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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549
 
 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 For the quarterly period endedMarch 22, 2005
    
    Commission file number000-22753
 TOTAL ENTERTAINMENT RESTAURANT CORP.  Delaware
    
    52-2016614(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer
Identification Number)
 1551 North Waterfront Parkway
Suite 310
Wichita, Kansas 67206
(Address of principal executive offices) (Zip code) (316) 634-0505
(Registrants telephone number, including area code) 9300 E. Central, Suite 100
Wichita, Kansas 67206
(Former Address) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. þ     Yes     o     NoIndicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act).
    
    þ     Yes     o     No
 Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date. Class
    
    Outstanding at April 27, 2005Common Stock, $.01 par value
    
    10,000,625 shares




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TOTAL ENTERTAINMENT RESTAURANT CORP. Index  
 PageNumberPART I. FINANCIAL INFORMATIONItem 1. Condensed Financial Statements (unaudited)Condensed Consolidated Balance Sheets at
March 22, 2005 and December 28, 2004
    
    2Condensed Consolidated Statements of
Operations for the twelve weeks ended
March 22, 2005 and March 23, 2004
    
    3Condensed Consolidated Statements of
Cash Flows for the twelve weeks ended
March 22, 2005 and March 23, 2004
    
    4Notes to Condensed Consolidated
Financial Statements
    
    5Item 2. Managements Discussion and
Analysis of Financial Condition and
Results of Operations
    
    7Item 3. Quantitative and Qualitative
Disclosures About Market Risk
    
    10Item 4. Procedures and Controls
    
    11PART II. OTHER INFORMATIONItem 6. Exhibits and Reports on Form 8-K
    
    11Certification by Steven M. Johnson Pursuant to Section 302Certification by James K. Zielke Pursuant to Section 302Certification by Steven M. Johnson Pursuant to Section 906Certification by James K. Zielke Pursuant to Section 906
  -1-




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TOTAL ENTERTAINMENT RESTAURANT CORP. 
 Condensed Consolidated Balance Sheets
 (in thousands)
(Unaudited)
 March 22,2005
    
    
    December 28, 2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    700
    
    
    $
    812Inventories
    
    
    2,569
    
    
    
    2,486Prepaid income taxes
    
    
    
    
    
    
    97Prepaid insurance
    
    
    1,382
    
    
    
    1,705Prepaid rent
    
    
    331
    
    
    
    1,088Other current assets
    
    
    820
    
    
    
    717Total current assets
    
    
    5,802
    
    
    
    6,905Property and equipment:Land
    
    
    600
    
    
    
    600Buildings
    
    
    703
    
    
    
    703Leasehold improvements
    
    
    63,432
    
    
    
    59,807Equipment
    
    
    31,383
    
    
    
    30,597Furniture and fixtures
    
    
    9,305
    
    
    
    9,150Property under capital leases
    
    
    918
    
    
    
    918106,341
    
    
    
    101,775Less accumulated depreciation and amortization
    
    
    35,481
    
    
    
    33,39470,860
    
    
    
    68,381Other assets:Goodwill, net of accumulated amortization
    
    
    3,661
    
    
    
    3,661Liquor licenses, net
    
    
    1,226
    
    
    
    1,256Other assets
    
    
    169
    
    
    
    364Total other assets
    
    
    5,056
    
    
    
    5,281Total assets
    
    $
    81,718
    
    
    $
    80,567LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of obligation under capital leases
    
    $
    8
    
    
    $
    8Accounts payable
    
    
    3,163
    
    
    
    2,906Checks outstanding in excess of cash balance
    
    
    924
    
    
    
    3,247Sales tax payable
    
    
    1,492
    
    
    
    1,257Accrued payroll
    
    
    1,573
    
    
    
    1,626Accrued payroll taxes
    
    
    1,018
    
    
    
    806Accrued income taxes
    
    
    1,256
    
    
    
