
  Percentage
    
    
    
    
    
    Percentage
    
    
    
    
    
    PercentageNumber
    
    of Total
    
    Number
    
    of Total
    
    Number
    
    of TotalName and Address of
    
    of Class A
    
    Class A
    
    of Class B
    
    Class B
    
    of Class C
    
    Class CBeneficial Owner
    
    Units
    
    Units
    
    Units
    
    Units
    
    Units
    
    UnitsCastle Harlan Partners IV, L.P. (1)(2)
    
    
    592,237.24
    
    
    
    52.77
    %
    
    
    592,237.24
    
    
    
    53.62
    %
    
    
    
    
    
    
    0.00
    %Castle Harlan Partners III, L.P. (1)(2)
    
    
    418,387.31
    
    
    
    37.28
    %
    
    
    418,387.31
    
    
    
    37.88
    %
    
    
    
    
    
    
    0.00
    %John K. Castle (1)(3)
    
    
    1,010,624.55
    
    
    
    90.05
    %
    
    
    1,010,624.55
    
    
    
    91.49
    %
    
    
    
    
    
    
    0.00
    %Donald N. Smith (1)
    
    
    64,993.50
    
    
    
    5.79
    %
    
    
    64,993.50
    
    
    
    5.88
    %
    
    
    
    
    
    
    0.00
    %Joseph F. Trungale (1)
    
    
    7,363.93
    
    
    
    0.66
    %
    
    
    
    
    
    
    0.00
    %
    
    
    40,616.16
    
    
    
    31.15
    %James W. Stryker (1)
    
    
    2,903.31
    
    
    
    0.26
    %
    
    
    141.83
    
    
    
    0.01
    %
    
    
    15,231.06
    
    
    
    11.68
    %Charles A. Conine (1)
    
    
    2,076.65
    
    
    
    0.19
    %
    
    
    787.97
    
    
    
    0.07
    %
    
    
    7,107.83
    
    
    
    5.45
    %Pete M. Pascuzzi (1)
    
    
    1,288.69
    
    
    
    0.11
    %
    
    
    
    
    
    
    0.00
    %
    
    
    7,107.83
    
    
    
    5.45
    %Allen
J. Bernstein (1)
    
    
    658.46
    
    
    
    0.06
    %
    
    
    658.46
    
    
    
    0.06
    %
    
    
    
    
    
    
    0.00
    %David B. Pittaway (1)
    
    
    224.19
    
    
    
    0.02
    %
    
    
    224.19
    
    
    
    0.02
    %
    
    
    
    
    
    
    0.00
    %William M. Pruellage (1)
    
    
    22.42
    
    
    
    0.00
    %
    
    
    22.42
    
    
    
    0.00
    %
    
    
    
    
    
    
    0.00
    %Total Units (including those listed above)
    
    
    1,122,262.90
    
    
    
    100.00
    %
    
    
    1,104,589.47
    
    
    
    100.00
    %
    
    
    130,398.52
    
    
    
    100.00
    %
 
 (1)
    
    The address for CHP IV, CHP III and Messrs. Castle, Pittaway and Pruellage is c/o Castle
Harlan, Inc., 150 East 58th Street, New York, New York 10155. The address for Mr. Bernstein is
c/o Endeavor Restaurant Group, P.O. Box 3758, New Hyde Park, New York 11040. The address for
Mr. Smith is 90 Hawthorne Lane, Barrington, Illinois 60010 and the address for the executive
officers named in the table is 6075 Poplar Avenue, Suite 800, Memphis, Tennessee 38119.(2)
    
    Includes units of ownership interests held by related entities and persons, all of which may
be deemed to be beneficially owned by CHP IV and CHP III, respectively. Each of CHP III and
CHP IV disclaim beneficial ownership of these units.(3)
    
    John K. Castle, a member of P&MC LLCs board of directors, is the controlling stockholder of
Castle Harlan Partners IV, G.P., Inc., the general partner of the general partner of CHP IV,
and as such may be deemed a beneficial owner of the units of P&MC Holding LLC owned by CHP IV
and its affiliates. Mr. Castle is also the controlling stockholder of Castle Harlan Partners
III, G.P., Inc., which is the general partner of the general partner of CHP III, and as such
may be deemed a beneficial owner of the units of P&MC Holding LLC owned by CHP III and its
affiliates. Mr. Castle disclaims beneficial ownership of all units in excess of both (i) his
proportionate partnership share of CHP IV and (ii) his proportionate ownership interest in CHP
III and its affiliates, respectively. (b) Securities Authorized for Issuance Under Equity Compensation Plans.
  83




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##### Table of Contents



(c) Arrangements Related to a Possible Change in Control of the Company.
  84




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions and Director Independence.
 (a) Transactions with Management and Others.
       (b) Independent Directors.
  85




