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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q/A



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Amendment No. 1 to Quarterly Report on Form 10-Q for the quarter ended December 11, 2005

Quarterly Report Pursuant to Section 13 or 15 (d)

of the Securities Exchange Act of 1934

For the quarterly period ended: DECEMBER 11, 2005

Commission File Number: 001-7323



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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



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO ̈

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

Large Accelerated Filer ̈Accelerated Filer  x    Non-accelerated filer ̈

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

The total number of shares
outstanding of the issuers no par common stock, as of December 27, 2005 was: 5,073,774



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Introductory Note

Grant Thornton LLP, the Companys independent registered public accounting firm, completed its review of the Companys Quarterly Report on Form 10-Q for the quarter ended December 11, 2005. The purpose
of this Form 10-Q/A is to:



| |  | remove the legend at the top of the facing page stating that the independent registered public accounting firms review is not complete;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  | remove the explanatory note above the index on page two of the report stating that the Companys independent registered public accounting firms review is not complete and
reporting the Companys plan to amend its Annual Report on Form 10-K for the year ended May 29, 2005 and its Quarterly Report on Form 10-Q for the quarter ended September 18, 2005 to include restated financial statements (such
amendments were filed respectively on February 24, 2006 and March 17, 2006); and to
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | revise the notes to consolidated financial statements by removing the second caption (Restatement of Financial Statements) under Note A -Accounting Policies and deleting Note B
 Restatement in its entirety.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, financial information under Items 1 and 2 of Part 1 of the Quarterly Report on Form 10-Q
for the quarter ended December 11, 2005 has been revised in this Form Q/A to delete certain references to restatements in prior periods, as previously amended in Form 10-K/A (being Amendment No. 1 to Form 10-K for the year ended
May 29, 2005) and in form 10-Q/A (being Amendment No. 1 to Form 10-Q for the quarter ended September 18, 2005).

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 -25 
|                               |  |          | 
|                               |  | Item 1A. |  | Risk Factors                                                                         |  | 26    
|                               |  |          | 
|                               |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operation |  | 27 -34
|                               | 
|PART II - OTHER INFORMATION    |  |         
|                               |  |          | 
|                               |  | Item 6.  |  | Exhibits                                                                             |  | 35    
|                               | 
|SIGNATURE                      |  | 35      



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Statement of Earnings

(Unaudited)



|                                          |  |                          |             |   |                    |   |             |                   |  |   |                   |   |  |   |            |  
|----------------------------------------- |  | ------------------------ | ----------- | - | ------------------ | - | ----------- | ----------------- |  | - | ----------------- | - |  | - | ---------- | -
|                                          |  | Twenty-eight weeks ended |             |   | Twelve weeks ended |  
|                                          |  | December 11, 2005        |             |   | December 12, 2004  |   |             | December 11, 2005 |  |   | December 12, 2004 |  
|Sales                                     |  | $                        | 153,485,878 |   |                    | $ | 150,809,640 |                   |  | $ | 66,953,103        |   |  | $ | 66,747,477 |  
|                                          |  |                          |             |  
|Cost of sales                             |  |                          |             |   |                    |   |             |                   |  |   |                   |   |  |   |            |  
|Food and paper                            |  |                          | 53,614,595  |   |                    |   | 52,752,737  |                   |  |   | 23,510,330        |   |  |   | 23,338,433 |  
|Payroll and related                       |  |                          | 50,752,080  |   |                    |   | 50,043,146  |                   |  |   | 22,199,894        |   |  |   | 22,135,748 |  
|Other operating costs                     |  |                          | 33,928,301  |   |                    |   | 30,758,207  |                   |  |   | 15,041,822        |   |  |   | 13,203,667 |  
|                                          |  |                          |             |   |                    |   |             |                   |  |   |                   |   |  |   |            |  
|                                          |  |                          | 138,294,976 |   |                    |   | 133,554,090 |                   |  |   | 60,752,046        |   |  |   | 58,677,848 |  
|                                          |  |                          |             |  
|Gross profit                              |  |                          | 15,190,902  |   |                    |   | 17,255,550  |                   |  |   | 6,201,057         |   |  |   | 8,069,629  |  
|                                          |  |                          |             |  
|Administrative and advertising            |  |                          | 7,923,259   |   |                    |   | 7,665,386   |                   |  |   | 3,342,188         |   |  |   | 3,340,625  |  
|Franchise fess and other revenue          |  |                          | (662,751    | ) |                    |   | (733,428    | )                 |  |   | (290,408          | ) |  |   | (310,573   | )
|(Gains) on sale of assets                 |  |                          |            |   |                    |   | (88,978     | )                 |  |   |                  |   |  |   | (88,978    | )
|                                          |  |                          |             |   |                    |   |             |                   |  |   |                   |   |  |   |            |  
|Operating profit                          |  |                          | 7,930,394   |   |                    |   | 10,412,570  |                   |  |   | 3,149,277         |   |  |   | 5,128,555  |  
|                                          |  |                          |             |  
|Interest expense                          |  |                          | 1,439,592   |   |                    |   | 1,446,664   |                   |  |   | 657,506           |   |  |   | 640,568    |  
|                                          |  |                          |             |   |                    |   |             |                   |  |   |                   |   |  |   |            |  
|Earnings before income taxes              |  |                          | 6,490,802   |   |                    |   | 8,965,906   |                   |  |   | 2,491,771         |   |  |   | 4,487,987  |  
|                                          |  |                          |             |  
|Income taxes                              |  |                          | 2,206,000   |   |                    |   | 3,225,000   |                   |  |   | 809,000           |   |  |   | 1,702,000  |  
|                                          |  |                          |             |   |                    |   |             |                   |  |   |                   |   |  |   |            |  
|Net Earnings                              |  | $                        | 4,284,802   |   |                    | $ | 5,740,906   |                   |  | $ | 1,682,771         |   |  | $ | 2,785,987  |  
|                                          |  |                          |             |   |                    |   |             |                   |  |   |                   |   |  |   |            |  
|Earnings per share (EPS) of common stock: |  |                          |             |   |                    |   |             |                   |  |   |                   |   |  |   |            |  
|Basic net earnings per share              |  | $                        | .85         |   |                    | $ | 1.14        |                   |  | $ | .33               |   |  | $ | .55        |  
|                                          |  |                          |             |   |                    |   |             |                   |  |   |                   |   |  |   |            |  
|Diluted net earnings per share            |  | $                        | .83         |   |                    | $ | 1.11        |                   |  | $ | .33               |   |  | $ | .54        |  
|                                          |  |                          |             |   |                    |   |             |                   |  |   |                   |   |  |   |            |  

The accompanying notes are an integral part of these statements.



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Balance Sheet

ASSETS



|                                                    |  |                               |             |              |   |            
|--------------------------------------------------- |  | ----------------------------- | ----------- | ------------ | - | -----------
|                                                    |  | December 11, 2005 (unaudited) |             | May 29, 2005
|Current assets                                      |  |                               |             |              |   |            
|Cash                                                |  | $                             | 322,800     |              | $ | 306,300    
|Trade and other receivables                         |  |                               | 1,732,813   |              |   | 1,389,975  
|Inventories                                         |  |                               | 4,653,942   |              |   | 4,592,093  
|Prepaid expenses and sundry deposits                |  |                               | 3,203,718   |              |   | 2,819,762  
|Prepaid and deferred income taxes                   |  |                               | 818,638     |              |   | 942,611    
|                                                    |  |                               |             |              |   |            
|Total current assets                                |  |                               | 10,731,911  |              |   | 10,050,741 
|                                                    |  |                              
|Property and equipment                              |  |                               |             |              |   |            
|Land and improvements                               |  |                               | 60,186,803  |              |   | 56,830,344 
|Buildings                                           |  |                               | 83,907,737  |              |   | 81,434,781 
|Equipment and fixtures                              |  |                               | 88,201,348  |              |   | 84,240,573 
|Leasehold improvements and buildings on leased land |  |                               | 27,184,430  |              |   | 21,590,570 
|Capitalized leases                                  |  |                               | 7,131,603   |              |   | 7,131,603  
|Construction in progress                            |  |                               | 3,874,457   |              |   | 6,435,214  
|                                                    |  |                               |             |              |   |            
|                                                    |  |                               | 270,486,378 |              |   | 257,663,085
|Less accumulated depreciation and amortization      |  |                               | 114,574,431 |              |   | 109,461,135
|                                                    |  |                               |             |              |   |            
|Net property and equipment                          |  |                               | 155,911,947 |              |   | 148,201,950
|                                                    |  |                              
|Other assets                                        |  |                               |             |              |   |            
|Goodwill                                            |  |                               | 740,644     |              |   | 740,644    
|Other intangible assets                             |  |                               | 1,440,986   |              |   | 1,400,659  
|Investments in land                                 |  |                               | 1,006,390   |              |   | 974,370    
|Property held for sale                              |  |                               | 1,857,244   |              |   | 1,857,244  
|Other                                               |  |                               | 4,209,142   |              |   | 4,239,974  
|                                                    |  |                               |             |              |   |            
|Total other assets                                  |  |                               | 9,254,406   |              |   | 9,212,891  
|                                                    |  |                               |             |              |   |            
|Total assets                                        |  | $                             | 175,898,264 |              | $ | 167,465,582
|                                                    |  |                               |             |              |   |            

The accompanying notes are an integral part of these statements.



