##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 25, 2005
 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
 THE RESTAURANT COMPANY
  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)
 
  Title of each class
    
    Name of each exchangeon which registered
 None
 None
 o þ
 o þ
 o þ
 þ
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer þ
 o þ
 Not Applicable
  Class: Common Stock, $.01 par value per share
    
    Outstanding as of December 25, 2005: 10,820 shares
 Form S-4 filed on January 12, 2006




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TABLE OF CONTENTS  PART IItem 1.BusinessItem 1a.Risk Factors.Item 1b.Unresolved Staff CommentsItem 2.PropertiesItem 3.Legal ProceedingsItem 4.Submission of Matters to Vote of ShareholdersPART IIItem 5. Market for Registrants Common Equity and Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6.Selected Financial DataiTEM 7.Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A Quantitative and Qualitative Disclosures About Market RiskItem 8 Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors and Executive Officers of the RegistrantItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountant Fees And ServicesPART IVItem 15. Exhibits and Financial Statement SchedulesSIGNATURESEx-31.1  Section 302 Certification of the CEOEx-31.2  Section 302 Certification of the CFO    Table of Contents  
 PART I
 
 Item 1 . Business .
 General .
 www.perkinsrestaurants.com
 Operations . .
   2




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Design Development .
 System Development .
 Research and Development .
 Significant Franchisees .
 Franchise Guarantees . Consolidation of
Variable Interest Entities
 Service Fee Agreements .
 3




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Source of Materials .
 Patents, Trademarks and Other Intellectual Property .
 Competition .
 Employees .
 Regulation .
   Segment Information .
 4




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##### Table of Contents



Item 1a. Risk Factors.
  
 Item 1b. Unresolved Staff Comments.
  
 Item 2 . Properties .
  Number of Restaurants
 Company-Operated
    
    Franchised
    
    TotalArizona
    
    
    
    
    
    
    1
    
    
    
    1Arkansas
    
    
    
    
    
    
    4
    
    
    
    4Colorado
    
    
    8
    
    
    
    4
    
    
    
    12Delaware
    
    
    
    
    
    
    1
    
    
    
    1Florida
    
    
    36
    
    
    
    22
    
    
    
    58Georgia
    
    
    
    
    
    
    1
    
    
    
    1Idaho
    
    
    
    
    
    
    8
    
    
    
    8Illinois
    
    
    7
    
    
    
    
    
    
    
    7Indiana
    
    
    
    
    
    
    5
    
    
    
    5Iowa
    
    
    16
    
    
    
    3
    
    
    
    19Kansas
    
    
    2
    
    
    
    4
    
    
    
    6Kentucky
    
    
    
    
    
    
    4
    
    
    
    4Maryland
    
    
    
    
    
    
    3
    
    
    
    3Michigan
    
    
    7
    
    
    
    2
    
    
    
    9Minnesota
    
    
    37
    
    
    
    35
    
    
    
    72Missouri
    
    
    7
    
    
    
    1
    
    
    
    8Montana
    
    
    
    
    
    
    9
    
    
    
    9Nebraska
    
    
    
    
    
    
    10
    
    
    
    10New Jersey
    
    
    
    
    
    
    14
    
    
    
    14New York
    
    
    
    
    
    
    14
    
    
    
    14North Carolina
    
    
    
    
    
    
    2
    
    
    
    2North Dakota
    
    
    3
    
    
    
    5
    
    
    
    8Ohio
    
    
    
    
    
    
    44
    
    
    
    44Oklahoma
    
    
    2
    
    
    
    
    
    
    
    2Pennsylvania
    
    
    7
    
    
    
    50
    
    
    
    57South Carolina
    
    
    
    
    
    
    4
    
    
    
    4South Dakota
    
    
    
    
    
    
    10
    
    
    
    10Tennessee
    
    
    4
    
    
    
    11
    
    
    
    15Virginia
    
    
    
    
    
    
    4
    
    
    
    4Washington
    
    
    
    
    
    
    6
    
    
    
    6West Virginia
    
    
    
    
    
    
    2
    
    
    
    2Wisconsin
    
    
    15
    
    
    
    28
    
    
    
    43Wyoming
    
    
    
    
    
    
    4
    
    
    
    4Canada
    
    
    
    
    
    
    16
    
    
    
    16Total
    
    
    151
    
    
    
    331
    
    
    
    482
 5




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##### Table of Contents



Number of Properties (1)
 Number of Properties(1)Use
    
    Owned
    
    
    Leased
    
    
    TotalOffices and Manufacturing Facilities(2)
    
    
    1
    
    
    
    10
    
    
    
    11Perkins Restaurant and Bakery(3)
    
    
    
    
    
    
    151
    
    
    
    151
 
 (1)
    
    In addition, we lease nine properties, all of which are subleased to others.
We also own three properties, two of which are leased to others and one that is vacant.(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 own a 25,149 square-foot
manufacturing facility in Cincinnati, Ohio, and lease two other properties in Cincinnati,
Ohio, consisting of 36,000 square feet and 120,000 square feet, for use as manufacturing
facilities.(3)
    
    The average term of the remaining leases is approximately thirteen years,
excluding renewal options. The longest lease term will mature in approximately 21 years and
the shortest lease term will mature in less than 1 year, assuming the exercise of all
renewal options.  
 Item 3 . Legal Proceedings .
  
 Item 4 . Submission of Matters to Vote of Shareholders .
  [Intentionally Left Blank ]
 6




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity and Related Stockholder
Matters and Issuer Purchases of Equity Securities.Market information.No established public market exists for our equity securities.Holders.As of December 25, 2005, there was 1 Stockholder of record.Dividends.A distribution of $180,000 was paid during 2005. A distribution of $1,250,000 was declared and
paid during 2004. No dividends or distributions were declared or paid during 2003. TRCs credit
agreements and indentures governing its debt securities restrict our ability to pay dividends or
distributions to our equity holders.Purchases of Equity Securities.Not applicable.
 [Intentionally Left Blank]
 7




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Item 6 . Selected Financial Data .
 
  Successor
    
    
    PredecessorSeptember 22,
    
    
    December 26, 2004 -2005 - December
    
    
    September 21,25, 2005
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Income Data:Revenues
    
    $
    92,546
    
    
    $
    259,789
    
    
    $
    341,341
    
    
    $
    332,642
    
    
    $
    337,456
    
    
    $
    330,504Income (loss) from continuing operations
    
    $
    (478
    )
    
    $
    (4,140
    )
    
    $
    5,145
    
    
    $
    2,096
    
    
    $
    600
    
    
    $
    (404
    )Loss from discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (96
    )
    
    $
    (1,195
    )
    
    $
    (378
    )Balance Sheet Data:Total assets
    
    $
    308,418
    
    
    
    
    
    
    $
    237,785
    
    
    $
    232,060
    
    
    $
    198,334
    
    
    $
    256,605Long-term debt and capital lease
obligations (a)
    
    $
    187,763
    
    
    
    
    
    
    $
    147,975
    
    
    $
    148,118
    
    
    $
    151,349
    
    
    $
    174,668Distributions
    
    $
    
    
    
    $
    180
    
    
    $
    1,250
    
    
    $
    
    
    
    $
    
    
    
    $
    Statistical Data:Full service Perkins Restaurants in operation at end of year:Company-operated (b)
    
    
    151
    
    
    
    
    
    
    
    153
    
    
    
    156
    
    
    
    155
    
    
    
    153Franchised (b)
    
    
    331
    
    
    
    
    
    
    
    333
    
    
    
    337
    
    
    
    343
    
    
    
    344Total
    
    
    482
    
    
    
    
    
    
    
    486
    
    
    
    493
    
    
    
    498
    
    
    
    497Average annual sales per company-operated restaurant
    
    $
    1,866
    
    
    
    
    
    
    $
    1,824
    
    
    $
    1,795
    
    
    $
    1,851
    
    
    $
    1,910Average annual royalties per franchised restaurant
    
    $
    64.0
    
    
    
    
    
    
    $
    63.3
    
    
    $
    61.4
    
    
    $
    61.2
    
    
    $
    62.1
 
 (a)
    
    Net of current maturities of $277, $331, $466, $9,489 and $1,030.(b)
    
    Excludes two Company-operated Sage Hen Cafes (closed in 2002) and one franchised Perkins
Express. 8




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Item 7 . Managements Discussion and Analysis of Financial Condition and Results of
Operations .
 GENERAL
  OVERVIEW
 Our Company:
   The Acquisition:
  9




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Sale Leaseback Transaction and Bond Redemption:
   Key Factors Affecting Our Results:
   10




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CRITICAL ACCOUNTING POLICIES
  Revenue Recognition:
  Concentration of Credit Risk:
  Insurance Reserves:
    11




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Long-Lived Assets:
        12




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Deferred Income Taxes:
  ACQUIRED RESTAURANT OPERATIONS
  SYSTEM DEVELOPMENT
  MANAGEMENTS OUTLOOK
  RESULTS OF OPERATIONS
 Overview
 13




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##### Table of Contents



Successor
    
    PredecessorSeptember
    
    December22, 2005 -
    
    27, 2004 -
    
    Year Ended
    
    Year EndedDecember
    
    September
    
    December
    
    December25, 2005
    
    21, 2005
    
    26, 2004
    
    28, 2003Revenues:Food sales
    
    
    94.1
    %
    
    
    93.7
    %
    
    
    93.7
    %
    
    
    93.5
    %Franchise revenues and other
    
    
    5.9
    
    
    
    6.3
    
    
    
    6.3
    
    
    
    6.5Total revenues
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Costs and expenses:Cost of sales (excluding depreciation shown below):Food cost
    
    
    29.5
    
    
    
    26.9
    
    
    
    27.4
    
    
    
    26.9Labor and benefits
    
    
    31.2
    
    
    
    31.7
    
    
    
    32.3
    
    
    
    33.1Operating expenses
    
    
    21.9
    
    
    
    20.6
    
    
    
    18.9
    
    
    
    19.3General and administrative
    
    
    8.9
    
    
    
    9.1
    
    
    
    9.2
    
    
    
    8.7Transaction costs
    
    
    0.9
    
    
    
    1.8
    
    
    
    
    
    
    
    Stock compensation
    
    
    
    
    
    
    3.4
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    3.9
    
    
    
    4.5
    
    
    
    5.5
    
    
    
    6.1Provision for (benefit from) disposition of assets, net
    
    
    (1.0
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    0.1Lease termination
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Asset write-down
    
    
    
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.1Interest, net
    
    
    5.9
    
    
    
    5.2
    
    
    
    4.7
    
    
    
    5.0Other, net
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    Total costs and expenses
    
    
    101.2
    
    
    
    103.1
    
    
    
    98.1
    
    
    
    99.5Income from continuing operations before income taxes
    
    
    (1.2
    )
    
    
    (3.1
    )
    
    
    1.9
    
    
    
    0.5Provision for income taxes
    
    
    0.7
    
    
    
    1.5
    
    
    
    (0.4
    )
    
    
    0.1Income from continuing operations
    
    
    (0.5)
    %
    
    
    (1.6)
    %
    
    
    1.5
    %
    
    
    0.6
    %
  14




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Successor Period From September 22, 2005 Through December 25, 2005 And The Predecessor Period From
December 27, 2004 Through September 21, 2005 Compared To The Year Ended December 26, 2004
 Revenues
    Costs and Expenses
 Food
cost
  Labor
and benefits
  15




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##### Table of Contents



Operating
expenses
  The following expenses are impacted by the Acquisition and the Sale Leaseback Transaction and,
therefore, may not be comparable to prior year.
 General
and administrative
  Transaction
costs and stock compensation
  Depreciation
and amortization
  Interest,
net
  16




