##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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Quarterly Report Under Section 13 or 15 (d)

of the Securities Exchange Act of
1934



FOR QUARTER ENDED MARCH 6, 2005



COMMISSION FILE NUMBER 001-07323



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FRISCHS RESTAURANTS, INC.

(Exact name of registrant as specified in its
charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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 an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act:    YES  x    NO ̈



The total number of shares outstanding of the issuers no par common stock, as of March
25, 2005 was: 5,055,782



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##### Table of Contents

TABLE OF CONTENTS



|                               |  |         |  |                                                                                       |  |        
|------------------------------ |  | ------- |  | ------------------------------------------------------------------------------------- |  | -------
|                               |  |         |  |                                                                                       |  | PAGE   
|PART I - FINANCIAL INFORMATION |  |        
|                               |  |         | 
|                               |  | ITEM 1. |  | FINANCIAL STATEMENTS                                                                  |  |        
|                               |  |         | 
|                               |  |         |  | CONSOLIDATED STATEMENT OF EARNINGS                                                    |  | 3      
|                               |  |         | 
|                               |  |         |  | CONSOLIDATED BALANCE SHEET                                                            |  | 4 - 5  
|                               |  |         | 
|                               |  |         |  | CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY                                        |  | 6      
|                               |  |         | 
|                               |  |         |  | CONSOLIDATED STATEMENT OF CASH FLOWS                                                  |  | 7      
|                               |  |         | 
|                               |  |         |  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                            |  | 8 - 23 
|                               |  |         | 
|                               |  | ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 24 - 34
|                               |  |         | 
|                               |  | ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 35     
|                               |  |         | 
|                               |  | ITEM 4. |  | CONTROLS AND PROCEDURES                                                               |  | 35     
|                               | 
|PART II -
OTHER INFORMATION    |  |        
|                               |  |         | 
|                               |  | ITEM 1. |  | LEGAL PROCEEDINGS                                                                     |  | 36     
|                               |  |         | 
|                               |  | ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K                                                      |  | 36 - 38
|                               |  |        
|SIGNATURE                      |  |         |  | 39                                                                                   



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Statement of Earnings

(Unaudited)



|                                                                  |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  
|----------------------------------------------------------------- |  | ----------------- | ----------- | - | ------------------ | - | ----------- | ------------- |  | - | ------------- | - |  | - | ---------- | -
|                                                                  |  | Forty weeks ended |             |   | Twelve weeks ended |  
|                                                                  |  | March 6, 2005     |             |   | March 7, 2004      |   |             | March 6, 2005 |  |   | March 7, 2004 |  
|Sales                                                             |  | $                 | 213,608,307 |   |                    | $ | 196,490,742 |               |  | $ | 62,798,667    |   |  | $ | 59,361,972 |  
|                                                                  |  |                   |             |  
|Cost of sales                                                     |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  
|Food and paper                                                    |  |                   | 75,144,025  |   |                    |   | 66,907,572  |               |  |   | 22,391,288    |   |  |   | 20,411,884 |  
|Payroll and related                                               |  |                   | 71,196,847  |   |                    |   | 66,516,495  |               |  |   | 21,004,517    |   |  |   | 20,171,019 |  
|Other operating costs                                             |  |                   | 44,021,135  |   |                    |   | 40,074,590  |               |  |   | 13,262,928    |   |  |   | 12,195,419 |  
|                                                                  |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  
|                                                                  |  |                   | 190,362,007 |   |                    |   | 173,498,657 |               |  |   | 56,658,733    |   |  |   | 52,778,322 |  
|                                                                  |  |                   |             |  
|Gross profit                                                      |  |                   | 23,246,300  |   |                    |   | 22,992,085  |               |  |   | 6,139,934     |   |  |   | 6,583,650  |  
|                                                                  |  |                   |             |  
|Administrative and advertising                                    |  |                   | 10,887,677  |   |                    |   | 9,816,919   |               |  |   | 3,222,291     |   |  |   | 2,861,271  |  
|Franchise fees and other revenue                                  |  |                   | (1,026,160  | ) |                    |   | (929,468    | )             |  |   | (292,732      | ) |  |   | (271,333   | )
|(Gains) losses on sale of assets                                  |  |                   | (88,978     | ) |                    |   | (40,964     | )             |  |   |              |   |  |   |           |  
|                                                                  |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  
|Operating profit                                                  |  |                   | 13,473,761  |   |                    |   | 14,145,598  |               |  |   | 3,210,375     |   |  |   | 3,993,712  |  
|                                                                  |  |                   |             |  
|Other expense (income)                                            |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  
|Interest expense                                                  |  |                   | 2,173,026   |   |                    |   | 1,874,515   |               |  |   | 726,362       |   |  |   | 558,220    |  
|Life insurance - death benefits in excess of cash surrender value |  |                   | (4,440,000  | ) |                    |   |             |               |  |   | (4,440,000    | ) |  |   |           |  
|                                                                  |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  
|Earnings before income tax                                        |  |                   | 15,740,735  |   |                    |   | 12,271,083  |               |  |   | 6,924,013     |   |  |   | 3,435,492  |  
|                                                                  |  |                   |             |  
|Income taxes                                                      |  |                   | 3,955,000   |   |                    |   | 4,356,000   |               |  |   | 781,000       |   |  |   | 1,219,000  |  
|                                                                  |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  
|NET EARNINGS                                                      |  | $                 | 11,785,735  |   |                    | $ | 7,915,083   |               |  | $ | 6,143,013     |   |  | $ | 2,216,492  |  
|                                                                  |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  
|Earnings per share (EPS) of common stock:                         |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  
|                                                                  |  |                   |             |  
|Basic net earnings per share                                      |  | $                 | 2.34        |   |                    | $ | 1.59        |               |  | $ | 1.22          |   |  | $ | 0.44       |  
|                                                                  |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  
|Diluted net earnings per share                                    |  | $                 | 2.29        |   |                    | $ | 1.54        |               |  | $ | 1.19          |   |  | $ | 0.43       |  
|                                                                  |  |                   |             |   |                    |   |             |               |  |   |               |   |  |   |            |  



The accompanying notes are an integral
part of these statements.



3



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Balance Sheet



ASSETS



|                                                    |  |                           |             |              |   |            
|--------------------------------------------------- |  | ------------------------- | ----------- | ------------ | - | -----------
|                                                    |  | March 6, 2005 (unaudited) |             | May 30, 2004
|Current Assets                                      |  |                           |             |              |   |            
|Cash                                                |  | $                         | 1,240,166   |              | $ | 294,410    
|Receivables                                         |  |                           |             |              |   |            
|Life insurance - death benefit                      |  |                           | 9,650,000   |              |   |           
|Trade                                               |  |                           | 1,905,411   |              |   | 1,384,798  
|Other                                               |  |                           | 208,811     |              |   | 381,090    
|Inventories                                         |  |                           | 4,711,873   |              |   | 4,381,814  
|Prepaid expenses and sundry deposits                |  |                           | 1,898,825   |              |   | 2,076,319  
|Prepaid and deferred income taxes                   |  |                           | 1,219,794   |              |   | 1,024,427  
|                                                    |  |                           |             |              |   |            
|Total current assets                                |  |                           | 20,834,880  |              |   | 9,542,858  
|                                                    |  |                          
|Property and Equipment                              |  |                           |             |              |   |            
|Land and improvements                               |  |                           | 57,129,706  |              |   | 50,250,328 
|Buildings                                           |  |                           | 81,756,559  |              |   | 75,040,561 
|Equipment and fixtures                              |  |                           | 83,826,037  |              |   | 77,673,937 
|Leasehold improvements and buildings on leased land |  |                           | 19,622,355  |              |   | 19,751,361 
|Capitalized leases                                  |  |                           | 7,519,109   |              |   | 7,388,580  
|Construction in progress                            |  |                           | 4,481,578   |              |   | 6,918,091  
|                                                    |  |                           |             |              |   |            
|                                                    |  |                           | 254,335,344 |              |   | 237,022,858
|Less accumulated depreciation and amortization      |  |                           | 108,538,785 |              |   | 101,302,386
|                                                    |  |                           |             |              |   |            
|Net property and equipment                          |  |                           | 145,796,559 |              |   | 135,720,472
|                                                    |  |                          
|Other Assets                                        |  |                           |             |              |   |            
|Goodwill                                            |  |                           | 740,644     |              |   | 740,644    
|Other intangible assets                             |  |                           | 1,380,560   |              |   | 1,122,982  
|Investments in land                                 |  |                           | 306,834     |              |   | 1,148,293  
|Property held for sale                              |  |                           | 1,857,244   |              |   | 1,160,785  
|Net cash surrender value-life insurance policies    |  |                           |            |              |   | 4,600,873  
|Other                                               |  |                           | 2,783,166   |              |   | 2,811,047  
|                                                    |  |                           |             |              |   |            
|Total other assets                                  |  |                           | 7,068,448   |              |   | 11,584,624 
|                                                    |  |                           |             |              |   |            
|                                                    |  | $                         | 173,699,887 |              | $ | 156,847,954
|                                                    |  |                           |             |              |   |            



The accompanying notes are an integral
part of these statements.



4



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##### Table of Contents

LIABILITIES AND SHAREHOLDERS EQUITY



|                                                                                                                           |  |                           |             |              |   |            
|-------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ----------- | ------------ | - | -----------
|                                                                                                                           |  | March 6, 2005 (unaudited) |             | May 30, 2004
|Current Liabilities                                                                                                        |  |                           |             |              |   |            
|Long-term obligations due within one year                                                                                  |  |                           |             |              |   |            
|Long-term debt                                                                                                             |  | $                         | 7,517,299   |              | $ | 6,230,801  
|Obligations under capitalized leases                                                                                       |  |                           | 563,018     |              |   | 508,520    
|Self insurance                                                                                                             |  |                           | 1,142,939   |              |   | 1,310,191  
|Notes payable                                                                                                              |  |                           | 2,000,000   |              |   |           
|Accounts payable                                                                                                           |  |                           | 14,779,053  |              |   | 13,380,257 
|Accrued expenses                                                                                                           |  |                           | 8,299,777   |              |   | 8,238,293  
|Income taxes                                                                                                               |  |                           |            |              |   | 436,265    
|                                                                                                                           |  |                           |             |              |   |            
|Total current liabilities                                                                                                  |  |                           | 34,302,086  |              |   | 30,104,327 
|                                                                                                                           |  |                          
|Long-Term Obligations                                                                                                      |  |                           |             |              |   |            
|Long-term debt                                                                                                             |  |                           | 35,869,329  |              |   | 35,226,734 
|Obligations under capitalized leases                                                                                       |  |                           | 3,315,333   |              |   | 3,221,384  
|Self insurance                                                                                                             |  |                           | 2,065,108   |              |   | 2,384,893  
|Deferred income taxes                                                                                                      |  |                           | 4,563,082   |              |   | 3,540,082  
|Deferred compensation and other                                                                                            |  |                           | 3,597,658   |              |   | 2,903,974  
|                                                                                                                           |  |                           |             |              |   |            
|Total long-term obligations                                                                                                |  |                           | 49,410,510  |              |   | 47,277,067 
|                                                                                                                           |  |                          
|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, 7,505,176 and 7,490,845 shares - stated value - $1 |  |                           | 7,505,176   |              |   | 7,490,845  
|Additional contributed capital                                                                                             |  |                           | 62,259,877  |              |   | 61,976,027 
|                                                                                                                           |  |                           |             |              |   |            
|                                                                                                                           |  |                           | 69,765,053  |              |   | 69,466,872 
|Retained earnings                                                                                                          |  |                           | 53,042,396  |              |   | 42,920,243 
|                                                                                                                           |  |                           |             |              |   |            
|                                                                                                                           |  |                           | 122,807,449 |              |   | 112,387,115
|Less cost of treasury stock (2,449,394 and 2,458,022 shares)                                                               |  |                           | 32,820,158  |              |   | 32,920,555 
|                                                                                                                           |  |                           |             |              |   |            
|Total shareholders equity                                                                                                 |  |                           | 89,987,291  |              |   | 79,466,560 
|                                                                                                                           |  |                           |             |              |   |            
|                                                                                                                           |  | $                         | 173,699,887 |              | $ | 156,847,954
|                                                                                                                           |  |                           |             |              |   |            



5



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Statement of Shareholders Equity