4



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##### Table of Contents

LIABILITIES AND SHAREHOLDERS EQUITY



|                                                                                                                           |  |                               |             |              |   |            
|-------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ----------- | ------------ | - | -----------
|                                                                                                                           |  | December 11, 2005 (unaudited) |             | May 29, 2005
|Current liabilities                                                                                                        |  |                               |             |              |   |            
|Long-term obligations due within one year                                                                                  |  |                               |             |              |   |            
|Long-term debt                                                                                                             |  | $                             | 8,747,594   |              | $ | 7,598,182  
|Obligations under capitalized leases                                                                                       |  |                               | 495,000     |              |   | 533,016    
|Self insurance                                                                                                             |  |                               | 877,864     |              |   | 851,737    
|Accounts payable                                                                                                           |  |                               | 14,723,345  |              |   | 12,799,147 
|Accrued expenses                                                                                                           |  |                               | 8,907,930   |              |   | 8,763,971  
|Income taxes                                                                                                               |  |                               | 178,106     |              |   | 416,125    
|                                                                                                                           |  |                               |             |              |   |            
|Total current liabilities                                                                                                  |  |                               | 33,929,839  |              |   | 30,962,178 
|                                                                                                                           |  |                              
|Long-term obligations                                                                                                      |  |                               |             |              |   |            
|Long-term debt                                                                                                             |  |                               | 32,423,850  |              |   | 29,570,481 
|Obligations under capitalized leases                                                                                       |  |                               | 2,917,050   |              |   | 3,136,836  
|Self insurance                                                                                                             |  |                               | 1,950,409   |              |   | 1,981,342  
|Deferred income taxes                                                                                                      |  |                               | 4,474,375   |              |   | 4,830,375  
|Deferred compensation and other                                                                                            |  |                               | 3,838,904   |              |   | 3,583,120  
|                                                                                                                           |  |                               |             |              |   |            
|Total long-term obligations                                                                                                |  |                               | 45,604,588  |              |   | 43,102,154 
|                                                                                                                           |  |                              
|Commitments                                                                                                                |  |                               |            |              |   |           
|                                                                                                                           |  |                              
|Shareholders equity                                                                                                       |  |                               |             |              |   |            
|Capital stock                                                                                                              |  |                               |             |              |   |            
|Preferred stock - authorized, 3,000,000 shares without par value; none issued                                              |  |                               |            |              |   |           
|Common stock - authorized, 12,000,000 shares without par value; issued, 7,521,097 and 7,505,176 shares - stated value - $1 |  |                               | 7,521,097   |              |   | 7,505,176  
|Additional contributed capital                                                                                             |  |                               | 62,531,392  |              |   | 62,226,047 
|                                                                                                                           |  |                               |             |              |   |            
|                                                                                                                           |  |                               | 70,052,489  |              |   | 69,731,223 
|                                                                                                                           |  |                              
|Retained earnings                                                                                                          |  |                               | 59,103,775  |              |   | 56,490,185 
|                                                                                                                           |  |                               |             |              |   |            
|                                                                                                                           |  |                               | 129,156,264 |              |   | 126,221,408
|                                                                                                                           |  |                              
|Less cost of treasury stock (2,447,323 and 2,449,394 shares)                                                               |  |                               | 32,792,427  |              |   | 32,820,158 
|                                                                                                                           |  |                               |             |              |   |            
|Total shareholders equity                                                                                                 |  |                               | 96,363,837  |              |   | 93,401,250 
|                                                                                                                           |  |                               |             |              |   |            
|Total liabilities and shareholders equity                                                                                 |  | $                             | 175,898,264 |              | $ | 167,465,582
|                                                                                                                           |  |                               |             |              |   |            



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

Consolidated Statement of Shareholders Equity

Twenty-eight weeks ended December 11, 2005 and December 12, 2004

(Unaudited)



|                                                    |  |                                                  |           |                                |   |            |                   |  |   |                 |   |  |       |             |   |  |   |            |  
|--------------------------------------------------- |  | ------------------------------------------------ | --------- | ------------------------------ | - | ---------- | ----------------- |  | - | --------------- | - |  | ----- | ----------- | - |  | - | ---------- | -
|                                                    |  | Common stock at $1 per share - Shares and amount |           | Additional contributed capital |   |            | Retained earnings |  |   | Treasury shares |   |  | Total |            
|Balance at May 30, 2004                             |  |                                                  | 7,490,845 |                                |   | 61,976,027 |                   |  |   | 43,969,077      |   |  |       | (32,920,555 | ) |  |   | 80,515,394 |  
|Net earnings for twenty-eight weeks                 |  |                                                  |          |                                |   |           |                   |  |   | 5,740,906       |   |  |       |            |   |  |   | 5,740,906  |  
|Stock options exercised - new shares issued         |  |                                                  | 9,831     |                                |   | 146,995    |                   |  |   |                |   |  |       |            |   |  |   | 156,826    |  
|Stock options exercised - treasury shares re-issued |  |                                                  |          |                                |   | (6,819     | )                 |  |   |                |   |  |       | 69,173      |   |  |   | 62,354     |  
|Tax benefit from stock options exercised            |  |                                                  |          |                                |   | 48,870     |                   |  |   |                |   |  |       |            |   |  |   | 48,870     |  
|Other treasury shares re-issued                     |  |                                                  |          |                                |   | 38,862     |                   |  |   |                |   |  |       | 33,542      |   |  |   | 72,404     |  
|Employee stock purchase plan                        |  |                                                  |          |                                |   | (32,612    | )                 |  |   |                |   |  |       |            |   |  |   | (32,612    | )
|Cash dividends - $.33 per share                     |  |                                                  |          |                                |   |           |                   |  |   | (1,663,570      | ) |  |       |            |   |  |   | (1,663,570 | )
|                                                    |  |                                                  |           |                                |   |            |                   |  |   |                 |   |  |       |             |   |  |   |            |  
|Balance at December 12, 2004                        |  |                                                  | 7,500,676 |                                |   | 62,171,323 |                   |  |   | 48,046,413      |   |  |       | (32,817,840 | ) |  |   | 84,900,572 |  
|Net earnings for twenty-four weeks                  |  |                                                  |          |                                |   |           |                   |  |   | 8,999,919       |   |  |       |            |   |  |   | 8,999,919  |  
|Stock options exercised - new shares issued         |  |                                                  | 4,500     |                                |   | 58,110     |                   |  |   |                |   |  |       |            |   |  |   | 62,610     |  
|Stock options exercised - treasury shares re-issued |  |                                                  |          |                                |   | 3,710      |                   |  |   |                |   |  |       | 26,780      |   |  |   | 30,490     |  
|Tax benefit from stock options exercised            |  |                                                  |          |                                |   | 25,629     |                   |  |   |                |   |  |       |            |   |  |   | 25,629     |  
|Other treasury shares re-issued                     |  |                                                  |          |                                |   | 1,103      |                   |  |   |                |   |  |       | 1,393       |   |  |   | 2,496      |  
|Treasury shares acquired                            |  |                                                  |          |                                |   |           |                   |  |   |                |   |  |       | (30,491     | ) |  |   | (30,491    | )
|Employee stock purchase plan                        |  |                                                  |          |                                |   | (33,828    | )                 |  |   |                |   |  |       |            |   |  |   | (33,828    | )
|Cash dividends - $.11 per share                     |  |                                                  |          |                                |   |           |                   |  |   | (556,147        | ) |  |       |            |   |  |   | (556,147   | )
|                                                    |  |                                                  |           |                                |   |            |                   |  |   |                 |   |  |       |             |   |  |   |            |  
|Balance at May 29, 2005                             |  |                                                  | 7,505,176 |                                |   | 62,226,047 |                   |  |   | 56,490,185      |   |  |       | (32,820,158 | ) |  |   | 93,401,250 |  
|Net earnings for twenty-eight weeks                 |  |                                                  |          |                                |   |           |                   |  |   | 4,284,802       |   |  |       |            |   |  |   | 4,284,802  |  
|Stock options exercised - new shares issued         |  |                                                  | 15,921    |                                |   | 271,476    |                   |  |   |                |   |  |       |            |   |  |   | 287,397    |  
|Tax benefit from stock options exercised            |  |                                                  |          |                                |   | 32,496     |                   |  |   |                |   |  |       |            |   |  |   | 32,496     |  
|Other treasury shares re-issued                     |  |                                                  |          |                                |   | 24,098     |                   |  |   |                |   |  |       | 27,731      |   |  |   | 51,829     |  
|Employee stock purchase plan                        |  |                                                  |          |                                |   | (22,725    | )                 |  |   |                |   |  |       |            |   |  |   | (22,725    | )
|Cash dividends - $.33 per share                     |  |                                                  |          |                                |   |           |                   |  |   | (1,671,212      | ) |  |       |            |   |  |   | (1,671,212 | )
|                                                    |  |                                                  |           |                                |   |            |                   |  |   |                 |   |  |       |             |   |  |   |            |  
|Balance at December 11, 2005                        |  | $                                                | 7,521,097 |                                | $ | 62,531,392 |                   |  | $ | 59,103,775      |   |  | $     | (32,792,427 | ) |  | $ | 96,363,837 |  
|                                                    |  |                                                  |           |                                |   |            |                   |  |   |                 |   |  |       |             |   |  |   |            |  

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

Twenty-eight weeks ended December 11, 2005 and December 12, 2004

(unaudited)



|                                                                             |  |      |             |   |      |   |             |  
|---------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                             |  | 2005 |             |   | 2004 |  
|Cash flows provided by (used in) operating activities:                       |  |      |             |   |      |   |             |  
|Net earnings                                                                 |  | $    | 4,284,802   |   |      | $ | 5,740,906   |  
|Adjustments to reconcile net earnings to net cash from operating activities: |  |      |             |   |      |   |             |  
|Depreciation and amortization                                                |  |      | 6,860,709   |   |      |   | 6,230,249   |  
|Loss (gain) on disposition of assets, including abandonments                 |  |      | 49,261      |   |      |   | (30,317     | )
|                                                                             |  |      |             |   |      |   |             |  
|                                                                             |  |      | 11,194,772  |   |      |   | 11,940,838  |  
|Changes in assets and liabilities:                                           |  |      |             |   |      |   |             |  
|Accounts receivable                                                          |  |      | (342,838    | ) |      |   | 117,871     |  
|Inventories                                                                  |  |      | (61,849     | ) |      |   | (264,125    | )
|Prepaid expenses and sundry deposits                                         |  |      | (383,956    | ) |      |   | (660,920    | )
|Other assets                                                                 |  |      | 20,927      |   |      |   | 224,635     |  
|Prepaid, accrued and deferred income taxes                                   |  |      | (470,046    | ) |      |   | 795,050     |  
|Tax benefit from stock options exercised                                     |  |      | 32,496      |   |      |   | 48,870      |  
|Accounts payable                                                             |  |      | 1,366,083   |   |      |   | (469,264    | )
|Accrued expenses                                                             |  |      | 143,959     |   |      |   | (125,282    | )
|Self insured obligations                                                     |  |      | (4,806      | ) |      |   | (336,761    | )
|Deferred compensation and other liabilities                                  |  |      | 255,784     |   |      |   | 220,069     |  
|                                                                             |  |      |             |   |      |   |             |  
|                                                                             |  |      | 555,754     |   |      |   | (449,857    | )
|                                                                             |  |      |             |   |      |   |             |  
|Net cash provided by operating activities                                    |  |      | 11,750,526  |   |      |   | 11,490,981  |  
|                                                                             |  |     
|Cash flows provided by (used in) investing activities:                       |  |      |             |   |      |   |             |  
|Additions to property and equipment                                          |  |      | (14,574,428 | ) |      |   | (13,138,614 | )
|Proceeds from disposition of property                                        |  |      |            |   |      |   | 242,360     |  
|Change in other assets                                                       |  |      | (107,981    | ) |      |   | (233,030    | )
|                                                                             |  |      |             |   |      |   |             |  
|Net cash (used in) investing activities                                      |  |      | (14,682,409 | ) |      |   | (13,129,284 | )
|                                                                             |  |     
|Cash flows provided by (used in) financing activities:                       |  |      |             |   |      |   |             |  
|Proceeds from borrowings                                                     |  |      | 8,500,000   |   |      |   | 7,500,000   |  
|Payment of long-term debt and capital lease obligations                      |  |      | (4,755,021  | ) |      |   | (4,030,572  | )
|Cash dividends paid                                                          |  |      | (1,113,097  | ) |      |   | (1,108,034  | )
|Proceeds from stock options exercised - new shares issued                    |  |      | 287,397     |   |      |   | 156,826     |  
|Proceeds from stock options exercised - treasury shares re-issued            |  |      |            |   |      |   | 62,354      |  
|Other treasury shares re-issued                                              |  |      | 51,829      |   |      |   | 72,404      |  
|Employee stock purchase plan                                                 |  |      | (22,725     | ) |      |   | (32,612     | )
|                                                                             |  |      |             |   |      |   |             |  
|Net cash provided by financing activities                                    |  |      | 2,948,383   |   |      |   | 2,620,366   |  
|                                                                             |  |      |             |   |      |   |             |  
|Net increase in cash and equivalents                                         |  |      | 16,500      |   |      |   | 982,063     |  
|Cash and equivalents at beginning of year                                    |  |      | 306,300     |   |      |   | 294,410     |  
|                                                                             |  |      |             |   |      |   |             |  
|Cash and equivalents at end of quarter                                       |  | $    | 322,800     |   |      | $ | 1,276,473   |  
|                                                                             |  |      |             |   |      |   |             |  
|Supplemental disclosures:                                                    |  |      |             |   |      |   |             |  
|Interest paid                                                                |  | $    | 1,697,832   |   |      | $ | 1,660,828   |  
|Income taxes paid (net of refunds, if any)                                   |  |      | 2,643,550   |   |      |   | 2,381,137   |  
|Dividends declared but not paid                                              |  |      | 558,115     |   |      |   | 555,536     |  
|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

