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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 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 333-131004
 PERKINS & MARIE CALLENDERS INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    62-1254388
(I.R.S. Employer Identification No.)6075 Poplar Ave. Suite 800 Memphis, TN
(Address of principal executive offices)
    
    38119
(Zip Code)
 
  Name of each exchangeTitle of each class
    
    on which registered
 None
 None
 o þ
 o þ
 o þ
 þ
  o o þ
 o þ
 Not Applicable
  Class: Common Stock, $.01 par value per share
    
    Outstanding as of December 31, 2006: 10,820 sharesDocuments incorporated by reference: None




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TABLE OF CONTENTS  PART IItem 1. BusinessItem 1a. Risk FactorsItem 1b. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to Vote of Security HoldersPART 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, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.Item 13. Certain Relationships and Related Transactions and Director IndependenceItem 14. Principal Accounting Fees And ServicesPART IVItem 15. Exhibits and Financial Statement SchedulesSIGNATURESEx-10.18 Trungale Employment AgreementEx-10.19 Stryker Employment AgreementEx-10.20 Barrasso Employment AgreementEx-10.21 Conine Employment AgreementEx-31.1 Section 302 CertificationEx-31.2 Section 302 CertificationEx-32.1 Section 906 CertificationEx-32.2 Section 906 Certification    Table of Contents  
 PART I
 
 Item 1 . Business .
 General .
  Formation and History of Perkins & Marie Callenders Inc.
    Financial Statement Presentation.
 www.perkinsrestaurants.com and www.mcpies.com
 Operations .
 2




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3




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Design Development .
 System Development .
  Research and Development .
 Significant Franchisees .
 4




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Significant
Licensees.
 Territorial Rights .
 Source of Materials .
 Patents, Trademarks and Other Intellectual Property .
 Competition .
 Employees .
 Regulation .
 5




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Segment Information .
 
 Item 1a. Risk Factors.
 The impact of a decline in general economic conditions or changes in consumer preferences could
adversely affect our restaurant sales growth, cash flow and overall financial results.
   We may not be able to compete successfully with other restaurants.
  6




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Food-borne illness incidents, claims of food-borne illness and adverse publicity could adversely
affect our future operating performance.
   We depend upon frequent deliveries of food and other supplies and price increases by our suppliers
could harm our business.
   Our expansion plans present risks.
  
    
    find quality locations;
    
    reach acceptable agreements regarding the lease or purchase of locations;
    
    comply with applicable zoning, land use and environmental regulations;
 7




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
    
    raise or have available an adequate amount of money for construction and opening costs;
    
    timely hire, train and retain the skilled management and other employees necessary
to meet staffing needs;
    
    obtain, for an acceptable cost, required permits and approvals;
    
    efficiently manage the amount of time and money used to build and open each new
restaurant; and
    
    general economic conditions.
    Labor shortages could slow our growth and adversely impact existing restaurants.
  8




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




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Increased energy costs could negatively impact the cost structure of our business.
  We may be locked into long-term and non-cancelable leases that we want to cancel, and may be unable
to renew leases that we want to extend at the end of their terms.
   Our controlling stockholder may take actions that conflict with the interests of others.
  The failure to enforce and maintain our intellectual property rights could adversely affect our
ability to maintain brand awareness.
   We may make acquisitions, which present additional risks.
  10




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
    
    adverse short-term effects on our reported operating results;
    
    diversion of managements attention;
    
    difficulties assimilating and integrating the operations of the acquired company
with our own; and
    
    unanticipated liabilities or contingencies relating to the acquired company.
 We are subject to extensive government regulations.
     11




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Restaurant chains face the risk of litigation in connection with operations.
   
 Item 1b. Unresolved Staff Comments.
  12




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Item 2 . Properties
  Perkins Restaurants
    
    Marie Callenders RestaurantsCompany-
    
    
    
    
    
    
    
    
    
    Company-Operated
    
    Franchised
    
    Total
    
    Operated
    
    Franchised
    
    TotalArizona
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    7
    
    
    
    
    
    
    
    7Arkansas
    
    
    
    
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    California
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    40
    
    
    
    102Colorado
    
    
    8
    
    
    
    4
    
    
    
    12
    
    
    
    
    
    
    
    1
    
    
    
    1Delaware
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Florida
    
    
    39
    
    
    
    18
    
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    Georgia
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Idaho
    
    
    
    
    
    
    8
    
    
    
    8
    
    
    
    1
    
    
    
    
    
    
    
    1Illinois
    
    
    7
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    Indiana
    
    
    
    
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Iowa
    
    
    16
    
    
    
    3
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    Kansas
    
    
    2
    
    
    
    4
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    Kentucky
    
    
    
    
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Maryland
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Michigan
    
    
    7
    
    
    
    2
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    Minnesota
    
    
    38
    
    
    
    35
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    Missouri
    
    
    7
    
    
    
    1
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    Montana
    
    
    
    
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    Nebraska
    
    
    
    
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    Nevada
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    3
    
    
    
    7New Jersey
    
    
    
    
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    New York
    
    
    
    
    
    
    15
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    North Carolina
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    North Dakota
    
    
    3
    
    
    
    5
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    Ohio
    
    
    
    
    
    
    41
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    Oklahoma
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    2Oregon
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    1
    
    
    
    5Pennsylvania
    
    
    7
    
    
    
    49
    
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    South Carolina
    
    
    
    
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    South Dakota
    
    
    
    
    
    
    10
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    Tennessee
    
    
    4
    
    
    
    11
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    Texas
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4Utah
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Virginia
    
    
    
    
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Washington
    
    
    
    
    
    
    6
    
    
    
    6
    
    
    
    3
    
    
    
    
    
    
    
    3West Virginia
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Wisconsin
    
    
    15
    
    
    
    27
    
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    Wyoming
    
    
    
    
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Canada
    
    
    
    
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    Mexico
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Total
    
    
    155
    
    
    
    322
    
    
    
    477
    
    
    
    92
    
    
    
    46
    
    
    
    138
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Number of Properties (1)Use
    
    Owned
    
    Leased
    
    TotalOffices and Manufacturing Facilities(2)
    
    
    1
    
    
    
    11
    
    
    
    12Perkins Restaurant and Bakery(3)
    
    
    
    
    
    
    155
    
    
    
    155Marie Callenders Restaurant and Bakery(4,5)
    
    
    
    
    
    
    92
    
    
    
    92
 
 (1)
    
    In addition to the properties noted in the schedule above, we lease
twenty-two properties which are subleased to others and we own two properties which are
leased to others.(2)
    
    Our principal office is located in Memphis, Tennessee, and currently
comprises approximately 50,000 square feet under a lease expiring on May 31, 2013, subject
to a renewal by us for a maximum of 60 months. We also lease an
office which comprises approximately 6,300 square feet in Mission Viejo, California,
with a lease term through April 30, 2013 with no renewal options. We also own a 25,149 square-foot
manufacturing facility in Cincinnati, Ohio, and lease two other properties in Cincinnati,
Ohio, consisting of 36,000 square feet and 120,000 square feet, and
one property in Corona, California, consisting of 29,600 square feet, for use as manufacturing
facilities.(3)
    
    The average term of the remaining leases is approximately twelve years,
excluding renewal options. The longest lease term will mature in approximately 20 years and
the shortest lease term will mature in less than 1 year, assuming the exercise of all
renewal options.(4)
    
    Includes one Callenders Grill restaurant and the East Side Marios
restaurant.(5)
    
    The average term of the remaining leases is approximately six years,
excluding renewal options. The longest lease term will mature in approximately 34 years and
the shortest lease term will mature in less than 1 year. 
 Item 3 . Legal Proceedings .
  
 Item 4 . Submission of Matters to Vote of Security Holders .
  14




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity and Related Stockholder
Matters and Issuer Purchases of Equity Securities.
 Market information
  Holders
  Dividends
  Purchases of Equity Securities
  [Intentionally Left Blank ]
 15




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Item 6 . Selected Financial Data .
 
  2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Income Data:Revenues
    
    $
    594,190
    
    
    $
    321,473
    
    
    $
    228,760
    
    
    $
    227,455
    
    
    $
    226,329Net Loss
    
    $
    (9,372
    )
    
    $
    (15,231
    )
    
    $
    (16,318
    )
    
    $
    (12,441
    )
    
    $
    (11,020
    )Balance Sheet Data:Total assets
    
    $
    346,845
    
    
    $
    346,276
    
    
    $
    56,459
    
    
    $
    60,662
    
    
    $
    57,628Long-term debt and capital lease obligations (a)
    
    $
    292,628
    
    
    $
    300,077
    
    
    $
    105,114
    
    
    $
    101,273
    
    
    $
    85,994Distributions
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Statistical Data:Full service Restaurants in operation at end of year:Company-operated Perkins
    
    
    155
    
    
    
    151
    
    
    
    
    
    
    
    
    
    
    
    Franchised Perkins (b)
    
    
    322
    
    
    
    331
    
    
    
    
    
    
    
    
    
    
    
    Total Perkins
    
    
    477
    
    
    
    482
    
    
    
    
    
    
    
    
    
    
    
    Company-operated Marie Callenders
    
    
    91
    
    
    
    92
    
    
    
    93
    
    
    
    95
    
    
    
    96Company-operated East Side Marios
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Franchised Marie Callenders
    
    
    46
    
    
    
    47
    
    
    
    51
    
    
    
    54
    
    
    
    59Total Marie Callenders
    
    
    138
    
    
    
    140
    
    
    
    145
    
    
    
    150
    
    
    
    156Average annual sales per company-operated Perkins restaurant
    
    $
    1,944
    
    
    $
    1,866
    
    
    $
    
    
    
    $
    
    
    
    $
    Average annual royalties per franchised Perkins restaurant
    
    $
    66
    
    
    $
    64
    
    
    $
    
    
    
    $
    
    
    
    $
    Average annual sales per company-operated Marie Callenders restaurant
    
    $
    2,369
    
    
    $
    2,298
    
    
    $
    2,202
    
    
    $
    2,122
    
    
    $
    2,081Average annual royalties per franchised Marie Callenders restaurant
    
    $
    105
    
    
    $
    107
    
    
    $
    102
    
    
    $
    98
    
    
    $
    99
 
 (a)
    
    Net of current maturities of $1,706, $3,311, $3,127, $3,616 and $7,575.(b)
    
    Excludes one franchised Perkins Express. 16




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




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OVERVIEW
  18




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KEY FACTORS AFFECTING OUR RESULTS
  19




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SUMMARY OF CRITICAL ACCOUNTING POLICIES
         20




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SUBSEQUENT EVENTS
    22




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SYSTEM DEVELOPMENT
  RESULTS OF OPERATIONS
 Definition of
Common Control in Relation to FASB Statement No. 141
  23




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Consolidated Results
    
    Perkins Restaurants
    
    Marie Callender's Restaurants2006
    
    2005
    
    2004
    
    2006
    
    2005
    
    2004
    
    2006
    
    2005
    
    2004Food sales
    
    $
    581,424
    
    
    $
    319,429
    
    
    $
    228,318
    
    
    $
    295,762
    
    
    $
    73,508
    
    
    $
    
    
    
    $
    216,342
    
    
    $
    215,464
    
    
    $
    214,923Franchise and other revenue
    
    
    31,448
    
    
    
    15,011
    
    
    
    9,397
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intersegment revenue
    
    
    (18,682
    )
    
    
    (12,967
    )
    
    
    (8,955
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Revenues
    
    $
    594,190
    
    
    $
    321,473
    
    
    $
    228,760
    
    
    $
    295,762
    
    
    $
    73,508
    
    
    $
    
    
    
    $
    216,342
    
    
    $
    215,464
    
    
    $
    214,923Food cost
    
    
    26.9
    %
    
    
    28.0
    %
    
    
    28.3
    %
    
    
    25.1
    %
    
    
    26.6
    %
    
    
    n/a
    
    
    
    29.9
    %
    
    
    30.5
    %
    
    
    30.5
    %Labor and benefits
    
    
    31.2
    %
    
    
    31.1
    %
    
    
    31.5
    %
    
    
    36.3
    %
    
    
    36.4
    %
    
    
    n/a
    
    
    
    32.1
    %
    
    
    32.2
    %
    
    
    32.8
    %Operating expenses
    
    
    25.3
    %
    
    
    26.6
    %
    
    
    26.5
    %
    
    
    25.9
    %
    
    
    26.9
    %
    
    
    n/a
    
    
    
    30.0
    %
    
    
    29.0
    %
    
    
    27.6
    %Segment Profit (Loss)
    
    $
    (9,372
    )
    
    $
    (15,231
    )
    
    $
    (16,318
    )
    
    $
    25,149
    
    
    $
    4,624
    
    
    
    n/a
    
    
    $
    9,220
    
    
    $
    9,988
    
    
    $
    11,378
 Perkins Franchise
    
    Marie Callender's Franchise
    
    Foxtail2006
    
    2005
    
    2004
    
    2006
    
    2005
    
    2004
    
    2006
    
    2005
    
    2004Food sales
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    69,320
    
    
    $
    30,457
    
    
    $
    13,395Franchise and other revenue
    
    
    22,052
    
    
    
