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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------



For the quarterly period ended March 30, 2005



or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
|- | --------------------------------------------------------------------------------------------



For the transition period from
 to



Commission File No. 333-115644



EPL Intermediate, Inc.

(Exact name
of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 13-4092105                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



3333 Michelson
Drive, Suite 550

Irvine, California 92612

(Address of principal executive offices)



Registrants telephone number, including area code:

(949) 399-2000



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



Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



As of May 13, 2005, the registrant had 100 shares of its common stock, $.01 par value, outstanding.



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TABLE OF CONTENTS



|     |  |                                                                                       |  |     
|---- |  | ------------------------------------------------------------------------------------- |  | ----
|Item |  |                                                                                       |  | Page
|     |  | PART I  FINANCIAL INFORMATION                                                        |  |     
|1.   |  | Financial Statements                                                                  |  | 4   
|2.   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 13  
|3.   |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 20  
|4.   |  | Controls and Procedures                                                               |  | 20  
|     |  | PART II  OTHER INFORMATION                                                           |  |     
|6.   |  | Exhibits                                                                              |  | 21  



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FORWARD-LOOKING STATEMENTS



Certain statements contained within this report constitute
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement
that may predict, forecast, indicate or imply future results, performance, achievements or events. They may contain words such as believe, anticipate, expect, estimate, intend,
project, plan, will, should, may, could or words or phrases of similar meaning.



These forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and
uncertainties. Also, these forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose material information as required by federal securities laws, we do not
intend to update you concerning any future revisions to any forward-looking statements to reflect events or circumstances occurring after the date of this report.



Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking
statements include our substantial level of indebtedness, food-borne-illness incidents, increases in the cost of chicken, our dependence upon frequent deliveries of food and other supplies, our vulnerability to changes in consumer preferences and
economic conditions, our sensitivity to events and conditions in the greater Los Angeles area, our ability to compete successfully with other quick service and fast casual restaurants, our ability to expand into new markets, our reliance in part on
our franchisees, our ability to support our expanding franchise system and litigation we face in connection with our operations. Actual results may differ materially due to these risks and uncertainties and those described in our Annual Report on
Form 10-K (File No. 333-115644) as filed with the Securities and Exchange Commission on March 29, 2005 and El Pollo Loco, Inc.s Annual Report on Form 10-K (File No. 333-115486) as filed with the Securities and Exchange Commission on March 29,
2005.



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PART I - FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------



EPL INTERMEDIATE, INC.

(A Wholly Owned Subsidiary of EPL Holdings, Inc.)



CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands)



|                                          |  |                  |         |               |   |        
|----------------------------------------- |  | ---------------- | ------- | ------------- | - | -------
|                                          |  | DECEMBER 29,2004 |         | MARCH 31,2005
|ASSETS                                    |  |                  |         |               |   |        
|                                          |  |                 
|CURRENT ASSETS:                           |  |                  |         |               |   |        
|Cash and cash equivalents                 |  | $                | 5,636   |               | $ | 8,974  
|Notes and accounts receivablenet         |  |                  | 2,714   |               |   | 2,991  
|Inventories                               |  |                  | 1,136   |               |   | 1,077  
|Prepaid expenses and other current assets |  |                  | 2,530   |               |   | 3,354  
|Income taxes receivable                   |  |                  | 2,124   |               |   | 2,045  
|Deferred income taxes                     |  |                  | 4,150   |               |   | 4,150  
|                                          |  |                  |         |               |   |        
|Total current assets                      |  |                  | 18,290  |               |   | 22,591 
|                                          |  |                  |         |               |   |        
|PROPERTY OWNEDNet                        |  |                  | 59,469  |               |   | 59,869 
|                                          |  |                  |         |               |   |        
|PROPERTY HELD UNDER CAPITAL LEASESNet    |  |                  | 4,634   |               |   | 4,350  
|                                          |  |                  |         |               |   |        
|GOODWILLNet                              |  |                  | 38,989  |               |   | 38,674 
|                                          |  |                 
|DOMESTIC TRADEMARKSNet                   |  |                  | 19,800  |               |   | 19,800 
|                                          |  |                 
|OTHER INTANGIBLE ASSETSNet               |  |                  | 25,443  |               |   | 24,702 
|                                          |  |                 
|OTHER ASSETS                              |  |                  | 613     |               |   | 615    
|                                          |  |                  |         |               |   |        
|TOTAL ASSETS                              |  | $                | 167,238 |               | $ | 170,601
|                                          |  |                  |         |               |   |        



|                                                          |  |            
|--------------------------------------------------------- |  | -----------
|See notes to condensed consolidated financial statements. |  | (continued)



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EPL INTERMEDIATE, INC.

(A Wholly Owned Subsidiary of EPL Holdings, Inc.)



CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands,
except share data)



|                                                                                         |  |                  |         |   |               |   |         |  
|---------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------- | - | ------- | -
|                                                                                         |  | DECEMBER 29,2004 |         |   | MARCH 31,2005 |  
|LIABILITIES AND STOCKHOLDERS DEFICIENCY                                                 |  |                  |         |   |               |   |         |  
|                                                                                         |  |                 
|CURRENT LIABILITIES:                                                                     |  |                  |         |   |               |   |         |  
|Current portion of notes payable to SunTrust Bank                                        |  | $                | 3,667   |   |               | $ | 3,667   |  
|Current portion of obligations under capital leases                                      |  |                  | 1,296   |   |               |   | 1,224   |  
|Current portion of other notes payable                                                   |  |                  | 619     |   |               |   | 612     |  
|Accounts payable                                                                         |  |                  | 8,075   |   |               |   | 9,791   |  
|Accrued salaries                                                                         |  |                  | 4,517   |   |               |   | 3,805   |  
|Accrued vacation                                                                         |  |                  | 1,467   |   |               |   | 1,671   |  
|Accrued insurance                                                                        |  |                  | 3,293   |   |               |   | 3,362   |  
|Accrued interest                                                                         |  |                  | 488     |   |               |   | 3,043   |  
|Accrued advertising                                                                      |  |                  | 264     |   |               |   | 256     |  
|Other accrued expenses and current liabilities                                           |  |                  | 4,273   |   |               |   | 4,091   |  
|                                                                                         |  |                  |         |   |               |   |         |  
|Total current liabilities                                                                |  |                  | 27,959  |   |               |   | 31,522  |  
|                                                                                         |  |                  |         |   |               |   |         |  
|NONCURRENT LIABILITIES:                                                                  |  |                  |         |   |               |   |         |  
|Senior secured notes                                                                     |  |                  | 110,000 |   |               |   | 110,000 |  
|Senior discount notes                                                                    |  |                  | 42,710  |   |               |   | 43,928  |  
|Notes payable to SunTrust Bankless current portion                                      |  |                  | 3,667   |   |               |   | 2,750   |  
|Obligations under capital leasesless current portion                                    |  |                  | 6,430   |   |               |   | 6,173   |  
|Other notes payableless current portion                                                 |  |                  | 1,193   |   |               |   | 1,099   |  
|Deferred income taxes                                                                    |  |                  | 4,578   |   |               |   | 4,578   |  
|Other noncurrent liabilities                                                             |  |                  | 9,576   |   |               |   | 9,311   |  
|                                                                                         |  |                  |         |   |               |   |         |  
|Total noncurrent liabilities                                                             |  |                  | 178,154 |   |               |   | 177,839 |  
|                                                                                         |  |                  |         |   |               |   |         |  
|COMMITMENTS AND CONTINGENCIES                                                            |  |                  |         |   |               |   |         |  
|                                                                                         |  |                 
|STOCKHOLDERS DEFICIENCY:                                                                |  |                  |         |   |               |   |         |  
|Common stock, $.01 par value20,000 shares authorized; 100 shares issued and outstanding |  |                  |         |   |               |   |         |  
|Additional paid-in-capital                                                               |  |                  | 315     |   |               |   | 315     |  
|Accumulated deficit                                                                      |  |                  | (39,190 | ) |               |   | (39,075 | )
|                                                                                         |  |                  |         |   |               |   |         |  
|Total stockholders deficiency                                                           |  |                  | (38,875 | ) |               |   | (38,760 | )
|                                                                                         |  |                  |         |   |               |   |         |  
|TOTAL                                                                                    |  | $                | 167,238 |   |               | $ | 170,601 |  
|                                                                                         |  |                  |         |   |               |   |         |  