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Provision
for/Benefit from disposition of assets and asset write down
     Other,
net
  Provision
for income taxes
  Year Ended December 26, 2004 Compared to Year Ended December 28, 2003
 Revenues
   .
 17




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Costs and Expenses
 Food
cost
   Labor
and benefits
    Operating
expenses
     General
and administrative
  18




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Depreciation
and amortization
  Provision
for/Benefit from disposition of assets
  Asset
write-down
  Interest,
net
  Provision
for income taxes
  CAPITAL RESOURCES AND LIQUIDITY
   19




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Working Capital and Cash Flows
  Operating
activities
  Investing
activities
  Financing
activities
   Successor
    
    PredecessorSeptember 22,
    
    December 27,2005 -
    
    2004 -
    
    Year Ended
    
    Year EndedDecember 25,
    
    September 21,
    
    December 26,
    
    December 28,2005
    
    2005
    
    2004
    
    2003Cash flows provided by
(used in) operating activities
    
    $
    7,805
    
    
    $
    (9,541
    )
    
    $
    23,127
    
    
    $
    20,361Cash flows provided by
(used for) investing activities
    
    
    (226,788
    )
    
    
    130,957
    
    
    
    (8,384
    )
    
    
    (9,711
    )Cash flows provided by
(used for) financing activities
    
    
    218,671
    
    
    
    (134,618
    )
    
    
    (1,717
    )
    
    
    (11,501
    )
 20




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Successor
    
    
    PredecessorSeptember 22,
    
    
    December 27,2005 -
    
    
    2004 -
    
    
    Year Ended
    
    
    Year EndedDecember 25,
    
    
    September 21,
    
    
    December 26,
    
    
    December 28,2005
    
    
    2005
    
    
    2004
    
    
    2003New restaurants
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    32Capital Improvements
    
    
    2,584
    
    
    
    3,247
    
    
    
    3,944
    
    
    
    5,053Remodeling and reimaging
    
    
    352
    
    
    
    1,041
    
    
    
    920
    
    
    
    1,378Manufacturing
    
    
    194
    
    
    
    655
    
    
    
    3,549
    
    
    
    1,107Other
    
    
    120
    
    
    
    1,328
    
    
    
    3,461
    
    
    
    2,170Total Capital Expenditures
    
    $
    3,250
    
    
    $
    6,271
    
    
    $
    11,874
    
    
    $
    9,740
  CASH CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
 Cash Contractual Obligations:
  Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    TotalContractual ObligationsNew Senior Notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    190,000
    
    
    
    190,000Credit Facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital lease obligations
    
    
    312
    
    
    
    166
    
    
    
    112
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    590Operating leases
    
    
    20,877
    
    
    
    20,570
    
    
    
    20,356
    
    
    
    19,321
    
    
    
    19,443
    
    
    
    239,268
    
    
    
    339,835Interest on indebtedness (1)
    
    
    19,000
    
    
    
    19,000
    
    
    
    19,000
    
    
    
    19,000
    
    
    
    19,000
    
    
    
    52,250
    
    
    
    147,250Purchase commitments
    
    
    43,252
    
    
    
    11,148
    
    
    
    2,431
    
    
    
    1,255
    
    
    
    133
    
    
    
    
    
    
    
    58,219Management fee (2)
    
    
    1,777
    
    
    
    1,777
    
    
    
    1,777
    
    
    
    1,777
    
    
    
    1,777
    
    
    
    2,270
    
    
    
    11,155Total contractual obligations
    
    $
    85,218
    
    
    $
    52,661
    
    
    $
    43,676
    
    
    $
    41,353
    
    
    $
    40,353
    
    
    $
    483,788
    
    
    $
    747,049
 
 (1)
    
    Represents projected interest expense using the interest rate of 10.0% on the $190.0 million
of Senior Notes and assumes no borrowings are drawn under our senior secured credit facility. Excludes fees
or any letters of credit that may be issued under our senior secured credit facility.(2)
    
    For additional information on the management fee, see Certain Relationships and Related
Transactions in Item 13 of this Form 10-K. 21




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Off-Balance Sheet Arrangements:
 Consolidation of Variable Interest Entities
  NEW ACCOUNTING PRONOUNCEMENTS
 Accounting Changes and Error Corrections
 22




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Inventory Costs
 Share Based Payments (revised 2004)
 IMPACT OF INFLATION
  IMPACT OF GOVERNMENTAL REGULATION
  ACCOUNTING REPORTING PERIOD
  23




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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 development and expansion plans; and
    
    statements covering our business strategy.
  24




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Item 7A . Quantitative and Qualitative Disclosures About Market Risk .
     25




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Item 8 . Financial Statements and Supplementary Data .
 RESPONSIBILITY FOR FINANCIAL STATEMENTS
    26




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Report of Independent Registered Public Accounting Firm
   
 
 27




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Report of Independent Registered Public Accounting Firm
    
 
 28




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Successor
    
    
    
    
    
    
    PredecessorSeptember 22, 2005 -
    
    
    December 27, 2004 -
    
    
    Year Ended December
    
    
    Year Ended DecemberDecember 25, 2005
    
    
    September 21, 2005
    
    
    26, 2004
    
    
    28, 2003REVENUES:Food sales
    
    $
    87,128
    
    
    $
    243,446
    
    
    $
    319,737
    
    
    $
    311,002Franchise and other revenue
    
    
    5,418
    
    
    
    16,343
    
    
    
    21,604
    
    
    
    21,640Total Revenues
    
    
    92,546
    
    
    
    259,789
    
    
    
    341,341
    
    
    
    332,642COSTS AND EXPENSES:Cost of sales (excluding depreciation shown below):Food cost
    
    
    27,346
    
    
    
    69,976
    
    
    
    93,439
    
    
    
    89,490Labor and benefits
    
    
    28,902
    
    
    
    82,352
    
    
    
    110,312
    
    
    
    110,115Operating expenses
    
    
    20,238
    
    
    
    53,438
    
    
    
    64,397
    
    
    
    64,283General and administrative
    
    
    8,233
    
    
    
    23,711
    
    
    
    31,395
    
    
    
    29,077Transaction costs
    
    
    867
    
    
    
    4,632
    
    
    
    
    
    
    
    Stock compensation
    
    
    
    
    
    
    8,925
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    3,589
    
    
    
    11,816
    
    
    
    18,866
    
    
    
    20,184Interest, net
    
    
    5,496
    
    
    
    13,380
    
    
    
    16,121
    
    
    
    16,586(Benefit from) provision for disposition of assets, net
    
    
    (904
    )
    
    
    (518
    )
    
    
    (109
    )
    
    
    336Lease Termination
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    761Asset write-down
    
    
    12
    
    
    
    248
    
    
    
    740
    
    
    
    455Other, net
    
    
    (105
    )
    
    
    (214
    )
    
    
    (469
    )
    
    
    (494
    )Total Costs and Expenses
    
    
    93,674
    
    
    
    267,746
    
    
    
    334,692
    
    
    
    330,793INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES
    
    
    (1,128
    )
    
    
    (7,957
    )
    
    
    6,649
    
    
    
    1,849BENEFIT FROM (PROVISION FOR) INCOME TAXES
    
    
    650
    
    
    
    3,817
    
    
    
    (1,504
    )
    
    
    247(LOSS) INCOME FROM CONTINUING OPERATIONS
    
    
    (478
    )
    
    
    (4,140
    )
    
    
    5,145
    
    
    
    2,096DISCONTINUED OPERATIONS:Loss from discontinued operations of Sage Hen
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (154
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58LOSS FROM DISCONTINUED OPERATIONS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (96
    )NET (LOSS) INCOME
    
    $
    (478
    )
    
    $
    (4,140
    )
    
    $
    5,145
    
    
    $
    2,000
  29




---



##### Table of Contents



Successor
    
    
    PredecessorDecember 25,
    
    
    December 26,2005
    
    
    2004ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    4,474
    
    
    $
    17,988Restricted cash
    
    
    8,225
    
    
    
    5,853Trade receivables, less allowance for doubtful accounts of $1,584 and $1,279
    
    
    10,554
    
    
    
    10,268Inventories, at the lower of first-in, first-out cost or market
    
    
    6,971
    
    
    
    7,166Escrow deposits
    
    
    18,162
    
    
    
    Prepaid expenses and other current assets
    
    
    3,188
    
    
    
    1,228Deferred income taxes
    
    
    2,845
    
    
    
    2,579Total current assets
    
    
    54,419
    
    
    
    45,082PROPERTY AND
EQUIPMENT, at cost, net of accumulated depreciation and amortization
    
    
    42,433
    
    
    
    113,011GOODWILL
    
    
    154,049
    
    
    
    57,961INTANGIBLE ASSETS, net of accumulated amortization of $476 and $5,914
    
    
    47,779
    
    
    
    6,609DEFERRED INCOME TAXES
    
    
    
    
    
    
    7,880OTHER ASSETS
    
    
    9,738
    
    
    
    7,242$
    308,418
    
    
    $
    237,785LIABILITIES AND STOCKHOLDERS INVESTMENTCURRENT LIABILITIES:Current maturities of capital lease obligations
    
    
    277
    
    
    
    331Accounts payable
    
    
    9,474
    
    
    
    9,980Franchisee advertising contributions
    
    
    4,752
    
    
    
    3,851Accrued expenses
    
    
    39,603
    
    
    
    23,435Total current liabilities
    
    
    54,106
    
    
    
    37,597CAPITAL LEASE OBLIGATIONS, less current maturities
    
    
    260
    
    
    
    537LONG-TERM DEBT
    
    
    187,503
    
    
    
    147,438DEFERRED TAX LIABILITY
    
    
    12,573
    
    
    
    OTHER LIABILITIES
    
    
    3,331
    
    
    
    8,927DUE TO PARENT
    
    
    
    
    
    
    47,715STOCKHOLDERS INVESTMENT:Common stock, $.01 par value, 100,000 shares authorized,
10,820 issued and outstanding
    
    
    1
    
    
    
    1Accumulated Other Comprehensive Income
    
    
    14
    
    
    
    75Retained Earnings (deficit)
    
    
    50,630
    
    
    
    (4,505
    )50,645
    
    
    
    (4,429
    )308,418
    
    
    
    237,785
  30




---



##### Table of Contents



AccumulatedOther
    
    
    RetainedCommon
    
    
    Comprehensive
    
    
    EarningsStock
    
    
    Income
    
    
    (Deficit)
    
    
    TotalPredecessor:Balance at December 29, 2002
    
    $
    1
    
    
    $
    
    
    
    $
    (10,400
    )
    
    $
    (10,399
    )Net income
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    2,000Foreign currency translation adjustment
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    42Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,042Balance at December 28, 2003
    
    
    1
    
    
    
    42
    
    
    
    (8,400
    )
    
    
    (8,357
    )Distribution
    
    
    
    
    
    
    
    
    
    
    (1,250
    )
    
    
    (1,250
    )Net income
    
    
    
    
    
    
    
    
    
    
    5,145
    
    
    
    5,145Foreign currency translation adjustment
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    33Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,178Balance at December 26, 2004
    
    
    1
    
    
    
    75
    
    
    
    (4,505
    )
    
    
    (4,429
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (4,140
    )
    
    
    (4,140
    )Foreign currency translation adjustment
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    16Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,124
    )Balance at September 21, 2005
    
    
    1
    
    
    
    91
    
    
    
    (8,645
    )
    
    
    (8,553
    )Successor:Balance at September 22, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional Paid-in capital
    
    
    1
    
    
    
    
    
    
    
    51,108
    
    
    
    51,109Net loss
    
    
    
    
    
    
    
    
    
    
    (478
    )
    
