##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 14, 2005
 Commission file number: 333-116897
 BUFFETS HOLDINGS, INC.
  Delaware
    
    22-3754018(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)1460 Buffet Way
Eagan, Minnesota
    
    55121(Address of principal
executive offices)
    
    (Zip Code)
 (651) 994-8608
 þ o
 o  o  þ
 o þ




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##### 



BUFFETS HOLDINGS, INC.
TABLE OF CONTENTS
 PagePart I. Financial InformationItem 1. Financial StatementsCondensed Consolidated Balance Sheets (Unaudited) as of June 29, 2005 and December 14, 2005
    
    
    3Condensed Consolidated Statements of Operations (Unaudited)  12 Weeks and 24 Weeks Ended December 15, 2004 and December 14, 2005
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited)  24 Weeks Ended December 15, 2004 and December 14, 2005
    
    
    5Notes to the Condensed Consolidated Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28Part II. Other InformationItem 5. Other Information
    
    
    29Item 6. Exhibits
    
    
    30Certification of Principal Executive, Financial and Accounting Officer
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 29,
    
    
    December 14,2005
    
    
    2005(Unaudited)(In thousands, except share data)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    20,662
    
    
    $
    32,854Receivables
    
    
    6,632
    
    
    
    5,471Inventories
    
    
    18,957
    
    
    
    18,945Prepaid expenses and other current assets
    
    
    6,318
    
    
    
    5,253Deferred income taxes
    
    
    12,533
    
    
    
    12,533Total current assets
    
    
    65,102
    
    
    
    75,056PROPERTY AND EQUIPMENT, net
    
    
    146,653
    
    
    
    143,010GOODWILL
    
    
    312,163
    
    
    
    312,163DEFERRED INCOME TAXES
    
    
    8,195
    
    
    
    8,195OTHER ASSETS, net
    
    
    12,910
    
    
    
    12,253Total assets
    
    $
    545,023
    
    
    $
    550,677LIABILITIES AND SHAREHOLDERS DEFICITCURRENT LIABILITIES:Accounts payable
    
    $
    44,883
    
    
    $
    43,946Accrued liabilities
    
    
    70,219
    
    
    
    74,670Income taxes payable
    
    
    6,990
    
    
    
    4,734Current maturities of long-term debt
    
    
    2,016
    
    
    
    2,016Total current liabilities
    
    
    124,108
    
    
    
    125,366LONG-TERM DEBT, net of current maturities
    
    
    464,178
    
    
    
    469,321DEFERRED LEASE OBLIGATIONS
    
    
    28,375
    
    
    
    28,618OTHER LONG-TERM LIABILITIES
    
    
    6,731
    
    
    
    6,542Total liabilities
    
    
    623,392
    
    
    
    629,847SHAREHOLDERS DEFICIT:Preferred stock; $.01 par value, 1,100,000 shares
authorized; none issued and outstanding as of June
29, 2005 and December 14, 2005
    
    
    
    
    
    
    Common stock; $.01 par value, 3,600,000 shares
authorized; 3,175,135 shares issued and
outstanding as of June 29, 2005 and 3,148,760 as
of December 14, 2005
    
    
    32
    
    
    
    31Additional paid in capital
    
    
    14
    
    
    
    9Accumulated deficit
    
    
    (78,415
    )
    
    
    (79,210
    )Total shareholders deficit
    
    
    (78,369
    )
    
    
    (79,170
    )Total liabilities and shareholders deficit
    
    $
    545,023
    
    
    $
    550,677
  3




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Twelve Weeks Ended
    
    
    Twenty Four Weeks EndedDecember 15,
    
    
    December 14,
    
    
    December 15,
    
    
    December 14,2004
    
    
    2005
    
    
    2004
    
    
    2005(Unaudited)
    
    
    (Unaudited)(In thousands)
    
    
    (In thousands)RESTAURANT SALES
    
    $
    205,175
    
    
    $
    218,274
    
    
    $
    422,383
    
    
    $
    445,012RESTAURANT COSTS:Food
    
    
    67,197
    
    
    
    74,201
    
    
    
    138,240
    
    
    
    148,976Labor
    
    
    62,586
    
    
    
    63,600
    
    
    
    126,892
    
    
    
    127,742Direct and occupancy
    
    
    50,306
    
    
    
    53,605
    
    
    
    102,081
    
    
    
    106,960Total restaurant costs
    
    
    180,089
    
    
    
    191,406
    
    
    
    367,213
    
    
    
    383,678ADVERTISING EXPENSES
    
    
    5,048
    
    
    
    9,508
    
    
    
    10,845
    
    
    
    16,573GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    10,954
    
    
    
    10,265
    
    
    
    20,850
    
    
    
    20,429IMPAIRMENT OF ASSETS
    
    
    
    
    
    
    1,350
    
    
    
    
    
    
    
    1,350OPERATING INCOME
    
    
    9,084
    
    
    
    5,745
    
    
    
    23,475
    
    
    
    22,982INTEREST EXPENSE
    
    
    11,094
    
    
    
    11,913
    
    
    
    21,931
    
    
    
    23,781INTEREST INCOME
    
    
    (181
    )
    
    
    (121
    )
    
    
    (246
    )
    
    
    (203
    )LOSS RELATED TO REFINANCING
    
    
    835
    
    
    
    
    
    
    
    835
    
    
    
    647LOSS RELATED TO EARLY EXTINGUISHMENT OF DEBT
    
    
    
    
    
    
    
    
    
    
    1,923
    
    
    
    OTHER INCOME
    
    
    (207
    )
    
    
    (287
    )
    
    
    (420
    )
    
    
    (484
    )LOSS BEFORE INCOME TAXES
    
    
    (2,457
    )
    
    
    (5,760
    )
    
    
    (548
    )
    
    
    (759
    )INCOME TAX EXPENSE (BENEFIT)
    
    
    (1,068
    )
    
    
    (1,841
    )
    
    
    (255
    )
    
    
    36Net loss
    
    $
    (1,389
    )
    
    $
    (3,919
    )
    
    $
    (293
    )
    
    $
    (795
    )
  4




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Twenty Four Weeks EndedDecember 15,
    