    Deferred income taxes
    
    
    567
    
    
    
    797Other accrued liabilities
    
    
    2,930
    
    
    
    2,494Total current liabilities
    
    
    12,931
    
    
    
    13,141Notes payable
    
    
    1,445
    
    
    
    3,680Obligations under capital leases, net of current portion
    
    
    887
    
    
    
    889Deferred taxes
    
    
    1,958
    
    
    
    1,830Deferred revenue
    
    
    64
    
    
    
    Accrued rent
    
    
    8,177
    
    
    
    7,938Stockholders equity:Preferred stock
    
    
    
    
    
    
    Common stock
    
    
    100
    
    
    
    99Additional paid-in capital
    
    
    29,484
    
    
    
    29,306Retained earnings
    
    
    26,672
    
    
    
    23,684Total stockholders equity
    
    
    56,256
    
    
    
    53,089Total liabilities and stockholders equity
    
    $
    81,718
    
    
    $
    80,567
 See accompanying notes. -2-




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TOTAL ENTERTAINMENT RESTAURANT CORP. 
 Condensed Consolidated Income Statements
 (in thousands, except per share information)
(Unaudited)
 Twelve Weeks
    
    
    Twelve Weeksended
    
    
    endedMarch 22,2005
    
    
    March 23,2004(restated)Sales:Food and beverage
    
    $
    37,074
    
    
    $
    31,421Entertainment and other
    
    
    2,281
    
    
    
    2,426Total net sales
    
    
    39,355
    
    
    
    33,847Costs and expenses:Costs of sales
    
    
    10,402
    
    
    
    9,116Restaurant operating expenses
    
    
    20,004
    
    
    
    16,983Depreciation and amortization
    
    
    2,096
    
    
    
    1,735Preopening costs
    
    
    393
    
    
    
    432Restaurant costs and expenses
    
    
    32,895
    
    
    
    28,266Restaurant operating income
    
    
    6,460
    
    
    
    5,581General and administrative expenses
    
    
    2,018
    
    
    
    1,745Income from operations
    
    
    4,442
    
    
    
    3,836Other income (expense):Other income
    
    
    
    
    
    
    3Interest expense
    
    
    (49
    )
    
    
    (52
    )Income before income taxes
    
    
    4,393
    
    
    
    3,787Provision for income taxes
    
    
    1,405
    
    
    
    1,146Net income
    
    
    2,988
    
    
    
    2,641Basic earnings per share
    
    $
    0.30
    
    
    $
    0.27Diluted earnings per share
    
    $
    0.29
    
    
    $
    0.25
 See accompanying notes. -3-




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TOTAL ENTERTAINMENT RESTAURANT CORP. 
 Condensed Consolidated Statements of Cash Flows
 (in thousands)
(Unaudited)
 Twelve weeks ended
    
    
    Twelve weeks endedMarch 22, 2005
    
    
    March 23, 2004(restated)Cash flows from operating activities:Net income
    
    $
    2,988
    
    
    $
    2,641Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    1,825
    
    
    
    1,756Deferred income taxes
    
    
    (102
    )
    
    
    108Net change in operating assets and liabilities:Change in operating assets
    
    
    1,247
    
    
    
    784Change in operating liabilities
    
    
    (107
    )
    
    
    (1,312
    )Net cash provided by operating activities
    
    
    5,851
    
    
    
    3,977Cash flows from investing activities:Purchases of property and equipment
    
    
    (3,839
    )
    
    
    (3,752
    )Purchases of liquor licenses
    
    
    
    
    
    
    (138
    )Net cash used in investing activities
    
    
    (3,839
    )
    
    
    (3,890
    )Cash flows from financing activities:Proceeds from revolving note payable to bank
    
    
    10,575
    
    
    
    8,315Payments of revolving note payable to bank
    
    
    (12,810
    )
    
    
    (8,615
    )Payments
under capital lease obligations
    
    
    (2
    )
    