    
    (478
    )Foreign currency translation adjustment
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (464
    )Balance at December 25, 2005
    
    
    1
    
    
    
    14
    
    
    
    50,630
    
    
    
    50,645
  31




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##### Table of Contents



Successor
    
    
    PredecessorSeptember 22,
    
    
    December 27,2005 -
    
    
    2004 -
    
    
    Year Ended
    
    
    Year Ended
    
    ,December 25,
    
    
    September 21,
    
    
    December 26,
    
    
    December 282005
    
    
    2005
    
    
    2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (478
    )
    
    $
    (4,140
    )
    
    $
    5,145
    
    
    $
    2,000Adjustments to reconcile net income
to net cash provided by operating activities :Depreciation and amortization
    
    
    3,589
    
    
    
    11,816
    
    
    
    18,866
    
    
    
    20,184Accretion of Senior Discount Notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7Amortization of Discount
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    Payments on notes receivable of franchise fees
    
    
    505
    
    
    
    293
    
    
    
    268
    
    
    
    302(Benefit from) provision for disposition of assets
    
    
    (904
    )
    
    
    (518
    )
    
    
    (109
    )
    
    
    336Asset write-down
    
    
    12
    
    
    
    248
    
    
    
    740
    
    
    
    455Other non-cash income and expense items, net
    
    
    75
    
    
    
    2,417
    
    
    
    752
    
    
    
    594Net changes in other operating assets and liabilities
    
    
    4,932
    
    
    
    (19,657
    )
    
    
    (2,535
    )
    
    
    (3,517
    )Total adjustments
    
    
    8,283
    
    
    
    (5,401
    )
    
    
    17,982
    
    
    
    18,361Net cash
provided by (used in) operating activities
    
    
    7,805
    
    
    
    (9,541
    )
    
    
    23,127
    
    
    
    20,361CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (3,250
    )
    
    
    (6,271
    )
    
    
    (11,874
    )
    
    
    (9,740
    )Acquisition of predecessors business
    
    
    (224,891
    )
    
    
    
    
    
    
    
    
    
    
    Proceeds from sale of property and equipment
    
    
    1,353
    
    
    
    137,228
    
    
    
    3,490
    
    
    
    29Net cash
(used in) provided by investing activities
    
    
    (226,788
    )
    
    
    130,957
    
    
    
    (8,384
    )
    
    
    (9,711
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (77
    )
    
    
    (254
    )
    
    
    (467
    )
    
    
    (648
    )Payments on long-term debt
    
    
    (6,600
    )
    
    
    (148,009
    )
    
    
    
    
    
    
    (14,603
    )Proceeds from long-term debt
    
    
    190,029
    
    
    
    4,000
    
    
    
    
    
    
    
    3,750Debt issuance costs
    
    
    (9,288
    )
    
    
    
    
    
    
    
    
    
    
    Proceeds for stock option redemption
    
    
    
    
    
    
    9,645
    
    
    
    
    
    
    
    Capital contribution from parent
    
    
    44,607
    
    
    
    
    
    
    
    
    
    
    
    Distribution to RHC
    
    
    
    
    
    
    
    
    
    
    (1,250
    )
    
    
    Net cash
provided by (used in) financing activities
    
    
    218,671
    
    
    
    (134,618
    )
    
    
    (1,717
    )
    
    
    (11,501
    )Net increase (decrease) in cash and cash equivalents
    
    
    (312
    )
    
    
    (13,202
    )
    
    
    13,026
    
    
    
    (851
    )CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    4,786
    
    
    
    17,988
    
    
    
    4,962
    
    
    
    5,813Balance, end of year
    
    $
    4,474
    
    
    $
    4,786
    
    
    $
    17,988
    
    
    $
    4,962
  32




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##### Table of Contents



THE RESTAURANT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 25, 2005
 (1) ORGANIZATION:
            33




---



##### Table of Contents



(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES :
              34




---



##### Table of Contents



Balance as of December 26, 2004
    
    $
    57,961Goodwill acquired
    
    
    154,049Impairment losses
    
    
    Goodwill eliminated at acquisition
    
    
    57,961Balance as of December 25, 2005
    
    $
    154,049
         35




---



##### Table of Contents



Accounting for Leases, as amended
     Accounting Changes and Error Corrections
 36




---



##### Table of Contents



Inventory Costs
 Share Based Payments (revised 2004)
 (3) 1999 RHC ACQUISITION :
    37




---



##### Table of Contents



PredecessorDecember 27, 2004 -
    
    
    December 26,
    
    
    December 28,September 21, 2005
    
    
    2004
    
    
    2003Statement of Operations Data (in thousands):Depreciation and amortization
    
    $
    462
    
    
    $
    2,146
    
    
    $
    2,122Interest expense
    
    
    571
    
    
    
    189
    
    
    
    188Benefit for income taxes
    
    
    (322
    )
    
    
    (947
    )
    
    
    (955
    )Net Loss
    
    $
    711
    
    
    $
    1,388
    
    
    $
    1,355
 (4) ACQUISITION:
  Total Purchase Price:Equity contribution
    
    $
    65,730Proceeds from debt issuance
    
    
    187,429Borrowings under the credit facility
    
    
    2,600Escrow deposits
    
    
    (22,113
    )Acquisition expenses and deferred financing
    
    
    7,489$
    241,135Total Assets Acquired:Current assets
    
    
    32,867Property and equipment, net
    
    
    42,626Other noncurrent assets
    
    
    17,231Liabilities assumed
    
    
    (63,156
    )Net assets acquired
    
    
    29,568Allocation of excess purchase price:Inventory
    
    
    100Deferred financing costs
    
    
    9,163Identifiable intangible assets
    
    
    48,255Goodwill
    
    
    154,049Total Purchase Price
    
    $
    241,135
  38




---



##### Table of Contents



As Reported
    
    
    Pro FormaPredecessor:December 27, 2004  September 21, 2005:Revenue
    
    $
    259,789
    
    
    $
    259,789Income before income taxes
    
    
    (7,957
    )
    
    
    (9,513
    )Net income
    
    
    (4,140
    )
    
    
    (5,267
    )2004:Revenue
    
    
    341,341
    
    
    
    341,341Income before income taxes
    
    
    6,649
    
    
    
    (14,125
    )Net income
    
    
    5,145
    
    
    
    (9,080
    )
   (5) SUPPLEMENTAL CASH FLOW INFORMATION :
  Successor
    
    
    PredecessorSeptember 22,
    
    
    December 27,2005 -
    
    
    2004 -December 25,
    
    
    September 21,
    
    
    December
    
    
    December2005
    
    
    2005
    
    
    26, 2004
    
    
    28, 2003(Increase) Decrease in:Receivables
    
    $
    (2,214
    )
    
    $
    624
    
    
    $
    (705
    )
    
    $
    (1,511
    )Inventories
    
    
    864
    
    
    
    (781
    )
    
    
    (967
    )
    
    
    (1,017
    )Prepaid expenses and other current assets
    
    
    (544
    )
    
    
    (667
    )
    
    
    274
    
    
    
    379Other assets
    
    
    18,431
    
    
    
    (33,895
    )
    
    
    (1,469
    )
    
    
    (1,283
    )Increase (Decrease) in:Accounts payable
    
    
    (2,632
    )
    
    
    2,126
    
    
    
    (1,153
    )
    
    
    (2,999
    )Accrued expenses
    
    
    (3,711
    )
    
    
    10,700
    
    
    
    730
    
    
    
    2,506Other liabilities
    
    
    (5,262
    )
    
    
    2,236
    
    
    
    755
    
    
    
    408$
    4,932
    
    
    $
    (19,657
    )
    
    $
    (2,535
    )
    
    $
    (3,517
    )
 39




---



##### Table of Contents



Successor
    
    
    PredecessorSeptember 22, 2005 -
    
    
    December 27, 2004 -December 25, 2005
    
    
    September 21, 2005(in thousands)Assets sold for notes receivable
    
    $
    
    
    
    $
    120Non-cash adjustments at the Acquisition date:Eliminate
deferred gain on Sale-Leaseback transaction - long term
    
    
    
    
    
    
    (71,507
    )Eliminate
deferred gain on Sale-Leaseback transaction - current
    
    
    
    
    
    
    (3,763
    )Capital contribution, shares exchanged in lieu of cash
    
    
    6,500
    
    
    
    Eliminate deferred credits
    
    
    
    
    
    
    (2,364
    )Eliminate deferred assets
    
    
    
    
    
    
    107Sale-Leaseback gain
    
    
    
    
    
    
    30,356Eliminate personal property
    
    
    
    
    
    
    (113
    )
  Successor
    
    
    PredecessorSeptember
    
    
    December 27,22, 2005 -
    
    
    2004 -December 25,
    
    
    September
    
    
    December
    
    
    December2005
    
    
    21, 2005
    
    
    26, 2004
    
    
    28, 2003Cash paid for interest
    
    $
    16
    
    
    $
    12,413
    
    
    $
    15,555
    
    
    $
    16,138Income taxes paid
    
    
    4,378
    
    
    
    17,903
    
    
    
    4,487
    
    
    
    1,281Income tax refunds received
    
    
    
    
    
    
    4
    
    
    
    98
    
    
    
    80
 40




---



##### Table of Contents



(6) PROPERTY AND EQUIPMENT :
  Successor
    
    
    Predecessor2005
    
    
    2004Owned:Land and land improvements
    
    $
    1,952
    
    
    $
    38,090Buildings
    
    
    7,751
    
    
    
    97,940Leasehold improvements
    
    
    15,534
    
    
    
    61,760Equipment
    
    
    18,496
    
    
    
    108,479Construction in progress
    
    
    117
    
    
    
    28343,850
    
    
    
    306,552Less  accumulated depreciation and amortization
    
    
    (3,077
    )
    
    
    (194,354
    )40,773
    
    
    
    112,198Property under Capital Lease:Buildings
    
    
    229
    
    
    
    17,116Less  accumulated amortization
    
    
    (36
    )
    
    
    (16,764
    )193
    
    
    
    352Assets Held for Sale, net of accumulated depreciation
    
    
    1,467
    
    
    
    461$
    42,433
    
    
    $
    113,011
  YearsOwned:Land improvements
    
    
    3 - 20Buildings
    
    
    20 - 30Leasehold improvements
    
    
    3 - 20Equipment
    
    
    1 - 7Property under Capital Lease:Buildings
    
    
    20
  41




---



##### Table of Contents



(7) LEASES :
  136 with both land and building leased15 with only the land leased
  6 with both land and building leased2 with both land and building owned3 with only the land leased
   Lease ObligationsCapital
    
    
    Operating2006
    
    
    312
    
    
    
    20,8772007
    
    
    166
    
    
    
    20,5702008
    
    
    112
    
    
    
    20,3562009
    
    
    
    
    
    
    19,3212010
    
    
    
    
    
    
    19,443Thereafter
    
    
    
    
    
    
    239,268Total minimum lease payments
    
    
    590
    
    
    $
    339,835Less:Amounts representing interest
    
    
    (53
    )Capital lease obligations
    
    $
    537
  Amounts Receivable AsLessor
    
    
    Sublessor2006
    
    
    145
    
    
    
    6662007
    
    
    145
    
    
    
    6662008
    
    
    145
    
    
    
    6662009
    
    
    151
    
    
    
    6462010
    
    
    152
    
    
    
    506Thereafter
    
    
    425
    
    
    
    2,070Total minimum lease rentals
    
    $
    1,163
    
    
    $
    5,220
 42




---



##### Table of Contents



Successor


    PredecessorSeptember 22, 2005-December 25, 2005


    December 27, 2004-September 21, 2005
    
    
    2004
    
    
    2003Minimum rentals
    
    $
6,530


    $
    10,462
    
    
    $
    10,173
    
    
    $
    9,941Contingent rentals
    

    211


    
    663
    
    
    