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##### Table of Contents



Item 14. Principal Accounting Fees And Services.
  2007
    
    
    2006Deloitte & Touche LLPAudit fees
    
    $
    675,000
    
    
    $
    485,000Tax fees (1)
    
    
    
    
    
    
    150,500Total
    
    $
    675,000
    
    
    $
    635,500PricewaterhouseCoopers LLPAudit fees
    
    $
    
    
    
    $
    128,000Tax fees
    
    
    
    
    
    
    Total
    
    $
    
    
    
    $
    128,000Ernst and Young LLPAudit fees
    
    $
    15,000
    
    
    $
    Tax fees
    
    
    
    
    
    
    Total
    
    $
    15,000
    
    
    $
    
 
 (1)
    
    Represents 2006 fees of $47,000 related to the review of deferred compensation plans and
consultation regarding IRC Section 409A compliance, fees of $50,000 related to transfer
pricing matters and fees of $53,500 regarding various federal and state income tax matters. 86




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
 (a)
    
    1. Financial Statements filed as part of this report are listed below:Report of Independent Registered Public Accounting Firm.Consolidated Statements of Operations for the years ended December 30, 2007, December 31,
2006 and December 25, 2005.Consolidated Balance Sheets at December 30, 2007 and December 31, 2006.Consolidated Statements of Stockholders Investment for the years ended December 30, 2007,
December 31, 2006 and December 25, 2005.Consolidated Statements of Cash Flows for the years ended December 30, 2007, December 31,
2006 and December 25, 2005.Notes to Consolidated Financial Statements.2. The following Financial Statement Schedule for the years ended December 30, 2007,
December 31, 2006 and December 25, 2005 is included:No. II. Valuation and Qualifying Accounts.Schedules I, III, IV and V are not applicable and have therefore been omitted.3. Exhibits:
 Exhibit No.1.1*
    
    Stock Purchase Agreement, dated as of September 2, 2005, by and among The Restaurant Holding
Corporation, The Individuals and Entities listed on Exhibit A attached thereto and TRC Holding Corp.1.2*
    
    First Amendment to Stock Purchase Agreement, dated as of September 21, 2005, by and among The
Restaurant Corporation, TRC Holding Corp., BancBoston Ventures Inc. and Donald N. Smith2.1*
    
    Stock Purchase Agreement, dated as of May 3, 2006, by and among The Restaurant Company, TRC Holding
LLC, Wilshire Restaurant Group, Inc. and the individuals and entities listed on Exhibit A attached
thereto.3.1*
    
    Certificate of Amendment of Certificate of Incorporation of The Restaurant Company dated August 7, 2006.3.2*
    
    Certificate of Amendment of Certificate of Formation of TRC Realty LLC dated December 5, 2006.4.1*
    
    First Supplemental Indenture, dated as of April 28, 2006, by and among The Restaurant Company, the
Guarantors and The Bank of New York, as trustee.4.2*
    
    Form of 10% Senior Notes due 2013 (included in Exhibit 4.1)4.3*
    
    Registration Rights Agreement, dated as of September 21, 2005, among TRC Finance, Inc., Perkins & Marie
Callenders Inc., the Guarantors and the Initial Purchasers4.4*
    
    Form of Guarantee (included in Exhibit 4.1)10.1*
    
    Purchase Agreement, dated as of September 16, 2005 among TRC Finance, Inc. and Wachovia Capital
Markets, LLC, BNP Paribas Securities Corp., Jefferies & Company, Inc. and Piper Jaffray & Co. as
Initial Purchasers10.2*
    
    Amended & Restated Credit Agreement, dated as of September 21, 2005, amended and restated as of May 3,
2006, by and among The Restaurant Company, The Restaurant Holding Corporation, the lenders who are or
may become a party to the Agreement, Wachovia Bank, National Association, as Administrative Agent for
the Lenders, BNP Paribas, as Syndication Agent, and Wells Fargo Foothill, Inc., as Documentation Agent.
 87




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##### Table of Contents



Exhibit No.10.3*
    
    Collateral Agreement, dated as of September 21, 2005, by and among The Restaurant Holding Corporation,
Perkins & Marie Callenders Inc., and certain of its Subsidiaries as Grantors, in favor of Wachovia
Bank, National Association, as Administrative Agent10.4*
    
    Revolving Credit Note, dated as of September 21, 2005, by Perkins & Marie Callenders Inc. in favor of
BNP Paribas, in the original amount of $12,500,00010.5*
    
    Revolving Credit Note, dated as of September 21, 2005, by Perkins & Marie Callenders Inc. in favor of
Wachovia Bank, National Association, in the original amount of $12,500,00010.6*
    
