##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the Fiscal Year Ended January 2, 2005                                                   
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to          .                                  

Commission File Number: 0-25123





P.F. Changs China Bistro, Inc.


(Exact name of registrant as specified in its charter)


|                                                                                             |  |                                         
|-------------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                                     |  | 86-0815086                              
|(State or other jurisdiction of
    incorporation or organization)                           |  | (I.R.S. Employer
    Identification No.)
|                                                                                            
|15210 N. Scottsdale Rd., Ste. 300
    Scottsdale, AZ(Address of principal executive offices) |  | 85254(Zip Code)                         

Registrants telephone number, including area code:


(602) 957-8986


Securities registered pursuant to Section 12(b) of the
Act:


NONE


Securities registered pursuant to Section 12(g) of the
Act:


Common Stock, $.001 par value


þ o


þ


þ o






DOCUMENTS INCORPORATED BY REFERENCE


(to the extent indicated herein)












---



##### Table of Contents



Explanatory Note




plus






2



---










TABLE OF CONTENTS


|             |     |  |  |                                                                                                    |      |  |    | 
|------------ | --- |  |  | -------------------------------------------------------------------------------------------------- | ---- |  | -- | 
|Item         |     |  |  |                                                                                                    | Page | 
|             |     |  |  |                                                                                                    |      | 
|PART I      
|             | 1.  |  |  | Business                                                                                           |      |  | 4  | 
|             | 2.  |  |  | Properties                                                                                         |      |  | 13 | 
|             | 3.  |  |  | Legal Proceedings                                                                                  |      |  | 15 | 
|             | 4.  |  |  | Submission of Matters to a Vote of Security
    Holders                                            |      |  | 15 | 
|            
|PART II     
|             | 5.  |  |  | Market for the Registrants Common
    Stock and Related Stockholder Matters                       |      |  | 15 | 
|             | 6.  |  |  | Selected Financial Data                                                                            |      |  | 16 | 
|             | 7.  |  |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations          |      |  | 17 | 
|             | 7A. |  |  | Quantitative and Qualitative Disclosures
    About Market Risks                                    |      |  | 32 | 
|             | 8.  |  |  | Financial Statements and Supplementary
    Data                                                    |      |  | 33 | 
|             | 9.  |  |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure           |      |  | 59 | 
|             | 9A. |  |  | Controls and Procedures                                                                            |      |  | 59 | 
|            
|PART III    
|             | 10. |  |  | Directors and Executive Officers of the
    Registrant                                             |      |  | 63 | 
|             | 11. |  |  | Executive Compensation                                                                             |      |  | 63 | 
|             | 12. |  |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters |      |  | 63 | 
|             | 13. |  |  | Certain Relationships and Related
    Transactions                                                 |      |  | 64 | 
|             | 14. |  |  | Principal Accounting Fees and Services                                                             |      |  | 64 | 
|            
|PART IV     
|             | 15. |  |  | Exhibits, Financial Statement Schedules                                                            |      |  | 64 | 
|EX-21.1     
|Exhibit 23.1
|Exhibit 31.1
|Exhibit 31.2
|Exhibit 32.1
|Exhibit 32.2



3



---



##### Table of Contents






PART I







|        |         
|------- | --------
|Item 1. | Business

General








Concept and Strategy




Menu


fan tsai. Fan tsai


4



---



##### Table of Contents











Operations








5



---



##### Table of Contents











Marketing






Competition




Management Information Systems




6



---



##### Table of Contents





Purchasing




Employees




Unit Economics




Access to Information


www.pfchangs.com.


Risk Factors




| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | Failure of our existing or new restaurants to achieve
    predicted results could have a negative impact on our revenues
    and performance results.



7



---



##### Table of Contents





| |                                                                                
| | -------------------------------------------------------------------------------
| | Our inability to retain key personnel could negatively
    impact our business.





| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | If we do not expand our restaurant operations, our
    operating revenue could decline.





| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | identification and availability of suitable locations;                                                 
|
| |  | competition for restaurant sites;                                                                      
|
| |  | negotiation of favorable lease arrangements;                                                           
|
| |  | timely development of commercial, residential, street or highway
    construction near our restaurants;
|
| |  | management of the costs of construction and development of new
    restaurants;                        
|
| |  | securing required governmental approvals and permits;                                                  
|
| |  | recruitment of qualified operating personnel, particularly
    managers and chefs;                     
|
| |  | weather conditions;                                                                                    
|
| |  | competition in new markets; and                                                                        
|
| |  | general economic conditions.                                                                           





| |                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------
| | Implementing our growth strategy may strain our management
    resources and negatively impact our competitive position.





| |                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The inability to develop and construct our restaurants
    within projected budgets and time periods will adversely affect
    our business and financial condition.



8



---



##### Table of Contents







| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | labor disputes;                                                                                     
|
| |  | shortages of materials and skilled labor;                                                           
|
| |  | weather interference;                                                                               
|
| |  | unforeseen engineering problems;                                                                    
|
| |  | environmental problems;                                                                             
|
| |  | construction or zoning problems;                                                                    
|
| |  | local government regulations;                                                                       
|
| |  | modifications in design to the size and scope of the
    projects; and                              
|
| |  | other unanticipated increases in costs, any of which could give
    rise to delays or cost overruns.





| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Potential labor shortages may delay planned openings or
    damage customer relations.





| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | Changes in general economic and political conditions
    affect consumer spending and may harm our revenues and operating
    results.





| |                                                                          
| | -------------------------------------------------------------------------
| | Fluctuations in operating results may cause profitability
    to decline.





| |   |                                                                         
| | - | ------------------------------------------------------------------------
| |  | general economic conditions;                                            
|
| |  | consumer confidence in the economy;                                     
|
| |  | changes in consumer preferences;                                        
|
| |  | competitive factors, including the performance of restaurant
    stocks;
|
| |  | weather conditions;                                                     
|
| |  | timing of new restaurant openings and related expenses;                 
|
| |  | revenues contributed by new restaurants; and                            
|
| |  | increases or decreases in comparable restaurant revenues.               

9



---



##### Table of Contents







| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | Future changes in financial accounting standards may cause
    adverse unexpected operating results and affect our reported
    results of operations.





| |                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our financial results may also fluctuate significantly as
    a result of recent changes in how we account for certain aspects
    of our partnership program.







| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | Intense competition in the restaurant industry could
    prevent us from increasing or sustaining our revenues and
    profitability.





10



---



##### Table of Contents







| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Failure to comply with governmental regulations could harm
    our business and our reputation.





| |   |                                                                  
| | - | -----------------------------------------------------------------
| |  | environmental;                                                   
|
| |  | building construction;                                           
|
| |  | zoning requirements;                                             
|
| |  | the preparation and sale of food and alcoholic
    beverages; and
|
| |  | employment.                                                      













| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | Increases in the minimum wage may have a material adverse
    effect on our business and financial results.



11



---



##### Table of Contents







| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | Changes in food costs could negatively impact our revenues
    and results of operations.





| |                                                                  
| | -----------------------------------------------------------------
| | Rising insurance costs could negatively impact
    profitability.





| |                                                                     
| | --------------------------------------------------------------------
| | Litigation could have a material adverse effect on our
    business.







| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | Compliance with changing regulation of corporate
    governance and public disclosure may result in additional
    expenses.



12



---



##### Table of Contents



Special Note Regarding Forward-Looking Statements









|        |           
|------- | ----------
|Item 2. | Properties



|               |  |           |    |  |                |  |       | 
|-------------- |  | --------- | -- |  | -------------- |  | ----- | 
|               |  | Number of |    |  | Average Square | 
|State          |  | Locations |    |  | Footage        | 
|               |  |           |    |  |                | 
|Alabama        |  |           | 1  |  |                |  | 6,650 | 
|Arizona        |  |           | 6  |  |                |  | 6,500 | 
|California     |  |           | 22 |  |                |  | 6,750 | 
|Colorado       |  |           | 5  |  |                |  | 7,050 | 
|Florida        |  |           | 9  |  |                |  | 6,550 | 
|Georgia        |  |           | 3  |  |                |  | 5,950 | 
|Illinois       |  |           | 3  |  |                |  | 7,800 | 
|Indiana        |  |           | 2  |  |                |  | 7,050 | 
|Iowa           |  |           | 1  |  |                |  | 7,100 | 
|Kansas         |  |           | 1  |  |                |  | 6,500 | 
|Louisiana      |  |           | 1  |  |                |  | 5,850 | 
|Massachusetts  |  |           | 1  |  |                |  | 5,750 | 
|Maryland       |  |           | 2  |  |                |  | 6,750 | 
|Michigan       |  |           | 3  |  |                |  | 6,750 | 
|Minnesota      |  |           | 2  |  |                |  | 7,150 | 
|Missouri       |  |           | 2  |  |                |  | 7,050 | 
|North Carolina |  |           | 3  |  |                |  | 6,850 | 
|Nebraska       |  |           | 1  |  |                |  | 7,100 | 
|New Jersey     |  |           | 2  |  |                |  | 7,650 | 
|New Mexico     |  |           | 1  |  |                |  | 7,450 | 
|Nevada         |  |           | 5  |  |                |  | 8,600 | 
|New York       |  |           | 4  |  |                |  | 7,200 | 
|Ohio           |  |           | 5  |  |                |  | 6,900 | 
|Oklahoma       |  |           | 2  |  |                |  | 7,500 | 
|Oregon         |  |           | 2  |  |                |  | 6,300 | 
|Pennsylvania   |  |           | 2  |  |                |  | 7,200 | 
|Tennessee      |  |           | 4  |  |                |  | 6,750 | 
|Texas          |  |           | 12 |  |                |  | 6,800 | 