Forty weeks ended March 6, 2005 and March 7, 2004

(Unaudited)



|                                                    |  |                                                  |           |                                |   |            |                   |  |   |                 |   |  |       |             |   |  |   |            |  
|--------------------------------------------------- |  | ------------------------------------------------ | --------- | ------------------------------ | - | ---------- | ----------------- |  | - | --------------- | - |  | ----- | ----------- | - |  | - | ---------- | -
|                                                    |  | Common stock at $1 per share - Shares and amount |           | Additional contributed capital |   |            | Retained earnings |  |   | Treasury shares |   |  | Total |            
|Balance at June 1, 2003                             |  | $                                                | 7,420,763 |                                | $ | 60,926,377 |                   |  | $ | 34,490,774      |   |  | $     | (33,072,188 | ) |  | $ | 69,765,726 |  
|Net earnings for forty weeks                        |  |                                                  |          |                                |   |           |                   |  |   | 7,915,083       |   |  |       |            |   |  |   | 7,915,083  |  
|Stock options exercised - new shares issued         |  |                                                  | 70,082    |                                |   | 754,384    |                   |  |   |                |   |  |       |            |   |  |   | 824,466    |  
|Stock options exercised - treasury shares re-issued |  |                                                  |          |                                |   | (9,103     | )                 |  |   |                |   |  |       | 107,138     |   |  |   | 98,035     |  
|Tax benefit from stock options exercised            |  |                                                  |          |                                |   | 366,464    |                   |  |   |                |   |  |       |            |   |  |   | 366,464    |  
|Other treasury shares re-issued                     |  |                                                  |          |                                |   | 18,180     |                   |  |   |                |   |  |       | 44,495      |   |  |   | 62,675     |  
|Employee stock purchase plan                        |  |                                                  |          |                                |   | (41,884    | )                 |  |   |                |   |  |       |            |   |  |   | (41,884    | )
|Cash dividends - $.31 per share                     |  |                                                  |          |                                |   |           |                   |  |   | (1,545,928      | ) |  |       |            |   |  |   | (1,545,928 | )
|                                                    |  |                                                  |           |                                |   |            |                   |  |   |                 |   |  |       |             |   |  |   |            |  
|Balance at March 7, 2004                            |  |                                                  | 7,490,845 |                                |   | 62,014,418 |                   |  |   | 40,859,929      |   |  |       | (32,920,555 | ) |  |   | 77,444,637 |  
|                                                    |  |                                                  |           |                                |  
|Net earnings for twelve weeks                       |  |                                                  |          |                                |   |           |                   |  |   | 2,613,927       |   |  |       |            |   |  |   | 2,613,927  |  
|Employee stock purchase plan                        |  |                                                  |          |                                |   | (38,391    | )                 |  |   |                |   |  |       |            |   |  |   | (38,391    | )
|Cash dividends - $.11 per share                     |  |                                                  |          |                                |   |           |                   |  |   | (553,613        | ) |  |       |            |   |  |   | (553,613   | )
|                                                    |  |                                                  |           |                                |   |            |                   |  |   |                 |   |  |       |             |   |  |   |            |  
|Balance at May 30, 2004                             |  |                                                  | 7,490,845 |                                |   | 61,976,027 |                   |  |   | 42,920,243      |   |  |       | (32,920,555 | ) |  |   | 79,466,560 |  
|                                                    |  |                                                  |           |                                |  
|Net earnings for forty weeks                        |  |                                                  |          |                                |   |           |                   |  |   | 11,785,735      |   |  |       |            |   |  |   | 11,785,735 |  
|Stock options exercised - new shares issued         |  |                                                  | 14,331    |                                |   | 205,105    |                   |  |   |                |   |  |       |            |   |  |   | 219,436    |  
|Stock options exercised - treasury shares re-issued |  |                                                  |          |                                |   | (3,109     | )                 |  |   |                |   |  |       | 95,953      |   |  |   | 92,844     |  
|Tax benefit from stock options exercised            |  |                                                  |          |                                |   | 74,501     |                   |  |   |                |   |  |       |            |   |  |   | 74,501     |  
|Other treasury shares re-issued                     |  |                                                  |          |                                |   | 39,965     |                   |  |   |                |   |  |       | 34,935      |   |  |   | 74,900     |  
|Treasury shares acquired                            |  |                                                  |          |                                |   |           |                   |  |   |                |   |  |       | (30,491     | ) |  |   | (30,491    | )
|Employee stock purchase plan                        |  |                                                  |          |                                |   | (32,612    | )                 |  |   |                |   |  |       |            |   |  |   | (32,612    | )
|Cash dividends - $.33 per share                     |  |                                                  |          |                                |   |           |                   |  |   | (1,663,582      | ) |  |       |            |   |  |   | (1,663,582 | )
|                                                    |  |                                                  |           |                                |   |            |                   |  |   |                 |   |  |       |             |   |  |   |            |  
|Balance at March 6, 2005                            |  | $                                                | 7,505,176 |                                | $ | 62,259,877 |                   |  | $ | 53,042,396      |   |  | $     | (32,820,158 | ) |  | $ | 89,987,291 |  
|                                                    |  |                                                  |           |                                |   |            |                   |  |   |                 |   |  |       |             |   |  |   |            |  



The accompanying notes are an integral
part of these statements.



6



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Statement of Cash Flows

Forty weeks ended March 6, 2005 and March 7, 2004

(unaudited)



|                                                                             |  |      |             |   |      |   |             |  
|---------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                             |  | 2005 |             |   | 2004 |  
|Cash flows provided by (used in) operating activities:                       |  |      |             |   |      |   |             |  
|Net earnings                                                                 |  | $    | 11,785,735  |   |      | $ | 7,915,083   |  
|Adjustments to reconcile net earnings to net cash from operating activities: |  |      |             |   |      |   |             |  
|Adjustment for life insurance benefit                                        |  |      | (4,440,000  | ) |      |   |            |  
|Depreciation and amortization                                                |  |      | 9,071,842   |   |      |   | 8,332,901   |  
|(Gain) loss on disposition of assets, including abandonments                 |  |      | (55,426     | ) |      |   | 352,160     |  
|                                                                             |  |      |             |   |      |   |             |  
|                                                                             |  |      | 16,362,151  |   |      |   | 16,600,144  |  
|Changes in assets and liabilities:                                           |  |      |             |   |      |   |             |  
|Accounts receivable                                                          |  |      | (348,334    | ) |      |   | (356,055    | )
|Inventories                                                                  |  |      | (330,059    | ) |      |   | (289,772    | )
|Prepaid expenses and sundry deposits                                         |  |      | 177,494     |   |      |   | 763,170     |  
|Prepaid income taxes                                                         |  |      | (195,367    | ) |      |   |            |  
|Other assets                                                                 |  |      | (260,767    | ) |      |   | (855,350    | )
|Accounts payable                                                             |  |      | 940,795     |   |      |   | 3,604,267   |  
|Accrued expenses                                                             |  |      | 61,484      |   |      |   | 244,656     |  
|Accrued and deferred income taxes                                            |  |      | 586,735     |   |      |   | 1,212,307   |  
|Tax benefit from stock options exercised                                     |  |      | 74,501      |   |      |   | 366,464     |  
|Self insured obligations                                                     |  |      | (487,036    | ) |      |   | (399,559    | )
|Deferred compensation and other                                              |  |      | 693,684     |   |      |   | 143,719     |  
|                                                                             |  |      |             |   |      |   |             |  
|                                                                             |  |      | 913,130     |   |      |   | 4,433,847   |  
|                                                                             |  |      |             |   |      |   |             |  
|Net cash provided by operating activities                                    |  |      | 17,275,281  |   |      |   | 21,033,991  |  
|                                                                             |  |     
|Cash flows provided by (used in) investing activities:                       |  |      |             |   |      |   |             |  
|Additions to property and equipment                                          |  |      | (18,595,237 | ) |      |   | (22,287,192 | )
|Proceeds from disposition of property                                        |  |      | 242,360     |   |      |   | 24,529      |  
|Proceeds from disposition of franchise rights                                |  |      | 168,982     |   |      |   | 156,464     |  
|Proceeds from construction litigation                                        |  |      |            |   |      |   | 1,700,000   |  
|Change in other assets                                                       |  |      | (345,888    | ) |      |   | (697,408    | )
|                                                                             |  |      |             |   |      |   |             |  
|Net cash (used in) investing activities                                      |  |      | (18,529,783 | ) |      |   | (21,103,607 | )
|                                                                             |  |     
|Cash flows provided by (used in) financing activities:                       |  |      |             |   |      |   |             |  
|Proceeds from borrowings                                                     |  |      | 9,500,000   |   |      |   | 7,500,000   |  
|Payment of long-term debt and capital lease obligations                      |  |      | (5,960,237  | ) |      |   | (4,636,725  | )
|Cash dividends paid                                                          |  |      | (1,663,582  | ) |      |   | (1,545,928  | )
|Proceeds from stock options exercised - new shares issued                    |  |      | 219,436     |   |      |   | 824,466     |  
|Proceeds from stock options exercised - treasury shares re-issued            |  |      | 92,844      |   |      |   | 98,035      |  
|Other treasury shares re-issued                                              |  |      | 74,900      |   |      |   | 62,675      |  
|Treasury shares acquired                                                     |  |      | (30,491     | ) |      |   |            |  
|Employee stock purchase plan                                                 |  |      | (32,612     | ) |      |   | (41,884     | )
|                                                                             |  |      |             |   |      |   |             |  
|Net cash provided by financing activities                                    |  |      | 2,200,258   |   |      |   | 2,260,639   |  
|                                                                             |  |      |             |   |      |   |             |  
|Net increase in cash and equivalents                                         |  |      | 945,756     |   |      |   | 2,191,023   |  
|Cash and equivalents at beginning of year                                    |  |      | 294,410     |   |      |   | 1,133,443   |  
|                                                                             |  |      |             |   |      |   |             |  
|Cash and equivalents at end of quarter                                       |  | $    | 1,240,166   |   |      | $ | 3,324,466   |  
|                                                                             |  |      |             |   |      |   |             |  
|Supplemental disclosures:                                                    |  |      |             |   |      |   |             |  
|Interest paid                                                                |  | $    | 2,433,556   |   |      | $ | 2,065,167   |  
|Income taxes paid (net of refunds, if any)                                   |  |      | 3,489,131   |   |      |   | 2,777,232   |  
|Life insurance receivable, net of beneficiary liability                      |  |      | 9,150,000   |   |      |   |            |  
|Lease transactions capitalized                                               |  |      | 537,777     |   |      |   |            |  



The accompanying notes are an integral
part of these statements.



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Third Quarter Fiscal 2005, Ended March 6, 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
restaurants currently operated by the Company are located in various regions of Ohio, Kentucky and Indiana. Plans are in place to expand Golden Corral operations into certain parts of Michigan, Pennsylvania and West Virginia.



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.



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. In the opinion of management, these interim financial statements include all adjustments (all of which were normal and recurring) necessary for a fair presentation of all periods presented. In
addition, certain reclassifications have been made to prior year information to conform to the current year presentation.



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, an additional week is added to the fourth quarter, which results in a 53 week fiscal year.



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.



Cash and Cash Equivalents



Highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. Outstanding checks in the
amount of $704,000 were included in accounts payable as of May 30, 2004.



Receivables



The Company values its
trade notes and accounts receivable on the reserve method. The reserve balance was $30,000 as of March 6, 2005 and May 30, 2004. The reserve is monitored for adequacy based on historical collection patterns and write-offs, and current credit risks.



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE A - ACCOUNTING POLICIES (CONTINUED)



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 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 Standards No. 13 (SFAS 13), Accounting for Leases, as amended. Interest on borrowings is
capitalized during active construction periods of new restaurants. Capitalized interest was $89,000 and $175,000 respectively, for the 40 weeks ended March 6, 2005 and March 7, 2004, and was zero and $55,000 respectively, for the twelve weeks ended
March 6, 2005 and March 7, 2004. 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 March 6, 2005 totaled approximately $5,386,000, for three Golden Corral restaurants. No Big Boy restaurants were under construction at March 6, 2005.
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 the Companys judgment.