    
    (2
    )Proceeds from exercise of stock options
    
    
    113
    
    
    
    219Net cash used in financing activities
    
    
    (2,124
    )
    
    
    (83
    )Net increase (decrease) in cash and cash equivalents
    
    
    (112
    )
    
    
    4Cash and cash equivalents at beginning of period
    
    
    812
    
    
    
    813Cash and cash equivalents at end of period
    
    $
    700
    
    
    $
    817Supplemental disclosure of cash flow information:Cash paid for interest
    
    
    96
    
    
    
    40Cash paid for income taxes, net of refunds received
    
    
    89
    
    
    
    (109
    )Supplemental disclosure of non cash activity:Additions to property and equipment in accounts payable
    
    
    430
    
    
    
    (383
    )Tax benefit related to stock options exercised
    
    
    66
    
    
    
    128
 See accompanying notes. -4-




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TOTAL ENTERTAINMENT RESTAURANT CORP. 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
  1.
    Basis of Presentation and Description of Business The unaudited condensed consolidated financial statements have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission. The information
furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments)
which are, in the opinion of management, necessary to fairly present the operating results for the
respective periods. Certain information and footnote disclosures normally presented in annual
financial statements prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. These financial statements should be read in
conjunction with the Companys audited consolidated financial statements in its 2004 Form 10-K.
The results of the twelve weeks ended March 22, 2005 are not necessarily indicative of the results
to be expected for the full year ending December 27, 2005.  2.
    Restatement of Financial Statements Following a review of lease accounting and leasehold amortization polices, we determined that it
was appropriate to adjust certain of our prior financial statements. As a result, we have restated
all of our historical consolidated financial statements for periods prior to the fourth quarter of
2004. Historically, when accounting for leases with renewal options, we recorded rent expense on a
straight-line basis over the initial non-cancelable lease term, with the term commencing on the
initial date of the lease agreement. We also used only the initial non-cancelable lease term in
the determination of capital leases. We amortized our leasehold improvements and other long-lived
assets on those properties over a period that included both the initial non-cancelable lease term
and all option periods provided for in the lease (or the useful life of the assets, if shorter).
Additionally, tenant allowances received from the lessor were recorded as a reduction of the
related leasehold improvements. We now have restated our financial statements to recognize rent
expense on a straight-line basis over the expected lease term, including cancelable option periods
where failure to exercise such options would result in an economic penalty, not to exceed fifteen
years (unless the initial lease term is in excess of fifteen years). The expected lease term,
including cancelable option periods where failure to exercise such options would result in an
economic penalty, not to exceed fifteen years (unless the initial lease term is in excess of
fifteen years), is also being utilized in the determination of capital leases. Additionally, the
estimated useful life of leasehold improvements for amortization purposes was reduced from twenty
years to fifteen years, or the remaining life of the lease, whichever is less. The lease term
commences on the date when we have full access to the property. Lease expenses from the date we
have full access to the property to the completion of construction are capitalized as leasehold
improvements. Tenant allowances are being recorded as accrued rent when received and included as a
reduction in the straight-line rent calculation described above. We also had one lease
reclassified from operating to capital as a result of these adjustments. The impact of these adjustments on the condensed consolidated income statements and cash flows for
the first quarter of 2004 is shown in the tables below. The Restatement decreased reported diluted
net earnings per share by $0.01 in the first quarter of 2004. The Restatement did not have any
impact on our previously reported cash balances, sales or same-restaurant sales or on our
compliance with any covenant under our credit facility or other debt instruments. -5-




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Net Income Adjustments Related to Restatement
(in thousands, except per share data) As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    RestatedRestaurant operating expenses
    
    $
    16,972
    
    
    $
    11
    
    
    $
    16,983Depreciation and amortization
    
    
    1,504
    
    
    
    231
    
    
    
    1,735Restaurant costs and expenses
    
    
    28,024
    
    
    
