##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---

FORM 10-Q/A



---

Amendment No. 1 to Quarterly Report on Form 10-Q for the quarter ended September 18, 2005

Quarterly Report Pursuant to Section 13 or 15 (d)

of the Securities Exchange Act of 1934

FOR QUARTER ENDED SEPTEMBER 18, 2005

COMMISSION FILE NUMBER 001-7323



---

FRISCHS RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|OHIO                                                           |  | 31-0523213                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|2800 Gilbert Avenue, Cincinnati, Ohio    |  | 45206     
|(Address of principal executive offices) |  | (Zip Code)

Registrants telephone number, including area code 513-961-2660

Not Applicable

Former name, former
address and former fiscal year, if changed since last report



---

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.    YES  x    NO ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act.

Large Accelerated Filer ̈Accelerated Filer  x    Non-accelerated Filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    YES ̈NO  x

The total number of shares outstanding of the issuers no par common stock, as of September 23, 2005 was: 5,063,274



---



---

##### Table of Contents

TABLE OF CONTENTS

Explanatory Note

As described in the Form 8-K filed by the Company on January 19, 2006, in early December 2005, the Companys actuarial consulting firm informed the Company of a formula error in the software program it created in 1995, which
caused the software program to not properly pro-rate the benefit for service for plan participants in the Companys defined benefit pension plan for managers, office employees and commissary employees with less than 28 years of service before
normal retirement. This actuarial formula error caused the Companys net periodic pension cost (and related accounts in the consolidated balance sheet and the consolidated statement of earnings) to be overstated. The purpose of this Form 10-Q/A
is to restate the Companys previously issued financial statements contained in its Form 10-Q for the fiscal quarter ended September 18, 2005 to correct the net periodic pension cost (and related accounts in the consolidated balance sheet
and the consolidated statement of earnings).



|                               |  |         |  |                                                                                                 |  |       
|------------------------------ |  | ------- |  | ----------------------------------------------------------------------------------------------- |  | ------
|                               |  | Page   
|PART I - FINANCIAL INFORMATION
|                               |  |         | 
|                               |  | Item 1. |  | Financial Statements:                                                                           |  |       
|                               |  |         | 
|                               |  |         |  | Consolidated Statement of Earnings (Restated)                                                   |  | 3     
|                               |  |         | 
|                               |  |         |  | Consolidated Balance Sheet (Restated)                                                           |  | 4 -5  
|                               |  |         | 
|                               |  |         |  | Consolidated Statement of Shareholders Equity (Restated)                                       |  | 6     
|                               |  |         | 
|                               |  |         |  | Consolidated Statement of Cash Flows (Restated)                                                 |  | 7     
|                               |  |         | 
|                               |  |         |  | Notes to Consolidated Financial Statements (Restated)                                           |  | 8 -26 
|                               |  |         | 
|                               |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operation (Restated) |  | 27 -35
|                              
|PART II - OTHER INFORMATION   
|                               |  |         | 
|                               |  | Item 6  |  | Exhibits                                                                                        |  | 36    
|                               | 
|SIGNATURE                      |  | 36     



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Statement of Earnings

(Unaudited)



|                                          |                             |                     |            |                             |  |   |            |  
|----------------------------------------- | --------------------------- | ------------------- | ---------- | --------------------------- |  | - | ---------- | -
|                                          |                             | Sixteen Weeks Ended |           
|                                          | September 18,2005(restated) |                     |            | September 19,2004(restated) | 
|Sales                                     |                             | $                   | 86,532,775 |                             |  | $ | 84,062,163 |  
|                                          |                             |                    
|Cost of sales                             |                             |                     |            |                             |  |   |            |  
|Food and paper                            |                             |                     | 30,104,265 |                             |  |   | 29,414,304 |  
|Payroll and related                       |                             |                     | 28,552,186 |                             |  |   | 27,907,398 |  
|Other operating costs                     |                             |                     | 18,886,479 |                             |  |   | 17,554,540 |  
|                                          |                             |                     |            |                             |  |   |            |  
|                                          |                             |                     | 77,542,930 |                             |  |   | 74,876,242 |  
|                                          |                             |                    
|Gross profit                              |                             |                     | 8,989,845  |                             |  |   | 9,185,921  |  
|                                          |                             |                    
|Administrative and advertising            |                             |                     | 4,581,071  |                             |  |   | 4,324,761  |  
|Franchise fees and other revenue          |                             |                     | (372,343   | )                           |  |   | (422,855   | )
|                                          |                             |                     |            |                             |  |   |            |  
|Operating profit                          |                             |                     | 4,781,117  |                             |  |   | 5,284,015  |  
|                                          |                             |                    
|Interest expense                          |                             |                     | 782,086    |                             |  |   | 806,096    |  
|                                          |                             |                     |            |                             |  |   |            |  
|Earnings before income taxes              |                             |                     | 3,999,031  |                             |  |   | 4,477,919  |  
|                                          |                             |                    
|Income taxes                              |                             |                     | 1,397,000  |                             |  |   | 1,523,000  |  
|                                          |                             |                     |            |                             |  |   |            |  
|Net Earnings                              |                             | $                   | 2,602,031  |                             |  | $ | 2,954,919  |  
|                                          |                             |                     |            |                             |  |   |            |  
|Earnings per share (EPS) of common stock: |                             |                     |            |                             |  |   |            |  
|                                          |                             |                    
|Basic net earnings per share              |                             | $                   | .51        |                             |  | $ | .59        |  
|                                          |                             |                     |            |                             |  |   |            |  
|Diluted net earnings per share            |                             | $                   | .50        |                             |  | $ | .57        |  
|                                          |                             |                     |            |                             |  |   |            |  

The accompanying notes are an integral part of these statements.



3



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Balance Sheet

ASSETS



|                                                    |  |                                        |             |              |   |            
|--------------------------------------------------- |  | -------------------------------------- | ----------- | ------------ | - | -----------
|                                                    |  | September 18,2005(unaudited)(restated) |             | May 29, 2005
|Current Assets                                      |  |                                        |             |              |   |            
|Cash                                                |  | $                                      | 314,885     |              | $ | 306,300    
|Trade Receivables                                   |  |                                        | 1,474,241   |              |   | 1,220,320  
|Other Receivables                                   |  |                                        | 179,441     |              |   | 169,655    
|Inventories                                         |  |                                        | 4,279,248   |              |   | 4,592,093  
|Prepaid expenses and sundry deposits                |  |                                        | 3,419,258   |              |   | 2,819,762  
|Prepaid and deferred income taxes                   |  |                                        | 943,000     |              |   | 942,611    
|                                                    |  |                                        |             |              |   |            
|Total current assets                                |  |                                        | 10,610,073  |              |   | 10,050,741 
|                                                    |  |                                       
|Property and Equipment                              |  |                                        |             |              |   |            
|Land and improvements                               |  |                                        | 60,605,232  |              |   | 56,830,344 
|Buildings                                           |  |                                        | 83,479,445  |              |   | 81,434,781 
|Equipment and fixtures                              |  |                                        | 86,849,526  |              |   | 84,240,573 
|Leasehold improvements and buildings on leased land |  |                                        | 22,814,781  |              |   | 21,590,570 
|Capitalized leases                                  |  |                                        | 7,131,603   |              |   | 7,131,603  
|Construction in progress                            |  |                                        | 3,554,835   |              |   | 6,435,214  
|                                                    |  |                                        |             |              |   |            
|                                                    |  |                                        | 264,435,422 |              |   | 257,663,085
|Less accumulated depreciation and amortization      |  |                                        | 112,005,444 |              |   | 109,461,135
|                                                    |  |                                        |             |              |   |            
|Net property and equipment                          |  |                                        | 152,429,978 |              |   | 148,201,950
|                                                    |  |                                       
|Other Assets                                        |  |                                        |             |              |   |            
|Goodwill                                            |  |                                        | 740,644     |              |   | 740,644    
|Other intangible assets                             |  |                                        | 1,436,236   |              |   | 1,400,659  
|Investments in land                                 |  |                                        | 1,006,390   |              |   | 974,370    
|Property held for sale                              |  |                                        | 1,857,244   |              |   | 1,857,244  
|Other                                               |  |                                        | 4,505,583   |              |   | 4,239,974  
|                                                    |  |                                        |             |              |   |            
|Total other assets                                  |  |                                        | 9,546,097   |              |   | 9,212,891  
|                                                    |  |                                        |             |              |   |            
|Total assets                                        |  | $                                      | 172,586,148 |              | $ | 167,465,582
|                                                    |  |                                        |             |              |   |            

The accompanying notes are an integral part of these statements.



4



---

##### Table of Contents

LIABILITIES AND SHAREHOLDERS EQUITY



|                                                                                                                           |  |                                        |             |              |   |            
|-------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------- | ----------- | ------------ | - | -----------
|                                                                                                                           |  | September 18,2005(unaudited)(restated) |             | May 29, 2005
|Current Liabilities                                                                                                        |  |                                        |             |              |   |            
|Long-term obligations due within one year                                                                                  |  |                                        |             |              |   |            
|Long-term debt                                                                                                             |  | $                                      | 8,058,400   |              | $ | 7,598,182  
|Obligations under capitalized leases                                                                                       |  |                                        | 487,801     |              |   | 533,016    
|Self insurance                                                                                                             |  |                                        | 866,215     |              |   | 851,737    
|Accounts payable                                                                                                           |  |                                        | 15,434,095  |              |   | 12,799,147 
|Accrued expenses                                                                                                           |  |                                        | 8,843,986   |              |   | 8,763,971  
|Income taxes                                                                                                               |  |                                        | 469,803     |              |   | 416,125    
|                                                                                                                           |  |                                        |             |              |   |            
|Total current liabilities                                                                                                  |  |                                        | 34,160,300  |              |   | 30,962,178 
|                                                                                                                           |  |                                       
|Long-Term Obligations                                                                                                      |  |                                        |             |              |   |            
|Long-term debt                                                                                                             |  |                                        | 29,638,788  |              |   | 29,570,481 
|Obligations under capitalized leases                                                                                       |  |                                        | 3,053,150   |              |   | 3,136,836  
|Self insurance                                                                                                             |  |                                        | 1,946,320   |              |   | 1,981,342  
|Deferred income taxes                                                                                                      |  |                                        | 5,046,508   |              |   | 4,830,375  
|Deferred compensation and other                                                                                            |  |                                        | 3,691,760   |              |   | 3,583,120  
|                                                                                                                           |  |                                        |             |              |   |            
|Total long-term obligations                                                                                                |  |                                        | 43,376,526  |              |   | 43,102,154 
|                                                                                                                           |  |                                       
|Commitments                                                                                                                |  |                                        |            |              |   |           
|                                                                                                                           |  |                                       
|Shareholders Equity                                                                                                       |  |                                        |             |              |   |            
|Capital stock                                                                                                              |  |                                        |             |              |   |            
|Preferred stock - authorized, 3,000,000 shares without par value; none issued                                              |  |                                        |            |              |   |           
|Common stock - authorized, 12,000,000 shares without par value; issued, 7,510,597 and 7,505,176 shares - stated value - $1 |  |                                        | 7,510,597   |              |   | 7,505,176  
|Additional contributed capital                                                                                             |  |                                        | 62,352,032  |              |   | 62,226,047 
|                                                                                                                           |  |                                        |             |              |   |            
|                                                                                                                           |  |                                        | 69,862,629  |              |   | 69,731,223 
|                                                                                                                           |  |                                       
|Retained earnings                                                                                                          |  |                                        | 57,979,120  |              |   | 56,490,185 
|                                                                                                                           |  |                                        |             |              |   |            
|                                                                                                                           |  |                                        | 127,841,749 |              |   | 126,221,408
|                                                                                                                           |  |                                       
|Less cost of treasury stock (2,447,323 and 2,449,394 shares)                                                               |  |                                        | 32,792,427  |              |   | 32,820,158 
|                                                                                                                           |  |                                        |             |              |   |            
|Total shareholders equity                                                                                                 |  |                                        | 95,049,322  |              |   | 93,401,250 
|                                                                                                                           |  |                                        |             |              |   |            
|Total liabilities and shareholders equity                                                                                 |  | $                                      | 172,586,148 |              | $ | 167,465,582
|                                                                                                                           |  |                                        |             |              |   |            



5



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Statement of Shareholders Equity

Sixteen weeks ended September 18, 2005 and September 19, 2004

(Unaudited)