Second Quarter Fiscal 2006, Ended December 11, 2005

NOTE A  ACCOUNTING POLICIES

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

Description of the Business

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

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

Consolidation Practices

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

Fiscal Year

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

Use of Estimates and Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to use estimates
and assumptions to measure certain items that affect the amounts reported. 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. Significant estimates and assumptions are used to measure self insurance liabilities, deferred executive compensation obligations, net periodic pension
cost and future pension obligations, the carrying values of property held for sale and for long-lived assets including property and equipment, goodwill and other intangible assets.

Management considers the following accounting policies to be critical accounting policies because the application of estimates to these policies require managements most difficult, subjective or complex
judgments: self-insurance liabilities, net periodic pension cost and future pension obligations, and the carrying values of long-lived assets.



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Cash and Cash Equivalents

Highly liquid investments with original maturities of three months or less are considered
to be cash equivalents. Outstanding checks in the amounts of $1,346,000 and $933,000 were included in accounts payable as of December 11, 2005 and May 29, 2005, respectively.

Receivables

The Company values its
trade notes and accounts receivable on the reserve method. The reserve balance was $30,000 as of December 11, 2005 and May 29, 2005. The reserve is monitored for adequacy based on historical collection patterns and write-offs, and current
credit risks.

Inventories

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

Accounting for Rebates

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

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided principally on the straight-line method over the estimated service lives, which range from ten to 25
years for buildings or components thereof and five to ten years for equipment. Leasehold improvements are depreciated over the shorter of the useful life of the asset or the lease term as lease terms are defined in Statement of Financial Accounting
Standards No. 13 (SFAS 13), Accounting for Leases, as amended. Interest on borrowings is capitalized during active construction periods of new restaurants. Capitalized interest was $87,000 and $89,000 respectively, for the 28 weeks
ended December 11, 2005 and December 12, 2004, and was $30,000 and $64,000 respectively, for the twelve weeks ended December 11, 2005 and December 12, 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 December 11, 2005 totaled approximately $1,015,000 for one Big Boy restaurant. No Golden Corral
restaurants were under construction at December 11, 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 managements judgment.



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Capitalized computer software is depreciated on the straight-line method over the estimated service lives, which range from three to ten years. The Companys cost capitalization policy with respect to computer software complies with
the American Institute of Certified Public Accountants Statement of Position 98-1 (SOP 98-1), Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. The installation of an enterprise information
system was completed in September 2004. Preliminary project stage costs were expensed as incurred in fiscal years 2002 and 2003. Software acquisition costs, installation, configuration, implementation and testing costs were capitalized during the
application development stage. The capitalization of the project included interest costs together with payroll and payroll related costs for certain employees who worked on the implementation. Capitalized interest for the 28 and twelve weeks ended
December 12, 2004 was $20,000 and zero, respectively. Capitalized payroll and payroll related costs for the 28 and twelve weeks ended December 12, 2004 was $96,000 and zero, respectively. Net of accumulated depreciation, the capitalized
cost of the enterprise information system was $4,135,000 and $4,400,000, respectively, as of December 11, 2005 and May 29, 2005.

Impairment of Assets

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

No impairment losses were recorded
during any of the periods presented in the accompanying consolidated financial statements.

Leases

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

Restaurant Closing Costs

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

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



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Goodwill and Other Intangible Assets, Including Licensing Agreements

Acquired goodwill is tested annually for
impairment and also whenever an impairment indicator arises. Impairment losses are recorded when impairment is determined to have occurred. As of December 11, 2005 and May 29, 2005, the carrying amount of goodwill acquired in prior years
was $741,000, which is net of $308,000 amortized in prior years.

Intangible assets having a finite useful life are subject to amortization, and are tested
annually for impairment. The Companys other intangible assets consist principally of initial franchise fees paid for each new Golden Corral restaurant the Company opens. Amortization of the $40,000 initial fee begins when the restaurant opens
and is computed using the straight-line method over the 15-year term of each individual restaurants franchise agreement. The fees are ratably amortized at $2,667 per year per restaurant, or approximately $91,000 per year in each of the next
five years for the 34 Golden Corral restaurants in operation as of December 11, 2005. Amortization for the 28 weeks ended December 11, 2005 and December 12, 2004 was $45,000 and $39,000 respectively, and was $20,000 and $17,000
respectively, for the twelve weeks ended December 11, 2005 and December 12, 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:



|                                                                                |  |                   |       |   |              |   |       |  
|------------------------------------------------------------------------------- |  | ----------------- | ----- | - | ------------ | - | ----- | -
|                                                                                |  | December 11, 2005 |       |   | May 29, 2005 |  
|                                                                                |  | (in thousands)    |      
|Golden Corral initial franchise fees subject to amortization                    |  | $                 | 1,360 |   |              | $ | 1,200 |  
|Less accumulated amortization                                                   |  |                   | (294  | ) |              |   | (249  | )
|                                                                                |  |                   |       |   |              |   |       |  
|Carrying amount of Golden Corral initial franchise fees subject to amortization |  |                   | 1,066 |   |              |   | 951   |  
|                                                                                |  |                  
|Current portion of Golden Corral initial franchise fees subject to amortization |  |                   | (91   | ) |              |   | (83   | )
|Golden Corral fees not yet subject to amortization                              |  |                   | 305   |   |              |   | 365   |  
|                                                                                |  |                  
|Other intangible assets                                                         |  |                   | 161   |   |              |   | 168   |  
|                                                                                |  |                   |       |   |              |   |       |  
|Total other intangible assets                                                   |  | $                 | 1,441 |   |              | $ | 1,401 |  
|                                                                                |  |                   |       |   |              |   |       |  

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



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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 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:



|              |  |                |       |                |   |              |  |              |     |  |   |    
|------------- |  | -------------- | ----- | -------------- | - | ------------ |  | ------------ | --- |  | - | ---
|              |  | 28 weeks ended |       | 12 weeks ended
|              |  | Dec. 11,2005   |       | Dec. 12,2004   |   | Dec. 11,2005 |  | Dec. 12,2004
|              |  | (in thousands)
|Golden Corral |  | $              | 969   |                | $ | 786          |  | $            | 309 |  | $ | 282
|Big Boy       |  |                | 162   |                |   | 264          |  |              | 61  |  |   | 45 
|              |  |                |       |                |   |              |  |              |     |  |   |    
|              |  | $              | 1,131 |                | $ | 1,050        |  | $            | 370 |  | $ | 327
|              |  |                |       |                |   |              |  |              |     |  |   |    

Benefit Plans

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

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

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

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



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Self Insurance

The Company self-insures its Ohio workers compensation claims up to $300,000 per claim. Initial
self-insurance liabilities are accrued based on prior claims history, including an amount developed for incurred but unreported claims. Claims experience has historically been reviewed each quarter, with a more comprehensive annual review being
performed during the first quarter of each fiscal year. The annual review would typically result in adjustments to the self-insurance liabilities to more closely match claims experience. Active claims management and post accident drug testing in
recent years has effected vast improvements in claims experience. As a result, management determined that a comprehensive review should be performed every quarter and that adjustments to the self-insurance liabilities should be recorded as needed
based on claims experience, beginning with the third quarter of fiscal 2005 that ended March 6, 2005. (Accordingly, adjustments of $349,000 and $81,000 were recorded respectively in the third and fourth quarters of fiscal 2005 to lower
self-insurance liabilities.) A lower rate is being used in the current fiscal year to accrue initial self-insurance liabilities, which should reduce future quarterly adjustments.

Self-insurance liabilities were lowered by $392,000 and $614,000 respectively, during the first quarters of fiscal years 2006 and 2005. The twelve weeks ended December 11, 2005 (the second quarter of fiscal 2006)
required an adjustment to increase self-insured liabilities by $18,000.