    823
    
    
    
    624Less  sublease rentals
    

    (186
    )

    
    (495
    )
    
    
    (677
    )
    
    
    (573
    )$
    6,555


    $
    10,630
    
    
    $
    10,319
    
    
    $
    9,992
  (8) GOODWILL AND INTANGIBLE ASSETS :
  Restaurants
    
    
    Franchise
    
    
    Manufacturing
    
    
    Other
    
    
    CompanyBalance as
of December 28, 2003 (Predecessor)
    
    $
    24,092
    
    
    $
    33,869
    
    
    $
    
    
    
    $
    
    
    
    $
    57,961Changes in the carrying amount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as
of December 26, 2004 (Predecessor)
    
    
    24,092
    
    
    
    33,869
    
    
    
    
    
    
    
    
    
    
    
    57,961Goodwill eliminated at acquisition
    
    
    (24,092
    )
    
    
    (33,869
    )
    
    
    
    
    
    
    
    
    
    
    (57,961
    )Goodwill acquired
    
    
    53,301
    
    
    
    100,748
    
    
    
    
    
    
    
    
    
    
    
    154,049Balance as
of December 25, 2005 (Successor)
    
    $
    53,301
    
    
    $
    100,748
    
    
    $
    
    
    
    $
    
    
    
    $
    154,049
  Successor2005
    
    

Predecessor2004Present value of estimated future royalty fee income
being amortized ratably over the remaining lives of
the franchise agreements
    
    $
    48,255
    
    
    $
    15,506Less  Accumulated Amortization
    
    
    (476
    )
    
    
    (8,897
    )Total
    
    $
    47,779
    
    
    $
    6,609
  43




---



##### Table of Contents



EstimatedAmortization Expense2006
    
    $
    1,9302007
    
    $
    1,9302008
    
    $
    1,9302009
    
    $
    1,9302010
    
    $
    1,930
 (9) ACCRUED EXPENSES :
  Successor
    
    
    Predecessor2005
    
    
    2004Payroll and related benefits
    
    $
    9,837
    
    
    $
    10,566Property, real estate and sales taxes
    
    
    2,676
    
    
    
    2,683Insurance
    
    
    1,151
    
    
    
    1,480Rent
    
    
    3,097
    
    
    
    1,669Advertising
    
    
    944
    
    
    
    1,280Contingent Escrow Liability
    
    
    11,002
    
    
    
    Interest
    
    
    5,054
    
    
    
    714Stock based compensation
    
    
    
    
    
    
    417Other
    
    
    5,842
    
    
    
    4,626$
    39,603
    
    
    $
    23,435
 (10) LONG-TERM DEBT :
  Successor
    
    
    Predecessor2005
    
    
    200410% Senior Notes, due October 1, 2013
    
    $
    187,503
    
    
    $
    Revolving credit facility, due September 21, 2010
    
    
    
    
    
    
    10.125% Unsecured Senior Notes, due December 15, 2007
    
    
    
    
    
    
    129,51611.25% Unsecured Senior Discount Notes, due May 15, 2008
    
    
    
    
    
    
    17,922187,503
    
    
    
    147,438Less current maturities
    
    
    
    
    
    
    $
    187,503
    
    
    $
    147,438
 44




---



##### Table of Contents



Successor
    
    
    Predecessor2005
    
    
    200410.125% Unsecured Senior Notes
    
    $
    
    
    
    $
    130,65411.25% Unsecured Senior Discount Notes
    
    
    
    
    
    
    18,08710.00% Unsecured Senior Notes
    
    
    177,956
    
    
    
    
    45




---



##### 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 Note
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.
   Amount2006
    
    $
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    187,503$
    187,503
  46




---



##### Table of Contents



(11) INCOME TAXES :
   Successor
    
    
    PredecessorSeptember 22, 2005 -
    
    
    December 27, 2004 -
    
    
    December
    
    
    DecemberDecember 25, 2005
    
    
    September 21, 2005
    
    
    26, 2004
    
    
    28, 2003Current:Federal
    
    $
    100
    
    
    $
    20,107
    
    
    $
    3,124
    
    
    $
    1,853State and local
    
    
    75
    
    
    
    3,275
    
    
    
    683
    
    
    
    344175
    
    
    
    23,382
    
    
    
    3,807
    
    
    
    2,197Deferred:Federal
    
    
    (749
    )
    
    
    (23,869
    )
    
    
    (2,159
    )
    
    
    (2,484
    )State and local
    
    
    (76
    )
    
    
    (3,330
    )
    
    
    (144
    )
    
    
    40(825
    )
    
    
    (27,199
    )
    
    
    (2,303
    )
    
    
    (2,444
    )$
    (650
    )
    
    $
    (3,817
    )
    
    $
    1,504
    
    
    $
    (247
    )
   Successor
    
    
    PredecessorSeptember 22, 2005 -
    
    
    December 27, 2004 -
    
    
    December
    
    
    DecemberDecember 25, 2005
    
    
    September 21, 2005
    
    
    26, 2004
    
    
    28, 2003Federal
    
    
    34.2
    %
    
    
    35.0
    %
    
    
    34.2
    %
    
    
    34.2
    %Federal income tax
credits and addbacks
    
    
    28.2
    
    
    
    12.5
    
    
    
    (16.6
    )
    
    
    (59.0
    )State income taxes,
net of Federal
taxes
    
    
    0.2
    
    
    
    0.7
    
    
    
    3.1
    
    
    
    3.4State deferred tax
rate changes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.3Nondeductible expenses and other
    
    
    (5.0
    )
    
    
    (0.2
    )
    
    
    1.9
    
    
    
    1.757.6
    %
    
    
    48.0
    %
    
    
    22.6
    %
    
    
    (13.4
    )%
 47




---



##### Table of Contents



2005 (Successor)
    
    
    2004 (Predecessor)(in thousands):
    
    Current
    
    
    Noncurrent
    
    
    Current
    
    
    NoncurrentCapital leases
    
    $
    112
    
    
    $
    27
    
    
    $
    133
    
    
    $
    75Inventory
    
    
    382
    
    
    
    
    
    
    
    349
    
    
    
    Accrued expenses and reserves
    
    
    2,351
    
    
    
    (452
    )
    
    
    1,824
    
    
    
    629Property and equipment
    
    
    
    
    
    
    7,699
    
    
    
    
    
    
    
    9,029State net operating loss
    
    
    
    
    
    
    193
    
    
    
    
    
    
    
    1,369Deferred compensation and other
    
    
    
    
    
    
    908
    
    
    
    273
    
    
    
    1,9472,845
    
    
    
    8,375
    
    
    
    2,579
    
    
    
    13,049Valuation allowance
    
    
    
    
    
    
    (2,790
    )
    
    
    
    
    
    
    (2,235
    )Deferred tax assets
    
    
    2,845
    
    
    
    5,585
    
    
    
    2,579
    
    
    
    10,814Intangibles and other
    
    
    
    
    
    
    (18,158
    )
    
    
    
    
    
    
    (2,934
    )Deferred tax liabilities
    
    
    
    
    
    
    (18,158
    )
    
    
    
    
    
    
    (2,934
    )$
    2,845
    
    
    $
    (12,573
    )
    
    $
    2,579
    
    
    $
    7,880
  (12) RELATED PARTY TRANSACTIONS :
 Management Agreement
  48




---



##### Table of Contents



Other Board Affiliations
  Sales
of Foxtail Products to a Licensee of an Affiliate of Castle
Harlan
  Pre-Acquisition Relationships
    (13) COMMITMENTS AND CONTINGENCIES :
   49




---



##### Table of Contents



Consolidation of Variable Interest Entities
   (14) LONG-TERM INCENTIVE PLANS :
   50




---



##### Table of Contents



(15) EMPLOYEE BENEFITS :
   51




---



##### Table of Contents



(16) ASSET WRITE-DOWNS :
    52




---



##### Table of Contents



(17) SEGMENT REPORTING :
    Restaurants
    
    
    Franchise
    
    
    Manufacturing
    
    
    Other
    
    
    TotalsSuccessorSeptember 22, 2005 - December 25, 2005:Revenue from external customers
    
    
    73,508
    
    
    
    5,418
    
    
    
    13,620
    
    
    
    
    
    
    
    92,546Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    3,169
    
    
    
    
    
    
    
    3,169Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,496
    
    
    
    5,496Depreciation and amortization
    
    
    2,841
    
    
    
    
    
    
    
    301
    
    
    
    447
    
    
    
    3,589Segment profit (loss)
    
    
    4,624
    
    
    
    4,778
    
    
    
    2,487
    
    
    
    (12,367
    )
    
    
    (478
    )Segment assets
    
    
    92,303
    
    
    
    106,218
    
    
    
    17,191
    
    
    
    92,706
    
    
    
    308,418Goodwill
    
    
    53,301
    
    
    
    100,748
    
    
    
    
    
    
    
    
    
    
    
    154,049Expenditures for segment assets
    
    
    3,003
    
    
    
    
    
    
    
    194
    
    
    
    53
    
    
    
    3,250PredecessorDecember 27, 2004 - September 21, 2005Revenue from external customers
    
    
    209,242
    
    
    
    16,343
    
    
    
    34,204
    
    
    
    
    
    
    
    259,789Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    6,267
    
    
    
    
    
    
    
    6,267Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,380
    
    
    
    13,380Depreciation and amortization
    
    
    8,946
    
    
    
    
    
    
    
    889
    
    
    
    1,981
    
    
    
    11,816Segment profit (loss)
    
    
    21,090
    
    
    
    14,158
    
    
    
    5,293
    
    
    
    (44,681
    )
    
    
    (4,140
    )Segment assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Goodwill
    
    
    24,092
    
    
    
    33,869
    
    
    
    
    
    
    
    
    
    
    
    57,961Expenditures for segment assets
    
    
    5,264
    
    
    
    
    
    
    
    655
    
    
    
    352
    
    
    
    6,271
 53




---



##### Table of Contents



Restaurants
    
    
    Franchise
    
    
    Manufacturing
    
    
    Other
    
    
    Totals2004 (Predecessor):Revenue from external customers
    
    $
    281,292
    
    
    $
    21,604
    
    
    $
    38,445
    
    
    $
    
    
    
    $
    341,341Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    9,420
    
    
    
    
    
    
    
    9,420Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,121
    
    
    
    16,121Depreciation and amortization
    
    
    13,454
    
    
    
    
    
    
    
    936
    
    
    
    4,476
    
    
    
    18,866Segment profit (loss)
    
    
    29,240
    
    
    
    18,871
    
    
    
    5,949
    
    
    
    (48,915
    )
    
    
    5,145Segment assets
    
    
    128,713
    
    
    
    54,209
    
    
    
    17,392
    
    
    
    37,471
    
    
    
    237,785Goodwill
    
    
    24,092
    
    
    
    33,869
    
    
    
    
    
    
    
    
    
    
    
    57,961Expenditures for segment assets
    
    
    7,531
    
    
    
    
    
    
    
    3,549
    
    
    
    794
    
    
    
    11,8742003 (Predecessor):Revenue from external customers
    
    $
    276,860
    
    
    $
    21,336
    
    
    $
    34,142
    
    
    $
    304
    
    
    $
    332,642Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    9,801
    
    
    
    
    
    
    
    9,801Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,586
    
    
    
    16,586Depreciation and amortization
    
    
    14,397
    
    
    
    
    
    
    
    921
    
    
    
    4,866
    
    
    
    20,184Segment profit (loss)
    