    
    December 14,2004
    
    
    2005(Unaudited)(In thousands)OPERATING ACTIVITIES:Net loss
    
    $
    (293
    )
    
    $
    (795
    )Adjustments to reconcile net loss to net cash provided by
operating activities:Depreciation and amortization
    
    
    15,163
    
    
    
    14,611Amortization of debt issuance cost
    
    
    658
    
    
    
    707Accretion of original issue discount
    
    
    5,506
    
    
    
    6,151Loss related to early extinguishment of debt
    
    
    1,923
    
    
    
    Deferred income taxes
    
    
    13
    
    
    
    Loss on disposal of assets
    
    
    1,655
    
    
    
    287Impairment of assets
    
    
    
    
    
    
    1,350Changes in assets and liabilities:Receivables
    
    
    930
    
    
    
    1,161Inventories
    
    
    80
    
    
    
    (64
    )Prepaid expenses and other current assets
    
    
    (7
    )
    
    
    1,065Accounts payable
    
    
    (5,230
    )
    
    
    (937
    )Accrued and other liabilities
    
    
    4,583
    
    
    
    4,505Income taxes payable
    
    
    (1,180
    )
    
    
    (2,256
    )Net cash provided by operating activities
    
    
    23,801
    
    
    
    25,785INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (10,343
    )
    
    
    (12,080
    )Sale (purchase) of other assets
    
    
    900
    
    
    
    (499
    )Net cash used in investing activities
    
    
    (9,443
    )
    
    
    (12,579
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    (8,672
    )
    
    
    (1,008
    )Issuance of stock
    
    
    13
    
    
    
    Repurchase of stock
    
    
    (284
    )
    
    
    (6
    )Reduction of restricted cash available for early
extinguishment of debt
    
    
    16,228
    
    
    
    Use of restricted cash for early extinguishment of debt
    
    
    (15,736
    )
    
    
    Debt issuance costs
    
    
    (56
    )
    
    
    Net cash used in financing activities
    
    
    (8,507
    )
    
    
    (1,014
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    5,851
    
    
    
    12,192CASH AND CASH EQUIVALENTS, beginning of period
    
    
    26,072
    
    
    
    20,662CASH AND CASH EQUIVALENTS, end of period
    
    $
    31,923
    
    
    $
    32,854SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid during the period for Interest (net of capitalized interest of $139 and $134)
    
    $
    14,595
    
    
    $
    18,209Income taxes
    
    $
    911
    
    
    $
    2,291
  5




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BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Nature of Organization
 Description of Business
   Interim Financial Information
    Principles of Consolidation
  Fiscal Year
  2. Summary of Significant Accounting Policies
 Long-Lived Assets
  6




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3. Recent Accounting Pronouncements
 Accounting Changes and Error Corrections Accounting Changes, Reporting Accounting Changes in Interim Financial Statements,
 Share-Based Payment.
 4. Stock-Based Compensation
 Accounting for Stock Issued to
Employees.
 Accounting for Stock-Based Compensation,
 5. Other Assets
  7




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Franchise fees
    
    
    Trademarks
    
    
    Liquor licenses
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    Grosscarrying
    
    
    Accumulated
    
    
    carrying
    
    
    Accumulated
    
    
    carrying
    
    
    Accumulated
    
    
    carrying
    
    
    Accumulatedamount
    
    
    amortization
    
    
    amount
    
    
    amortization
    
    
    Amount
    
    
    amortization
    
    
    Amount
    
    
    amortizationBALANCE, June 29, 2005
    
    $
    69
    
    
    $
    (65
    )
    
    $
    34
    
    
    $
    (34
    )
    
    $
    345
    
    
    $
    (25
    )
    
    $
    448
    
    
    $
    (124
    )FY 2006 Activity:Amortization
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )BALANCE, December 14, 2005
    
    $
    69
    
    
    $
    (67
    )
    
    $
    34
    
    
    $
    (34
    )
    
    $
    345
    
    
    $
    (25
    )
    
    $
    448
    
    
    $
    (126
    )
 6. Long-Term Debt
  Buffets, Inc.Credit Facility:Revolving credit facility
    
    $
    Term loan, interest at LIBOR plus 3.50%, due quarterly through
June 28, 2009 (interest rate at 6.3% as of December 14, 2005)
    
    
    198,061Total Credit Facility
    
    
    198,061Senior subordinated notes, interest at 11.25%, due July 15,
2010, net of discount of $4,621
    
    
    180,044Total long-term debt at Buffets, Inc.
    
    
    378,105
 Buffets Holdings, Inc.Senior discount notes, interest at 13.875%, due December 15,
2010, net of discount of $38,768
    
    
    93,232Grand total long-term debt
    
    
    471,337Less  Current maturities
    
    
    2,016$
    469,321
 Credit Facility
    8




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111/4% Senior Subordinated Notes
 1 4
 137/8% Senior Discount Notes
 7 8 7 8
 7. Significant Events
 Appointment of Chief Executive Officer
  8. Related-Party Transactions
  9. Litigation
  9




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##### Table of Contents



10. Subsequent Events
 New Holding Company
   Strategic Alternatives.
  Store Closures
 Accounting for Costs Associated
with Exit or Disposal Activities
 Appointment of Chief Financial Officer
  10




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11. Condensed Consolidating Financial Statements
 1 4
 11




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Condensed Consolidating Balance Sheet
As of June 29, 2005
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    49
    
    
    $
    14,154
    
    
    $
    6,459
    
    
    $
    
    
    
    $
    20,662Receivables
    
    
    
    
    
    
    591
    
    
    
    288,145
    
    
    
    (282,104
    )
    
    
    6,632Inventories
    
    
    
    
    
    
    827
    
    
    
    18,130
    
    
    
    
    
    
    
    18,957Prepaid expenses and other current assets
    
    
    4
    
    
    
    5,985
    
    
    
    329
    
    
    
    
    
    
    
    6,318Deferred income taxes
    
    
    187
    
    
    
    10,860
    
    
    
    1,486
    
    
    
    
    
    
    
    12,533Total current assets
    
    
    240
    
    
    
    32,417
    
    
    