|                                                    |  |                                               |           |                              |   |            |                  |  |   |                 |   |  |       |             |   |  |   |            |  
|--------------------------------------------------- |  | --------------------------------------------- | --------- | ---------------------------- | - | ---------- | ---------------- |  | - | --------------- | - |  | ----- | ----------- | - |  | - | ---------- | -
|                                                    |  | Common stockat $1 per share -Shares andamount |           | Additionalcontributedcapital |   |            | Retainedearnings |  |   | Treasury shares |   |  | Total |            
|Balance at May 30, 2004 (as originally reported)    |  | $                                             | 7,490,845 |                              | $ | 61,976,027 |                  |  | $ | 42,920,243      |   |  | $     | (32,920,555 | ) |  | $ | 79,466,560 |  
|Pension actuarial correction                        |  |                                               |           |                              |   |            |                  |  |   | 1,048,834       |   |  |       |             |   |  |   | 1,048,834  |  
|                                                    |  |                                               |           |                              |   |            |                  |  |   |                 |   |  |       |             |   |  |   |            |  
|Balance at May 30, 2004 (restated)                  |  |                                               | 7,490,845 |                              |   | 61,976,027 |                  |  |   | 43,969,077      |   |  |       | (32,920,555 | ) |  |   | 80,515,394 |  
|Net earnings for sixteen weeks (restated)           |  |                                               |          |                              |   |           |                  |  |   | 2,954,919       |   |  |       |            |   |  |   | 2,954,919  |  
|Stock options exercised - new shares issued         |  |                                               | 3,165     |                              |   | 46,683     |                  |  |   |                |   |  |       |            |   |  |   | 49,848     |  
|Stock options exercised - treasury shares re-issued |  |                                               |          |                              |   | 896        |                  |  |   |                |   |  |       | 2,223       |   |  |   | 3,119      |  
|Tax benefit from stock options exercised            |  |                                               |          |                              |   | 10,138     |                  |  |   |                |   |  |       |            |   |  |   | 10,138     |  
|Other treasury shares re-issued                     |  |                                               |          |                              |   | 38,862     |                  |  |   |                |   |  |       | 33,542      |   |  |   | 72,404     |  
|Cash dividends - $.22 per share                     |  |                                               |          |                              |   |           |                  |  |   | (1,108,034      | ) |  |       |            |   |  |   | (1,108,034 | )
|                                                    |  |                                               |           |                              |   |            |                  |  |   |                 |   |  |       |             |   |  |   |            |  
|Balance at September 19, 2004 (restated)            |  |                                               | 7,494,010 |                              |   | 62,072,606 |                  |  |   | 45,815,962      |   |  |       | (32,884,790 | ) |  |   | 82,497,788 |  
|Net earnings for thirty-six weeks (restated)        |  |                                               |          |                              |   |           |                  |  |   | 11,785,906      |   |  |       |            |   |  |   | 11,785,906 |  
|Stock options exercised - new shares issued         |  |                                               | 11,166    |                              |   | 158,422    |                  |  |   |                |   |  |       |            |   |  |   | 169,588    |  
|Stock options exercised - treasury shares re-issued |  |                                               |          |                              |   | (4,005     | )                |  |   |                |   |  |       | 93,730      |   |  |   | 89,725     |  
|Tax benefit from stock options exercised            |  |                                               |          |                              |   | 64,361     |                  |  |   |                |   |  |       |            |   |  |   | 64,361     |  
|Other treasury shares re-issued                     |  |                                               |          |                              |   | 1,103      |                  |  |   |                |   |  |       | 1,393       |   |  |   | 2,496      |  
|Treasury shares acquired                            |  |                                               |          |                              |   |           |                  |  |   |                |   |  |       | (30,491     | ) |  |   | (30,491    | )
|Employee stock purchase plan                        |  |                                               |          |                              |   | (66,440    | )                |  |   |                |   |  |       |            |   |  |   | (66,440    | )
|Cash dividends - $.22 per share                     |  |                                               |          |                              |   |           |                  |  |   | (1,111,683      | ) |  |       |            |   |  |   | (1,111,683 | )
|                                                    |  |                                               |           |                              |   |            |                  |  |   |                 |   |  |       |             |   |  |   |            |  
|Balance at May 29, 2005 (restated)                  |  |                                               | 7,505,176 |                              |   | 62,226,047 |                  |  |   | 56,490,185      |   |  |       | (32,820,158 | ) |  |   | 93,401,250 |  
|Net earnings for sixteen weeks (restated)           |  |                                               |          |                              |   |           |                  |  |   | 2,602,031       |   |  |       |            |   |  |   | 2,602,031  |  
|Stock options exercised - new shares issued         |  |                                               | 5,421     |                              |   | 89,770     |                  |  |   |                |   |  |       |            |   |  |   | 95,191     |  
|Tax benefit from stock options exercised            |  |                                               |          |                              |   | 12,117     |                  |  |   |                |   |  |       |            |   |  |   | 12,117     |  
|Other treasury shares re-issued                     |  |                                               |          |                              |   | 24,098     |                  |  |   |                |   |  |       | 27,731      |   |  |   | 51,829     |  
|Cash dividends - $.22 per share                     |  |                                               |          |                              |   |           |                  |  |   | (1,113,096      | ) |  |       |            |   |  |   | (1,113,096 | )
|                                                    |  |                                               |           |                              |   |            |                  |  |   |                 |   |  |       |             |   |  |   |            |  
|Balance at September 18, 2005 (restated)            |  | $                                             | 7,510,597 |                              | $ | 62,352,032 |                  |  | $ | 57,979,120      |   |  | ($    | 32,792,427  | ) |  | $ | 95,049,322 |  
|                                                    |  |                                               |           |                              |   |            |                  |  |   |                 |   |  |       |             |   |  |   |            |  

The accompanying notes are an integral part of these statements.



6



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Statement of Cash Flows

Sixteen weeks ended September 18, 2005 and September 19, 2004

(unaudited)



|                                                                             |  |                             |            |   |                             |   |            |  
|---------------------------------------------------------------------------- |  | --------------------------- | ---------- | - | --------------------------- | - | ---------- | -
|                                                                             |  | September 18,2005(restated) |            |   | September 19,2004(restated) |  
|Cash flows provided by (used in) operating activities:                       |  |                             |            |   |                             |   |            |  
|Net earnings                                                                 |  | $                           | 2,602,031  |   |                             | $ | 2,954,919  |  
|Adjustments to reconcile net earnings to net cash from operating activities: |  |                             |            |   |                             |   |            |  
|Depreciation and amortization                                                |  |                             | 3,847,077  |   |                             |   | 3,489,168  |  
|Loss on disposition of assets, including abandonments                        |  |                             | 23,528     |   |                             |   | 57,445     |  
|                                                                             |  |                             |            |   |                             |   |            |  
|                                                                             |  |                             | 6,472,636  |   |                             |   | 6,501,532  |  
|Changes in assets and liabilities:                                           |  |                             |            |   |                             |   |            |  
|Accounts receivable                                                          |  |                             | (263,707   | ) |                             |   | (244,257   | )
|Inventories                                                                  |  |                             | 312,845    |   |                             |   | (88,642    | )
|Prepaid expenses and sundry deposits                                         |  |                             | (599,496   | ) |                             |   | (828,269   | )
|Other assets                                                                 |  |                             | (250,734   | ) |                             |   | 91,080     |  
|Prepaid, accrued and deferred income taxes                                   |  |                             | 269,422    |   |                             |   | 537,982    |  
|Tax benefit from stock options exercised                                     |  |                             | 12,117     |   |                             |   | 10,138     |  
|Accounts payable                                                             |  |                             | 2,077,988  |   |                             |   | (94,794    | )
|Accrued expenses                                                             |  |                             | 80,015     |   |                             |   | (1,118,270 | )
|Self insured obligations                                                     |  |                             | (20,544    | ) |                             |   | (401,915   | )
|Other liabilities                                                            |  |                             | 108,640    |   |                             |   | 108,929    |  
|                                                                             |  |                             |            |   |                             |   |            |  
|                                                                             |  |                             | 1,726,546  |   |                             |   | (2,028,018 | )
|                                                                             |  |                             |            |   |                             |   |            |  
|Net cash provided by operating activities                                    |  |                             | 8,199,182  |   |                             |   | 4,473,514  |  
|                                                                             |  |                            
|Cash flows provided by (used in) investing activities:                       |  |                             |            |   |                             |   |            |  
|Additions to property and equipment                                          |  |                             | (8,073,197 | ) |                             |   | (8,999,056 | )
|Proceeds from disposition of property                                        |  |                             |           |   |                             |   | 10,057     |  
|Change in other assets                                                       |  |                             | (107,909   | ) |                             |   | (138,055   | )
|                                                                             |  |                             |            |   |                             |   |            |  
|Net cash (used in) investing activities                                      |  |                             | (8,181,106 | ) |                             |   | (9,127,054 | )
|                                                                             |  |                            
|Cash flows provided by (used in) financing activities:                       |  |                             |            |   |                             |   |            |  
|Proceeds from borrowings                                                     |  |                             | 3,000,000  |   |                             |   | 7,500,000  |  
|Payment of long-term debt and capital lease obligations                      |  |                             | (2,600,375 | ) |                             |   | (2,155,145 | )
|Cash dividends paid                                                          |  |                             | (556,136   | ) |                             |   | (553,709   | )
|Proceeds from stock options exercised - new shares issued                    |  |                             | 95,191     |   |                             |   | 49,848     |  
|Proceeds from stock options exercised - treasury shares re-issued            |  |                             |           |   |                             |   | 3,119      |  
|Other treasury shares re-issued                                              |  |                             | 51,829     |   |                             |   | 72,404     |  
|                                                                             |  |                             |            |   |                             |   |            |  
|Net cash (used in) provided by financing activities                          |  |                             | (9,491     | ) |                             |   | 4,916,517  |  
|                                                                             |  |                             |            |   |                             |   |            |  
|Net increase in cash and equivalents                                         |  |                             | 8,585      |   |                             |   | 262,977    |  
|Cash and equivalents at beginning of year                                    |  |                             | 306,300    |   |                             |   | 294,410    |  
|                                                                             |  |                             |            |   |                             |   |            |  
|Cash and equivalents at end of quarter                                       |  | $                           | 314,885    |   |                             | $ | 557,387    |  
|                                                                             |  |                             |            |   |                             |   |            |  
|Supplemental disclosures:                                                    |  |                             |            |   |                             |   |            |  
|Interest paid                                                                |  | $                           | 880,427    |   |                             | $ | 911,684    |  
|Income taxes paid (net of refunds, if any)                                   |  |                             | 1,115,461  |   |                             |   | 974,880    |  
|Dividends declared but not paid                                              |  |                             | 556,960    |   |                             |   | 554,325    |  
|Lease transactions capitalized                                               |  |                             |           |   |                             |   | 537,777    |  

The accompanying notes are an integral part of these statements.



7



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Restated)

First Quarter Fiscal 2006, Ended September 18, 2005

NOTE A  ACCOUNTING POLICIES

A
summary of the Companys significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Description of the Business

Frischs Restaurants, Inc. (The Company) is a regional company that operates full service family-style restaurants under the name Frischs Big Boy. The Company also operates grill buffet style restaurants under the
name Golden Corral pursuant to certain licensing agreements. All Big Boy restaurants are currently located in various regions of Ohio, Kentucky and Indiana. Golden Corral restaurants currently operate primarily in the greater
metropolitan areas of Cincinnati, Dayton, Toledo and Cleveland, Ohio, Louisville, Kentucky and Pittsburgh, Pennsylvania. Plans are in place to expand the Golden Corral operation into markets in Morgantown, West Virginia, Columbus, Ohio, northern
Indiana and southern Michigan.

The Company owns the trademark Frischs and has exclusive, irrevocable ownership of the rights to the
Big Boy trademark, trade name and service mark in the states of Kentucky and Indiana, and in most of Ohio and Tennessee. All of the Frischs Big Boy restaurants also offer drive-thru service. The Company also licenses
Big Boy restaurants to other operators, currently in certain parts of Ohio, Kentucky and Indiana. In addition, the Company operates a commissary and food manufacturing plant near its headquarters in Cincinnati, Ohio that services all Big Boy
restaurants operated by the Company, and is available to supply restaurants licensed to others.

Restatement of
Financial Statements

In early December 2005, the Companys actuarial consulting firm informed the Company of a formula error in the software
program it created in 1995, which caused the software program to not properly pro-rate the benefit for service for plan participants in the Companys defined benefit pension plan for managers, office employees and commissary employees with less
than 28 years of service before normal retirement. This actuarial formula error caused the Companys net periodic pension cost (and related accounts in the consolidated balance sheet and the consolidated statement of earnings) to be overstated.
The cumulative effect of the error on total assets was $1,986,000 and $1,866,000 respectively, as of September 18, 2005 and May 29, 2005. (See Note B  Restatement.)

Consolidation Practices

The
accompanying consolidated financial statements include the accounts of Frischs Restaurants, Inc. and all of its subsidiaries. Significant inter-company accounts and transactions have been eliminated in consolidation. Certain reclassifications
have been made to prior year information to conform to the current year presentation. In the opinion of management, these interim financial statements include all adjustments (all of which were normal and recurring, except for the restatement
described above) necessary for a fair presentation of all periods presented.

Fiscal Year

The Companys fiscal year is the 52 or 53 week period ending on the Sunday nearest to the last day of May. The first quarter of each fiscal year contains sixteen
weeks, while the last three quarters each normally contain twelve weeks. Every fifth or sixth year, the additional week needed to make a 53 week year is added to the fourth quarter, resulting in a thirteen week fourth quarter.

Use of Estimates

The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America requires management to use estimates and assumptions to measure certain items that affect the amounts reported. These judgments are
based on knowledge and experience about past and current events, and assumptions about future events. Although management believes its estimates are reasonable and adequate, future events affecting them may differ markedly from current judgment.



8



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Significant estimates and assumptions are used to measure self insurance liabilities, deferred executive compensation obligations, net periodic pension cost and future pension obligations, the carrying values of property held for sale and
for long-lived assets including property and equipment, goodwill and other intangible assets. Management believes the application of estimates to its policies regarding the measurement of self insurance liabilities, net periodic pension cost and
future pension obligations, and the carrying values of long-lived assets are critical accounting policies that require managements most difficult, subjective or complex judgments.

Cash and Cash Equivalents

Highly
liquid investments with original maturities of three months or less are considered to be cash equivalents. Outstanding checks in the amounts of $321,000 and $933,000 were included in accounts payable as of September 18, 2005 and May 29,
2005, respectively.

Receivables

The Company values its trade notes and accounts receivable on the reserve method. The reserve balance was $30,000 as of September 18, 2005 and May 29, 2005. The reserve is monitored for adequacy based on
historical collection patterns and write-offs, and current credit risks.

Inventories

Inventories, comprised principally of food items, are valued at the lower of cost, determined by the first-in, first-out method, or market.

Accounting for Rebates

Cash
consideration received from certain food vendors is treated as a reduction of cost of sales and is recognized in the same period that the Company sells the food.

Property and Equipment

Property and
equipment are stated at cost. Depreciation is provided principally on the straight-line method over the estimated service lives, which range from ten to 25 years for buildings or components thereof and five to ten years for equipment. Leasehold
improvements are depreciated over the shorter of the useful life of the asset or the lease term as lease terms are defined in Statement of Financial Accounting Standards No. 13 (SFAS 13), Accounting for Leases, as amended. Interest
on borrowings is capitalized during active construction periods of new restaurants. Capitalized interest for the sixteen weeks ended September 18, 2005 and September 19, 2004 was $57,000 and $25,000, respectively. Property betterments are
capitalized while the cost of maintenance and repairs is expensed as incurred.

The cost of land not yet in service is included in construction in
progress if construction has begun or if construction is likely within the next twelve months. Estimated remaining expenditures for new restaurant construction that was in progress as of September 18, 2005 totaled approximately $2,199,000
for two Golden Corral restaurants. The cost of land on which construction is not likely within the next twelve months is classified as Investments in land in the consolidated balance sheet.

Certain surplus property is currently held for sale. All of the surplus property is stated at the lower of cost or market and is classified as Property held for
sale in the consolidated balance sheet. Market values are generally determined by real estate brokers and/or managements judgement.