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. Included in the capitalization of the project were interest costs together with payroll and payroll related
costs for certain employees who worked on the implementation. Capitalized interest was $15,000 and $65,000 respectively, for the 40 weeks ended March 6, 2005 and March 7, 2004, and was zero and $26,000 respectively, for the twelve weeks ended March
6, 2005 and March 7, 2004. The capitalized payroll and payroll related costs were $96,000 and $423,000 respectively, for the 40 weeks ended March 6, 2005 and March 7, 2004, and were zero and $204,000 respectively, for the twelve weeks ended March 6,
2005 and March 7, 2004. Net of accumulated depreciation, the capitalized cost of the enterprise information system was $4,740,000 as of March 6, 2005.



9



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE A - ACCOUNTING POLICIES (CONTINUED)



Impairment of Assets



Under Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets, the Company 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 recorded during
any of the periods presented in the accompanying consolidated financial statements.



Leases



Scheduled 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. The term of the lease also includes the period of time when no rent is paid to the landlord, often referred to as a rent holiday, that
generally occurs while the restaurant is being constructed on leased land. Contingent rentals, typically based on a percentage of restaurant sales in excess of a fixed amount, are expensed as incurred. The Company does not receive leasehold
incentives from landlords.



Restaurant
Closing Costs



Any liabilities associated with exit or disposal activities
initiated after December 31, 2002 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. No significant disposal costs were incurred for the two restaurants that have been permanently closed since
December 31, 2002, as the leases for both locations expired upon closing or shortly thereafter.



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. The adoption of SFAS 143 on June 2, 2003 did not materially impact the Companys financial statements.



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 March 6, 2005 and March 7, 2004, 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
$77,000 per year in each of the next five years for the 29 Golden Corral restaurants in operation as of March 6, 2005. Amortization for the 40 weeks



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE A - ACCOUNTING POLICIES (CONTINUED)



ended March 6, 2005 and March 7, 2004 was $57,000 and $46,000 respectively, and was $18,000 and $15,000 respectively, for the twelve weeks ended March 6, 2005 and March
7, 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:



|                                                                                |  |                |       |   |              |   |       |  
|------------------------------------------------------------------------------- |  | -------------- | ----- | - | ------------ | - | ----- | -
|                                                                                |  | March 6, 2005  |       |   | May 30, 2004 |  
|                                                                                |  | (in thousands) |      
|Golden Corral initial franchise fees subject to amortization                    |  | $              | 1,160 |   |              | $ | 1,040 |  
|Less accumulated amortization                                                   |  |                | (230  | ) |              |   | (174  | )
|                                                                                |  |                |       |   |              |   |       |  
|Carrying amount of Golden Corral initial franchise fees subject to amortization |  |                | 930   |   |              |   | 866   |  
|Current portion of Golden Corral initial franchise fees subject to amortization |  |                | (77   | ) |              |   | (69   | )
|Golden Corral fees not yet subject to amortization                              |  |                | 375   |   |              |   | 180   |  
|Other                                                                           |  |                | 153   |   |              |   | 146   |  
|                                                                                |  |                |       |   |              |   |       |  
|Total other intangible assets                                                   |  | $              | 1,381 |   |              | $ | 1,123 |  
|                                                                                |  |                |       |   |              |   |       |  



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.



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 40 weeks ended March 6, 2005 and March 7, 2004 were
$1,146,000 ($881,000 for Golden Corral and $265,000 for Big Boy) and $1,433,000 ($1,134,000 for Golden Corral and $299,000 for Big Boy), respectively. For the twelve weeks ended March 6, 2005 and March 7, 2004, opening expenses were $96,000 ($95,000
for Golden Corral and $1,000 for Big Boy) and $486,000 ($247,000 for Golden Corral and $239,000 for Big Boy), respectively.



11



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE A - ACCOUNTING POLICIES (CONTINUED)



Benefit Plans



The Company has two qualified defined benefit pension plans covering all of its eligible employees. (Hourly restaurant employees hired after December 31, 1998 are ineligible to enter the qualified defined benefit
pension plans. Instead, these employees are offered participation in a 401(k) savings plan with a matching 40 percent employer cash contribution.) 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. In addition, the Company has an unfunded non-qualified Supplemental Executive Retirement Plan (SERP) that provides a supplemental retirement
benefit to the executive officers of the Company and certain other highly compensated employees whose benefits under the qualified plans are reduced when their compensation exceeds Internal Revenue Code imposed limitations or when
elective salary deferrals are made to the Companys non-qualified Executive Savings Plan. Prepaid pension benefit costs (see Note E  Pension Plans) and Executive Savings Plan assets are the principal components of Other long-term
assets in the balance sheet.



The executive officers of the Company and
certain other highly compensated employees began receiving comparable pension benefits commencing in the year 2000, through a non-qualified Non Deferred Cash Balance Plan instead of accruing additional benefits under the qualified
defined benefit pension plans and the SERP. (Also see Note E  Pension Plans.)



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. The Company has historically reviewed claims experience each quarter, with a more comprehensive review performed during the first quarter of each year that would typically
result in adjustments to the self insurance liabilities to more closely reflect annual claims experience. During the twelve weeks ended March 6, 2005, the Company undertook a comprehensive review of claims experience and determined that adjustments
to the self insurance liabilities were warranted during the third quarter. The Company will continue this procedure each quarter and adjust these insurance reserves as needed based on claims experience.



Favorable claims experience allowed insurance reserves to be lowered by $614,000 and $710,000
respectively, during the first quarters of fiscal years 2005 and 2004. The recently completed third quarter review allowed insurance reserves to be lowered by an additional $349,000, bringing the total adjustment for fiscal year 2005 to $963,000.



Fair Value of Financial Instruments



With the exception of long-term debt (see Note B - 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, taking into account the unusual nature of the non-taxable life insurance benefit described in Note H  Officers Life Insurance Benefit.



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE A - ACCOUNTING POLICIES (CONTINUED)



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 during the periods presented herein 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:



|                                                                                                                                        |  |                                       |        |                |   |              |  |              |       |  |   |      
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- | ------ | -------------- | - | ------------ |  | ------------ | ----- |  | - | -----
|                                                                                                                                        |  | 40 weeks ended                        |        | 12 weeks ended
|                                                                                                                                        |  | Mar. 6, 2005                          |        | Mar. 7, 2004   |   | Mar. 6, 2005 |  | Mar. 7, 2004
|                                                                                                                                        |  | (in thousands, except per share data)
|Net Income, as reported                                                                                                                 |  | $                                     | 11,786 |                | $ | 7,915        |  | $            | 6,143 |  | $ | 2,216
|Deduct: total stock-based employee compensation expense determined under fair value based method for all grants (a), net of tax
effects |  |                                       | 308    |                |   | 216          |  |              | 50    |  |   | 36   
|                                                                                                                                        |  |                                       |        |                |   |              |  |              |       |  |   |      
|Pro forma net income                                                                                                                    |  | $                                     | 11,478 |                | $ | 7,699        |  | $            | 6,093 |  | $ | 2,180
|                                                                                                                                        |  |                                       |        |                |   |              |  |              |       |  |   |      
|Earnings per share                                                                                                                      |  |                                       |        |                |   |              |  |              |       |  |   |      
|                                                                                                                                        |  |                                       |        |               
|Basic  as reported                                                                                                                     |  | $                                     | 2.34   |                | $ | 1.59         |  | $            | 1.22  |  | $ | .44  
|Basic  pro forma                                                                                                                       |  | $                                     | 2.28   |                | $ | 1.54         |  | $            | 1.21  |  | $ | .43  
|                                                                                                                                        |  |                                       |        |               
|Diluted  as reported                                                                                                                   |  | $                                     | 2.29   |                | $ | 1.54         |  | $            | 1.19  |  | $ | .43  
|Diluted  pro forma                                                                                                                     |  | $                                     | 2.23   |                | $ | 1.50         |  | $            | 1.18  |  | $ | .42  

---

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



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



|                                               |  |                |         |   |                |   |         |              |  |   |              |   |  |   |         |  
|---------------------------------------------- |  | -------------- | ------- | - | -------------- | - | ------- | ------------ |  | - | ------------ | - |  | - | ------- | -
|                                               |  | 40 weeks ended |         |   | 12 weeks ended |  
|                                               |  | Mar. 6, 2005   |         |   | Mar. 7, 2004   |   |         | Mar. 6, 2005 |  |   | Mar. 7, 2004 |  
|Dividend yield                                 |  |                | 1.61    | % |                |   | 1.87    | %            |  |   | 1.61         | % |  |   | 1.87    | %
|Expected volatility                            |  |                | 29      | % |                |   | 27      | %            |  |   | 29           | % |  |   | 27      | %
|Risk free interest rate                        |  |                | 3.82    | % |                |   | 2.57    | %            |  |   | 3.82         | % |  |   | 2.57    | %
|Expected lives                                 |  |                | 5 years |   |                |   | 5 years |              |  |   | 5 years      |   |  |   | 5 years |  
|Weighted average fair value of options granted |  | $              | 8.13    |   |                | $ | 4.32    |              |  | $ | 8.13         |   |  | $ | 4.32    |  



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE A - ACCOUNTING POLICIES (CONTINUED)



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
interim or annual reporting period that begins after June 15, 2005, which will be the Companys second quarter of fiscal year 2006. The impact upon adoption should 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 Company reviewed all 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.



NOTE B - TERM DEBT



|                             |  |                         |       |                        |   |                         |  |                        |       |  |   |       
|---------------------------- |  | ----------------------- | ----- | ---------------------- | - | ----------------------- |  | ---------------------- | ----- |  | - | ------
|                             |  | March 6, 2005           |       | May 30, 2004          
|                             |  | Payable within one year |       | Payable after one year |   | Payable within one year |  | Payable after one year
|                             |  | (in thousands)         
|Construction Draw Facility - |  |                         |       |                        |   |                         |  |                        |       |  |   |       
|Construction Phase Loans     |  | $                       |      |                        | $ |                        |  | $                      |      |  | $ |      
|Term Loans                   |  |                         | 7,517 |                        |   | 25,869                  |  |                        | 6,231 |  |   | 25,227
|Bullet Loan                  |  |                         |      |                        |   | 10,000                  |  |                        |      |  |   | 10,000
|Revolving Credit Loan        |  |                         | 2,000 |                        |   |                        |  |                        |      |  |   |      
|                             |  |                         |       |                        |   |                         |  |                        |       |  |   |       
|                             |  | $                       | 9,517 |                        | $ | 35,869                  |  | $                      | 6,231 |  | $ | 35,227
|                             |  |                         |       |                        |   |                         |  |                        |       |  |   |       



The portion payable after one year
matures as follows:



|                      |  |                |        |              |   |       
|--------------------- |  | -------------- | ------ | ------------ | - | ------
|                      |  | March 6, 2005  |        | May 30, 2004
|                      |  | (in thousands)
|Period ending in 2006 |  | $              |       |              | $ | 6,664 
|2007                  |  |                | 7,528  |              |   | 6,376 
|2008                  |  |                | 6,855  |              |   | 15,684
|2009                  |  |                | 15,453 |              |   | 4,059 
|2010                  |  |                | 3,092  |              |   | 1,616 
|2011                  |  |                | 2,222  |              |   | 828   
|Subsequent to 2011    |  |                | 719    |              |   |      
|                      |  |                |        |              |   |       
|                      |  | $              | 35,869 |              | $ | 35,227
|                      |  |                |        |              |   |       



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE B  TERM DEBT (CONTINUED)



The
Construction Draw Facility is an unsecured draw credit line that provides for borrowing of up to $61,500,000 to construct and open Golden Corral restaurants. As of March 6, 2005, $9,000,000 remained available to be borrowed before the Facility
expires September 1, 2006, unless extended. It is subject to a 1/4percent 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. All funds borrowed under the Facility as of March 6, 2005 have been converted to Term Loans. Fixed interest rates have been chosen for all of the Term Loans, the weighted average of which is
6.13 percent. All of the Term Loans are being repaid in 84 equal monthly installments of principal and interest aggregating $780,000, expiring in various periods ranging from May 2006 through January 2012. Prepayments of the Term Loans are
permissible upon payment of sizeable prepayment fees and other amounts. Any outstanding Construction Phase Loan that has not been converted into a Term Loan shall mature and be payable in full on September 1, 2006, unless extended.



The $10,000,000 Bullet Loan is secured by mortgages on the real
property of six Golden Corral restaurants. It matures and is payable in one installment on December 31, 2007. In December 2004, the Company exercised its option to convert the loan from variable rated interest to a fixed rate of 5.57 percent for the
remainder of the term. Interest is payable monthly in arrears. Following the end of the quarter ended March 6, 2005, the Company elected to prepay $7,000,000, reducing the balance outstanding to $3,000,000.