    5,418
    
    
    
    
    
    
    
    4,842
    
    
    
    5,045
    
    
    
    5,207
    
    
    
    
    
    
    
    
    
    
    
    Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,682
    )
    
    
    (12,967
    )
    
    
    (8,955
    )Total Revenues
    
    $
    22,052
    
    
    $
    5,418
    
    
    $
    
    
    
    $
    4,842
    
    
    $
    5,045
    
    
    $
    5,207
    
    
    $
    50,638
    
    
    $
    17,490
    
    
    $
    4,440Food cost
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    56.9
    %
    
    
    58.3
    %
    
    
    61.0
    %Labor and benefits
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    12.3
    %
    
    
    11.8
    %
    
    
    10.5
    %Operating expenses
    
    
    9.6
    %
    
    
    11.8
    %
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    9.4
    %
    
    
    8.7
    %
    
    
    10.8
    %Segment Profit (Loss)
    
    $
    19,929
    
    
    $
    4,778
    
    
    
    n/a
    
    
    $
    4,841
    
    
    $
    5,044
    
    
    $
    5,207
    
    
    $
    8,255
    
    
    $
    4,891
    
    
    $
    2,278
 Other (a)2006
    
    2005
    
    2004Food sales
    
    $
    
    
    
    $
    
    
    
    $
    Franchise and other revenue
    
    
    4,554
    
    
    
    4,548
    
    
    
    4,190Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    Total Revenues
    
    $
    4,554
    
    
    $
    4,548
    
    
    $
    4,190Food cost
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aLabor and benefits
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aOperating expenses
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aSegment Profit (Loss)
    
    $
    (76,766
    )
    
    $
    (44,556
    )
    
    $
    (35,181
    )
 
 (a)
    
    Licensing revenue of $4,107,000, $3,747,000 and $3,455,000 for fiscal 2006, 2005 and 2004,
respectively, is included in the Other segment revenues. The Other segment loss includes corporate
general and administrative expenses, interest expense and other non-operational expenses. For
details of the other segment loss, see Note 17, Segment
Reporting in the Notes to Consolidated Financial Statements. 25




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##### Table of Contents



Year Ended December 31, 2006 Compared to the Year Ended December 25, 2005
 Restaurant Segments Overview
    Foxtail Segment Overview
   Franchise Segments Overview
    Revenues
  26




---



##### Table of Contents



Costs and Expenses
 Food Cost
      Labor and Benefits Expenses
  27




---



##### Table of Contents



Operating Expenses
   General and Administrative Expenses
  Depreciation and Amortization
  Asset
Impairments and Closed Store Expenses
  Gain
on Extinguishment of Debt
  28




---



##### Table of Contents



Interest, net
  Taxes
  Year Ended December 25, 2005 Compared to the Year Ended December 30, 2004
 Restaurant Segments Overview
    Foxtail Segment Overview
   Franchise Segments Overview
 29




---



##### Table of Contents



Revenues
       Costs
and Expenses
 Food Cost
     30




---



##### Table of Contents



Labor and Benefits Expenses
    Operating Expenses
   General and Administrative Expenses
  Depreciation and Amortization
  Asset
Impairments and Closed Store Expenses
  Interest, net
 31




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##### Table of Contents



Taxes
  CAPITAL RESOURCES AND LIQUIDITY
     Working Capital and Cash Flows
  Operating activities
  Investing activities
  Financing activities
  32




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##### Table of Contents



Year Ended
    
    Year Ended
    
    Year EndedDecember 31,
    
    December 25,
    
    December 30,2006
    
    2005
    
    2004Cash flows provided by
operating activities
    
    $
    15,233
    
    
    $
    19,148
    
    
    $
    3,855Cash flows used in
investing activities
    
    
    (18,013
    )
    
    
    (230,164
    )
    
    
    (5,193
    )Cash flows provided by
financing activities
    
    
    7,861
    
    
    
    213,205
    
    
    
    31
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 25,
    
    
    December 30,2006
    
    
    2005
    
    
    2004New restaurants
    
    $
    2,980
    
    
    $
    69
    
    
    $
    Restaurant improvements
    
    
    7,815
    
    
    
    6,263
    
    
    
    3,055Remodeling and reimaging
    
    
    6,963
    
    
    
    3,065
    
    
    
    775Manufacturing
    
    
    563
    
    
    
    383
    
    
    
    114Other
    
    
    1,241
    
    
    
    299
    
    
    
    1,737Total Capital Expenditures
    
    $
    19,562
    
    
    $
    10,079
    
    
    $
    5,681
  CASH CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
 Cash Contractual Obligations:
 33




---



##### Table of Contents



Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    TotalContractual Obligations10% Senior Notes
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    190,000
    
    
    $
    190,000Term Loan
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    94,500
    
    
    
    99,500Revolver
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital lease obligations
    
    
    1,509
    
    
    
    1,260
    
    
    
    1,110
    
    
    
    1,007
    
    
    
    792
    
    
    
    28,172
    
    
    
    33,850Operating leases
    
    
    35,984
    
    
    
    34,953
    
    
    
    32,409
    
    
    
    30,244
    
    
    
    26,826
    
    
    
    265,342
    
    
    
    425,758Interest on indebtedness (1)
    
    
    27,069
    
    
    
    26,988
    
    
    
    26,907
    
    
    
    26,826
    
    
    
    26,745
    
    
    
    43,442
    
    
    
    177,977Purchase commitments (2)
    
    
    68,337
    
    
    
    5,058
    
    
    
    1,898
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    75,426Management fee (3)
    
    
    5,576
    
    
    
    5,576
    
    
    
    5,576
    
    
    
    5,408
    
    
    
    3,576
    
    
    
    3,576
    
    
    
    29,288Total contractual obligations
    
    $
    139,475
    
    
    $
    74,835
    
    
    $
    68,900
    
    
    $
    64,618
    
    
    $
    58,939
    
    
    $
    625,032
    
    
    $
    1,031,799
 
 (1)
    
    Represents interest expense using the interest rate of 10.0% on the $190,000,000 of 10% Senior
Notes and 8.11% on the $99,500,000 Term Loan and assumes no borrowings are drawn under our
Revolver. Excludes interest on capital lease obligations and fees on any letters of credit that
may be issued under our Credit Agreement.(2)
    
    Primarily represents commitments to purchase food products for the restaurant and
manufacturing segments.(3)
    
    The company is obligated for management fees due to CHI; however, as long as the current
lending agreements are in place, the Company is limited as to the amount that can be paid each
year.   RECENT ACCOUNTING PRONOUNCEMENTS
   34




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##### Table of Contents



35




---



##### Table of Contents



IMPACT OF INFLATION
  IMPACT OF GOVERNMENTAL REGULATION
  ACCOUNTING REPORTING PERIOD
   RECLASSIFICATIONS
  INFORMATION CONCERNING FORWARD LOOKING STATEMENTS
   
    
    competitive pressures and trends in the restaurant industry;
    
    prevailing prices and availability of food, supplies and labor;
 36




---



##### Table of Contents




    
    relationships with franchisees and financial health of franchisees;
    
    general economic conditions and demographic patterns;
    
    our substantial indebtedness;
    
    our ability to integrate acquisitions;
    
    our development and expansion plans; and
    
    statements covering our business strategy.
  37




---



##### Table of Contents



Item 7A . Quantitative and Qualitative Disclosures About Market Risk .
  Interest Rate Risk
 Foreign Currency Exchange Rate Risk
 Commodity Price Risk
 38




---



##### Table of Contents



Item 8 . Financial Statements and Supplementary Data .
 RESPONSIBILITY FOR FINANCIAL STATEMENTS
    39




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
      
 40




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
     
  41




---



##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 25,
    
    
    December 30,2006
    
    
    2005
    
    
    2004REVENUES:Food sales
    
    $
    562,742
    
    
    $
    306,462
    
    
    $
    219,363Franchise and other revenue
    
    
    31,448
    
    
    
    15,011
    
    
    
    9,397Total Revenues
    
    
    594,190
    
    
    
    321,473
    
    
    
    228,760COSTS AND EXPENSES:Cost of sales (excluding depreciation
shown below):Food cost
    
    
    159,751
    
    
    
    90,095
    
    
    
    64,776Labor and benefits
    
    
    185,405
    
    
    
    99,841
    
    
    
    71,951Operating expenses
    
    
    150,102
    
    
    
    85,485
    
    
    
    60,669General and administrative
    
    
    48,188
    
    
    
    21,242
    
    
    
    15,697Transaction costs
    
    
    5,674
    
    
    
    867
    
    
    
    Depreciation and amortization
    
    
    25,641
    
    
    
    11,594
    
    
    
    8,312Interest, net
    
    
    36,197
    
    
    
    26,362
    
    
    
    19,665Asset impairments
    
    
    3,089
    
    
    
    611
    
    
    
    1,781Gain on extinguishment of debt
    
    
    (12,642
    )
    
    
    (565
    )
    
    
    Other, net
    
    
    1,509
    
    
    
    1,181
    
    
    
    1,481Total Costs and Expenses
    
    
    602,914
    
    
    
    336,713
    
    
    
    244,332Loss before income taxes and minority interests
    
    
    (8,724
    )
    
    
    (15,240
    )
    
    
    (15,572
    )(Provision for) benefit from income taxes
    
    
    (155
    )
    
    
    638
    
    
    
    (26
    )Minority interests
    
    
    (493
    )
    
    
    (629
    )
    
    
    (720
    )NET LOSS
    
    $
    (9,372
    )
    
    $
    (15,231
    )
    
    $
    (16,318
    )
  42




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##### Table of Contents



December 31, 2006
    
    
    December 25, 2005ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    9,069
    
    
    $
    3,988Restricted cash
    
    
    11,193
    
    
    
    8,225Receivables,
less allowances for doubtful accounts of $1,624 and $1,683 in 2006
and 2005, respectively
    
    
    18,316
    
    
    
    16,108Inventories
    
    
    10,996
    
    
    
    11,328Prepaid expenses and other current assets
    
    
    4,824
    
    
    
    4,333Escrow deposits
    
    
    
    
    
    
    7,160Total current assets
    
    
    54,398
    
    
    
    51,142PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization
    
    
    91,044
    
    
    
    78,515INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS
    
    
    238
    
    
    
    311GOODWILL
    
    
    30,038
    
    
    
    43,449INTANGIBLE ASSETS, net of accumulated amortization
    
    
    156,792
    
    
    
    158,688DEFERRED INCOME TAXES
    
    
    708
    
    
    
    OTHER ASSETS
    
    
    13,627
    
    
    
    14,171$
    346,845
    
    
    $
    346,276LIABILITIES AND STOCKHOLDERS INVESTMENTCURRENT LIABILITIES:Accounts payable
    
    $
    22,799
    
    
    $
    21,814Accrued expenses
    
    
    58,288
    
    
    
    53,569Accrued income taxes
    
    
    75
    
    
    
    Franchise advertising contributions
    
    
    5,392
    
    
    
    4,752Current maturities of long-term debt and capital lease obligations
    
    
    1,706
    
    
    
    3,311Total current liabilities
    
    
    88,260
    
    
    
    83,446CAPITAL LEASE OBLIGATIONS, less current maturities
    
    
    6,249
    
    
    
    6,939LONG-TERM DEBT, less current maturities
    
    
    286,379
    
    
    
    293,138DEFERRED INCOME TAXES
    
    
    
    
    
    
    9,728DEFERRED RENT
    
    
    9,768
    
    
    
    7,440OTHER LIABILITIES
    
    
    11,785
    
    
    
    5,238MINORITY INTEREST IN CONSOLIDATED PARTNERSHIPS
    
    
    75
    
    
    
    177STOCKHOLDERS INVESTMENT:Common stock, $.01 par value, 100,000 shares authorized,
10,820 issued and outstanding
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    136,131
    
    
    
    123,907Notes secured by stock
    
    
    
    
    
    
    (1,308
    )Other comprehensive income
    
    
    13
    
    
    
    14Accumulated deficit
    
    
    (191,816
    )
    
    
    (182,444
    )Total stockholders investment
    
    
    (55,671
    )
    
    
    (59,830
    )$
    346,845
    
    
    $
    346,276
  43




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##### Table of Contents



AccumulatedCapital in
    
    
    
    
    
    
    Additional
    
    
    Notes
    
    
    Other
    
    
    RetainedPreferred
    
    
    Common
    
    
    Excess of
    
    
    Treasury
    
    
    Paid-in
    
    
    Secured
    
    
    Comprehensive
    
    
    EarningsStock
    
    
    Stock
    
    
    Par Value
    
    
    Stock
    
    
    Capital
    
    
    By Stock
    
    
    Income
    
    
    (Deficit)
    
    
    TotalBalance
atDecember 25, 2003
    
    $
    56,557
    
    
    $
    
    
    
    $
    8,205
    
    
    $
    (137
    )
    
    $
    
    
    
    $
    (1,113
    )
    
    $
    
    
    
    $
    (150,895
    )
    
    $
    (87,383
    )Accrued
interest on notes
secured by stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (92
    )
    
    
    
    
    
    
    
    
    
    
    (92
    )Stock issuance
    
    
    6,720
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,720Warrant issuance
    
    
    