13



---



##### Table of Contents



|           |  |           |   |  |                |  |       | 
|---------- |  | --------- | - |  | -------------- |  | ----- | 
|           |  | Number of |   |  | Average Square | 
|State      |  | Locations |   |  | Footage        | 
|           |  |           |   |  |                | 
|Utah       |  |           | 2 |  |                |  | 5,300 | 
|Virginia   |  |           | 4 |  |                |  | 6,750 | 
|Washington |  |           | 3 |  |                |  | 6,750 | 
|Wisconsin  |  |           | 1 |  |                |  | 6,450 | 



|           |  |           |    |  |                |  |       | 
|---------- |  | --------- | -- |  | -------------- |  | ----- | 
|           |  | Number of |    |  | Average Square | 
|State      |  | Locations |    |  | Footage        | 
|           |  |           |    |  |                | 
|Arizona    |  |           | 13 |  |                |  | 3,050 | 
|California |  |           | 7  |  |                |  | 3,250 | 
|Colorado   |  |           | 4  |  |                |  | 3,100 | 
|Nevada     |  |           | 1  |  |                |  | 3,250 | 
|New Mexico |  |           | 1  |  |                |  | 3,350 | 
|Oklahoma   |  |           | 2  |  |                |  | 3,250 | 
|Texas      |  |           | 24 |  |                |  | 3,300 | 
|Utah       |  |           | 2  |  |                |  | 3,250 | 



Expansion Strategy and Site Selection








14



---



##### Table of Contents














|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings








|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders






PART II







|        |                                                                             
|------- | ----------------------------------------------------------------------------
|Item 5. | Market for the Registrants Common Stock and Related
    Stockholder Matters





|                   |  |      |       |  |     |  |       | 
|------------------ |  | ---- | ----- |  | --- |  | ----- | 
|Quarter Ended      |  | High |       |  | Low | 
|                   |  |      |       |  |     | 
|March 30, 2003     |  |      | 39.89 |  |     |  | 30.25 | 
|June 29, 2003      |  |      | 49.80 |  |     |  | 36.28 | 
|September 28, 2003 |  |      | 51.22 |  |     |  | 44.01 | 
|December 28, 2003  |  |      | 54.59 |  |     |  | 42.55 | 
|March 28, 2004     |  |      | 52.24 |  |     |  | 46.27 | 
|June 27, 2004      |  |      | 51.93 |  |     |  | 41.87 | 
|September 26, 2004 |  |      | 46.07 |  |     |  | 39.50 | 
|January 2, 2005    |  |      | 57.87 |  |     |  | 44.80 | 





15



---



##### Table of Contents








|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



Selected Consolidated Financial Data


|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |         |        |         |         |         |        |         |         | 
|-------------------------------------------------------------- | ----------------------------- | ------------------------------------- | -------------------------------- | ------ | ----------- | ------- | ------- | ----------- | ------ | ------- | ----------- | ------ | ------- | ----------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | 
|                                                               |                               | Fiscal Year                           |                                  |        | Fiscal Year |         |         | Fiscal Year |        |         | Fiscal Year |        |         | Fiscal Year |        
|                                                               |                               | 2000(1)(2)                            |                                  |        | 2001(1)(2)  |         |         | 2002(1)(2)  |        |         | 2003(1)(2)  |        |         | 2004        |        
|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |        
|                                                               |                               | (In thousands, except per share data) |                                 
|                                                               |                               | (Restated)                            |                                  |        | (Restated)  |         |         | (Restated)  |        |         | (Restated)  |        |         |            
|Statement of Income Data:                                      |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |         |        |         |         |         |       
|Revenues                                                       |                               | $                                     | 225,435                          |        |             | $       | 306,441 |             |        | $       | 406,609     |        |         | $           | 539,917 |        |         | $       | 706,941 |       
|Costs and expenses:                                            |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |         |        |         |         |         |       
|                                                               | Restaurant operating costs:   |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |         |        |         |         |         |        |        
|                                                               |                               | Cost of sales                         |                                  |        | 64,720      |         |         |             | 86,368 |         |             |        | 112,571 |             |         |        | 152,788 |         |         |        | 200,736 |        
|                                                               |                               | Labor                                 |                                  |        | 69,685      |         |         |             | 97,094 |         |             |        | 133,536 |             |         |        | 174,989 |         |         |        | 231,575 |        
|                                                               |                               | Partner bonus expense, imputed        |                                  |        | 761         |         |         |             | 992    |         |             |        | 1,192   |             |         |        | 1,439   |         |         |        | 1,750   |        
|                                                               |                               | Operating                             |                                  |        | 30,842      |         |         |             | 41,597 |         |             |        | 55,293  |             |         |        | 73,660  |         |         |        | 99,528  |        
|                                                               |                               | Occupancy                             |                                  |        | 13,904      |         |         |             | 18,716 |         |             |        | 24,129  |             |         |        | 28,914  |         |         |        | 37,693  |        
|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |        
|                                                               |                               |                                       | Total restaurant operating costs |        |             | 179,912 |         |             |        | 244,767 |             |        |         | 326,721     |         |        |         | 431,790 |         |        |         | 571,282 | 
|                                                               | General and administrative    |                                       |                                  | 12,265 |             |         |         | 16,316      |        |         |             | 20,513 |         |             |         | 28,692 |         |         |         | 34,662 |        
|                                                               | Depreciation and amortization |                                       |                                  | 8,902  |             |         |         | 12,476      |        |         |             | 15,847 |         |             |         | 21,817 |         |         |         | 29,155 |        
|                                                               | Preopening expense            |                                       |                                  | 5,280  |             |         |         | 5,180       |        |         |             | 6,428  |         |             |         | 8,790  |         |         |         | 7,995  |        
|                                                               | Partner investment expense(3) |                                       |                                  | 1,385  |             |         |         | 2,744       |        |         |             | 5,798  |         |             |         | 4,196  |         |         |         | 17,671 |        
|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |        
|Income from operations                                         |                               |                                       | 17,691                           |        |             |         | 24,958  |             |        |         | 31,302      |        |         |             | 44,632  |        |         |         | 46,176  |       
|Interest income (expense) and other income, net                |                               |                                       | (39                              | )      |             |         | 900     |             |        |         | 41          |        |         |             | 466     |        |         |         | 612     |       
|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |        
|Income before minority interest and provision for income taxes |                               |                                       | 17,652                           |        |             |         | 25,858  |             |        |         | 31,343      |        |         |             | 45,098  |        |         |         | 46,788  |       
|Minority interest                                              |                               |                                       | (3,556                           | )      |             |         | (4,558  | )           |        |         | (5,243      | )      |         |             | (7,887  | )      |         |         | (10,078 | )     
|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |        
|Income before provision for income taxes                       |                               |                                       | 14,096                           |        |             |         | 21,300  |             |        |         | 26,100      |        |         |             | 37,211  |        |         |         | 36,710  |       
|Provision for income taxes                                     |                               |                                       | (5,365                           | )      |             |         | (7,530  | )           |        |         | (8,875      | )      |         |             | (12,424 | )      |         |         | (10,656 | )     
|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |        
|Net income                                                     |                               | $                                     | 8,731                            |        |             | $       | 13,770  |             |        | $       | 17,225      |        |         | $           | 24,787  |        |         | $       | 26,054  |       
|Basic net income per share                                     |                               | $                                     | 0.42                             |        |             | $       | 0.58    |             |        | $       | 0.70        |        |         | $           | 0.98    |        |         | $       | 1.01    |       
|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |        
|Diluted net income per share                                   |                               | $                                     | 0.38                             |        |             | $       | 0.54    |             |        | $       | 0.66        |        |         | $           | 0.94    |        |         | $       | 0.98    |       
|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |        
|Shares used in calculation of basic net income per share       |                               |                                       | 20,752                           |        |             |         | 23,728  |             |        |         | 24,688      |        |         |             | 25,345  |        |         |         | 25,727  |       
|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |        
|Shares used in calculation of diluted net income per share     |                               |                                       | 22,708                           |        |             |         | 25,470  |             |        |         | 25,924      |        |         |             | 26,250  |        |         |         | 26,575  |       
|                                                               |                               |                                       |                                  |        |             |         |         |             |        |         |             |        |         |             |        

|                            |  |                |         |  |              |   |         |              |  |   |              |  |  |            |         |  |  |   |         | 
|--------------------------- |  | -------------- | ------- |  | ------------ | - | ------- | ------------ |  | - | ------------ |  |  | ---------- | ------- |  |  | - | ------- | 
|                            |  | As of          |         |  | As of        |   |         | As of        |  |   | As of        |  |  | As of      |        
|                            |  | December 31,   |         |  | December 30, |   |         | December 29, |  |   | December 28, |  |  | January 2, |        
|                            |  | 2000           |         |  | 2001         |   |         | 2002         |  |   | 2003         |  |  | 2005       |        
|                            |  |                |         |  |              |   |         |              |  |   |              |  |  |            |        
|                            |  | (In thousands) |        
|                            |  | (Restated)     |         |  | (Restated)   |   |         | (Restated)   |  |   | (Restated)   |  |  |           
|Balance Sheet Data:         |  |                |         |  |              |   |         |              |  |   |              |  |  |            |         |  |  |   |         | 
|Cash and cash equivalents   |  | $              | 6,390   |  |              | $ | 20,799  |              |  | $ | 39,089       |  |  | $          | 45,478  |  |  | $ | 66,409  | 
|Total assets                |  |                | 133,066 |  |              |   | 191,338 |              |  |   | 238,850      |  |  |            | 303,821 |  |  |   | 383,515 | 
|Long-term debt              |  |                | 1,485   |  |              |   | 1,644   |              |  |   | 1,441        |  |  |            | 136     |  |  |   | 545     | 
|Common stockholders equity |  |                | 75,652  |  |              |   | 133,296 |              |  |   | 168,019      |  |  |            | 204,332 |  |  |   | 244,957 | 

16



---



##### Table of Contents








|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | P.F. Changs has restated its previously reported
    consolidated financial statements for changes in Occupancy,
    General and Administrative, Preopening and Depreciation expenses
    for all previous years presented due to the treatment of lease
    accounting. See Note 1 to our consolidated financial
    statements.                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(2) | P.F. Changs has reclassified certain of our restaurants
    costs relating to complimentary and employee meals from
    operating expenses to contra-revenue accounts as discussed in
    Note 2 to our consolidated financial statements. This
    reclassification has no effect on net income. The total amount
    reclassified is reflected as a reduction of operating expenses
    and a corresponding reduction of revenues in the same amount in
    each year affected. The reclassification resulted in a reduction
    of revenues and a reduction of operating expenses of
    $19.3 million, $15.5 million, $12.3 million and
    $9.5 million in fiscal years 2003, 2002, 2001 and 2000,
    respectively.
|   
|(3) | Partner investment expense increased during 2004 as a result of
    a $12.5 million modification of certain partnership
    agreements as discussed in Note 2 to our consolidated
    financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Overview