A $5,000,000 unsecured Revolving Credit Loan is in place that is intended to fund temporary
working capital needs. The loan, $2,000,000 of which was outstanding as of March 6, 2005, is subject to a 30 consecutive day out-of-debt period each year. It matures on September 1, 2006, unless extended. 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 rate in effect at March 6, 2005 was 4.06 percent. The loan
is subject to a 1⁄4 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. Following the end of the quarter ended March 6, 2005, the
Company retired the $2,000,000 balance.



These loan agreements contain
covenants relating to tangible net worth, interest expense, 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 March 6, 2005. Compensating balances are not required by these loan agreements.



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 March 6, 2005 and May 30, 2004, as the current
provisions of the loans call for variable rated interest. 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 March
6, 2005 and May 30, 2004:



|                             |  |                |        |              |   |                |  |            |        |  |   |       
|---------------------------- |  | -------------- | ------ | ------------ | - | -------------- |  | ---------- | ------ |  | - | ------
|                             |  | March 6, 2005  |        | May 30, 2004
|                             |  | Carrying Value |        | Fair value   |   | Carrying value |  | Fair value
|                             |  | (in thousands)
|Construction Draw Facility - |  |                |        |              |   |                |  |            |        |  |   |       
|Term Loans                   |  | $              | 33,386 |              | $ | 33,214         |  | $          | 31,458 |  | $ | 31,822



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE C - LEASED PROPERTY



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 March 6, 2005, eleven of the
Companys 28 leased restaurant locations have been capitalized. 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 (in thousands):



|                              |  |                   |        |   |              |   |        |  
|----------------------------- |  | ----------------- | ------ | - | ------------ | - | ------ | -
|                              |  | Asset balances at |       
|                              |  | March 6, 2005     |        |   | May 30, 2004 |  
|Restaurant facilities         |  | $                 | 6,306  |   |              | $ | 6,306  |  
|Equipment                     |  |                   | 1,213  |   |              |   | 1,083  |  
|                              |  |                   |        |   |              |   |        |  
|                              |  |                   | 7,519  |   |              |   | 7,389  |  
|Less accumulated amortization |  |                   | (6,052 | ) |              |   | (6,116 | )
|                              |  |                   |        |   |              |   |        |  
|                              |  | $                 | 1,467  |   |              | $ | 1,273  |  
|                              |  |                   |        |   |              |   |        |  



As of March 6, 2005, seventeen of the
Companys restaurant properties are occupied pursuant to operating leases, four of which are ground leases for Golden Corral restaurants. Two more Golden Corral ground leases have been entered into for restaurants to open respectively in April
and June 2005 (currently under construction). The operating lease table below includes scheduled payments for these leases. 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 property in 2023. Total rental expense of operating leases was $1,225,000 (exclusive of a $615,000 charge discussed in detail below) and $1,117,000 respectively, for the 40 weeks ended March
6, 2005 and March 7, 2004, and was $356,000 (also exclusive of a $615,000 charge discussed in detail below) and $343,000 respectively, during the twelve weeks ended March 6, 2005 and March 7, 2004.



During the quarter ended March 6, 2005, the Company undertook a review of its accounting for
leases. The review determined that the Company had erred by not accounting for escalating rental payments on a straight-line basis over the terms of the applicable leases, including option periods considered to be part of the lease term under SFAS
13, as amended. In addition, rent had not been recorded for rent holiday periods that often occur during construction of buildings on leased land, when no rent is payable. As a result, the Company determined that its balance sheet had a
$615,000 understatement for accrued rent. The impact of this issue on the Companys financial statements was evaluated and it was determined that the errors were not material to any of the applicable prior periods. Thus, the cumulative $615,000
adjustment was charged against earnings during the twelve weeks ended March 6, 2005 ($400,000 after tax).



Future minimum lease payments under capitalized leases and operating leases having an initial or remaining term of one year or more follow. Certain of the capitalized leases include residual value guarantees.
Operating leases have been adjusted to include option periods considered to be part of the lease term under SFAS 13, as amended.



|                             |  |                    |       |   |                  |   |       
|---------------------------- |  | ------------------ | ----- | - | ---------------- | - | ------
|Period ending March 6,       |  | Capitalized leases |       |   | Operating leases
|                             |  | (in thousands)    
|2006                         |  | $                  | 926   |   |                  | $ | 1,697 
|2007                         |  |                    | 703   |   |                  |   | 1,578 
|2008                         |  |                    | 2,693 |   |                  |   | 1,552 
|2009                         |  |                    | 157   |   |                  |   | 1,508 
|2010                         |  |                    | 110   |   |                  |   | 1,453 
|2011 to 2025                 |  |                    | 252   |   |                  |   | 14,570
|                             |  |                    |       |   |                  |   |       
|Total                        |  |                    | 4,841 |   |                  | $ | 22,358
|                             |  |                    |       |   |                  |   |       
|Amount representing interest |  |                    | (963  | ) |                  |   |       
|                             |  |                    |       |   |                  |   |       
|Present value of obligations |  |                    | 3,878 |   |                  |   |       
|Portion due within one-year  |  |                    | (563  | ) |                  |   |       
|                             |  |                    |       |   |                  |   |       
|Long-term obligations        |  | $                  | 3,315 |   |                  |   |       
|                             |  |                    |       |   |                  |   |       



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE D - 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 (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 ten 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 ten 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.



Options to purchase 7,000 shares were granted in October 2004. As of March 6, 2005, no other awards (meaning any form of stock option, stock
appreciation right, 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 is 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 stock dividends paid 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 March 6, 2005, 6,204 shares remained available to be optioned. Of the 556,228 cumulative shares optioned to date, 369,577 remain
outstanding as of March 6, 2005.



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE D - CAPITAL STOCK (CONTINUED)



Shares may be optioned to employees at not less than 75 percent 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 ten 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.



The 1984 Stock Option Plan expired May 8, 1994. The final 14,090 outstanding options expired in June 2003, ten years from the date originally granted.



The changes in outstanding and exercisable options involving all Plans are summarized below:



|                                 |  |                |   |               |                               |       |               |         |   |                               |   |      
|-------------------------------- |  | -------------- | - | ------------- | ----------------------------- | ----- | ------------- | ------- | - | ----------------------------- | - | -----
|                                 |  | 40 weeks ended
|                                 |  | March 6, 2005  |   | March 7, 2004
|                                 |  | No. of shares  |   |               | Weighted avg. price per share |       | No. of shares |         |   | Weighted avg. price per share
|Outstanding at beginning of year |  | 319,993        |   |               | $                             | 15.97 |               | 321,665 |   |                               | $ | 13.96
|Granted during the 40 weeks      |  | 81,000         |   |               | $                             | 29.37 |               | 91,000  |   |                               | $ | 19.28
|Exercised during the 40 weeks    |  | (21,497        | ) |               | $                             | 14.53 |               | (78,082 | ) |                               | $ | 11.73
|Expired during the 40 weeks      |  |               |   |               | $                             |      |               | (14,090 | ) |                               | $ | 14.38
|Forfeited during the 40 weeks    |  | (2,919         | ) |               | $                             | 20.83 |               | (500    | ) |                               | $ | 17.17
|                                 |  |                |   |               |                               |       |               |         |   |                               |   |      
|Outstanding at end of quarter    |  | 376,577        |   |               | $                             | 18.90 |               | 319,993 |   |                               | $ | 15.97
|                                 |  |                |   |               |                               |       |               |         |   |                               |   |      
|Exercisable at beginning of year |  | 227,314        |   |               | $                             | 14.94 |               | 233,156 |   |                               | $ | 13.21
|                                 |  |                |   |               |                               |       |               |         |   |                               |   |      
|Exercisable at end of quarter    |  | 283,903        |   |               | $                             | 17.04 |               | 227,314 |   |                               | $ | 14.94
|                                 |  |                |   |               |                               |       |               |         |   |                               |   |      



Stock options outstanding and
exercisable as of March 6, 2005 for all Plans:



|                                   |  |  |  |               |  |                                  |       |                                          |           
|---------------------------------- |  |  |  | ------------- |  | -------------------------------- | ----- | ---------------------------------------- | ----------
|Range of Exercise Prices per
Share |  |  |  | No. of shares |  | Weighted average price per share |       | Weighted average remaining life in years
|Outstanding:                       |  |  |  |               |  |                                  |       |                                          |           
|$  8.31 to $13.00                  |  |  |  | 72,647        |  | $                                | 10.62 |                                          | 5.11 years
|$13.01 to $18.00                   |  |  |  | 59,920        |  | $                                | 13.73 |                                          | 6.30 years
|$18.01 to $24.20                   |  |  |  | 164,010       |  | $                                | 19.36 |                                          | 7.80 years
|$24.21 to $30.13                   |  |  |  | 80,000        |  | $                                | 29.36 |                                          | 9.29 years
|                                   |  |  |  |               |  |                                  |       |                                          |           
|$ 8.31 to  $30.13                  |  |  |  | 376,577       |  | $                                | 18.90 |                                          | 7.36 years
|                                   |  |  |  |              
|Exercisable:                       |  |  |  |               |  |                                  |       |                                          |           
|$  8.31 to $13.00                  |  |  |  | 72,647        |  | $                                | 10.62 |                                          |          
|$13.01 to $18.00                   |  |  |  | 59,920        |  | $                                | 13.73 |                                          |          
|$18.01 to $24.20                   |  |  |  | 121,336       |  | $                                | 19.53 |                                          |          
|$24.21 to $30.13                   |  |  |  | 30,000        |  | $                                | 29.18 |                                          |          
|                                   |  |  |  |               |  |                                  |       |                                          |           
|$ 8.31 to  $30.13                  |  |  |  | 283,903       |  | $                                | 17.04 |                                          |          



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE D - CAPITAL STOCK (CONTINUED)



Shareholders approved the Employee Stock Option Plan (elsewhere referred to as Employee Stock Purchase Plan) in October 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 percent 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 October 31, 2004 (latest available data), 99,011 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 October 31, 2004, the custodian held 39,769 shares on behalf of employees.



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 March 6, 2005, 49,374 shares remained in the reserve, including 8,260 shares allocated but not issued to participants.



There are no other outstanding options, warrants or rights.



Treasury Stock



As of March 6, 2005, the Companys treasury held 2,449,394 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 two-year authorization that expired October 7, 2004.



Most of the remaining shares held in the treasury were acquired in August 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            |  | Stock equivalents |      | Diluted earnings per share
|                |  | Weighted average shares outstanding |  | EPS               |      |                            | Weighted average shares outstanding |  | EPS      
|40 weeks ended: |  |                                     |  |                   |      |                            |                                     |  |           |  |   |     
|March 6, 2005   |  | 5,041,246                           |  | $                 | 2.34 |                            | 114,833                             |  | 5,156,079 |  | $ | 2.29
|March 7, 2004   |  | 4,988,618                           |  | $                 | 1.59 |                            | 135,358                             |  | 5,123,976 |  | $ | 1.54
|                |  |                                     |  |                   |     
|12 weeks ended: |  |                                     |  |                   |      |                            |                                     |  |           |  |   |     
|                |  |                                     |  |                   |     
|March 6, 2005   |  | 5,051,894                           |  | $                 | 1.22 |                            | 111,263                             |  | 5,163,157 |  | $ | 1.19
|March 7, 2004   |  | 5,020,434                           |  | $                 | .44  |                            | 154,751                             |  | 5,175,185 |  | $ | .43 