    314,549
    
    
    
    (282,104
    )
    
    
    65,102PROPERTY AND EQUIPMENT, net
    
    
    
    
    
    
    6,453
    
    
    
    140,200
    
    
    
    
    
    
    
    146,653GOODWILL, net
    
    
    
    
    
    
    18,730
    
    
    
    293,433
    
    
    
    
    
    
    
    312,163DEFERRED INCOME TAXES
    
    
    2,792
    
    
    
    5,403
    
    
    
    
    
    
    
    
    
    
    
    8,195OTHER ASSETS, net
    
    
    2,556
    
    
    
    142,419
    
    
    
    5,237
    
    
    
    (137,302
    )
    
    
    12,910Total assets
    
    $
    5,588
    
    
    $
    205,422
    
    
    $
    753,419
    
    
    $
    (419,406
    )
    
    $
    545,023LIABILITIES AND SHAREHOLDERS EQUITY
(DEFICIT)CURRENT LIABILITIES:Accounts payable
    
    
    
    
    
    
    327,351
    
    
    
    2,859
    
    
    
    (285,327
    )
    
    
    44,883Accrued liabilities
    
    
    
    
    
    
    45,634
    
    
    
    24,585
    
    
    
    
    
    
    
    70,219Income taxes payable
    
    
    (1,877
    )
    
    
    8,867
    
    
    
    
    
    
    
    
    
    
    
    6,990Current maturities of long-term debt
    
    
    
    
    
    
    121
    
    
    
    1,895
    
    
    
    
    
    
    
    2,016Total current liabilities
    
    
    (1,877
    )
    
    
    381,973
    
    
    
    29,339
    
    
    
    (285,327
    )
    
    
    124,108LONG-TERM DEBT, net of current maturities
    
    
    87,439
    
    
    
    22,604
    
    
    
    354,135
    
    
    
    
    
    
    
    464,178DEFERRED LEASE OBLIGATIONS
    
    
    
    
    
    
    1,671
    
    
    
    26,704
    
    
    
    
    
    
    
    28,375OTHER LONG-TERM LIABILITIES
    
    
    
    
    
    
    3,227
    
    
    
    3,504
    
    
    
    
    
    
    
    6,731Total liabilities
    
    
    85,562
    
    
    
    409,475
    
    
    
    413,682
    
    
    
    (285,327
    )
    
    
    623,392COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS EQUITY (DEFICIT)Common stock
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32Additional paid in capital
    
    
    14
    
    
    
    82,311
    
    
    
    199,244
    
    
    
    (281,555
    )
    
    
    14Retained earnings (accumulated deficit)
    
    
    (80,020
    )
    
    
    (286,364
    )
    
    
    140,493
    
    
    
    147,476
    
    
    
    (78,415
    )Total
shareholders equity (deficit)
    
    
    (79,974
    )
    
    
    (204,053
    )
    
    
    339,737
    
    
    
    (134,079
    )
    
    
    (78,369
    )Total liabilities and shareholders
equity (deficit)
    
    $
    5,588
    
    
    $
    205,422
    
    
    $
    753,419
    
    
    $
    (419,406
    )
    
    $
    545,023
 12




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Condensed Consolidating Balance Sheet
As of December 14, 2005
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    43
    
    
    $
    28,714
    
    
    $
    4,097
    
    
    $
    
    
    
    $
    32,854Receivables
    
    
    
    
    
    
    464
    
    
    
    296,097
    
    
    
    (291,090
    )
    
    
    5,471Inventories
    
    
    
    
    
    
    835
    
    
    
    18,110
    
    
    
    
    
    
    
    18,945Prepaid expenses and other current
assets
    
    
    1
    
    
    
    2,629
    
    
    
    2,623
    
    
    
    
    
    
    
    5,253Deferred income taxes
    
    
    187
    
    
    
    10,860
    
    
    
    1,486
    
    
    
    
    
    
    
    12,533Total current assets
    
    
    231
    
    
    
    43,502
    
    
    
    322,413
    
    
    
    (291,090
    )
    
    
    75,056PROPERTY AND EQUIPMENT, net
    
    
    
    
    
    
    5,989
    
    
    
    137,021
    
    
    
    
    
    
    
    143,010GOODWILL, net
    
    
    
    
    
    
    18,730
    
    
    
    293,433
    
    
    
    
    
    
    
    312,163DEFERRED INCOME TAXES
    
    
    2,792
    
    
    
    5,403
    
    
    
    
    
    
    
    
    
    
    
    8,195OTHER ASSETS, net
    
    
    2,392
    
    
    
    141,847
    
    
    
    5,316
    
    
    
    (137,302
    )
    
    
    12,253Total assets
    
    $
    5,415
    
    
    $
    215,471
    
    
    $
    758,183
    
    
    $
    (428,392
    )
    
    $
    550,677LIABILITIES AND SHAREHOLDERS EQUITY
(DEFICIT)CURRENT LIABILITIES:Accounts payable
    
    
    
    
    
    
    336,105
    
    
    
    2,457
    
    
    
    (294,616
    )
    
    
    43,946Accrued liabilities
    
    
    
    
    
    
    46,258
    
    
    
    28,412
    
    
    
    
    
    
    
    74,670Income taxes payable
    
    
    (3,930
    )
    
    
    8,664
    
    
    
    
    
    
    
    
    
    
    
    4,734Current maturities of long-term debt
    
    
    
    
    
    
    121
    
    
    
    1,895
    
    
    
    
    
    
    
    2,016Total current liabilities
    
    
    (3,930
    )
    
    
    391,148
    
    
    
    32,764
    
    
    
    (294,616
    )
    
    
    125,366LONG-TERM DEBT, net of current maturities
    
    
    93,232
    
    
    
    22,565
    
    
    
    353,524
    
    
    
    
    
    
    
    469,321DEFERRED LEASE OBLIGATIONS
    
    
    
    
    
    
    1,735
    
    
    
    26,883
    
    
    
    
    
    
    
    28,618OTHER LONG-TERM LIABILITIES
    
    
    
    
    
    
    3,134
    
    
    
    3,408
    
    
    
    
    
    
    