9



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Capitalized computer software is depreciated on the straight-line method over the estimated service lives, which range from three to ten years. The Companys cost capitalization policy with respect to computer software complies with
the American Institute of Certified Public Accountants Statement of Position 98-1 (SOP 98-1), Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. The installation of an enterprise information
system was completed in September 2004. Preliminary project stage costs were expensed as incurred in fiscal years 2002 and 2003. Software acquisition costs, installation, configuration, implementation and testing costs were capitalized during the
application development stage. The capitalization of the project included interest costs together with payroll and payroll related costs for certain employees who worked on the implementation. Capitalized interest for the sixteen weeks ended
September 18, 2005 and September 19, 2004 was zero and $20,000, respectively. Capitalized payroll and payroll related costs for the sixteen weeks ended September 18, 2005 and September 19, 2004 were zero and $96,000,
respectively. Net of accumulated depreciation, the capitalized cost of the enterprise information system was $4,249,000 and $4,400,000, respectively, as of September 18, 2005 and May 29, 2005.

Impairment of Assets

Under
Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets, management considers a history of cash flow losses on a restaurant-by-restaurant basis to be its primary
indicator of potential impairment. Carrying values are reviewed for impairment when events or changes in circumstances indicate that the assets carrying values may not be recoverable from the estimated future cash flows expected to result from
the properties use and eventual disposition. When undiscounted expected future cash flows are less than carrying values, an impairment loss is recognized equal to the amount by which the carrying values exceed the net realizable values of the
assets. Net realizable values are generally determined by estimates provided by real estate brokers and/or the Companys past experience in disposing of unprofitable restaurant properties.

No impairment losses were recognized during either of the sixteen weeks ended September 18, 2005 or September 19, 2004.

Leases

Minimum scheduled lease
payments on operating leases, including escalating rental payments, are recognized as rent expense on a straight-line basis over the term of the lease, including option periods considered to be part of the lease term, as defined by SFAS 13, as
amended. Contingent rentals, typically based on a percentage of restaurant sales in excess of a fixed amount, are expensed as incurred. SFAS 13 also requires rent to be recognized during that part of term of the lease when no rent is paid to the
landlord, often referred to as a rent holiday, that generally occurs while a restaurant is being constructed on leased land. Effective September 19, 2005, the recognition of rent during rent holiday periods will no
longer be capitalized and will instead be charged to expense.

Restaurant Closing Costs

Any liabilities associated with exit or disposal activities are recorded in accordance with Statement of Financial Accounting Standards No. 146 (SFAS 146),
Accounting for Obligations Associated with Disposal Activities. SFAS 146 requires that liabilities be recognized for exit and disposal costs only when the liabilities are incurred, rather than upon the commitment to an exit or disposal
plan. Its application has not materially impacted the Companys financial statements in any of the periods presented.

Statement of Financial
Accounting Standards No. 143 (SFAS 143), Accounting for Asset Retirement Obligations, is applicable to legal obligations associated with the retirement of certain tangible long-lived assets. Its application has not materially
impacted the Companys financial statements in any of the periods presented.



10



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Goodwill and Other Intangible Assets, Including Licensing Agreements

Acquired goodwill is tested annually for
impairment and also whenever an impairment indicator arises. Impairment losses are recorded when impairment is determined to have occurred. As of September 18, 2005 and May 29, 2005, the carrying amount of goodwill acquired in prior years
was $741,000, which is net of $308,000 amortized in prior years.

Intangible assets having a finite useful life are subject to amortization, and are tested
annually for impairment. The Companys other intangible assets consist principally of initial franchise fees paid for each new Golden Corral restaurant the Company opens. Amortization of the $40,000 initial fee begins when the restaurant opens
and is computed using the straight-line method over the 15 year term of each individual restaurants franchise agreement. The fees are ratably amortized at $2,667 per year per restaurant, or approximately $85,000 per year in each of the next
five years for the 32 Golden Corral restaurants in operation as of September 18, 2005. Amortization was $25,000 and $22,000 respectively, for the sixteen weeks ended September 18, 2005 and September 19, 2004. The remaining balance of
other intangible assets, including fees paid for future Golden Corral restaurants, is not currently being amortized because these assets have indefinite or as yet to be determined useful lives.

An analysis of other intangible assets follows:



|                                                                                |  |                   |       |   |             |   |       |  
|------------------------------------------------------------------------------- |  | ----------------- | ----- | - | ----------- | - | ----- | -
|                                                                                |  | September 18,2005 |       |   | May 29,2005 |  
|                                                                                |  | (in thousands)    |      
|Golden Corral initial franchise fees subject to amortization                    |  | $                 | 1,280 |   |             | $ | 1,200 |  
|Less accumulated amortization                                                   |  |                   | (274  | ) |             |   | (249  | )
|                                                                                |  |                   |       |   |             |   |       |  
|Carrying amount of Golden Corral initial franchise fees subject to amortization |  |                   | 1,006 |   |             |   | 951   |  
|Current portion of Golden Corral initial franchise fees subject to amortization |  |                   | (85   | ) |             |   | (83   | )
|Golden Corral fees not yet subject to amortization                              |  |                   | 355   |   |             |   | 365   |  
|Other intangible assets                                                         |  |                   | 160   |   |             |   | 168   |  
|                                                                                |  |                   |       |   |             |   |       |  
|Total other intangible assets                                                   |  | $                 | 1,436 |   |             | $ | 1,401 |  
|                                                                                |  |                   |       |   |             |   |       |  

The franchise agreements with Golden Corral Franchising Systems, Inc. also require the Company to pay fees based
on defined gross sales. These costs are charged to operations as incurred.

Revenue Recognition

Revenue from restaurant operations is recognized upon receipt of payment from customers. Revenue from the sale of gift cards is deferred for recognition until redeemed by
the customer. Revenue from the sale of commissary products to Big Boy restaurants licensed to other operators is recognized upon shipment of product. Revenue from franchise fees, based on sales of Big Boy restaurants licensed to other operators, is
recorded on the accrual method as earned. Initial franchise fees are recognized as revenue when the fees are deemed fully earned and non-refundable, ordinarily upon the execution of the license agreement, in consideration of the Companys
services to that time.



11



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

New Store Opening Costs

New store opening costs consist of new employee training costs, the cost of a team to
coordinate the opening and the cost of certain replaceable items such as uniforms and china. New store opening costs are charged to expense as incurred. Opening costs for the sixteen weeks ended September 18, 2005 and September 19, 2004
were $761,000 ($660,000 for Golden Corral and $101,000 for Big Boy) and $723,000 ($504,000 for Golden Corral and $219,000 for Big Boy), respectively.

Benefit Plans

The Company has two qualified defined benefit pension plans covering all of its eligible employees.
Qualified defined benefit pension plan benefits are based on years-of-service and other factors. The Companys funding policy is to contribute at least annually amounts sufficient to satisfy legal funding requirements plus such additional
tax-deductible amounts deemed advisable under the circumstances. Contributions are intended to provide not only for benefits attributed to service-to-date, but also for those expected to be earned in the future. (See Note F  Pension Plans.)
Hourly restaurant employees hired after December 31, 1998 are ineligible to participate in the qualified defined benefit pension plans. Instead, these employees are offered participation in a 401(k) savings plan (the hourly plan) with a
matching 40 percent employer cash contribution.

The executive officers of the Company and certain other highly compensated employees
(HCEs) are disqualified from participation in the Companys 401(k) savings plan (the salaried plan  ten percent matching employer cash contribution). A non-qualified savings plan  Frischs Executive Savings Plan (FESP)
 provides a means by which HCEs may continue to defer a portion of their compensation. FESP allows deferrals of up to 25 percent of a participants salary into a choice of mutual funds or common stock of the Company. Matching
contributions are added to the first ten percent of salary deferred at a rate of ten percent for deferrals into mutual funds, while a fifteen percent match is added to the common stock option. Although the Company owns the mutual funds until the
retirement of the participants, the funds are invested at the direction of the participants. The FESP liability to the participants is included in Deferred compensation and other long term obligations in the balance sheet.

The Company also has an unfunded non-qualified Supplemental Executive Retirement Plan (SERP) that was originally intended to provide a supplemental retirement benefit to
the HCEs whose benefits under the qualified defined benefit pension plans were reduced when their compensation exceeded Internal Revenue Code imposed limitations or when elective salary deferrals were made to FESP. In 2000, HCEs became
ineligible to be credited with additional benefits for service under the qualified defined benefit pension plans and the SERP (interest continues to accrue). Comparable pension benefits are provided through a non-qualified Non Deferred Cash Balance
Plan. (See Note F  Pension Plans.)

Prepaid pension benefit costs (see Note F  Pension Plans) and FESP assets are the principal components of
Other long-term assets in the balance sheet. Also see Note B  Restatement.

Self Insurance

The Company self-insures its Ohio workers compensation claims up to $300,000 per claim. Initial self-insurance liabilities are accrued based on
prior claims history, including an amount developed for incurred but unreported claims. Claims experience has historically been reviewed each quarter, with a more comprehensive annual review being performed during the first quarter of each fiscal
year. The annual review would typically result in adjustments to the self-insurance liabilities to more closely match claims experience. Active claims management and post accident drug testing in recent years has effected vast improvements in claims
experience. As a result, management determined that a comprehensive review should be performed every quarter and that adjustments to the self-insurance liabilities should be recorded as needed based on claims experience, beginning with the
3rdquarter of fiscal 2005 that ended March 6, 2005. A lower rate is being used in the current fiscal year to
accrue initial self-insurance liabilities, which should reduce future quarterly adjustments.



12



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Self-insurance liabilities were lowered by $392,000 and $614,000 respectively, during the first quarters of fiscal 2006 and 2005. Further reductions of $349,000 and $81,000 were recorded respectively in the third and fourth quarters of
fiscal 2005.

Fair Value of Financial Instruments

With the exception of long-term debt (see Note C Long-Term Debt), the carrying value of the Companys financial instruments approximates fair value.

Income Taxes

Taxes are provided on
all items included in the statement of earnings regardless of when such items are reported for tax purposes. The provision for income taxes in all periods has been computed based on managements estimate of the effective tax rate for the entire
year.

Stock Based Compensation

The Company accounts for stock options using the intrinsic value method of measuring compensation expense prescribed by Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to
Employees, as permitted by Statement of Financial Accounting Standards No. 123 (SFAS 123), Accounting for Stock Based Compensation. No stock based employee compensation cost is included in net income, as all options granted
have during the periods presented had an exercise price equal to the market value of the stock on the date of the grant. In accordance with Statement of Financial Standards No. 148 (SFAS 148), Accounting for Stock Based Compensation
 Transition and Disclosure, the following table presents the effect on net income and earnings per share if the Company had accounted for stock options using the fair value recognition provisions of SFAS 123:



|                                                                                                                                     |  |                                       |       |                             |   |      
|------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------- | ----- | --------------------------- | - | -----
|                                                                                                                                     |  | Sixteen weeks ended                  
|                                                                                                                                     |  | (restated)September 18,2005           |       | (restated)September 19,2004
|                                                                                                                                     |  | (in thousands, except per share data)
|Net Income, as reported                                                                                                              |  | $                                     | 2,602 |                             | $ | 2,955
|Deduct: total stock-based employeecompensation expense determinedunder fair value based method forall grants (a), net of tax
effects |  |                                       | 96    |                             |   | 129  
|                                                                                                                                     |  |                                       |       |                             |   |      
|Pro forma net income                                                                                                                 |  | $                                     | 2,506 |                             | $ | 2,826
|                                                                                                                                     |  |                                       |       |                             |   |      
|Earnings per share                                                                                                                   |  |                                       |       |                             |   |      
|Basic  as reported                                                                                                                  |  | $                                     | .51   |                             | $ | .59  
|Basic  pro forma                                                                                                                    |  | $                                     | .50   |                             | $ | .56  
|                                                                                                                                     |  |                                      
|Diluted  as reported                                                                                                                |  | $                                     | .50   |                             | $ | .57  
|Diluted  pro forma                                                                                                                  |  | $                                     | .49   |                             | $ | .55  

---

|(a) | For a summary of options granted, refer to the stock option section of Note E  Capital Stock.
|--- | ----------------------------------------------------------------------------------------------



13



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

The estimated total stock-based employee compensation expense was determined using the modified Black-Scholes option pricing model with the following weighted average assumptions:



|                                               |  |                     |         |   |                   |   |         |  
|---------------------------------------------- |  | ------------------- | ------- | - | ----------------- | - | ------- | -
|                                               |  | Sixteen weeks ended |        
|                                               |  | September 18,2005   |         |   | September 19,2004 |  
|Dividend yield                                 |  |                     | 1.80    | % |                   |   | 1.61    | %
|Expected volatility                            |  |                     | 26      | % |                   |   | 29      | %
|Risk free interest rate                        |  |                     | 3.84    | % |                   |   | 3.86    | %
|Expected lives                                 |  |                     | 5 years |   |                   |   | 5 years |  
|Weighted average fair value of options granted |  | $                   | 6.11    |   |                   | $ | 8.25    |  

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board revised Statement of Financial Accounting Standards No. 123 (SFAS 123), Accounting for Stock Based
Compensation. The revised SFAS 123 (SFAS 123(R)), Share-Based Payment, supersedes Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees. SFAS 123(R) requires the fair value
of stock options issued to be expensed. It is effective as of the beginning of the first annual reporting period that begins after June 15, 2005, which will be the Companys fiscal year 2007 that begins May 29, 2006. The impact upon
adoption is expected to be similar to the pro forma information required by SFAS 148 that is disclosed in Note A  Accounting Policies.

Statement of
Financial Accounting Standards No. 151 (SFAS 151), Inventory Costs, clarifies accounting for abnormal amounts of idle facility expense, freight, handling costs and spoilage. SFAS 151 is effective for inventory costs incurred during
fiscal years that begin after June 15, 2005. Earlier application is permitted. Its adoption is not expected to have any material impact on the Companys earnings.

The Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) No. FAS 13-1, Accounting for Rental Costs Incurred during a Construction Period, on October 6, 2005. This FSP requires
rental costs associated with ground or building operating leases that are incurred during a construction period to be recognized as rental expense. The capitalization of such rental costs is to cease upon application of the FSP to the first
reporting period beginning after December 15, 2005. Earlier adoption being permitted, the Company elected to cease capitalizing such rental costs effective with the quarter that began September 19, 2005 (see the discussion of
Leases under Note A  Accounting Policies).

The Company reviewed all other significant newly issued accounting pronouncements, including
Statements of Financial Accounting Standards Nos. 152 Accounting for Real Estate Time Sharing Transactions and 153 Exchanges of Nonmonetary Assets, and concluded that, other than those disclosed herein, no material impact is
anticipated on the financial statements as a result of future adoption. Statement of Accounting Standards No. 154 Accounting Changes and Error Corrections  a replacement of APB Opinion No. 20 and FASB Statement No. 3
was issued in May 2005, effective for fiscal years beginning after December 15, 2005. No immediate material impact is presently anticipated on the financial statements as a result its adoption.