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE E - PENSION PLANS



As discussed more fully in Note A  Accounting Policies, the Company sponsors two qualified defined benefit pension plans plus an unfunded non qualified Supplemental
Executive Retirement Plan (SERP) for highly compensated employees (HCEs). The following table shows the components of net periodic pension cost for all periods presented in these consolidated financial statements:



|                                                                  |  |                |        |   |                |   |        |              |  |   |              |   |  |   |      |  
|----------------------------------------------------------------- |  | -------------- | ------ | - | -------------- | - | ------ | ------------ |  | - | ------------ | - |  | - | ---- | -
|                                                                  |  | 40 weeks ended |        |   | 12 weeks ended |  
|                                                                  |  | Mar. 6, 2005   |        |   | Mar. 7, 2004   |   |        | Mar. 6, 2005 |  |   | Mar. 7, 2004 |  
|                                                                  |  | (in thousands) |       
|Net periodic pension cost components                              |  |                |        |   |                |   |        |              |  |   |              |   |  |   |      |  
|Service cost                                                      |  | $              | 1,495  |   |                | $ | 1,352  |              |  | $ | 450          |   |  | $ | 426  |  
|Interest cost                                                     |  |                | 1,164  |   |                |   | 1,016  |              |  |   | 349          |   |  |   | 322  |  
|Expected return on plan assets                                    |  |                | (1,511 | ) |                |   | (1,209 | )            |  |   | (454         | ) |  |   | (378 | )
|Amortization of prior service cost                                |  |                | 54     |   |                |   | 53     |              |  |   | 16           |   |  |   | 16   |  
|Amortization of loss                                              |  |                | 297    |   |                |   | 342    |              |  |   | 93           |   |  |   | 93   |  
|                                                                  |  |                |        |   |                |   |        |              |  |   |              |   |  |   |      |  
|Net periodic pension cost                                         |  | $              | 1,499  |   |                | $ | 1,554  |              |  | $ | 454          |   |  | $ | 479  |  
|                                                                  |  |                |        |   |                |   |        |              |  |   |              |   |  |   |      |  
|Weighted average discount rate                                    |  |                | 6.5    | % |                |   | 6.5    | %            |  |   | 6.5          | % |  |   | 6.5  | %
|Weighted average rate of compensation increase                    |  |                | 5.0    | % |                |   | 5.0    | %            |  |   | 5.0          | % |  |   | 5.0  | %
|Weighted average expected long-term rate of return on plan assets |  |                | 8.5    | % |                |   | 8.5    | %            |  |   | 8.5          | % |  |   | 8.5  | %



Contributions to the Plans are
expected to exceed $2,125,000 for fiscal 2005, $300,000 of which had been paid as of March 6, 2005. Contributions for fiscal 2004 were $2,304,000, of which $304,000 was paid in fiscal 2005.



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 $398,000 and $382,000 respectively, during the 40 weeks ended March 6, 2005 and March 7, 2004, and was $123,000 and $112,000 respectively, for the twelve weeks ended
March 6, 2005 and March 7, 2004. Contributions of $521,000 and $489,000 respectively, were made to the Plan in December 2004 and December 2003.



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 40 weeks ended March 6, 2005 and March 7, 2004, matching contributions to the 401(k) plans amounted to $127,000 and $120,000 respectively, and were $36,000 and $35,000 respectively, during the
twelve weeks ended March 6, 2005 and March 7, 2004. Matching contributions to the Executive Savings Plan were $16,000 and $12,000 respectively, during the 40 weeks ended March 6, 2005 and March 7, 2004, and were $4,000 and $3,000 respectively,
during the twelve weeks ended March 6, 2005 and March 7, 2004.



The Company
does not sponsor post retirement health care benefits.



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE F  SEGMENT INFORMATION



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



|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|--------------------------------- |  | -------------- | ------- | - | -------------- | - | ------- | ------------ |  | - | ------------ | - |  | - | ------ | -
|                                  |  | 40 weeks ended |         |   | 12 weeks ended |  
|                                  |  | Mar. 6, 2005   |         |   | Mar. 7, 2004   |   |         | Mar. 6, 2005 |  |   | Mar. 7, 2004 |  
|                                  |  | (in thousands) |        
|Sales                             |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Big Boy                           |  | $              | 142,427 |   |                | $ | 135,905 |              |  | $ | 41,834       |   |  | $ | 40,476 |  
|Golden Corral                     |  |                | 71,181  |   |                |   | 60,586  |              |  |   | 20,965       |   |  |   | 18,886 |  
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|                                  |  | $              | 213,608 |   |                | $ | 196,491 |              |  | $ | 62,799       |   |  | $ | 59,362 |  
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Earnings before income taxes      |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Big Boy                           |  | $              | 16,266  |   |                | $ | 16,618  |              |  | $ | 4,085        |   |  | $ | 4,697  |  
|Opening expense                   |  |                | (265    | ) |                |   | (299    | )            |  |   | (01          | ) |  |   | (239   | )
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Total Big Boy                     |  |                | 16,001  |   |                |   | 16,319  |              |  |   | 4,084        |   |  |   | 4,458  |  
|                                  |  |                |         |  
|Golden Corral                     |  |                | 3,141   |   |                |   | 3,190   |              |  |   | 672          |   |  |   | 976    |  
|Opening expense                   |  |                | (881    | ) |                |   | (1,134  | )            |  |   | (95          | ) |  |   | (247   | )
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Total Golden Corral               |  |                | 2,260   |   |                |   | 2,056   |              |  |   | 577          |   |  |   | 729    |  
|                                  |  |                |         |  
|Total restaurant level profit     |  |                | 18,261  |   |                |   | 18,375  |              |  |   | 4,661        |   |  |   | 5,187  |  
|                                  |  |                |         |  
|Administrative expense            |  |                | (5,902  | ) |                |   | (5,200  | )            |  |   | (1,743       | ) |  |   | (1,465 | )
|Franchise fees and other revenue  |  |                | 1,026   |   |                |   | 930     |              |  |   | 292          |   |  |   | 271    |  
|Gains and (losses) on asset sales |  |                | 89      |   |                |   | 41      |              |  |   |             |   |  |   |       |  
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Operating profit                  |  |                | 13,474  |   |                |   | 14,146  |              |  |   | 3,210        |   |  |   | 3,993  |  
|                                  |  |                |         |  
|Interest expense                  |  |                | (2,173  | ) |                |   | (1,875  | )            |  |   | (726         | ) |  |   | (558   | )
|Life insurance benefit            |  |                | 4,440   |   |                |   |        |              |  |   | 4,440        |   |  |   |       |  
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Total other (expense) income      |  |                | 2,267   |   |                |   | (1,875  | )            |  |   | 3,714        |   |  |   | (558   | )
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|                                  |  | $              | 15,741  |   |                | $ | 12,271  |              |  | $ | 6,924        |   |  | $ | 3,435  |  
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Depreciation and amortization     |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Big Boy                           |  | $              | 5,679   |   |                | $ | 5,525   |              |  | $ | 1,795        |   |  | $ | 1,662  |  
|Golden Corral                     |  |                | 3,393   |   |                |   | 2,808   |              |  |   | 1,047        |   |  |   | 935    |  
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|                                  |  | $              | 9,072   |   |                | $ | 8,333   |              |  | $ | 2,842        |   |  | $ | 2,597  |  
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Capital expenditures              |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|Big Boy                           |  | $              | 6,023   |   |                | $ | 8,706   |              |  | $ | 50           |   |  | $ | 3,369  |  
|Golden Corral                     |  |                | 12,572  |   |                |   | 13,581  |              |  |   | 5,406        |   |  |   | 3,773  |  
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  
|                                  |  | $              | 18,595  |   |                | $ | 22,287  |              |  | $ | 5,456        |   |  | $ | 7,142  |  
|                                  |  |                |         |   |                |   |         |              |  |   |              |   |  |   |        |  



|                    |  |              |         |              |   |        
|------------------- |  | ------------ | ------- | ------------ | - | -------
|                    |  | As of       
|                    |  | Mar. 6, 2005 |         | May 30, 2004
|Identifiable assets |  |              |         |              |   |        
|Big Boy             |  | $            | 94,673  |              | $ | 84,680 
|Golden Corral       |  |              | 79,027  |              |   | 72,168 
|                    |  |              |         |              |   |        
|                    |  | $            | 173,700 |              | $ | 156,848
|                    |  |              |         |              |   |        



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE G  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 excess of $1,000,000. The Company is vigorously prosecuting this claim and believes that it will ultimately prevail.



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 in excess of $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 during
the first quarter of fiscal year 2004 and the case was dismissed.



The Company
is also subject to various claims and suits 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



The Company is contingently liable for the performance of certain leases that have been
assigned or sub-let to third parties. The average annual obligations of these leases approximate $49,000 over the next five years. In the event of default by the assignees or sub-lessees, the Company generally has the right to re-assign or sub-let
the properties.



As of March 6, 2005, the Company had 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 in support of an environmental remediation plan on land the Company no longer
owns. There are no other outstanding letters of credit issued by the Company.



NOTE H  OFFICERS LIFE INSURANCE BENEFIT



The Company held
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 the policies, the Company has filed claims for death
benefits expected to total $9,650,000, which is recorded in accounts receivable as of March 6, 2005. Estimates of the cash surrender value of these polices totaling $4,710,000 were previously recorded in the balance sheet as Net cash surrender
value-life insurance policies. The excess of the expected proceeds over the cash surrender value amounting to $4,440,000, which is net of a liability to another beneficiary (see Note I  Related Party Transactions), has been recorded in
earnings as a non-taxable benefit during the quarter ended March 6, 2005. All of the expected proceeds had been received in full by April 6, 2005.



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



NOTE I - 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 $3,802,000 and $3,395,000 respectively, during the 40 weeks ended March
6, 2005 and March 7, 2004, and was $1,097,000 and $980,000 respectively, during the twelve weeks ended March 6, 2005 and March 7, 2004. The amount owed to the Company from these restaurants was $233,000 and $116,000 respectively, as of March 7, 2005
and May 30, 2004. Amounts due are always 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 held on the Chairman of the Board (see Note H  Officers Life Insurance
Benefit) was a split dollar policy providing for the sum of $500,000 to be paid to the Chairmans widow, who is also 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 becomes 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.
As of March 6, 2005, the current portion of the obligation was included in current liabilities, as the first of 120 monthly payments amounting to $17,838 was made to the Chairmans widow on March 1, 2005.



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##### Table of Contents

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



CORPORATE OVERVIEW



The Companys Third Quarter of Fiscal 2005 consists of the twelve weeks ended March 6, 2005, and compares with the twelve weeks ended March 7, 2004, which
constituted the Third Quarter of Fiscal 2004. The First Three Quarters of Fiscal 2005 consist of the 40 weeks ended March 6, 2005, and compare with the 40 weeks ended March 7, 2004, which constituted the First Three Quarters of Fiscal 2004.



As Managements Discussion and Analysis of Financial Condition and
Results of Operations (MD & A) should be read in conjunction with the consolidated financial statements, it should be noted that the presentation of the consolidated statement of earnings has been substantially revised beginning with the filing
of this Form 10-Q for the Third Quarter of Fiscal 2005. The corresponding reclassifications to last years results have been made to conform to the current year presentation. The Company believes the revisions enhance the presentation by adding
the measures of gross profit and operating profit.



Record sales were achieved during the Third Quarter of Fiscal 2005, rising 5.8 percent to $62,799,000 from $59,362,000 in the Third Quarter of Fiscal 2004. Net earnings for the Third Quarter of Fiscal 2005 were a record $6,143,000, or
diluted earnings per share (EPS) of $1.19. Net earnings for the Third Quarter of Fiscal 2004 were $2,216,000, or $.43 diluted EPS.



The results for the Third Quarter of Fiscal 2005 profited significantly from a $4,440,000 non-taxable life insurance benefit amounting to $.86 diluted EPS. The benefit
resulted from filing death claims on several life insurance policies owned by the Company that insured the life of Jack C. Maier, Chairman of the Board and formerly President and Chief Executive Officer, who died in February 2005. The total of the
claims approximating $9,650,000 is carried in accounts receivable as of March 6, 2005. The non-taxable $4,440,000 benefit was derived from subtracting the estimated cash surrender value of the policies that was previously recorded in the balance
sheet as Net cash surrender value  life insurance policies, and a liability to another beneficiary.



All of the life insurance claims had been received in full before the filing of this Form 10-Q. The proceeds were used to reduce outstanding debt by $9,000,000.