    6,542Total liabilities
    
    
    89,302
    
    
    
    418,582
    
    
    
    416,579
    
    
    
    (294,616
    )
    
    
    629,847COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS EQUITY (DEFICIT)Common stock
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31Additional paid in capital
    
    
    9
    
    
    
    82,311
    
    
    
    199,244
    
    
    
    (281,555
    )
    
    
    9Retained earnings (accumulated deficit)
    
    
    (83,927
    )
    
    
    (285,422
    )
    
    
    142,360
    
    
    
    147,779
    
    
    
    (79,210
    )Total shareholders equity (deficit)
    
    
    (83,887
    )
    
    
    (203,111
    )
    
    
    341,604
    
    
    
    (133,776
    )
    
    
    (79,170
    )Total liabilities and shareholders
equity (deficit)
    
    $
    5,415
    
    
    $
    215,471
    
    
    $
    758,183
    
    
    $
    (428,392
    )
    
    $
    550,677
 13




---



##### Table of Contents



Condensed Consolidating Statement of Operations
For the Twelve Weeks Ended December 15, 2004
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)RESTAURANT SALES
    
    $
    
    
    
    $
    9,048
    
    
    $
    196,127
    
    
    $
    
    
    
    $
    205,175RESTAURANT COSTS:Food
    
    
    
    
    
    
    3,207
    
    
    
    63,990
    
    
    
    
    
    
    
    67,197Labor
    
    
    
    
    
    
    2,821
    
    
    
    59,765
    
    
    
    
    
    
    
    62,586Direct and occupancy
    
    
    
    
    
    
    1,272
    
    
    
    49,034
    
    
    
    
    
    
    
    50,306Total restaurant costs
    
    
    
    
    
    
    7,300
    
    
    
    172,789
    
    
    
    
    
    
    
    180,089ADVERTISING EXPENSES
    
    
    
    
    
    
    223
    
    
    
    4,825
    
    
    
    
    
    
    
    5,048GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    
    
    
    
    483
    
    
    
    10,471
    
    
    
    
    
    
    
    10,954OPERATING INCOME
    
    
    
    
    
    
    1,042
    
    
    
    8,042
    
    
    
    
    
    
    
    9,084INTEREST EXPENSE
    
    
    2,646
    
    
    
    507
    
    
    
    7,941
    
    
    
    
    
    
    
    11,094INTEREST INCOME
    
    
    
    
    
    
    (181
    )
    
    
    
    
    
    
    
    
    
    
    (181
    )LOSS RELATED TO REFINANCING
    
    
    835
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835OTHER INCOME
    
    
    
    
    
    
    (207
    )
    
    
    
    
    
    
    
    
    
    
    (207
    )INCOME (LOSS) BEFORE
INCOME TAXES
    
    
    (3,481
    )
    
    
    923
    
    
    
    101
    
    
    
    
    
    
    
    (2,457
    )INCOME TAX EXPENSE
(BENEFIT)
    
    
    (1,336
    )
    
    
    341
    
    
    
    (73
    )
    
    
    
    
    
    
    (1,068
    )Net income (loss)
    
    $
    (2,145
    )
    
    $
    582
    
    
    $
    174
    
    
    $
    
    
    
    $
    (1,389
    )
 14




---



##### Table of Contents



Condensed Consolidating Statement of Operations
For the Twenty Four Weeks Ended December 15, 2004
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)RESTAURANT SALES
    
    $
    
    
    
    $
    18,539
    
    
    $
    403,844
    
    
    $
    
    
    
    $
    422,383RESTAURANT COSTS:Food
    
    
    
    
    
    
    6,582
    
    
    
    131,658
    
    
    
    
    
    
    
    138,240Labor
    
    
    
    
    
    
    5,672
    
    
    
    121,220
    
    
    
    
    
    
    
    126,892Direct and occupancy
    
    
    
    
    
    
    2,526
    
    
    
    99,555
    
    
    
    
    
    
    
    102,081Total restaurant costs
    
    
    
    
    
    
    14,780
    
    
    
    352,433
    
    
    
    
    
    
    
    367,213ADVERTISING EXPENSES
    
    
    
    
    
    
    476
    
    
    
    10,369
    
    
    
    
    
    
    
    10,845GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    3
    
    
    
    915
    
    
    
    19,932
    
    
    
    
    
    
    
    20,850OPERATING INCOME (LOSS)
    
    
    (3
    )
    
    
    2,368
    
    
    
    21,110
    
    
    
    
    
    
    
    23,475INTEREST EXPENSE
    
    
    5,292
    
    
    
    998
    
    
    
    15,641
    
    
    
    
    
    
    
    21,931INTEREST INCOME
    
    
    
    
    
    
    (246
    )
    
    
    
    
    
    
    
    
    
    
    (246
    )LOSS RELATED TO REFINANCING
    
    
    835
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835LOSS RELATED TO EARLY
EXTINGUISHMENT OF DEBT
    
    
    
    
    
    
    1,923
    
    
    
    
    
    
    
    
    
    
    
    1,923OTHER INCOME
    
    
    
    
    
    
    (420
    )
    
    
    
    
    
    
    
    
    
    
    (420
    )INCOME (LOSS) BEFORE
INCOME TAXES
    
    
    (6,130
    )
    
    
    113
    
    
    
    5,469
    
    
    
    
    
    
    
    (548
    )INCOME TAX EXPENSE
(BENEFIT)
    
    
    (2,215
    )
    
    
    40
    
    
    
    1,920
    
    
    
    
    
    
    
    (255
    )Net income (loss)
    
    $
    (3,915
    )
    
    $
    73
    
    
    $
    3,549
    
    
    $
    
    
    
    $
    (293
    )
 15




---



##### Table of Contents



Condensed Consolidating Statement of Operations
For the Twelve Weeks Ended December 14, 2005
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)RESTAURANT SALES
    
    $
    
    
    
    $
    10,095
    
    
    $
    208,179
    
    
    $
    
    
    
    $
    218,274RESTAURANT COSTS:Food
    
    
    
    
    
    
    3,593
    
    
    
    70,608
    
    
    
    
    
    
    
    74,201Labor
    
    
    
    
    