14



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE B  RESTATEMENT (for error in actuarial calculation relating to defined benefit pension plan)

In early December 2005, the Companys actuarial consulting firm informed the Company of an error in the software program created by the consultant in June 1995, to
calculate certain items in connection with the Companys defined benefit pension plan for managers, office employees and commissary employees. The error was in a formula the consultant used to calculate the pro-ration of an individuals
benefits between pre- and post- 1993 accounts. According to the actuarial consultant, its formula failed to properly prorate the benefit for service for plan participants with less than 28 years of service before normal retirement. Given the nature
of the error, the Company could not have identified this error through its review of the actuarial information provided by the actuarial consultant.

The
actuarial consultant has confirmed to the Company that the error has had no effect on any benefits paid to plan participants.

The formula error has
impacted the calculation (computed under Statement of Financial Accounting Standards No. 87, Employers Accounting for Pensions) of the Companys net periodic pension cost (and related accounts in the consolidated balance
sheet and the consolidated statement of earnings) for that defined benefit pension plan, resulting in a series of annual overstatements of the net periodic pension cost for each of the previous ten fiscal years. The overstatement in each period is
deemed by the Company to be immaterial for that period. The cumulative balance sheet effect of these errors as of September 18, 2005 was an understatement of prepaid pension costs of approximately $1,986,000, of which $58,000 was understated in
Prepaid expenses and sundry deposits and $1,928,000 was understated in Other long-term assets. As of May 29, 2005, the cumulative balance sheet effect of the prepaid pension understatement was $1,866,000, of which
$268,000 was understated in Prepaid expenses and sundry deposits and $1,598,000 was understated in Other long-term assets.

The table below shows the financial statement effects of the error on the Companys consolidated balance sheet:



|                                                         |                   |                |             |  |   |        
|-------------------------------------------------------- | ----------------- | -------------- | ----------- |  | - | -------
|                                                         |                   | (in thousands)
|                                                         | September 18,2005 |                | May 29,2005
|Prepaid expenses and sundry deposits  as reported       |                   | $              | 3,361       |  | $ | 2,551  
|Prepaid expenses and sundry deposits  as restated       |                   |                | 3,419       |  |   | 2,820  
|                                                         |                   |               
|Other long-term assets  as reported                     |                   |                | 2,578       |  |   | 2,642  
|Other long-term assets  as restated                     |                   |                | 4,506       |  |   | 4,240  
|                                                         |                   |               
|Total assets  as reported                               |                   |                | 170,600     |  |   | 165,599
|Total assets  as restated                               |                   |                | 172,586     |  |   | 167,465
|                                                         |                   |               
|Deferred income taxes  as reported                      |                   |                | 4,372       |  |   | 4,196  
|Deferred income taxes  as restated                      |                   |                | 5,047       |  |   | 4,830  
|                                                         |                   |               
|Retained earnings  as reported                          |                   |                | 56,667      |  |   | 55,258 
|Retained earnings  as restated                          |                   |                | 57,979      |  |   | 56,490 
|                                                         |                   |               
|Total shareholders equity  as reported                 |                   |                | 93,738      |  |   | 92,170 
|Total shareholders equity  as restated                 |                   |                | 95,049      |  |   | 93,402 
|                                                         |                   |               
|Total liabilities and shareholders equity  as reported |                   |                | 170,600     |  |   | 165,599
|Total liabilities and shareholders equity  as restated |                   |                | 172,586     |  |   | 167,465



15



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE B  RESTATEMENT (for error in actuarial calculation relating to defined benefit pension plan)

The table below shows the financial statement effects of the error on the Companys consolidated statement of earnings for the sixteen weeks ended September 18,
2005 and September 19, 2004 (in thousands, except per share amounts):



|                                           |  |                   |        |                   |   |       
|------------------------------------------ |  | ----------------- | ------ | ----------------- | - | ------
|                                           |  | September 18,2005 |        | September 19,2004
|Payroll and related expense  as reported  |  | $                 | 28,672 |                   | $ | 27,993
|Payroll and related expense  as restated  |  |                   | 28,552 |                   |   | 27,907
|                                           |  |                  
|Gross profit  as reported                 |  |                   | 8,870  |                   |   | 9,101 
|Gross profit  as restated                 |  |                   | 8,990  |                   |   | 9,186 
|                                           |  |                  
|Operating profit  as reported             |  |                   | 4,661  |                   |   | 5,199 
|Operating profit  as restated             |  |                   | 4,781  |                   |   | 5,284 
|                                           |  |                  
|Earnings before income taxes  as reported |  |                   | 3,879  |                   |   | 4,393 
|Earnings before income taxes  as restated |  |                   | 3,999  |                   |   | 4,478 
|                                           |  |                  
|Income taxes  as reported                 |  |                   | 1,357  |                   |   | 1,494 
|Income taxes  as restated                 |  |                   | 1,397  |                   |   | 1,523 
|                                           |  |                  
|Net earnings  as reported                 |  |                   | 2,522  |                   |   | 2,899 
|Net earnings  as restated                 |  |                   | 2,602  |                   |   | 2,955 
|                                           |  |                  
|Diluted EPS  as reported                  |  |                   | .49    |                   |   | .56   
|Diluted EPS  as restated                  |  |                   | .50    |                   |   | .57   

The table below shows the financial statement effects of the error on the Companys consolidated statement of
cash flows for the sixteen weeks September 18, 2005 and September 19, 2004 (in thousands):



|                                                         |  |                   |       |   |                   |   |       |  
|-------------------------------------------------------- |  | ----------------- | ----- | - | ----------------- | - | ----- | -
|                                                         |  | September 18,2005 |       |   | September 19,2004 |  
|Net earnings  as reported                               |  | $                 | 2,522 |   |                   | $ | 2,899 |  
|Net earnings  as restated                               |  |                   | 2,602 |   |                   |   | 2,955 |  
|                                                         |  |                  
|Changes in assets and liabilites:                        |  |                   |       |   |                   |   |       |  
|Prepaid expenses and sundry deposits  as reported       |  |                   | (810  | ) |                   |   | (474  | )
|Prepaid expenses and sundry deposits  as restated       |  |                   | (599  | ) |                   |   | (828  | )
|                                                         |  |                  
|Other assets  as reported                               |  |                   | 79    |   |                   |   | (178  | )
|Other assets  as restated                               |  |                   | (251  | ) |                   |   | 91    |  
|                                                         |  |                  
|Prepaid, accrued and deferred income taxes  as reported |  |                   | 229   |   |                   |   | 509   |  
|Prepaid, accrued and deferred income taxes  as restated |  |                   | 269   |   |                   |   | 538   |  
|                                                         |  |                  
|Cash and equivalents at end of quarter  as reported     |  |                   | 315   |   |                   |   | 557   |  
|Cash and equivalents at end of quarter  as restated     |  |                   | 315   |   |                   |   | 557   |  



16



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE C  LONG-TERM DEBT



|                             |                       |                    |                       |              |                       |        |                       |   |       |  |   |       
|---------------------------- | --------------------- | ------------------ | --------------------- | ------------ | --------------------- | ------ | --------------------- | - | ----- |  | - | ------
|                             |                       | September 18, 2005 |                       | May 29, 2005
|                             | Payablewithinone year |                    | Payableafter one year |              | Payablewithinone year |        | Payableafter one year
|                             |                       | (in thousands)    
|Construction Draw Facility - |                       |                    |                       |              |                       |        |                       |   |       |  |   |       
|Construction Phase Loans     |                       | $                  |                      |              | $                     | 1,500  |                       | $ |      |  | $ | 2,000 
|Term Loans                   |                       |                    | 8,058                 |              |                       | 25,139 |                       |   | 7,598 |  |   | 24,570
|Bullet Loan                  |                       |                    |                      |              |                       | 3,000  |                       |   |      |  |   | 3,000 
|Revolving Credit Loan        |                       |                    |                      |              |                       |       |                       |   |      |  |   |      
|                             |                       |                    |                       |              |                       |        |                       |   |       |  |   |       
|                             |                       | $                  | 8,058                 |              | $                     | 29,639 |                       | $ | 7,598 |  | $ | 29,570
|                             |                       |                    |                       |              |                       |        |                       |   |       |  |   |       

The portion payable after one year matures as follows:



|                      |  |                   |        |             |   |       
|--------------------- |  | ----------------- | ------ | ----------- | - | ------
|                      |  | September 18,2005 |        | May 29,2005
|                      |  | (in thousands)   
|Period ending in 2007 |  | $                 | 9,083  |             | $ | 9,363 
|2008                  |  |                   | 9,539  |             |   | 9,726 
|2009                  |  |                   | 5,108  |             |   | 5,161 
|2010                  |  |                   | 2,994  |             |   | 2,780 
|2011                  |  |                   | 2,259  |             |   | 2,058 
|Subsequent to 2011    |  |                   | 656    |             |   | 482   
|                      |  |                   |        |             |   |       
|                      |  | $                 | 29,639 |             | $ | 29,570
|                      |  |                   |        |             |   |       

On September 27, 2005, the Company amended and restated all of its loan agreements with its lender. The
Construction Draw Facility (the Facility), an unsecured draw credit line intended to finance Golden Corral construction, was amended to increase the maximum that may be borrowed from $61,500,000 to $76,500,000. As $57,500,000 had already been
cumulatively drawn, the amount available to be borrowed was effectively increased from $4,000,000 to $19,000,000. The expiration for borrowing under the Facility was extended from September 1, 2006 to September 1, 2008.

The Facility is subject to a .25 percent unused commitment fee. Under the terms of the Facility, funds borrowed are initially governed as a Construction Phase Loan, with
interest determined by a pricing matrix that uses changeable basis points, determined by certain of the Companys financial ratios. The basis points are added to or subtracted from one of various indices chosen by the Company. Interest is
payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly. Within six months of the completion and opening of each restaurant, the balance outstanding under each Construction Phase Loan
must be converted to a Term Loan amortized over a period not to exceed seven years. Upon conversion, the Company may select a fixed interest rate over the chosen term or may choose among various adjustable rate options.

Fixed interest rates have been chosen for all of the Term Loans (original notes for $56,000,000), the weighted average of which is 6.09 percent, and all of the Term
Loans are being repaid in 84 equal monthly installments of principal and interest aggregating $832,000, expiring in various periods ranging from May 2006 through September 2012. Prepayments of the Term Loans are permissible upon payment of sizeable
prepayment fees and other amounts. As of September 18, 2005, $1,500,000 remained in the Construction Phase of the Facility, which was converted to Term Loan on October 1, 2005. An additional $2,000,000 was borrowed under the Facility on
September 30, 2005. Any outstanding Construction Phase Loan that has not been converted into a Term Loan shall mature and be payable in full on September 1, 2008, unless extended.



17



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE C  LONG-TERM DEBT (CONTINUED)

The Bullet Loan bears interest at a fixed rate of 5.57 percent. It matures and is payable in one installment on December 31, 2007. On September 27, 2005, four of six mortgages that had been held as collateral for the Bullet Loan
were released pursuant to the amended and restated loan agreements. The approximate book value of the real property secured by the two remaining mortgages is $4,327,000 as of September 18, 2005.

The Revolving Credit Loan allows for borrowing of up to $5,000,000 to fund temporary working capital needs. The loan, none of which was outstanding as of
September 18, 2005, is subject to a 30 consecutive day out-of-debt period each year. The amended and restated loan agreements extended its maturity from September 1, 2006 to September 1, 2008. Interest is determined by the same
pricing matrix used for Construction Phase Loans under the Construction Draw Facility, the basis points from which are added to or subtracted from one of various indices chosen by the Company. The loan is subject to a .25 percent unused commitment
fee. Interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly.

These loan
agreements contain covenants relating to tangible net worth, cash flow, debt levels, capitalization changes, asset dispositions, investments and restrictions on pledging certain restaurant operating assets. The Company was in compliance with all
loan covenants as of September 18, 2005. Compensating balances are not required by these loan agreements.

Being variable rated interest loans, the
fair values of any outstanding balances in the Construction Phase of the Construction Draw Facility or the Revolving Credit Loan approximate carrying value as of September 18, 2005 and May 29, 2005. The fair value of the Bullet Loan also
approximates carrying value. The fair values of the fixed rate Term Loans shown in the following table are based on fixed rates that would be available for loans with identical terms and maturities, if borrowed at September 18, 2005 and
May 29, 2005.



|                                        |  |                    |        |              |   |               |  |           |        |  |   |       
|--------------------------------------- |  | ------------------ | ------ | ------------ | - | ------------- |  | --------- | ------ |  | - | ------
|                                        |  | September 18, 2005 |        | May 29, 2005
|                                        |  | Carryingvalue      |        | Fairvalue    |   | Carryingvalue |  | Fairvalue
|                                        |  | (in thousands)    
|Construction Draw Facility - Term Loans |  | $                  | 33,197 |              | $ | 32,645        |  | $         | 32,169 |  | $ | 31,715

NOTE D - LEASED PROPERTY

Although it is the Companys policy to own its restaurant locations whenever possible, the Company occupies certain of its restaurants pursuant to lease agreements.
The majority of the leases are for fifteen or twenty years and contain renewal options for ten to fifteen years, and/or have favorable purchase options. As of September 18, 2005, 30 restaurants were in operation on leased premises, ten of which
are capital leases. Delivery equipment is also held under capitalized leases expiring during periods through 2012. Amortization of capitalized lease assets is computed on the straight-line method over the primary terms of the leases. An analysis of
the capitalized leased property follows:



|                              |  |                   |        |   |             |   |        |  
|----------------------------- |  | ----------------- | ------ | - | ----------- | - | ------ | -
|                              |  | Asset balances at |       
|                              |  | September 18,2005 |        |   | May 29,2005 |  
|                              |  | (in thousands)    |       
|Restaurant facilities         |  | $                 | 5,967  |   |             | $ | 5,967  |  
|Equipment                     |  |                   | 1,165  |   |             |   | 1,165  |  
|                              |  |                   |        |   |             |   |        |  
|                              |  |                   | 7,132  |   |             |   | 7,132  |  
|Less accumulated amortization |  |                   | (5,957 | ) |             |   | (5,841 | )
|                              |  |                   |        |   |             |   |        |  
|                              |  | $                 | 1,175  |   |             | $ | 1,291  |  
|                              |  |                   |        |   |             |   |        |  



18



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE D - LEASED PROPERTY (CONTINUED)

As of
September 18, 2005, twenty of the Companys restaurant properties are occupied pursuant to operating leases, six of which are ground leases for Golden Corral restaurants. The Company is also obligated to two other Golden Corral ground
leases for restaurants to open in October and November 2005. The Company also occupies office space under an operating lease that expires during 2013, with renewal options available through 2023. The Company has the option to purchase the office
property in 2023.