    242
    
    
    
    28,266Restaurant operating income
    
    
    5,823
    
    
    
    (242
    )
    
    
    5,581Income from operations
    
    
    4,078
    
    
    
    (242
    )
    
    
    3,836Interest expense
    
    
    35
    
    
    
    17
    
    
    
    52Income before income taxes
    
    
    4,046
    
    
    
    (259
    )
    
    
    3,787Income taxes
    
    
    1,372
    
    
    
    (226
    )
    
    
    1,146Net income
    
    
    2,674
    
    
    
    (33
    )
    
    
    2,641Basic net earnings per share
    
    
    0.27
    
    
    
    (0.00
    )
    
    
    0.27Diluted net earnings per share
    
    
    0.26
    
    
    
    (0.01
    )
    
    
    0.25
 Cash Flow Adjustments Related to Restatement
(in thousands, except per share data) As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    RestatedNet cash provided by
operating activities
    
    $
    3,222
    
    
    $
    755
    
    
    $
    3,977Net cash used in
investing activities
    
    
    (3,137
    )
    
    
    (753
    )
    
    
    (3,890
    )Net cash provided by
financing activities
    
    
    (81
    )
    
    
    (2
    )
    
    
    (83
    )
  3.
    Accounting for Stock-Based Compensation In accordance with Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees, the Company uses the intrinsic value-based method for measuring stock-based
compensation cost which measures compensation cost as the excess, if any, of the quoted market
price of Companys common stock at the grant date over the amount the employee must pay for the
stock. The Companys policy is to grant stock options with grant prices equal to the fair value of
the Companys common stock at the date of grant. Proceeds from the exercise of common stock options
issued to officers, directors and key employees under the Companys stock option plans are credited
to common stock to the extent of par value and to additional paid-in capital for the excess. Pro forma information regarding net income and earnings per share is required by Statement No.
123, which also requires the information be determined as if the Company has accounted for its
employee stock options granted under the fair value of that Statement. The fair value method for
these options were estimated at the date of grant using a Black-Scholes option pricing model with
the following weighted-average assumptions: risk-free interest rate ranging from 2.9% to 5.3%; no
dividend yields; volatility factor ranging from 0.281 to 0.853; and a weighted-average expected
life of the option of 5 years. The Black-Scholes option valuation model was developed for use in estimating the fair value of
traded options which have no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions, including the expected stock
price volatility. Because the Companys employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in managements opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee stock options. -6-




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For purposes of pro forma disclosures, the estimated fair value of the options is amortized to
expense over the options vesting period. The Companys pro forma information is as follows: 12 weeks ended
    
    
    12 weeks endedMarch 22, 2005
    
    
    March 23, 2004Net income, as reported
    
    $
    2,988
    
    
    $
    2,641Pro forma stock-based employee
compensation cost, net of tax
    
    
    171
    
    
    
    163Pro forma net income
    
    
    2,817
    
    
    