|                                                          |  |            
|--------------------------------------------------------- |  | -----------
|See notes to condensed consolidated financial statements. |  | (concluded)



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EPL INTERMEDIATE, INC.

(A Wholly Owned Subsidiary of EPL Holdings, Inc.)



CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

13 WEEKS
ENDED MARCH 31, 2004 AND 2005

(In thousands)



|                                         |  |                      |        |               |   |       
|---------------------------------------- |  | -------------------- | ------ | ------------- | - | ------
|                                         |  | MARCH 31,2004        |        | MARCH 31,2005
|                                         |  | (as restated,Note 9) |        |              
|OPERATING REVENUE:                       |  |                      |        |               |   |       
|Restaurant revenue                       |  | $                    | 50,454 |               | $ | 51,159
|Franchise revenue                        |  |                      | 3,387  |               |   | 3,511 
|                                         |  |                      |        |               |   |       
|Total operating revenue                  |  |                      | 53,841 |               |   | 54,670
|                                         |  |                      |        |               |   |       
|OPERATING EXPENSES:                      |  |                      |        |               |   |       
|Product cost                             |  |                      | 15,554 |               |   | 16,213
|Payroll and benefits                     |  |                      | 14,007 |               |   | 13,573
|Depreciation and amortization            |  |                      | 3,242  |               |   | 3,482 
|Other operating expenses                 |  |                      | 14,723 |               |   | 16,472
|                                         |  |                      |        |               |   |       
|Total operating expenses                 |  |                      | 47,526 |               |   | 49,740
|                                         |  |                      |        |               |   |       
|OPERATING INCOME                         |  |                      | 6,315  |               |   | 4,930 
|                                         |  |                     
|INTEREST EXPENSE, net                    |  |                      | 3,582  |               |   | 4,736 
|                                         |  |                      |        |               |   |       
|INCOME BEFORE PROVISION FOR INCOME TAXES |  |                      | 2,733  |               |   | 194   
|                                         |  |                     
|PROVISION FOR INCOME TAXES               |  |                      | 1,134  |               |   | 79    
|                                         |  |                      |        |               |   |       
|NET INCOME                               |  | $                    | 1,599  |               | $ | 115   
|                                         |  |                      |        |               |   |       



See notes to condensed consolidated
financial statements.



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EPL INTERMEDIATE, INC.

(A Wholly Owned Subsidiary of EPL Holdings, Inc.)



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

13
WEEKS ENDED MARCH 31, 2004 AND 2005

(In thousands)



|                                                                                  |  |                      |         |   |               |   |        |  
|--------------------------------------------------------------------------------- |  | -------------------- | ------- | - | ------------- | - | ------ | -
|                                                                                  |  | MARCH 31,2004        |         |   | MARCH 31,2005 |  
|                                                                                  |  | (as restated,Note 9) |         |   |               |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                      |         |   |               |   |        |  
|Net income                                                                        |  | $                    | 1,599   |   |               | $ | 115    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                      |         |   |               |   |        |  
|Depreciation and amortization of property and intangible assets                   |  |                      | 3,242   |   |               |   | 3,482  |  
|Interest accretion                                                                |  |                      |         |   |               |   | 1,218  |  
|Asset impairment                                                                  |  |                      |         |   |               |   | 165    |  
|Gain on disposal of assets                                                        |  |                      |        |   |               |   | (143   | )
|Amortization of deferred financing costs                                          |  |                      | 293     |   |               |   | 402    |  
|Changes in operating assets and liabilities:                                      |  |                      |         |   |               |   |        |  
|Notes and accounts receivablenet                                                 |  |                      | (315    | ) |               |   | (277   | )
|Inventories                                                                       |  |                      | 202     |   |               |   | 59     |  
|Prepaid expenses and other current assets                                         |  |                      | (667    | ) |               |   | (824   | )
|Income taxes receivable / payable                                                 |  |                      | 1,134   |   |               |   | 79     |  
|Other assets                                                                      |  |                      | 46      |   |               |   | (2     | )
|Accounts payable                                                                  |  |                      | (443    | ) |               |   | 1,716  |  
|Accrued salaries and vacation                                                     |  |                      | (1,859  | ) |               |   | (508   | )
|Accrued insurance                                                                 |  |                      | 227     |   |               |   | 69     |  
|Accrued interest                                                                  |  |                      | 2,544   |   |               |   | 2,555  |  
|Accrued advertising                                                               |  |                      | 1,286   |   |               |   | (8     | )
|Other accrued expenses and current and noncurrent liabilities                     |  |                      | (548    | ) |               |   | (447   | )
|                                                                                  |  |                      |         |   |               |   |        |  
|Net cash provided by operating activities                                         |  |                      | 6,741   |   |               |   | 7,651  |  
|                                                                                  |  |                      |         |   |               |   |        |  
|CASH FLOW FROM INVESTING ACTIVITIES:                                              |  |                      |         |   |               |   |        |  
|Proceeds from asset disposition                                                   |  |                      |        |   |               |   | 483    |  
|Purchase of property                                                              |  |                      | (2,121  | ) |               |   | (3,449 | )
|                                                                                  |  |                      |         |   |               |   |        |  
|Net cash used in investing activities                                             |  |                      | (2,121  | ) |               |   | (2,966 | )
|                                                                                  |  |                      |         |   |               |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |  |                      |         |   |               |   |        |  
|Issuance of notes payable                                                         |  |                      | 39,049  |   |               |   |        |  
|Payment of obligations under capital leases                                       |  |                      | (286    | ) |               |   | (329   | )
|Payments on notes payable                                                         |  |                      | (1,138  | ) |               |   | (1,018 | )
|Distributions to EPL Holdings, Inc.                                               |  |                      | (37,000 | ) |               |   |        |  
|Deferred financing costs                                                          |  |                      | (2,531  | ) |               |   |       |  
|                                                                                  |  |                      |         |   |               |   |        |  
|Net cash used in financing activities                                             |  |                      | (1,906  | ) |               |   | (1,347 | )
|                                                                                  |  |                      |         |   |               |   |        |  



|                                                          |  |            
|--------------------------------------------------------- |  | -----------
|See notes to condensed consolidated financial statements. |  | (continued)



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EPL INTERMEDIATE, INC.