    
    
    
    
    
    
    
    1,454
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,454Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,318
    )
    
    
    (16,318
    )Balance
atDecember 30, 2004
    
    
    63,277
    
    
    
    
    
    
    
    9,659
    
    
    
    (137
    )
    
    
    
    
    
    
    (1,205
    )
    
    
    
    
    
    
    (167,213
    )
    
    
    (95,619
    )Accrued
interest on notes
secured by stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103
    )
    
    
    
    
    
    
    
    
    
    
    (103
    )Capital contribution and
business combination
    
    
    (63,277
    )
    
    
    1
    
    
    
    (9,659
    )
    
    
    137
    
    
    
    123,907
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,109Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,231
    )
    
    
    (15,231
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,217
    )Balance
atDecember 25, 2005
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    123,907
    
    
    
    (1,308
    )
    
    
    14
    
    
    
    (182,444
    )
    
    
    (59,830
    )Capital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,545
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,545Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,372
    )
    
    
    (9,372
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,373
    )Note forgiveness
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (321
    )
    
    
    1,308
    
    
    
    
    
    
    
    
    
    
    
    987Balance
atDecember 31, 2006
    
    $
    
    
    
    $
    1
    
    
    $
    
    
    
    $
    
    
    
    $
    136,131
    
    
    $
    
    
    
    $
    13
    
    
    $
    (191,816
    )
    
    $
    (55,671
    )
  44




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##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 25,
    
    
    December 30,2006
    
    
    2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (9,372
    )
    
    $
    (15,231
    )
    
    $
    (16,318
    )Adjustments to reconcile net loss to net cash
provided by operating activities :Depreciation and amortization
    
    
    25,641
    
    
    
    11,594
    
    
    
    8,312Amortization of discount
    
    
    321
    
    
    
    74
    
    
    
    Other non-cash income and expense items
    
    
    6,690
    
    
    
    12,437
    
    
    
    (97
    )Gain on extinguishment of debt
    
    
    (12,642
    )
    
    
    (565
    )
    
    
    (Gain) loss on disposition of assets
    
    
    665
    
    
    
    (704
    )
    
    
    209Asset write-down
    
    
    2,058
    
    
    
    1,315
    
    
    
    1,572Minority interests
    
    
    493
    
    
    
    629
    
    
    
    720Equity in net loss of unconsolidated partnerships
    
    
    73
    
    
    
    (54
    )
    
    
    9Net changes in operating assets and liabilities
    
    
    1,306
    
    
    
    8,830
    
    
    
    9,448Total adjustments
    
    
    24,605
    
    
    
    33,556
    
    
    
    20,173Net cash provided by operating activities
    
    
    15,233
    
    
    
    18,325
    
    
    
    3,855CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (19,562
    )
    
    
    (10,079
    )
    
    
    (5,681
    )Acquisition
of business, net of cash acquired of $4,270
    
    
    
    
    
    
    (220,621
    )
    
    
    Proceeds from sale of assets
    
    
    1,549
    
    
    
    1,359
    
    
    
    488Net cash used in investing activities
    
    
    (18,013
    )
    
    
    (229,341
    )
    
    
    (5,193
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (895
    )
    
    
    (798
    )
    
    
    (1,017
    )Payments on long-term debt
    
    
    (112,467
    )
    
    
    (10,640
    )
    
    
    (42,005
    )Proceeds from long-term debt
    
    
    111,941
    
    
    
    190,029
    
    
    
    40,000Debt issuance costs
    
    
    (2,720
    )
    
    
    (9,288
    )
    
    
    Distributions to minority partners
    
    
    (543
    )
    
    
    (602
    )
    
    
    (875
    )Accrued interest on convertible promissory notes
    
    
    
    
    
    
    
    
    
    
    120Accrued interest on notes secured by stock
    
    
    
    
    
    
    (103
    )
    
    
    (92
    )Capital contribution from parent
    
    
    12,545
    
    
    
    44,607
    
    
    
    3,900Net cash provided by financing activities
    
    
    7,861
    
    
    
    213,205
    
    
    
    31Net increase (decrease) in cash and cash equivalents
    
    
    5,081
    
    
    
    2,189
    
    
    
    (1,307
    )CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    3,988
    
    
    
    1,799
    
    
    
    3,106Balance, end of year
    
    $
    9,069
    
    
    $
    3,988
    
    
    $
    1,799
  45




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##### Table of Contents



PERKINS & MARIE CALLENDERS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
 (1) ORGANIZATION:
             46




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(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES :
         47




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##### Table of Contents



YearsOwned:Land improvements
    
    
    3  20Buildings
    
    
    20  30Leasehold improvements
    
    
    3  20
    (a)Equipment
    
    
    1  7Property under Capital Lease:Buildings
    
    
    20
    (a)
 
 (a)
    
    Depreciable life is limited to the lesser of the useful life of the asset or the term of the lease.      48




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Accounting for Leases, as amended
   49




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50




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##### Table of Contents



(3) ACQUISITION:
   Net Assets Acquired:Current assets
    
    $
    30,599Property and equipment, net
    
    
    42,739Other noncurrent assets
    
    
    17,121Liabilities assumed
    
    
    (59,670
    )Net assets acquired
    
    $
    30,789
 51




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Allocation of excess purchase price:Inventory
    
    $
    100Other assets
    
    
    9,163Property and equipment
    
    
    20,087Identifiable intangible assets
    
    
    158,900Goodwill
    
    
    30,038$
    218,288
    (4) COMBINATION OF COMPANIES UNDER COMMON CONTROL:
    52




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Year Ended
    
    Year Ended(in thousands):
    
    December 25, 2005
    

December
30, 2004Net sales
    
    $
    591,060
    
    
    $
    570,101Loss before income taxes and minority interests
    
    
    (15,137
    )
    
    
    (8,274
    )Net loss
    
    
    (15,766
    )
    
    
    (8,994
    )
  (5) SUPPLEMENTAL CASH FLOW INFORMATION :
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 25,
    
    
    December 30,2006
    
    
    2005
    
    
    2004(Increase) Decrease in:Receivables
    
    $
    (1,941
    )
    
    $
    (2,877
    )
    
    $
    2,314Inventories
    
    
    332
    
    
    
    426
    
    
    
    (244
    )Prepaid expenses and other current assets
    
    
    1,509
    
    
    
    10,374
    
    
    
    (44
    )Other assets
    
    
    (447
    )
    
    
    8,308
    
    
    
    (3,831
    )Increase (Decrease) in:Accounts payable
    
    
    985
    
    
    
    941
    
    
    
    (3,162
    )Accrued expenses
    
    
    3,313
    
    
    
    (14,334
    )
    
    
    16,859Other liabilities
    
    
    (2,445
    )
    
    
    5,992
    
    
    
    (2,444
    )$
    1,306
    
    
    $
    8,830
    
    
    $
    9,448
  53




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Year Ended
    
    Year Ended
    
    Year EndedDecember 31,
    
    December 25,
    
    December 30,2006
    
    2005
    
    2004Cash paid for interest
    
    $
    26,308
    
    
    $
    7,225
    
    
    $
    6,220Income taxes paid
    
    
    1,389
    
    
    
    4,405
    
    
    
    46Income tax refunds received
    
    
    605
    
    
    
    6
    
    
    
    
 (6) PROPERTY AND EQUIPMENT :
  December 31,
    
    
    December 25,2006
    
    
    2005Owned:Land and land improvements
    
    $
    1,641
    
    
    $
    1,952Buildings
    
    
    6,021
    
    
    
    7,751Leasehold improvements
    
    
    62,691
    
    
    
    60,475Equipment
    
    
    104,150
    
    
    
    84,694Construction in progress
    
    
    3,942
    
    
    
    1,016178,445
    
    
    
    155,888Less  accumulated depreciation and amortization
    
    
    (92,661
    )
    
    
    (84,645
    )85,784
    
    
    
    71,243Property under Capital Lease:Buildings
    
    
    9,057
    
    
    
    9,457Less  accumulated amortization
    
    
    (3,797
    )
    
    
    (3,652
    )5,260
    
    
    
    5,805Assets Held for Sale, net of accumulated depreciation
    
    
    
    
    
    
    1,467Property and Equipment, net
    
    $
    91,044
    
    
    $
    78,515
 54




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##### Table of Contents



(7) LEASES :
   Lease ObligationsCapital
    
    
    Operating2007
    
    $
    1,509
    
    
    $
    35,9842008
    
    
    1,260
    
    
    
    34,9532009
    
    
    1,110
    
    
    
    32,4092010
    
    
    1,007
    
    
    
    30,2442011
    
    
    792
    
    
    
    26,826Thereafter
    
    
    28,172
    
    
    
    265,342Total minimum lease payments
    
    
    33,850
    
    
    $
    425,758Less:Amounts
representing interest (3.3%-24.57%)
    
    
    (26,910
    )Capital
lease obligations
    
    $
    6,940
  Lessor
    
    
    Sublessor2007
    
    $
    145
    
    
    $
    1,5862008
    
    
    145
    
    
    
    1,4542009
    
    
    151
    
    
    
    1,2772010
    
    
    152
    
    
    
    1,1052011
    
    
    115
    
    
    
    828Thereafter
    
    
    174
    
    
    
    2,140Total minimum lease rentals
    
    $
    882
    
    
    $
    8,390
 55




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##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 25,
    
    
    December 30,2006
    
    
    2005
    
    
    2004Minimum rentals
    
    $
    39,017
    
    
    $
    21,793
    
    
    $
    10,830Contingent rentals
    
    
    1,764
    
    
    
    1,122
    
    
    
    763Less  sublease rentals
    
    
    (966
    )
    
    
    (795
    )
    
    
    (424
    )$
    39,815
    
    
    $
    22,120
    
    
    $
    11,169
  (8) GOODWILL AND INTANGIBLE ASSETS :
  Perkins
    
    
    Perkins
    
    
    
    
    
    
    TotalRestaurants
    
    
    Franchise
    
    
    Manufacturing
    
    
    CompanyBalance as of December 30, 2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Goodwill acquired
    
    
    14,228
    
    
    
    26,815
    
    
    
    2,406
    
    
    
    43,449Balance as of December 25, 2005
    
    
    14,228
    
    
    
    26,815
    
    
    
    2,406
    
    
    
    43,449Purchase accounting adjustments
    
    
    (4,392
    )
    
    
    (8,277
    )
    
    
    (742
    )
    
    
    (13,411
    )Balance as of December 31, 2006
    
    $
    9,836
    
    
    $
    18,538
    
    
    $
    1,664
    
    
    $
    30,038
   December
31,
2006
    
    
    December 25,
2005Amortizing
intangible assets:Franchise agreements
    
    $
    35,000
    
    
    $
    35,000Customer relationships
    
    
    13,300
    
    
    
    13,300Acquired franchise rights
    
    
    11,076
    
    
    
    11,076Design prototype
    
    
    834
    
    
    
    794Subtotal
    
    
    60,210
    
    
    
    60,170Less  Accumulated Amortization
    
    
    (14,018
    )
    
    
    (12,082
    )Total
amortizing intangible assets
    
    
    46,192
    
    
    
    48,088Nonamortizing
intangible assets:Tradename
    
    
    110,600
    
    
    
    110,600Total
intangible assets
    
    $
    156,792
    
    
    $
    158,688
 56




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EstimatedAmortization Expense2007
    
    $
    2,0772008
    
    
    2,0592009
    
    
    2,0512010
    
    
    2,0422011
    
    
    2,036
 (9) ACCRUED EXPENSES :
  December 31,
    
    

December
25,2006
    
    
    2005Payroll and related benefits
    
    $
    18,209
    
    
    $
    14,679Property, real estate and sales taxes
    
    
    4,692
    
    
    
    4,182Insurance
    
    
    5,086
    
    
    
    4,736Gift cards and gift certificates
    
    
    8,233
    
    
    
    5,755Advertising
    
    
    1,262
    
    
    
    944Interest
    
    
    6,085
    
    
    
    5,553Management fees
    
    
    2,210
    
    
    
    9,200Other
    
    
    12,511
    
    
    
    8,520$
    58,288
    
    
    $
    53,569
 (10) LONG-TERM DEBT :
  December
31,
    
    

December
25,2006
    
    
    200510% Senior
Notes, due October 1, 2013, net of discount of $2,175 and
$2,497, respectively
    
    $
    187,825
    
    
    $
    187,503Revolver, due May 3, 2011
    
    
    
    
    
    
    Term Loan, due May 3, 2013
    
    
    99,500
    
    
    
    Secured Term Loan A
    
    
    
    
    
    
    11,237Secured Term Loan B
    
    
    
    
    
    
    25,000Credit Facility
    
    
    
    
    
    
    2,251$35 million Subordinated Term Loan
    
    
    
    
    
    
    69,547Other
    
    
    69
    
    
    
    287,394
    
    
    
    295,538Less current maturities
    
    
    (1,015
    )
    
    
    (2,400
    )$
    286,379
    
    
    $
    293,138
 57




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Subordinated Debt
    58




---



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59




---



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December 31,
2006
    

December 25,200510.00% Unsecured Senior Notes
    
    $
    180,500
    
    
    $
    177,956Term Loan
    
    
    99,500
    
    
    
    
    1.
    