    2,478Earnings per share:Basic, as reported
    
    $
    0.30
    
    
    $
    0.27Basic, pro forma
    
    $
    0.28
    
    
    $
    0.25Diluted, as reported
    
    $
    0.29
    
    
    $
    0.25Diluted, pro forma
    
    $
    0.27
    
    
    $
    0.24Weighted average fair value of options
granted during the quarter
    
    $
    4.57
    
    
    $
    4.90
  4.
    Stock Options During the twelve week period ended March 22, 2005, the Company granted to certain key
employees stock options for 89,000 shares of Common Stock at a weighted-average exercise price of
$10.84 per share and options to purchase 35,877 shares were exercised at a weighted-average
exercise price of $3.13 per share pursuant to its 1997 Incentive and Nonqualified Stock Option
Plan.  5.
    Earnings Per Share Basic earnings per share amounts are computed based on the weighted average number of shares
actually outstanding. The number of weighted averaged shares outstanding for the twelve week
periods ended March 22, 2005 and March 23, 2004 were 9,961,247 and 9,850,512, respectively. Diluted earnings per share are computed similar to basic earnings per share except that the
weighted average shares outsanding are increased to include additional shares for the assumed
exercise of stock options, if dilutive. The number of additional shares is calculated by assuming
that outstanding stock options were exercised and the proceeds from such exercises were used to
acquire common shares at an average price during the reporting period. The number of shares
resulting from this computation of diluted earnings per share for the twelve weeks ended March 22,
2005 and March 23, 2004 were 10,392,639 and 10,442,063, respectively. 
 Item 2.Managements Discussion and Anaysis of Financial Condition and Results of
Operations General The following discussion and analysis should be read in conjunction with the Financial
Statements and Notes thereto included elsewhere in this Form 10-Q. As of March 22, 2005, the Company owned and operated 77 restaurants under the Fox and Hound
Smokehouse & Tavern, Fox and Hound English Pub & Grille, and Fox and Hound Pub & Grille (Fox and
Hound), Baileys Smokehouse & Tavern, Baileys Sports Grille and Baileys Pub & Grille
(Baileys) brand names. The Companys restaurants offer a broad menu of mid-priced appetizers,
entrees, and desserts served in generous portions. In addition, each location features a
full-service bar and offers a wide selection of major domestic, imported and specialty beers. Each
restaurant emphasizes a high energy environment. Most have multiple billiard tables with satellite
and cable coverage of a variety of sporting events and music videos. In addition to our food, the
Company believes that customers are attracted to the elegant yet comfortable atmosphere of dark
wood interiors, polished brass, embroidered chairs and booths, and etched glass. The Fox and Hound
and Baileys restaurants share identical design and operational principles and menus. As of March
22, 2005, the Company owned and operated 59 Fox and Hound restaurants and 18 Baileys restaurants
located in Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Louisiana,
Michigan, Missouri, Nebraska, New Jersey, New Mexico, North Carolina, Ohio, -7-




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Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas and Virginia. As of March 23, 2004,
the Company owned and operated 50 Fox and Hound restaurants and 16 Baileys restaurants. The components of the Companys net sales are food and non-alcoholic beverages, alcoholic
beverages, and entertainment and other (principally billiard table rental fees). For the twelve
weeks ended March 22, 2005, food and non-alcoholic beverages were 34.4% of total sales, alcoholic
beverages were 58.4% of total sales and entertainment and other were 7.2% of total sales. For the
twelve weeks ended March 23, 2004, food and non-alcoholic beverages were 33.8% of total sales,
alcoholic beverages were 59.0% of total sales and entertainment and other were 7.2% of total sales. The components of the Companys cost of sales primarily include direct costs of food,
non-alcoholic beverages and alcoholic beverages. These costs are generally variable and will
fluctuate with changes in sales volume and sales mix. Components of restaurant operating expenses include operating payroll and fringe benefits, and
occupancy, maintenance and utilities. All but one of the Companys locations are leased and
provide for a minimum annual rent, with some leases calling for additional rent based on sales
volume at the particular location in excess of specified minimum sales levels. Depreciation and amortization costs primarily include depreciation and amortization of capital
expenditures for restaurants. Preopening costs include labor costs, costs of hiring and training personnel and certain other
costs relating to opening new restaurants. General and administrative expenses include all corporate and administrative functions that
support existing operations and provide an infrastructure to support future growth. Management,
supervisory and staff salaries, employee benefits, travel, information systems, training, rent and
office supplies as well as accounting services fees are major items of costs in this category. In calculating comparable restaurant sales, the Company includes a restaurant in the
comparable restaurant base after it has been in operation for 18 full months. As of March 22,
2005, there were 60 restaurants in the comparable restaurant base. Annualized average weekly sales
are computed by dividing net sales during the period by the number of store operating weeks and
multiplying the result by 52. Results of Operations The following table sets forth for the periods indicated (i) the percentages which certain
items included in the Condensed Consolidated Statement of Operations bear to net sales, and (ii)
other selected operating data. The Company operates on a 52 or 53 week fiscal year ending the last
Tuesday in December. Fiscal years 2005 and 2004 consist of 52 weeks. Fiscal quarters consist of
three accounting periods of 12 weeks each and a final period of 16 or 17 weeks. Twelve Weeks EndedMarch 22,
    