    Joinder Agreement, dated as of September 21, 2005, by and among TRC Finance, Inc., Perkins & Marie
Callenders Inc., Perkins & Marie Callenders Inc. of Minnesota, Perkins Finance Corporation and TRC
Realty LLC10.18**
    
    Employment Agreement between Perkins & Marie Callenders Inc. and Joseph F. Trungale, President and
Chief Executive Officer10.19**
    
    Employment Agreement between Perkins & Marie Callenders Inc. and James W. Stryker, Executive Vice
President and Chief Financial Officer10.20**
    
    Employment Agreement between Perkins & Marie Callenders Inc. and James F. Barrasso, Executive Vice
President, Foodservice10.21**
    
    Employment Agreement between Perkins & Marie Callenders Inc. and Charles A. Conine, Executive Vice
President, Human Resources & Administration10.22***
    
    Employment Agreement between Perkins & Marie Callenders Inc. and Fred T. Grant, Jr., Executive Vice
President and Chief Financial Officer10.23****
    
    Waiver No. 2 and Amendment No. 1, dated as of March 14, 2008, to the Amended & Restated Credit
Agreement, dated as of September 21, 2005, amended and restated as of May 3, 2006, by and among The
Restaurant Company, The Restaurant Holding Corporation, the lenders who are or may become a party to
the Agreement, Wachovia Bank, National Association, as Administrative Agent for the Lenders, BNP
Paribas, as Syndication Agent, and Wells Fargo Foothill, Inc., as Documentation Agent.21.1*
    
    List of subsidiaries of Perkins & Marie Callenders Inc.31.1
    
    Chief Executive Officer Certification Pursuant to Sarbanes-Oxley Act of 2002, Section 30231.2
    
    Chief Financial Officer Certification Pursuant to Sarbanes-Oxley Act of 2002, Section 302.32.1
    
    Chief Executive Officer Certification Pursuant to Sarbanes-Oxley Act of 2002, Section 906.32.2
    
    Chief Financial Officer Certification Pursuant to Sarbanes-Oxley Act of 2002, Section 906.
 
 *
    
    Previously filed as an exhibit to the Registrants Registration Statement on Form S-4 (File
No. 333-131004), originally filed on January 12, 2006.**
    
    Previously filed as an exhibit to the Annual Report on Form 10-K (File No. 333-57925),
originally filed on June 27, 2007.***
    
    Previously filed as an exhibit to the Registrants
Current Report on Form 8-K, originally filed on March 18, 2008.****
    
    Previously filed as an exhibit to the Registrants
Current Report on Form 8-K, originally filed on March 17, 2008. Trademark Notice.
  88




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##### Table of Contents



PERKINS & MARIE CALLENDERS INC.By:
    /s/ Joseph F. TrungaleChief Executive Officer  Signature
    
    Title/s/ Joseph F. Trungale

Joseph F. Trungale
    
    President and Chief Executive Officer (Principal
Executive Officer)/s/ James W. Stryker

James W. Stryker
    
    Executive Vice President and Chief Financial Officer (Principal
Financial and Accounting Officer)
  89




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##### Table of Contents



Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EAdditionsBalance at
    
    
    (b)
    
    
    Charged
    
    
    Charged
    
    
    Deductions
    
    
    BalanceBeginning of
    
    
    Business
    
    
    to Costs &
    
    
    to Other
    
    
    from
    
    
    at CloseDescription
    
    Period
    
    
    Combination
    
    
    Expenses
    
    
    Accounts
    
    
    Reserves
    
    
    of PeriodFISCAL YEAR ENDED DECEMBER 30, 2007Allowance for Doubtful Accounts
    
    $
    1,624
    
    
    $
    0
    
    
    $
    77
    
    
    $
    0
    
    
    $
    (159
    )(a)
    
    $
    1,542FISCAL YEAR ENDED DECEMBER 31, 2006Allowance for Doubtful Accounts
    
    $
    1,683
    
    
    $
    0
    
    
    $
    433
    
    
    $
    0
    
    
    $
    (492
    )(a)
    
    $
    1,624Reserve for Disposition of Assets
    
    $
    156
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    (156
    )
    
    $
    0FISCAL YEAR ENDED DECEMBER 25, 2005Allowance for Doubtful Accounts
    
    $
    75
    
    
    $
    1,819
    
    
    $
    26
    
    
    $
    0
    
    
    $
    (237
    )(a)
    
    $
    1,683Reserve for Disposition of Assets
    
    $
    0
    
    
    $
    156
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    156
 
 (a)
    
    Represents uncollectible accounts written off, net of recoveries, and net costs associated
with sublease receivables for which a reserve was established.(b)
    
    See Note 4, Combination of Companies under Common Control. 90