    The Company would, at the time of such Restricted Payments and after giving pro forma effect
thereto as if such Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of additional indebtedness
pursuant to the fixed charge coverage ratio tests as defined in the indenture.2.
    
    Such Restricted Payment, together with the aggregate amount of all other Restricted Payments
made by the Company after September 21, 2005, is less than the sum, without duplication, of
(i) 50% of the consolidated net income of the Company for the period from the beginning of the
first full fiscal quarter commencing after the date of the indenture to the end of the
Companys most recent ended fiscal quarter for which internal financial statements are
available at the time of the Restricted Payment; (ii) 100% of the aggregate net proceeds
received by the Company since the date of the indenture as a contribution to its equity
capital or from the sale of equity interests of the Company or from the conversion of
interests or debt securities that have been converted to equity interests and (iii) to the
extent that any Restricted Investment, as defined, that was made after the date of the
indenture is sold for cash, the lesser of (a) the cash return of capital or (b) the aggregate
amount of such restricted investment that was treated as a Restricted Payment when made.
   60




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Amount2007
    
    $
    1,0152008
    
    
    1,0182009
    
    
    1,0182010
    
    
    1,0182011
    
    
    1,000Thereafter
    
    
    282,325$
    287,394
  (11) INCOME TAXES
   December 31,
    
    
    December 25,
    
    
    December 30,2006
    
    
    2005
    
    
    2004Current:Federal
    
    $
    (588
    )
    
    $
    (101
    )
    
    $
    State and local
    
    
    (275
    )
    
    
    (86
    )
    
    
    (26
    )(863
    )
    
    
    (187
    )
    
    
    (26
    )Deferred:Federal
    
    
    490
    
    
    
    749
    
    
    
    State and local
    
    
    218
    
    
    
    76
    
    
    
    708
    
    
    
    825
    
    
    
    $
    (155
    )
    
    $
    638
    
    
    $
    (26
    )
  61




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##### Table of Contents



December 31,
    
    December 25,
    
    December 30,2006
    
    2005
    
    2004Federal
    
    
    (34.0)
    %
    
    
    (35.0)
    %
    
    
    (34.0)
    %Federal income tax credits
and addbacks
    
    
    (21.3)
    %
    
    
    (6.5)
    %
    
    
    (3.0)
    %State income taxes, net of
Federal taxes
    
    
    0.6
    %
    
    
    0.0
    %
    
    
    0.1
    %Changes in contingency reserve
    
    
    (2.1)
    %
    
    
    0.0
    %
    
    
    0.0
    %Nondeductible interest, expenses,
other, net
    
    
    2.2
    %
    
    
    11.3
    %
    
    
    13.5
    %Federal and
state valuation allowances
    
    
    56.3
    %
    
    
    26.0
    %
    
    
    23.6
    %1.7
    %
    
    
    (4.2)
    %
    
    
    0.2
    %
  December 31,
    
    
    December 25,2006
    
    
    2005Deferred tax assets:Net operating loss carryforwards
    
    $
    14,678
    
    
    $
    10,009Accrued expenses not currently deductible
    
    
    10,515
    
    
    
    9,368Tax credit carryforwards
    
    
    6,269
    
    
    
    4,503Property, equipment, and improvements  tax basis
in excess of book basis
    
    
    8,694
    
    
    
    13,520Capital leases
    
    
    659
    
    
    
    139Deferred interest
    
    
    
    
    
    
    7,391State taxes not currently deductible
    
    
    
    
    
    
    5Total deferred tax assets
    
    
    40,815
    
    
    
    44,935Less valuation allowance
    
    
    (21,111
    )
    
    
    (36,838
    )19,704
    
    
    
    8,097Deferred tax liabilities:Investment in unconsolidated partnerships
    
    
    (88
    )
    
    
    (88
    )Intangible assets  book basis in excess of tax basis
    
    
    (18,908
    )
    
    
    (17,737
    )(18,996
    )
    
    
    (17,825
    )Net deferred tax assets
    
    $
    708
    
    
    $
    (9,728
    )
  62




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(12) RELATED PARTY TRANSACTIONS :
 Management Agreement
   63




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Other Board Affiliations
  (13) COMMITMENTS AND CONTINGENCIES :
     (14) LONG-TERM INCENTIVE PLANS :
  64




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##### Table of Contents



(15) EMPLOYEE BENEFITS :
    65




---



##### Table of Contents



(16) SEGMENT REPORTING :
    66




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##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2006
    
    
    December 25, 2005
    
    
    December 30, 2004RevenuePerkins Restaurants
    
    $
    295,762
    
    
    $
    73,508
    
    
    $
    Marie Callenders Restaurants
    
    
    216,342
    
    
    
    215,464
    
    
    
    214,923Perkins Franchise
    
    
    22,052
    
    
    
    5,418
    
    
    
    Marie Callenders Franchise
    
    
    4,842
    
    
    
    5,045
    
    
    
    5,207Foxtail
    
    
    69,320
    
    
    
    30,457
    
    
    
    13,395Intersegment revenue
    
    
    (18,682
    )
    
    
    (12,967
    )
    
    
    (8,955
    )Other
    
    
    4,554
    
    
    
    4,548
    
    
    
    4,190Total
    
    $
    594,190
    
    
    $
    321,473
    
    
    $
    228,760
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2006
    
    
    December 25, 2005
    
    
    December 30, 2004Interest Expense, netPerkins Restaurants
    
    $
    
    
    
    $
    
    
    
    $
    Marie Callenders Restaurants
    
    
    
    
    
    
    
    
    
    
    Perkins Franchise
    
    
    
    
    
    
    
    
    
    
    Marie Callenders Franchise
    
    
    
    
    
    
    
    
    
    
    Foxtail
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    36,197
    
    
    
    26,362
    
    
    
    19,665Total
    
    $
    36,197
    
    
    $
    26,362
    
    
    $
    19,665
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2006
    
    
    December 25, 2005
    
    
    December 30, 2004Depreciation and amortizationPerkins Restaurants
    
    $
    12,356
    
    
    $
    2,841
    
    
    $
    Marie Callenders Restaurants
    
    
    8,046
    
    
    
    7,842
    
    
    
    8,219Perkins Franchise
    
    
    
    
    
    
    
    
    
    
    Marie Callenders Franchise
    
    
    
    
    
    
    
    
    
    
    Foxtail
    
    
    1,659
    
    
    
    464
    
    
    
    93Other
    
    
    3,580
    
    
    
    447
    
    
    
    Total
    
    $
    25,641
    
    
    $
    11,594
    
    
    $
    8,312
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2006
    
    
    December 25, 2005
    
    
    December 30, 2004Segment net income (loss)Perkins Restaurants
    
    $
    25,149
    
    
    $
    4,624
    
    
    $
    Marie Callenders Restaurants
    
    
    9,220
    
    
    
    9,988
    
    
    
    11,378Perkins Franchise
    
    
    19,929
    
    
    
    4,778
    
    
    
    Marie Callenders Franchise
    
    
    4,841
    
    
    
    5,044
    
    
    
    5,207Foxtail
    
    
    8,255
    
    
    
    4,891
    
    
    
    2,278Other
    
    
    (76,766
    )
    
    
    (44,556
    )
    
    
    (35,181
    )Total
    
    $
    (9,372
    )
    
    $
    (15,231
    )
    
    $
    (16,318
    )
 67




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##### Table of Contents



December 31, 2006
    
    
    December 25, 2005Segment assetsPerkins Restaurants
    
    $
    94,146
    
    
    $
    89,447Marie Callenders Restaurants
    
    
    36,393
    
    
    
    37,616Perkins Franchise
    
    
    123,392
    
    
    
    135,389Marie Callenders Franchise
    
    
    
    
    
    
    420Foxtail
    
    
    41,715
    
    
    
    42,082Other
    
    
    51,199
    
    
    
    41,322Total
    
    $
    346,845
    
    
    $
    346,276December 31, 2006
    
    
    December 25, 2005GoodwillPerkins Restaurants
    
    $
    9,836
    
    
    $
    14,228Marie Callenders Restaurants
    
    
    
    
    
    
    Perkins Franchise
    
    
    18,538
    
    
    
    26,815Marie Callenders Franchise
    
    
    
    
    
    
    Foxtail
    
    
    1,664
    
    
    
    2,406Other
    
    
    
    
    
    
    Total
    
    $
    30,038
    
    
    $
    43,449Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2006
    
    
    December 25, 2005
    
    
    December 30, 2004Capital ExpendituresPerkins Restaurants
    
    $
    9,625
    
    
    $
    3,003
    
    
    $
    Marie Callenders Restaurants
    
    
    8,448
    
    
    
    6,461
    
    
    
    5,431Perkins Franchise
    
    
    
    
    
    
    
    
    
    
    Marie Callenders Franchise
    
    
    
    
    
    
    
    
    
    
    Foxtail
    
    
    563
    
    
    
    383
    
    
    
    114Other
    
    
    926
    
    
    
    232
    
    
    
    136Total
    
    $
    19,562
    
    
    $
    10,079
    
    
    $
    5,681
   68




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##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2006
    
    
    December 25, 2005
    
    
    December 30, 2004General and administrative expenses
    
    $
    43,176
    
    
    $
    18,993
    
    
    $
    15,697Depreciation and amortization expenses
    
    
    3,580
    
    
    
    447
    
    
    
    Interest expense, net
    
    
    36,197
    
    
    
    26,362
    
    
    
    19,665(Gain) loss on disposition of assets, net
    
    
    670
    
    
    
    (704
    )
    
    
    209Asset write-down
    
    
    2,058
    
    
    
    1,315
    
    
    
    1,572Lease termination
    
    
    366
    
    
    
    
    
    
    
    Transaction costs
    
    
    5,674
    
    
    
    867
    
    
    
    Provision for (benefit from) income taxes
    
    
    155
    
    
    
    (638
    )
    
    
    26Minority interest
    
    
    493
    
    
    
    629
    
    
    
    720Gain on early extinguishment of debt
    
    
    (12,642
    )
    
    
    (565
    )
    
    
    Licensing revenue
    
    
    (4,107
    )
    
    
    (3,747
    )
    
    
    (3,455
    )Other
    
    
    1,146
    
    
    
    1,597
    
    
    
    747$
    76,766
    
    
    $
    44,556
    
    
    $
    35,181
 (17) COMPREHENSIVE LOSS :
  69




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##### Table of Contents



(18) CONDENSED CONSOLIDATED FINANCIAL INFORMATION
   Consolidating
statement of operations for the year ended December 31, 2006 (in
thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    PMCM
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCIRevenueFood sales
    
    $
    258,945
    
    
    $
    82,667
    
    
    $
    190,346
    
    
    $
    
    
    
    $
    30,784
    
    
    $
    
    
    
    $
    562,742Franchise and other revenue
    
    
    13,731
    
    
    
    15,189
    
    
    
    9,396
    
    
    
    15
    
    
    
    
    
    
    
    (6,883
    )
    
    
    31,448Total revenues
    
    
    272,676
    
    
    
    97,856
    
    
    
    199,742
    
    
    
    15
    
    
    
    30,784
    
    
    
    (6,883
    )
    
    
    594,190Cost and expenses 
(excluding depreciation
shown below):Food cost
    
    
    76,676
    
    
    
    18,904
    
    
    
    55,629
    
    
    
    
    
    
    
    8,542
    
    
    
    
    
    
    
    159,751Labor and benefits
    
    
    84,608
    
    
    
    29,908
    
    
    
    61,765
    
    
    
    
    
    
    
    9,124
    
    
    
    
    
    
    
    185,405Operating expenses
    
    
    59,569
    
    
    
    27,064
    
    
    
    55,842
    
    
    
    15
    
    
    
    10,920
    
    
    
    (3,308
    )
    
    
    150,102General and administrative
    
    
    36,427
    
    
    
    3,585
    
    
    
    11,751
    
    
    
    
    
    
    
    
    
    
    
    (3,575
    )
    
    
    48,188Transaction costs
    
    
    3,545
    
    
    
    
    
    
    
    2,129
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,674Depreciation and amortization
    
    
    14,418
    
    
    
    3,290
    
    
    
    6,583
    
    
    
    
    
    
    
    1,350
    
    
    
    
    
    
    
    25,641Interest, net
    
    
    26,882
    
    
    
    (697
    )
    
    
    10,005
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    36,197Asset impairments
    
    
    1,569
    
    
    
    
    
    
    
    1,495
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    3,089Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (12,642
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,642
    )Other, net
    
    
    (143
    )
    
    
    (35
    )
    
    
    1,687
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,509Total costs and expenses
    
    
    303,551
    
    
    
    82,019
    
    
    
    194,244
    
    
    
    15
    
    
    
    29,968
    
    
    
    (6,883
    )
    
    
    602,914(Loss) income before income taxes and minority
interests
    
    
    (30,875
    )
    
    
    15,837
    
    
    
    5,498
    
    
    
    
    
    
    
    816
    
    
    
    
    
    
    
    (8,724
    )Benefit from (provision for) income taxes
    
    
    5,427
    
    
    
    (5,582
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (155
    )Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (493
    )
    
    
    