    
    March 23,2005
    
    
    2004Operating Statement Data:Net sales
    
    
    100.0
    %
    
    
    100.0
    %Costs and expenses:Costs of sales
    
    
    26.5
    
    
    
    26.9Restaurant operating expenses
    
    
    50.8
    
    
    
    50.2Depreciation and amortization
    
    
    5.3
    
    
    
    5.1Preopening costs
    
    
    1.0
    
    
    
    1.3Restaurant costs and expenses
    
    
    83.6
    
    
    
    83.5Restaurant operating income
    
    
    16.4
    
    
    
    16.5General and administrative expenses
    
    
    5.1
    
    
    
    5.1Income from operations
    
    
    11.3
    
    
    
    11.4Interest expense
    
    
    0.1
    
    
    
    0.2Income before income taxes
    
    
    11.2
    
    
    
    11.2Provision for income taxes
    
    
    3.6
    
    
    
    3.4Net income
    
    
    7.6
    %
    
    
    7.8
    %
 -8-




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Restaurant Operating Data (dollars in thousands):Annualized average weekly sales per location
    
    $
    2,256
    
    
    $
    2,260Number of restaurants at end of the period
    
    
    77
    
    
    
    66
 Twelve Weeks Ended March 22, 2005 Compared to Twelve Weeks Ended March 23, 2004 Net sales increased $5,508,000 (16.3%) for the twelve weeks ended March 22, 2005 to
$39,355,000 from $33,847,000 for the twelve weeks ended March 23, 2004. This increase was due to a
16.4% increase in store weeks (907 versus 779) as a result of 11 restaurants opening since March
23, 2004 and a relatively flat annualized average weekly sales for units open during the entire
period. Comparable restaurant sales increased 0.6% for the quarter ended March 22, 2005. Costs of sales increased $1,286,000 (14.1%) for the twelve weeks ended March 22, 2005 to
$10,402,000 from $9,116,000 in the twelve weeks ended March 23, 2004, and decreased as a percentage
of sales to 26.5% from 26.9%. This decrease is principally attributable to an increase in menu
prices during the quarter. Restaurant operating expenses increased $3,021,000 (17.8%) for the twelve weeks ended March
22, 2005 to $20,004,0000 from $16,983,000 in the twelve weeks ended March 23, 2004, and increased
as a percentage of net sales to 50.8% from 50.2%. This increase as a percentage of sales is
principally attributable to higher occupancy costs on new units and higher utility expense. Depreciation and amortization increased $361,000 (20.8%) for the twelve weeks ended March 22,
2005 to $2,096,000 from $1,735,000 in the twelve weeks ended March 23, 2004, and increased as a
percentage of sales to 5.3% from 5.1%. This increase in expense is due to additional depreciation
on 11 restaurants opened since March 23, 2004. Preopening costs decreased $39,000 (9.0%) for the twelve weeks ended March 22, 2005 to
$393,000 from $432,000 in the twelve weeks ended March 23, 2004. These costs are attributable to
two units that opened during the twelve weeks ended March 22, 2005 and partial preopening expenses
for three restaurants which have yet to open. Two restaurants were opened in the twelve weeks
ended March 23, 2004. General and administrative expenses increased $273,000 (15.6%) for the twelve weeks ended
March 22, 2005 to $2,018,000 from $1,745,000 in the twelve weeks ended March 23, 2004, and remained
consistent as a percentage of net sales at 5.1%. Interest expense was $49,000 for the twelve weeks ended March 22, 2005 and $52,000 for the
twelve weeks ended March 23, 2004. This decrease is due to a lower average balance which was
partially offset by a higher average interest rate applicable to the revolving note payable in the
current fiscal year compared with the prior fiscal year. The effective income tax rate was 32.0% for the twelve weeks ended March 22, 2005 and 30.3%
for the twelve weeks ended March 23, 2004. The increase is primarily due to the impact of the
credit for social security taxes paid on tips in excess of minimum wage relative to the amount of
estimated annual income before income taxes. Quarterly Fluctuations, Seasonality and Inflation The timing of new unit openings will result in significant fluctuations in quarterly results.
The Company expects seasonality to be a factor in the results of its business in the future due to
expected lower second and third quarter revenues due to the summer season. The primary inflationary
factors affecting the Companys operations include food, liquor and labor costs. A large number of
the Companys restaurant personnel are tipped employees who are paid at the federal subminimum wage
level; therefore, future subminimum wage changes will have a significant effect on labor costs. As
costs of food and labor have increased, the Company has historically been able to offset these
increases through economies of scale, improved operating procedures and menu price changes;
however, short-term fluctuations in raw product pricing may have an impact on the Companys costs
of food. To date, inflation has not had a material impact on operating margins. Liquidity and Capital Resources As is customary in the restaurant industry, the Company operates with negative working
capital. Negative working capital increased $893,000 to $7,129,000 as of March 22, 2005 from
$6,236,000 as of December 28, 2004. This increase is attributable primarily to payments on the
line of credit and cost of purchases of property and equipment in excess of cash provided by
operations. Cash decreased $112,000 to $700,000 at March 22, 2005 compared to the balance of
$812,000 at December 28, 2004. The Company does not have significant receivables or inventory and
receives trade credit based upon negotiated terms in purchasing food and supplies. Because funds -9-