17



---



##### Table of Contents



Results of Operations




|                                                |                               |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |      |       |     |      |      |       |     |      |      | 
|----------------------------------------------- | ----------------------------- | ------------------------------ | -------------------------------- | --- | ---------------- | ---- | ----- | ---------- | ---- | ---- | ------------ | --- | ---- | ------ | ----- | --- | ------- | ---- | ----- | --- | ---- | ---- | ----- | --- | ---- | ---- | 
|                                                |                               | Fiscal Year 2003(1)(2)         |                                  |     | Fiscal Year 2004 |     
|                                                |                               |                                |                                  |     |                  |     
|                                                |                               | Consolidated                   |                                  |     | Bistro           |      |       | Pei Wei    |      |      | Consolidated |     |      | Bistro |       |     | Pei Wei |     
|                                                |                               |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |     
|                                                |                               | (Restated)                     |                                  |     | (Restated)       |      |       | (Restated) |      |      |              |     |      |        |      
|Statements of Income Data:                      |                               |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |      |       |     |      |      |       |    
|Revenues                                        |                               |                                | 100.0                            | %   |                  |      | 100.0 | %          |      |      | 100.0        | %   |      |        | 100.0 | %   |         |      | 100.0 | %   |      |      | 100.0 | %  
|Costs and expenses:                             |                               |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |      |       |     |      |      |       |    
|                                                | Restaurant operating costs:   |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |      |       |     |      |      |       |     |     
|                                                |                               | Cost of sales                  |                                  |     | 28.3             |      |       |            | 28.2 |      |              |     | 29.6 |        |       |     | 28.4    |      |       |     | 28.3 |      |       |     | 28.9 |     
|                                                |                               | Labor                          |                                  |     | 32.4             |      |       |            | 32.3 |      |              |     | 33.5 |        |       |     | 32.8    |      |       |     | 32.7 |      |       |     | 33.4 |     
|                                                |                               | Partner bonus expense, imputed |                                  |     | 0.3              |      |       |            | 0.3  |      |              |     | 0.2  |        |       |     | 0.2     |      |       |     | 0.3  |      |       |     | 0.1  |     
|                                                |                               | Operating                      |                                  |     | 13.6             |      |       |            | 13.6 |      |              |     | 14.3 |        |       |     | 14.1    |      |       |     | 13.9 |      |       |     | 15.1 |     
|                                                |                               | Occupancy                      |                                  |     | 5.4              |      |       |            | 5.2  |      |              |     | 6.3  |        |       |     | 5.3     |      |       |     | 5.2  |      |       |     | 6.1  |     
|                                                |                               |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |     
|                                                |                               |                                | Total restaurant operating costs |     |                  | 80.0 |       |            |      | 79.5 |              |     |      | 83.9   |       |     |         | 80.8 |       |     |      | 80.4 |       |     |      | 83.6 | 
|                                                | General and administrative    |                                |                                  | 5.3 |                  |      |       | 5.1        |      |      |              | 7.4 |      |        |       | 4.9 |         |      |       | 4.7 |      |      |       | 6.4 |     
|                                                | Depreciation and amortization |                                |                                  | 4.0 |                  |      |       | 4.0        |      |      |              | 4.5 |      |        |       | 4.1 |         |      |       | 4.1 |      |      |       | 4.6 |     
|                                                | Preopening expense            |                                |                                  | 1.6 |                  |      |       | 1.4        |      |      |              | 3.3 |      |        |       | 1.1 |         |      |       | 1.0 |      |      |       | 2.2 |     
|                                                | Partner investment expense    |                                |                                  | 0.8 |                  |      |       | 0.8        |      |      |              | 0.5 |      |        |       | 2.5 |         |      |       | 2.5 |      |      |       | 2.7 |     
|                                                |                               |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |     
|Income (loss) from operations                   |                               |                                | 8.3                              |     |                  |      | 9.1   |            |      |      | 0.4          |     |      |        | 6.5   |     |         |      | 7.5   |     |      |      | 0.4   |    
|Interest and other income (expense), net        |                               |                                | 0.1                              |     |                  |      | 0.1   |            |      |      | 0.0          |     |      |        | 0.1   |     |         |      | 0.1   |     |      |      | 0.0   |    
|Minority interest                               |                               |                                | (1.5                             | )   |                  |      | (1.5  | )          |      |      | (1.0         | )   |      |        | (1.4  | )   |         |      | (1.5  | )   |      |      | (0.9  | )  
|                                                |                               |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |     
|Income (loss) before provision for income taxes |                               |                                | 6.9                              |     |                  |      | 7.7   | %          |      |      | (0.6         | )%  |      |        | 5.2   |     |         |      | 6.1   | %   |      |      | (0.5  | )% 
|                                                |                               |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |     
|Provision for income taxes                      |                               |                                | (2.3                             | )   |                  |      |       |            |      |      |              |     |      |        | (1.5  | )   |         |      |       |     |      |      |       |    
|                                                |                               |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |     
|Net income                                      |                               |                                | 4.6                              | %   |                  |      |       |            |      |      |              |     |      |        | 3.7   | %   |         |      |       |     |      |      |       |    
|                                                |                               |                                |                                  |     |                  |      |       |            |      |      |              |     |      |        |       |     |         |     









18



---



##### Table of Contents





| |                                                                        
| | -----------------------------------------------------------------------
| | Year Ended January 2, 2005 Compared to Year Ended
    December 28, 2003



| |         
| | --------
| | Revenues





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Revenues increased by $124.9 million at our
    Bistro restaurants. This increase was attributable to revenues
    of $44.1 million generated by new restaurants opened in
    2004, a $55.6 million increase in revenues in 2004 for
    restaurants that opened in 2003 and a $25.2 million
    increase in revenues for restaurants opened prior to 2003. The
    increase in revenues, excluding new stores, is attributable to a
    1% price increase in the second quarter of 2004 as well as
    increased customer traffic growth.                                
|
| | Pei Wei: Revenues increased by $42.1 million at our
    Pei Wei restaurants. The increase was primarily attributable to
    revenues of $23.6 million generated by our 20 new
    restaurants opened in 2004, a $17.1 million increase in
    revenues in 2004 for the 17 restaurants that opened in 2003 and
    an approximate $1.4 million increase in revenues for
    restaurants opened prior to 2003. The increase in revenues for
    restaurants opened prior to 2003 was due to a price increase of
    approximately 1.5% implemented during the second quarter of 2004.



| |                   
| | ------------------
| | Costs and Expenses

Cost of Sales.




| |                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Cost of sales at the Bistro increased as a
    percentage of revenues to 28.3% for the year ended
    January 2, 2005 from 28.2% for the year ended
    December 28, 2003. This increase was primarily the result
    of higher meat, oil and rice prices, which is partially offset
    by lower seafood and produce prices.                                                                                      
|
| | Pei Wei: Cost of sales at Pei Wei decreased as a
    percentage of revenues to 28.9% for the year ended
    January 2, 2005 from 29.6% for the year ended
    December 28, 2003. This decrease was primarily attributable
    to improved purchasing efficiencies associated with a more
    mature store base as well as a decrease in seafood and produce
    prices slightly offset by higher meat, oil and rice prices.

Labor.




| |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: As a percentage of revenues, labor expenses at
    the Bistro increased to 32.7% for the year ended January 2,
    2005 from 32.3% for the year ended December 28, 2003. This
    increase was a result of increased insurance costs due to
    additional employees enrolled in medical and dental plans as
    well as an increase in the companys contribution towards
    hourly employee health insurance costs.       
|
| | Pei Wei: As a percentage of revenues, labor expenses at
    Pei Wei decreased to 33.4% for the year ended January 2,
    2005 from 33.5% for the year ended December 28, 2003. This
    decrease was a result of improvement in efficiencies given a
    more mature restaurant base offset by increased insurance costs
    as well as an increase in the companys contribution
    towards hourly employee health insurance costs.

Partner Bonus Expense, Imputed.


19



---



##### Table of Contents







| |                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Partner bonus expense, imputed at the Bistro
    remained flat at 0.3% of sales for both years ended
    January 2, 2005 and December 28, 2003 as expected.                               
|
| | Pei Wei: Partner bonus expense, imputed at Pei Wei
    decreased nominally to 0.1% of sales for the year ended
    January 2, 2005 from 0.2% for the year ended
    December 28, 2003 as expected.

Operating.




| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Operating expenses as a percentage of revenues
    increased at our Bistro restaurants to 13.9% for the year ended
    January 2, 2005 from 13.6% for the year ended
    December 28, 2003. This increase was primarily the result
    of higher utility costs and fuel surcharges from distributors.  
|
| | Pei Wei: Operating expenses as a percentage of revenues
    increased at our Pei Wei restaurants to 15.1% for the year ended
    January 2, 2005 from 14.3% for the year ended
    December 28, 2003. This increase was primarily the result
    of higher utility costs and fuel surcharges from distributors.

Occupancy.




| |                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Occupancy costs at the Bistro remained consistent
    as a percentage of revenues at 5.2% for both years ended
    January 2, 2005 and December 28, 2003. The decrease
    resulting from more favorable lease terms associated with new
    restaurants was offset by higher insurance costs.                                                                
|
| | Pei Wei: Occupancy costs at Pei Wei decreased as a
    percentage of revenues to 6.1% for the year ended
    January 2, 2005 from 6.3% for the year ended
    December 28, 2003. This decrease was primarily the result
    of increased sales leverage achieved on those occupancy costs
    that are fixed in nature, slightly offset by higher insurance
    costs.

General and Administrative.