(A Wholly Owned Subsidiary of EPL Holdings, Inc.)



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

13
WEEKS ENDED MARCH 31, 2004 AND 2005

(In thousands)



|                                                                                  |  |                      |       |               |   |      
|--------------------------------------------------------------------------------- |  | -------------------- | ----- | ------------- | - | -----
|                                                                                  |  | MARCH 31,2004        |       | MARCH 31,2005
|                                                                                  |  | (as restated,Note 9) |       |              
|INCREASE IN CASH AND CASH EQUIVALENTS                                             |  | $                    | 2,714 |               | $ | 3,338
|                                                                                  |  |                     
|CASH AND CASH EQUIVALENTSBeginning of period                                     |  |                      | 5,378 |               |   | 5,636
|                                                                                  |  |                      |       |               |   |      
|CASH AND CASH EQUIVALENTSEnd of period                                           |  | $                    | 8,092 |               | $ | 8,974
|                                                                                  |  |                      |       |               |   |      
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the period for: |  |                      |       |               |   |      
|Interest                                                                          |  | $                    | 180   |               | $ | 382  
|                                                                                  |  |                      |       |               |   |      
|Income taxes                                                                      |  | $                    |      |               | $ |     
|                                                                                  |  |                      |       |               |   |      



|                                                          |  |            
|--------------------------------------------------------- |  | -----------
|See notes to condensed consolidated financial statements. |  | (concluded)



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EPL INTERMEDIATE, INC.

(A Wholly Owned Subsidiary of EPL Holdings, Inc.)



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



1.
Basis of Presentation



The accompanying condensed
consolidated financial statements are unaudited. EPL Intermediate, Inc. (EPLI) and subsidiary, El Pollo Loco, Inc. (collectively, the Company) prepared these condensed consolidated financial statements in accordance with the
Securities and Exchange Commissions instructions for Quarterly Reports on Form 10-Q. In compliance with those instructions, certain information and footnote disclosures normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have been condensed or omitted.



The accompanying condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments and accruals) that
management considers necessary for a fair presentation of its financial position and results of operations for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results
that may be expected for the entire year.



The accompanying
condensed consolidated financial statements should be read in conjunction with the Companys audited consolidated financial statements and the related notes thereto included in the Companys Annual Report on Form 10-K (File No. 333-115644)
as filed with the Securities and Exchange Commission on March 29, 2005.



The Company uses a 52-, 53-week fiscal year ending on the last Wednesday of the calendar year. In a 52-week fiscal year, each quarter includes 13 weeks of operations; in a 53-week fiscal year, the first, second and third quarters each
include 13 weeks of operations and the fourth quarter includes 14 weeks of operations. Fiscal year 2004, which ended December 29, 2004, and fiscal year 2005, which will end December 28, are both 52-week fiscal years. For simplicity of presentation,
the Company has described the 13-week periods ended March 31, 2004 and March 30, 2005 as March 31, 2004 and 2005, respectively.



The Company is a wholly owned subsidiary of EPL Holdings, Inc. (Holdings), which is majority owned by affiliates of American Securities
Capital Partners, L.P. (ASCP). The Companys activities are performed principally through its wholly owned subsidiary, El Pollo Loco, Inc. (EPL), which develops, franchises, licenses, and operates quick-service
restaurants under the name El Pollo Loco.



2. Asset Impairment



The Company periodically reviews the performance of
company-operated stores for indicators of asset impairment. If the Company concludes that the carrying value of certain assets will not be recovered based on expected undiscounted future cash flows, an impairment write-down is recorded to reduce the
assets to their estimated fair value. As a result of this review, the Company recorded an impairment charge of approximately $0.2 million in March 2005 for one under-performing company-operated store that will continue to be operated. The impairment
charge is included in other operating expenses in the accompanying condensed consolidated statements of income.



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3. Stock-Based Compensation



The Company uses the intrinsic value method to account for employee stock options in accordance with APB Opinion No. 25,
Accounting for Stock Issued to Employees. Under APB Opinion No. 25, the Company does not recognize compensation expense related to employee stock options if the exercise price of the options is equal to or greater than the market price of the
underlying stock on the date of grant.



SFAS No. 123,
Accounting for Stock-Based Compensation, encourages, but does not require, the recognition of compensation expense for employee stock-based compensation arrangements using the minimum value method of accounting. The Company has elected the
disclosure only alternative permitted by SFAS No. 123 and has disclosed pro forma net income amounts using the minimum value method.



Had compensation expense for the stock options in Holdings issued to and held by EPLs employees and one member of EPLs board of directors been
recognized based on the minimum value on the grant date under the methodology prescribed by SFAS No. 123, the Companys net income for the 13 weeks ended March 31, 2004 and 2005 would have been impacted as shown in the following table (in
thousands):



|                                                                                                                                           |  |                         |       |      |   |    
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | ----- | ---- | - | ---
|                                                                                                                                           |  | 13 Weeks EndedMarch 31,
|                                                                                                                                           |  | 2004                    |       | 2005
|Net income as reported                                                                                                                     |  | $                       | 1,599 |      | $ | 115
|Deduct:                                                                                                                                    |  |                         |       |      |   |    
|Total stock based employee compensation expense determined under the minimum value based method for all awards, net of related tax
effects |  |                         | 20    |      |   | 13 
|                                                                                                                                           |  |                         |       |      |   |    
|Pro forma net income                                                                                                                       |  | $                       | 1,579 |      | $ | 102
|                                                                                                                                           |  |                         |       |      |   |    



The minimum value of
each option grant is estimated on the grant date using the following assumptions for the 13 weeks ended March 31, 2004 and 2005: risk-free interest rate of 3.31% and 4.33%, respectively; expected volatility of 0% for each period; an expected option
life of 7.1 and 7.0 years, respectively, for each period; and no expected dividends for each period.



4. Commitments and Contingencies



The Company is involved in certain litigation, which includes a wage-hour purported class action and a trademark issue where the ultimate outcome is presently not determinable. While the Company intends to defend
against these actions vigorously, the Company cannot at this time determine the likelihood of adverse judgments or a likely range of damages in the event of adverse judgments. Any settlement of or judgment arising from these lawsuits could be
material.



There are various other claims and pending legal
actions against or indirectly involving the Company, including claims asserted by employees and other matters. It is the opinion of management, after considering a number of factors, including but not limited to the current status of litigations
(including any settlement discussions), the views of retained counsel, the nature of the litigation, the prior experience of the Company and the amounts that the Company has accrued for known contingencies, that the ultimate disposition of these
matters will not materially affect the financial position or results of operations of the Company.



5. Senior Secured Notes Payable



On December 19, 2003, EPL issued $110.0 million aggregate principal amount of senior secured notes due 2009 (Senior Secured Notes) in a private offering. Interest accrues at 9.25% per annum and is payable semi-annually in June
and December. Principal is due December 18, 2009. On September 16, 2004, EPL completed the exchange of 100% of the outstanding principal of the Senior Secured Notes for registered, publicly tradable notes that have substantially identical terms as
the Senior Secured Notes. The Senior Secured Notes are secured by a second-priority lien on substantially all of EPLs and the Companys assets and a second priority pledge by the Company of all its outstanding stock of EPL. EPL may, at
its option, redeem some or all of the Senior Secured Notes prior to their maturity.