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available from cash sales are not needed immediately to pay for food and supplies, or to finance
inventory, they may be considered as a source of financing for noncurrent capital expenditures. On September 1, 1998 the Company entered into a loan agreement with Intrust Bank, N.A. (the
Line of Credit) which provides for a line of credit of $20,000,000 subject to certain limitations
based on earnings before interest, taxes, depreciation and amortization of the past fifty-two weeks
and the amount of capital lease obligations on personal property. The Line of Credit is secured by
substantially all of the Companys assets. The Line of Credit requires monthly payments of
interest only until November 1, 2006, at which time equal monthly installments of principal and
interest are required as necessary to fully amortize the outstanding indebtedness plus future
interest over a period of four years. Interest is accrued at 1/2% below the prime rate as published
in The Wall Street Journal. Proceeds from the Line of Credit are being used for restaurant
development. As of March 22, 2005 the Company had borrowed $1,445,000 under the Line of Credit.
The Company is in compliance with all debt covenants. Cash flows from operations were $5,851,000 in the 12 weeks ended March 22, 2005 compared to
$3,977,000 in the 12 weeks ended March 23, 2004. Purchases of property and equipment were
$3,839,000 in the 12 weeks ended March 22, 2005 compared to $3,752,000 in the 12 weeks ended March
23, 2004. Net payments on the revolving note payable to bank were $2,235,000 for the 12 week
period ending March 22, 2005 compared to $300,000 for the 12 weeks ending March 23, 2004. The Company intends to open ten to twelve new locations in fiscal year 2005 and twelve to
fifteen new locations in fiscal year 2006. At March 22, 2005, two units had been opened in fiscal
2005, five units were under construction, contracts had been executed on four additional sites, and
contract negotiations had begun on one additional site. The Company is currently evaluating
locations in markets familiar to its management team. However, the number of locations actually
opened and the timing thereof may vary depending upon the ability of the Company to locate suitable
sites and negotiate favorable leases. The Company expects to expend approximately $22 to $25
million to open new locations over the next twelve months. The Company believes the funds available from the Line of Credit and its cash flow from
operations will be sufficient to satisfy its working capital and capital expenditure requirements
for at least the next twelve months. There can be no assurance, however, that changes in the
Companys operating plans, the acceleration or modification of the Companys expansion plans, lower
than anticipated revenues, increased expenses, stock repurchases, potential acquisitions or other
events will not cause the Company to seek additional financing sooner than anticipated, prevent the
Company from achieving the goals of its expansion strategy or prevent any newly opened locations
from operating profitably. There can be no assurance that additional financing will be available
on terms acceptable to the Company or at all. Forward Looking Statements This report contains certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are intended to be covered by the safe harbors created thereby. Although the Company
believes that the assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and, therefore, there can be no assurance
that the forward-looking statements included in this report will prove to be accurate. Our actual
results may differ materially from the forward-looking statements contained herein. Factors that
could cause actual results to differ from the results discussed in the forward-looking statements
include, but are not limited to, potential increases in food, alcohol, labor, and other operating
costs, changes in competition, the inability to find suitable new locations, changes in consumer
preferences or spending patterns, changes in demographic trends, the effectiveness of our operating
and growth initiatives and promotional efforts, and changes in government regulation. Further
information about the factors that might affect the Companys financial and other results are
included in the Companys 10-K, filed with the Securities and Exchange Commission. In light of
the significant uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by the Company or any
other person that the objectives and plans of the Company will be achieved. 
 Item 3.Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk The Companys Line of Credit has a variable rate which is directly affected by changes in U.S.
interest rates. The average interest rate of the Facility was 4.8% for the twelve weeks ended
March 22, 2005. The interest rate at March 22, 2005 was 5.0%. The following table presents the
quantitative interest rate risks at March 22, 2005: -10-