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: General and administrative expenses at the Bistro
    increased by $3.8 million to $28.6 million for the
    year ended January 2, 2005 from $24.8 million for the
    year ended December 28, 2003. This increase was due
    primarily to the addition of corporate management personnel and
    increased incentive accruals, which resulted in approximately
    $2.2 million of additional compensation. The increase was
    also due to $0.8 million in legal fees associated with the
    settlement of our California litigation in the first quarter of
    2004, $0.3 million in increased costs related to our
    voluntary SEC review and related restatement in the first
    quarter of 2004, $0.6 million relating to Sarbanes-Oxley
    404 consulting and

20



---



##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | accounting services as well as an increase in occupancy as a
    result of growth of our restaurant base and infrastructure.
    These increases were partially offset by lower health insurance
    costs due to changes in our health insurance plan, resulting
    from higher contribution levels from our salaried employees.
    General and administrative expenses decreased as a percentage of
    revenues from 5.1% for the year ended December 28, 2003 to
    4.7% for the year ended January 2, 2005.                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | Pei Wei: General and administrative expenses at Pei Wei
    increased by $2.2 million to $6.1 million for the year
    ended January 2, 2005 from $3.9 million for the year
    ended December 28, 2003. This increase was due primarily to
    the addition of corporate management personnel including
    additional development team resources to support continued
    expansion, and higher health insurance costs due to changes in
    our health insurance plan resulting from lower contribution
    levels from our salaried employees, which resulted in
    approximately $1.8 million of additional compensation and
    benefits expense. General and administrative expenses decreased
    as a percentage of revenues from 7.4% for the year ended
    December 28, 2003 to 6.4% for the year ended
    January 2, 2005 as a result of our increasing revenue base
    associated with our new store openings.

Depreciation and Amortization.




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: At our Bistro restaurants, depreciation and
    amortization increased by $5.4 million to
    $24.8 million for the year ended January 2, 2005 from
    $19.4 million for the year ended December 28, 2003.
    This increase was primarily due to depreciation and amortization
    on restaurants opened in 2004 totaling $2.0 million as well
    as a full years depreciation and amortization on
    restaurants opened in 2003, which resulted in an increase of
    $2.5 million.
|
| | Pei Wei: At our Pei Wei restaurants, depreciation and
    amortization increased by $2.0 million to $4.4 million
    for the year ended January 2, 2005 from $2.4 million
    for the year ended December 28, 2003. This increase was
    primarily due to depreciation and amortization on restaurants
    opened in 2004 totaling $1.0 million as well as a full
    years depreciation and amortization on restaurants opened
    in 2003, which resulted in an increase of $0.9 million.    

Preopening Expense.




| |                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Preopening expenses decreased by
    $1.1 million to $5.9 million for the year ended
    January 2, 2005 from $7.0 million for the year ended
    December 28, 2003. The decrease is primarily due to lower
    than average preopening costs for our 2004 openings as compared
    to 2003 openings. There were 18 Bistros opened in both 2004 and
    2003.
|
| | Pei Wei: Preopening expenses increased by
    $0.3 million to $2.1 million for the year ended
    January 2, 2005 from $1.8 million for the year ended
    December 28, 2003. This increase was primarily due to
    opening 20 Pei Weis in 2004 as compared to 17 Pei Weis in 2003.                                                                                 

Partner Investment Expense.


21



---



##### Table of Contents







| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Partner investment expense at the Bistro
    increased by $11.2 million to $15.1 million for the
    year ended January 2, 2005 from $3.9 million for the
    year ended December 28, 2003. This increase was primarily
    the result of the recognition of $10.9 million investment
    expense relating to the remaining unamortized portion of the
    unearned compensation recognized as of the date of modification
    of our operating agreements, which occurred during the first
    quarter of 2004, as well as the impact on investment expense of
    18 stores partnership interests being effective during
    2004.
|
| | Pei Wei: Partner investment expense at Pei Wei increased
    by $2.3 million to $2.6 million for the year ended
    January 2, 2005 from $0.3 million for the year ended
    December 28, 2003. This increase was primarily the result
    of the recognition of $1.6 million of investment expense
    relating to the remaining unamortized portion of the unearned
    compensation recognized as of the date of modification of our
    operating agreements, which occurred during the first quarter of
    2004, as well as the impact on investment expense of 20
    stores partnership interests being effective during 2004.      



| |                                         
| | ----------------------------------------
| | Interest and Other Income (Expense), Net





| |                  
| | -----------------
| | Minority Interest





| |                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Minority interest at the Bistro as a percentage
    of revenues was 1.5% for both years ended January 2, 2005
    and December 28, 2003.                    
|
| | Pei Wei: Minority interest at Pei Wei as a percentage of
    revenues was 0.9% for the year ended January 2, 2005 and
    1.0% for the year ended December 28, 2003.



| |                           
| | --------------------------
| | Provision for Income Taxes



22



---



##### Table of Contents





| |                                                                          
| | -------------------------------------------------------------------------
| | Year Ended December 28, 2003 Compared to Year Ended
    December 29, 2002



|                                                |                               |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |      |       |     |      |      |       |     |      |      | 
|----------------------------------------------- | ----------------------------- | ------------------------------ | -------------------------------- | --- | ---------------------- | ---- | ----- | ---------- | ---- | ---- | ------------ | ---- | ---- | ---------- | ----- | --- | ---------- | ---- | ----- | --- | ---- | ---- | ----- | --- | ---- | ---- | 
|                                                |                               | Fiscal Year 2002(1)(2)         |                                  |     | Fiscal Year 2003(1)(2) |     
|                                                |                               |                                |                                  |     |                        |     
|                                                |                               | Consolidated                   |                                  |     | Bistro                 |      |       | Pei Wei    |      |      | Consolidated |      |      | Bistro     |       |     | Pei Wei    |     
|                                                |                               |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |     
|                                                |                               | (Restated)                     |                                  |     | (Restated)             |      |       | (Restated) |      |      | (Restated)   |      |      | (Restated) |       |     | (Restated) |     
|Statements of Income Data:                      |                               |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |      |       |     |      |      |       |    
|Revenues                                        |                               |                                | 100.0                            | %   |                        |      | 100.0 | %          |      |      | 100.0        | %    |      |            | 100.0 | %   |            |      | 100.0 | %   |      |      | 100.0 | %  
|Costs and expenses:                             |                               |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |      |       |     |      |      |       |    
|                                                | Restaurant operating costs:   |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |      |       |     |      |      |       |     |     
|                                                |                               | Cost of sales                  |                                  |     | 27.7                   |      |       |            | 27.6 |      |              |      | 28.8 |            |       |     | 28.3       |      |       |     | 28.2 |      |       |     | 29.6 |     
|                                                |                               | Labor                          |                                  |     | 32.8                   |      |       |            | 32.6 |      |              |      | 37.7 |            |       |     | 32.4       |      |       |     | 32.3 |      |       |     | 33.5 |     
|                                                |                               | Partner bonus expense, imputed |                                  |     | 0.3                    |      |       |            | 0.3  |      |              |      | 0.1  |            |       |     | 0.3        |      |       |     | 0.3  |      |       |     | 0.2  |     
|                                                |                               | Operating                      |                                  |     | 13.6                   |      |       |            | 13.5 |      |              |      | 14.8 |            |       |     | 13.6       |      |       |     | 13.6 |      |       |     | 14.3 |     
|                                                |                               | Occupancy                      |                                  |     | 5.9                    |      |       |            | 5.9  |      |              |      | 7.1  |            |       |     | 5.4        |      |       |     | 5.2  |      |       |     | 6.3  |     
|                                                |                               |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |     
|                                                |                               |                                | Total restaurant operating costs |     |                        | 80.4 |       |            |      | 79.9 |              |      |      | 88.5       |       |     |            | 80.0 |       |     |      | 79.5 |       |     |      | 83.9 | 
|                                                | General and administrative    |                                |                                  | 5.0 |                        |      |       | 4.6        |      |      |              | 12.3 |      |            |       | 5.3 |            |      |       | 5.1 |      |      |       | 7.4 |     
|                                                | Depreciation and amortization |                                |                                  | 3.9 |                        |      |       | 3.8        |      |      |              | 5.1  |      |            |       | 4.0 |            |      |       | 4.0 |      |      |       | 4.5 |     
|                                                | Preopening expense            |                                |                                  | 1.6 |                        |      |       | 1.3        |      |      |              | 6.3  |      |            |       | 1.6 |            |      |       | 1.4 |      |      |       | 3.3 |     
|                                                | Partner investment expense    |                                |                                  | 1.4 |                        |      |       | 1.5        |      |      |              | 0.4  |      |            |       | 0.8 |            |      |       | 0.8 |      |      |       | 0.5 |     
|                                                |                               |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |     
|Income (loss) from operations                   |                               |                                | 7.7                              |     |                        |      | 8.8   |            |      |      | (12.6        | )    |      |            | 8.3   |     |            |      | 9.1   |     |      |      | 0.4   |    
|Interest and other income (expense), net        |                               |                                | 0.0                              |     |                        |      | 0.0   |            |      |      | (0.1         | )    |      |            | 0.1   |     |            |      | 0.1   |     |      |      | 0.0   |    
|Minority interest                               |                               |                                | (1.3                             | )   |                        |      | (1.4  | )          |      |      | 0.0          |      |      |            | (1.5  | )   |            |      | (1.5  | )   |      |      | (1.0  | )  
|                                                |                               |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |     
|Income (loss) before provision for income taxes |                               |                                | 6.4                              |     |                        |      | 7.5   | %          |      |      | (12.7        | )%   |      |            | 6.9   |     |            |      | 7.7   | %   |      |      | (0.6  | )% 
|                                                |                               |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |     
|Provision for income taxes                      |                               |                                | (2.2                             | )   |                        |      |       |            |      |      |              |      |      |            | (2.3  | )   |            |      |       |     |      |      |       |    
|                                                |                               |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |     
|Net income                                      |                               |                                | 4.2                              | %   |                        |      |       |            |      |      |              |      |      |            | 4.6   | %   |            |      |       |     |      |      |       |    
|                                                |                               |                                |                                  |     |                        |      |       |            |      |      |              |      |      |            |       |     |            |     











| |         
| | --------
| | Revenues





| |                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Revenues increased by $101.6 million at our
    Bistro restaurants. This increase was attributable to revenues
    of $43.2 million generated by new restaurants opened in
    2003, a $39.9 million increase in revenues in 2003 for
    restaurants that opened in 2002 and a $18.5 million
    increase in revenues for

23



---



##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | restaurants opened prior to 2002. The increase in revenues for
    restaurants opened prior to 2003 was due to increased customer
    visits as well as a modest price increase in the first quarter
    of 2003.                                                                                                                                                                                                      
|
| | Pei Wei: Revenues increased by $31.7 million at our
    Pei Wei restaurants. The increase was primarily attributable to
    revenues of $18.9 million generated by our seventeen new
    restaurants opened in 2003, a $12.7 million increase in
    revenues in 2003 for the eleven restaurants that opened in 2002
    and an approximate $0.1 million increase in revenues for
    restaurants opened prior to 2002.



| |                   
| | ------------------
| | Costs and Expenses

Cost of Sales.




| |                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Cost of sales at the Bistro increased as a
    percentage of revenues to 28.2% for the year ended
    December 28, 2003 from 27.6% for the year ended
    December 29, 2002. This increase was primarily the result
    of higher poultry, produce and dry food prices.
|
| | Pei Wei: Cost of sales at Pei Wei increased as a
    percentage of revenues to 29.6% for the year ended
    December 28, 2003 from 28.8% for the year ended
    December 29, 2002. This increase was primarily the result
    of higher poultry, produce and dry food prices.  