EPL incurred approximately $6.1 million of direct costs in connection with this offering. These costs have been capitalized and are included in other intangible assets as deferred financing costs in the accompanying
condensed consolidated balance sheets. Concurrent with the closing of the Senior Secured Notes, EPL amended its previously existing bank credit facility as described in Note 6.



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EPL used $39.5 million of the proceeds from the Senior Secured Notes offering to reduce its previously
existing bank notes payable and used $70.0 million of the proceeds to pay a dividend to EPLI. EPLI applied the proceeds from the dividend to repurchase all of the outstanding shares of its preferred stock in an aggregate amount of $20.1 million and
to make a distribution to Holdings in the amount of $49.9 million, which Holdings subsequently distributed to its shareholders. In connection with that distribution, Holdings reduced the exercise price of outstanding common stock options in Holdings
previously issued to EPLs management and one member of EPLs Board of Directors (the Option Holders). In addition, EPL accrued in December 2003 and paid the Option Holders in January 2004 $1.9 million in bonuses. In fiscal
2004, EPL accrued approximately $0.6 million in bonuses that were paid to the Option Holders in March 2005. EPL will make additional cash bonus payments to the Option Holders related to the revaluation of the stock options at various times through
2009 subject to their continued employment and other conditions; these payments are estimated to aggregate approximately $0.5 million. The combined effect of the reduction in the exercise price of the options and the cash bonus payments is to
restore the approximate economic position of the Option Holders to that existing immediately before the dividend to the shareholders of Holdings.



6. SunTrust Bank Credit Facility



In connection with the Senior Secured Notes offering discussed in Note 5, the Companys Credit Facility with SunTrust Bank was amended on December
19, 2003. The amended Credit Facility consists of a $15.0 million revolving loan (the Revolver) and an $11.0 million term loan (the Term Loan and together with the Revolver, the Amended Credit Facility). The
Revolver has a $10.0 million sub-limit for letters of credit and a $5.0 million swing loan. The Revolver and Term Loan mature on December 31, 2006. Availability of credit under the Revolver is governed by a borrowing base, determined as a multiple
of earnings before interest, taxes, depreciation and amortization (EBITDA), as defined in the agreement. The Amended Credit Facility is secured by a first-priority pledge by Holdings of all of the outstanding stock of EPLI, a first
priority pledge by EPLI of all of EPLs outstanding stock and a first priority security interest in substantially all EPLs tangible and intangible assets. In addition, the Amended Credit Facility is guaranteed by EPLI and Holdings.



At December 29, 2004 and March 31, 2005, the Company had $7.3
million and $6.4 million, respectively, outstanding under the Term Loan. The Company did not have any borrowings outstanding under the Revolver, but did have $8.0 million in outstanding letters of credit at December 29, 2004 and March 31, 2005. As
of December 29, 2004 and March 31, 2005, the Company had $7.0 million available for borrowing under the Revolver.



7. EPL Intermediate, Inc. Senior Discount Notes



In March of 2004, EPLI sold $70.0 million in aggregate principal amount at maturity of 121⁄2% Senior Discount Notes due 2010 (the Intermediate
Notes). The Intermediate Notes are unsecured. On October 18, 2004, EPLI completed the exchange of 100% of the outstanding principal of the Intermediate Notes for registered, publicly tradable notes that have substantially the same terms as the
Intermediate Notes. The Company realized gross proceeds of $39.0 million from the sale of the Intermediate Notes. After offering expenses of approximately $2.0 million, the net proceeds of approximately $37.0 million were used to make a cash
distribution to Holdings, which applied the proceeds to pay a cash dividend to its stockholders. In connection with this transaction, the Company incurred approximately $1.3 million in expenses in April 2004 related to the revaluation of options
previously issued to the Option Holders to purchase shares of common stock of Holdings. Also, in fiscal 2004, the Company accrued $0.4 million in bonuses that was paid in the first quarter 2005. The Company will make additional cash bonus payments
to the Option Holders related to the revaluation of the stock options at various times through 2009 subject to their continued employment and other conditions; these payments are estimated to aggregate approximately $0.5 million. The combined effect
of the reduction in the exercise price of the options and the cash bonus payments is to restore the approximate economic position of the Option Holders to that existing immediately before the dividend to the shareholders of Holdings.



No cash interest will accrue on the Intermediate Notes prior to March 15,
2009. Instead, the principal value of the Intermediate Notes will increase (representing accretion of original issue discount) from the date of original issuance until but not including March 15, 2009 at a rate of 121⁄2% per annum compounded
annually, so that the accreted value of the Intermediate Notes on March 15, 2009 will be equal to the full principal amount at maturity. As of March 31, 2005, $4.9 million in interest had accreted on the Intermediate Notes. Beginning on March 15,
2009, cash interest will accrue on the Intermediate Notes at an annual rate of 121⁄2% per annum payable in arrears on March 15, 2010. Principal is also due March 15, 2010.



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As a holding company, the stock of EPL constitutes EPLIs only material asset. Consequently, EPL
conducts all of the Companys consolidated operations and owns substantially all of the Companys consolidated operating assets. The Companys principal source of the cash required to pay its obligations is the cash that EPL generates
from its operations. EPL is a separate and distinct legal entity and has no obligation to make funds available to EPLI. The terms of EPLs senior credit facility and the indenture governing the Senior Secured Notes significantly restrict EPL
from paying dividends, making loans or other distributions and otherwise transferring assets to the Company. Furthermore, EPL will be permitted under the terms of its senior credit facility and the indenture governing the Senior Secured Notes to
incur additional indebtedness that may severely restrict or prohibit the making of distributions, the payment of dividends or the making of loans by EPL to the Company, and the indenture governing the Intermediate Notes permits EPLI to allow EPL to
incur such indebtedness.



8. Income Taxes



The Companys taxable income or loss is included in the consolidated
federal and state income tax returns of Holdings. The Company records its provision for income taxes based on its separate stand-alone operating results using the asset and liability method. The Company recorded a provision for income taxes of $1.1
million and $0.1 million for the 13 weeks ended March 31, 2004 and 2005, respectively. The effective tax rates for the 13 weeks ended March 31, 2004 and 2005, were 41.5% and 40.7%, respectively.



9. Restatement of Financial Statements



Based on a review begun in December 2004, the Company determined that its
accounting for leases was in error. Upon completion of its review, the Company corrected its lease and leasehold depreciation accounting in 2004 and restated certain historical financial information for prior periods to correct errors in its lease
accounting and leasehold depreciation policies.



Corrections to
the Companys lease accounting policies include adjusting lease terms, as defined in SFAS No. 13, Accounting for Leases, as amended, to include option renewals where failure to exercise such options would result in an economic penalty,
recognizing the straight-line effect over the lease term of escalating rents during the option periods and recognizing the effect of pre-opening rent holidays over the related lease terms. In addition, the restatement includes an
adjustment to depreciation expense to correct the depreciable lives being used for certain leasehold costs and improvements where the contractual term of the lease, including lease option periods for which a reasonable assurance exists that the
option would be exercised, was shorter than the historical depreciation period previously used to record depreciation expense.