    
    
    
    (493
    )Equity in earnings (loss) of subsidiaries
    
    
    16,076
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,076
    )
    
    
    NET (LOSS) INCOME
    
    $
    (9,372
    )
    
    $
    10,255
    
    
    $
    5,498
    
    
    $
    
    
    
    $
    323
    
    
    $
    (16,076
    )
    
    $
    (9,372
    )
 70




---



##### Table of Contents



Consolidating
statement of operations for the year ended December 25, 2005 (in
thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    PMCM
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCIRevenueFood sales
    
    $
    66,461
    
    
    $
    20,667
    
    
    $
    186,828
    
    
    $
    
    
    
    $
    32,506
    
    
    $
    
    
    
    $
    306,462Franchise and other revenue
    
    
    2,779
    
    
    
    3,735
    
    
    
    9,593
    
    
    
    206
    
    
    
    
    
    
    
    (1,302
    )
    
    
    15,011Total revenues
    
    
    69,240
    
    
    
    24,402
    
    
    
    196,421
    
    
    
    206
    
    
    
    32,506
    
    
    
    (1,302
    )
    
    
    321,473Cost
and expenses 
(excluding depreciation shown below):Food cost
    
    
    21,104
    
    
    
    4,863
    
    
    
    54,732
    
    
    
    
    
    
    
    9,396
    
    
    
    
    
    
    
    90,095Labor and benefits
    
    
    20,901
    
    
    
    8,001
    
    
    
    61,118
    
    
    
    
    
    
    
    9,821
    
    
    
    
    
    
    
    99,841Operating expenses
    
    
    15,651
    
    
    
    6,590
    
    
    
    52,760
    
    
    
    206
    
    
    
    11,108
    
    
    
    (830
    )
    
    
    85,485General and administrative
    
    
    8,216
    
    
    
    489
    
    
    
    13,009
    
    
    
    
    
    
    
    
    
    
    
    (472
    )
    
    
    21,242Transaction costs
    
    
    867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    867Depreciation and amortization
    
    
    3,025
    
    
    
    564
    
    
    
    6,743
    
    
    
    
    
    
    
    1,262
    
    
    
    
    
    
    
    11,594Interest, net
    
    
    5,624
    
    
    
    (128
    )
    
    
    20,864
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    26,362Asset impairment (recovery)
    
    
    (892
    )
    
    
    
    
    
    
    1,381
    
    
    
    
    
    
    
    122
    
    
    
    
    
    
    
    611Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (565
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (565
    )Other, net
    
    
    (105
    )
    
    
    
    
    
    
    1,286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,181Total costs and expenses
    
    
    74,391
    
    
    
    20,379
    
    
    
    211,328
    
    
    
    206
    
    
    
    31,711
    
    
    
    (1,302
    )
    
    
    336,713(Loss) income before income taxes and minority
interests
    
    
    (5,151
    )
    
    
    4,023
    
    
    
    (14,907
    )
    
    
    
    
    
    
    795
    
    
    
    
    
    
    
    (15,240
    )Benefit from (provision for) income taxes
    
    
    2,082
    
    
    
    (1,432
    )
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    638Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (629
    )
    
    
    
    
    
    
    (629
    )Equity in earnings (loss) of subsidiaries
    
    
    (12,162
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,162
    
    
    
    NET (LOSS) INCOME
    
    $
    (15,231
    )
    
    $
    2,591
    
    
    $
    (14,919
    )
    
    $
    
    
    
    $
    166
    
    
    $
    12,162
    
    
    $
    (15,231
    )
 71




---



##### Table of Contents



Consolidating
statement of operations for the year ended December 30, 2004 (in
thousands):
 Guarantor
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI



    WRG
    
    

Non-Guarantors
    
    
    Eliminations
    
    
    PMCIRevenueFood Sales
    
    $
    



    $
    186,686
    
    
    $
    32,677
    
    
    $
    
    
    
    $
    219,363Franchise and Other Revenue
    

    



    
    9,397
    
    
    
    
    
    
    
    
    
    
    
    9,397Total Revenues
    

    



    
    196,083
    
    
    
    32,677
    
    
    
    
    
    
    
    228,760Costs and Expenses (excluding depreciation
shown below):Food cost
    

    



    
    55,046
    
    
    
    9,730
    
    
    
    
    
    
    
    64,776Labor and benefits
    

    



    
    61,841
    
    
    
    10,110
    
    
    
    
    
    
    
    71,951Operating expenses
    

    



    
    50,200
    
    
    
    10,469
    
    
    
    
    
    
    
    60,669General and administrative
    

    



    
    15,697
    
    
    
    
    
    
    
    
    
    
    
    15,697Depreciation and amortization
    

    



    
    6,989
    
    
    
    1,323
    
    
    
    
    
    
    
    8,312Interest, net
    

    



    
    19,665
    
    
    
    
    
    
    
    
    
    
    
    19,665Asset impairment
    

    



    
    1,441
    
    
    
    340
    
    
    
    
    
    
    
    1,781Other, net
    

    



    
    1,481
    
    
    
    
    
    
    
    
    
    
    
    1,481Total Costs and Expenses
    

    



    
    212,360
    
    
    
    31,972
    
    
    
    
    
    
    
    244,332(Loss) income before income taxes
    

    



    
    (16,277
    )
    
    
    705
    
    
    
    
    
    
    
    (15,572
    )Provision for income taxes
    

    



    
    (26
    )
    
    
    
    
    
    
    
    
    
    
    (26
    )Minority interests
    

    


    
    
    
    
    
    (720
    )
    
    
    
    
    
    
    (720
    )Equity in earnings of subsidiaries
    

    (16,318

)

    
    
    
    
    
    
    
    
    
    16,318


    
    
    
    NET (LOSS) INCOME
    

    (16,318

)


    $
    (16,303
    )
    
    $
    (15
    )
    
    $
    16,318

    
    
    $
    (16,318
    )
 72




---



##### Table of Contents



Consolidating
balance sheet as of December 31, 2006 (in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    PMCM
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCICURRENT ASSETS:Cash and cash equivalents
    
    $
    3,132
    
    
    $
    201
    
    
    $
    7,158
    
    
    $
    
    
    
    $
    (1,422
    )
    
    $
    
    
    
    $
    9,069Restricted cash
    
    
    4,209
    
    
    
    6,984
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,193Trade receivables, less 
allowance for doubtful
accounts
    
    
    12,662
    
    
    
    43
    
    
    
    5,576
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    18,316Inventories, net
    
    
    6,364
    
    
    
    481
    
    
    
    3,882
    
    
    
    
    
    
    
    269
    
    
    
    
    
    
    
    10,996Prepaid expenses and other current assets
    
    
    3,781
    
    
    
    316
    
    
    
    693
    
    
    
    
    
    
    
    34
    
    
    
    
    
    
    
    4,824Total current assets
    
    
    30,148
    
    
    
    8,025
    
    
    
    17,309
    
    
    
    
    
    
    
    (1,084
    )
    
    
    
    
    
    
    54,398PROPERTY AND EQUIPMENT, net
    
    
    44,762
    
    
    
    10,885
    
    
    
    32,755
    
    
    
    
    
    
    
    2,642
    
    
    
    
    
    
    
    91,044INVESTMENTS
IN
CONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    
    
    
    
    228
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    238GOODWILL
    
    
    30,038
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,038INTANGIBLE ASSETS, net
    
    
    45,885
    
    
    
    110,600
    
    
    
    307
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156,792INVESTMENTS IN SUBSIDIARIES
    
    
    31,105
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,105
    )
    
    
    DUE FROM PMCI
    
    
    
    
    
    
    14,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,494
    )
    
    
    DUE FROM SUBSIDIARIES
    
    
    105,884
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105,884
    )
    
    
    DEFERRED INCOME TAXES
    
    
    708
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    708OTHER ASSETS
    
    
    11,560
    
    
    
    
    
    
    
    (1,008
    )
    
    
    
    
    
    
    3,075
    
    
    
    
    
    
    
    13,627$
    300,090
    
    
    $
    144,004
    
    
    $
    49,591
    
    
    $
    
    
    
    $
    4,643
    
    
    $
    (151,483
    )
    
    $
    346,845CURRENT LIABILITIES:Accounts payable
    
    $
    10,756
    
    
    $
    2,310
    
    
    $
    8,324
    
    
    $
    
    
    
    $
    1,409
    
    
    $
    
    
    
    $
    22,799Accrued expenses
    
    
    28,455
    
    
    
    7,547
    
    
    
    20,707
    
    
    
    
    
    
    
    1,579
    
    
    
    
    
    
    
    58,288Accrued income taxes
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75Franchise advertising contributions
    
    
    5,392
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,392Current maturities of long term debt and
capital lease obligations
    
    
    1,166
    
    
    
    
    
    
    
    540
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,70645,844
    
    
    
    9,857
    
    
    
    29,571
    
    
    
    
    
    
    
    2,988
    
    
    
    
    
    
    
    88,260CAPITAL LEASE OBLIGATIONS, less current
maturities
    
    
    94
    
    
    
    
    
    
    
    6,155
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,249LONG-TERM DEBT, less current maturities
    
    
    286,325
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    286,379DEFERRED RENT
    
    
    5,384
    
    
    
    
    
    
    
    4,164
    
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    9,768OTHER LIABILITIES
    
    
    4,095
    
    
    
    
    
    
    
    7,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,785DUE TO PMCM
/ PMCR
    
    
    14,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,494
    )
    
    
    DUE TO PARENT
    
    
    
    
    
    
    
    
    
    
    108,974
    
    
    
    10
    
    
    
    (3,100
    )
    
    
    (105,884
    )
    
    
    MINORITY INTERESTS IN CONSOLIDATED PARTNERSHIPS
    
    
    (475
    )
    
    
    
    
    
    
    423
    
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    75STOCKHOLDERS INVESTMENT:Common Stock
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    1Preferred Stock
    
    
    
    
    
    
    
    
    
    
    63,277
    
    
    
    
    
    
    
    
    
    
    
    (63,277
    )
    
    
    Capital in excess of par
    
    
    
    
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    9,515
    
    
    
    (9,338
    )
    
    
    Additional paid-in capital
    
    
    136,131
    
    
    
    121,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (121,300
    )
    
    
    136,131Treasury stock
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    Notes secured by stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Retained earnings (deficit)
    
    
    (191,816
    )
    
    
    12,846
    
    
    
    (170,403
    )
    
    
    (10
    )
    
    
    (5,107
    )
    
    
    162,674
    
    
    
    (191,816
    )(55,671
    )
    
    
    134,147
    
    
    
    (107,440
    )
    
    
    (10
    )
    
    
    4,408
    
    
    
    (31,105
    )
    
    
    (55,671
    )$
    300,090
    
    
    $
    144,004
    
    
    $
    49,591
    
    
    $
    
    
    
    $
    4,643
    
    
    $
    (151,483
    )
    
    $
    346,845
 73




---



##### Table of Contents



Consolidating
balance sheet as of December 25, 2005 (in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    PMCM
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCICURRENT ASSETS:Cash and cash equivalents
    
    $
    1,591
    
    
    $
    1,567
    
    
    $
    2,609
    
    
    $
    (23
    )
    
    $
    (1,756
    )
    
    $
    
    
    
    $
    3,988Restricted cash
    
    
    3,496
    
    
    
    4,729
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,225Trade receivables, less 
allowance for doubtful
accounts
    
    
    11,890
    
    
    
    3
    
    
    
    4,198
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    16,108Inventories, net
    
    
    6,415
    
    
    
    556
    
    
    
    4,035
    
    
    
    
    
    
    
    322
    
    
    
    
    
    
    
    11,328Prepaid expenses and other current assets
    
    
    2,927
    
    
    
    261
    
    
    
    1,105
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    4,333Escrow deposits
    
    
    7,160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,160Total current assets
    
    
    33,479
    
    
    
    7,116
    
    
    
    11,947
    
    
    
    (23
    )
    
    
    (1,377
    )
    
    
    
    
    
    
    51,142PROPERTY AND EQUIPMENT, net
    
    
    34,826
    
    
    
    7,607
    
    
    
    33,637
    
    
    
    
    
    
    
    2,445
    
    
    
    
    
    
    
    78,515INVESTMENTS
IN
CONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    
    
    
    
    301
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    311GOODWILL
    
    
    43,449
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,449INTANGIBLE ASSETS, net
    
    
    158,379
    
    
    
    
    
    
    
    309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    158,688INVESTMENTS IN SUBSIDIARIES
    
    
    (57,761
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,761
    
    
    
    DUE FROM PMCI
    
    
    
    
    
    
    45,584
    
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    (45,622
    )
    
    
    OTHER ASSETS
    
    
    9,730
    
    
    
    
    
    
    
    724
    
    
    
    8
    
    
    
    3,709
    
    
    
    
    
    
    
    14,171$
    222,102
    
    
    $
    60,307
    
    
    $
    46,918
    
    
    $
    23
    
    
    $
    4,787
    
    
    $
    12,139
    
    
    $
    346,276CURRENT LIABILITIES:Accounts payable
    
    $
    7,939
    
    
    $
    1,527
    
    
    $
    11,389
    
    
    $
    8
    
    
    $
    951
    
    
    $
    
    
    