    
    2,999
    
    
    
    60,601
    
    
    
    
    
    
    
    63,600Direct and occupancy
    
    
    
    
    
    
    1,370
    
    
    
    52,235
    
    
    
    
    
    
    
    53,605Total restaurant costs
    
    
    
    
    
    
    7,962
    
    
    
    183,444
    
    
    
    
    
    
    
    191,406ADVERTISING EXPENSES
    
    
    
    
    
    
    440
    
    
    
    9,068
    
    
    
    
    
    
    
    9,508GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    2
    
    
    
    475
    
    
    
    9,788
    
    
    
    
    
    
    
    10,265IMPAIRMENT OF ASSETS
    
    
    
    
    
    
    
    
    
    
    1,350
    
    
    
    
    
    
    
    1,350OPERATING INCOME (LOSS)
    
    
    (2
    )
    
    
    1,218
    
    
    
    4,529
    
    
    
    
    
    
    
    5,745INTEREST EXPENSE
    
    
    2,978
    
    
    
    536
    
    
    
    8,399
    
    
    
    
    
    
    
    11,913INTEREST INCOME
    
    
    
    
    
    
    (121
    )
    
    
    
    
    
    
    
    
    
    
    (121
    )LOSS RELATED TO REFINANCING
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OTHER INCOME
    
    
    
    
    
    
    (287
    )
    
    
    
    
    
    
    
    
    
    
    (287
    )INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (2,980
    )
    
    
    1,090
    
    
    
    (3,870
    )
    
    
    
    
    
    
    (5,760
    )INCOME TAX EXPENSE (BENEFIT)
    
    
    (1,474
    )
    
    
    484
    
    
    
    (851
    )
    
    
    
    
    
    
    (1,841
    )Net income (loss)
    
    $
    (1,506
    )
    
    $
    606
    
    
    $
    (3,019
    )
    
    $
    
    
    
    $
    (3,919
    )
 16




---



##### Table of Contents



Condensed Consolidating Statement of Operations
For the Twenty Four Weeks Ended December 14, 2005
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)RESTAURANT SALES
    
    $
    
    
    
    $
    20,626
    
    
    $
    424,386
    
    
    $
    
    
    
    $
    445,012RESTAURANT COSTS:Food
    
    
    
    
    
    
    7,337
    
    
    
    141,639
    
    
    
    
    
    
    
    148,976Labor
    
    
    
    
    
    
    6,099
    
    
    
    121,643
    
    
    
    
    
    
    
    127,742Direct and occupancy
    
    
    
    
    
    
    2,871
    
    
    
    104,089
    
    
    
    
    
    
    
    106,960Total restaurant costs
    
    
    
    
    
    
    16,307
    
    
    
    367,371
    
    
    
    
    
    
    
    383,678ADVERTISING EXPENSES
    
    
    
    
    
    
    768
    
    
    
    15,805
    
    
    
    
    
    
    
    16,573GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    3
    
    
    
    947
    
    
    
    19,479
    
    
    
    
    
    
    
    20,429IMPAIRMENT OF ASSETS
    
    
    
    
    
    
    
    
    
    
    1,350
    
    
    
    
    
    
    
    1,350OPERATING INCOME (LOSS)
    
    
    (3
    )
    
    
    2,604
    
    
    
    20,381
    
    
    
    
    
    
    
    22,982INTEREST EXPENSE
    
    
    5,957
    
    
    
    1,069
    
    
    
    16,755
    
    
    
    
    
    
    
    23,781INTEREST INCOME
    
    
    
    
    
    
    (203
    )
    
    
    
    
    
    
    
    
    
    
    (203
    )LOSS RELATED TO REFINANCING
    
    
    
    
    
    
    647
    
    
    
    
    
    
    
    
    
    
    
    647OTHER INCOME
    
    
    
    
    
    
    (484
    )
    
    
    
    
    
    
    
    
    
    
    (484
    )INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (5,960
    )
    
    
    1,575
    
    
    
    3,626
    
    
    
    
    
    
    
    (759
    )INCOME TAX EXPENSE (BENEFIT)
    
    
    (2,053
    )
    
    
    633
    
    
    
    1,456
    
    
    
    
    
    
    
    36Net income (loss)
    
    $
    (3,907
    )
    
    $
    942
    
    
    $
    2,170
    
    
    $
    
    
    
    $
    (795
    )
 17




---



##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the Twenty Four Weeks Ended December 15, 2004
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)OPERATING ACTIVITIES:Net income (loss)
    
    $
    (3,915
    )
    
    $
    73
    
    
    $
    3,549
    
    
    $
    
    
    
    $
    (293
    )Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    
    
    
    
    1,614
    
    
    
    13,549
    
    
    
    
    
    
    
    15,163Amortization of debt issuance costs
    
    
    151
    
    
    
    30
    
    
    
    477
    
    
    
    
    
    
    
    658Accretion of original issue discount
    
    
    5,141
    
    
    
    22
    
    
    
    343
    
    
    
    
    
    
    
    5,506Loss related to early extinguishment of debt
    
    
    
    
    
    
    1,923
    
    
    
    
    
    
    
    
    
    
    
    1,923Deferred income taxes
    
    
    (1,024
    )
    
    
    62
    
    
    
    975
    
    
    
    
    
    
    
    13Loss on disposal of assets
    
    
    
    
    
    
    
    
    
    
    1,655
    
    
    
    
    
    
    
    1,655Changes in assets and liabilities:Receivables
    
    
    
    
    
    
    26,242
    
    
    
    (25,009
    )
    
    
    (303
    )
    
    
    930Inventories
    
    
    
    
    
    
    7
    
    
    
    73
    
    
    
    
    
    
    
    80Prepaid expenses and other assets
    
    
    
    
    
    
    1,864
    
    
    
    (1,871
    )
    
    
    
    
    
    
    (7
    )Accounts payable
    
    
    (17
    )
    
    
    (5,259
    )
    
    
    46
    
    
    
    
    
    
    
    (5,230
    )Accrued and other liabilities
    
    
    
    
    
    
    346
    
    
    
    4,237
    
    
    
    
    
    
    