The Company restated its condensed consolidated statement of income for the 13 weeks ended March 31, 2004. The effects of the restatement are summarized
below:



|                                         |  |                              |        |             |   |       
|---------------------------------------- |  | ---------------------------- | ------ | ----------- | - | ------
|                                         |  | 13 Weeks EndedMarch 31, 2004
|                                         |  | As PreviouslyReported        |        | As Restated
|Depreciation and amortization            |  | $                            | 3,176  |             | $ | 3,242 
|Other operating expenses                 |  |                              | 14,668 |             |   | 14,723
|Total operating expenses                 |  |                              | 47,405 |             |   | 47,526
|Operating income                         |  |                              | 6,436  |             |   | 6,315 
|Income before provision for income taxes |  |                              | 2,854  |             |   | 2,733 
|Provision for income taxes               |  |                              | 1,170  |             |   | 1,134 
|Net income                               |  |                              | 1,684  |             |   | 1,599 



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------



You should read the following discussion together with our unaudited condensed consolidated financial statements and
related notes thereto included elsewhere in this filing. This report contains certain forward-looking statements within the meaning of federal securities laws. See Forward-looking Statements above.



We use a 52-, 53-week fiscal year ending on the last Wednesday of the
calendar year. For simplicity of presentation, we have described the 13 week periods ended March 31, 2004 and March 30, 2005 as March 31, 2004 and 2005, respectively. In a 52-week fiscal year, each quarter includes 13 weeks of operations; in a
53-week fiscal year, the first, second and third quarters each include 13 weeks of operations and the fourth quarter includes 14 weeks of operations. Fiscal year 2004, which ended December 29, 2004, and fiscal year 2005, which ends December 28,
2005, are both 52-week fiscal years. References to our restaurant system mean both company-operated and franchised restaurants. Unless otherwise indicated, references to our restaurants or results or statistics attributable
to one or more restaurants without expressly identifying them as company-operated, franchise or the entire restaurant system mean our company-operated restaurants only.



Overview



The following managements discussion and analysis of financial condition and results of operations gives effect to the restatement discussed in Note
9 to the condensed consolidated financial statements.



EPL
Intermediate, Inc. (EPLI) through its wholly owned subsidiary El Pollo Loco, Inc. (EPL and collectively with EPLI, the Company, we, us and our) owns, operates and franchises
quick service restaurants (QSR) specializing in marinated flame-grilled chicken. As of March 31, 2005, our restaurant system had 321 restaurants, consisting of 136 company-operated and 185 franchised locations, located principally in
California, with additional restaurants in Arizona, Nevada and Texas. In the first quarter of 2005, we closed one company-operated and one franchise restaurant and we opened one new franchise restaurant. Our typical restaurant is a freestanding
building ranging from approximately 2,200 to 2,600 square feet with seating for approximately 60 customers and offering drive-thru convenience.



Our total revenue is derived from two primary sources, company-operated restaurant revenue and franchise revenue, the latter of which is comprised
principally of franchise royalties, franchise fees and sublease rental income. For the 13 weeks ended March 31, 2005, same-store sales for restaurants systemwide increased 1.5% over the 13 weeks ended March 31, 2004. We believe that same-store sales
will continue to be positive through the remainder of fiscal 2005, but that the rate of increase will continue to be moderate as we are comparing same-store sales to relatively strong comparable quarters from the previous year.



The increase in company-operated restaurant revenue is due to growth in new
company-operated restaurants and to increases in same-store sales, which includes price increases over this period. We expect to open four to eight company-operated restaurants per year over the next few years, which is consistent with our
company-operated restaurant growth. Many factors can influence sales at all or specific restaurants, including increased competition, strength of marketing promotions, the restaurant managers operational execution and changes in local market
conditions and demographics.



Franchise revenue consists of
royalties, initial franchise fees and franchise rental income. Royalties average 4% of the franchisees net sales. We believe that new franchise restaurant growth will increase as we sign development agreements with experienced franchisees in
new and existing markets. We currently have the approvals necessary to market to both new and existing franchisees in all states except Maryland, Illinois and North Dakota, where our applications for registration are pending as of the date of this
filing. In fiscal years 2003 and 2004, we entered into area development agreements that, beginning in the fourth quarter of 2004 but primarily in fiscal years 2005, 2006 and 2007, are expected to result in area development fees being recognized as
the related restaurants open. We sublease facilities to certain franchisees and the sublease rent is included in our franchise revenue. This revenue exceeds rent payments made under the leases that are included in franchise expense. Since we do not
expect to lease or sublease new properties to our franchisees as we expand our franchise restaurants, we expect the portion of franchise revenue attributable to franchise rental income to decrease over time.



Product cost includes food and paper costs. This expense is our largest
single expense, it is subject to increase or decrease based on commodity cost changes, and depends in part on the success of controls we have in place to manage product cost in the restaurants. In February 2004 we renewed our chicken contracts for a
one-year term at higher prices than our previous contract. In February 2005, we renewed our chicken contracts with terms ranging from two to three years at significantly higher prices than the expiring contracts. We implemented price increases in
November 2004 to partially mitigate the impact of higher chicken prices on our profitability, but we expect food cost to increase as a percent of restaurant sales in fiscal 2005.



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Payroll and benefits make up the next largest single expense. Payroll and benefits have been and remain
subject to inflation, including salaries due to minimum wage increases and expenses for health insurance and workers compensation insurance. Workers compensation insurance costs are subject to a number of factors, and although the state
of California passed legislation designed to reduce workers compensation insurance expense to employers, we cannot predict whether such legislation will actually reduce our workers compensation insurance expense. We have continued to see
a reduction in the number of workers compensation claims due to employee safety initiatives that we began implementing in fiscal year 2003.



Other operating expenses include restaurant operating expense, franchise expense, and general and administrative expense.



Restaurant other operating expense includes occupancy, advertising and other
costs such as utilities, repair and maintenance, janitorial and cleaning and operating supplies.



Franchise expense consists primarily of rent expense that we pay to landlords associated with leases under restaurants we are subleasing to franchisees.
Franchise expense usually fluctuates primarily as subleases expire and to some degree based on rents that are tied to a percentage of sales calculation. Since we do not expect to lease or sublease new properties to our franchisees as we expand our
franchise restaurants, we expect franchise expense as a percentage of franchise revenue to decrease over time. Expansion of our franchise operations does not require us to incur material additional capital expenditures.



General and administrative expense has increased and is expected to continue
to increase as a result of EPLs sale of $110.0 million in aggregate principal amount of 91⁄4% Senior Secured Notes due 2009 (the Senior Secured Notes) ) and EPLIs sale of $70.0 million in aggregate principal amount
at maturity of 121⁄2% Senior Discount Notes due 2010 (the Intermediate Notes) and the exchange of both notes for registered notes under the Securities Act of 1933, as amended. We have incurred and will incur additional expenses due to
rating agency fees, higher directors and officers insurance, compliance with laws relating to corporate governance and public disclosure, and to the revaluation of common stock options of EPL Holdings, Inc. as a result of these two transactions. In
addition, in fiscal year 2004 we began to incur additional costs associated with developing disclosure controls and procedures and implementing the level of internal controls required for a company with registered securities. We expect these costs
to increase in future periods. General and administrative expense has increased as a result of the new bonus arrangements that we implemented in connection with the sale of the Senior Secured Notes and the Intermediate Notes.