    $
    21,814Accrued expenses
    
    
    19,850
    
    
    
    6,056
    
    
    
    26,355
    
    
    
    25
    
    
    
    1,283
    
    
    
    
    
    
    
    53,569Franchise advertising contributions
    
    
    4,752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,752Current maturities of long term debt and
capital lease obligations
    
    
    277
    
    
    
    
    
    
    
    3,034
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,31132,818
    
    
    
    7,583
    
    
    
    40,778
    
    
    
    33
    
    
    
    2,234
    
    
    
    
    
    
    
    83,446CAPITAL LEASE OBLIGATIONS, less current
maturities
    
    
    260
    
    
    
    
    
    
    
    6,679
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,939LONG-TERM DEBT, less current maturities
    
    
    187,503
    
    
    
    
    
    
    
    105,635
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    293,138DEFERRED INCOME TAXES
    
    
    9,728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,728DEFERRED RENT
    
    
    2,670
    
    
    
    
    
    
    
    4,529
    
    
    
    
    
    
    
    241
    
    
    
    
    
    
    
    7,440OTHER LIABILITIES
    
    
    3,331
    
    
    
    
    
    
    
    1,907
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,238DUE TO PMCM
/ PMCR
    
    
    45,622
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,622
    )
    
    
    DUE TO PARENT
    
    
    
    
    
    
    
    
    
    
    1,950
    
    
    
    
    
    
    
    (1,950
    )
    
    
    
    
    
    
    MINORITY INTERESTS IN CONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177
    
    
    
    
    
    
    
    177STOCKHOLDERS INVESTMENT:Common Stock
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    1Preferred Stock
    
    
    
    
    
    
    
    
    
    
    63,277
    
    
    
    
    
    
    
    
    
    
    
    (63,277
    )
    
    
    Capital in excess of par
    
    
    
    
    
    
    
    
    
    
    144
    
    
    
    
    
    
    
    9,515
    
    
    
    (9,659
    )
    
    
    Additional paid-in capital
    
    
    123,907
    
    
    
    50,132
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,132
    )
    
    
    123,907Treasury stock
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    Notes secured by stock
    
    
    (1,308
    )
    
    
    
    
    
    
    (1,308
    )
    
    
    
    
    
    
    
    
    
    
    1,308
    
    
    
    (1,308
    )Other comprehensive income
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14Retained earnings (deficit)
    
    
    (182,444
    )
    
    
    2,591
    
    
    
    (176,536
    )
    
    
    (10
    )
    
    
    (5,430
    )
    
    
    179,385
    
    
    
    (182,444
    )(59,830
    )
    
    
    52,724
    
    
    
    (114,560
    )
    
    
    (10
    )
    
    
    4,085
    
    
    
    57,761
    
    
    
    (59,830
    )$
    222,102
    
    
    $
    60,307
    
    
    $
    46,918
    
    
    $
    23
    
    
    $
    4,787
    
    
    $
    12,139
    
    
    $
    346,276
 74




---



##### Table of Contents



Consolidating
Statement of Cash Flows for the year ended December 31, 2006 (in
thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    PMCM
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCICASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (9,372
    )
    
    $
    10,255
    
    
    $
    5,498
    
    
    $
    
    
    
    $
    323
    
    
    $
    (16,076
    )
    
    $
    (9,372
    )Adjustments to reconcile net income to net cash
provided by operating activities:Equity in the earnings of subsidiaries
    
    
    (16,076
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,076
    
    
    
    Depreciation and amortization
    
    
    14,418
    
    
    
    3,290
    
    
    
    6,925
    
    
    
    
    
    
    
    1,008
    
    
    
    
    
    
    
    25,641Amortization of discount
    
    
    321
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321Other non-cash income and expense items
    
    
    (91
    )
    
    
    
    
    
    
    6,781
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,690(Gain) loss on disposition of assets
    
    
    635
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    665Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (12,642
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,642
    )Asset write-down
    
    
    568
    
    
    
    
    
    
    
    1,457
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    2,058Change in partnerships minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    493
    
    
    
    
    
    
    
    493Equity in (income) net loss of unconsolidated
partnerships
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73Net changes in operating assets and liabilities
    
    
    3,355
    
    
    
    (1
    )
    
    
    (3,479
    )
    
    
    23
    
    
    
    1,408
    
    
    
    
    
    
    
    1,306Total adjustments
    
    
    3,130
    
    
    
    3,289
    
    
    
    (858
    )
    
    
    23
    
    
    
    2,945
    
    
    
    16,076
    
    
    
    24,605Net cash (used in) provided by operating activities
    
    
    (6,242
    )
    
    
    13,544
    
    
    
    4,640
    
    
    
    23
    
    
    
    3,268
    
    
    
    
    
    
    
    15,233CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (3,211
    )
    
    
    (7,568
    )
    
    
    (7,542
    )
    
    
    
    
    
    
    (1,241
    )
    
    
    
    
    
    
    (19,562
    )Proceeds from sale of property and equipment
    
    
    1,536
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,549Intercompany activities
    
    
    78,510
    
    
    
    (78,510
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    76,835
    
    
    
    (86,078
    )
    
    
    (7,529
    )
    
    
    
    
    
    
    (1,241
    )
    
    
    
    
    
    
    (18,013
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (277
    )
    
    
    
    
    
    
    (618
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (895
    )Payments on long-term debt
    
    
    (10,900
    )
    
    
    
    
    
    
    (101,567
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (112,467
    )Proceeds from long-term debt
    
    
    110,400
    
    
    
    
    
    
    
    1,541
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111,941Intercompany financing
    
    
    (106,932
    )
    
    
    
    
    
    
    108,082
    
    
    
    
    
    
    
    (1,150
    )
    
    
    
    
    
    
    Debt issuance costs
    
    
    (2,720
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,720
    )Distributions to minority partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (543
    )
    
    
    
    
    
    
    (543
    )Capital contribution from parent
    
    
    (58,623
    )
    
    
    71,168
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,545Net cash (used in) provided by financing activities
    
    
    (69,052
    )
    
    
    71,168
    
    
    
    7,438
    
    
    
    
    
    
    
    (1,693
    )
    
    
    
    
    
    
    7,861Net increase (decrease) in cash and cash equivalents
    
    
    1,541
    
    
    
    (1,366
    )
    
    
    4,549
    
    
    
    23
    
    
    
    334
    
    
    
    
    
    
    
    5,081CASH AND CASH EQUIVALENTS:Balance, beginning of year
    
    
    1,591
    
    
    
    1,567
    
    
    
    2,609
    
    
    
    (23
    )
    
    
    (1,756
    )
    
    
    
    
    
    
    3,988Balance, end of year
    
    $
    3,132
    
    
    $
    201
    
    
    $
    7,158
    
    
    $
    
    
    
    $
    (1,422
    )
    
    $
    
    
    
    $
    9,069
 75




---



##### Table of Contents



Consolidating
Statement of Cash Flows for the year ended December 25, 2005 (in
thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    PMCM
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCICASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (15,231
    )
    
    $
    2,591
    
    
    $
    (14,919
    )
    
    $
    
    
    
    $
    166
    
    
    $
    12,162
    
    
    $
    (15,231
    )Adjustments to reconcile net income to net cash
provided by operating activities:Equity in the earnings of subsidiaries
    
    
    12,162
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,162
    )
    
    
    Depreciation and amortization
    
    
    3,025
    
    
    
    564
    
    
    
    6,743
    
    
    
    
    
    
    
    1,262
    
    
    
    
    
    
    
    11,594Amortization of discount
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74Other non-cash income and expense items
    
    
    75
    
    
    
    
    
    
    
    12,362
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,437(Gain) loss on disposition of assets
    
    
    (904
    )
    
    
    
    
    
    
    201
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (704
    )Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (565
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (565
    )Asset write-down
    
    
    12
    
    
    
    
    
    
    
    1,179
    
    
    
    
    
    
    
    124
    
    
    
    
    
    
    
    1,315Change in partnerships minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    629
    
    
    
    
    
    
    
    629Equity in (income) net loss of unconsolidated
partnerships
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )Net changes in operating assets and liabilities
    
    
    3,993
    
    
    
    608
    
    
    
    7,625
    
    
    
    13
    
    
    
    (3,409
    )
    
    
    
    
    
    
    8,830Total adjustments
    
    
    18,437
    
    
    
    1,172
    
    
    
    27,491
    
    
    
    13
    
    
    
    (1,395
    )
    
    
    (12,162
    )
    
    
    33,556Net cash (used in) provided by operating activities
    
    
    3,206
    
    
    
    3,763
    
    
    
    12,572
    
    
    
    13
    
    
    
    (1,229
    )
    
    
    
    
    
    
    18,325CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (3,002
    )
    
    
    (248
    )
    
    
    (9,286
    )
    
    
    
    
    
    
    2,457
    
    
    
    
    
    
    
    (10,079
    )Acquisition
of business, net of cash acquired of $4,270
    
    
    (220,753
    )
    
    
    169
    
    
    
    
    
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    (220,621
    )Proceeds from sale of property and equipment
    
    
    1,353
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,359Intercompany activities
    
    
    2,116
    
    
    
    (2,117
    )
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    (220,286
    )
    
    
    (2,196
    )
    
    
    (9,280
    )
    
    
    (36)
    
    
    
    2,457
    
    
    
    
    
    
    
    (229,341
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (77
    )
    
    
    
    
    
    
    (721
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (798
    )Payments on long-term debt
    
    
    (6,600
    )
    
    
    
    
    
    
    (4,040
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,640
    )Proceeds from long-term debt
    
    
    190,029
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190,029Intercompany
financing
    
    
    
    
    
    
    
    
    
    
    2,091
    
    
    
    
    
    
    
    (2,091
    )
    
    
    
    
    
    
    Debt issuance costs
    
    
    (9,288
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,288
    )Distributions to minority partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (602
    )
    
    
    
    
    
    
    (602
    )Accrued interest on notes secured by stock
    
    
    
    
    
    
    
    
    
    
    (103
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103
    )Capital contribution from parent
    
    
    44,607
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,607Net cash (used in) provided by financing activities
    
    
    218,671
    
    
    
    
    
    
    
    (2,773
    )
    
    
    
    
    
    
    (2,693
    )
    
    
    
    
    
    
    213,205Net increase (decrease) in cash and cash equivalents
    
    
    1,591
    
    
    
    1,567
    
    
    
    519
    
    
    
    (23
    )
    
    
    (1,465
    )
    
    
    
    
    
    
    2,189CASH AND CASH EQUIVALENTS:Balance, beginning of period
    
    
    
    
    
    
    
    
    
    
    2,090
    
    
    
    
    
    
    
    (291
    )
    
    
    
    
    
    
    1,799Balance, end of year
    
    $
    1,591
    
    
    $
    1,567
    
    
    $
    2,609
    
    
    $
    (23
    )
    
    $
    (1,756
    )
    
    $
    
    
    
    $
    3,988
 76




---



##### Table of Contents



Consolidating
Statement of Cash Flows for the year ended December 30, 2004 (in
thousands):
 Gurantor
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI



    WRG
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    PMCICASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (16,318

)

    $
    (16,303
    )
    
    $
    (15
    )
    
    $
    16,318
    
    
    $
    (16,318
    )Adjustments to reconcile net income to net
cash provided by operating activities:Equity in earnings of subsidiary
    

    16,318


    
    
    
    
    
    
    
    
    
    (16,318

    )
    
    
    Depreciation and amortization
    

    



    
    6,989
    
    
    
    1,323
    
    
    
    
    
    
    
    8,312Payments on notes receivable of franchise
fees
    

    



    
    
    
    
    
    
    
    
    
    
    
    
    
    (Benefit from) provision for disposition
of assets
    

    



    
    199
    
    
    
    10
    
    
    
    
    
    
    
    209Asset write-down
    

    



    
    1,242
    
    
    
    330
    
    
    
    
    
    
    
    1,572Change in partnerships minority interests
    

    



    
    
    
    
    
    720
    
    
    
    
    
    
    
    720Other non-cash income and expense
    

    



    
    (97
    )
    
    
    
    
    
    
    
    
    
    
    (97
    )Equity in net loss of unconsolidated
    

    



    
    9
    
    
    
    
    
    
    
    
    
    
    
    9Net changes in other operating assets and
    

    


    
    8,826
    
    
    
    622
    
    
    
    
    
    
    
    9,448Total adjustments
    

    16,318



    
    17,168
    
    
    
    3,005
    
    
    
    
    
    
    
    20,173Net cash provided by operating activities
    

    



    
    865
    
    
    
    2,990
    
    
    
    
    
    
    
    3,855CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    

    



    
    (4,704
    )
    
    
    (977
    )
    
    
    
    
    
    
    (5,681
    )Intercompany activities
    

    



    
    
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from sale of property and
    

    



    
    488
    
    
    
    
    
    
    
    
    
    
    
    488Net cash used in investing activities
    

    



    
    (4,216
    )
    
    
    (977
    )
    
    
    
    
    
    
    (5,193
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease
    

    



    
    (1,017
    )
    
    
    
    
    
    
    
    
    
    
    (1,017
    )Payments on long-term debt
    

    