Labor.




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: As a percentage of revenues, labor expenses at
    the Bistro decreased to 32.3% for the year ended
    December 28, 2003 from 32.6% for the year ended
    December 29, 2002. This decrease was a result of increased
    sales leverage on those labor costs that are fixed in nature, as
    well as lower workers compensation expense given an improvement
    in claims trends, partially offset by higher payroll taxes and
    health insurance costs.
|
| | Pei Wei: As a percentage of revenues, labor expenses at
    Pei Wei decreased to 33.5% for the year ended December 28,
    2003 from 37.7% for the year ended December 29, 2002. This
    decrease was primarily due to improvement in labor efficiencies
    in our newer units as well as the reduced impact of newer
    restaurants on our expanding revenue base.                                                                                                

Partner Bonus Expense, Imputed.




| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Partner bonus expense, imputed at the Bistro was
    0.3% of revenues for both years ended December 28, 2003 and
    December 29, 2002.                                         
|
| | Pei Wei: Partner bonus expense, imputed at Pei Wei
    increased nominally to 0.2% of sales for the year ended
    December 28, 2003 from 0.1% for the year ended
    December 29, 2002.

Operating.




| |                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Operating expenses as a percentage of revenues
    increased at our Bistro restaurants to 13.6% for the year ended
    December 28, 2003 from 13.5% for the year ended
    December 29, 2002. This increase was primarily attributable
    to slightly higher utility and repairs and maintenance expenses.

24



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Pei Wei: Operating expenses as a percentage of revenues
    decreased at our Pei Wei restaurants to 14.3% for the year ended
    December 28, 2003 from 14.8% for the year ended
    December 29, 2002. This decrease was primarily attributable
    to the reduced impact of new restaurants on our expanding
    revenue base.

Occupancy.




| |                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Occupancy costs at the Bistro decreased as a
    percentage of revenues to 5.2% for the year ended
    December 28, 2003 from 5.9% for the year ended
    December 29, 2002. This decrease was primarily the result
    of the increased sales leverage achieved on occupancy costs that
    are fixed in nature, more favorable lease terms associated with
    new restaurants and lower property tax expense.
|
| | Pei Wei: Occupancy costs at Pei Wei decreased as a
    percentage of revenues to 6.3% for the year ended
    December 28, 2003 from 7.1% for the year ended
    December 29, 2002. This decrease was primarily the result
    of increased sales leverage achieved on those occupancy costs
    that are fixed in nature, more favorable lease terms associated
    with new restaurants and lower property tax expense.

General and Administrative.




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: General and administrative expenses at the Bistro
    increased by $6.9 million to $24.8 million for the
    year ended December 28, 2003 from $17.9 million for
    the year ended December 29, 2002. This increase was due
    primarily to the addition of corporate management personnel and
    higher health insurance costs, which resulted in approximately
    $4.3 million of additional compensation and benefits
    expense. In addition to increased travel costs to support a
    larger restaurant base, we also spent an additional
    $1.4 million in accounting, consulting and legal fees in
    our efforts to maintain high standards of corporate governance,
    compliance with the Sarbanes-Oxley Act and new SEC regulations,
    litigation defense and other corporate matters. General and
    administrative expenses increased as a percentage of revenues
    from 5.1% for the year ended December 28, 2003 to 4.6% for
    the year ended December 29, 2002.
|
| | Pei Wei: General and administrative expenses at Pei Wei
    increased by $1.3 million to $3.9 million for the year
    ended December 28, 2003 from $2.6 million for the year
    ended December 29, 2002. This increase was due primarily to
    the addition of corporate management personnel, which resulted
    in approximately $1.1 million of additional compensation
    and benefits expense, as we continue to expand the concept and
    add infrastructure to support our operations. Pei Wei also
    experienced significant increases in general and administrative
    expenses in the following areas: travel expenses associated with
    new store openings, accounting, legal and occupancy costs.
    General and administrative expenses decreased as a percentage of
    revenues to 7.4% for the year ended December 28, 2003 from
    12.3% for the year ended December 29, 2002 as a result of
    our increasing revenue base associated with our new store
    openings.   

Depreciation and Amortization.




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: At our Bistro restaurants, depreciation and
    amortization increased by $4.7 million to
    $19.4 million for the year ended December 28, 2003
    from $14.7 million for the year ended December 29,
    2002. This increase was primarily due to depreciation and
    amortization on restaurants opened in 2003 totaling
    $1.9 million as well as a full years depreciation and
    amortization on restaurants opened in 2002.

25



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Pei Wei: At our Pei Wei restaurants, depreciation and
    amortization increased by $1.3 million to $2.4 million
    for the year ended December 28, 2003 from $1.1 million
    for the year ended December 29, 2002. This increase was
    primarily due to depreciation and amortization on restaurants
    opened in 2003 totaling $0.7 million as well as a full
    years depreciation and amortization on restaurants opened
    in 2002.

Preopening Expense.




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Preopening expenses increased by
    $2.0 million to $7.0 million for the year ended
    December 28, 2003 from $5.0 million for the year ended
    December 29, 2002. This increase was due to the opening of
    18 Bistros in 2003 as compared to 14 Bistros in 2002, the
    expenses associated with the opening of three Bistros in January
    2004 compared to two in January 2003 and higher than anticipated
    average expenses for our 2003 new unit openings.
|
| | Pei Wei: Preopening expenses increased by
    $0.4 million to $1.8 million for the year ended
    December 28, 2003 from $1.4 million for the year ended
    December 29, 2002. This increase was primarily due to our
    opening 17 Pei Weis in 2003 as compared to 11 Pei Weis in 2002,
    partially offset by lower than anticipated average expenses for
    our 2003 new unit openings.                                                                                     

Partner Investment Expense.




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bistro: Partner investment expense at the Bistro
    decreased to $3.9 million for the year ended
    December 28, 2003 from $5.7 million for the year ended
    December 29, 2002. This decrease was primarily the result
    of an additional $2.5 million recorded in fiscal 2002 as
    compared to fiscal 2003 for the excess of the purchase price of
    partner repurchases over the imputed fair value for those
    partner purchases, offset by a $0.7 million increase in the
    accrual of the excess of our partners imputed fair value
    of their ownership interest over their actual cash contribution.
|
| | Pei Wei: Partner investment expense at Pei Wei increased
    to $0.3 million for the year ended December 28, 2003
    from $0.1 million for the year ended December 29,
    2002. This increase was the result of an increase in the accrual
    of the excess of our partners imputed fair value of their
    ownership interest over their actual cash contribution.                                                                                                                                                                                                                                                     



| |                                         
| | ----------------------------------------
| | Interest and Other Income (Expense), Net





| |                  
| | -----------------
| | Minority Interest



26



---



##### Table of Contents





| |                           
| | --------------------------
| | Provision for Income Taxes