Rent expense under operating leases for the sixteen weeks ended:



|                    |  |                   |     |                   |   |    
|------------------- |  | ----------------- | --- | ----------------- | - | ---
|                    |  | September 18,2005 |     | September 19,2004
|                    |  | (in thousands)   
|Minimum rentals     |  | $                 | 554 |                   | $ | 485
|Contingent payments |  |                   | 13  |                   |   | 14 
|                    |  |                   |     |                   |   |    
|                    |  | $                 | 567 |                   | $ | 499
|                    |  |                   |     |                   |   |    

Future minimum lease payments under capitalized leases and operating leases, including residual value guarantees
on certain of the capitalized leases, having an initial or remaining term of one year or more follow:



|                             |  |                   |       |   |                 |   |       
|---------------------------- |  | ----------------- | ----- | - | --------------- | - | ------
|Period ending September 18,  |  | Capitalizedleases |       |   | Operatingleases
|                             |  | (in thousands)   
|2006                         |  | $                 | 846   |   |                 | $ | 1,734 
|2007                         |  |                   | 617   |   |                 |   | 1,725 
|2008                         |  |                   | 2,478 |   |                 |   | 1,722 
|2009                         |  |                   | 119   |   |                 |   | 1,669 
|2010                         |  |                   | 87    |   |                 |   | 1,459 
|2011 to 2025                 |  |                   | 156   |   |                 |   | 16,627
|                             |  |                   |       |   |                 |   |       
|Total                        |  |                   | 4,303 |   |                 | $ | 24,936
|                             |  |                   |       |   |                 |   |       
|Amount representing interest |  |                   | (762  | ) |                 |   |       
|                             |  |                   |       |   |                 |   |       
|Present value of obligations |  |                   | 3,541 |   |                 |   |       
|Portion due within one-year  |  |                   | (488  | ) |                 |   |       
|                             |  |                   |       |   |                 |   |       
|Long-term obligations        |  | $                 | 3,053 |   |                 |   |       
|                             |  |                   |       |   |                 |   |       

Not included in the above table are certain leases of former operating properties that the Company has assigned or
sub-let to third parties. The average annual obligations of these leases approximate $50,000 over the next five years. The Company remains contingently liable for the performance of these leases. In the event of default by the assignees or
sub-lessees, the Company generally retains the right to re-assign or sub-let the properties.

NOTE E - CAPITAL STOCK

2003 Stock Option and Incentive Plan

Shareholders approved the 2003 Stock Option and Incentive Plan (the 2003 Incentive Plan or Plan) on October 6, 2003. The 2003 Incentive Plan provides for several forms of awards including
stock options, stock appreciation rights, stock awards including restricted and unrestricted awards of stock, and performance awards. The Plan will continue in effect until terminated by the Board of Directors. Subject to adjustment for changes in
capitalization, the maximum number of shares of common stock that the Plan may issue is 800,000. The Plan provides that the total number of shares of common stock covered by options plus the number of stock appreciation rights granted to any one
individual may not exceed 80,000 during any fiscal year. Additionally, no more than 80,000 shares of common stock may be issued in payment of performance awards denominated in shares, and no more than $1,000,000 in cash



19



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE E - CAPITAL STOCK (CONTINUED)

(or fair
market value, if paid in shares) may be paid pursuant to performance awards denominated in dollars, granted to any one individual during any fiscal year if the awards are intended to qualify as performance based compensation. Employees of the
Company and non-employee directors of the Company are eligible to be selected to participate in the Plan. Participation is based on selection by the Compensation Committee (the Committee) of the Board of Directors. Although there is no limit to the
number of participants in the Plan, there are approximately 40 persons currently participating in the Plan.

Options to purchase shares of the
Companys common stock permit the holder to purchase a fixed number of shares at a fixed price. When options are granted, the Committee determines the number of shares subject to the option, the term of the option which may not exceed 10 years,
the time or times when the option will become exercisable and the price per share that a participant must pay to exercise the option. No option will be granted with an exercise price that is less than 100 percent of fair market value on the date of
the grant.

Stock appreciation rights (SARs) are rights to receive payment, in cash, shares of common stock or a combination of the two, equal to the
excess of (1) the fair market value of a share of common stock on the date of exercise over (2) the price per share of common stock established in connection with the grant of the SAR (the reference price).

The reference price must be at least 100 percent of the common stocks fair market value on the date the SAR is granted. SARs may be granted by the Committee
in its discretion to any participant, and may have terms no longer than 10 years.

Stock awards are grants of shares of common stock that may be restricted
(subject to a holding period or other conditions) or unrestricted. The Committee determines the amounts, vesting, if any, terms and conditions of the awards, including the price to be paid, if any, for restricted awards and any contingencies related
to the attainment of specified performance goals or continued employment or service.

The Committee may also grant performance awards to participants.
Performance awards are the right to receive cash, common stock or both, at the end of a specified performance period, subject to satisfaction of the performance criteria and any vesting conditions established for the award.

As of September 18, 2005, options to purchase 78,500 shares had been granted to date, none of which had yet to vest. No other awards - stock appreciation rights,
restricted stock award, unrestricted stock award or performance awardhad been granted under the 2003 Stock Option and Incentive Plan.

Other Stock Option Plans

The 1993 Stock Option Plan was not affected by the adoption of the 2003 Stock Option and
Incentive Plan. The 1993 Stock Option Plan originally authorized the grant of stock options for up to 562,432 shares (as adjusted for changes in capitalization in earlier years) of the common stock of the Company for a ten-year period beginning
May 9, 1994. Shareholders approved the Amended and Restated 1993 Stock Option Plan (Amended Plan) in October 1998, which extended the availability of options to be granted to October 4, 2008. As of September 18, 2005, 6,204 shares
remained available to be optioned. Of the 556,228 cumulative shares optioned to date, 364,156 remain outstanding as of September 18, 2005, 211,478 of which belong to the President and Chief Executive Officer.

Shares may be optioned to employees at not less than 75% of fair market value on the date granted. The Amended Plan added a provision for automatic, annual stock option
grants of 1,000 shares to each of the Companys non-employee directors. The per share exercise price for options granted to non-employee directors must equal 100 percent of fair market value on the date of grant. The Amended Plan also added a
Company right to repurchase shares acquired on exercise of options if an optionee chooses to dispose of such shares. Stock appreciation rights are not provided for under the Amended Plan. All outstanding options under the 1993 Plan were granted at
fair market value and expire 10 years from the date of grant. Outstanding options to the President and Chief Executive Officer generally vest in six months, while options granted to non-employee directors vest after one year. Outstanding options
granted to other key employees vest in three equal annual installments.



20



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE ECAPITAL STOCK (CONTINUED)

The
changes in outstanding and exercisable options involving both the 1993 Stock Option Plan and the 2003 Stock Option and Incentive Plan:



|                                   |                    |                     |                    |                              |   |              |  |         |                              |  |   |      
|---------------------------------- | ------------------ | ------------------- | ------------------ | ---------------------------- | - | ------------ |  | ------- | ---------------------------- |  | - | -----
|                                   |                    | Sixteen weeks ended
|                                   | September 18, 2005 |                     | September 19, 2004
|                                   | No. ofshares       |                     |                    | Weighted avg.price per share |   | No. ofshares |  |         | Weighted avg.price per share
|Outstanding at beginning of year   |                    | 376,577             |                    |                              | $ | 18.90        |  | 319,993 |                              |  | $ | 15.97
|Granted during the sixteen weeks   |                    | 71,500              |                    |                              | $ | 24.54        |  | 74,000  |                              |  | $ | 29.74
|Exercised during the sixteen weeks |                    | (5,421              | )                  |                              | $ | 17.56        |  | (3,331  | )                            |  | $ | 15.90
|Expired during the sixteen weeks   |                    |                    |                    |                              |   |             |  |        |                              |  |   |     
|Forfeited during the sixteen weeks |                    |                    |                    |                              |   |             |  | (1,919  | )                            |  | $ | 18.94
|                                   |                    |                     |                    |                              |   |              |  |         |                              |  |   |      
|Outstanding at end of quarter      |                    | 442,656             |                    |                              | $ | 19.83        |  | 388,743 |                              |  | $ | 18.58
|                                   |                    |                     |                    |                              |   |              |  |         |                              |  |   |      
|Exercisable at beginning of year   |                    | 283,903             |                    |                              | $ | 17.04        |  | 227,314 |                              |  | $ | 13.21
|                                   |                    |                     |                    |                              |   |              |  |         |                              |  |   |      
|Exercisable at end of quarter      |                    | 328,153             |                    |                              | $ | 17.95        |  | 265,240 |                              |  | $ | 15.29
|                                   |                    |                     |                    |                              |   |              |  |         |                              |  |   |      

Stock options outstanding and exercisable as of September 18, 2005 for the 1993 Stock Option Plan and the
2003 Stock Option and Incentive Plan:



|                                   |  |              |  |                                 |       |                                         |           
|---------------------------------- |  | ------------ |  | ------------------------------- | ----- | --------------------------------------- | ----------
|Range of Exercise Prices per Share |  | No. ofshares |  | Weighted averageprice per share |       | Weighted averageremaining life in years
|Outstanding:                       |  |              |  |                                 |       |                                         |           
|$ 8.31 to $13.00                   |  | 72,229       |  | $                               | 10.62 |                                         | 4.61 years
|$13.01 to $18.00                   |  | 59,252       |  | $                               | 13.73 |                                         | 5.80 years
|$18.01 to $24.20                   |  | 166,675      |  | $                               | 19.56 |                                         | 7.41 years
|$24.21 to $30.13                   |  | 144,500      |  | $                               | 27.23 |                                         | 9.22 years
|                                   |  |              |  |                                 |       |                                         |           
|$ 8.31 to $30.13                   |  | 442,656      |  | $                               | 19.83 |                                         | 7.33 years
|                                   |  |              | 
|Exercisable:                       |  |              |  |                                 |       |                                         |           
|$ 8.31 to $13.00                   |  | 72,229       |  | $                               | 10.62 |                                         |          
|$13.01 to $18.00                   |  | 59,252       |  | $                               | 13.73 |                                         |          
|$18.01 to $24.20                   |  | 145,332      |  | $                               | 19.42 |                                         |          
|$24.21 to $30.13                   |  | 51,340       |  | $                               | 28.93 |                                         |           
|                                   |  |              |  |                                 |       |                                         |           
|$ 8.31 to $30.13                   |  | 328,153      |  | $                               | 17.95 |                                         |          

Shareholders approved the Employee Stock Option Plan (elsewhere referred to as Employee Stock Purchase Plan) in
1998. The Plan provides employees who have completed 90 days of continuous service with an opportunity to purchase shares of the Companys common stock through payroll deduction. Immediately following the end of each semi-annual offering
period, participant account balances are used to purchase shares of stock at the lesser of 85% of the fair market value of shares at the beginning of the offering period or at the end of the offering period. The Plan authorizes a maximum of
1,000,000 shares that may be purchased on the open market or from the Companys treasury. As of April 30, 2005 (latest available data), 107,744 shares had been purchased through the plan. Shares purchased through the Plan are held by the
Plans custodian until withdrawn or distributed. As of April 30, 2005, the custodian held 40,676 shares on behalf of employees.



21



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE E - CAPITAL STOCK (CONTINUED)

A total
of 58,492 common shares (as adjusted for changes in capitalization in earlier years) were reserved for issuance under the non-qualified Executive Savings Plan (see Note A  Accounting Policies) when it was established in 1993. As of
September 18, 2005, 49,172 shares remained in the reserve, including 8,723 shares allocated but not issued to participants.

There are no other outstanding options, warrants or rights.

Treasury Stock

As of September 18, 2005, the Companys treasury held 2,447,323 shares of the Companys common stock. From September 1998 through January 2002, 1,135,286
shares of the Companys common stock were repurchased at a cost of $12,162,000 pursuant to repurchase programs authorized by the Companys Board of Directors. No shares were repurchased under the authorization that expired on
October 7, 2004.

Most of the remaining shares held in the treasury were acquired in 1997 pursuant to the terms of a modified Dutch
Auction self-tender offer.

Earnings Per Share

Basic earnings per share is based on the weighted average number of outstanding common shares during the period presented. Diluted earnings per share includes the effect of common stock equivalents, which assumes the
exercise and conversion of dilutive stock options.



|                              |  |                                     |  |                  |     |                            |         |                                     |           |     |   |    
|----------------------------- |  | ----------------------------------- |  | ---------------- | --- | -------------------------- | ------- | ----------------------------------- | --------- | --- | - | ---
|                              |  | Basic earnings per share            |  | Stockequivalents |     | Diluted earnings per share
|                              |  | Weighted average Shares outstanding |  | EPS              |     |                            |         | Weighted average shares outstanding |           | EPS
|September 18, 2005 (restated) |  | 5,057,673                           |  | $                | .51 |                            | 104,175 |                                     | 5,161,848 |     | $ | .50
|September 19, 2004 (restated) |  | 5,034,866                           |  |                  | .59 |                            | 124,322 |                                     | 5,159,188 |     |   | .57

Stock options to purchase 100,000 shares in the quarter ended September 18, 2005 and 73,500 in the quarter
ended September 19, 2004 were excluded from the calculation because the effect was anti-dilutive.



22



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE F - PENSION PLANS

As discussed more
fully in Note A  Accounting Policies, the Company sponsors two qualified defined benefit plans plus an unfunded non-qualified Supplemental Executive Retirement Plan (SERP) for highly compensated employees (HCEs). Also, see
Note B  Restatement. The following table shows the components of net periodic pension cost for all three plans for the sixteen weeks ended September 18, 2005 and September 19, 2004:



|                                                                  |  |                              |      |   |                              |   |      |  
|----------------------------------------------------------------- |  | ---------------------------- | ---- | - | ---------------------------- | - | ---- | -
|                                                                  |  | Sixteen weeks ended          |     
|                                                                  |  | (restated)September 18, 2005 |      |   | (restated)September 19, 2004 |  
|Net periodic pension cost components                              |  |                              |      |   |                              |   |      |  
|Service cost                                                      |  | $                            | 488  |   |                              | $ | 525  |  
|Interest cost                                                     |  |                              | 433  |   |                              |   | 463  |  
|Expected return on plan assets                                    |  |                              | (584 | ) |                              |   | (627 | )
|Amortization of prior service cost                                |  |                              | 22   |   |                              |   | 21   |  
|Amortization of loss                                              |  |                              | 143  |   |                              |   | 153  |  
|                                                                  |  |                              |      |   |                              |   |      |  
|Net periodic pension cost                                         |  | $                            | 502  |   |                              | $ | 535  |  
|                                                                  |  |                              |      |   |                              |   |      |  
|Weighted average discount rate                                    |  |                              | 6.0  | % |                              |   | 6.5  | %
|Weighted average rate of compensation increase                    |  |                              | 4.5  | % |                              |   | 5.0  | %
|Weighted average expected long-term rate of return on plan assets |  |                              | 8.5  | % |                              |   | 8.5  | %

The Company anticipates making contributions to the two qualified defined benefit pension plans sufficient to
satisfy legal funding requirements for the year ending May 28, 2006 plus additional tax-deductible amounts that may be deemed advisable.