In December of 2003, EPL offered and sold the Senior Secured Notes. EPL used
the gross proceeds from the sale of such notes, along with cash on hand, to reduce its outstanding bank debt by $39.5 million, to make a cash distribution to EPL Intermediate, Inc., in the amount of $70.0 million and to pay transaction-related fees
and expenses of $6.1 million. We applied the proceeds received from EPL to repurchase all of the outstanding shares of our preferred stock in an aggregate amount of $20.1 million and to make a distribution to our parent, EPL Holdings, Inc., in the
amount of $49.9 million. EPL Holdings, Inc. applied the proceeds received from us to make a dividend on its outstanding common stock. In connection with the sale of the Senior Secured Notes, EPL amended its senior credit agreement (of which EPLI is
a guarantor), which now provides for an $11.0 million term loan facility and a $15.0 million revolving credit facility (which was undrawn as of March 31, 2005, except for $8.0 million in outstanding letters of credit).



In March of 2004, EPLI offered and sold the Intermediate Notes. The net
proceeds of the offering, after deducting expenses, were approximately $37 million, which we used to make a cash dividend to EPL Holdings, Inc. EPL Holdings, Inc. used the proceeds received from us to make a dividend on its outstanding common stock.



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Results of Operations



Our operating results for the 13 weeks ended March 31, 2004 and 2005 are expressed as a percentage of restaurant revenue below:



|                                     |  |                         |   |  |       |  
|------------------------------------ |  | ----------------------- | - |  | ----- | -
|                                     |  | 13 Weeks EndedMarch 31, |  
|                                     |  | 2004                    |   |  | 2005  |  
|Income Statement Data:               |  |                         |   |  |       |  
|Restaurant revenue                   |  | 100.0                   | % |  | 100.0 | %
|Product cost                         |  | 30.8                    |   |  | 31.7  |  
|Payroll and benefits                 |  | 27.8                    |   |  | 26.5  |  
|Depreciation and amortization        |  | 6.4                     |   |  | 6.8   |  
|Other operating expenses             |  | 29.2                    |   |  | 32.2  |  
|Operating income                     |  | 12.5                    |   |  | 9.6   |  
|Interest expense                     |  | 7.1                     |   |  | 9.3   |  
|Income before income taxes           |  | 5.4                     |   |  | 0.4   |  
|Net income                           |  | 3.2                     |   |  | 0.2   |  
|                                     |  |                        
|Supplementary Income Statement Data: |  |                         |   |  |       |  
|Restaurant other operating expense   |  | 18.2                    |   |  | 19.3  |  
|Franchise expense                    |  | 1.6                     |   |  | 1.5   |  
|General and administrative expense   |  | 9.4                     |   |  | 11.4  |  
|Total other operating expenses       |  | 29.2                    |   |  | 32.2  |  



13 Weeks Ended
March 31, 2005 Compared to 13 Weeks Ended March 31, 2004



Restaurant revenue increased $0.7 million, or 1.4%, to $51.2 million for the 13 weeks ended March 31, 2005 from $50.5 million for the 13 weeks ended March 31, 2004. This increase was partially due to an additional $0.1 million in restaurant
revenue resulting from a 0.3% increase in company-operated same-store sales for the 2005 period from the 2004 period. Restaurants enter the comparable restaurant base for same-store sales the first full week after that restaurants one-year
anniversary. The increase in restaurant revenue was also due in part to $2.0 million from four restaurants opened and two restaurants acquired from a franchisee in fiscal 2004. Restaurant revenue was reduced $0.2 million by the closure of a
restaurant in 2005 and $1.3 million by the sale to franchisees of two restaurants and the closure of three restaurants in fiscal 2004.



Franchise revenue increased $0.1 million, or 3.7%, to $3.5 million for the 13 weeks ended March 31, 2005 from $3.4 million for the 13 weeks ended March
31, 2004. This increase is primarily due to an increase in royalties resulting from a 2.6% increase in franchise same-store sales.



Product cost increased $0.6 million, or 4.2%, to $16.2 million for the 13 weeks ended March 31, 2005 from $15.6 million for the 13 weeks ended March 31,
2004. These costs as a percentage of restaurant revenue were 31.7% for the 2005 period compared to 30.8% for the 2004 period. This 0.9% increase resulted primarily from chicken prices increasing 1.0% as a percentage of restaurant revenue as our new
chicken contracts took effect in March 2004 and 2005.



Payroll
and benefit expenses decreased $0.4 million, or 3.1%, to $13.6 million for the 13 weeks ended March 31, 2005 from $14.0 million for the 13 weeks ended March 31, 2004. As a percentage of restaurant revenue, these costs decreased 1.3% to 26.5% for the
2005 period from 27.8% for the 2004 period. This decrease was primarily due to menu price increases taken in November 2004 and also in part to the installation of chicken marinating tumblers in all company-operated restaurants, which reduces the
amount of labor required to marinate the chicken.



Depreciation
and amortization increased $0.3 million, or 7.4%, to $3.5 million for the 13 weeks ended March 31, 2005 compared to $3.2 million for the 13 weeks ended March 31, 2004. These costs as a percentage of restaurant revenue increased 0.4% to 6.8% in 2005
from 6.4% for the 2004 period. The increase in depreciation expense is due to capital expenditures on existing restaurants for remodels and equipment upgrades.



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Other operating expenses include restaurant operating expense, franchise expense, and general and
administrative expense.



Restaurant other operating expense,
which includes utilities, repair and maintenance, advertising, property taxes, occupancy and other operating expenses, increased $0.7 million, or 7.7%, to $9.9 million for the 13 weeks ended March 31, 2005 from $9.2 million for the 13 weeks ended
March 31, 2004. These costs as a percentage of restaurant revenue increased 1.1% to 19.3% for the 2005 period from 18.2% for the 2004 period. The increase in operating costs is due primarily to increased advertising expense of $0.6 million. Our
advertising spending in the first quarter of 2004 was under the planned annual rate of 4% and each quarter may be above or below this planned annual rate, depending on the timing of marketing promotion and the relative weights and price of media
spending.



Franchise expense consists primarily of rent expense
that we pay to landlords associated with leases under restaurants we are subleasing to franchisees. This expense usually fluctuates primarily as subleases expire and to some degree based on rents that are tied to a percentage of sales calculation.
Franchise expense decreased $0.1 million, or 5.4%, to $0.7 million for the 13 weeks ended March 31, 2005 compared to $0.8 million for the 13 weeks ended March 31, 2004.



General and administrative expense increased $1.1 million, or 22.8%, to $5.8 million for the 13 weeks ended March 31, 2005
from $4.7 million for the 13 weeks ended March 31, 2004. General and administrative expense as a percentage of revenue was 11.4% and 9.4% for the thirteen weeks ended March 31, 2005 and 2004, respectively. The largest component of the increase was
due to $0.3 million increase in outside services expense, which is primarily attributed to implementation costs of the Sarbanes-Oxley Act of 2002. The increase in costs is also due to an impairment charge of approximately $0.2 million, which was
recorded by the Company for one under-performing company-operated store that will continue to operate, partially offset by a gain on sale of land of approximately $0.1 million that was also recorded in the 2005 period. In addition, legal fees
increased $0.1 million and additional headcount and raises increased salary expense by $0.2 million for the 2005 period.



Interest expense, net of interest income, increased $1.1 million, or 32.2%, to $4.7 million for the 13 weeks ended March 31, 2005 from $3.6 million for
the 13 weeks ended March 31, 2004. This increase is due to additional interest expense related to EPLIs issuance of the Intermediate Notes in March 2004. Our average debt balances for the 2005 period increased to $170.0 million compared to
$133.1 million for the 2004 period and our average interest rate increased to 9.75% for the 2005 period compared to 9.09% for the 2004 period.