    
    (42,005
    )
    
    
    
    
    
    
    
    
    
    
    (42,005
    )Proceeds from long-term debt
    

    



    
    40,000
    
    
    
    
    
    
    
    
    
    
    
    40,000Intercompany
financing
    

    



    
    1,132
    
    
    
    (1,132
    )
    
    
    
    
    
    
    Distributions to minority partners
    

    



    
    
    
    
    
    (875
    )
    
    
    
    
    
    
    (875
    )Accrued interest on convertible promissory
    

    



    
    120
    
    
    
    
    
    
    
    
    
    
    
    120Accrued interest on notes secured by
    

    



    
    (92
    )
    
    
    
    
    
    
    
    
    
    
    (92
    )Capital contribution from parent
    

    



    
    3,900
    
    
    
    
    
    
    
    
    
    
    
    3,900Net cash used in financing activities
    

    



    
    2,038
    
    
    
    (2,007
    )
    
    
    
    
    
    
    31Net increase (decrease) in cash and cash

cash equivalents
    

    



    
    (1,313
    )
    
    
    6
    
    
    
    
    
    
    
    (1,307
    )CASH AND CASH EQUIVALENTS:Balance, beginning of year
    

    



    
    3,403
    
    
    
    (297
    )
    
    
    
    
    
    
    3,106Balance, end of year
    
    $
    



    $
    2,090
    
    
    $
    (291
    )
    
    $
    
    
    
    $
    1,799
 77




---



##### Table of Contents



(19) SUBSEQUENT
EVENTS:
    (20) UNAUDITED
QUARTERLY CONSOLIDATED FINANCIAL DATA:
  (a)
    
    Net2006(b)
    
    Revenues
    
    Gross Profit
    
    Income(Loss)1st Quarter
    
    $
    169,646
    
    
    $
    27,078
    
    
    $
    (5,224
    )2nd Quarter
    
    
    136,910
    
    
    
    23,360
    
    
    
    3,7963rd Quarter
    
    
    134,237
    
    
    
    19,586
    
    
    
    (7,854
    )4th Quarter
    
    
    153,397
    
    
    
    28,908
    
    
    
    (90
    )$
    594,190
    
    
    $
    98,932
    
    
    $
    (9,372
    )(a)2005(b)
    
    Revenues
    
    Gross Profit
    

Net
Loss1st Quarter
    
    $
    57,105
    
    
    $
    7,300
    
    
    $
    (2,207
    )2nd Quarter
    
    
    53,749
    
    
    
    5,737
    
    
    
    (5,899
    )3rd Quarter
    
    
    66,425
    
    
    
    8,379
    
    
    
    (5,651
    )4th Quarter
    
    
    144,194
    
    
    
    24,636
    
    
    
    (1,474
    )$
    321,473
    
    
    $
    46,052
    
    
    $
    (15,231
    )
    78




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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 .
  79




---



##### Table of Contents



PART III
 
 Item 10 . Directors, Executive Officers and Corporate Governance .
 (a) Directors and Executive Officers of the Registrant
  Name
    
    Age
    
    Position with PMCIJoseph F. Trungale
    
    
    65
    
    
    Director, President and Chief Executive OfficerJames W. Stryker
    
    
    60
    
    
    Executive Vice President and Chief Financial OfficerJames F. Barrasso
    
    
    54
    
    
    Executive Vice President, Foodservice DevelopmentCharles A. Conine
    
    
    55
    
    
    Executive Vice President of Human ResourcesPete M. Pascuzzi
    
    
    56
    
    
    Senior Vice President, Corporate Restaurant Operations
 Joseph F. Trungale
  James W. Stryker
  James F. Barrasso
  80




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##### Table of Contents



Charles A. Conine
  Pete M. Pascuzzi
  (b) Code of Ethics
 www.perkinsrestaurants.com
 (c) Audit
Committee
  
 Item 11 . Executive Compensation .
 Compensation Discussion and Analysis
    81




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##### Table of Contents



Benchmarking of Base Compensation
  82




---



##### Table of Contents



Cash Bonuses under Our Non-Equity Incentive Plan
     Severance and Change in Control Payments
  continuation of a
 83




---



##### Table of Contents



Other Benefits
  Compensation Committee Report
   
 Executive Compensation Tables
  Summary Compensation Table  2006
 Change inPension ValueandNonqualifiedNon-Equity
    
    DeferredIncentive Plan
    
    Compensation
    
    All OtherSalary
    
    Compensation
    
    Earnings
    
    Compensation
    
    TotalName and Principal Position
    
    Year
    
    (1)
    
    (2)
    
    (3)
    
    (4)
    
    (5)Joseph F. Trungale
    
    
    2006
    
    
    
    $566,539
    
    
    
    $446,250
    
    
    
    
    
    
    
    $51,536
    
    
    
    $1,064,325President and 
Chief Executive OfficerPhillip Ratner
    
    
    2006
    
    
    
    $357,156
    
    
    
    $123,234
    
    
    
    $2,987
    
    
    
    $193,786
    
    
    
    $677,163Former President and 
Chief Executive Officer, WRG
 84




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##### Table of Contents



Change inPension ValueandNonqualifiedNon-Equity
    
    DeferredIncentive Plan
    
    Compensation
    
    All OtherSalary
    
    Compensation
    
    Earnings
    
    Compensation
    
    TotalName and Principal Position
    
    Year
    
    (1)
    
    (2)
    
    (3)
    
    (4)
    
    (5)James W. Stryker
    
    
    2006
    
    
    $
    304,111
    
    
    $
    144,585
    
    
    $
    14,364
    
    
    $
    36,959
    
    
    $
    500,019Executive Vice President, 
Chief Financial OfficerJames F. Barrasso
    
    
    2006
    
    
    $
    277,276
    
    
    $
    119,340
    
    
    
    
    
    
    $
    35,961
    
    
    $
    432,577Executive Vice President, 
Food Service DevelopmentCharles A. Conine
    
    
    2006
    
    
    $
    224,722
    
    
    $
    107,865
    
    
    $
    2,305
    
    
    $
    237,520
    
    
    $
    572,412Executive Vice President, 
Human Resources and Administration
 
 (1)
    
    The amounts in this column include any salary
contributed by the named executive officer to our
nonqualified deferred compensation and 401(k) plans. In
May 2007, our compensation committee approved annual base
compensation for these executive officers as follows: Mr. Trungale  $625,000; Mr. Stryker
 $328,000; Mr. Barrasso  $260,000; Mr. Conine
$244,000.(2)
    
    The amounts in this column represent total
performance-based bonuses earned for services rendered
during 2006. These bonuses were earned during 2006 and
were based entirely on our financial performance and the
executive officers performance against his or her
specified individual objectives; these bonus amounts
were paid in 2007. For Mr. Ratner the bonus shown was
prorated in accordance with the terms of his employment
agreement.(3)
    
    Amounts represent Non-Qualified Deferred
Compensation Plan earnings.(4)
    
    See table below for detail of amounts in this column.(5)
    
    The dollar value in this column for each named
executive officer represents the sum of all compensation
reflected in the preceding columns. 85




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##### Table of Contents



All Other Compensation2006
 NQDCLoan
    
    
    
    
    
    
    Medical
    
    
    401(k)
    
    
    MatchingVehicle
    
    
    
    
    
    
    Relocation
    
    
    Forgiveness
    
    
    Life Insurance
    
    
    Insurance
    
    
    Matching
    
    
    Contributions
    
    
    Legal Fees
    
    
    SeveranceAllowance
    
    
    Club Dues
    
    
    (1) (2)
    
    
    (3)
    
    
    Premiums
    
    

Premiums
    
    
    Contributions
    
    
    (4)
    
    

(5)
    
    
    Payments
    
    
    TotalJoseph F. Trungale
    
    $
    9,600
    
    
    $
    6,336
    
    
    $
    
    
    

    $
    
    
    
    $
    8,625
    
    
    $
    26,420
    
    

    $
    

    
    

    $
    
    
    

    $
    555
    
    

    $
    

    
    
    $
    51,536Phillip Ratner
    
    $
    13,000
    
    


    $
    

    
    
    $
    23,160
    
    

    $
    
    
    
    $
    3,780
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    153,846
    
    
    $
    193,786James W. Stryker
    
    $
    11,104
    
    
    $
    696
    
    
    $
    
    
    
    $
    
    
    
    $
    7,826
    
    
    $
    7,185
    
    
    $
    1,234
    
    
    $
    8,359
    
    
    $
    555
    
    
    $
    
    
    
    $
    36,959James F. Barrasso
    
    $
    9,600
    
    
    $
    6,074
    
    

    $
    
    
    
    $
    
    
    
    $
    5,468
    
    
    $
    14,164
    
    
    $
    100
    
    
    $
    
    
    
    $
    555
    
    
    $
    
    
    
    $
    35,961Charles A. Conine
    
    $
    11,104
    
    
    $
    618
    
    
    $
    109,953
    
    
    $
    90,455
    
    
    $
    5,423
    
    
    $
    2,522
    
    
    $
    554
    
    
    $
    16,336
    
    
    $
    555
    
    

    $
    
    
    
    $
    237,520
 
 (1)
    
    In connection with his relocation to Memphis, TN, the Company incurred various relocation
payments on behalf of Mr. Conine, including non-recurring closing costs on the sale of his
primary residence, temporary housing in Memphis, and the cost of transferring his household
goods and vehicle. We expect to pay additional, related expenses in
2007. Amounts paid in
2006 totaled $109,953.(2)
    
    The relocation payment to Mr. Ratner equals the total of his mortgage differential
reimbursement received during his 2006 employment with the Company
prior to the Combination as discussed in the section entitled Severance and Change in Control Payments.(3)
    
    In connection with the Combination, a loan outstanding to Mr. Conine was forgiven in
exchange for the surrender of WRG securities pledged as security for the loan.(4)
    
    Amounts represent contributions made by the Company and are
discussed in the Nonqualified Deferred Compensation section. Amounts
include a discretionary contribution equal to $6,542 for
Mr. Stryker and $14,438 for Mr. Conine. These amounts were
awarded in early 2007 based on account balances as of December 31,
2006.(5)
    
    Legal fees totaling $2,220 in the aggregate were paid on behalf of our executive officers
for advice rendered in connection with their employment agreements. 86




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##### Table of Contents



Pension Benefits
   Pension Benefits2006
 Number of Years
    
    Present Value of
    
    Payments DuringName
    
    Plan Name
    
    Credited Service
    
    Accumulated Benefit
    
    Last Fiscal YearJoseph F. Trungale
    
    SERP I
    
    
    1
    
    
    $
    15,000
    
    
    $
    0Phillip Ratner
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    James W. Stryker
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    James F. Barrasso
    
    SERP I
    
    
    1
    
    
    $
    10,000
    
    
    $
    0Charles A. Conine
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 87




---



##### Table of Contents



Nonqualified Deferred Compensation
  Nonqualified Deferred Compensation2006
 Executive
    
    Registrant
    
    AggregateContributions in
    
    Contributions in
    
    Earnings in Last
    
    Aggregate
    
    Aggregate BalanceLast Fiscal Year
    
    Last Fiscal Year
    
    Fiscal Year
    
    Withdrawals/Distributions
    
    at Last Fiscal YearName
    
    (1)
    
    (2)
    
    (3)
    
    
    
    EndJoseph F. Trungale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phillip Ratner
    
    $
    11,002
    
    
    
    
    
    
    $
    2,987
    
    
    
    
    
    
    $
    36,970James W. Stryker
    
    $
    3,504
    
    
    $
    8,359
    
    
    $
    14,364
    
    
    
    
    
    
    $
    82,205James F. Barrasso
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Charles A. Conine
    
    $
    7,110
    
    
    $
    16,336
    
    
    $
    2,305
    
    
    
    
    
    
    $
    179,773
 
 (1)
    
    Amounts represent deferred salary and are reflected as such in the Salary column of
the Summary Compensation Table.(2)
    
    Amounts represent contributions made by the Company and are reflected as such in the All Other
Compensation column of the Summary Compensation Table, as well as in the NQDC Matching
Contributions column of the All Other Compensation Table. Amounts include a discretionary
contribution equal to $6,542 for Mr. Stryker and $14,438 for Mr. Conine; these amounts were awarded
in early 2007 based on account balances as of December 31, 2006.(3)
    
    Amounts are also reflected in the Change in Pension Value and Nonqualified Deferred
Compensation Earnings column of the Summary Compensation Table.     88




---



##### Table of Contents



Severance and Change of Control Agreements
      89




---



##### Table of Contents



Salary
    
    
    BenefitsName
    
    (1)
    
    
    (2)Individuals with 24 months
continuation:Joseph F. Trungale
    
    $
    1,250,000
    
    
    $
    47,356Phillip Ratner
    
    
    1,000,000
    
    
    
    8,218Individuals with 12 months continuation:James W. Stryker
    
    
    328,000
    
    
    
    15,410James F. Barrasso
    
    
    260,000
    
    
    
    12,624Charles A. Conine
    
    
    244,000
    
    
    
    8,550
 
 (1)
    
    Reflects 24 months of continued salary in the cases of Mr. Trungale and Mr. Ratner and 12 months of continued salary in the cases of
Mr. Stryker, Mr. Barrasso and Mr. Conine. As of December 31, 2006, Mr. Ratner, whose employment with WRG was
terminated in September 2006, had received $153,846 of the total potential salary payment shown.(2)
    
    Reflects 24 months of continued health (medical, dental and vision) and life insurance in the cases of Mr. Trungale and
Mr. Ratner; and 12 months of continued health (medical, dental and vision) and life insurance in the cases of Mr.
Stryker, Mr. Conine and Mr. Barrasso. Employment Agreements and Offer Letters
  Joseph F. Trungale
  James W. Stryker
  90




---



##### Table of Contents



James F. Barrasso
  Charles A. Conine
  Employee Benefit Plans
 401(k) Plan
  Director Compensation
  91




---



##### Table of Contents



2006 Non-Employee Director Compensation
 FeesEarnedName
    
    Year
    
    
    ($)Allen J. Bernstein, Non-Executive Chairman
    
    
    2006
    
    
    $
    300,000
    (1)Zane Tankel, Director
    
    
    2006
    
    
    $
    20,000Lee Cohn, Director
    
    
    2006
    
    
    $
    20,000Dr. John J. Connolly, Director
    
    
    2006
    
    
    $
    26,250
 
 (1)
    
    Mr. Bernstein is compensated at the rate of $200,000 per year for consulting services to
PMCI as well as his service as non-executive chairman of our board of directors. Mr. Bernstein was
also awarded a special bonus of $100,000 for his service to PMCI in 2006, payable in 2007 . 
 Item 12 . Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters .
 (a) Security ownership of certain beneficial owners.
  