Without the effect of the life insurance benefit, diluted EPS for the Third
Quarter of Fiscal 2005 was $.10 lower than the Third Quarter of Fiscal 2004. Having a noteworthy effect on the results for the Third Quarter of Fiscal 2005:



| |  | Big Boy same store sales increased 1.4 percent. Big Boy same store sales increases have been achieved in 29 of the last 30 quarters.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  | Golden Corral same store sales decreased 7.3 percent. Golden Corral restaurant level profit was $152,000 lower than last years third quarter, reducing diluted EPS by $.02.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | An additional favorable self insurance reserve adjustment of $349,000 was credited to operating profit, adding $.05 to diluted EPS.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  | $615,000 was charged against operating profit to correct the Companys accounting for leases to conform the recognition of rent expense to a straight-line basis over the term
of lease, including applicable option periods and any rent holidays. The charge reduced diluted EPS by $.08.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $316,000 was charged against operating profit reflecting a change in timing for the recognition of payroll taxes and employee benefits. The charge reduced diluted EPS by $.04.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Interest expense was $168,000 higher than last years third quarter, reducing diluted EPS by $.02.
|- |  | --------------------------------------------------------------------------------------------------



Record sales were also achieved for the First Three Quarters of Fiscal 2005, rising 8.7 percent to $213,608,000 from $196,491,000 in the
First Three Quarters of Fiscal 2004. Net earnings for the First Three Quarters of Fiscal 2005 were a record $11,786,000, or $2.29 diluted EPS. Excluding the life insurance benefit, net earnings for the First Three Quarters of Fiscal 2005 were
$7,346,000, or $1.42 diluted EPS. Comparable net earnings from the First Three Quarters of Fiscal 2004 were $7,915,000, or $1.54 diluted EPS.



Significant items affecting the results for the First Three Quarters:



| |  | Big Boy same store sales increased 1.7 percent higher than last year.
|- |  | ---------------------------------------------------------------------



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##### Table of Contents

| |  | Golden Corral same store sales decreased 5 percent below last year. Golden Corral restaurant level profit was $204,000 higher than last year, adding $.03 to diluted EPS.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Interest expense was $299,000 higher than last year, reducing diluted EPS by $.04.
|- |  | ----------------------------------------------------------------------------------



| |  | The $615,000 that was charged against operating profit to correct lease accounting reduced diluted EPS by $.08.
|- |  | ---------------------------------------------------------------------------------------------------------------



| |  | The $316,000 that was charged against operating profit for payroll taxes and employee benefits reduced diluted EPS by $.04.
|- |  | ---------------------------------------------------------------------------------------------------------------------------



| |  | Incremental costs to comply with the Sarbanes Oxley Act of 2002 have reduced diluted EPS by $.02.
|- |  | -------------------------------------------------------------------------------------------------



| |  | $253,000 in higher favorable self insurance reserve adjustments added $.03 to diluted EPS.
|- |  | ------------------------------------------------------------------------------------------



The Company does not have any off-balance sheet arrangements or special purpose
entities.



RESULTS OF OPERATIONS



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 Big Boy operators and the sale of certain product to grocery stores. Changes in sales occur when new restaurants are opened and older restaurants are
closed. Same store sales are affected by changes in customer counts and menu price increases. Sales reached record heights during the Third Quarter of Fiscal 2005 and the First Three Quarters of Fiscal 2005:



|                             |  |                |        |                      |   |               |  |               |         |  |   |        
|---------------------------- |  | -------------- | ------ | -------------------- | - | ------------- |  | ------------- | ------- |  | - | -------
|                             |  | 3rd Quarter    |        | First Three Quarters
|                             |  | March 6, 2005  |        | March 7, 2004        |   | March 6, 2005 |  | March 7, 2004
|                             |  | (in thousands)
|Big Boy restaurants          |  | $              | 39,484 |                      | $ | 38,654        |  | $             | 135,478 |  | $ | 130,484
|Wholesale sales to licensees |  |                | 1,934  |                      |   | 1,484         |  |               | 6,211   |  |   | 4,738  
|Other wholesale sales        |  |                | 416    |                      |   | 338           |  |               | 738     |  |   | 683    
|                             |  |                |        |                      |   |               |  |               |         |  |   |        
|Total Big Boy Sales          |  |                | 41,834 |                      |   | 40,476        |  |               | 142,427 |  |   | 135,905
|                             |  |                |        |                     
|Golden Corral sales          |  |                | 20,965 |                      |   | 18,886        |  |               | 71,181  |  |   | 60,586 
|                             |  |                |        |                      |   |               |  |               |         |  |   |        
|Total sales                  |  | $              | 62,799 |                      | $ | 59,362        |  | $             | 213,608 |  | $ | 196,491
|                             |  |                |        |                      |   |               |  |               |         |  |   |        



Big Boy same store sales were 1.4
percent higher than the Third Quarter of Fiscal 2004. The Big Boy same store sales increase was 1.7 percent during the First Three Quarters of Fiscal 2005. Customer counts were off 1.6 percent and 1.2 percent respectively during the Third Quarter of
Fiscal 2005 and the First Three Quarters of Fiscal 2005 when compared with comparable periods last year. Higher average guest checks driven by menu price increases were enough to offset the effects of fewer customers. Menu prices were increased 1.5
percent in September 2004 and 1 percent in February 2005.



The rest of the Big
Boy sales increases were achieved on the combination of more restaurants in operation and higher wholesale sales. Wholesale sales increased significantly in both the Third Quarter of Fiscal 2005 and the First Three Quarters of Fiscal 2005. The
higher wholesale sales are attributed to a licensed operator of sixteen Big Boy restaurants in the Toledo, Ohio market that began purchasing food from the Companys commissary.



The Company operated 89 Big Boy restaurants as of March 6, 2005, including one that opened in August 2004 and another that re-opened in
September 2004 that had been closed for rebuilding since May 2004. One older, low volume Big Boy restaurant was closed in November 2004. No additional Big Boy restaurants are currently scheduled to be built in the next twelve months. Two new
buildings are planned; one to replace an existing restaurant on the same site, the other building will relocate an existing operation to a superior site.



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The Golden Corral sales increases are the result of more restaurants in operation:



|                                    |  |            |  |                   |  |       |  |     
|----------------------------------- |  | ---------- |  | ----------------- |  | ----- |  | ----
|                                    |  | Third Qtr. |  | First Three Qtrs.
|                                    |  | 2005       |  | 2004              |  | 2005  |  | 2004
|In operation at beginning of period |  | 29         |  | 24                |  | 26    |  | 20  
|Opened during the period            |  | 0          |  | 1                 |  | 3     |  | 5   
|In operation at end of period       |  | 29         |  | 25                |  | 29    |  | 25  
|Total sales weeks during period     |  | 348        |  | 294               |  | 1,111 |  | 901 



Three Golden Corral restaurants were
under construction as of March 6, 2005. Scheduled openings are in April, June and August. Two more are currently being planned to open in September and November.



Golden Corral same store sales decreased 7.3 percent during the Third Quarter of Fiscal 2005. This marked the sixth consecutive quarter of
Golden Corral same store sales declines. The decline for the First Three Quarters of Fiscal 2005 is 5.0 percent. Higher average guest checks can not overcome the effect of the continuing decline in customer counts, which were down 8.5 percent for
the Third Quarter of Fiscal 2005 and down 9.9 percent for the First Three Quarters of Fiscal 2005. While some of the declines can be traced to the sister-store effect of building additional restaurants in existing markets to achieve
market penetration, management is actively seeking to identify and solve other factors that are apparently contributing to the decline. The last menu price increase was 2.3 percent in May 2004.



Following general industry practice, same store sales comparisons include only those
restaurants that had been open for five full fiscal quarters prior to the start of the comparison periods. This removes possible misleading numbers that can be caused by the great influx of customers during the first several months of a
restaurants operation, sometimes called the honeymoon period of a new restaurant. Using this formula, 22 of 29 restaurants were included in the Third Quarter of Fiscal 2005 same store sales calculation. Only twenty of the 29
restaurants were included in the comparison for the First Three Quarters.



Gross Profit



Gross profit for the Big Boy segment
includes commissary operations. Gross profit differs from restaurant level profit disclosed in Note F (Segment Information) as advertising expense is charged against restaurant level profit. Gross profit for both operating segments is highlighted
below.



|                              |  |                |       |                      |   |               |  |               |        |  |   |       
|----------------------------- |  | -------------- | ----- | -------------------- | - | ------------- |  | ------------- | ------ |  | - | ------
|                              |  | 3rd Quarter    |       | First Three Quarters
|                              |  | March 6, 2005  |       | March 7, 2004        |   | March 6, 2005 |  | March 7, 2004
|                              |  | (in thousands)
|Big Boy gross profit          |  | $              | 5,091 |                      | $ | 5,452         |  | $             | 19,434 |  | $ | 19,637
|Golden Corral gross profit    |  |                | 1,049 |                      |   | 1,131         |  |               | 3,812  |  |   | 3,355 
|                              |  |                |       |                      |   |               |  |               |        |  |   |       
|Total gross profit by segment |  | $              | 6,140 |                      | $ | 6,583         |  | $             | 23,246 |  | $ | 22,992
|                              |  |                |       |                      |   |               |  |               |        |  |   |       



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##### Table of Contents

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



|                                                |  |                   |  |                   |  |                   |  |                   |  |        |  |      |  |       |  |        |  |      |  |       |  |        |  |     
|----------------------------------------------- |  | ----------------- |  | ----------------- |  | ----------------- |  | ----------------- |  | ------ |  | ---- |  | ----- |  | ------ |  | ---- |  | ----- |  | ------ |  | ----
|                                                |  | 12 weeks 03/06/05 |  | 12 weeks 03/07/04 |  | 40 weeks 03/06/05 |  | 40 weeks 03/07/04
|                                                |  | Total             |  | BigBoy            |  | GC                |  | Total             |  | BigBoy |  | GC   |  | Total |  | BigBoy |  | GC   |  | Total |  | BigBoy |  | GC  
|Food and Paper                                  |  | 35.7              |  | 33.3              |  | 40.3              |  | 34.4              |  | 32.4   |  | 38.6 |  | 35.2  |  | 32.9   |  | 39.7 |  | 34.1  |  | 31.9   |  | 38.9
|Payroll and Related                             |  | 33.4              |  | 35.0              |  | 30.3              |  | 34.0              |  | 35.4   |  | 30.9 |  | 33.3  |  | 34.6   |  | 30.8 |  | 33.9  |  | 35.0   |  | 31.2
|Other Operating Costs (including opening costs) |  | 21.1              |  | 19.5              |  | 24.4              |  | 20.5              |  | 18.7   |  | 24.5 |  | 20.6  |  | 18.9   |  | 24.1 |  | 20.4  |  | 18.6   |  | 24.4
|Gross Profit                                    |  | 9.8               |  | 12.2              |  | 5.0               |  | 11.1              |  | 13.5   |  | 6.0  |  | 10.9  |  | 13.6   |  | 5.4  |  | 11.6  |  | 14.5   |  | 5.5 



The higher food and paper cost
percentages shown in the table for both Big Boy and Golden Corral for the Third Quarter of Fiscal 2005 and the First Three Quarters of Fiscal 2005 are the result of escalating commodity costs, especially beef, dairy and pork. Beef, in particular,
continues to be a highly volatile market. Import and export restrictions can cause wide fluctuations in cost. 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, as well as its use of steak as a featured item on the buffet.



The Company believes that commodity prices will continue rising for the foreseeable future and management is resolved to manage the business around that fact. Menu price hikes have helped to counter the effects of the
higher cost of food to a certain degree, however, menu prices can not be raised high enough at once to offset the significant increases that have been seen on a wide range of products. The effect of commodity price increases are also actively
managed with changes to the Big Boy menu mix and effective selection of items served on the Golden Corral food bar.



The Company has historically reviewed self insured claims experience each quarter, with a more comprehensive review performed during the first quarter of each year at
which time the reserves were usually reduced to more closely reflect claims experience. The Company has been able to significantly reduce its reserves in recent years because the combination of active management of claims and post accident drug
testing has produced improved claims experience by lowering both the number of claims and the average cost per claim.



Because of these trends, the Company undertook a comprehensive review of claims experience during the Third Quarter of Fiscal 2005 and determined that a favorable
adjustment to the reserves of $349,000 was warranted. The adjustment in the Third Quarter of Fiscal 2005 brought the total reduction to the reserves for the First Three Quarters of Fiscal 2005 to $963,000. The adjustment included in the First Three
Quarters of Fiscal 2004 was $710,000. Comprehensive reviews will be conducted during each quarter hereafter with adjustments to the reserves as needed.