Our provision for income taxes consisted of income tax expense of $0.1 million and $1.1 million for the 13 weeks ended March 31, 2005 and 2004,
respectively, or an effective tax rate of 40.7% for 2005 and 41.5% for 2004.



Net income decreased to $0.1 million, or 0.2% as a percentage of restaurant revenue, for the 13 weeks ended March 31, 2005 compared to $1.6 million, or 3.2% for the 13 weeks ended March 31, 2004 primarily due to
higher interest expense and increased general and administrative expenses.



Liquidity and Capital Resources



Our principal
liquidity requirements are to service our debt and meet our capital expenditure needs. Our indebtedness at March 31, 2005 was $169.4 million. Our ability to make payments on and to refinance our indebtedness, and to fund planned capital expenditures
will depend on our ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on our current level of
operations, we believe our cash flow from operations, available cash and available borrowings under the $15.0 million revolving portion of EPLs senior credit facility will be adequate to meet our future liquidity needs for the foreseeable
future. Cash and cash equivalents increased $3.4 million from $5.6 million at December 29, 2004 to $9.0 million at March 31, 2005. We made cash bonus payments of $1.0 million in March 2005 related to the revaluation of stock options in connection
with the debt transactions. Although we expect to make cash bonus payments at various times through 2009 related to the revaluation of stock options, the amounts paid will not exceed, in aggregate, $1.0 million. In the first three months of fiscal
2005, we made $1.0 million in principal repayments on EPLs loan. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under EPLs senior credit
facility in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs. If we acquire restaurants from franchisees, our debt service requirements could increase. In addition, we may fund restaurant openings
through credit received by trade suppliers and landlord contributions. If our cash flow from operations is inadequate to meet our obligations under our indebtedness we may need to refinance all or a portion of our indebtedness, including the Senior
Secured Notes and the Intermediate Notes, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.



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As a holding company, the stock of EPL constitutes our only material asset. Consequently, EPL conducts
all of our consolidated operations and owns substantially all of our consolidated operating assets. Our principal source of the cash required to pay our obligations is the cash that EPL generates from its operations. EPL is a separate and distinct
legal entity and has no obligation to make funds available to us. The terms of EPLs senior credit facility and the indenture governing the Senior Secured Notes significantly restrict EPL from paying dividends, making loans or other
distributions and otherwise transferring assets to us. Furthermore, EPL will be permitted under the terms of its senior credit facility and the indenture governing the Senior Secured Notes to incur additional indebtedness that may severely restrict
or prohibit the making of distributions, the payment of dividends or the making of loans by EPL to us, and the indenture governing the Intermediate Notes permits us to allow EPL to incur such indebtedness. We cannot assure you that the agreements
governing our current and future indebtedness will permit our subsidiaries to provide us with sufficient dividends, distributions or loans to fund scheduled interest and principal payments on the Intermediate Notes when due.



Working Capital and Cash Flows



We presently have, in the past have had, and may have in the future,
negative working capital balances. The working capital deficit principally is the result of our investment to build new restaurants, remodel and replace or improve equipment in company-operated restaurants, and to acquire new restaurant information
systems. We do not have significant receivables or inventories and we receive trade credit based upon negotiated terms in purchasing food and supplies. Funds available from cash sales and franchise revenue not needed immediately to pay for food and
supplies or to finance receivables or inventories typically have been used for the capital expenditures referenced above and/or debt service payments under our existing indebtedness. As discussed above we spent cash on a number of items directly or
indirectly related to our debt financings.



Operating
Activities.We had net cash provided by operating activities of $7.7 million for the 13 weeks ended March 31, 2005 compared with net cash provided by operating activities of $6.7 million for the 13 weeks ended March 31, 2004. The increase in
cash provided by operating activities of $1.0 million in the 2005 period compared to the 2004 period was primarily attributable to a decrease in net income offset by changes in operating assets and liabilities.



Investing Activities.We had net cash used in investing activities of
$3.0 million for the 13 weeks ended March 31, 2005 compared with net cash used in investing activities of $2.1 million for the 13 weeks ended March 31, 2004. The increase in cash used in investing activities of $0.9 million was related to timing of
expenditures for new store construction and spending for the rollout of the new restaurant computer systems for company-operated restaurants.



Financing Activities.We had net cash used in financing activities of $1.3 million for the 13 weeks ended March 31, 2005 compared with net cash
used in financing activities of $1.9 million for the 13 weeks ended March 31, 2004. The decrease in cash used in financing activities in the 2005 period was attributable to $2.5 million in deferred financing costs related to the issuance of the
Senior Secured Notes and the Senior Discount Notes that were paid in 2004 partially offset by proceeds from the issuance of the Senior Discount Notes.



Debt and Other Obligations



At March 31, 2005, we had $43.9 million outstanding in aggregate principal amount of the Intermediate Notes. No cash interest will accrue on the
Intermediate Notes prior to March 15, 2009. Instead, the principal value of the Intermediate Notes will increase (representing accretion of original issue discount) from the date of original issuance until but not including March 15, 2009 at a rate
of 121/2% per annum compounded annually, so that the accreted value of the Intermediate Notes on March 15, 2009
will be equal to the full principal amount of $70.0 million at maturity. Beginning on March 15, 2009, cash interest will accrue on the Intermediate Notes at an annual rate of 121/2% per annum payable in arrears on March 15, 2010. Principal is also due March 15, 2010.



EPLs senior credit facility provides for an $11.0 million term loan and $15.0 million in revolving availability, with
a $10.0 million sub limit for letters of credit. In addition, EPL has $110.0 million outstanding in aggregate principal amount of the Senior Secured Notes.



At March 31, 2005, we had certain secured loan commitments, which were assumed in connection with purchases of restaurants from franchisees, of
approximately $1.5 million.



We have certain land and building
leases for which the building portion is treated as a capital lease. These assets are amortized over the life of the respective lease.



At March 31, 2005, we had outstanding letters of credit totaling $8.0 million, which served as collateral for our various workers compensation
insurance programs.



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Franchisees pay a monthly advertising fee of 4% of gross sales for the Los Angeles designated market area
or 5% of gross sales for other markets. Pursuant to our Uniform Franchise Offering Circular, we contribute, where we have company-operated restaurants, to the advertising fund on the same basis as franchised restaurants. Under our franchise
agreements, we are obligated to use all advertising fees collected from franchisees to purchase, develop and engage in advertising, public relations and marketing activities to promote the El Pollo Loco brand.



In connection with the issuance of the Senior Secured Notes and the dividend
paid by EPL Holdings, Inc. shortly thereafter, the exercise prices of outstanding options to purchase shares of the common stock of EPL Holdings, Inc. were adjusted. In addition, we accrued in December 2003 and paid Option Holders in January 2004
$1.9 million in bonuses. In fiscal 2004, the Company accrued approximately $0.6 million in bonuses that were paid to the Option Holders in March 2005. We will make additional cash bonus payments to the Option Holders related to the revaluation of
the stock options at various times through 2009 subject to continued employment and other conditions, which we estimate will aggregate approximately $0.5 million. The combined effect of the adjustment to the exercise price and such cash bonus
payments was to restore the approximate economic position of such option holders to that existing immediately before the dividend that EPL Holdings, Inc. paid to its stockholders following the sale of the Senior Secured Notes.