    4,583Income taxes payable/refundable
    
    
    (1,191
    )
    
    
    1,630
    
    
    
    (1,619
    )
    
    
    
    
    
    
    (1,180
    )Net cash provided by (used in)
operating activities
    
    
    (855
    )
    
    
    28,554
    
    
    
    (3,595
    )
    
    
    (303
    )
    
    
    23,801INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    
    
    
    
    (647
    )
    
    
    (9,696
    )
    
    
    
    
    
    
    (10,343
    )Corporate cash advances (payments)
    
    
    
    
    
    
    (33,425
    )
    
    
    33,122
    
    
    
    303
    
    
    
    Proceeds from sale (purchase) of other assets
    
    
    (69
    )
    
    
    
    
    
    
    969
    
    
    
    
    
    
    
    900Net cash provided by (used in) investing
activities
    
    
    (69
    )
    
    
    (34,072
    )
    
    
    24,395
    
    
    
    303
    
    
    
    (9,443
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    (520
    )
    
    
    (8,152
    )
    
    
    
    
    
    
    (8,672
    )Repurchase of common stock
    
    
    (284
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (284
    )Proceeds from issuance of common stock
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Reduction of restricted cash available for
early extinguishment of debt
    
    
    
    
    
    
    16,228
    
    
    
    
    
    
    
    
    
    
    
    16,228Use of restricted cash for early
extinguishment of debt
    
    
    
    
    
    
    (944
    )
    
    
    (14,792
    )
    
    
    
    
    
    
    (15,736
    )Dividends
    
    
    1,201
    
    
    
    (1,201
    )
    
    
    
    
    
    
    
    
    
    
    Debt issuance costs
    
    
    (56
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56
    )Net cash provided by (used in) financing
activities
    
    
    874
    
    
    
    13,563
    
    
    
    (22,944
    )
    
    
    
    
    
    
    (8,507
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (50
    )
    
    
    8,045
    
    
    
    (2,144
    )
    
    
    
    
    
    
    5,851CASH AND CASH EQUIVALENTS, beginning of period
    
    
    96
    
    
    
    19,771
    
    
    
    6,205
    
    
    
    
    
    
    
    26,072CASH AND CASH EQUIVALENTS, end of period
    
    $
    46
    
    
    $
    27,816
    
    
    $
    4,061
    
    
    $
    
    
    
    $
    31,923
 18




---



##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the Twenty Four Weeks Ended December 14, 2005
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)OPERATING ACTIVITIES:Net income (loss)
    
    $
    (3,907
    )
    
    $
    942
    
    
    $
    2,170
    
    
    $
    
    
    
    $
    (795
    )Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    
    
    
    
    1,313
    
    
    
    13,298
    
    
    
    
    
    
    
    14,611Amortization of debt issuance costs
    
    
    163
    
    
    
    33
    
    
    
    511
    
    
    
    
    
    
    
    707Accretion of original issue discount
    
    
    5,793
    
    
    
    21
    
    
    
    337
    
    
    
    
    
    
    
    6,151Loss on disposal of assets
    
    
    
    
    
    
    
    
    
    
    287
    
    
    
    
    
    
    
    287Impairment of assets
    
    
    
    
    
    
    
    
    
    
    1,350
    
    
    
    
    
    
    
    1,350Changes in assets and liabilities:Receivables
    
    
    
    
    
    
    30,758
    
    
    
    (29,294
    )
    
    
    (303
    )
    
    
    1,161Inventories
    
    
    
    
    
    
    (8
    )
    
    
    (56
    )
    
    
    
    
    
    
    (64
    )Prepaid expenses and other assets
    
    
    3
    
    
    
    3,356
    
    
    
    (2,294
    )
    
    
    
    
    
    
    1,065Accounts payable
    
    
    
    
    
    
    (535
    )
    
    
    (402
    )
    
    
    
    
    
    
    (937
    )Accrued and other liabilities
    
    
    
    
    
    
    595
    
    
    
    3,910
    
    
    
    
    
    
    
    4,505Income taxes payable/refundable
    
    
    (2,053
    )
    
    
    (203
    )
    
    
    
    
    
    
    
    
    
    
    (2,256
    )Net cash provided by (used in)
operating activities
    
    
    (1
    )
    
    
    36,272
    
    
    
    (10,183
    )
    
    
    (303
    )
    
    
    25,785INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    
    
    
    
    (818
    )
    
    
    (11,262
    )
    
    
    
    
    
    
    (12,080
    )Corporate cash advances (payments)
    
    
    
    
    
    
    (20,834
    )
    
    
    20,531
    
    
    
    303
    
    
    
    Proceeds from sale (purchase) of other assets
    
    
    1
    
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    (499
    )Net cash provided by (used in) investing
activities
    
    
    1
    
    
    
    (21,652
    )
    
    
    8,769
    
    
    
    303
    
    
    
    (12,579
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    (60
    )
    
    
    (948
    )
    
    
    
    
    
    
    (1,008
    )Repurchase of common stock
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )Net cash used in financing activities
    
    
    (6
    )
    
    
    (60
    )
    
    
    (948
    )
    
    
    
    
    
    
    (1,014
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (6
    )
    
    
    14,560
    
    
    
    (2,362
    )
    
    
    
    
    
    
    12,192CASH AND CASH EQUIVALENTS, beginning of period
    
    
    49
    
    
    
    14,154
    
    
    
    6,459
    
    
    
    
    
    
    
    20,662CASH AND CASH EQUIVALENTS, end of period
    
    $
    43
    
    
    $
    28,714
    
    
    $
    4,097
    
    
    $
    
    
    
    $
    32,854
 19




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 You should read the following discussion in conjunction with our condensed consolidated
financial statements and related notes included elsewhere in this report. Unless the context
indicates or requires otherwise, (i) the term Buffets Holdings refers to Buffets Holdings, Inc.;
(ii) the term Buffets refers to Buffets, Inc., our principal operating subsidiary; (iii) the
terms we, our, ours, and the Company refer to Buffets Holdings, Inc. and its subsidiaries.
Some of the statements in the following discussion are forward-looking statements. See
Forward-Looking Statements and Risk Factors.
 Overview
        
    
    We recognize as restaurant sales the proceeds from the sale of food and beverages at
our company owned restaurants at the time of such sale. We recognize the proceeds from
the sale of gift certificates/cards when the gift certificates/cards are redeemed at our
restaurants. Until redemption, the unearned revenue from the sale of gift
certificates/cards is included in accrued liabilities on our consolidated balance
sheets. Our franchise income includes royalty fees and initial franchise fees received
from our franchisees. We recognize royalty fees as other income based on the sales
reported at the franchise restaurants.
    