Compensation
expense (not included in the net periodic pension cost described above) relating to the Non Deferred Cash Balance Plan (see Note A  Accounting Policies) was $159,000 and $151,000 respectively, during the sixteen weeks ended September 18,
2005 and September 19, 2004. Fiscal 2006s contribution to the Non-Deferred Cash Balance Plan is expected to approximate $485,000.

The Company
also sponsors two 401(k) plans and a non-qualified Executive Savings Plan for certain HCEs who have been disqualified from participation in the 401(k) plans (see Note A  Accounting Policies). In the sixteen weeks ended September 18,
2005 and September 19, 2004, matching contributions to the 401(k) plans amounted to $49,000 and $53,000 respectively. Matching contributions to the Executive Savings Plan were $7,000 and $8,000 respectively, during the sixteen weeks ended
September 18, 2005 and September 19, 2004.

The Company does not sponsor post retirement health care benefits.



23



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE G  SEGMENT INFORMATION

The
Company has two reportable segments within the food service industry: Big Boy restaurants and Golden Corral restaurants. Financial information by operating segment is as follows:



|                                 |                             |                     |         |                             |  |   |         |  
|-------------------------------- | --------------------------- | ------------------- | ------- | --------------------------- |  | - | ------- | -
|                                 |                             | Sixteen weeks ended |        
|                                 | (restated)September 18,2005 |                     |         | (restated)September 19,2004 | 
|                                 |                             | (in thousands)      |        
|Sales                            |                             |                     |         |                             |  |   |         |  
|Big Boy                          |                             | $                   | 55,135  |                             |  | $ | 55,192  |  
|Golden Corral                    |                             |                     | 31,398  |                             |  |   | 28,870  |  
|                                 |                             |                     |         |                             |  |   |         |  
|                                 |                             | $                   | 86,533  |                             |  | $ | 84,062  |  
|                                 |                             |                     |         |                             |  |   |         |  
|Earnings before income taxes     |                             |                     |         |                             |  |   |         |  
|Big Boy                          |                             | $                   | 6,473   |                             |  | $ | 6,318   |  
|Opening expense                  |                             |                     | (101    | )                           |  |   | (219    | )
|                                 |                             |                     |         |                             |  |   |         |  
|Total Big Boy                    |                             |                     | 6,372   |                             |  |   | 6,099   |  
|                                 |                             |                    
|Golden Corral                    |                             |                     | 1,286   |                             |  |   | 1,634   |  
|Opening expense                  |                             |                     | (659    | )                           |  |   | (504    | )
|                                 |                             |                     |         |                             |  |   |         |  
|Total Golden Corral              |                             |                     | 627     |                             |  |   | 1,130   |  
|                                 |                             |                    
|Total restaurant level profit    |                             |                     | 6,999   |                             |  |   | 7,229   |  
|                                 |                             |                    
|Administrative expense           |                             |                     | (2,590  | )                           |  |   | (2,368  | )
|Franchise fees and other revenue |                             |                     | 372     |                             |  |   | 423     |  
|                                 |                             |                     |         |                             |  |   |         |  
|Operating profit                 |                             |                     | 4,781   |                             |  |   | 5,284   |  
|                                 |                             |                    
|Interest expense                 |                             |                     | (782    | )                           |  |   | (806    | )
|                                 |                             |                     |         |                             |  |   |         |  
|                                 |                             | $                   | 3,999   |                             |  | $ | 4,478   |  
|                                 |                             |                     |         |                             |  |   |         |  
|Depreciation and amortization    |                             |                     |         |                             |  |   |         |  
|Big Boy                          |                             | $                   | 2,287   |                             |  | $ | 2,196   |  
|Golden Corral                    |                             |                     | 1,560   |                             |  |   | 1,293   |  
|                                 |                             |                     |         |                             |  |   |         |  
|                                 |                             | $                   | 3,847   |                             |  | $ | 3,489   |  
|                                 |                             |                     |         |                             |  |   |         |  
|Capital expenditures             |                             |                     |         |                             |  |   |         |  
|Big Boy                          |                             | $                   | 2,801   |                             |  | $ | 3,227   |  
|Golden Corral                    |                             |                     | 5,272   |                             |  |   | 5,772   |  
|                                 |                             |                     |         |                             |  |   |         |  
|                                 |                             | $                   | 8,073   |                             |  | $ | 8,999   |  
|                                 |                             |                     |         |                             |  |   |         |  
|                                 |                            
|                                 |                             | As of               |        
|                                 | (restated)September 18,2005 |                     |         | (restated)May 29, 2005      | 
|Identifiable assets              |                             |                     |         |                             |  |   |         |  
|Big Boy                          |                             | $                   | 85,838  |                             |  | $ | 84,943  |  
|Golden Corral                    |                             |                     | 86,748  |                             |  |   | 82,523  |  
|                                 |                             |                     |         |                             |  |   |         |  
|                                 |                             | $                   | 172,586 |                             |  | $ | 167,466 |  
|                                 |                             |                     |         |                             |  |   |         |  



24



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE H  CONTINGENCIES

Litigation

The construction of a Golden Corral restaurant in Canton, Ohio was halted in August 2001 in order to
assess structural concerns. In March 2002, a final assessment of the defects resulted in the Companys decision to construct a new building on another part of the lot. (The restaurant finally opened for business in January 2003.) On
July 30, 2002, the general contractor that built the defective building filed a demand for arbitration against the Company seeking $294,000 plus interest, fees, and costs it claims is owed by the Company under the construction contract. The
Company denies the claim and has filed a counterclaim against the general contractor alleging defective construction and claiming damages, lost profits, interest and costs in an amount exceeding $1,000,000. The Company is vigorously prosecuting this
claim and believes that it will ultimately prevail in the matter, which is currently before the American Arbitration Association.

On August 29, 2002,
the Company filed a separate lawsuit against the architect that designed the defective building alleging negligent design and claiming damages, lost profits, interest and costs exceeding $2,500,000. In July 2003, the Company resolved all claims,
counterclaims and cross claims against the trial court defendants, including the architect and the architects structural engineering consultant. The defendants agreed to pay the Company the sum of $1,700,000 in full and final settlement of all
claims. The Company received the settlement funds in full in July 2004 and the case was dismissed.

A group of current and former employees of one of the
Companys Golden Corral restaurants filed a collective action against the Company in December 2003 alleging multiple violations of the Fair Labor Standards Act. The parties are currently negotiating a settlement agreement that will dismiss the
case in U. S. District Court and submit the matter to arbitration. The proposed settlement will include provisions for opt-in notices to be sent to all current and former employees of the restaurant who are eligible to participate in the
arbitration. While it is not possible to ascertain the ultimate legal and financial liability of the Company with respect to this matter, the Company has set aside a reserve that it believes is a reasonable estimate for the probable resolution of
the matter. The charge against earnings to establish a reserve during the quarter ended September 18, 2005 did not have a material adverse impact on the Companys earnings or financial position.

The Company is subject to various other claims and suits that arise in the ordinary course of business. The Company does not believe that any ultimate liability for such
claims will have a material impact on its earnings, cash flows or financial position.

Other Contingencies

The Company is contingently liable for the performance of a ground lease that has been assigned to a third party. The annual obligation of the lease
approximates $48,000 through 2020. Should the third party default, the Company has the right to re-assign the lease.

As of September 18, 2005, the
Company has two outstanding letters of credit totaling $164,000 in support of its self- insurance program (See Note A  Accounting Policies). The Company also has an outstanding letter of credit for $162,000 that supports an environmental
remediation plan for the restoration of certain land that the Company no longer owns, which was contaminated by a previous owner who can not be located. There are no other outstanding letters of credit issued by the Company.



25



---

##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

NOTE I  LIFE INSURANCE BENEFIT

The
Company owned a number of life insurance policies on the Chairman of the Board of Directors (formerly President and Chief Executive Officer of the Company), who died on February 2, 2005. As the primary beneficiary of these policies, the Company
filed claims for death benefits aggregating $9,659,000. Estimates of the cash surrender value of the policies totaling $4,719,000 had previously been recorded in the balance sheet as Net cash surrender value  life insurance
policies. The excess of the proceeds over the cash surrender value amounted to $4,440,000, which is net of $500,000 that was due another beneficiary (see Note J  Related Party Transactions), was credited to earnings as a non-taxable
benefit during the third quarter of fiscal 2005. All of the death benefit proceeds have been collected in full.

NOTE J -
RELATED PARTY TRANSACTIONS

A Big Boy licensed restaurant owned by an officer and director of the Company and two Big Boy licensed restaurants owned by
children and other family members of another director of the Company pay to the Company franchise and advertising fees, employee leasing and other fees, and make purchases from the Companys commissary. The total paid to the Company by these
three restaurants amounted to $1,489,000 and $1,488,000 respectively, during the sixteen weeks ended September 18, 2005 and September 19, 2004. The amount owed to the Company from these restaurants was $124,000 and $106,000 respectively,
as of September 18, 2005 and May 29, 2005. Amounts due are generally settled within 28 days of billing.

All related party transactions described
above were effected on substantially similar terms as transactions with persons having no relationship with the Company.

One of the life insurance
policies that the Company owned on the Chairman of the Board (see Note I  Life Insurance Benefit) was a split dollar policy that provided for the sum of $500,000 to be paid to the Chairmans widow, who is a director of the Company.

The Chairman of the Board had an employment agreement that had a provision for deferred compensation. The agreement provided that upon its expiration or
upon the Chairmans retirement, disability, death or other termination of employment, the Company would become obligated to pay the Chairman or his survivors for each of the next ten years the amount of $214,050, which is to be adjusted
annually to reflect 50 percent of the annual percentage change in the Consumer Price Index. The present value of the obligation has been historically reflected in the balance sheet as a long term obligation under the caption Deferred
compensation and other. The current portion of the obligation is included in current liabilities, as monthly payments of $17,838 to the Chairmans widow commenced on March 1, 2005.



26



---

##### Table of Contents

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements included in this Managements
Discussion and Analysis of Financial Condition and Results of Operation (MD&A) are forward-looking statements (as that item is defined in the Private Securities Litigation Reform Act of 1995) that are subject to risks, uncertainties
and other factors that could cause actual results and performance to differ materially from those expressed or implied by those statements. Factors that could cause such differences to occur include, but are not limited to, those discussed in this
MD&A under the caption Risk Factors. Forward-looking statements can generally be identified in sentences that contain words that are used to convey the fact that the statement being made is prospective rather than
strictly relating to historical or present facts. Such words include, but are not limited to, those shown below:



|         |  |        |  |          |  |              |  |           |  |           
|-------- |  | ------ |  | -------- |  | ------------ |  | --------- |  | ----------
|should |  | may  |  | plan   |  | anticipate |  | project |  | believe 
|could  |  | will |  | expect |  | estimate   |  | intend  |  | continue

All forward-looking information in this MD&A is provided by the Company pursuant to the safe harbor
established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of all risk factors. The Company undertakes no obligation to update any forward-looking statements that may be contained in this MD&A.

Restatement

In early
December 2005, the Companys actuarial consulting firm informed the Company of a formula error in the software program it created in 1995, which caused the software program to not properly pro-rate the benefit for service for plan participants
in the Companys defined benefit pension plan for managers, office employees and commissary employees with less than 28 years of service before normal retirement. This actuarial formula error caused the Companys net periodic pension cost
(and related accounts in the consolidated balance sheet and the consolidated statement of earnings) to be overstated. The cumulative effect of the error on total assets was $1,986,000 and $1,866,000 respectively, as of September 18, 2005 and
May 29, 2005.

CORPORATE OVERVIEW

The Companys First Quarter of Fiscal 2006 consists of the sixteen weeks ended September 18, 2005, and compares with the sixteen weeks ended September 19, 2004, which constituted the First Quarter of
Fiscal 2005. The first quarter of the Companys fiscal year normally accounts for a disproportionate share of annual revenue and earnings because it contains sixteen weeks, whereas the following three quarters normally contain only twelve weeks
each. Operations consist of two reportable segments within the restaurant industry: Big Boy restaurants and Golden Corral restaurants.

It should be noted that certain reclassifications to the consolidated statement of earnings for the First Quarter of Fiscal 2005 have been made to conform to the current year presentation for the First Quarter of Fiscal 2006.

Sales reached a record $86,533,000 for the First Quarter of Fiscal 2006, as sales rose $2,471,000 higher than the First Quarter of Fiscal 2005. The 2.9 percent increase
was well below expectation, however, as same store sales decreased in both the Big Boy and Golden Corral segments of the business. Net earnings for the First Quarter of Fiscal 2006 were $2,602,000 (as restated), or diluted earnings per share (EPS)
of $.50 (as restated), compared with $2,955,000 (as restated), or diluted EPS of $.57 (as restated) in the First Quarter of Fiscal 2005.

Results for the
first quarters of both years were positively impacted by favorable claims experience in the Companys self-insurance program. Self insurance reserves were lowered by $392,000 ($255,000 net after income tax, or $.05 per diluted share) in the
First Quarter of Fiscal 2006, while the First Quarter of Fiscal 2005 received the benefit of a $614,000 adjustment ($405,000 net after income tax, or $.08 per diluted share).

In addition to the same store sales decreases and the lower impact of the self-insurance adjustment this year, other factors, which in the aggregate significantly contributed to the reduction in net earnings, include
higher utility costs, higher opening expenses related to opening new restaurants and a charge to establish a reserve to cover the probable settlement of a legal action against the Company. The adverse effect of these factors on net earnings was
partly offset by improvement in Golden Corrals food cost as a percentage of sales, chiefly reflecting lower beef costs.