Fair Value of Financial Instruments

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

Income Taxes

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

Stock Based Compensation

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



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)



|                                                                                                                                        |  |                                       |       |                |   |               |  |               |       |  |   |      
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- | ----- | -------------- | - | ------------- |  | ------------- | ----- |  | - | -----
|                                                                                                                                        |  | 28 weeks ended                        |       | 12 weeks ended
|                                                                                                                                        |  | Dec. 11, 2005                         |       | Dec. 12, 2004  |   | Dec. 11, 2005 |  | Dec. 12, 2004
|                                                                                                                                        |  | (in thousands, except per share data)
|Net Income, as reported                                                                                                                 |  | $                                     | 4,285 |                | $ | 5,741         |  | $             | 1,683 |  | $ | 2,786
|Deduct: total stock-based employee compensation expense determined under fair value based method for all grants (a), net of tax
effects |  |                                       | 193   |                |   | 258           |  |               | 96    |  |   | 130  
|                                                                                                                                        |  |                                       |       |                |   |               |  |               |       |  |   |      
|Pro forma net income                                                                                                                    |  | $                                     | 4,092 |                | $ | 5,483         |  | $             | 1,587 |  | $ | 2,656
|                                                                                                                                        |  |                                       |       |                |   |               |  |               |       |  |   |      
|Earnings per share                                                                                                                      |  |                                       |       |                |   |               |  |               |       |  |   |      
|                                                                                                                                        |  |                                       |       |               
|Basic  as reported                                                                                                                     |  | $                                     | 0.85  |                | $ | 1.14          |  | $             | .33   |  | $ | .55  
|Basic  pro forma                                                                                                                       |  | $                                     | 0.81  |                | $ | 1.09          |  | $             | .31   |  | $ | .53  
|                                                                                                                                        |  |                                       |       |               
|Diluted  as reported                                                                                                                   |  | $                                     | 0.83  |                | $ | 1.11          |  | $             | .33   |  | $ | .54  
|Diluted  pro forma                                                                                                                     |  | $                                     | 0.79  |                | $ | 1.06          |  | $             | .31   |  | $ | .52  

---

|(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:



|                                               |  |                |         |   |                |   |         |               |  |   |               |   |  |   |         |  
|---------------------------------------------- |  | -------------- | ------- | - | -------------- | - | ------- | ------------- |  | - | ------------- | - |  | - | ------- | -
|                                               |  | 28 weeks ended |         |   | 12 weeks ended |  
|                                               |  | Dec. 11, 2005  |         |   | Dec. 12, 2004  |   |         | Dec. 11, 2005 |  |   | Dec. 12, 2004 |  
|Dividend yield                                 |  |                | 1.80    | % |                |   | 1.61    | %             |  |   | 1.80          | % |  |   | 1.61    | %
|Expected volatility                            |  |                | 26      | % |                |   | 29      | %             |  |   | 26            | % |  |   | 29      | %
|Risk free interest rate                        |  |                | 3.87    | % |                |   | 3.82    | %             |  |   | 4.25          | % |  |   | 3.35    | %
|Expected lives                                 |  |                | 5 years |   |                |   | 5 years |               |  |   | 5 years       |   |  |   | 5 years |  
|Weighted average fair value of options granted |  | $              | 6.19    |   |                | $ | 8.13    |               |  | $ | 6.12          |   |  | $ | 6.79    |  

New Accounting Pronouncements

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



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

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

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

The Company reviewed all other significant
newly issued accounting pronouncements, including Statements of Financial Accounting Standards Nos. 152 Accounting for Real Estate Time Sharing Transactions and 153 Exchanges of Nonmonetary Assets, and concluded that, other
than those disclosed herein, no material impact is anticipated on the financial statements as a result of future adoption. Statement of Accounting Standards No. 154 (SFAS 154), Accounting Changes and Error Corrections  a replacement
of APB Opinion No. 20 and FASB Statement No. 3 was issued in May 2005, effective for fiscal years beginning after December 15, 2005. The Company will comply with the provisions of SFAS 154 for any accounting changes or error
corrections that occur after May 28, 2006.

NOTE B - LONG-TERM DEBT



|                                                      |  |                         |       |                        |   |                         |  |                        |       |  |   |       
|----------------------------------------------------- |  | ----------------------- | ----- | ---------------------- | - | ----------------------- |  | ---------------------- | ----- |  | - | ------
|                                                      |  | December 11, 2005       |       | May 29, 2005          
|                                                      |  | Payable within one year |       | Payable after one year |   | Payable within one year |  | Payable after one
year
|                                                      |  | (in thousands)         
|Construction Draw Facility - Construction Phase Loans |  | $                       |      |                        | $ | 1,500                   |  | $                      |      |  | $ | 2,000 
|Term Loans                                            |  |                         | 8,748 |                        |   | 27,924                  |  |                        | 7,598 |  |   | 24,570
|Bullet Loan                                           |  |                         |      |                        |   | 3,000                   |  |                        |      |  |   | 3,000 
|Revolving Credit Loan                                 |  |                         |      |                        |   |                        |  |                        |      |  |   |      
|                                                      |  |                         |       |                        |   |                         |  |                        |       |  |   |       
|                                                      |  | $                       | 8,748 |                        | $ | 32,424                  |  | $                      | 7,598 |  | $ | 29,570
|                                                      |  |                         |       |                        |   |                         |  |                        |       |  |   |       

The portion payable after one year matures as follows:



|                      |  |                   |        |              |   |       
|--------------------- |  | ----------------- | ------ | ------------ | - | ------
|                      |  | December 11, 2005 |        | May 29, 2005
|                      |  | (in thousands)   
|Period ending in 2007 |  | $                 | 9,547  |              | $ | 9,363 
|2008                  |  |                   | 10,121 |              |   | 9,726 
|2009                  |  |                   | 5,039  |              |   | 5,161 
|2010                  |  |                   | 3,689  |              |   | 2,780 
|2011                  |  |                   | 2,662  |              |   | 2,058 
|Subsequent to 2011    |  |                   | 1,366  |              |   | 482   
|                      |  |                   |        |              |   |       
|                      |  | $                 | 32,424 |              | $ | 29,570
|                      |  |                   |        |              |   |       



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE B - LONG-TERM DEBT (CONTINUED)

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

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

Fixed interest rates have been chosen for all of the Term Loans (original notes
for $61,500,000), the weighted average of which is 6.08 percent, and all of the Term Loans are being repaid in 84 equal monthly installments of principal and interest aggregating $913,000, expiring in various periods ranging from May 2006 through
December 2012. Prepayments of the Term Loans are permissible upon payment of sizeable prepayment fees and other amounts. As of December 11, 2005, $1,500,000 remained in the Construction Phase of the Facility, which was subsequently converted to
Term Loan on January 1, 2006. Any outstanding Construction Phase Loan that has not been converted into a Term Loan shall mature and be payable in full on September 1, 2008, unless extended.

The Bullet Loan bears interest at a fixed rate of 5.57 percent. It matures and is payable in one installment on December 31, 2007. On September 27, 2005, four
of six mortgages that had been held as collateral for the Bullet Loan were released pursuant to the amended and restated loan agreements. The approximate book value of the real property secured by the two remaining mortgages is $4,291,000 as of
December 11, 2005.

The Revolving Credit Loan allows for borrowing of up to $5,000,000 to fund temporary working capital needs. The loan, none of
which was outstanding as of December 11, 2005, is subject to a 30 consecutive day out-of-debt period each year. The amended and restated loan agreements extended its maturity from September 1, 2006 to September 1, 2008. Interest is
determined by the same pricing matrix used for Construction Phase Loans under the Construction Draw Facility, the basis points from which are added to or subtracted from one of various indices chosen by the Company. The loan is subject to a .25
percent unused commitment fee. Interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly.

These loan agreements contain covenants relating to tangible net worth, cash flow, debt levels, capitalization changes, asset dispositions, investments and restrictions on pledging certain restaurant operating assets. The Company was in
compliance with all loan covenants as of December 11, 2005. Compensating balances are not required by these loan agreements.

Being variable rated
interest loans, the fair values of any outstanding balances in the Construction Phase of the Construction Draw Facility or the Revolving Credit Loan approximate carrying value as of December 11, 2005 and May 29, 2005. The fair value of the
Bullet Loan also approximates carrying value. The fair values of the fixed rate Term Loans shown in the following table are based on fixed rates that would be available for loans with identical terms and maturities, if borrowed at December 11,
2005 and May 29, 2005.



|                                              |  |                   |        |              |   |                |  |            |        |  |   |       
|--------------------------------------------- |  | ----------------- | ------ | ------------ | - | -------------- |  | ---------- | ------ |  | - | ------
|                                              |  | December 11, 2005 |        | May 29, 2005
|                                              |  | Carrying value    |        | Fair value   |   | Carrying value |  | Fair value
|                                              |  | (in thousands)   
|Term Loans - under Construction Draw Facility |  | $                 | 36,672 |              | $ | 36,315         |  | $          | 32,168 |  | $ | 31,715



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE C - LEASED PROPERTY

Although it is
the Companys policy to own its restaurant locations whenever possible, the Company occupies certain of its restaurants pursuant to lease agreements. Most 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 December 11, 2005, 32 restaurants were in operation on leased premises, ten of which are capital leases. Delivery equipment is also held under capitalized leases expiring during
periods through 2012. Amortization of capitalized lease assets is computed on the straight-line method over the primary terms of the leases. An analysis of the capitalized leased property follows:



|                              |  |                   |        |   |              |   |        |  
|----------------------------- |  | ----------------- | ------ | - | ------------ | - | ------ | -
|                              |  | Asset balances at |       
|                              |  | December 11, 2005 |        |   | May 29, 2005 |  
|                              |  | (in thousands)    |       
|Restaurant facilities         |  | $                 | 5,967  |   |              | $ | 5,967  |  
|Equipment                     |  |                   | 1,165  |   |              |   | 1,165  |  
|                              |  |                   |        |   |              |   |        |  
|                              |  |                   | 7,132  |   |              |   | 7,132  |  
|Less accumulated amortization |  |                   | (6,072 | ) |              |   | (5,841 | )
|                              |  |                   |        |   |              |   |        |  
|                              |  | $                 | 1,060  |   |              | $ | 1,291  |  
|                              |  |                   |        |   |              |   |        |  

As of December 11, 2005, 22 of the Companys restaurant properties are occupied pursuant to operating
leases, eight of which are ground leases for Golden Corral restaurants. The Company is also obligated to a ground lease for a Big Boy restaurant that is currently under construction and is scheduled to open in February 2006. Office space is occupied
under an operating lease that expires during 2013, with renewal options available through 2023. The Company has the option to purchase the office property in 2023.

Rent expense under operating leases:



|                    |  |                |       |                |   |              |  |              |     |  |   |    
|------------------- |  | -------------- | ----- | -------------- | - | ------------ |  | ------------ | --- |  | - | ---
|                    |  | 28 weeks ended |       | 12 weeks ended
|                    |  | Dec. 11,2005   |       | Dec. 12,2004   |   | Dec. 11,2005 |  | Dec. 12,2004
|                    |  | (in thousands)
|Minimum rentals     |  | $              | 1,025 |                | $ | 837          |  | $            | 471 |  | $ | 352
|Contingent payments |  |                | 28    |                |   | 32           |  |              | 15  |  |   | 18 
|                    |  |                |       |                |   |              |  |              |     |  |   |    
|                    |  | $              | 1,053 |                | $ | 869          |  | $            | 486 |  | $ | 370
|                    |  |                |       |                |   |              |  |              |     |  |   |    



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE C - LEASED PROPERTY (CONTINUED)

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



|                             |  |                    |       |   |                  |   |       
|---------------------------- |  | ------------------ | ----- | - | ---------------- | - | ------
|Period ending December 11,   |  | Capitalized leases |       |   | Operating leases
|                             |  | (in thousands)    
|2006                         |  | $                  | 776   |   |                  | $ | 1,751 
|2007                         |  |                    | 2,777 |   |                  |   | 1,776 
|2008                         |  |                    | 189   |   |                  |   | 1,764 
|2009                         |  |                    | 116   |   |                  |   | 1,720 
|2010                         |  |                    | 81    |   |                  |   | 1,439 
|2011 to 2025                 |  |                    | 153   |   |                  |   | 17,409
|                             |  |                    |       |   |                  |   |       
|Total                        |  |                    | 4,092 |   |                  | $ | 25,859
|                             |  |                    |       |   |                  |   |       
|Amount representing interest |  |                    | (680  | ) |                  |   |       
|                             |  |                    |       |   |                  |   |       
|Present value of obligations |  |                    | 3,412 |   |                  |   |       
|Portion due within one-year  |  |                    | (495  | ) |                  |   |       
|                             |  |                    |       |   |                  |   |       
|Long-term obligations        |  | $                  | 2,917 |   |                  |   |       
|                             |  |                    |       |   |                  |   |       

Not included in the above table is a contingent liability for the performance of a ground lease that has been
assigned to a third party. The annual obligation of the lease approximates $48,000 through 2020. Should the third party default, the Company has the right to re-assign the lease.