    
    21,197
    
    
    
    18,623
    
    
    
    8,210
    
    
    
    (45,934
    )
    
    
    2,096Segment assets
    
    
    136,406
    
    
    
    41,879
    
    
    
    13,381
    
    
    
    40,394
    
    
    
    232,060Goodwill
    
    
    24,092
    
    
    
    33,869
    
    
    
    
    
    
    
    
    
    
    
    57,961Expenditures for segment assets
    
    
    7,599
    
    
    
    
    
    
    
    1,107
    
    
    
    1,034
    
    
    
    9,740
    Successor
    
    
    PredecessorSeptember 22, 2005 -
    
    
    December 27, 2004 -December 25, 2005
    
    
    September 21, 2005
    
    
    2004
    
    
    2003General and administrative
    
    $
    5,986
    
    
    $
    20,064
    
    
    $
    26,928
    
    
    $
    24,507Transaction costs
    
    
    867
    
    
    
    4,632
    
    
    
    
    
    
    
    Stock compensation
    
    
    
    
    
    
    8,925
    
    
    
    436
    
    
    
    19Depreciation and amortization
    
    
    447
    
    
    
    1,981
    
    
    
    4,476
    
    
    
    4,866Asset write-down
    
    
    12
    
    
    
    248
    
    
    
    740
    
    
    
    455Lease termination
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    761(Benefit from) provision for
disposition of assets, net
    
    
    (904
    )
    
    
    (518
    )
    
    
    (109
    )
    
    
    336Interest expense
    
    
    5,496
    
    
    
    13,380
    
    
    
    16,121
    
    
    
    16,586(Benefit from) provision for
income taxes
    
    
    (650
    )
    
    
    (3,817
    )
    
    
    1,504
    
    
    
    (247
    )Other
    
    
    (1,113
    )
    
    
    (214
    )
    
    
    (1,181
    )
    
    
    (1,349
    )$
    10,141
    
    
    $
    44,681
    
    
    $
    48,915
    
    
    $
    45,934
 54




---



##### Table of Contents



(18) ACQUIRED RESTAURANT OPERATIONS :
  (19) ASSET DISPOSITIONS :
      (20) DISCONTINUED OPERATIONS :
  55




---



##### Table of Contents



2003
 Lease termination charge
    
    $
    (154
    )Income tax benefit
    
    
    58Loss on discontinued operations
    
    $
    (96
    )
 (21) COMPREHENSIVE INCOME AND LOSS :
  (22) SALE LEASEBACK TRANSACTION :
  (23) CONDENSED CONSOLIDATED FINANCIAL INFORMATION
  56




---



##### Table of Contents



Consolidating statement of operations from September 22, 2005 through December 25, 2005
(Successor):
 Other
    
    
    
    
    
    
    ConsolidatedTRC
    
    
    TRCM
    
    
    Guarantors
    
    
    Eliminations
    
    
    TRC(in thousands)Revenue
Food Sales
    
    $
    66,461
    
    
    $
    20,667
    
    
    
    
    
    
    
    
    
    
    $
    87,128Franchise and Other Revenue
    
    
    2,779
    
    
    
    3,735
    
    
    
    206
    
    
    
    (1,302
    )
    
    
    5,418Total Revenues
    
    
    69,240
    
    
    
    24,402
    
    
    
    206
    
    
    
    (1,302
    )
    
    
    92,546Costs and ExpensesCost of Sales (excluding depreciation shown below):Food cost
    
    
    22,483
    
    
    
    4,863
    
    
    
    
    
    
    
    
    
    
    
    27,346Labor and benefits
    
    
    20,901
    
    
    
    8,001
    
    
    
    
    
    
    
    
    
    
    
    28,902Operating expenses
    
    
    14,272
    
    
    
    6,590
    
    
    
    206
    
    
    
    (830
    )
    
    
    20,238General and administrative
    
    
    8,216
    
    
    
    489
    
    
    
    
    
    
    
    (472
    )
    
    
    8,233Transaction costs
    
    
    867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    867Depreciation and amortization
    
    
    3,025
    
    
    
    564
    
    
    
    
    
    
    
    
    
    
    
    3,589Interest, net
    
    
    5,624
    
    
    
    (128
    )
    
    
    
    
    
    
    
    
    
    
    5,496Benefit from disposition of assets
    
    
    (904
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (904
    )Asset write-down
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Other, net
    
    
    (105
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105
    )Total Costs and Expenses
    
    
    74,391
    
    
    
    20,379
    
    
    
    206
    
    
    
    (1,302
    )
    
    
    93,674(Loss) income before income taxes
    
    
    (5,151
    )
    
    
    4,023
    
    
    
    
    
    
    
    
    
    
    
    (1,128
    )(Benefit from) provision for income taxes
    
    
    2,082
    
    
    
    (1,432
    )
    
    
    
    
    
    
    
    
    
    
    650Equity in earnings (loss) of subsidiaries
    
    
    2,591
    
    
    
    
    
    
    
    
    
    
    
    (2,591
    )
    
    
    NET (LOSS) INCOME
    
    $
    (478
    )
    
    $
    2,591
    
    
    $
    
    
    
    $
    (2,591
    )
    
    $
    (478
    )
 57




---



##### Table of Contents



Consolidating statement of operations from December 27, 2004 through September 21, 2005
(Predecessor):
 Other
    
    
    
    
    
    
    ConsolidatedTRC
    
    
    TRCM
    
    
    Guarantors
    
    
    Eliminations
    
    
    TRC(in thousands)Revenue
Food Sales
    
    $
    185,771
    
    
    $
    57,675
    
    
    $
    
    
    
    $
    
    
    
    $
    243,446Franchise and Other Revenue
    
    
    10,338
    
    
    
    11,004
    
    
    
    181
    
    
    
    (5,180
    )
    
    
    16,343Total Revenues
    
    
    196,109
    
    
    
    68,679
    
    
    
    181
    
    
    
    (5,180
    )
    
    
    259,789Costs and ExpensesCost of Sales (excluding depreciation shown below):Food cost
    
    
    55,976
    
    
    
    14,000
    
    
    
    
    
    
    
    
    
    
    
    69,976Labor and benefits
    
    
    59,481
    
    
    
    22,871
    
    
    
    
    
    
    
    
    
    
    
    82,352Operating expenses
    
    
    40,138
    
    
    
    15,467
    
    
    
    181
    
    
    
    (2,348
    )
    
    
    53,438General and administrative
    
    
    23,657
    
    
    
    2,886
    
    
    
    
    
    
    
    (2,832
    )
    
    
    23,711Transaction costs
    
    
    4,632
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,632Stock compensation
    
    
    8,925
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,925Depreciation and amortization
    
    
    9,081
    
    
    
    2,735
    
    
    
    
    
    
    
    
    
    
    
    11,816Interest, net
    
    
    13,684
    
    
    
    (304
    )
    
    
    
    
    
    
    
    
    
    
    13,380(Benefit
from) provision for disposition of assets
    
    
    (652
    )
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    (518
    )Asset write-down
    
    
    248
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248Other, net
    
    
    (214
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (214
    )Total Costs and Expenses
    
    
    214,956
    
    
    
    57,789
    
    
    
    181
    
    
    
    (5,180
    )
    
    
    267,746(Loss) income before income taxes
    
    
    (18,847
    )
    
    
    10,890
    
    
    
    
    
    
    
    
    
    
    
    (7,957
    )Benefit from (provision for) income taxes
    
    
    7,639
    
    
    
    (3,822
    )
    
    
    
    
    
    
    
    
    
    
    3,817Equity in earnings (loss) of subsidiaries
    
    
    7,068
    
    
    
    
    
    
    
    
    
    
    
    (7,068
    )
    
    
    NET (LOSS) INCOME
    
    $
    (4,140
    )
    
    $
    7,068
    
    
    $
    
    
    
    $
    (7,068
    )
    
    $
    (4,140
    )
 58




---



##### Table of Contents



Consolidating statement of operations for the year ended December 26, 2004 (Predecessor):
 Other
    
    
    
    
    
    
    ConsolidatedTRC
    
    
    TRCM
    
    
    Guarantors
    
    
    Eliminations
    
    
    TRC(in thousands)Revenue
Food Sales
    
    $
    242,667
    
    
    $
    77,070
    
    
    $
    
    
    
    $
    
    
    
    $
    319,737Franchise and Other
    
    
    13,174
    
    
    
    14,759
    
    
    
    525
    
    
    
    (6,854
    )
    
    
    21,604Revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Revenues
    
    
    255,841
    
    
    
    91,829
    
    
    
    525
    
    
    
    (6,854
    )
    
    
    341,341Costs and ExpensesCost of Sales (excluding depreciation shown below):Food cost
    
    
    74,102
    
    
    
    19,337
    
    
    
    
    
    
    
    
    
    
    
    93,439Labor and benefits
    
    
    80,396
    
    
    
    29,916
    
    
    
    
    
    
    
    
    
    
    
    110,312Operating expenses
    
    
    47,641
    
    
    
    19,345
    
    
    
    525
    
    
    
    (3,114
    )
    
    
    64,397General and administrative
    
    
    31,274
    
    
    
    3,861
    
    
    
    
    
    
    
    (3,740
    )
    
    
    31,395Depreciation and amortization
    
    
    15,183
    
    
    
    3,683
    
    
    
    
    
    
    
    
    
    
    
    18,866Interest, net
    
    
    16,419
    
    
    
    (298
    )
    
    
    
    
    
    
    
    
    
    
    16,121Benefit from disposition of assets
    
    
    (109
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (109
    )Asset write-down
    
    
    740
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740Other, net
    
    
    (469
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (469
    )Total Costs and Expenses
    
    
    265,177
    
    
    
    75,844
    
    
    
    525
    
    
    
    (6,854
    )
    
    
    334,692(Loss) income before income taxes
    
    
    (9,336
    )
    
    
    15,985
    
    
    
    
    
    
    
    
    
    
    
    6,649Benefit from (provision for) income taxes
    
    
    4,168
    
    
    
    (5,672
    )
    
    
    
    
    
    
    
    
    
    
    (1,504
    )Equity in earnings (loss) of subsidiaries
    
    
    10,313
    
    
    
    
    
    
    
    
    
    
    
    (10,313
    )
    
    
    NET (LOSS) INCOME
    
    $
    5,145
    
    
    $
    10,313
    
    
    $
    
    
    
    $
    (10,313
    )
    
    $
    5,145
 59




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##### Table of Contents



Consolidating statement of operations for the year ended December 28, 2003 (Predecessor):
 Other
    
    
    
    
    
    
    ConsolidatedTRC
    
    
    TRCM
    
    
    Guarantors
    
    
    Eliminations
    
    
    TRC(in thousands)RevenueFood Sales
    
    $
    233,459
    
    
    $
    77,543
    
    
    $
    
    
    
    $
    
    
    
    $
    311,002Franchise and Other Revenue
    
    
    12,207
    
    
    
    14,720
    
    
    
    1,153
    
    
    
    (6,440
    )
    
    
    21,640Total Revenues
    
    
    245,666
    
    
    
    92,263
    
    
    
    1,153
    
    
    
    (6,440
    )
    
    
    332,642Costs and ExpensesCost of Sales (excluding depreciation shown below):Food cost
    
    
    69,629
    
    
    
    19,861
    
    
    
    
    
    
    
    
    
    
    
    89,490Labor and benefits
    
    
    79,673
    
    
    
    30,442
    
    
    
    
    
    
    
    
    
    
    
    110,115Operating expenses
    
    
    46,208
    
    
    
    21,205
    
    
    
    
    
    
    
    (3,130
    )
    
    
    64,283General and administrative
    
    
    27,823
    
    
    