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Principal Amount by Expected Maturity(In thousands)FairThere-
    
    
    
    
    
    
    Value(dollars in thousands)
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    after
    
    
    Total
    
    
    3/22/05Variable rate debt
    
    $
    
    
    
    $
    137
    
    
    $
    342
    
    
    $
    359
    
    
    $
    376
    
    
    $
    231
    
    
    $
    1,445
    
    
    $
    1,445Average Interest Rate
1/2% below prime
    
    
    
    
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
 
 Item 4.Procedures and Controls As of the end of the period covered by this report, the Company carried out an evaluation,
under the supervision and with the participation of the Companys management, including the
Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design
and operation of the Companys disclosure controls and procedures pursuant to Exchange Act Rule
13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Companys disclosure controls and procedures are effective. During the first
quarter of 2005, the Company has implemented additional review procedures over the selection and
monitoring of appropriate assumptions and factors affecting lease and depreciation accounting to
remediate the material weakness identified in the Companys annual report on Form 10-K/A for the
period ending December 28, 2004 related to the Companys selection, monitoring and review of
factors and assumptions affecting lease and depreciation accounting. There were no other
significant changes in the Companys internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation. 
 PART II. OTHER INFORMATION 
 Item 6.Exhibits Exhibits Exhibit 31.1
- Certification by Steven M. Johnson pursuant to Rule 13a-14(a) or 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2
- Certification by James K. Zielke pursuant to Rule 13a-14(a) or 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32.1
- Certification by Steven M. Johnson pursuant to Rule 13a-14(b) or 15d-14(b) and
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 32.2
- Certification by James K. Zielke pursuant to Rule 13a-14(b) or 15d-14(b) 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. -11-




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TOTAL ENTERTAINMENT RESTAURANT CORP. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed in its behalf by the undersigned thereunto duly authorized. Total Entertainment Restaurant Corp.
(Registrant)Date  April 29, 2005
    /s/ James K. ZielkeJames K. ZielkeChief Financial Officer,
Secretary and Treasurer
(Duly Authorized Officer) -12-