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 10 years, the time or times when the option will become exercisable and the price per share that a participant must pay to exercise the
option. No option will be granted with an exercise price that is less than 100 percent of fair market value on the date of the grant.

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



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Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE D  CAPITAL STOCK (CONTINUED)

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

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

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

As of December 11, 2005, options to purchase 84,500 shares had been granted, including 20,000 that belong to the President and Chief Executive Officer. The Committee has determined that outstanding options belonging to the President
and Chief Executive Officer vest six months from the date of grant. The Committee has further determined that outstanding options granted to other key employees vest in three equal annual installments and that outstanding options granted to
non-employee members of the Board of Directors vest one year from the date of grant. As of December 11, 2005, 724,000 shares remain available to be optioned, including 8,500 shares granted that were subsequently forfeited, which are again
available for grants in accordance with the Re-Use of Shares provision of the Plan.

No other awards - stock appreciation rights, restricted
stock award, unrestricted stock award or performance award - had been granted under the 2003 Stock Option and Incentive Plan.

Other Stock Option Plans

The 1993 Stock Option Plan was not affected by the adoption of the 2003 Stock Option and Incentive Plan. The 1993
Stock Option Plan originally authorized the grant of stock options for up to 562,432 shares (as adjusted for changes in capitalization in earlier years) of the common stock of the Company for a ten-year period beginning May 9, 1994.
Shareholders approved the Amended and Restated 1993 Stock Option Plan (Amended Plan) in October 1998, which extended the availability of options to be granted to October 4, 2008. As of December 11, 2005, 6,204 shares remained available to
be optioned. Of the 556,228 cumulative shares optioned to date, 342,821 remain outstanding as of December 11, 2005, 211,478 of which belong to the President and Chief Executive Officer.

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

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



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE D  CAPITAL STOCK (CONTINUED)



|                                 |  |                   |   |                   |                               |       |               |         |   |                               |   |      
|-------------------------------- |  | ----------------- | - | ----------------- | ----------------------------- | ----- | ------------- | ------- | - | ----------------------------- | - | -----
|                                 |  | 28 weeks ended   
|                                 |  | December 11, 2005 |   | December 12, 2004
|                                 |  | No. of shares     |   |                   | Weighted avg. price per share |       | No. of shares |         |   | Weighted avg. price per share
|Outstanding at beginning of year |  | 376,577           |   |                   | $                             | 18.90 |               | 319,993 |   |                               | $ | 15.97
|Granted during the 28 weeks      |  | 77,500            |   |                   | $                             | 24.50 |               | 81,000  |   |                               | $ | 29.37
|Exercised during the 28 weeks    |  | (15,921           | ) |                   | $                             | 18.05 |               | (14,997 | ) |                               | $ | 14.61
|Expired during the 28 weeks      |  |                  |   |                   | $                             |      |               |        |   |                               | $ |     
|Forfeited during the 28 weeks    |  | (19,335           | ) |                   | $                             | 25.90 |               | (1,919  | ) |                               | $ | 18.94
|                                 |  |                   |   |                   |                               |       |               |         |   |                               |   |      
|Outstanding at end of quarter    |  | 418,821           |   |                   | $                             | 19.65 |               | 384,077 |   |                               | $ | 18.84
|                                 |  |                   |   |                   |                               |       |               |         |   |                               |   |      
|Exercisable at beginning of year |  | 283,903           |   |                   | $                             | 17.04 |               | 227,314 |   |                               | $ | 14.94
|                                 |  |                   |   |                   |                               |       |               |         |   |                               |   |      
|Exercisable at end of quarter    |  | 315,319           |   |                   | $                             | 17.84 |               | 260,571 |   |                               | $ | 15.58
|                                 |  |                   |   |                   |                               |       |               |         |   |                               |   |      

Stock options outstanding and exercisable as of December 11, 2005 for the 1993 Stock option Plan and the 2003
Stock option and Incentive Plan:



|                                   |  |              |  |                                  |       |                                          |           
|---------------------------------- |  | ------------ |  | -------------------------------- | ----- | ---------------------------------------- | ----------
|Range of Exercise Prices per Share |  | No. ofshares |  | Weighted average price per share |       | Weighted average remaining life in years
|Outstanding:                       |  |              |  |                                  |       |                                          |           
|$ 8.31 to $13.00                   |  | 72,229       |  | $                                | 10.62 |                                          | 4.36 years
|$13.01 to $18.00                   |  | 58,085       |  | $                                | 13.74 |                                          | 5.55 years
|$18.01 to $24.20                   |  | 160,507      |  | $                                | 19.78 |                                          | 7.27 years
|$24.21 to $30.13                   |  | 128,000      |  | $                                | 27.25 |                                          | 8.96 years
|                                   |  |              |  |                                  |       |                                          |           
|$ 8.31 to $30.13                   |  | 418,821      |  | $                                | 19.65 |                                          | 7.05 years
|                                   |  |              | 
|Exercisable:                       |  |              |  |                                  |       |                                          |           
|$ 8.31 to $13.00                   |  | 72,229       |  | $                                | 10.62 |                                          |          
|$13.01 to $18.00                   |  | 58,085       |  | $                                | 13.74 |                                          |          
|$18.01 to $24.20                   |  | 135,998      |  | $                                | 19.46 |                                          |          
|$24.21 to $30.13                   |  | 49,007       |  | $                                | 28.87 |                                          |          
|                                   |  |              |  |                                  |       |                                          |           
|$ 8.31 to $30.13                   |  | 315,319      |  | $                                | 17.84 |                                          |          

Shareholders approved the Employee Stock Option Plan (elsewhere referred to as Employee Stock Purchase Plan) in
1998. The Plan provides employees who have completed 90 days of continuous service with an opportunity to purchase shares of the Companys common stock through payroll deduction. Immediately following the end of each semi-annual offering
period, participant account balances are used to purchase shares of stock at the lesser of 85% of the fair market value of shares at the beginning of the offering period or at the end of the offering period. The Plan authorizes a maximum of
1,000,000 shares that may be purchased on the open market or from the Companys treasury. As of October 31, 2005 (latest available data), 109,868 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, 2005, the custodian held 37,371 shares on behalf of employees.



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Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE D  CAPITAL STOCK (CONTINUED)

A
total of 58,492 common shares (as adjusted for changes in capitalization in earlier years) were reserved for issuance under the non-qualified Executive Savings Plan (see Note A  Accounting Policies) when it was established in 1993. As of
December 11, 2005, 48,330 shares remained in the reserve, including 10,162 shares allocated but not issued to participants.

There are no other outstanding options, warrants or rights.

Treasury Stock

As of December 11, 2005, the Companys treasury held 2,447,323 shares of the Companys common stock. From September 1998 through January 2002, 1,135,286
shares of the Companys common stock were repurchased at a cost of $12,162,000 pursuant to repurchase programs authorized by the Companys Board of Directors. No shares were repurchased under the two-year authorization that expired
October 7, 2004.

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

Earnings Per Share

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



|                  |  |                                    |  |                   |      |                            |         |                                    |           |     |   |     
|----------------- |  | ---------------------------------- |  | ----------------- | ---- | -------------------------- | ------- | ---------------------------------- | --------- | --- | - | ----
|                  |  | Basic earnings per share           |  | Stock equivalents |      | Diluted earnings per share
|                  |  | Weighted averageshares outstanding |  | EPS               |      |                            |         | Weighted averageshares outstanding |           | EPS
|28 weeks ended:   |  |                                    |  |                   |      |                            |         |                                    |           |     |   |     
|                  |  |                                    |  |                   |     
|December 11, 2005 |  | 5,061,406                          |  | $                 | 0.85 |                            | 100,295 |                                    | 5,161,701 |     | $ | 0.83
|December 12, 2004 |  | 5,036,682                          |  | $                 | 1.14 |                            | 116,355 |                                    | 5,153,037 |     | $ | 1.11
|                  |  |                                    |  |                   |     
|12 weeks ended:   |  |                                    |  |                   |      |                            |         |                                    |           |     |   |     
|                  |  |                                    |  |                   |     
|December 11, 2005 |  | 5,066,385                          |  | $                 | .33  |                            | 95,881  |                                    | 5,162,266 |     | $ | .33 
|December 12, 2004 |  | 5,039,103                          |  | $                 | .55  |                            | 105,119 |                                    | 5,144,222 |     | $ | .54 



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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:



|                                                                  |  |                |        |   |                |   |        |              |  |   |              |   |  |   |      |  
|----------------------------------------------------------------- |  | -------------- | ------ | - | -------------- | - | ------ | ------------ |  | - | ------------ | - |  | - | ---- | -
|                                                                  |  | 28 weeks ended |        |   | 12 weeks ended |  
|Net periodic pension cost components                              |  | Dec. 11,2005   |        |   | Dec. 12,2004   |   |        | Dec. 11,2005 |  |   | Dec. 12,2004 |  
|                                                                  |  | (in thousands) |       
|Service cost                                                      |  | $              | 894    |   |                | $ | 873    |              |  | $ | 405          |   |  | $ | 348  |  
|Interest cost                                                     |  |                | 790    |   |                |   | 770    |              |  |   | 357          |   |  |   | 306  |  
|Expected return on plan assets                                    |  |                | (1,068 | ) |                |   | (1,043 | )            |  |   | (484         | ) |  |   | (415 | )
|Amortization of prior service cost                                |  |                | 38     |   |                |   | 35     |              |  |   | 17           |   |  |   | 14   |  
|Amortization of loss                                              |  |                | 269    |   |                |   | 261    |              |  |   | 126          |   |  |   | 108  |  
|                                                                  |  |                |        |   |                |   |        |              |  |   |              |   |  |   |      |  
|Net periodic pension cost                                         |  | $              | 923    |   |                | $ | 896    |              |  | $ | 421          |   |  | $ | 361  |  
|                                                                  |  |                |        |   |                |   |        |              |  |   |              |   |  |   |      |  
|Weighted average discount rate                                    |  |                | 6.0    | % |                |   | 6.5    | %            |  |   | 6.0          | % |  |   | 6.5  | %
|Weighted average rate of compensation increase                    |  |                | 4.5    | % |                |   | 5.0    | %            |  |   | 4.5          | % |  |   | 5.0  | %
|Weighted average expected long-term rate of return on plan assets |  |                | 8.5    | % |                |   | 8.5    | %            |  |   | 8.5          | % |  |   | 8.5  | %

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

Compensation
expense (not included in the net periodic pension cost described above) relating to the Nondeferred Cash Balance Plan (see Note A  Accounting Policies) was $268,000 and $275,000 respectively, during the 28 weeks ended December 11, 2005
and December 12, 2004, and was $109,000 and $124,000 respectively, for the twelve weeks ended December 11, 2005 and December 12, 2004. Contributions of $367,000 and $521,000 respectively, were made to the Plan in December 2005 and
December 2004.