    3,411
    
    
    
    1,153
    
    
    
    (3,310
    )
    
    
    29,077Depreciation and amortization
    
    
    16,164
    
    
    
    4,020
    
    
    
    
    
    
    
    
    
    
    
    20,184Interest, net
    
    
    16,844
    
    
    
    (258
    )
    
    
    
    
    
    
    
    
    
    
    16,586Provision for disposition of assets
    
    
    186
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    336Lease termination
    
    
    761
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    761Asset write-down
    
    
    455
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    455Other, net
    
    
    (494
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (494
    )Total Costs and Expenses
    
    
    257,249
    
    
    
    78,831
    
    
    
    1,153
    
    
    
    (6,440
    )
    
    
    330,793(Loss) income before income taxes
    
    
    (11,583
    )
    
    
    13,432
    
    
    
    
    
    
    
    
    
    
    
    1,849Benefit from (provision for) income taxes
    
    
    4,961
    
    
    
    (4,714
    )
    
    
    
    
    
    
    
    
    
    
    247Equity in earnings (loss) of subsidiaries
    
    
    8,718
    
    
    
    
    
    
    
    
    
    
    
    (8,718
    )
    
    
    Income (loss) from continuing operations
    
    
    2,096
    
    
    
    8,718
    
    
    
    
    
    
    
    (8,718
    )
    
    
    2,096Discontinued Operations:Loss from
discontinued operations of Sage Hen
    
    
    (154
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (154
    )Income tax benefit
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58Loss from discontinued operations
    
    
    (96
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (96
    )NET (LOSS) INCOME
    
    $
    2,000
    
    
    $
    8,718
    
    
    $
    
    
    
    $
    (8,718
    )
    
    $
    2,000
 60




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##### Table of Contents



Consolidating balance sheet as of December 25, 2005 (Successor):
 Other
    
    
    
    
    
    
    ConsolidatedTRC
    
    
    TRCM
    
    
    Guarantors
    
    
    Eliminations
    
    
    TRC(in thousands)CURRENT ASSETS:Cash and cash equivalents
    
    
    2,930
    
    
    
    1,567
    
    
    
    (23
    )
    
    
    
    
    
    
    4,474Restricted cash
    
    
    3,496
    
    
    
    4,729
    
    
    
    
    
    
    
    
    
    
    
    8,225Trade receivables, less allowance for doubtful
accounts
    
    
    10,551
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    10,554Inventories, net
    
    
    6,415
    
    
    
    556
    
    
    
    
    
    
    
    
    
    
    
    6,971Escrow Deposits
    
    
    18,162
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,162Prepaid expenses and other current assets
    
    
    2,927
    
    
    
    261
    
    
    
    
    
    
    
    
    
    
    
    3,188Deferred income taxes
    
    
    2,845
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,845Total current assets
    
    
    47,326
    
    
    
    7,116
    
    
    
    (23
    )
    
    
    
    
    
    
    54,419PROPERTY AND EQUIPMENT, net
    
    
    34,826
    
    
    
    7,607
    
    
    
    
    
    
    
    
    
    
    
    42,433GOODWILL
    
    
    154,049
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,049INTANGIBLE ASSETS, net
    
    
    47,779
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,779INVESTMENTS IN SUBSIDIARIES
    
    
    52,714
    
    
    
    
    
    
    
    
    
    
    
    (52,714
    )
    
    
    DUE FROM TRC
    
    
    
    
    
    
    45,584
    
    
    
    38
    
    
    
    (45,622
    )
    
    
    OTHER ASSETS
    
    
    9,730
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    9,738346,424
    
    
    
    60,307
    
    
    
    23
    
    
    
    (98,336
    )
    
    
    308,418LIABILITIES AND STOCKHOLDERS INVESTMENTCURRENT LIABILITIES:Current maturities of capital lease obligations
    
    
    277
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    277Accounts payable
    
    
    7,939
    
    
    
    1,527
    
    
    
    8
    
    
    
    
    
    
    
    9,474Franchisee advertising contributions
    
    
    4,752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,752Accrued expenses
    
    
    33,522
    
    
    
    6,056
    
    
    
    25
    
    
    
    
    
    
    
    39,603Total current liabilities
    
    
    46,490
    
    
    
    7,583
    
    
    
    33
    
    
    
    
    
    
    
    54,106CAPITAL
LEASE OBLIGATIONS, less current maturities
    
    
    260
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    260LONG-TERM DEBT
    
    
    187,503
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    187,503DEFERRED TAX LIABILITY
    
    
    12,573
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,573OTHER LIABILITIES
    
    
    3,331
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,331DUE TO TRCM/TRC REALTY
    
    
    45,622
    
    
    
    
    
    
    
    
    
    
    
    (45,622
    )
    
    
    STOCKHOLDERS INVESTMENT:Common stock
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    (1
    )
    
    
    1Additional paid-in capital
    
    
    51,108
    
    
    
    50,132
    
    
    
    
    
    
    
    (50,132
    )
    
    
    51,108Other comprehensive income
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14Retained earnings (deficit)
    
    
    (478
    )
    
    
    2,591
    
    
    
    (10
    )
    
    
    (2,581
    )
    
    
    (478
    )Total stockholders investment
    
    
    50,645
    
    
    
    52,724
    
    
    
    (10
    )
    
    
    (52,714
    )
    
    
    50,645346,424
    
    
    
    60,307
    
    
    
    23
    
    
    
    (98,336
    )
    
    
    308,418
 61




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##### Table of Contents



Consolidating balance sheet as of December 26, 2004 (Predecessor):
 Other
    
    
    
    
    
    
    ConsolidatedTRC
    
    
    TRCM
    
    
    Guarantors
    
    
    Eliminations
    
    
    TRC(in thousands)CURRENT ASSETS:Cash and cash equivalents
    
    $
    15,791
    
    
    $
    2,201
    
    
    $
    (4
    )
    
    $
    
    
    
    $
    17,988Restricted cash
    
    
    2,053
    
    
    
    3,800
    
    
    
    
    
    
    
    
    
    
    
    5,853Trade receivables, less allowance for doubtful
accounts
    
    
    10,268
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,268Inventories, net
    
    
    6,652
    
    
    
    514
    
    
    
    
    
    
    
    
    
    
    
    7,166Escrow Deposits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Prepaid expenses and other current assets
    
    
    1,051
    
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    1,228Deferred income taxes
    
    
    2,579
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,579Total current assets
    
    
    38,394
    
    
    
    6,692
    
    
    
    (4
    )
    
    
    
    
    
    
    45,082PROPERTY AND EQUIPMENT, net
    
    
    91,524
    
    
    
    21,362
    
    
    
    125
    
    
    
    
    
    
    
    113,011GOODWILL
    
    
    57,961
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,961INTANGIBLE ASSETS, net
    
    
    6,609
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,609INVESTMENT IN SUBSIDIARIES
    
    
    59,049
    
    
    
    
    
    
    
    
    
    
    
    (59,049
    )
    
    
    DUE FROM TRC
    
    
    
    
    
    
    37,412
    
    
    
    
    
    
    
    (37,412
    )
    
    
    DEFERRED INCOME TAXES
    
    
    7,880
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,880OTHER ASSETS
    
    
    6,983
    
    
    
    250
    
    
    
    9
    
    
    
    
    
    
    
    7,242$
    268,400
    
    
    $
    65,716
    
    
    $
    130
    
    
    $
    (96,461
    )
    
    $
    237,785LIABILITIES AND STOCKHOLDERS INVESTMENT
CURRENT LIABILITIES:Current maturities of capital lease obligations
    
    $
    331
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    331Accounts payable
    
    
    8,187
    
    
    
    1,786
    
    
    
    7
    
    
    
    
    
    
    
    9,980Franchisee advertising contributions
    
    
    3,851
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,851Accrued expenses
    
    
    18,495
    
    
    
    4,871
    
    
    
    69
    
    
    
    
    
    
    
    23,435Total current liabilities
    
    
    30,864
    
    
    
    6,657
    
    
    
    76
    
    
    
    
    
    
    
    37,597CAPITAL
LEASE OBLIGATIONS, less current maturities
    
    
    537
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    537LONG-TERM DEBT
    
    
    147,438
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147,438DUE TO TRCM
    
    
    37,412
    
    
    
    
    
    
    
    
    
    
    
    (37,412
    )
    
    
    DUE TO PARENT
    
    
    47,715
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,715OTHER LIABILITIES
    
    
    8,863
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    8,927STOCKHOLDERS INVESTMENT:Common stock
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    (1
    )
    
    
    1Additional paid-in capital
    
    
    
    
    
    
    21,751
    
    
    
    
    
    
    
    (21,751
    )
    
    
    Other comprehensive income
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75Retained earnings (deficit)
    
    
    (4,505
    )
    
    
    37,307
    
    
    
    (10
    )
    
    
    (37,297
    )
    
    
    (4,505
    )Total stockholders investment
    
    
    (4,429
    )
    
    
    59,059
    
    
    
    (10
    )
    
    
    (59,049
    )
    
    
    (4,429
    )$
    268,400
    
    
    $
    65,716
    
    
    $
    130
    
    
    $
    (96,461
    )
    
    $
    237,785
 62




---



##### Table of Contents



Consolidating Statement of Cash Flows for the period September 22, 2005 through December 25, 2005
(Successor):
 Other
    
    
    
    
    
    
    ConsolidatedTRC
    
    
    TRCM
    
    
    Guarantors
    
    
    Eliminations
    
    
    TRC(in thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    
    (478
    )
    
    
    2,591
    
    
    
    
    
    
    
    (2,591
    )
    
    
    (478
    )Adjustments to reconcile net
income to net cash provided by
operating activities:Equity in earnings of subsidiary
    
    
    (2,591
    )
    
    
    
    
    
    
    
    
    
    
    2,591
    
    
    
    Depreciation and amortization
    
    
    3,025
    
    
    
    564
    
    
    
    
    
    
    
    
    
    
    
    3,589Amortization of discount
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74Payments on notes receivable of
franchise fees
    
    
    505
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    505(Benefit from) provision for
disposition of assets
    
    
    (904
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (904
    )Asset write-down
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Other non-cash income and
expense items, net
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75Net changes in other operating
assets and liabilities
    
    
    4,311
    
    
    
    608
    
    
    
    13
    
    
    
    
    
    
    
    4,932Total adjustments
    
    
    4,507
    
    
    
    1,172
    
    
    
    13
    
    
    
    2,591
    
    
    
    8,283Net cash provided by operating
activities
    
    
    4,029
    
    
    
    3,763
    
    
    
    13
    
    
    
    
    
    
    
    7,805CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and
equipment
    
    
    (3,002
    )
    
    
    (248
    )
    
    
    
    
    
    
    
    
    
    
    (3,250
    )Acquisition of predecessors
business
    
    
    (224,891
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (224,891
    )Proceeds from sale of property
and equipment
    
    
    1,353
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,353Intercompany activities
    
    
    2,116
    
    
    
    (2,117
    )
    
    
    1
    
    
    
    
    
    
    
    Net cash used in investing
activities
    
    
    (224,424
    )
    
    
    (2,365
    )
    
    
    1
    
    
    
    
    
    
    
    (226,788
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under
capital lease obligations
    
    
    (77
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77
    )Payments on long-term debt
    
    
    (6,600
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,600
    )Proceeds from long-term debt
    
    
    190,029
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190,029Debt issuance costs
    
    
    (9,288
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,288
    )Capital contribution from parent
    
    
    44,607
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,607Net cash
provided by financing
activities
    
    
    218,671
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218,671Net increase (decrease) in
cash and cash equivalents
cash equivalents
    
    
    (1,724
    )
    