Quarterly Results








|                                                               |                               |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |            |     |      |      |         |     |      |      |         |     |      |      | 
|-------------------------------------------------------------- | ----------------------------- | ------------------------------ | -------------------------------- | --- | ----------- | ---- | ------- | ---------- | ---- | ---- | ---------- | --- | ---- | ---------- | ------- | --- | ---------- | ---- | ------- | ---------- | ---- | ---- | ---------- | --- | ---- | ---- | ------- | --- | ---- | ---- | ------- | --- | ---- | ---- | 
|                                                               |                               | Fiscal 2003                    |                                  |     | Fiscal 2004 |     
|                                                               |                               |                                |                                  |     |             |     
|                                                               |                               | First                          |                                  |     | Second      |      |         | Third      |      |      | Fourth     |     |      | First      |         |     | Second     |      |         | Third      |      |      | Fourth     |    
|                                                               |                               | Quarter                        |                                  |     | Quarter     |      |         | Quarter    |      |      | Quarter    |     |      | Quarter    |         |     | Quarter    |      |         | Quarter    |      |      | Quarter    |    
|                                                               |                               |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |            |    
|                                                               |                               | (1)(2)                         |                                  |     | (1)(2)      |      |         | (1)(2))    |      |      | (1)(2)     |     |      | (1)(2)     |         |     | (1)(2)     |      |         | (2)        |      |      |           
|                                                               |                               |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |           
|                                                               |                               | (Restated)                     |                                  |     | (Restated)  |      |         | (Restated) |      |      | (Restated) |     |      | (Restated) |         |     | (Restated) |      |         | (Restated) |      |      | (Restated) |    
|Revenues                                                       |                               | $                              | 126,953                          |     |             | $    | 131,905 |            |      | $    | 134,926    |     |      | $          | 146,133 |     |            | $    | 164,056 |            |      | $    | 169,602    |     |      | $    | 174,013 |     |      | $    | 199,270 |    
|Costs and expenses:                                            |                               |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |            |     |      |      |         |     |      |      |         |    
|                                                               | Restaurant operating costs:   |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |            |     |      |      |         |     |      |      |         |     |     
|                                                               |                               | Cost of sales                  |                                  |     | 27.8        | %    |         |            | 28.2 | %    |            |     | 28.5 | %          |         |     | 28.7       | %    |         |            | 28.6 | %    |            |     | 28.2 | %    |         |     | 28.1 | %    |         |     | 28.7 | %   
|                                                               |                               | Labor                          |                                  |     | 32.8        |      |         |            | 32.4 |      |            |     | 32.4 |            |         |     | 32.0       |      |         |            | 33.3 |      |            |     | 33.3 |      |         |     | 32.3 |      |         |     | 32.2 |     
|                                                               |                               | Partner bonus expense, imputed |                                  |     | 0.3         |      |         |            | 0.3  |      |            |     | 0.3  |            |         |     | 0.3        |      |         |            | 0.2  |      |            |     | 0.2  |      |         |     | 0.3  |      |         |     | 0.3  |     
|                                                               |                               | Operating                      |                                  |     | 13.4        |      |         |            | 13.7 |      |            |     | 13.7 |            |         |     | 13.8       |      |         |            | 13.8 |      |            |     | 14.0 |      |         |     | 14.2 |      |         |     | 14.3 |     
|                                                               |                               | Occupancy                      |                                  |     | 5.4         |      |         |            | 5.4  |      |            |     | 5.4  |            |         |     | 5.2        |      |         |            | 5.2  |      |            |     | 5.3  |      |         |     | 5.4  |      |         |     | 5.4  |     
|                                                               |                               |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |            |    
|                                                               |                               |                                | Total restaurant operating costs |     |             | 79.7 |         |            |      | 80.0 |            |     |      | 80.3       |         |     |            | 79.9 |         |            |      | 81.1 |            |     |      | 81.1 |         |     |      | 80.3 |         |     |      | 80.9 | 
|                                                               | General and administrative    |                                |                                  | 5.3 |             |      |         | 5.6        |      |      |            | 5.1 |      |            |         | 5.3 |            |      |         | 5.3        |      |      |            | 4.9 |      |      |         | 5.1 |      |      |         | 4.4 |     
|                                                               | Depreciation and amortization |                                |                                  | 3.8 |             |      |         | 4.0        |      |      |            | 4.1 |      |            |         | 4.2 |            |      |         | 4.0        |      |      |            | 4.1 |      |      |         | 4.2 |      |      |         | 4.2 |     
|                                                               | Preopening expense            |                                |                                  | 1.6 |             |      |         | 0.9        |      |      |            | 2.0 |      |            |         | 2.0 |            |      |         | 1.4        |      |      |            | 0.8 |      |      |         | 1.2 |      |      |         | 1.1 |     
|                                                               | Partner investment expense(3) |                                |                                  | 0.6 |             |      |         | 0.7        |      |      |            | 1.2 |      |            |         | 0.6 |            |      |         | 8.2        |      |      |            | 0.5 |      |      |         | 1.0 |      |      |         | 0.8 |     
|                                                               |                               |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |            |    
|Income from operations                                         |                               |                                | 9.0                              |     |             |      | 8.9     |            |      |      | 7.3        |     |      |            | 8.0     |     |            |      | (0.0    | )          |      |      | 8.6        |     |      |      | 8.3     |     |      |      | 8.6     |    
|Interest income (expense), net                                 |                               |                                | 0.1                              |     |             |      | 0.1     |            |      |      | 0.1        |     |      |            | 0.1     |     |            |      | 0.1     |            |      |      | 0.0        |     |      |      | 0.1     |     |      |      | 0.2     |    
|                                                               |                               |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |            |    
|Income before minority interest and provision for income taxes |                               |                                | 9.1                              |     |             |      | 8.9     |            |      |      | 7.4        |     |      |            | 8.1     |     |            |      | 0.1     |            |      |      | 8.6        |     |      |      | 8.3     |     |      |      | 8.8     |    
|Minority interest                                              |                               |                                | (1.6                             | )   |             |      | (1.5    | )          |      |      | (1.4       | )   |      |            | (1.3    | )   |            |      | (1.4    | )          |      |      | (1.4       | )   |      |      | (1.5    | )   |      |      | (1.4    | )  
|                                                               |                               |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |            |    
|Income before provision for income taxes                       |                               |                                | 7.5                              |     |             |      | 7.4     |            |      |      | 5.9        |     |      |            | 6.7     |     |            |      | (1.3    | )          |      |      | 7.2        |     |      |      | 6.8     |     |      |      | 7.4     |    
|Provision for income taxes                                     |                               |                                | (2.5                             | )   |             |      | (2.5    | )          |      |      | (1.9       | )   |      |            | (2.3    | )   |            |      | 0.9     |            |      |      | (2.3       | )   |      |      | (2.1    | )   |      |      | (2.3    | )  
|                                                               |                               |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |            |    
|Net income                                                     |                               |                                | 5.0                              | %   |             |      | 4.9     | %          |      |      | 4.0        | %   |      |            | 4.5     | %   |            |      | (0.4    | )%         |      |      | 5.0        | %   |      |      | 4.7     | %   |      |      | 5.1     | %  
|                                                               |                               |                                |                                  |     |             |      |         |            |      |      |            |     |      |            |         |     |            |      |         |            |      |      |            |    



27



---



##### Table of Contents













Liquidity and Capital Resources






28



---



##### Table of Contents











Critical Accounting Policies




29



---



##### Table of Contents





| |                 
| | ----------------
| | Lease Obligation







| |                      
| | ---------------------
| | Partnership Structure







| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets



30



---



##### Table of Contents





| |               
| | --------------
| | Self Insurance





| |             
| | ------------
| | Income Taxes







New Accounting Standards


Share-Based Payment Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees Statement of Cash Flows.




31



---



##### Table of Contents





Inflation




Purchase Commitments


|                        |  |                        |         |      |        |                |        |       |      |     |        |  |      |         |        |  |  |   |         | 
|----------------------- |  | ---------------------- | ------- | ---- | ------ | -------------- | ------ | ----- | ---- | --- | ------ |  | ---- | ------- | ------ |  |  | - | ------- | 
|                        |  | Payments Due by Period |        
|                        |  |                        |        
|                        |  |                        |         | Less |        |                |        |       | More |    
|                        |  |                        |         | Than |        |                | 1-3    |       |      | 3-5 |        |  | Than |        
|Contractual Obligations |  | Total                  |         |      | 1 Year |                |        | Years |      |     | Years  |  |      | 5 Years |       
|                        |  |                        |         |      |        |                |        |       |      |     |        |  |      |         |       
|                        |  |                        |         |      |        | (In thousands) |        |       |     
|Long-Term Debt          |  | $                      | 1,158   |      |        | $              | 613    |       |      | $   | 479    |  |      | $       | 6      |  |  | $ | 60      | 
|Operating Leases        |  |                        | 278,055 |      |        |                | 26,118 |       |      |     | 53,078 |  |      |         | 51,509 |  |  |   | 147,350 | 
|Purchase Obligations    |  |                        | 71,823  |      |        |                | 71,666 |       |      |     | 111    |  |      |         | 46     |  |  |   |        | 
|                        |  |                        |         |      |        |                |        |       |      |     |        |  |      |         |       
|Total                   |  | $                      | 351,036 |      |        | $              | 98,397 |       |      | $   | 53,668 |  |      | $       | 51,561 |  |  | $ | 147,410 | 
|                        |  |                        |         |      |        |                |        |       |      |     |        |  |      |         |       



Disclosure in Managements Discussion and Analysis
about Off-Balance Sheet Arrangements and Aggregate Contractual
Obligations







|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risks



32



---



##### Table of Contents








|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

P.F. CHANGS CHINA BISTRO, INC.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                   |                                                                                                                                                                       |      |  |    | 
|---------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | -- | 
|                                   |                                                                                                                                                                       | Page | 
|                                   |                                                                                                                                                                       |      | 
|Consolidated Financial Statements: |                                                                                                                                                                       |      |  |   
|                                   | Report of Independent Registered Public
    Accounting Firm                                                                                                           |      |  | 34 | 
|                                   | Consolidated Balance Sheets at
    December 28, 2003 (Restated) and January 2, 2005                                                                                   |      |  | 35 | 
|                                   | Consolidated Statements of Income for the
    Years Ended December 29, 2002 (Restated), December 28,
    2003 (Restated) and January 2, 2005                          |      |  | 36 | 
|                                   | Consolidated Statements of Common
    Stockholders Equity for the Years Ended December 29,
    2002 (Restated), December 28, 2003 (Restated) and
    January 2, 2005 |      |  | 37 | 
|                                   | Consolidated Statements of Cash Flows for
    the Years Ended December 29, 2002 (Restated),
    December 28, 2003 (Restated) and January 2, 2005                      |      |  | 38 | 
|                                   | Notes to Consolidated Financial
    Statements                                                                                                                        |      |  | 39 | 

33



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















| |                      
| | ---------------------
| | /s/ Ernst & Young LLP





34



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.