    Restaurant costs reflect only direct restaurant operating costs, including food,
labor and direct and occupancy costs. Labor costs include compensation and benefits for
both hourly and restaurant management employees. Direct and occupancy costs consist
primarily of costs of supplies, maintenance, utilities, rent, real estate taxes,
insurance, depreciation and amortization.
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##### Table of Contents




    
    Advertising expenses reflect all advertising and promotional costs.
    
    General and administrative expenses reflect all costs, other than advertising
expenses, not directly related to the operation of restaurants. These expenses consist
primarily of corporate administrative compensation and overhead, district and regional
management compensation and related management expenses and the costs of recruiting,
training and supervising restaurant management personnel.
    
    Impairment of assets reflects fair market adjustments to the carrying value of
long-lived assets, primarily comprised of leasehold improvements and equipment.
    
    Interest expense reflects interest costs associated with our debt, amortization of
debt issuance cost and accretion of original issuance discount on our subordinated notes
and bonds.
    
    Interest income reflects interest earned on our short-term investments.
    
    Effective as of July 28, 2005, we entered into Amendment No. 1, dated as of April 6,
2005, to Buffets Amended and Restated Credit Agreement, dated as of February 20, 2004.
Loss related to refinancing in fiscal 2006 is comprised of transaction fees incurred in
conjunction with this amendment. Loss related to refinancing in fiscal 2005 reflects
costs associated with an initial public offering of Income Deposit Securities that was
withdrawn due to unfavorable market conditions.
    
    Loss related to the early extinguishment of debt reflects the costs associated with
redeeming a portion of Buffets 111/4% senior subordinated notes prior to their maturity
during fiscal year 2005.
    
    Other income primarily reflects franchise fees earned.
    
    Income tax expense reflects the current and deferred tax provision (benefit)
determined in accordance with the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for Income Taxes.
 Critical Accounting Policies
   Long-Lived Assets
   21




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##### Table of Contents



Goodwill
  Insurance Reserves
  Store Closing Reserve
   Income Taxes
   22




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##### Table of Contents



Gift Cards
  Results of Operations
 The following discussion reflects our historical results for the 12-week periods ended
December14, 2005 and December 15, 2004.
 Our future results may not be consistent with our historical results. Our fiscal 2005 results
included a loss related to the withdrawal of an initial public offering of Income Deposit
Securities due to unfavorable market conditions. Our fiscal 2006 results include a charge for the
impairment of long-lived assets. The following discussion should be read in conjunction with our
condensed consolidated financial statements and related notes included elsewhere in this report.
  Twelve Weeks EndedDecember 15, 2004
    
    
    December 14, 2005(dollars in thousands)Restaurant sales
    
    $
    205,175
    
    
    
    100.0
    %
    
    $
    218,274
    
    
    
    100.0
    %Restaurant costs
    
    
    180,089
    
    
    
    87.8
    
    
    
    191,406
    
    
    
    87.7Advertising expenses
    
    
    5,048
    
    
    
    2.5
    
    
    
    9,508
    
    
    
    4.4General and administrative
expenses
    
    
    10,954
    
    
    
    5.3
    
    
    
    10,265
    
    
    
    4.7Impairment of assets
    
    
    
    
    
    
    
    
    
    
    1,350
    
    
    
    0.6Operating income
    
    
    9,084
    
    
    
    4.4
    
    
    
    5,745
    
    
    
    2.6Interest expense
    
    
    11,094
    
    
    
    5.4
    
    
    
    11,913
    
    
    
    5.5Interest income
    
    
    (181
    )
    
    
    (0.1
    )
    
    
    (121
    )
    
    
    (0.1
    )Loss related to refinancing
    
    
    835
    
    
    
    0.4
    
    
    
    
    
    
    
    Other income
    
    
    (207
    )
    
    
    (0.1
    )
    
    
    (287
    )
    
    
    (0.1
    )Loss before income taxes
    
    
    (2,457
    )
    
    
    (1.2
    )
    
    
    (5,760
    )
    
    
    (2.6
    )Income tax benefit
    
    
    (1,068
    )
    
    
    (0.5
    )
    
    
    (1,841
    )
    
    
    (0.8
    )Net loss
    
    $
    (1,389
    )
    
    
    (0.7
    )
    
    $
    (3,919
    )
    
    
    (1.8
    )
 Certain percentage amounts do not sum to total due to rounding.
 Restaurant Sales.
 Restaurant Costs.
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##### Table of Contents



Advertising Expenses.
 General and Administrative Expenses.
 Impairment of Assets.
 Interest Expense. 7 8
 Loss Related to Refinancing.
 Income Taxes.
 For the 24 Weeks Ended December 14, 2005 Compared to the 24 Weeks Ended December 15, 2004
 Our future results may not be consistent with our historical results. Our fiscal 2005 results
included a loss related to the redemption of approximately $14.3 million of 111/4% Senior
Subordinated notes due 2010 and a loss related to the withdrawal of an initial public offering of
Income Deposit Securities due to unfavorable market conditions. As of July 28, 2005, we entered
into Amendment No. 1, dated as of April 6, 2005, to Buffets Amended and Restated Credit Agreement,
dated as of February 20, 2004. The loss related to refinancing in fiscal 2006 is comprised of
transaction fees incurred in conjunction with this amendment. Our fiscal 2006 results also include
a charge for the impairment of long-lived assets. The following discussion should be read in
conjunction with our condensed consolidated financial statements and related notes included
elsewhere in this report.
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##### Table of Contents



24 Weeks EndedDecember 15, 2004
    
    
    December 14, 2005(dollars in thousands)Restaurant sales
    
    $
    422,383
    
    
    