    
    1,398
    
    
    
    14
    
    
    
    
    
    
    
    (312
    )CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    4,654
    
    
    
    169
    
    
    
    (37
    )
    
    
    
    
    
    
    4,786Balance, end of year
    
    
    2,930
    
    
    
    1,567
    
    
    
    (23
    )
    
    
    
    
    
    
    4,474
 63




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##### Table of Contents



Consolidating Statement of Cash Flows for the period December 27, 2004 through September 21, 2005
(Predecessor):
 Other
    
    
    
    
    
    
    ConsolidatedTRC
    
    
    TRCM
    
    
    Guarantors
    
    
    Eliminations
    
    
    TRC(in thousands)CASH FLOWS FROM OPERATING
ACTIVITIES:Net income (loss)
    
    
    (4,140
    )
    
    
    7,068
    
    
    
    
    
    
    
    (7,068
    )
    
    
    (4,140
    )Adjustments to reconcile net
income to net cash provided
by operating
activities:Equity in earnings of subsidiary
    
    
    (7,068
    )
    
    
    
    
    
    
    
    
    
    
    7,068Depreciation and amortization
    
    
    9,081
    
    
    
    2,735
    
    
    
    
    
    
    
    
    
    
    
    11,816Payments on notes receivable of
franchise fees
    
    
    293
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    293(Benefit from) provision for
disposition of assets
    
    
    (652
    )
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    (518
    )Asset write-down
    
    
    248
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248Other non-cash income and
expense items, net
    
    
    2,417
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,417Net changes in other operating
assets and liabilities
    
    
    (19,242
    )
    
    
    (485
    )
    
    
    70
    
    
    
    
    
    
    
    (19,657
    )Total adjustments
    
    
    (14,923
    )
    
    
    2,384
    
    
    
    70
    
    
    
    7,068
    
    
    
    (5,401
    )Net cash
(used in)
provided by operating
activities
    
    
    (19,063
    )
    
    
    9,452
    
    
    
    70
    
    
    
    
    
    
    
    (9,541
    )CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and
equipment
    
    
    (6,271
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,271
    )Intercompany activities
    
    
    25,382
    
    
    
    (25,279
    )
    
    
    (103
    )
    
    
    
    
    
    
    Proceeds from sale of property
and equipment
    
    
    107,433
    
    
    
    29,795
    
    
    
    
    
    
    
    
    
    
    
    137,228Net cash
provided by (used in) investing
activities
    
    
    126,544
    
    
    
    4,516
    
    
    
    (103
    )
    
    
    
    
    
    
    130,957CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under
capital lease obligations
    
    
    (254
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (254
    )Payments on long-term debt
    
    
    (148,009
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (148,009
    )Proceeds from long-term debt
    
    
    4,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,000Proceeds for stock option
redemption
    
    
    9,645
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,645Dividend to TRC
    
    
    16,000
    
    
    
    (16,000
    )
    
    
    
    
    
    
    
    
    
    
    Net cash used in financing
activities
    
    
    (118,618
    )
    
    
    (16,000
    )
    
    
    
    
    
    
    
    
    
    
    (134,618
    )Net increase (decrease) in
cash and cash equivalents
cash equivalents
    
    
    (11,137
    )
    
    
    (2,032
    )
    
    
    (33
    )
    
    
    
    
    
    
    (13,202
    )CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    15,791
    
    
    
    2,201
    
    
    
    (4
    )
    
    
    
    
    
    
    17,988Balance, end of year
    
    
    4,654
    
    
    
    169
    
    
    
    (37
    )
    
    
    
    
    
    
    4,786
 64




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##### Table of Contents



Consolidating Statement of Cash Flows for the year ended December 26, 2004 (Predecessor):
 Other
    
    
    
    
    
    
    ConsolidatedTRC
    
    
    TRCM
    
    
    Guarantors
    
    
    Eliminations
    
    
    TRC(in thousands)CASH FLOWS FROM OPERATING
ACTIVITIES:Net income (loss)
    
    $
    5,145
    
    
    $
    10,313
    
    
    $
    
    
    
    $
    (10,313
    )
    
    $
    5,145Adjustments to reconcile net
income to net cash provided by
operating activities:Equity in earnings of subsidiary
    
    
    (10,313
    )
    
    
    
    
    
    
    
    
    
    
    10,313
    
    
    
    Depreciation and amortization
    
    
    15,183
    
    
    
    3,683
    
    
    
    
    
    
    
    
    
    
    
    18,866Payments on notes receivable of
franchise fees
    
    
    268
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    268(Benefit from) provision for
disposition of assets
    
    
    (109
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (109
    )Asset write-down
    
    
    740
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740Other non-cash income and
expense items, net
    
    
    752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    752Net changes in other operating
assets and liabilities
    
    
    610
    
    
    
    (3,130
    )
    
    
    (15
    )
    
    
    
    
    
    
    (2,535
    )Total adjustments
    
    
    7,131
    
    
    
    553
    
    
    
    (15
    )
    
    
    10,313
    
    
    
    17,982Net cash
provided by (used in) operating
activities
    
    
    12,276
    
    
    
    10,866
    
    
    
    (15
    )
    
    
    
    
    
    
    23,127CASH FLOWS FROM INVESTING
ACTIVITIES:Cash paid for property and
equipment
    
    
    (10,106
    )
    
    
    (1,768
    )
    
    
    
    
    
    
    
    
    
    
    (11,874
    )Intercompany activities
    
    
    9,357
    
    
    
    (9,357
    )
    
    
    
    
    
    
    
    
    
    
    Proceeds from sale of property
and equipment
    
    
    3,490
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,490Net cash
provided by (used in) investing
activities
    
    
    2,741
    
    
    
    (11,125
    )
    
    
    
    
    
    
    
    
    
    
    (8,384
    )CASH FLOWS FROM FINANCING
ACTIVITIES:Principal payments under
capital lease obligations
    
    
    (467
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (467
    )Payments on long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Distribution to RHC
    
    
    (1,250
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,250
    )Net cash used in financing
activities
    
    
    (1,717
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,717
    )Net increase (decrease) in
cash and cash equivalents
cash equivalents
    
    
    13,300
    
    
    
    (259
    )
    
    
    (15
    )
    
    
    
    
    
    
    13,026CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    2,491
    
    
    
    2,460
    
    
    
    11
    
    
    
    
    
    
    
    4,962Balance, end of year
    
    $
    15,791
    
    
    $
    2,201
    
    
    $
    (4
    )
    
    $
    
    
    
    $
    17,988
 65




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##### Table of Contents



Consolidating Statement of Cash Flows for the year ended December 28, 2003 (Predecessor):
 Other
    
    
    
    
    
    
    ConsolidatedTRC
    
    
    TRCM
    
    
    Guarantors
    
    
    Eliminations
    
    
    TRC(in thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    2,000
    
    
    $
    8,718
    
    
    $
    
    
    
    $
    (8,718
    )
    
    $
    2,000Adjustments to reconcile net income
to net cash provided by operating
activities:Equity in earnings of subsidiary
    
    
    (8,718
    )
    
    
    
    
    
    
    
    
    
    
    8,718
    
    
    
    Depreciation and amortization
    
    
    16,164
    
    
    
    4,020
    
    
    
    
    
    
    
    
    
    
    
    20,184Accretion of senior discount notes
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7Payments on notes receivable of
franchise fees
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302(Benefit from) provision for
disposition of assets
    
    
    186
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    336Asset write-down
    
    
    455
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    455Other non-cash income and expense
items, net
    
    
    594
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    594Net changes in other operating assets
and liabilities
    
    
    (8,462
    )
    
    
    5,008
    
    
    
    (63
    )
    
    
    
    
    
    
    (3,517
    )Total adjustments
    
    
    528
    
    
    
    9,178
    
    
    
    (63
    )
    
    
    8,718
    
    
    
    18,361Net cash
provided by (used in) operating
activities
    
    
    2,528
    
    
    
    17,896
    
    
    
    (63
    )
    
    
    
    
    
    
    20,361CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (7,572
    )
    
    
    (2,168
    )
    
    
    
    
    
    
    
    
    
    
    (9,740
    )Intercompany activities
    
    
    13,414
    
    
    
    (13,414
    )
    
    
    
    
    
    
    
    
    
    
    Proceeds from sale of property and
equipment
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29Net cash
provided by (used in) investing activities
    
    
    5,871
    
    
    
    (15,582
    )
    
    
    
    
    
    
    
    
    
    
    (9,711
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital
lease obligations
    
    
    (648
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (648
    )Payments on long-term debt
    
    
    (14,603
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,603
    )Proceeds from long-term debt
    
    
    3,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,750Net cash used in financing activities
    
    
    (11,501
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,501
    )Net increase (decrease) in cash and
cash equivalents
    
    
    (3,102
    )
    
    
    2,314
    
    
    
    (63
    )
    
    
    
    
    
    
    (851
    )CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    5,593
    
    
    
    146
    
    
    
    74
    
    
    
    
    
    
    
    5,813Balance, end of year
    
    $
    2,491
    
    
    $
    2,460
    
    
    $
    11
    
    
    $
    
    
    
    $
    4,962
 66




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##### Table of Contents



2005 (b)
    
    Revenues
    
    
    Gross Profit (a)
    
    
    Net Income(Loss)1st Quarter
    
    $
    108,978
    
    
    $
    23,172
    
    
    $
    2,8572nd Quarter
    
    
    80,618
    
    
    
    18,418
    
    
    
    4283rd Quarter
    
    
    81,084
    
    
    
    14,956
    
    
    
    (7,543
    )4th Quarter
    
    
    81,655
    
    
    
    13,537
    
    
    
    (360
    )$
    352,335
    
    
    $
    70,083
    
    
    $
    (4,618
    )
 2004 (b)
    
    Revenues
    
    
    Gross Profit (a)
    
    
    Net Income1st Quarter
    
    $
    105,117
    
    
    $
    22,380
    
    
    $
    4902nd Quarter
    
    
    77,672
    
    
    
    16,806
    
    
    
    1,3803rd Quarter
    
    
    78,368
    
    
    
    16,908
    
    
    
    1,2414th Quarter
    
    
    80,184
    
    
    
    17,099
    
    
    
    2,034$
    341,341
    
    
    $
    73,193
    
    
    $
    5,145
 
 (a)
    
    Represents total revenues less cost of sales.(b)
    
    Our financial reporting calendar has thirteen four-week periods ending on the last Sunday in
December. The first quarter includes four four-week periods. The second, third and fourth
quarters include three four-week periods. 67




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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 .
  