In connection with the issuance of the Intermediate Notes in March 2004 and
the dividend paid by EPL Holdings, Inc. shortly thereafter, the exercise prices of outstanding options to purchase shares of the common stock of EPL Holdings, Inc. were adjusted. In addition, we accrued and paid Option Holders in April 2004 $1.3
million in bonuses. Also, in fiscal 2004, we accrued $0.4 million in bonuses that we paid in the first quarter 2005. We will make additional cash bonus payments to the Option Holders related to the revaluation of the stock options at various times
through 2009 subject to continued employment and other conditions, which we estimate will aggregate approximately $0.5 million. The combined effect of the adjustment to the exercise price and such cash bonus payments will be to restore the
approximate economic position of such Option Holders to that existing immediately before the dividend that EPL Holdings, Inc. paid to its stockholders following the sale of the Intermediate Notes.



As of March 31, 2005, EPL was in compliance with all of the financial
covenants contained in its senior credit facility and in the indenture governing the Senior Secured Notes, and we were in compliance with all of the covenants contained in the indenture governing the Intermediate Notes. As of such date we calculated
all relevant ratios under EPLs senior credit facility as follows:



| |  |  | EPLs ratio of funded debt to Adjusted EBITDA (as such terms are defined in the senior credit agreement) was 3.64 to 1;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | EPLs ratio of senior funded debt to Adjusted EBITDA (as such terms are defined in the senior credit agreement) was 0.64 to 1;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | EPLs interest coverage ratio (as such term is defined in the senior credit agreement) was 2.85 to 1; and
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | EPLs fixed charge coverage ratio (as such term is defined in the senior credit agreement) was 1.47 to 1.
| | - |  | -----------------------------------------------------------------------------------------------------------



These four ratios were permitted to be no greater than 4.35 to 1, no greater
than 1.25 to 1, no less than 2.0 to 1 and no less than 1.15 to 1, respectively, as of such date. As of March 31, 2005, we calculated EPLs fixed charge coverage ratio (as such term is defined in the indenture governing the Senior
Secured Notes), the only ratio under EPLs indenture, at 2.84 to 1. Until December 15, 2005, the indenture permits EPL to incur indebtedness if its fixed charge coverage ratio for the most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on which such indebtedness was incurred would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom),
as if such indebtedness had been incurred at the beginning of such four-quarter period.



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In addition, as March 31, 2005, we calculated our fixed charge coverage ratio and our
consolidated leverage ratio (as such terms are defined in the indenture governing the Intermediate Notes), the only ratios under such indenture, at 2.06 to 1 and 4.71 to 1, respectively. Such indenture permits us to incur indebtedness
that (a) is contractually subordinated to the Intermediate Notes, (b) has a maturity date after June 16, 2010, and (c) does not provide for payment of cash interest prior to June 16, 2010, and permits our restricted subsidiaries (as such
term is defined in such indenture), including EPL, to incur indebtedness, if our fixed charge coverage ratio for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date
on which such indebtedness was incurred would have been at least 2.0 to 1, and, in the case of indebtedness incurred by us, if our consolidated leverage ratio would have been equal to or less than 4.0 to 1, all as determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if such indebtedness had been incurred at the beginning of such four-quarter period. Because, as of March 31, 2005, our consolidated leverage ratio exceeded 4.0 to 1, the
indenture governing the Intermediate Notes prevents EPL Intermediate, Inc. from incurring additional indebtedness, unless such indebtedness constitutes permitted debt under the indenture, until such time as our consolidated coverage
ratio (calculated using consolidated cash flow for the four most recent fiscal quarters for which financial statements are available) is equal to or less than 4.0 to 1.



Critical Accounting Policies and Estimates



The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and judgments, including
those related to recoverability of fixed assets, intangible assets, closed restaurants, workers compensation insurance and contingent liabilities. We base our estimates and judgments on historical experience and on various other factors that
we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Refer to our Annual Report on Form 10-K (File No. 333-115644) as filed with the Securities and Exchange Commission on March 29, 2005 for further discussion of our critical accounting policies and
estimates.



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|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------



The inherent risk in market risk sensitive instruments and positions primarily relates to potential losses arising from adverse changes in interest rates.



We are subject to market risk from exposure to changes in
interest rates based on our financing activities. This exposure relates to borrowings under our senior credit facility that are payable at floating rates of interest.



We do not consider the change in fair value of our long-term fixed rate debt resulting from a hypothetical 10% fluctuation
in interest rates, as of March 31, 2005 to be material.



|Item 4. | Controls and Procedures
|------- | -----------------------



We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the
Exchange Act)) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms, and that such information is accumulated and communicated to our management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.



As of March 31, 2005, the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our
management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our principal executive officer and principal
financial officer concluded that our disclosure controls and procedures were effective.



There have been no significant changes in our internal controls over financial reporting or in other factors that have materially affected or that are reasonably likely to materially affect our internal controls over
financial reporting either during the quarter or subsequent to the date we completed our evaluation.



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PART II  OTHER
INFORMATION



|Item 6. | Exhibits.
|------- | ---------



|               |  |                                                                                                       
|-------------- |  | ------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Documents                                                                              
|               | 
|10.1*(1)       |  | Letter Agreement, dated February 23, 2005, between El Pollo Loco, Inc. and Gold Kist Inc.             
|               | 
|10.2*(1)       |  | Letter Agreement, dated February 15, 2005, between El Pollo Loco, Inc. and Pilgrims Pride Corporation 
|               | 
|31.1           |  | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|               | 
|31.2           |  | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|               | 
|32.1           |  | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|               | 
|32.2           |  | Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



|(1) | Incorporated by reference from El Pollo Loco, Inc.s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 (File No. 333-115486) as filed on May 13, 2005.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|* | Certain confidential portions of this exhibit have been redacted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES



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.



|                   |  |  |  |                       |  |                       |  |                                          
|------------------ |  |  |  | --------------------- |  | --------------------- |  | -----------------------------------------
|                   |  |  |  | EPL INTERMEDIATE, INC
|                   |  |  | 
|Date: May 13, 2005 |  |  |  | By:                   |  | /s/ Stephen E. Carley
|                   |  |  |  |                       |  |                       |  | Stephen E. Carley President              
|                   |  |  | 
|                   |  |  |  | By:                   |  | /s/ Joseph Stein     
|                   |  |  |  |                       |  |                       |  | Joseph Stein Vice President and Treasurer



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EXHIBIT INDEX



|               |  |                                                                                                       
|-------------- |  | ------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Documents                                                                              
|               | 
|10.1*(1)       |  | Letter Agreement, dated February 23, 2005, between El Pollo Loco, Inc. and Gold Kist Inc.             
|               | 
|10.2*(1)       |  | Letter Agreement, dated February 15, 2005, between El Pollo Loco, Inc. and Pilgrims Pride Corporation 
|               | 
|31.1           |  | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|               | 
|31.2           |  | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|               | 
|32.1           |  | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|               | 
|32.2           |  | Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



|(1) | Incorporated by reference from El Pollo Loco, Inc.s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 (File No. 333-115486) as filed on May 13, 2005.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|* | Certain confidential portions of this exhibit have been redacted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------