27



---

##### Table of Contents

RESULTS OF OPERATION

Sales

The Companys sales are
primarily generated through the operation of Big Boy restaurants and Golden Corral restaurants. Big Boy sales also include wholesale sales from the Companys commissary to restaurants licensed to other operators and the sale of Big Boys
signature brand tartar sauce to grocery stores. Same store sales comparisons are a key metric that management uses in the operation of the business. Same store sales are affected by changes in customer counts and menu price increases. Changes in
sales also occur when new restaurants are opened and older restaurants are closed. Below is the detail of consolidated restaurant sales:



|                                  |                |             |        |  |   |       
|--------------------------------- | -------------- | ----------- | ------ |  | - | ------
|                                  |                | 1st Quarter
|                                  | 2006           |             | 2005  
|                                  | (in thousands)
|Big Boy restaurants               |                | $           | 52,263 |  | $ | 52,847
|Wholesale sales to licensees      |                |             | 2,679  |  |   | 2,173 
|Wholesale sales to grocery stores |                |             | 193    |  |   | 172   
|                                  |                |             |        |  |   |       
|Total Big Boy sales               |                |             | 55,135 |  |   | 55,192
|                                  |                |            
|Golden Corral restaurants         |                |             | 31,398 |  |   | 28,870
|                                  |                |             |        |  |   |       
|Consolidated restaurant sales     |                | $           | 86,533 |  | $ | 84,062
|                                  |                |             |        |  |   |       

The $584,000 decline in Big Boy restaurant sales can be traced to a same store sales decline of .8 percent
(reflecting a 2.8 percent drop in customer counts) and to a restaurant that closed in November 2004. Big Boy same store sales have now declined for two consecutive quarters. During the fourth quarter of the last fiscal year, same store sales
declined .1 percent on a decrease in customer counts of 1.4 percent.

Before the last quarter of last year began, the Company had achieved Big Boy same
store sales increases in 29 of the last 30 quarters. Management believes a direct correlation exists between the lower customer counts that have been experienced over the last two quarters and the steep cost of gasoline. It is noteworthy that a
gallon of gasoline first crossed the mark of $2.00 per gallon in the Companys market regions in March 2005, which coincided with the start of last years fourth quarter.

The effects of the lower customer counts have been somewhat softened by higher average guest checks which have been primarily driven by menu price increases. An increase of 1.5 percent was implemented shortly before
last years first quarter ended, 1.0 percent was put in place near the end of last years third quarter and menu prices were increased 1.4 percent near the end of this years first quarter. Another menu price increase is likely in
February 2006.

The Company currently operates 89 Big Boy restaurants, including one that re-opened in August 2005 following its reconstruction. It had
been temporarily closed since May 2005. No other new Big Boy restaurants were opened during the last twelve months. One older, very low volume Big Boy ceased operations in November 2004. A brand new Big Boy is currently scheduled to open in February
2006. Two existing Big Boys are currently scheduled to be relocated to better sites within the same markets that will involve no interruption of sales, the first of which is scheduled to open in March 2006, the other in October 2006.



|The | $2,528,000 increase in Golden Corral sales was entirely due to more restaurants in operation:
|--- | ---------------------------------------------------------------------------------------------



|                                     |  |                   |  |                  
|------------------------------------ |  | ----------------- |  | -----------------
|                                     |  | First Quarter2006 |  | First Quarter2005
|In operation at beginning of year    |  | 30                |  | 26               
|Opened during the first quarter      |  | 2                 |  | 1                
|In operation at end of first quarter |  | 32                |  | 27               
|Total sales weeks                    |  | 498               |  | 424              



28



---

##### Table of Contents

Two Golden Corral restaurants were under construction as of September 18, 2005 that are scheduled to open
respectively in October and November 2005. Current plans call for three Golden Corrals to open respectively in July, September and November 2006.

The
decline in Golden Corral same store sales continued in the First Quarter of Fiscal 2006, decreasing 11.2 percent on a 13.8 percent drop in customer counts. Golden Corral restaurants have now suffered eight consecutive quarters of same store sales
decreases, including 33 consecutive weekly declines, most of which have been double-digit declines. This pattern has not been halted thus far into the second quarter. Management believes that sharp increases in gasoline prices have been especially
harsh on Golden Corral restaurants, as the correlation between the cost of gasoline and lower customer counts is more well defined than is the correlation for Big Boy restaurants. But steep gasoline prices are clearly not the entire reason for
Golden Corrals poor performance, as its declining sales began well before the spike in gasoline costs. Market research is currently underway to identify the various causes of the decline in sales so that appropriate responses can be developed.
Management is eager to take appropriate action to eliminate the source of the problem or at least mitigate its effects, thereby reversing the sales declines. Price increases of 1.8 percent and 2.3 percent were implemented respectively in May 2005
and May 2004.

Gross Profit

Gross profit for the Big Boy segment includes commissary operations. Gross profit differs from restaurant level profit discussed in Note G (Segment Information) to the consolidated financial statements, as advertising expense is charged
against restaurant level profit. Gross profit for both operating segments is highlighted below:



|                              |                |                |                |  |   |      
|----------------------------- | -------------- | -------------- | -------------- |  | - | -----
|                              |                | 1st Quarter   
|                              | (restated)2006 |                | (restated)2005
|                              |                | (in thousands)
|Big Boy gross profit          |                | $              | 7,692          |  | $ | 7,432
|Golden Corral gross profit    |                |                | 1,298          |  |   | 1,754
|                              |                |                |                |  |   |      
|Total gross profit by segment |                | $              | 8,990          |  | $ | 9,186
|                              |                |                |                |  |   |      

The operating percentages shown in the following table are percentages of total sales, including Big Boy wholesale
sales. The table supplements the discussion that follows concerning cost of sales for both the Big Boy and Golden Corral reporting segments, including food cost, payroll and other operating costs.



|                                                |  |                             |  |                             |  |       |  |       |  |        |  |      
|----------------------------------------------- |  | --------------------------- |  | --------------------------- |  | ----- |  | ----- |  | ------ |  | -----
|                                                |  | (restated) 1st Quarter 2006 |  | (restated) 1st Quarter 2005
|                                                |  | Total                       |  | BigBoy                      |  | GC    |  | Total |  | BigBoy |  | GC   
|Sales                                           |  | 100.0                       |  | 100.0                       |  | 100.0 |  | 100.0 |  | 100.0  |  | 100.0
|Food and Paper                                  |  | 34.8                        |  | 32.6                        |  | 38.6  |  | 35.0  |  | 32.5   |  | 39.8 
|Payroll and Related                             |  | 33.0                        |  | 34.3                        |  | 30.6  |  | 33.2  |  | 34.5   |  | 30.6 
|Other Operating Costs (including opening costs) |  | 21.8                        |  | 19.1                        |  | 26.7  |  | 20.9  |  | 19.5   |  | 23.5 
|Gross Profit                                    |  | 10.4                        |  | 14.0                        |  | 4.1   |  | 10.9  |  | 13.5   |  | 6.1  

The lower food and paper cost percentage in the Golden Corral segment for the First Quarter of Fiscal 2006 is
primarily the result of moderating beef costs. The market for beef remains highly volatile, as import and export restrictions can cause wide cost fluctuations. The food and paper cost percentages for the Golden Corral segment are much higher than
the Big Boy segment because of the all-you-can-eat nature of the Golden Corral concept.

Self-insured claims experience has historically been reviewed each
quarter, with a comprehensive review during the first quarter each year, when the self-insured reserves would be reduced to more closely reflect claims experience. The Company has been able to take significant adjustments to the reserves during the
first quarters of recent years



29



---

##### Table of Contents

because of active claims management and post accident drug testing. Beginning with the third quarter of fiscal 2005,
management determined that comprehensive reviews were warranted each quarter, and that the self-insured reserves should be adjusted as necessary based on claims experience.

The review of insurance reserves during the First Quarter of Fiscal 2006 resulted in a favorable adjustment to the insurance reserve of $392,000, much lower than the First Quarter of Fiscal 2005 when the favorable
adjustment was $614,000. A lower percentage of payroll is being used in the current fiscal year to accrue initial self-insurance reserves, which should reduce the size of future quarterly adjustments.

The payroll and related cost percentage moved slightly downward in the First Quarter of Fiscal 2006 for the Big Boy segment, the result of a reduction in the number of
hours worked. Golden Corral management achieved significant reductions in hours worked commensurate with its lower sales, keeping its ratio of payroll dollars to sales about even with last year. There has been no appreciable change in average pay
rates for either Big Boy or Golden Corral.

Although congressional efforts continually mount to increase the federal minimum wage, the Company believes it
is unlikely that such federal legislation will be enacted in the near term. However, the Company believes legislation at the state level is a greater possibility. If such legislation were to be enacted, the Company would counter the effects with
higher menu prices, together with tighter payroll standards and a reduction in hours worked. New overtime pay rules initiated by the U.S. Department of Labor went into effect in August 2004. The new rules had a negligible impact on the Company.

Net periodic pension cost (computed under Statement of Financial Accounting Standards No. 87, Employers Accounting for Pensions) was
$502,000 (as restated) and $535,000 (as restated) respectively, in the First Quarter of Fiscal 2006 and the First Quarter of 2005. The discount rate used to measure net periodic pension cost was 6.0 percent in the First Quarter of Fiscal 2006 versus
a rate 6.5 percent in the First Quarter of Fiscal 2005. The reduction in the rate had the effect of offsetting recent improvements in investment returns on equity investments that are held by the Companys defined benefit pension plans. The
Company anticipates making contributions to the two qualified defined benefit pension plans that it sponsors that will satisfy legal funding requirements for the year ending May 28, 2006 plus additional tax-deductible amounts that may be deemed
advisable.

Other operating costs include occupancy costs such as maintenance, rent, depreciation, property tax, insurance and utilities; field
supervision; accounting and payroll preparation costs; franchise fees for Golden Corral restaurants; opening costs and many other restaurant operating expenses. As most of these expenses tend to be more fixed in nature, same store sales decreases
cause these costs to be a higher percentage of sales, as reflected in the above table for the Golden Corral segment. Higher energy costs also adversely affected other operating costs.

Operating Profit

To arrive at the
measure of operating profit, administrative and advertising expense is subtracted from gross profit and other revenue is added to it. Gains and losses from sale of real property, if any, are then respectively added or subtracted.

Administrative and advertising expense increased $256,000 during the First Quarter of Fiscal 2006, or 5.9 percent higher than the First Quarter of Fiscal 2005. The
increase is attributable to the combination of higher legal costs, procurement costs in connection with hiring the Companys new Chief Operating Officer and a charge to set aside a reserve to cover the likely settlement of a legal action
against the Company.

Revenue from franchise fees is based on sales of Big Boy restaurants that are licensed to other operators. The fees are based
principally on percentages of sales generated by the licensed restaurants and are recorded on the accrual method as earned. As of September 18, 2005, 28 Big Boy restaurants were licensed to other operators and paying fees to the Company. Other
revenue also includes certain other fees from licensed restaurants along with miscellaneous rent and investment income.

There were no gains or losses from
the sale of real property in either the First Quarter of Fiscal 2006 or the First Quarter of Fiscal 2005, nor were any impairment of assets recorded during those periods.

Other Expense

Despite lower levels
of debt, interest expense is only down 3.0 percent during the First Quarter of Fiscal 2006, the result of higher average interest rates.



30



---

##### Table of Contents

Income tax expense as a percentage of pretax earnings was estimated at 35 percent in the First Quarter of Fiscal 2006 and
was 34 percent in the First Quarter of Fiscal 2005. These rates have been kept consistently low through the Companys use of tax credits, principally the federal credit allowed for Employer Social Security and Medicare Taxes Paid on Certain
Employee Tips, and to a lesser degree, the federal Work Opportunity Tax Credit (WOTC).

LIQUIDITY AND CAPITAL RESOURCES

Sources of Funds

Sales to restaurant customers provide the Companys principal source of cash. The funds from sales are immediately available for the Companys use, as substantially all sales to restaurant customers are received in cash or are
settled by debit or credit cards. Net earnings plus depreciation provide the primary source of cash provided by operating activities. Other sources of cash may include borrowing against credit lines, proceeds received when employees exercise stock
options and occasional sales of real estate. In addition to servicing debt, these cash flows are utilized for discretionary objectives, including capital projects (principally restaurant expansion) and dividends.

Working Capital Practices

The
Company has historically maintained a strategic negative working capital position, a common practice in the restaurant industry. As significant cash flows are consistently provided by operations, and credit lines are readily available, the use of
this practice should not hinder the Companys ability to satisfactorily retire any of its obligations when due, including the aggregated contractual obligations and commercial commitments shown in the following table.

Aggregated Information about Contractual Obligations and Commercial Commitments September 18, 2005



|                                         |  |                                       |  |        |  |        |  |        |  |        |  |        |  |                
|---------------------------------------- |  | ------------------------------------- |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ |  | ---------------
|                                         |  | Payments due by period (in thousands)
|                                         |  | Total                                 |  | year 1 |  | year 2 |  | year 3 |  | year 4 |  | year 5 |  | morethan 5years
|Long-Term Debt                           |  | 37,697                                |  | 8,058  |  | 9,083  |  | 9,539  |  | 5,108  |  | 2,994  |  | 2,915          
|Rent due under Capital Lease Obligations |  | 4,303                                 |  | 846    |  | 617    |  | 2,478  |  | 119    |  | 87     |  | 156            
|1 Rent due under Operating Leases        |  | 24,936                                |  | 1,734  |  | 1,725  |  | 1,722  |  | 1,669  |  | 1,459  |  | 16,627         
|2 Unconditional Purchase Obligations     |  | 8,223                                 |  | 8,223  |  |        |  |        |  |        |  |        |  |                
|3 Other Long-Term Obligations            |  | 2,151                                 |  | 214    |  | 217    |  | 220    |  | 223    |  | 226    |  | 1,051          
|Total Contractual Cash Obligations       |  | 77,310                                |  | 19,075 |  | 11,642 |  | 13,959 |  | 7,119  |  | 4,766  |  | 20,749         

---

|1 | Not included in the table is a contingent liability for the performance of a ground lease that has been assigned to a third party. The annual obligation of the lease approximates
$48,000 through 2020. Should the third party default, the Company has the right to re-assign the lease. Operating leases include option periods considered to be part of the lease term under the provisions of Statement of Financial Accounting
Statement No. 13, Accounting for Leases, as amended.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Primarily consists of commitments for capital projects plus certain food and beverage items.
|- | --------------------------------------------------------------------------------------------

|3 | Deferred compensation liability.
|- | --------------------------------

The working capital deficit was
$23,550,000 (as restated) as of September 18, 2005. The deficit was $20,911,000 (as restated) as of May 29, 2005. The working capital deficit is expected to continue increasing over the next few years at a modest, manageable pace as
construction debt is prudently increased to supplement the use of internally generated cash to finance expansion plans. In September 2005, the maximum amount that may be borrowed under the terms of the Companys Construction Draw Facility was
increased by $15,000,000, which increased to $19,000,000 the amount available to be drawn upon before the Facility expires on September 1, 2008, unless extended. Additionally, a $5,000,000 working capital revolving line of credit (currently
unused) is readily available through September 1, 2008, if needed.