When compared against comparable periods in fiscal 2004, payroll and related cost percentages moved downward in both the Third Quarter and First Three Quarters of Fiscal
2005 for both the Big Boy and Golden Corral operating segments. When the benefit of the self insured workers compensation reserve adjustments (discussed in the preceding paragraph) that were apportioned to payroll and related costs is
excluded, all percentages still moved lower except for a slight increase for Big Boy in the Third Quarter of Fiscal 2005. The reductions were achieved in spite of higher costs for medical insurance and the continuing high charges for pension related
costs. The Big Boy same store sales increases helped the Big Boy payroll percentages while average pay rates remained level and hours



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##### Table of Contents

worked inched upward during the Third Quarter and First Three Quarters of Fiscal 2005. Golden Corrals percentages
moved downward during the Third Quarter and First Three Quarters of Fiscal 2005 despite the decline in same store sales during the Third Quarter of Fiscal 2005 and the First Three Quarters of Fiscal 2005. The lower Golden Corral percentages were
achieved with a significant reduction in the number of hours worked while pay rates were roughly even with last year.



Although congressional efforts continually mount to raise the federal minimum wage, the Company believes that it is unlikely that Federal legislation to do so will be
enacted in the near term. However, if such legislation is enacted, the Company would counter the effects with higher menu prices, together with tighter payroll standards and a reduction in the number of hours that employees would be permitted to
work. New overtime 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. 132(R)) was $454,000 and $479,000 respectively, in the Third Quarter of Fiscal
2005 and the Third Quarter of Fiscal 2004. Net periodic pension cost was $1,499,000 and $1,554,000 respectively, for the First Three Quarters of Fiscal 2005 and the First Three Quarters of Fiscal 2004. Escalating pension costs have been experienced
the past few years as a result of poor returns on equity investments held by the Companys defined benefit pension plans during the first part of the current decade. The Companys contributions to these plans are expected to be $2,125,000
for fiscal year Fiscal 2005, $300,000 of which had been paid as of March 6, 2005. Contributions can be made through February 15, 2006. Contributions to the plans for fiscal year 2004 were $2,304,000, $304,000 of which was paid in fiscal 2005.



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. Most of these expenses tend
to be more fixed in nature, however, the Third Quarter of Fiscal 2005 was adversely impacted by a $615,000 charge to correct the Companys accounting for leases to conform the recognition of rent expense on a straight-line basis over the term
of the lease, including any option periods considered to be part of the lease term, as lease terms are defined by Statement of Financial Accounting Standards No. 13 (SFAS 13), Accounting for Leases, as amended. SFAS 13 also defines the
term of the lease as including the period of time when no rent is paid to the landlord, often referred to as a rent holiday, that generally occurs while a restaurant is being built on leased land.



Operating profit



To arrive at the measure of operating profit, administrative and advertising expense is subtracted from gross profit, while franchise fees
and other revenue is added to it. Gains and losses on sale of assets are then respectively added or subtracted.



Administrative and advertising expense increased $361,000 during the Third Quarter of Fiscal 2005, or 12.6 percent higher than the Third Quarter of Fiscal 2004. The First
Three Quarters of Fiscal 2005 increased $1,071,000 or 10.9 percent higher than the First Three Quarters of Fiscal 2004. The largest component of these increases is higher spending for advertising and marketing programs that is proportionate with
higher sales levels, reflecting the Companys long standing policy to spend a constant percentage of Big Boy and Golden Corral sales on advertising and marketing. Also having an impact on administrative and advertising expense for both the
Third Quarter of Fiscal 2005 and the First Three Quarters of Fiscal 2005 are the costs to comply with Section 404 of the Sarbanes Oxley Act and a charge to recognize an obligation to an environmental remediation plan on a piece of property the
Company no longer owns.



Revenue from franchise fees is based on sales of Big
Boy restaurants that are franchised to other operators. The fees are based principally on percentages of sales generated by the licensed restaurants. As of March 6, 2005, 30 Big Boy restaurants had been franchised to others. Other revenue also
includes certain other fees from franchisees along with miscellaneous rent and investment income.



Gains and losses on sale of assets consist of transactions involving real property and sometimes may include restaurant equipment that is sold together with real property as a package when closed restaurants are sold.
Gains and losses reported on this line do not include abandonment losses that often arise when certain equipment is replaced before it reaches the end of its expected life. Abandonment losses are instead reported in other operating costs. Amounts
reported for the Third Quarters of Fiscal 2005 and Fiscal 2004 primarily represent gains from the sale of undeveloped land.



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##### Table of Contents

No impairments of assets were recorded in the First Three Quarters of Fiscal 2005 or the First Three Quarters of Fiscal
2004.



Other Expense (Income)



Interest expense increased $168,000 during the Third Quarter of Fiscal 2005, or 30.1 percent
higher than the Third Quarter of Fiscal 2004. The First Three Quarters of Fiscal 2005 experienced an increase of $299,000 or 15.9 percent above the First Three Quarters of Fiscal 2004. The increases have been caused by the combination of higher
debt, higher interest rates and lower levels of capitalized interest. As $9,000,000 in outstanding debt was retired after March 6, 2005, a significant relief in interest costs can be expected through the remainder of the fiscal year.



In addition to interest expense, the $4,440,000 non-taxable life insurance benefit is also
classified as Other expense (income), not included in operating profit.



Income Taxes



The tax rate applied to earnings before
income tax, exclusive of the $4,440,000 non-taxable life insurance benefit, was 35 percent for the First Three Quarters of Fiscal 2005. The rate was 31.4 percent for the Third Quarter of Fiscal 2005, which included the effect of lowering the annual
rate from 36 percent to 35 percent during the quarter. Provisions for income taxes 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. To a lesser degree, the Company also uses 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 by 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 from employees exercising of
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.



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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



As of March 6, 2005



|                                           |  |                                       |  |        |  |        |  |        |  |        |  |        |  |                  
|------------------------------------------ |  | ------------------------------------- |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ |  | -----------------
|                                           |  | Payments due by period (in thousands)
|                                           |  | Total                                 |  | year 1 |  | year 2 |  | year 3 |  | year 4 |  | year 5 |  | more than 5 years
|Term debt                                  |  | 45,387                                |  | 9,517  |  | 7,528  |  | 6,855  |  | 15,453 |  | 3,092  |  | 2,942            
|Rent due under capital lease obligations   |  | 4,841                                 |  | 926    |  | 703    |  | 2,693  |  | 157    |  | 110    |  | 252              
|1       Rent due under operating leases    |  | 22,358                                |  | 1,697  |  | 1,578  |  | 1,552  |  | 1,508  |  | 1,453  |  | 14,570           
|2       Unconditional purchase obligations |  | 10,789                                |  | 10,789 |  |       |  |       |  |       |  |       |  |                 
|3       Other long-term obligations        |  | 2,275                                 |  | 214    |  | 217    |  | 220    |  | 223    |  | 226    |  | 1,175            
|Total contractual cash obligations         |  | 85,650                                |  | 23,143 |  | 10,026 |  | 11,320 |  | 17,341 |  | 4,881  |  | 18,939           

---

|1 | Not included 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
$49 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 re-sublet the properties.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Operating leases include option periods
considered to be part of the lease term under SFAS 13, as amended.



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

|3 | Deferred compensation obligation.
|- | ---------------------------------



The working capital deficit was $13,467,000 as of March 6, 2005, a reduction from $20,925,000 as of December 12, 2004. The decrease reflects the inclusion of $9,650,000
in accounts receivable at March 6, 2005 for life insurance claims, all of which had been collected at the time of the filing of this Form 10-Q. The proceeds were used to retire a $2,000,000 short term note payable and $7,000,000 of long term debt.



Beginning with the fourth quarter, the working capital deficit is likely to
resume its expansion at a modest, manageable pace as construction debt is prudently increased to supplement the use of internally generated cash to finance expansion plans. As of March 6, 2005, $9,000,000 remained available to be drawn against a
Construction Draw Credit Facility, which is scheduled to expire on September 1, 2006, unless extended. Additionally, a $5,000,000 working capital revolving line of credit is readily available if needed, having been fully restored by the recent
retirement of a $2,000,000 short term note payable that had been borrowed against it.



Operating Activities



Operating cash flows were
$17,275,000 in the First Three Quarters of Fiscal 2005, a decrease of $3,759,000 compared with the First Three quarters of Fiscal 2004. The decrease is attributable to the combination of lower net earnings when the non-taxable life insurance benefit
is excluded, and a much lower increase in accounts payable.



Investing
Activities



Capital spending is the principal component of investing
activities. Capital spending was $18,595,000 during the First Three Quarters of Fiscal 2005, a decrease of $3,692,000 from the First Three Quarters of Fiscal 2004. This years capital spending includes $12,572,000 for Golden Corral restaurants,
principally for new restaurant construction and site acquisitions, plus the costs to remodel five of the original restaurants built in 1999 and 2000. Big Boy capital costs were $6,023,000, consisting of new restaurant construction, remodeling
existing restaurants including kitchen and dining room expansions, routine equipment replacements and other capital outlays.



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##### Table of Contents

The Company reached a new development agreement with Golden Corral Franchising Systems, Inc. in July 2004. The new
agreement added 21 Golden Corrals to the development schedule, bringing the total to 62 restaurants to be in operation by December 31, 2011. The Company is in compliance with the development agreement, which calls for five restaurants to be opened
each year through December 2010, with the final three scheduled for 2011. As of March 6, 2005, 29 restaurants were in operation with three restaurants under construction. Costs remaining to complete construction of these three restaurants were
estimated at $5,386,000 as of March 6, 2005. Construction of three more Golden Corrals is scheduled to be completed over the next twelve months. On average, the cost to build and equip each Golden Corral restaurant is approximately $3,300,000,
including land.



No Big Boy restaurants were under construction as of March 6,
2005. Two buildings are likely to be constructed during the next twelve months. One of the new buildings will be a replacement on the same site, while the other new building will replace an existing restaurant by relocating to a superior site. The
approximate cost to build and equip a new Big Boy restaurant ranges from $2,300,000 to $2,800,000, depending on land cost. 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.



It is the Companys policy to own the land on
which it builds new restaurants; however, it is sometimes necessary to enter ground leases to obtain desirable land on which to build. Four Golden Corral restaurants have been built on leased land. Two more Golden Corral ground leases have been
entered into for restaurants to open respectively in April and June 2005. All of these leases have been accounted for as operating leases. As of March 6, 2005, the Company occupied 28 restaurants pursuant to leases, eleven of which are capital
leases pursuant to SFAS 13 Accounting for Leases, as amended.



Investing activities for the First Three Quarters of Fiscal 2004 included the recovery of $1,700,000 received in settlement of certain litigation relating to defective construction of a Golden Corral restaurant. The settlement was with the
architect and the architects structural engineering consultant. It was sufficient to recover all construction costs incurred, including the cost to raze the defective building. The Company continues to vigorously prosecute its claim exceeding
$1,000,000 against the general contractor that built the building.



Financing Activities



Borrowing against the
Companys credit lines amounted to $9,500,000 during the First Three Quarters of Fiscal 2005. Scheduled and other payments of long-term debt and capital lease obligations amounted to $5,960,000 during the First Three Quarters of Fiscal 2005.
Debt was further reduced by $9,000,000 before the filing of this Form 10-Q. Regular quarterly cash dividends paid to shareholders totaled $1,664,000. As the Company expects to continue its 44 year practice of paying regular quarterly cash dividends,
the Board of Directors declared an $.11 per share dividend on March 15, 2005.



Options to purchase 377,000 shares of the Companys common stock were outstanding as of March 6, 2005, including 284,000 fully vested shares at a weighted average exercise price per share of $17.04. Proceeds of $312,000 were received
during the First Three Quarters of Fiscal 2005 from employees and directors who acquired 21,500 shares of the Companys common stock through the exercise of stock options. The 1993 Stock Option Plan has approximately 6,200 shares remaining that
are available to be optioned. Shareholders approved the 2003 Stock Option and Incentive Plan in October 2003. As of March 6, 2005, 793,000 shares were available to be optioned under the 2003 Stock Option and Incentive Plan.



The Companys stock repurchase program expired October 7, 2004. It had authorized the
repurchase of up to 500,000 shares of the Companys common stock. No shares were acquired during the two year life of the program, as the price at which shares of the Companys common stock had been traded did not warrant utilization of
the program.



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RISK FACTORS AND SAFE HARBOR STATEMENT



Statements included in this Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) that are
not historical facts are forward-looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can generally be identified in sentences that contain words such as should,
could, will, may, plan, expect, anticipate, estimate, project, intend, believe and similar words that are used to convey the fact
that the statement being made is prospective and does not strictly relate to historical or present facts. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from anticipated
results. The Company undertakes no obligation to update any of the forward-looking statements that may be contained in this MD&A.