    100.0
    %
    
    $
    445,012
    
    
    
    100.0
    %Restaurant costs
    
    
    367,213
    
    
    
    86.9
    
    
    
    383,678
    
    
    
    86.2Advertising expenses
    
    
    10,845
    
    
    
    2.6
    
    
    
    16,573
    
    
    
    3.7General and administrative
expenses
    
    
    20,850
    
    
    
    4.9
    
    
    
    20,429
    
    
    
    4.6Impairment of assets
    
    
    
    
    
    
    
    
    
    
    1,350
    
    
    
    0.3Operating income
    
    
    23,475
    
    
    
    5.6
    
    
    
    22,982
    
    
    
    5.2Interest expense
    
    
    21,931
    
    
    
    5.2
    
    
    
    23,781
    
    
    
    5.3Interest income
    
    
    (246
    )
    
    
    (0.1
    )
    
    
    (203
    )
    
    
    Loss related to refinancing
    
    
    835
    
    
    
    0.2
    
    
    
    647
    
    
    
    0.1Loss related to early
extinguishment of debt
    
    
    1,923
    
    
    
    0.5
    
    
    
    
    
    
    
    Other income
    
    
    (420
    )
    
    
    (0.1
    )
    
    
    (484
    )
    
    
    (0.1
    )Loss before income taxes
    
    
    (548
    )
    
    
    (0.1
    )
    
    
    (759
    )
    
    
    (0.2
    )Income tax expense (benefit)
    
    
    (255
    )
    
    
    (0.1
    )
    
    
    36
    
    
    
    Net loss
    
    $
    (293
    )
    
    
    (0.1
    )
    
    $
    (795
    )
    
    
    (0.2
    )
 Certain percentage amounts do not sum to total due to rounding .
 Restaurant Sales.
 Restaurant Costs.
 Advertising Expenses.
 General and Administrative Expenses.
 Impairment of Assets.
 Interest Expense. 7 ¤
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##### Table of Contents



Loss Related to Refinancing.
 Loss Related to the Early Extinguishment of Debt. 1 4 1 4
 Income Taxes.
 Liquidity and Capital Resources
    Operating Activities.
 Investing Activities.
 Financing Activities.
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##### Table of Contents



Future Capital Expenditures.
  §
    
    Spend approximately $2 million on a new restaurant to be opened this fiscal year.§
    
    Spend approximately $17 million on remodeling and improvement costs that will be
capitalized. Remodels incorporate design elements to update the décor of our existing
facilities including a lighter, more contemporary interior design and expanded dessert
displays. Other improvement costs include a variety of outlays such as display grills, new
carpet, equipment and minor leasehold improvements.§
    
    Spend approximately $0.5 million on miscellaneous corporate and information systems
investments.
  Store
Closures
  Credit Facilities and Other Long Term Debt
    1 4
 27




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##### Table of Contents



7 8
 Seasonality and Quarterly Fluctuations
  Forward-Looking Statements and Risk Factors
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risks. 1 4 7 8
 Food Commodity Risks.
 
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
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##### Table of Contents



Changes in Internal Control
  
 PART II. OTHER INFORMATION
 
 ITEM 5. OTHER INFORMATION
 Directors and Executive Officers of the Registrant.
    Executive Compensation.
 Certain Relationships and Related Transactions.
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##### Table of Contents



Entry into a Material Definitive Agreement.
  Strategic Alternatives.
 Store Closures
 Voluntary Filer. www.sec.gov
 
 ITEM 6. EXHIBITS
  30




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##### Table of Contents



SIGNATURES
  BUFFETS HOLDINGS, INC.Date: January 25, 2006
    
    By:
    
    /s/ R. Michael Andrews, Jr.

R. Michael Andrews, Jr.Chief Executive Officer(Principal Executive, Financial and Accounting Officer)
 
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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Description10.1*
    
    Description of the Material Terms of Buffets, Inc.s
Fiscal 2006 Incentive Based Compensation Program for
Executives, dated as of November 7, 2005 (incorporated
by reference to Exhibit 10.1 to Buffets Holdings,
Inc.s Current Report on Form 8-K, filed with the
Commission on November 10, 2005 (SEC file No.
333-116897)).10.2*
    
    Advisory Agreement, dated September 28, 2000, by and
among Buffets Holdings, Inc., Buffets, Inc. and Roe H.
Hatlen (incorporated by reference to Exhibit 10.4 to
Buffets, Inc.s Registration Statement on Form S-4,
filed with the Commission on August 16, 2002 (SEC file
No. 333-98301)).10.3*
    
    Amendment No. 1, dated December 13, 2005, to the
Advisory Agreement, dated September 28, 2000, by and
among Buffets Holdings, Inc., Buffets, Inc. and Roe H.
Hatlen (incorporated by reference to Exhibit 10.1 to
Buffets Holdings, Inc.s Current Report on Form 8-K,
filed with the Commission on December 16, 2005 (SEC
file No. 333-116897)).10.4*
    
    Form of Buffets Holdings, Inc. Cash and Phantom
Incentive Unit Award Agreement (incorporated by
reference to Exhibit 10.2 to Buffets Holdings, Inc.s
Current Report on Form 8-K, filed with the Commission
on December 16, 2005 (SEC file No. 333-116897)).10.5*
    
    Form of Buffets Holdings, Inc. Severance Protection
Agreement (incorporated by reference to Exhibit 10.3
to Buffets Holdings, Inc.s Current Report on Form
8-K, filed with the Commission on December 16, 2005
(SEC file No. 333-116897)).10.6*
    
    Contribution Agreement, dated as of December 29, 2005,
among Buffets Holdings, Inc., Caxton-Iseman
Investments, L.P., Sentinel Capital Partners II, L.P.,
members of Buffets Holdings senior management and
Buffets Restaurants Holdings, Inc. (incorporated by
reference to Exhibit 10.1 to Buffets Holdings, Inc.s
Current Report on Form 8-K, filed with the Commission
on December 30, 2005 (SEC file No. 333-116897)).31.1
    
    Certification of Principal Executive, Financial and
Accounting Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    Previously provided or incorporated by reference. 32