 PART III
 
 Item 10 . Directors and Executive Officers of the Registrant .
 (a) Directors and Executive Officers of the Registrant
  Name
    
    Age
    
    Position with TRCJoseph F. Trungale
    
    
    63
    
    
    Director, President and Chief Executive OfficerJames F. Barrasso
    
    
    54
    
    
    Executive Vice President, Foodservice Development
 Joseph F. Trungale
  68




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##### Table of Contents



James F. Barrasso
  (b) Code of Ethics
 www.perkinsrestaurants.com
 69




---



##### Table of Contents



Item 11 . Executive Compensation .
  Long TermCompensation
    
    SecuritiesRestricted
    
    UnderlyingAnnual Compensation
    
    Stock
    
    Options/
    
    All OtherName and Principal Position
    
    Year
    
    Salary ($)
    
    Bonus ($)
    
    Awards ($)
    
    SARs (#)(1)
    
    CompensationJoseph F. Trungale
    
    
    2005
    
    
    
    382,232
    
    
    
    296,043
    
    
    
    1,351,754
    (6)
    
    
     
    (6)
    
    
    132,501
    (7)President and
    
    
    2004
    
    
    
    363,755
    
    
    
    127,104
    
    
    
    108,481
    
    
    
    10.9329
    
    
    
    106,086
    (2)(3)Chief Executive Officer
    
    
    2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    James F. Barrasso
    
    
    2005
    
    
    
     221,220
    
    
    
    469,582
    
    
    
     1,072,634
    (6)
    
    
     
    (6)
    
    
     515,908
    (7)Executive Vice President, Food
    
    
    2004
    
    
    
    256,149
    
    
    
    27,494
    
    
    
    41,401
    
    
    
    8.6752
    
    
    
    16,874
    (3)(5)Service Development
    
    
    2003
    
    
    
    212,242
    
    
    
    25,182
    
    
    
    27,998
    
    
    
    7.6547
    
    
    
    6,000
    (5)Donald N. Smith (4)
    
    
    2005
    
    
    
     446,493
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Former Chairman and Chief
    
    
    2004
    
    
    
    567,802
    
    
    
    272,915
    
    
    
    
    
    
    
    
    
    
    
    Executive Officer
    
    
    2003
    
    
    
    535,326
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Michael P. Donahoe (4)
    
    
    2005
    
    
    
     269,524
    
    
    
     323,943
    
    
    
     1,072,634
    (6)
    
    
    
    (6)
    
    
    270,484
    (7)Former Executive Vice President,
    
    
    2004
    
    
    
    280,565
    
    
    
    59,359
    
    
    
    44,401
    
    
    
    8.6752
    
    
    
    16,874
    (3)(5)Finance & Chief Financial Officer
    
    
    2003
    
    
    
    246,077
    
    
    
    
    
    
    
    27,998
    
    
    
    7.6547
    
    
    
    176,091
    (2)(5)
 
 1.
    
    Represents amounts earned under the 2002 Stock Option Plan. Options under the 2002 Stock
Option Plan were awarded with a strike price of $0.01 per share to vest over six to ten
years. At December 26, 2004, the value of our parents stock was estimated at $23,347 per
share by an independent appraiser. During fiscal 2004, Mr. Trungale had 4.646 shares vest
and Mr. Donahoe and Mr. Barrasso each had 1.773 shares vest.2.
    
    Includes relocation costs paid by us for $90,000 on behalf of Mr. Trungale and $170,091
on behalf of Mr. Donahoe.3.
    
    Includes payments made under the SERP I in the amount of $16,086 for Mr. Trungale, and
$10,724 for Mr. Donahoe and Mr. Barrasso.4.
    
    The Company no longer employs Mr. Smith and Mr. Donahoe. Mr. Smith resigned his
position in conjunction with the Acquisition. On November 16, 2005, Mr. Donahoe resigned
his position as Director, Executive Vice President, Finance and Chief Financial Officer of
the Company and all his positions with our parent and subsidiaries.5.
    
    Includes $6,150 for 2004 and $6,000 for 2003 of Perkins matching contributions
allocated to the named executive officers under the Perkins Retirement Savings Plan and the
Deferred Compensation Plan.6.
    
    Represents payments made under the 2002 Stock Option Plan in conjunction
 with the Acquisition. All shares under the 2002 Stock Option
Plan vested and were redeemed in conjunction with the Acquisition. At December 25, 2005, no stock option or other equity compensation plans existed.7.
    
    For Mr. Barrasso, the amount represents payments of $88,334
under the Supplemental Executive Retirement Plan (SERP) and $427,575
under the Non Qualified Deferred Compensation Plan (NQDC).
For Mr. Donahoe, the amount represents payments of $88,334 under the SERP
and $182,150 under the NQDC. For Mr. Trungale, the amount represents payments of $132,501 under the SERP. 70




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##### Table of Contents



Compensation of Directors.
  
 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 TRC Holding LLCs
outstanding equity;
    
    Each member of TRC Holding LLCs board of directors;
    
    Each of our executive officers named in the executive compensation table; and
    
    All members of TRC Holding LLCs board of directors and our executive officers as a group.
  Percentage
    
    
    
    
    
    PercentageNumber
    
    of Total
    
    Number
    
    of Totalof Class A
    
    Class A
    
    of Class B
    
    Class BName and Address of Beneficial Owner
    
    Units
    
    Units
    
    Units
    
    UnitsCastle Harlan Partners IV, LP (1)(2)
    
    
    592,237.23627
    
    
    
    90.11
    %
    
    
    592,237.23627
    
    
    
    90.11
    %John K. Castle (1)(3)
    
    
    592,237.23627
    
    
    
    90.11
    %
    
    
    592,237.23627
    
    
    
    90.11
    %Donald N. Smith (1)
    
    
    64,993.50065
    
    
    
    9.89
    %
    
    
    64,993.50065
    
    
    
    9.89
    %Joseph F. Trungale (1)
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    0.00
    %James F. Barrasso (1)
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    0.00
    %Robert K. Winters (1)
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    0.00
    %Allan C. Bernstein (1)
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    0.00
    %Dr. John C. Connolly (1)
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    0.00
    %David B. Pittaway (1)
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    0.00
    %William M. Pruellage (1)
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    0.00
    %All directors and executive
officers as a group (including
those listed above)
    
    
    657,230.73692
    
    
    
    100.00
    %
    
    
    657,230.73692
    
    
    
    100.00
    %
 
 (1)
    
    The address for CHP IV and Messrs. Castle, Pittaway and Pruellage is c/o Castle Harlan,
Inc., 150 East 58th Street, New York, New York 10155. The address for Messrs. Bernstein
and Connolly is Mortons Restaurant Group, Inc., 325 North LaSalle Street, Suite 500, Chicago,
Illinios 60610. The address for Mr. Smith is 90 Hawthorne Lane, Barrington, Illinois 60010 and 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. CHP IV disclaims beneficial ownership of
these units. 71




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##### Table of Contents



(3)
    
    John K. Castle, a member of TRC Holding 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, the direct parent of TRC Holding LLC, and as such may be deemed a beneficial owner of the units of TRC Holding LLC owned by CHP IV and
its affiliates. Mr. Castle disclaims beneficial ownership of all units in excess of his
proportionate partnership share of CHP IV. (b) Securities Authorized for Issuance Under Equity Compensation Plans.
  (c) Arrangements Related to a Possible Change in Control of the Company.
  
 Item 13 . Certain Relationships and Related Transactions .
 (a) Transactions with Management and Others.
 Management Agreement
    Other Board Affiliations
  72




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##### Table of Contents



Sales of Foxtail Products to a Licensee of an Affiliate of Castle Harlan
  Pre-Acquisition Relationships
    
 Item 14 . Principal Accountant Fees And Services .
  2005
    
    
    2004Audit fees (2)
    
    $
    762,000
    
    
    $
    193,000Tax fees (1)
    
    
    5,000
    
    
    
    5,000Total
    
    $
    767,000
    
    
    $
    198,000
 
 (1)
    
    Represents fees primarily related to review of the Companys federal income tax
return.(2)
    
    Approximately $13,000 of the 2004 amount relates to the 2003 financial
statement audit. 73




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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:
      2.
    
    The following Financial Statement Schedule for the Successor Period from
September 22, 2005 through December 25, 2005, for the Predecessor period from December
27, 2004 through September 21, 2005 and for the Predecessor years ended December 26,
2004 and December 28, 2003 is included:
  Report of Independent Registered Public Accounting Firm on Financial
Statement Schedule.II.
    
    Valuation and Qualifying Accounts.
  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. Smith3.1*
    
    
    Certificate of Incorporation of The Restaurant Company3.2*
    
    
    Bylaws of The Restaurant Company4.1*
    
    
    Indenture dated September 21, 2005 by and among TRC Finance,
Inc., The Restaurant Company, the Guarantors and The Bank of New
York, as Trustee4.2*
    
    
    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., The Restaurant Company, the Guarantors
and the Initial Purchasers4.4*
    
    
    Form of Guarantee (included in Exhibit 4.1)
 74




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##### Table of Contents



Exhibit No.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*
    
    
    Credit Agreement, dated as of September 21, 2005, by and among
The Restaurant Company, as Borrower, The Restaurant Holding
Corporation, as Holdings, the Lenders referred to therein, and
Wachovia Bank, National Association, as Administrative Agent,
Documentation Agent Swingline Lender and Issuing Lender, Wachovia
Capital Markets, LLC, as Sole Lead Arranger and Sole Book Manager
and BNP Paribas, as Syndication Agent10.3*
    
    
    Collateral Agreement, dated as of September 21, 2005, by and
among The Restaurant Holding Corporation, The Restaurant Company,
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 The
Restaurant Company in favor of BNP Paribas, in the original
amount of $12,500,00010.5*
    
    
    Revolving Credit Note, dated as of September 21, 2005, by The
Restaurant Company 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., The Restaurant Company, The Restaurant Company
of Minnesota, Perkins Finance Corporation and TRC Realty LLC10.18**
    
    
    Employment Agreement between The Restaurant Company and Joseph F.
Trungale, President and Chief Executive Officer10.19**
    
    
    The Restaurant Company 2005 Corporate Annual Incentive Plan21.1*
    
    
    List of subsidiaries of The Restaurant Company23.1*
    
    
    Consent of PricewaterhouseCoopers LLP31.1
    
    
    Principal Executive Officer Certification Pursuant to
Sarbanes-Oxley Act of 2002, Section 30231.2
    
    
    Principal Financial Officer Certification Pursuant to
Sarbanes-Oxley Act of 2002, Section 302.
 
 *
    
    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.**
    
    Compensation Plan or Arrangement 75




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##### Table of Contents



Trademark Notice .
  [Intentionally Left Blank]
 76




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##### Table of Contents



rd
 THE RESTAURANT COMPANYBy:
    
    /s/ Joseph F. TrungaleChief Executive Officer
 rd
 Signature
    
    
    
    Title/s/ Joseph F. Trungale
    
    
    
    President and Chief Executive OfficerJoseph F. Trungale
    
    
    
    (Principal Executive Officer)/s/ Karen L. Young
    
    
    
    Acting Senior Financial DirectorKaren L. Young
    
    
    
    (Principal Financial and Accounting Officer)
  77




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
on
Financial Statement Schedule
 
  
 
 78




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##### Table of Contents



Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EAdditionsBalance at
    
    
    Charged
    
    
    Charged
    
    
    Deductions
    
    
    BalanceBeginning of
    
    
    to Costs &
    
    
    to Other
    
    
    from
    
    
    at CloseDescription
    
    Period
    
    
    Expenses
    
    
    Accounts
    
    
    Reserves
    
    
    of PeriodFISCAL YEAR ENDED
DECEMBER 25, 2005 (Successor)Allowance for
Doubtful Accounts
    
    $
    1,279
    
    
    $
    661
    
    
    $
    
    
    
    $
    (356
    )(a)
    
    $
    1,584Reserve for
Disposition of
Assets
    
    $
    156
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    156FISCAL YEAR ENDED
DECEMBER 26, 2004 (Predecessor)Allowance for
Doubtful Accounts
    
    $
    1,003
    
    
    $
    719
    
    
    $
    
    
    
    $
    (443
    )(a)
    
    $
    1,279Reserve for
Disposition of
Assets
    
    $
    156
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    156FISCAL YEAR ENDED
DECEMBER 28, 2003 (Predecessor)Allowance for
Doubtful Accounts
    
    $
    1,174
    
    
    $
    552
    
    
    $
    
    
    
    $
    (723
    )(a)
    
    $
    1,003Reserve for
Disposition of
Assets
    
    $
    156
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    156
 
 (a)
    
    Represents uncollectible accounts written off, net of recoveries, and net costs associated with direct financing sublease receivables for which a reserve was established. S-1