The Company sponsors two 401(k) plans (see Note A  Accounting Policies). In addition, a non-qualified Executive Savings Plan is
sponsored for certain HCEs who have been disqualified from participation in the 401(k) plans (see Note A  Accounting Policies). In the 28 weeks ended December 11, 2005 and December 12, 2004, matching contributions to the 401(k)
plans amounted to $85,000 and $91,000 respectively, and were $36,000 and $38,000 respectively, during the twelve weeks ended December 11, 2005 and December 12, 2004. Matching contributions to the Executive Savings Plan were $12,000 and
$12,000 respectively, during the 28 weeks ended December 11, 2005 and December 12, 2004, and were $5,000 and $4,000 respectively, during the twelve weeks ended December 11, 2005 and December 12, 2004.

The Company does not sponsor post retirement health care benefits.



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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:



|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|-------------------------------- |  | -------------- | -------- | - | -------------- | - | ------- | ------------ |  | - | ------------ | - |  | - | ------ | -
|                                 |  | 28 weeks ended |          |   | 12 weeks ended |  
|                                 |  | Dec. 11,2005   |          |   | Dec. 12,2004   |   |         | Dec. 11,2005 |  |   | Dec. 12,2004 |  
|                                 |  | (in thousands) |         
|Sales                            |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|Big Boy                          |  | $              | 99,528   |   |                | $ | 100,594 |              |  | $ | 44,394       |   |  |   | 45,401 |  
|Golden Corral                    |  |                | 53,958   |   |                |   | 50,216  |              |  |   | 22,559       |   |  |   | 21,346 |  
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|                                 |  |                | $153,486 |   |                | $ | 150,810 |              |  | $ | 66,953       |   |  | $ | 66,747 |  
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|Earnings before income taxes     |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|Big Boy                          |  | $              | 12,033   |   |                | $ | 12,297  |              |  | $ | 5,559        |   |  | $ | 5,978  |  
|Opening expense                  |  |                | (162     | ) |                |   | (264    | )            |  |   | (60          | ) |  |   | (45    | )
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|Total Big Boy                    |  |                | 11,871   |   |                |   | 12,033  |              |  |   | 5,499        |   |  |   | 5,933  |  
|                                 |  |                |          |  
|Golden Corral                    |  |                | 743      |   |                |   | 2,502   |              |  |   | (542         | ) |  |   | 869    |  
|Opening expense                  |  |                | (969     | ) |                |   | (786    | )            |  |   | (310         | ) |  |   | (282   | )
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|Total Golden Corral              |  |                | (226     | ) |                |   | 1,716   |              |  |   | (852         | ) |  |   | 587    |  
|                                 |  |                |          |  
|Total restaurant level profit    |  |                | 11,645   |   |                |   | 13,749  |              |  |   | 4,647        |   |  |   | 6,520  |  
|                                 |  |                |          |  
|Administrative expense           |  |                | (4,377   | ) |                |   | (4,159  | )            |  |   | (1,788       | ) |  |   | (1,791 | )
|Franchise fees and other revenue |  |                | 663      |   |                |   | 733     |              |  |   | 290          |   |  |   | 311    |  
|Gain on asset sales              |  |                |         |   |                |   | 89      |              |  |   |             |   |  |   | 89     |  
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|Operating profit                 |  |                | 7,931    |   |                |   | 10,412  |              |  |   | 3,149        |   |  |   | 5,129  |  
|                                 |  |                |          |  
|Interest expense                 |  |                | (1,440   | ) |                |   | (1,446  | )            |  |   | (657         | ) |  |   | (641   | )
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|                                 |  |                |          |  
|Earnings before income taxes     |  | $              | 6,491    |   |                | $ | 8,966   |              |  | $ | 2,492        |   |  | $ | 4,488  |  
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|Depreciation and amortization    |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|Big Boy                          |  | $              | 4,072    |   |                | $ | 3,884   |              |  | $ | 1,785        |   |  | $ | 1,688  |  
|Golden Corral                    |  |                | 2,789    |   |                |   | 2,346   |              |  |   | 1,229        |   |  |   | 1,053  |  
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|                                 |  | $              | 6,861    |   |                | $ | 6,230   |              |  | $ | 3,014        |   |  | $ | 2,741  |  
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|Capital expenditures             |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|Big Boy                          |  | $              | 6,004    |   |                | $ | 5,973   |              |  | $ | 3,203        |   |  | $ | 2,746  |  
|Golden Corral                    |  |                | 8,570    |   |                |   | 7,166   |              |  |   | 3,298        |   |  |   | 1,394  |  
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  
|                                 |  | $              | 14,574   |   |                | $ | 13,139  |              |  | $ | 6,501        |   |  | $ | 4,140  |  
|                                 |  |                |          |   |                |   |         |              |  |   |              |   |  |   |        |  



|                    |  |              |         |             |   |        
|------------------- |  | ------------ | ------- | ----------- | - | -------
|                    |  | As of       
|                    |  | Dec. 11,2005 |         | May 29,2005
|Identifiable assets |  |              |         |             |   |        
|Big Boy             |  | $            | 86,898  |             | $ | 84,944 
|Golden Corral       |  |              | 89,000  |             |   | 82,522 
|                    |  |              |         |             |   |        
|                    |  | $            | 175,898 |             | $ | 167,466
|                    |  |              |         |             |   |        



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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 an amount exceeding $1,000,000. The Company is vigorously prosecuting this
claim and believes that it will ultimately prevail in the matter, which is currently before the American Arbitration Association.

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

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

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

Other Contingencies

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

As of December 11, 2005, the Company has two
outstanding letters of credit totaling $164,000 in support of its self- insurance program (See Note A  Accounting Policies). The Company also has an outstanding letter of credit for $162,000 that supports an environmental remediation plan for
the restoration of certain land that the Company no longer owns, which was contaminated by a previous owner who can not be located. There are no other outstanding letters of credit issued by the Company.



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##### Table of Contents

Frischs Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE H  LIFE INSURANCE BENEFIT

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

NOTE 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 $2,662,000 and $2,705,000 respectively, during the 28 weeks ended December 11, 2005 and December 12, 2004, and was $1,173,000 and $1,216,000 respectively, during the twelve weeks ended December 11, 2005
and December 12, 2004. The amount owed to the Company from these restaurants was $152,000 and $106,000 respectively, as of December 11, 2005 and May 29, 2005. Amounts due are generally settled within 28 days of billing.

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

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

The Chairman of the Board had an
employment agreement that had a provision for deferred compensation. The agreement provided that upon its expiration or upon the Chairmans retirement, disability, death or other termination of employment, the Company would become obligated to
pay the Chairman or his survivors for each of the next ten years the amount of $214,050, which is to be adjusted annually to reflect 50 percent of the annual percentage change in the Consumer Price Index. The present value of the long-term portion
of the obligation approximating $1,482,000 is reflected in the balance sheet under the caption Deferred compensation and other. The present value of the current portion of the obligation approximating $123,000 is included in current
liabilities.



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##### Table of Contents

ITEM 1A. RISK FACTORS

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

Severe winter weather could have a prominent
negative impact upon revenue during the twelve-week third quarter of fiscal 2006 which spans most of the winter season from mid December through early March 2006. Consumer confidence, already weakened by a soft economy in the Companys Midwest
operating markets and the steep cost of gasoline, may decline further during the winter months as home heating costs soar and consumer debt payments are scheduled to rise, harming discretionary spending in general, and spending in restaurants in
particular. The Companys occupancy and other fixed operating costs will have a greater adverse impact on results of operations during any quarter that may experience disruptions to normal sales patterns.

The Companys costs are also obviously affected by increasing energy prices. Petroleum based material is often used to package certain products for distribution.
The cost to transport these products from the commissary to restaurant operations will rise with each increase in gasoline prices. Finally, and most significantly, rising natural gas prices are expected to result in much higher costs to heat dining
rooms and cook food during the winter months.

Golden Corral same-store sales declines have been experienced for nine consecutive quarters. During the
quarter for which this report on Form 10-Q is being filed, Golden Corrals pre-tax earnings declined nearly $1,440,000 from the same period a year ago to a pre-tax loss of just over $850,000, resulting in a pre-tax loss of $226,000 for the
first half of fiscal 2006. Seven Golden Corrals are now cash flow negative. The ability of the Company to identify the root cause of the downturn, thereby allowing corrective measures to be set in place, being critical to the restoration of
sales and margin growth, poses a significant risk.

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



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##### Table of Contents

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

SAFE HARBOR STATEMENT under the PRIVATE SECURITIES LITIGATION REFORM ACT of 1995

Certain statements contained in this Managements
Discussion and Analysis of Financial Condition and Results of Operation (MD&A) are forward-looking statements (as that item is defined in the Private Securities Litigation Reform Act of 1995) that are subject to risks, uncertainties
and other factors that could cause actual results and performance to differ materially from those expressed or implied by those statements. Factors that could cause such differences to occur include, but are not limited to, those discussed in this
Form 10-Q/A under Item 1A. Risk Factors. Forward-looking statements can generally be identified in sentences that contain words such as should, would, could, may,
plan, anticipate, project, believe, will, expect, estimate, intend, continue, assumptions, goals, target,
and similar words (or derivatives thereof) that may be used to convey forward-looking statements that are contained in this MD&A.