31



---

##### Table of Contents

Operating Activities

Operating cash flows were $8,199,000 in the First Quarter of Fiscal 2006, or $3,726,000 higher than the First quarter of Fiscal 2005. The increase is attributable to
normal changes in assets and liabilities such as prepaid expenses, inventories and accounts payable, all of which can and do often widely fluctuate. Management believes a more reliable gauge to measure cash flows from the operation of the business
is to use the simple method of net earnings plus depreciation. This method yields $6,473,000 (as restated) in cash flows from operating activities for the First Quarter of Fiscal 2006 versus $6,502,000 (as restated) in the First Quarter of Fiscal
2005.

Investing Activities

Capital spending is the principal component of the Companys investing activities. Capital spending was $8,073,000 during the First Quarter of Fiscal 2006, a decrease of $926,000 from the First Quarter of Fiscal 2005. The capital
spending includes $5,272,000 for Golden Corral restaurants, consisting of new restaurant construction, site acquisitions and remodeling costs. Also included in the capital costs was $2,801,000 spent on Big Boy restaurants, consisting of new
restaurant construction, remodeling existing restaurants including kitchen and dining room expansions, routine equipment replacements and other capital outlays.

Financing Activities

Borrowing
against credit lines amounted to $3,000,000 during the First Quarter of Fiscal 2006. An additional $2,000,000 was borrowed shortly after the end of the quarter. Scheduled and other payments of long-term debt and capital lease obligations amounted to
$2,600,000 during the First Quarter of Fiscal 2006. Regular quarterly cash dividends paid to shareholders totaled $556,000. Dividends declared but not paid as of September 18, 2005 totaled $557,000. The Company expects to continue its 45 year
practice of paying regular quarterly cash dividends.

During the First Quarter of Fiscal 2006, employees acquired approximately 5,400 shares of the
Companys common stock pursuant to the exercise of stock options, yielding proceeds to the Company of approximately $95,000. As of September 18, 2005, 364,156 shares granted remain outstanding under the 1993 Stock Option Plan, including
328,153 fully vested shares at a weighted average price per share of $17.95, and 6,204 remained available to be granted. As of September 18, 2005, 78,500 shares have been granted under the 2003 Stock Option and Incentive Plan, none of which had
vested, and 721,500 shares remain available to be granted.

Other Information

The Company reached a new agreement with Golden Corral Franchising Systems, Inc. in July 2004. The new agreement added 22 Golden Corral restaurants to the development
schedule, bringing to 63, the total number of restaurants planned to be in operation by December 31, 2011. The development agreement, which had called for five new restaurants to open each calendar year through 2010 with the final four
scheduled for 2011, was modified in June 2005 to permit the opening of only three restaurants in calendar year 2006. The Company asked for the modification in order to use cash flows and credit facilities in a debt neutral manner. The modification
did not change the Companys intention to complete the build out schedule by December 31, 2011.

As of September 18, 2005, 32 Golden Corral
restaurants were in operation with two restaurants under construction, which are scheduled to open in October and November 2005. Costs remaining to complete construction of these two restaurants were estimated at $2,199,000 as of September 18,
2005. Construction of the three restaurants planned to open in calendar year 2006 is currently scheduled to respectively begin in March, May and July. Five older Golden Corrals are scheduled to be remodeled in Fiscal 2006 at a cost of
approximately $150,000 per restaurant.

Construction of a brand new Big Boy restaurant began in October 2005 that should be ready to open in February 2006.
Construction of two Big Boy restaurants that will replace existing operations on better sites will begin respectively in November 2005 and May 2006. Approximately one-fifth of the Companys Big Boy restaurants are routinely renovated or
decoratively updated each year at an average cost of $75,000 per restaurant. In addition, certain high-volume Big Boy restaurants are regularly evaluated to determine whether their kitchens should be redesigned for increased efficiencies. A typical
kitchen redesign costs approximately $125,000.

Including land and land improvements, the cash required to build and equip each new restaurant ranges from
$2,600,000 to $3,500,000 for a Golden Corral, and from $2,200,000 to $2,900,000 for a Big Boy. The actual cost depends greatly on the price paid for the land and the cost of land improvements, which can vary widely from location to location, and
whether the land is purchased or leased.

It is the Companys policy to own the land on which it builds new restaurants; however, it is becoming more
frequently necessary to enter ground leases to obtain desirable land on which to build. Six of the 32 Golden Corral restaurants now in operation were built on leased land. The two Golden Corral restaurants currently under



32



---

##### Table of Contents

construction are being built on leased land. In addition, two of the three Big Boy restaurants that will start
construction between October 2005 and May 2006 will be on leased land. All of these leases are being accounted for as operating leases pursuant to Statement of Financial Accounting Standards No. 13 (SFAS 13), Accounting for Leases
as amended. As of September 18, 2005, the Company occupied a total of 30 restaurants pursuant to leases, ten of which are capital leases under the provisions of SFAS 13.

RISK FACTORS

Food safety is the
most significant risk to any company that operates in the restaurant industry. It has become the focus of increased government regulatory initiatives at the local, state and federal levels. To limit the Companys exposure to the risk of food
contamination, management rigorously emphasizes and enforces the Companys food safety policies in all of the Companys restaurants, and at the commissary and food manufacturing plant that the Company operates for Big Boy restaurants.
These policies are designed to work cooperatively with programs established by health agencies at all levels of government authority, including the federal Hazard Analysis of Critical Control Points (HACCP) program. In addition, the Company makes
use of ServSafe Training, a nationally recognized program developed by the National Restaurant Association. The ServSafe program provides accurate, up-to-date science-based information to all levels of restaurant workers on all aspects of food
handling, from receiving and storing to preparing and serving. All restaurant managers are required to be certified in ServSafe Training and are required to be re-certified every five years.

Other examples of risks and uncertainties facing the Company include, but are not limited to, the following:



| |  | intense competition for customers;
|- |  | ----------------------------------



| |  | consumer perceptions of value, food quality and quality of service;
|- |  | -------------------------------------------------------------------



| |  | changing consumer preferences, particularly based on concerns with nutritional content of the Companys food or restaurant food in general;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  | the effects of higher gasoline prices on discretionary spending by consumers in restaurants.
|- |  | --------------------------------------------------------------------------------------------



| |  | changing demographics in neighborhoods in which the Company operates restaurants;
|- |  | ---------------------------------------------------------------------------------



| |  | changes in business strategy and development plans;
|- |  | ---------------------------------------------------



| |  | the rising cost of quality sites on which to build restaurants;
|- |  | ---------------------------------------------------------------



| |  | poor selection of restaurant sites on which to build;
|- |  | -----------------------------------------------------



| |  | changes in the supply and cost of food;
|- |  | ---------------------------------------



| |  | the effects of other inflationary pressures, especially higher costs for health care benefits and higher energy prices;
|- |  | -----------------------------------------------------------------------------------------------------------------------



| |  | rolling power outages, especially during the summer months;
|- |  | -----------------------------------------------------------



| |  | shortages of qualified labor;
|- |  | -----------------------------



| |  | seasonal weather conditions, particularly during the winter months of the third quarter;
|- |  | ----------------------------------------------------------------------------------------



| |  | natural disasters;
|- |  | ------------------



| |  | fires or explosions;
|- |  | --------------------



| |  | criminal acts, including bomb threats, robberies, hostage taking, kidnapping and other violent crimes;
|- |  | ------------------------------------------------------------------------------------------------------



| |  | acts of terrorists or acts of war; and
|- |  | --------------------------------------



| |  | civil disturbances and boycotts.
|- |  | --------------------------------

Risks
and uncertainties also include:



| |  | rising variable interest rates;
|- |  | -------------------------------



| |  | limitations on borrowing capacity;
|- |  | ----------------------------------



| |  | legal claims;
|- |  | -------------



| |  | changes in accounting standards;
|- |  | --------------------------------



| |  | estimates used in preparing financial statements and the inherent risk that future events affecting them may cause actual results to differ markedly;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  | disruptions to the business during transitions to new computer software;
|- |  | ------------------------------------------------------------------------



| |  | financial stability of technology vendors to support computer software over the long-term;
|- |  | ------------------------------------------------------------------------------------------



| |  | unauthorized access to information systems;
|- |  | -------------------------------------------



33



---

##### Table of Contents

| |  | changes in governmental regulations regarding the environment;
|- |  | --------------------------------------------------------------



| |  | exposure to penalties for potential violations of numerous governmental regulations in general, and immigration (I-9) and labor regulations regarding minors in particular;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | any future imposition by OSHA of costly ergonomics regulations on workplace safety;
|- |  | -----------------------------------------------------------------------------------



| |  | legislative changes affecting labor law, especially increases in the federal or state minimum wage requirements; and
|- |  | --------------------------------------------------------------------------------------------------------------------



| |  | legislation or court rulings that result in changes to tax codes.
|- |  | -----------------------------------------------------------------

The
Company continually takes reasonable preventive measures to reduce the risks and uncertainties that it faces. However, the nature of some risks and uncertainties offers little control to the Company. The materialization of any of the risks and
uncertainties identified herein, together with those risks not specifically listed or those that are presently unforeseen, could result in significant adverse effects on the Companys financial position, results of operations and cash flows,
which could include the permanent closure of the affected restaurant(s) with an impairment of assets charge taken against earnings, and could adversely affect the price at which shares of the Companys common stock trade.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to use estimates and assumptions to measure certain items that affect the amounts
reported in the financial statements and accompanying footnotes. These judgments are based on knowledge and experience about past and current events, and assumptions about future events. Accounting estimates can and do change as new events occur and
additional information becomes available. Actual results may differ markedly from current judgment.

Two factors are required for an accounting policy to
be deemed critical. The policy must be significant to the fair presentation of a companys financial condition and its results of operations, and the policy must require managements most difficult, subjective or complex judgments. The
Company believes the following to be critical accounting policies.

Self Insurance

The Company self-insures a significant portion of expected losses from its workers compensation program in the state of Ohio. The Company purchases coverage from an
insurance company for individual claims in excess of $300,000. Reserves for claims expense include a provision for incurred but not reported claims. Each quarter, the Company reviews claims valued by its third party administrator (TPA)
and then applies experience and judgment to determine the most probable future value of incurred claims. As the TPA submits additional new information, the Company reviews it in light of past history of claims for similar injuries, probability of
settlement, and any other facts that might provide guidance in determining ultimate value of individual claims. Unexpected changes in any of these or other factors could result in actual costs differing materially from initial projections.

Pension Plans

Pension plan accounting requires rate assumptions for future compensation increases and the long term return on plan assets. A discount rate is also applied to the calculations of net periodic pension cost and projected benefit obligations.
An informal committee consisting of executives from the Finance Department and the Human Resources Department, with guidance provided by the Companys actuarial consulting firm, develops these assumptions each year. The consulting firm also
provides services in calculating estimated future obligations and net periodic pension cost. The plan assets are targeted to be invested 70 percent in equity securities, as these investments have historically provided the greatest long-term returns.
The Company has used an 8.5 percent expected long-term rate of return on plan assets for many years, and will likely continue with that rate for the foreseeable future. Management believes that 8.5 percent is a fair rate over the long term, despite
poor market performance in the early years of the current decade which has adversely impacted net periodic pension cost in recent years, after many years of steady, low costs. Managements application of these assumptions in no way caused the
error in the calculation of net periodic pension cost described in detail in Note B to the consolidated financial statements.



34



---

##### Table of Contents

Long-Lived Assets

Long-lived assets include property and equipment, goodwill and other intangible assets. Property and equipment typically approximate 85 percent of the Companys total assets. Judgments and estimates are used to
determine the carrying value of long-lived assets. This includes the assignment of appropriate useful lives, which affect depreciation and amortization expense. Capitalization policies are continually monitored to assure they remain appropriate.

In addition, carrying values of property and equipment are tested for impairment each quarter using historical cash flow losses on a
restaurant-by-restaurant basis. Carrying values are also reviewed whenever events or circumstances indicate the carrying value may be impaired. When undiscounted expected future cash flows are less than carrying values, an impairment loss is
recognized for the amount by which carrying values exceed estimated realizable values. Future cash flows can be difficult to predict. Changing neighborhood demographics and economic conditions, and many other factors may impact operating
performance, which affect cash flow. Estimated realizable values are provided by real estate brokers and/or the Companys past experience in disposing of property.

Sometimes it becomes necessary to cease operating a certain restaurant due to poor performance. The final impairment amount can be significantly different from the initial charge, particularly if the eventual market
price received from the disposition of the property differs materially from initial estimates of realizable values.

Acquired goodwill and other intangible
assets are tested for impairment annually or whenever an impairment indicator arises.



35



---

##### Table of Contents

PART II - OTHER INFORMATION



|ITEM 6. | EXHIBITS
|------- | --------



|     |  |                                                                                                     
|---- |  | ----------------------------------------------------------------------------------------------------
|15   |  | Letter re: unaudited interim financial statements, is filed herewith.                               
|     | 
|31.1 |  | Certification of Chief Executive Officer pursuant to rule 13a -14(a)/15d  14(a) is filed herewith. 
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to rule 13a - 14(a)/15d  14(a) is filed herewith.
|     | 
|32.1 |  | Section 1350 Certification of Chief Executive Officer is filed herewith.                            
|     | 
|32.2 |  | Section 1350 Certification of Chief Financial Officer is filed herewith.                            

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.



|                    |  |    |  |                                           
|------------------- |  | -- |  | ------------------------------------------
|                    |  |    |  | FRISCHS RESTAURANTS, INC.                
|                    |  |    |  | (Registrant)                              
|DATE March 10, 2006 |  |    |  |                                           
|                    |  |   
|                    |  | BY |  | /s/ Donald H. Walker                      
|                    |  |    |  | Donald H. Walker                          
|                    |  |    |  | Vice President  Finance, Treasurer and   
|                    |  |    |  | Principal Financial and Accounting Officer



36