    
    Each person who is known by us to beneficially own 5% or more of P&MC Holding LLCs
outstanding equity;
    
    Each member of P&MC Holding LLCs board of directors;
    
    Each of our executive officers named in the executive compensation table; and
    
    All members of P&MC Holding LLCs board of directors and our executive officers as a group.
  92




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##### Table of Contents



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, L.P. (1)(2)
    
    
    592,237.23627
    
    
    
    53.62
    %
    
    
    592,237.23627
    
    
    
    53.62
    %Castle Harlan Partners III, L.P. (1)(2)
    
    
    418,387.31260
    
    
    
    37.88
    %
    
    
    418,387.31260
    
    
    
    37.88
    %John K. Castle (1)(3)
    
    
    1,010,624.54887
    
    
    
    91.49
    %
    
    
    1,010,624.54887
    
    
    
    91.49
    %Donald N. Smith (1)
    
    
    64,993.50065
    
    
    
    5.88
    %
    
    
    64,993.50065
    
    
    
    5.88
    %James W. Stryker (1)
    
    
    141.83407
    
    
    
    0.01
    %
    
    
    141.83407
    
    
    
    0.01
    %Charles A. Conine (1)
    
    
    787.96703
    
    
    
    0.07
    %
    
    
    787.96703
    
    
    
    0.07
    %Allan C. Bernstein (1)
    
    
    658.45598
    
    
    
    0.06
    %
    
    
    658.45598
    
    
    
    0.06
    %David B. Pittaway (1)
    
    
    224.19238
    
    
    
    0.02
    %
    
    
    224.19238
    
    
    
    0.02
    %William M. Pruellage (1)
    
    
    22.41924
    
    
    
    0.00
    %
    
    
    22.41924
    
    
    
    0.00
    %Total Units (including those listed above)
    
    
    1,104,589.47116
    
    
    
    100.00
    %
    
    
    1,104,589.47116
    
    
    
    100.00
    %
 
 (1)
    
    The address for CHP IV, CHP III and Messrs. Castle, Pittaway and Pruellage is c/o
Castle Harlan, Inc., 150 East 58th Street, New York, New York 10155. The address for
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 and CHP III, respectively. Each of CHP III
and CHP IV disclaim beneficial ownership of these units.(3)
    
    John K. Castle, a member of PMC Holding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 the buyer parent, and as such may be deemed a beneficial owner of the
units of PMC Holding owned by CHP IV and its affiliates. Mr. Castle is also the controlling
stockholder of Castle Harlan Partners III, G.P., Inc., which is the general partner of the general
partner of Castle Harlan Partners III, L.P., and as such may be
deemed a beneficial owner of the units of PMC Holding owned by CHP
III and its affiliates. Mr. Castle disclaims beneficial ownership of all units
in excess of both (i) his proportionate partnership share of CHP IV
and (ii) his proportionate ownership interest in Castle Harlan
Partners III, L.P. and its affiliates, respectively. (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 and Director Independence .
 (a) Transactions with Management and Others.
 Management Agreement
  93




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##### Table of Contents



Other Board Affiliations
  (b)
Independent Directors.
  
 Item 14 . Principal Accounting Fees And Services .
  2006
    
    
    2005Deloitte & Touche LLPAudit fees
    
    $
    485,000
    
    
    $
    Tax fees (1)
    
    
    150,500
    
    
    
    7,500Total
    
    $
    635,500
    
    
    $
    7,500PricewaterhouseCoopers LLPAudit fees
    
    $
    128,000
    
    
    $
    762,000Tax fees (2)
    
    
    
    
    
    
    5,000Total
    
    $
    128,000
    
    
    $
    767,000Ernst & Young LLPAudit fees
    
    $
    
    
    
    $
    925,000Tax fees
    
    
    
    
    
    
    Total
    
    $
    
    
    
    $
    925,000
 
 (1)
    
    Represents 2005 fees of $7,500 to review the Companys
September 21, 2005 federal income tax return and 2006 fees of $47,000 related
to the review
of deferred compensation plans and consultation regarding IRC Section
409A compliance, fees of $50,000 related to transfer pricing matters
and fees of $53,500 regarding various federal and state income tax
matters.(2)
    
    Represents fees primarily related to review of the Companys federal income tax
return. 94




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##### Table of Contents



PART IV
 
 Item 15 . Exhibits and Financial Statement Schedules .
 (a
    )
    
    1. Financial Statements filed as part of this report are listed below:Report of Independent Registered Public Accounting Firm.Consolidated Statements of Operations for the years ended December 31, 2006, December 25,
2005 and December 30, 2004.Consolidated Balance Sheets at December 31, 2006 and December 25, 2005.Consolidated Statements of Stockholders Investment for the years ended December 31, 2006,
December 25, 2005 and December 30, 2004.Consolidated Statements of Cash Flows for the years ended December 31, 2006, December 25,
2005 and December 30, 2004.Notes to
Consolidated Financial Statements.2. The following Financial Statement Schedule for the years ended December 31,
2006, December 25, 2005 and December 30, 2004 is included:
 No.II.
    
    Valuation and Qualifying Accounts.
  3. Exhibits:
  1.1*
    
    Stock Purchase Agreement, dated as of September 2, 2005, by and
among The Restaurant Holding Corporation, The Individuals and
Entities listed on Exhibit A attached thereto and TRC Holding Corp.1.2*
    
    First Amendment to Stock Purchase Agreement, dated as of September
21, 2005, by and among The Restaurant Corporation, TRC Holding
Corp., BancBoston Ventures Inc. and Donald N. Smith2.1*
    
    Stock Purchase Agreement, dated as of May 3, 2006, by and among The
Restaurant Company, TRC Holding LLC, Wilshire Restaurant Group, Inc.
and the individuals and entities listed on Exhibit A attached
thereto.3.1*
    
    Certificate of Amendment of Certificate of Incorporation of The
Restaurant Company dated August 7, 2006.3.2*
    
    Certificate of Amendment of Certificate of Formation of TRC Realty
LLC dated December 5, 2006.4.1*
    
    First Supplemental Indenture, dated as of April 28, 2006, by and
among The Restaurant Company, the Guarantors and The Bank of New
York, as trustee.4.2*
    
    Form of 10% Senior Notes due 2013 (included in Exhibit 4.1)4.3*
    
    Registration Rights Agreement, dated as of September 21, 2005, among
TRC Finance, Inc., Perkins & Marie Callenders Inc., the Guarantors
and the Initial Purchasers4.4*
    
    Form of Guarantee (included in Exhibit 4.1)
 95




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##### Table of Contents



10.1*
    
    Purchase Agreement, dated as of September 16, 2005 among TRC
Finance, Inc. and Wachovia Capital Markets, LLC, BNP Paribas
Securities Corp., Jefferies & Company, Inc. and Piper Jaffray & Co.
as Initial Purchasers10.2*
    
    Amended & Restated Credit Facility, dated as of September 21, 2005,
amended and restated as of May 3, 2006, by and among The Restaurant
Company, The Restaurant Holding Corporation, the lenders who are or
may become a party to the Agreement, Wachovia Bank, National
Association, as Administrative Agent for the Lenders, BNP Paribas,
as Syndication Agent, and Wells Fargo Foothill, Inc., as
Documentation Agent.10.3*
    
    Collateral Agreement, dated as of September 21, 2005, by and among
The Restaurant Holding Corporation, Perkins & Marie Callenders
Inc., and certain of its Subsidiaries as Grantors, in favor of
Wachovia Bank, National Association, as Administrative Agent10.4*
    
    Revolving Credit Note, dated as of September 21, 2005, by Perkins &
Marie Callenders Inc. in favor of BNP Paribas, in the original
amount of $12,500,00010.5*
    
    Revolving Credit Note, dated as of September 21, 2005, by Perkins &
Marie Callenders Inc. in favor of Wachovia Bank, National
Association, in the original amount of $12,500,00010.6*
    
    Joinder Agreement, dated as of September 21, 2005, by and among TRC
Finance, Inc., Perkins & Marie Callenders Inc., Perkins & Marie
Callenders Inc. of Minnesota, Perkins Finance Corporation and TRC
Realty LLC10.18
    
    Employment Agreement between Perkins & Marie Callenders Inc. and
Joseph F. Trungale, President and Chief Executive Officer10.19
    
    Employment Agreement between Perkins & Marie Callenders Inc. and
James W. Stryker, Executive Vice President and Chief Financial
Officer10.20
    
    Employment Agreement between Perkins & Marie Callenders Inc. and
James F. Barrasso, Executive Vice President, Foodservice10.21
    
    Employment Agreement between Perkins & Marie Callenders Inc. and
Charles A. Conine, Executive Vice President, Human Resources &
Administration21.1*
    
    List of subsidiaries of Perkins & Marie Callenders Inc.31.1
    
    Chief Executive Officer Certification Pursuant to Sarbanes-Oxley Act
of 2002, Section 30231.2
    
    Chief Financial Officer Certification Pursuant to Sarbanes-Oxley Act
of 2002, Section 302.32.1
    
    Chief Executive Officer Certification Pursuant to Sarbanes-Oxley Act
of 2002, Section 906.32.2
    
    Chief Financial Officer Certification Pursuant to Sarbanes-Oxley Act
of 2002, Section 906.
 
 *
    
    Previously filed as an exhibit to the Registrants Registration Statement on
Form S-4 (File No. 333-131004), originally filed on January 12, 2006. 96




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##### Table of Contents



Trademark Notice .
  [Intentionally Left Blank]
 97




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##### Table of Contents



PERKINS & MARIE CALLENDERS INC.By:
    /s/ Joseph F. TrungaleChief Executive Officer  Signature
    
    Title/s/ Joseph F. Trungale
    
    President and Chief Executive OfficerJoseph F. Trungale
    
    (Principal
Executive Officer)/s/ James W. Stryker
    
    Executive Vice President and Chief Financial OfficerJames W. Stryker
    
    (Principal
Financial and Accounting Officer)
  98




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##### Table of Contents



Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EAdditionsBalance at
    
    
    (b)
    
    
    Charged
    
    
    Charged
    
    
    Deductions
    
    
    BalanceBeginning of
    
    
    Business
    
    
    to Costs &
    
    
    to Other
    
    
    from
    
    
    at CloseDescription
    
    Period
    
    
    Combination
    
    
    Expenses
    
    
    Accounts
    
    
    Reserves
    
    
    of PeriodFISCAL YEAR ENDED DECEMBER 31, 2006Allowance for Doubtful Accounts
    
    $
    1,683
    
    
    $
    0
    
    
    $
    433
    
    
    $
    0
    
    
    $
    (492
    )(a)
    
    $
    1,624Reserve for Disposition of Assets
    
    $
    156
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    (156
    )
    
    $
    0FISCAL YEAR
ENDED DECEMBER 25, 2005Allowance for Doubtful Accounts
    
    $
    75
    
    
    $
    1,819
    
    
    $
    26
    
    
    $
    0
    
    
    $
    (237
    )(a)
    
    $
    1,683Reserve for Disposition of Assets
    
    $
    0
    
    
    $
    156
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    156FISCAL YEAR ENDED DECEMBER 30, 2004Allowance for Doubtful Accounts
    
    $
    347
    
    
    $
    0
    
    
    $
    (98
    )
    
    $
    0
    
    
    $
    (174
    )
    
    $
    75Reserve for Disposition of Assets
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
 
 (a)
    
    Represents uncollectible accounts written off, net of recoveries, and net costs associated
with sublease receivables for which a reserve was established.(b)
    
    See Note 4, Combination of Companies under Common Control. S-1