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

CORPORATE
OVERVIEW

The Companys Second Quarter of Fiscal 2006 consists of the twelve weeks ended December 11, 2005, and compares with the twelve weeks
ended December 12, 2004, which constituted the Second Quarter of Fiscal 2005. The First Half of Fiscal 2006 consists of the 28 weeks ended December 11, 2005, and compares with the 28 weeks ended December 12, 2004, which constituted
the First Half of Fiscal 2005. The first half of the Companys fiscal year normally accounts for a disproportionate share of annual revenue and earnings because it contains 28 weeks whereas the second half of the year normally contains only 24
weeks. The twelve-week third quarter in particular is a disproportionately smaller share of annual revenue and earnings because it spans most of the winter season from mid December through early March. Additionally, severe winter weather can have a
marked negative impact upon revenue and earnings during the third quarter. Operations consist of two reportable segments within the restaurant industry: Big Boy restaurants and Golden Corral restaurants.

Certain reclassifications to the consolidated statement of earnings have been made to the Second Quarter of Fiscal 2005 and the First Half of 2005 to conform to the
current year presentation.

Despite reaching record sales of $66,953,000 during the Second Quarter of Fiscal 2006 (an increase of $206,000, or .3 percent
higher than the Second Quarter of Fiscal 2005), sales volume was disappointing:



| |  | Big Boy same store sales decreased 1.8 percent.
|- |  | -----------------------------------------------



| |  | Golden Corral same store sales declined 10.7 percent.
|- |  | -----------------------------------------------------

Record sales of
$153,486,000 were reached for the First Half of Fiscal 2006, an increase of $2,676,000 or 1.8 percent higher than the First Half of Fiscal 2005. However, it should be noted:



| |  | Big Boy same store sales decreased of 1.2 percent.
|- |  | --------------------------------------------------



| |  | Golden Corral same store sales declined 10.5 percent.
|- |  | -----------------------------------------------------

Net earnings for
the Second Quarter of Fiscal 2006 were $1,683,000, or diluted earnings per share (EPS) of $.33. Comparable net earnings from the Second Quarter of Fiscal 2005 were $2,786,000, or $.54 diluted EPS. Net earnings for the First Half of Fiscal 2006 were
$4,285,000, or $.83 diluted EPS. Comparable net earnings from the First Half of Fiscal 2005 were $5,741,000, or $1.11 diluted EPS. The erosion of sales had its impact on comparable gross profits:



| |  | Big Boy gross profit declined 6.6 percent from the Second Quarter of Fiscal 2005, and 1.4 percent below the First Half of Fiscal 2005.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  | Golden Corral gross profit was 135 percent below the Second Quarter of Fiscal 2005, and was 66.6 percent below the First Half of Fiscal 2005.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

RESULTS OF OPERATION

Sales

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



|                              |  |                |        |              |   |              |  |              |         |  |   |        
|----------------------------- |  | -------------- | ------ | ------------ | - | ------------ |  | ------------ | ------- |  | - | -------
|                              |  | Second Quarter |        | First Half  
|                              |  | Dec. 11,2005   |        | Dec. 12,2004 |   | Dec. 11,2005 |  | Dec. 12,2004
|                              |  | (in thousands)
|Big Boy restaurant sales      |  | $              | 42,119 |              | $ | 43,147       |  | $            | 94,381  |  | $ | 95,994 
|Wholesale sales to licensees  |  |                | 2,119  |              |   | 2,103        |  |              | 4,799   |  |   | 4,277  
|Other wholesale sales         |  |                | 156    |              |   | 151          |  |              | 349     |  |   | 323    
|                              |  |                |        |              |   |              |  |              |         |  |   |        
|Total Big Boy Sales           |  |                | 44,394 |              |   | 45,401       |  |              | 99,529  |  |   | 100,594
|                              |  |                |        |             
|Golden Corral sales           |  |                | 22,559 |              |   | 21,346       |  |              | 53,957  |  |   | 50,216 
|                              |  |                |        |              |   |              |  |              |         |  |   |        
|Consolidated restaurant sales |  | $              | 66,953 |              | $ | 66,747       |  | $            | 153,486 |  | $ | 150,810
|                              |  |                |        |              |   |              |  |              |         |  |   |        

Decreased Big Boy restaurant sales shown in the above table are attributable to same store sales declines of 1.8
percent and 1.2 percent respectively, in the Second Quarter of Fiscal 2006 and the First Half of Fiscal 2006. The same store sales declines can be further traced to lower customer counts, as current traffic fell 3.5 percent below the Second Quarter
of Fiscal 2005 and 3 percent lower than the First Half of Fiscal 2005. Big Boy same store sales have declined for three consecutive quarters. Menu prices were increased 1.4 percent in September 2005, 1 percent in February 2005 and 1.5 percent in
September 2004. Another price increase is currently being planned for February 2006.

Through the third quarter of fiscal 2005 (ended March 6, 2005),
Big Boy restaurants had achieved same store sales increases in 29 of the last 30 quarters. Management continues to believe there is a direct correlation between lower customer counts that have been experienced over the last three quarters and the
continuing steep cost of gasoline. It is noteworthy that gasoline prices first crossed the threshold of $2.00 per gallon in March 2005. A soft economy in the Companys Midwest markets has probably affected consumer confidence in general
especially as home heating costs are likely to soar over the coming winter months.

The Company currently operates 89 Big Boy restaurants. This count
includes one that re-opened in August 2005 following its reconstruction. It had been temporarily closed since May 2005. No other new Big Boy restaurants have opened during the last twelve months. One older, low volume Big Boy restaurant ceased
operations in November 2004. A brand new Big Boy is currently under construction, scheduled to open in February 2006. Two existing Big Boy restaurants are planned for relocation to better sites within the same markets (during calendar year 2006). No
interruption of sales is expected during construction.



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##### Table of Contents

The Golden Corral sales increases were due entirely to more restaurants in operation:



|                                    |  |             |  |            |  |      |  |     
|----------------------------------- |  | ----------- |  | ---------- |  | ---- |  | ----
|                                    |  | Second Qtr. |  | First Half
|                                    |  | 2006        |  | 2005       |  | 2006 |  | 2005
|In operation at beginning of period |  | 32          |  | 27         |  | 30   |  | 26  
|Opened during the period            |  | 2           |  | 2          |  | 4    |  | 3   
|In operation at end of period       |  | 34          |  | 29         |  | 34   |  | 29  
|Total sales weeks during period     |  | 394         |  | 339        |  | 892  |  | 763 

There were no Golden Corral restaurants under construction as of December 11, 2005. Current plans now call
for only two Golden Corral restaurants to open in calendar year 2006.

For the Second Quarter of Fiscal 2006, Golden Corral same store sales were 10.7
percent below the Second Quarter of Fiscal 2005, as customer counts fell by 11.3 percent. Golden Corral restaurants have now suffered nine consecutive quarters of same store sales decreases, including 45 consecutive weekly declines, most of which
have been double-digit declines. For the First Half of Fiscal 2006, same store sales decreased 10.5 percent on an 11.6 percent drop in customer counts. Prices were increased 1.8 percent in May 2005.

Steep gasoline prices have been especially harsh on Golden Corrals customer counts. In addition, the soft Midwest economy has had a greater effect on Golden Corral
sales than on Big Boy sales. However, management believes that operational execution is in need of improvement. Certain strategies are now being implemented to grow sales and halt unacceptable margin erosions. Reducing new store openings will allow
management to focus on a return to fundamentals, including proper in-store execution, every day promotion, labor scheduling and staffing. A new marketing strategy  Everyone Deserves a Good Meal, Everyday is also being put
into place that features special menu items at dinner each day of the week.

Gross Profit

Gross profit for the Big Boy segment includes wholesale sales and cost of wholesale sales. Gross profit differs from restaurant level profit discussed in Note F (Segment
Information) to the consolidated financial statements, as advertising expense is charged against restaurant level profit. Gross profit for both operating segments is shown below:



|                                  |  |                |       |            |              |   |              |  |              |        |  |   |       
|--------------------------------- |  | -------------- | ----- | ---------- | ------------ | - | ------------ |  | ------------ | ------ |  | - | ------
|                                  |  | 2nd Quarter    |       | First Half
|                                  |  | Dec. 11,2005   |       |            | Dec. 12,2004 |   | Dec. 11,2005 |  | Dec. 12,2004
|                                  |  | (in thousands)
|Big Boy gross profit              |  | $              | 6,563 |            |              | $ | 7,027        |  | $            | 14,256 |  | $ | 14,459
|Golden Corral gross profit (loss) |  |                | (362  | )          |              |   | 1,043        |  |              | 935    |  |   | 2,797 
|                                  |  |                |       |            |              |   |              |  |              |        |  |   |       
|Total gross profit by segment     |  | $              | 6,201 |            |              | $ | 8,070        |  | $            | 15,191 |  | $ | 17,256
|                                  |  |                |       |            |              |   |              |  |              |        |  |   |       



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##### Table of Contents

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



|                                                |  |                   |  |                   |  |                   |  |                   |  |        |  |       |  |       |  |        |  |       |  |       |  |        |  |      
|----------------------------------------------- |  | ----------------- |  | ----------------- |  | ----------------- |  | ----------------- |  | ------ |  | ----- |  | ----- |  | ------ |  | ----- |  | ----- |  | ------ |  | -----
|                                                |  | 12 weeks 12/11/05 |  | 12 weeks 12/12/04 |  | 28 weeks 12/11/05 |  | 28 weeks 12/12/04
|                                                |  | Total             |  | BigBoy            |  | GC                |  | Total             |  | BigBoy |  | GC    |  | Total |  | BigBoy |  | GC    |  | Total |  | BigBoy |  | GC   
|Sales                                           |  | 100.0             |  | 100.0             |  | 100.0             |  | 100.0             |  | 100.0  |  | 100.0 |  | 100.0 |  | 100.0  |  | 100.0 |  | 100.0 |  | 100.0  |  | 100.0
|Food and Paper                                  |  | 35.1              |  | 32.5              |  | 40.2              |  | 35.0              |  | 33.0   |  | 39.2  |  | 34.9  |  | 32.6   |  | 39.3  |  | 35.0  |  | 32.7   |  | 39.5 
|Payroll and Related                             |  | 33.2              |  | 34.0              |  | 31.6              |  | 33.2              |  | 34.0   |  | 31.3  |  | 33.1  |  | 34.2   |  | 31.0  |  | 33.2  |  | 34.3   |  | 30.9 
|Other Operating Costs (including opening costs) |  | 22.5              |  | 18.7              |  | 29.8              |  | 19.8              |  | 17.5   |  | 24.6  |  | 22.1  |  | 18.9   |  | 28.0  |  | 20.4  |  | 18.6   |  | 24.0 
|Gross Profit                                    |  | 9.2               |  | 14.8              |  | -1.6              |  | 12.0              |  | 15.5   |  | 4.9   |  | 9.9   |  | 14.3   |  | 1.7   |  | 11.4  |  | 14.4   |  | 5.6  

Food cost percentages in the Golden Corral segment are much higher than Big Boy because of the all-you-can-eat
nature of the Golden Corral concept. Golden Corrals food cost percentages increased over comparable periods due to primarily high beef prices. Big Boys percentages improved reflecting cost stabilization of certain commodities combined
with the effects of higher menu prices.