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 which adds higher compliance costs to the Company. 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 receive re-certification in ServSafe Training 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 where 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;
|- |  | -----------------------------------



| |  | 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;
|- |  | ----------------------



| |  | 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;
|- |  | ------------------------------------------------------------------------------------------



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



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



| |  | exposure to penalties for potential violations of numerous governmental regulations in general, and immigration (I-9) and minor labor regulations 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 its risks and uncertainties. However, the nature of some risks and uncertainties leaves the Company
with little control. 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 any 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 principals 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.



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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.



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##### Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS



The Company has no significant market risk exposure to interest rate changes as all of its debt is currently financed with fixed interest rates. The Company does not currently use derivative financial instruments to
manage its exposure to changes in interest rates. The Company does not use foreign currency.



Big Boy restaurants utilize centralized purchasing and food preparation through the Companys commissary and food manufacturing plant. The Company believes the commissary operation ensures uniform product quality
and safety, timeliness of distribution to restaurants and results in lower food and supply costs.



Food supplies are generally plentiful and may be obtained from any number of suppliers. Quality and price are the principal determinants of source. Commodity pricing affects the cost of many of the Companys food
products. Commodity pricing can be extremely volatile, affected by many factors outside the Companys control, including import and export restrictions, production and the impact of weather on crops. Certain commodities, principally beef,
chicken, pork, dairy products, fish, french fries and coffee, are generally purchased based upon market prices established with vendors. Purchase contracts for some of these items may contain contractual provisions that limit the price to be paid
over a certain period of time. The Company does not use financial instruments as a hedge against changes in commodity pricing.



For Golden Corral restaurants, the Company currently purchases substantially all food, beverage and other menu items from the same vendor that Golden Corral Franchising
Systems, Inc. (the Franchisor) uses for its operations. Deliveries are made two times per week. Other vendors are available to provide products that meet the Franchisors specifications should the Company wish or need to make a change.



ITEM 4. CONTROLS AND PROCEDURES



The
Companys Chief Executive Officer (CEO) and Chief Financial Officer (CFO) reviewed and evaluated the Companys disclosure controls and procedures, as defined in Securities Exchange Act regulations 240.13a-15(e) and 240.15d-15(e) as of the
end of the period covered by this report. Based on that evaluation, the Companys CEO and CFO concluded that the Companys disclosure controls and procedures were effective as of March 6, 2005.



The Company completed the second and final implementation phase of its enterprise information
system in September 2004. Phase I of the implementation, which included new software modules for the General Ledger, Accounts Payable, Procurement, Inventory Control and Asset Management, was completed in April 2004. Phase II of the implementation
incorporated Payroll and Human Resources modules into the system. Certain changes in the system of internal control are still being instituted to enhance the effectiveness of the systems modules.



There were no other significant changes in the Companys internal controls over
financial reporting during the fiscal quarter ended March 6, 2005 that have materially affected, or are reasonably likely to affect, the Companys Internal control over financial reporting.



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##### Table of Contents

PART II - OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



The Company is the
owner of a Golden Corral Restaurant located in North Canton, Ohio. In 2001, the Companys general contractor, Fortney & Weygandt, Inc. (Fortney) constructed a Golden Corral Restaurant at the original location on the North Canton
site. Complicated geological conditions at the site required that the restaurant be built on a structural slab (platform), which rested upon driven piles. The foundation system for the building had been designed by a Houston, Texas engineering firm,
Maverick Engineering, Inc. (Maverick). Maverick was a subcontractor to the Companys architect of record, LMH&T.



Shortly before the scheduled opening of the restaurant, it was discovered that, due to a combination of design and construction errors, the building had shifted, which
caused separation of the building from its underground plumbing system. The Company elected to demolish the original structure, and subsequently built a new building on a different portion of the original parcel. The restaurants grand opening
was, therefore, delayed until January 2003.



On July 30, 2002, the
Companys general contractor, Fortney, filed a Demand for Arbitration against the Company with the American Arbitration Association. Fortney sought recovery of its outstanding contract balance, in the sum of $293,638, plus interest,
fees, and costs. Fortney contends that it is owed this money by the Company under the terms of the General Construction Contract. The Company has denied that it owes these monies to Fortney, and has filed a counterclaim against Fortney alleging
defective construction. The Companys claim against Fortney is for excess cost of construction, loss profit, interest and costs, in an amount exceeding $1,000,000.



On August 29, 2002, the Company filed a lawsuit in the Stark County, Ohio Court of Common Pleas against its former architect, LMH&T,
alleging negligent design as a casual factor in the demise of the original structure. The Company sought damages including lost profits, interest, and costs exceeding $2,500,000. LMH&T brought into the lawsuit its structural engineering
consultant, Maverick, as well as the Companys soils consultant, Cowherd Banner Carlson Engineering (CBC).



In July 2003, the Company resolved all claims, counterclaims, and cross-claims, against and involving the trial court defendants. The trial court defendants, including
LMH&T and Maverick, agreed to pay to the Company the sum of $1,700,000 in full and final settlement of all claims. The Company received the settlement funds in full during the first quarter of fiscal year 2004 and the case was dismissed.



The resolution between the Company and the trial court defendants (design
team) is separate and apart from the dispute between Fortney and the Company, which is before the American Arbitration Association. In that action, Fortney continues to seek recovery of $293,638, plus interest, fees, and costs. The Company continues
to seek the balance of its claim from Fortney.



From time to time, the Company
is subject to various claims and suits 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.



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



a)
EXHIBITS



3 (a) Third Amended Articles of Incorporation, filed
as Exhibit (3) (a) to the Registrants Form 10-K Annual Report for 1993, is incorporated herein by reference.



3 (b) Code of Regulations, filed as Exhibit (3) (a) to the Registrants Form 10-Q Quarterly Report for December 15, 1996, is incorporated herein by
reference.



3 (c) Amendments to the Code of Regulations
adopted October 1, 1984, filed as Exhibit (3) (b) to the Registrants Form 10-Q Quarterly Report for December 15, 1996, is incorporated herein by reference.



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##### Table of Contents

3 (d) Amendments to the Code of Regulations adopted October 24, 1996, filed as Exhibit (3) (c) to the
Registrants Form 10-Q Quarterly Report for December 15, 1996, is incorporated herein by reference.



10 (a) Intellectual Property Use and Noncompete Agreement between the Registrant and Liggett Restaurant Enterprises LLC (now known as Big Boy Restaurants
International, LLC) dated January 8, 2001, filed as Exhibit (10) (a) to the Registrants Form 10-Q Quarterly Report for March 4, 2001, is incorporated herein by reference.



10 (b) Transfer Agreement between the Registrant and Liggett Restaurant Enterprises LLC (now known as Big Boy Restaurants
International, LLC) dated January 8, 2001, filed as Exhibit (10) (b) to the Registrants Form 10-Q Quarterly Report for March 4, 2001, is incorporated herein by reference.



10 (c)1 First Amended and Restated Loan Agreement (Golden Corral) and Exhibit 10(c)2 Second Amended and Restated Loan
Agreement (Revolving and Bullet Loans) between the Registrant and US Bank NA effective October 15, 2004, filed as exhibits 10(c)1 and 10(c)2 to the Registrants Form 10-Q Quarterly Report for September 19, 2004, are incorporated herein by
reference.



10 (d) Area Development Agreement, Termination
Agreement and Addendum effective July 20, 2004 between the Registrant and Golden Corral Franchising Systems, Inc., filed as Exhibit 10 (f) to the Registrants Form 10-K Annual Report for 2004, is incorporated herein by reference.



10 (e) Employment Agreement between the Registrant and Jack C. Maier
effective May 29, 2000, filed as Exhibit (10) (d) to the Registrants Form 10-Q Quarterly Report for September 17, 2000, is incorporated herein by reference. *



10 (f) Employment Agreement between the Registrant and Craig F. Maier effective June 2, 2003, filed as Exhibit 10 (h) to the
Registrants Form 10-K Annual Report for 2003, is incorporated herein by reference. *



10 (g) Frischs Executive Savings Plan effective November 15, 1993, filed as Exhibit (10) (a) to the Registrants Form 10-Q Quarterly Report for September 17, 1995, is incorporated herein by reference. *



10 (h) Second Amendment to the Frischs Executive
Savings Plan effective July 28, 2004, filed as Exhibit 10(h) to the Registrants Form 10-Q Quarterly Report for September 19, 2004, is incorporated herein by reference. *



10 (i) Frischs Executive Retirement Plan effective June 1, 1994, filed as Exhibit (10) (b) to the Registrants
Form 10-Q Quarterly Report for September 17, 1995, is incorporated herein by reference. *



10 (j) Amendment No. 1 to Frischs Executive Retirement Plan effective January 1, 2000, filed as Exhibit 10 (k) to the Registrants form 10-K Annual Report for 2003, is incorporated herein by reference.*



10 (k) 2003 Stock Option and Incentive Plan, filed as
Appendix A to the Registrants Proxy Statement dated August 28, 2003, is incorporated herein by reference. *



10 (l) Forms of agreement to be used for stock options granted to employees and to non-employee directors under the Registrants 2003 Stock Option
and Incentive Plan, filed as Exhibits 99.1 and 99.2 to the Registrants From 8-K dated October 1, 2004, are incorporated herein by reference. *



10 (m) Amended and Restated 1993 Stock Option Plan, filed as Exhibit A to the Registrants Proxy Statement dated September 9, 1998, is incorporated
herein by reference. *



10 (n) Employee Stock Option Plan,
filed as Exhibit B to the Registrants Proxy Statement dated September 9, 1998, is incorporated herein by reference. *



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##### Table of Contents

10 (o) Agreement between the Registrant and Craig F. Maier dated November 21, 1989, filed as Exhibit (10)
(g) to the Registrants Form 10-K Annual Report for 1990, is incorporated herein by reference. *



10 (p) Frischs Nondeferred Cash Balance Plan effective January 1, 2000, filed as Exhibit (10) (r) to the Registrants Form 10-Q Quarterly
Report for December 10, 2000, is incorporated herein by reference, together with the Trust Agreement established by the Registrant between Firstar Bank, N.A. (Trustee) (now known as US Bank) and Donald H. Walker (Grantor). There are identical Trust
Agreements between Firstar Bank, N.A. (Trustee) (now known as US Bank) and Craig F. Maier, Paul F. McFarland, W. Gary King, Karen F. Maier, Ken C. Hull, Michael E. Conner, Todd M. Rion and certain other highly compensated employees
(Grantors). *



10 (q) Senior Executive Bonus Plan effective
June 2, 2003, filed as Exhibit (10) (s) to the Registrants Form 10-K Annual Report for 2003, is incorporated herein by reference.*

---

|* | denotes compensatory plan or agreement
|- | --------------------------------------



15 Letter re: unaudited interim financial statements, is filed herewith.



31.1 Certification of Chief Executive Officer pursuant to rule 13a -14(a) is filed herewith.



31.2 Certification of Chief Financial Officer pursuant to rule 13a - 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.



b). Reports on Form 8-K:



A Form 8-K was filed on
January 10, 2005 reporting under item 2.02, Results of Operations and Financial Condition, the Registrants press release announcing financial results for the quarter ending December 12, 2004.



A Form 8-K was filed on February 4, 2005 reporting under item 5.02,
Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers, the death on February 2, 2005 of the Registrants Chairman of the Board, Jack C. Maier.



A Form 8-K was filed on February 8, 2005 reporting under item 8.01, Other
Events, the expected life insurance benefits to be received by the Registrant as a result of the death of the Chairman of the Board, Jack C. Maier.



A Form 8-K was filed on March 17, 2005 reporting under item 5.02, Departure of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers, that the Board of Directors had unanimously elected Daniel W. Geeding as Chairman of the Board, and Karen F. Maier as a new director.



A Form 8-K was filed on April 13, 2005 reporting under item 2.02, Results of Operations and Financial Condition, the Registrants press release
announcing financial results for the quarter ending March 6, 2005.



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##### Table of Contents

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 April 15, 2005 |  |                            |  |                                                                                   
|                    |  |                           
|                    |  | BY                         |  | /s/ Donald H. Walker                                                              
|                    |  |                            |  | Donald H. Walker                                                                  
|                    |  |                            |  | Vice President  Finance, Treasurer and Principal Financial and Accounting Officer



39