Self-insured claims experience has historically been reviewed each quarter, with a comprehensive review during the
first quarter of each year, when the self-insured reserves would be adjusted to more closely reflect claims experience. The Company has been able to take significant reductions to the reserves during the first quarters of recent years because of
active claims management and post accident drug testing. Beginning with the third quarter of fiscal 2005, management determined that comprehensive reviews were warranted each quarter, and that self-insured reserves should be adjusted as necessary
based on claims experience.

The reviews of self-insured reserves resulted in favorable adjustments of $392,000 and $614,000, respectively, during the
first quarters of fiscal 2006 and fiscal 2005. An unfavorable adjustment of $18,000 was recorded during the Second Quarter of Fiscal 2006. A lower percentage of payroll is being used in the current fiscal year to accrue initial self-insurance
reserves, which should reduce the size of future quarterly adjustments.

Payroll and related cost percentages remained fairly stable in all periods
presented reflecting significant reductions in the number of hours worked to coincide with lower sales levels. Although congressional efforts continually mount to increase the federal minimum wage, the Company believes it is unlikely that such
federal legislation will be passed in the near term. The Company believes minimum wage legislation at the state level poses a greater threat. When, and if, such legislation is enacted, the Company will counter the effects with higher menu prices,
together with tighter payroll standards and a reduction in hours worked. New overtime pay rules initiated by the U. S. Department of labor went into effect in August 2004. The new rules had a negligible impact on the Company.

Net periodic pension cost (computed under Statement of Financial Accounting Standards No. 87) was $421,000 in the Second Quarter of Fiscal 2006 and was $361,000 the
Second Quarter of Fiscal 2005. Net periodic pension cost was $923,000 for the First Half of Fiscal 2006 and was $896,000 for the First Half of Fiscal 2005. The Company anticipates making contributions to the two qualified defined pension plans that
it sponsors that will satisfy legal funding requirements for the year ending May 28, 2006 plus additional tax-deductible amounts that may be deemed advisable.



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Other operating costs include occupancy costs such as maintenance, rent, depreciation, property tax, insurance and
utilities; field supervision; accounting and payroll preparation costs; franchise fees for Golden Corral restaurants; opening costs and many other restaurant operating expenses. As most of these expenses tend to be more fixed in nature, same store
sales decreases cause these costs to be a higher percentage of sales, as reflected in the above table for Big Boy and Golden Corral. Lower opening costs over the second half of fiscal 2006 should help improve the Golden Corral percentage, reflecting
the Companys decision to not build any more Golden Corrals during fiscal 2006. From that decision, the Company also expects to improve operational execution in same stores.

Operating Profit

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

Administrative and advertising expense increased $258,000, or 3.4 percent during the First Half of Fiscal 2006, while the Second Quarter of Fiscal 2006 was roughly the
same as the second Quarter of Fiscal 2005. The cost of litigating certain matters is the largest component of the increase during the First Half of Fiscal 2006.

Revenue from franchise fees is based on sales of Big Boy restaurants that are licensed to other operators. The fees are based principally on percentages of sales generated by the licensed restaurants and are recorded on the accrual method
as earned. As of December 11, 2005, 28 Big Boy restaurants were licensed to other operators and are paying fees to the Company. Other revenue also includes certain other fees from licensed restaurants along with miscellaneous rent and
investment income.

Gains and losses on the 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. The amount reported on the line (Gain) on sale of assets in the Second Quarter of Fiscal 2005 resulted from the sale of an undeveloped tract of land.

Other Expense

Despite lower debt levels during fiscal 2006, interest expense was roughly level with comparable periods last year. Higher interest rates have been experienced in fiscal 2006 on funds held in the construction phase of a Construction Draw
Facility, before conversion into term loans. Also, lower capitalized interest has been recorded in fiscal 2006. Finally, interest expense associated with the payment of a deferred compensation arrangement has been accrued through the First Half of
2006.

As a percentage of pre-tax earnings, the estimated effective tax rate for the entire year was reduced to 34 percent during the Second Quarter of
Fiscal 2006, down from 35 percent in the first quarter. During the Second Quarter of Fiscal 2005, the rate was increased to 36 percent, up from 34 percent in the first quarter. These rates have been kept consistently low through the Companys
use of tax credits, principally the federal credit allowed for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Funds

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

Working Capital Practices

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



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Aggregated Information about Contractual Obligations and Commercial Commitments

December 11, 2005



|                                         |  |                                       |  |        |  |        |  |        |  |        |  |        |  |                
|---------------------------------------- |  | ------------------------------------- |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ |  | ---------------
|                                         |  | Payments due by period (in thousands)
|                                         |  | Total                                 |  | year 1 |  | year 2 |  | year 3 |  | year 4 |  | year 5 |  | morethan 5years
|Long-Term Debt                           |  | 41,171                                |  | 8,748  |  | 9,547  |  | 10,121 |  | 5,039  |  | 3,689  |  | 4,027          
|Rent due under Capital Lease Obligations |  | 4,092                                 |  | 776    |  | 2,777  |  | 189    |  | 116    |  | 81     |  | 153            
|1 Rent due under Operating Leases        |  | 25,859                                |  | 1,751  |  | 1,776  |  | 1,764  |  | 1,720  |  | 1,439  |  | 17,409         
|2 Unconditional Purchase Obligations     |  | 5,397                                 |  | 5,397  |  |        |  |        |  |        |  |        |  |                
|3 Other Long-Term Obligations            |  | 2,098                                 |  | 214    |  | 217    |  | 220    |  | 223    |  | 226    |  | 998            
|Total Contractual Cash Obligations       |  | 78,617                                |  | 16,886 |  | 14,317 |  | 12,294 |  | 7,098  |  | 5,435  |  | 22,587         

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

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

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

The working capital deficit was
$23,198,000 as of December 11, 2005. The deficit was $20,911,000 as of May 29, 2005. The working capital deficit is expected to level off in the near term as new construction debt is scaled back to a debt neutral position, reflecting the
reduction in expected new restaurant openings. As of December 11, 2005, $13,500,000 remained available under the terms of a Construction Draw Facility, which expires September 1, 2008, unless extended. Additionally, a $5,000,000 working
capital revolving line of credit (currently unused) is readily available through September 1, 2008, if needed.

Operating Activities

Operating cash flows were $11,750,000 in the First Half of Fiscal 2006, or $260,000 higher than the First Half of
Fiscal 2005. However, management believes a more reliable gauge to measure cash flows from the operation of the business is to use the simple method of net earnings plus depreciation. This method yields $11,195,000 in cash flows from operating
activities for the First Half of Fiscal 2006 versus $11,941,000 in the First Half of Fiscal 2005, the decrease reflecting lower earnings.

Investing Activities

Capital spending is the principal component of the Companys investing activities. Capital
spending was $14,574,000 during the First Half of Fiscal 2006, an increase of $1,435,000 over the First Half of Fiscal 2005. The capital spending includes $8,570,000 for Golden Corral restaurants, consisting of new restaurant construction, site
acquisitions and remodeling costs. Capital spending for Big Boy restaurants totaled $6,004,000, which included new restaurant construction, remodeling costs, routine equipment replacements and other capital outlays.

Financing Activities

Borrowing
against credit lines amounted to $8,500,000 during the First Half of Fiscal 2006, including $5,500,000 borrowed during the Second Quarter of Fiscal 2006. Scheduled and other payments of long-term debt and capital lease obligations amounted to
$4,755,000 during the First Half of Fiscal 2006. Regular quarterly cash dividends paid to shareholders totaled $1,113,000. Dividends declared but not paid as of December 11, 2004 totaled $558,000. The Company expects to continue its 45 year
practice of paying regular quarterly cash dividends.



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During the First Half of Fiscal 2006, employees acquired nearly 16,000 shares of the Companys common stock pursuant
to the exercise of stock options, yielding proceeds to the Company of approximately $288,000. As of December 11, 2005, 418,821 shares granted under the Companys two stock option plans remain outstanding including 315,319 fully vested
shares at a weighted average price per share of $17.84. As of December 11, 2005, 730,204 shares are available to be granted under these plans.

Other Information

The Company reached a new agreement with Golden Corral Franchising Systems, Inc. in July 2004. The
new agreement added 22 Golden Corrals to the development schedule, bringing to 63, the total number of restaurants planned to be in operation by December 31, 2011. The development agreement, which had called for five new restaurants to open in
each calendar year through 2010 with the final four scheduled for 2011, was modified in June 2005 to permit the opening of only three restaurants in calendar year 2006. It now appears likely only two will be built in 2006. As of December 11,
2005, 34 Golden Corral restaurants were in operation. No Golden Corral restaurants were under construction. Five Golden Corral restaurants are being remodeled in Fiscal 2006 at an approximate cost of $150,000 per restaurant.

Construction of a brand new Big Boy restaurant began in October 2005 that is expected to open in February 2006. Plans are currently being made to relocate two existing
Big Boy restaurants (during calendar year 2006) to better sites within the same market areas. Approximately one-fifth of the Big Boy restaurants are routinely renovated or decoratively updated each year at an average cost of $75,000 per restaurant.
In addition, certain high volume Big Boy restaurants are regularly evaluated to determine whether their kitchens should be redesigned for increased efficiencies. A typical kitchen redesign costs approximately $125,000.

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

It is the Companys policy to own the land on which it builds new restaurants; however, it is becoming more frequently necessary to enter ground leases to obtain
desirable land on which to build. Six of the 34 Golden Corral restaurants now in operation were constructed on leased land. The Big Boy restaurant currently under construction is also being built on leased land. All of these leases have been
accounted for as operating leases pursuant to Statement of Financial Accounting Standards No. 13 (SFAS 13), Accounting for Leases, as amended. As of December 11, 2005, the Company occupied a total of 32 restaurants pursuant to
leases, ten of which are capital leases under the provisions SFAS 13.

APPLICATION of CRITICAL ACCOUNTING POLICIES

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

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

Self Insurance

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



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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.

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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ITEM 6. EXHIBITS



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

SIGNATURE

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



|                    |  |                            |  |                                           
|------------------- |  | -------------------------- |  | ------------------------------------------
|                    |  | FRISCHS RESTAURANTS, INC.
|                    |  | (registrant)              
|                    |  |                           
|DATE March 27, 2006 |  |                            |  |                                           
|                    |  |                           
|                    |  | BY                         |  | /s/ Donald H. Walker                      
|                    |  |                            |  | Donald H. Walker                          
|                    |  |                            |  | Vice President  Finance, Treasurer and   
|                    |  |                            |  | Principal Financial and Accounting Officer



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