CONSOLIDATED BALANCE SHEETS


|                                                                                                                                     |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |   |         |         |    | 
|------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | ------- | ---------- | - | ------- | ------- | -- | 
|                                                                                                                                     |                                                                                                                                                            | December 28,                                                                                                                                                          |         |         | January 2, |  
|                                                                                                                                     |                                                                                                                                                            | 2003                                                                                                                                                                  |         |         | 2005       |  
|                                                                                                                                     |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |  
|                                                                                                                                     |                                                                                                                                                            | (In thousands)                                                                                                                                                        |        
|                                                                                                                                     |                                                                                                                                                            | (Restated)                                                                                                                                                            |         |         |           
|ASSETS                                                                                                                              
|Current assets:                                                                                                                      |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |   |         |        
|                                                                                                                                     | Cash and cash equivalents                                                                                                                                  |                                                                                                                                                                       | $       | 45,478  |            |   | $       | 66,409  |   
|                                                                                                                                     | Short-term investments                                                                                                                                     |                                                                                                                                                                       |         | 5,000   |            |   |         | 5,000   |   
|                                                                                                                                     | Inventories                                                                                                                                                |                                                                                                                                                                       |         | 2,911   |            |   |         | 2,951   |   
|                                                                                                                                     | Prepaids and other current assets                                                                                                                          |                                                                                                                                                                       |         | 6,313   |            |   |         | 9,874   |   
|                                                                                                                                     |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |  
|Total current assets                                                                                                                 |                                                                                                                                                            |                                                                                                                                                                       | 59,702  |         |            |   | 84,234  |        
|Property and equipment, net                                                                                                          |                                                                                                                                                            |                                                                                                                                                                       | 228,170 |         |            |   | 280,641 |        
|Deferred income tax assets                                                                                                           |                                                                                                                                                            |                                                                                                                                                                       | 3,560   |         |            |   | 3,755   |        
|Goodwill                                                                                                                             |                                                                                                                                                            |                                                                                                                                                                       | 6,819   |         |            |   | 6,819   |        
|Other assets                                                                                                                         |                                                                                                                                                            |                                                                                                                                                                       | 5,570   |         |            |   | 8,066   |        
|                                                                                                                                     |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |  
|Total assets                                                                                                                         |                                                                                                                                                            | $                                                                                                                                                                     | 303,821 |         |            | $ | 383,515 |        
|                                                                                                                                     |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |  
|                                                                                                                                    
|LIABILITIES AND COMMON STOCKHOLDERS EQUITY                                                                                         
|Current liabilities:                                                                                                                 |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |   |         |        
|                                                                                                                                     | Accounts payable                                                                                                                                           |                                                                                                                                                                       | $       | 8,367   |            |   | $       | 14,013  |   
|                                                                                                                                     | Construction payable                                                                                                                                       |                                                                                                                                                                       |         | 6,459   |            |   |         | 3,899   |   
|                                                                                                                                     | Accrued expenses                                                                                                                                           |                                                                                                                                                                       |         | 27,918  |            |   |         | 32,298  |   
|                                                                                                                                     | Unearned revenue                                                                                                                                           |                                                                                                                                                                       |         | 9,851   |            |   |         | 12,459  |   
|                                                                                                                                     | Current portion of long-term debt, including $1,454,000 and
    $198,000 due to related parties at December 28, 2003 and
    January 2, 2005, respectively |                                                                                                                                                                       |         | 1,454   |            |   |         | 613     |   
|                                                                                                                                     |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |  
|Total current liabilities                                                                                                            |                                                                                                                                                            |                                                                                                                                                                       | 54,049  |         |            |   | 63,282  |        
|Long-term debt, including $136,000 and $62,000 due to related
    parties at December 28, 2003 and January 2, 2005,
    respectively |                                                                                                                                                            |                                                                                                                                                                       | 136     |         |            |   | 545     |        
|Lease obligations                                                                                                                    |                                                                                                                                                            |                                                                                                                                                                       | 33,427  |         |            |   | 43,936  |        
|Minority interests                                                                                                                   |                                                                                                                                                            |                                                                                                                                                                       | 11,877  |         |            |   | 30,795  |        
|Commitments and contingencies                                                                                                        |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |   |         |        
|Common stockholders equity:                                                                                                         |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |   |         |        
|                                                                                                                                     |                                                                                                                                                            | Common stock, $0.001 par value, 40,000,000 shares
    authorized: 25,518,039 shares issued and outstanding at
    December 28, 2003 and 26,067,507 at January 2, 2005 |         |         | 26         |   |         |         | 26 | 
|                                                                                                                                     | Additional paid-in capital                                                                                                                                 |                                                                                                                                                                       |         | 139,639 |            |   |         | 154,210 |   
|                                                                                                                                     | Retained earnings                                                                                                                                          |                                                                                                                                                                       |         | 64,667  |            |   |         | 90,721  |   
|                                                                                                                                     |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |  
|Total common stockholders equity                                                                                                    |                                                                                                                                                            |                                                                                                                                                                       | 204,332 |         |            |   | 244,957 |        
|                                                                                                                                     |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |  
|Total liabilities and common stockholders equity                                                                                    |                                                                                                                                                            | $                                                                                                                                                                     | 303,821 |         |            | $ | 383,515 |        
|                                                                                                                                     |                                                                                                                                                            |                                                                                                                                                                       |         |         |            |  



35



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.





CONSOLIDATED STATEMENTS OF INCOME


|                                                               |                               |                                          |                                  |        |              |         |         |            |         |         |         |        |         |         | 
|-------------------------------------------------------------- | ----------------------------- | ---------------------------------------- | -------------------------------- | ------ | ------------ | ------- | ------- | ---------- | ------- | ------- | ------- | ------ | ------- | ------- | 
|                                                               |                               | Year Ended                               |                                  |        | Year Ended   |         |         | Year Ended |        
|                                                               |                               | December 29,                             |                                  |        | December 28, |         |         | January 2, |        
|                                                               |                               | 2002                                     |                                  |        | 2003         |         |         | 2005       |        
|                                                               |                               |                                          |                                  |        |              |         |         |            |        
|                                                               |                               | (In thousands, except per share amounts) |                                 
|                                                               |                               | (Restated)                               |                                  |        | (Restated)   |         |         |           
|Revenues                                                       |                               | $                                        | 406,609                          |        |              | $       | 539,917 |            |         | $       | 706,941 |       
|Costs and expenses:                                            |                               |                                          |                                  |        |              |         |         |            |         |         |         |       
|                                                               | Restaurant operating costs:   |                                          |                                  |        |              |         |         |            |         |         |         |        |        
|                                                               |                               | Cost of sales                            |                                  |        | 112,571      |         |         |            | 152,788 |         |         |        | 200,736 |        
|                                                               |                               | Labor                                    |                                  |        | 133,536      |         |         |            | 174,989 |         |         |        | 231,575 |        
|                                                               |                               | Partner bonus expense, imputed           |                                  |        | 1,192        |         |         |            | 1,439   |         |         |        | 1,750   |        
|                                                               |                               | Operating                                |                                  |        | 55,293       |         |         |            | 73,660  |         |         |        | 99,528  |        
|                                                               |                               | Occupancy                                |                                  |        | 24,129       |         |         |            | 28,914  |         |         |        | 37,693  |        
|                                                               |                               |                                          |                                  |        |              |         |         |            |        
|                                                               |                               |                                          | Total restaurant operating costs |        |              | 326,721 |         |            |         | 431,790 |         |        |         | 571,282 | 
|                                                               | General and administrative    |                                          |                                  | 20,513 |              |         |         | 28,692     |         |         |         | 34,662 |        
|                                                               | Depreciation and amortization |                                          |                                  | 15,847 |              |         |         | 21,817     |         |         |         | 29,155 |        
|                                                               | Preopening expense            |                                          |                                  | 6,428  |              |         |         | 8,790      |         |         |         | 7,995  |        
|                                                               | Partner investment expense    |                                          |                                  | 5,798  |              |         |         | 4,196      |         |         |         | 17,671 |        
|                                                               |                               |                                          |                                  |        |              |         |         |            |        
|Income from operations                                         |                               |                                          | 31,302                           |        |              |         | 44,632  |            |         |         | 46,176  |       
|Interest and other income (expense):                           |                               |                                          |                                  |        |              |         |         |            |         |         |         |       
|                                                               | Interest expense              |                                          |                                  | (263   | )            |         |         | (11        | )       |         |         | (3     | )      
|                                                               | Interest and other income     |                                          |                                  | 304    |              |         |         | 477        |         |         |         | 615    |        
|                                                               |                               |                                          |                                  |        |              |         |         |            |        
|Income before minority interest and provision for income taxes |                               |                                          | 31,343                           |        |              |         | 45,098  |            |         |         | 46,788  |       
|Minority interest                                              |                               |                                          | (5,243                           | )      |              |         | (7,887  | )          |         |         | (10,078 | )     
|                                                               |                               |                                          |                                  |        |              |         |         |            |        
|Income before provision for income taxes                       |                               |                                          | 26,100                           |        |              |         | 37,211  |            |         |         | 36,710  |       
|Provision for income taxes                                     |                               |                                          | (8,875                           | )      |              |         | (12,424 | )          |         |         | (10,656 | )     
|                                                               |                               |                                          |                                  |        |              |         |         |            |        
|Net income                                                     |                               | $                                        | 17,225                           |        |              | $       | 24,787  |            |         | $       | 26,054  |       
|                                                               |                               |                                          |                                  |        |              |         |         |            |        
|Net income per share:                                          |                               |                                          |                                  |        |              |         |         |            |         |         |         |       
|                                                               | Basic                         |                                          | $                                | 0.70   |              |         | $       | 0.98       |         |         | $       | 1.01   |        
|                                                               |                               |                                          |                                  |        |              |         |         |            |        
|                                                               | Diluted                       |                                          | $                                | 0.66   |              |         | $       | 0.94       |         |         | $       | 0.98   |        
|                                                               |                               |                                          |                                  |        |              |         |         |            |        
|Weighted average shares used in computation:                   |                               |                                          |                                  |        |              |         |         |            |         |         |         |       
|                                                               | Basic                         |                                          |                                  | 24,688 |              |         |         | 25,345     |         |         |         | 25,727 |        
|                                                               |                               |                                          |                                  |        |              |         |         |            |        
|                                                               | Diluted                       |                                          |                                  | 25,924 |              |         |         | 26,250     |         |         |         | 26,575 |        
|                                                               |                               |                                          |                                  |        |              |         |         |            |        



36



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.





CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS
EQUITY


|                                                                           |  |                             |        |  |            |   |    |          |  |   |          |  |  |       |        |  |  |   |         | 
|-------------------------------------------------------------------------- |  | --------------------------- | ------ |  | ---------- | - | -- | -------- |  | - | -------- |  |  | ----- | ------ |  |  | - | ------- | 
|                                                                           |  | Common Stockholders Equity |       
|                                                                           |  |                             |       
|                                                                           |  | Common Stock                |        |  | Additional |   |    |         
|                                                                           |  |                             |        |  | Paid-In    |   |    | Retained |  |   |         
|                                                                           |  | Shares                      |        |  | Amount     |   |    | Capital  |  |   | Earnings |  |  | Total |       
|                                                                           |  |                             |        |  |            |   |    |          |  |   |          |  |  |       |       
|                                                                           |  | (In thousands)              |       
|Balances, December 30, 2001, as restated                                   |  |                             | 23,896 |  |            | $ | 24 |          |  | $ | 110,617  |  |  | $     | 22,655 |  |  | $ | 133,296 | 
|Issuance of common stock under stock option plans                          |  |                             | 1,066  |  |            |   | 1  |          |  |   | 4,885    |  |  |       |       |  |  |   | 4,886   | 
|Issuance of common stock under employee stock purchase plan                |  |                             | 40     |  |            |   |   |          |  |   | 825      |  |  |       |       |  |  |   | 825     | 
|Issuance of common stock of Pei Wei subsidiary under stock
    option plan |  |                             |       |  |            |   |   |          |  |   | 111      |  |  |       |       |  |  |   | 111     | 
|Tax benefit from disqualifying stock option dispositions                   |  |                             |       |  |            |   |   |          |  |   | 11,676   |  |  |       |       |  |  |   | 11,676  | 
|Net income, as restated                                                    |  |                             |       |  |            |   |   |          |  |   |         |  |  |       | 17,225 |  |  |   | 17,225  | 
|                                                                           |  |                             |        |  |            |   |    |          |  |   |          |  |  |       |       
|Balances, December 29, 2002, as restated                                   |  |                             | 25,002 |  |            |   | 25 |          |  |   | 128,114  |  |  |       | 39,880 |  |  |   | 168,019 | 
|Issuance of common stock under stock option plans                          |  |                             | 473    |  |            |   | 1  |          |  |   | 5,289    |  |  |       |       |  |  |   | 5,290   | 
|Issuance of common stock under employee stock purchase plan                |  |                             | 43     |  |            |   |   |          |  |   | 1,123    |  |  |       |       |  |  |   | 1,123   | 
|Issuance of common stock of Pei Wei subsidiary under stock
    option plan |  |                             |       |  |            |   |   |          |  |   | 138      |  |  |       |       |  |  |   | 138     | 
|Tax benefit from disqualifying stock option dispositions                   |  |                             |       |  |            |   |   |          |  |   | 4,975    |  |  |       |       |  |  |   | 4,975   | 
|Net income                                                                 |  |                             |       |  |            |   |   |          |  |   |         |  |  |       | 24,787 |  |  |   | 24,787  | 
|                                                                           |  |                             |        |  |            |   |    |          |  |   |          |  |  |       |       
|Balances, December 28, 2003, as restated                                   |  |                             | 25,518 |  |            |   | 26 |          |  |   | 139,639  |  |  |       | 64,667 |  |  |   | 204,332 | 
|Issuance of common stock under stock option plans                          |  |                             | 510    |  |            |   |   |          |  |   | 5,911    |  |  |       |       |  |  |   | 5,911   | 
|Issuance of common stock under employee stock purchase plan                |  |                             | 40     |  |            |   |   |          |  |   | 1,548    |  |  |       |       |  |  |   | 1,548   | 
|Issuance of common stock of Pei Wei subsidiary under stock
    option plan |  |                             |       |  |            |   |   |          |  |   | 76       |  |  |       |       |  |  |   | 76      | 
|Tax benefit from disqualifying stock option dispositions                   |  |                             |       |  |            |   |   |          |  |   | 7,036    |  |  |       |       |  |  |   | 7,036   | 
|Net income                                                                 |  |                             |       |  |            |   |   |          |  |   |         |  |  |       | 26,054 |  |  |   | 26,054  | 
|                                                                           |  |                             |        |  |            |   |    |          |  |   |          |  |  |       |       
|Balances, January 2, 2005                                                  |  |                             | 26,068 |  |            | $ | 26 |          |  | $ | 154,210  |  |  | $     | 90,721 |  |  | $ | 244,957 | 
|                                                                           |  |                             |        |  |            |   |    |          |  |   |          |  |  |       |       



37



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                                         |                                                                                 |                                   |         |        |              |   |         |            |        |   |         |        |        |  
|-------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | --------------------------------- | ------- | ------ | ------------ | - | ------- | ---------- | ------ | - | ------- | ------ | ------ | -
|                                                                                                         |                                                                                 | Year Ended                        |         |        | Year Ended   |   |         | Year Ended |       
|                                                                                                         |                                                                                 | December 29,                      |         |        | December 28, |   |         | January 2, |       
|                                                                                                         |                                                                                 | 2002                              |         |        | 2003         |   |         | 2005       |       
|                                                                                                         |                                                                                 |                                   |         |        |              |   |         |            |       
|                                                                                                         |                                                                                 | (In thousands)                    |        
|                                                                                                         |                                                                                 | (Restated)                        |         |        | (Restated)   |   |         |           
|Operating Activities:                                                                                    |                                                                                 |                                   |         |        |              |   |         |            |        |   |         |       
|Net income                                                                                               |                                                                                 | $                                 | 17,225  |        |              | $ | 24,787  |            |        | $ | 26,054  |       
|Adjustments to reconcile net income to net cash provided by
    operating activities:                    |                                                                                 |                                   |         |        |              |   |         |            |        |   |         |       
|                                                                                                         | Depreciation and amortization                                                   |                                   |         | 15,847 |              |   |         | 21,817     |        |   |         | 29,155 |       
|                                                                                                         | Partner investment expense                                                      |                                   |         | 4,294  |              |   |         | 3,355      |        |   |         | 17,195 |       
|                                                                                                         | Partner bonus expense, imputed                                                  |                                   |         | 1,192  |              |   |         | 1,439      |        |   |         | 1,750  |       
|                                                                                                         | Deferred income taxes                                                           |                                   |         | (1,395 | )            |   |         | (3,308     | )      |   |         | (195   | )     
|                                                                                                         | Tax benefit from disqualifying stock option dispositions
    credited to equity |                                   |         | 11,676 |              |   |         | 4,975      |        |   |         | 7,036  |       
|                                                                                                         | Minority interest                                                               |                                   |         | 5,243  |              |   |         | 7,887      |        |   |         | 10,078 |       
|                                                                                                         | Changes in operating assets and liabilities:                                    |                                   |         |        |              |   |         |            |        |   |         |        |       
|                                                                                                         |                                                                                 | Inventories                       |         |        | (253         | ) |         |            | (592   | ) |         |        | (40    | )
|                                                                                                         |                                                                                 | Prepaids and other current assets |         |        | (2,725       | ) |         |            | (137   | ) |         |        | (3,561 | )
|                                                                                                         |                                                                                 | Other assets                      |         |        | 803          |   |         |            | (1,708 | ) |         |        | (1,110 | )
|                                                                                                         |                                                                                 | Accounts payable                  |         |        | 1,287        |   |         |            | 1,316  |   |         |        | 5,646  |  
|                                                                                                         |                                                                                 | Accrued expenses                  |         |        | (785         | ) |         |            | 12,421 |   |         |        | 4,380  |  
|                                                                                                         |                                                                                 | Lease obligations                 |         |        | 6,447        |   |         |            | 6,476  |   |         |        | 10,509 |  
|                                                                                                         |                                                                                 | Unearned revenue                  |         |        | 2,744        |   |         |            | 2,957  |   |         |        | 2,608  |  
|                                                                                                         |                                                                                 |                                   |         |        |              |   |         |            |       
|Net cash provided by operating activities                                                                |                                                                                 |                                   | 61,600  |        |              |   | 81,685  |            |        |   | 109,505 |       
|Investing Activities:                                                                                    |                                                                                 |                                   |         |        |              |   |         |            |        |   |         |       
|Capital expenditures                                                                                     |                                                                                 |                                   | (51,229 | )      |              |   | (70,832 | )          |        |   | (84,146 | )     
|Sales (purchases) of investments                                                                         |                                                                                 |                                   | 9,500   |        |              |   | (1,200  | )          |        |   |        |       
|Proceeds (purchases) of minority interests                                                               |                                                                                 |                                   | 47      |        |              |   | (22     | )          |        |   | (595    | )     
|                                                                                                         |                                                                                 |                                   |         |        |              |   |         |            |       
|Net cash used in investing activities                                                                    |                                                                                 |                                   | (41,682 | )      |              |   | (72,054 | )          |        |   | (84,741 | )     
|Financing Activities:                                                                                    |                                                                                 |                                   |         |        |              |   |         |            |        |   |         |       
|Repayments of long-term debt                                                                             |                                                                                 |                                   | (1,901  | )      |              |   | (1,756  | )          |        |   | (1,456  | )     
|Proceeds from promissory note                                                                            |                                                                                 |                                   |        |        |              |   |        |            |        |   | 74      |       
|Proceeds from sale of subsidiary common stock                                                            |                                                                                 |                                   | 111     |        |              |   | 138     |            |        |   | 76      |       
|Proceeds from stock options exercised and employee stock
    purchases                                   |                                                                                 |                                   | 5,711   |        |              |   | 6,413   |            |        |   | 7,459   |       
|Proceeds from minority investors contributions                                                          |                                                                                 |                                   | 934     |        |              |   | 1,074   |            |        |   | 1,175   |       
|Distributions to minority members and partners                                                           |                                                                                 |                                   | (6,483  | )      |              |   | (9,111  | )          |        |   | (11,161 | )     
|                                                                                                         |                                                                                 |                                   |         |        |              |   |         |            |       
|Net cash used in financing activities                                                                    |                                                                                 |                                   | (1,628  | )      |              |   | (3,242  | )          |        |   | (3,833  | )     
|                                                                                                         |                                                                                 |                                   |         |        |              |   |         |            |       
|Net increase in cash and cash equivalents                                                                |                                                                                 |                                   | 18,290  |        |              |   | 6,389   |            |        |   | 20,931  |       
|Cash and cash equivalents at the beginning of the year                                                   |                                                                                 |                                   | 20,799  |        |              |   | 39,089  |            |        |   | 45,478  |       
|                                                                                                         |                                                                                 |                                   |         |        |              |   |         |            |       
|Cash and cash equivalents at the end of the year                                                         |                                                                                 | $                                 | 39,089  |        |              | $ | 45,478  |            |        | $ | 66,409  |       
|                                                                                                         |                                                                                 |                                   |         |        |              |   |         |            |       
|Supplemental Disclosures of Cash Flow Information:                                                       |                                                                                 |                                   |         |        |              |   |         |            |        |   |         |       
|Cash paid for interest                                                                                   |                                                                                 | $                                 | 195     |        |              | $ | 146     |            |        | $ | 104     |       
|Cash paid for income taxes, net of refunds                                                               |                                                                                 |                                   | 2,019   |        |              |   | 1,791   |            |        |   | 11,144  |       
|Supplemental Disclosures of Non-Cash Items:                                                              |                                                                                 |                                   |         |        |              |   |         |            |        |   |         |       
|Purchase of minority interests through issuance of long-term
    debt and conversion to members capital |                                                                                 |                                   | 2,955   |        |              |   | 370     |            |        |   | 355     |       



38



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


January 2, 2005




|   |                                                                       
|-- | ----------------------------------------------------------------------
|1. | Restatement of Previously Issued Consolidated Financial
    Statements

plus




39



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                                         |  |                         |         |   |                         |   |         |               |  |   |          |   |  |   |         |  
|---------------------------------------- |  | ----------------------- | ------- | - | ----------------------- | - | ------- | ------------- |  | - | -------- | - |  | - | ------- | -
|                                         |  | Year Ended December 30, |         |   | Year Ended December 29, |  
|                                         |  | 2002                    |         |   | 2003                    |  
|                                         |  |                         |         |   |                         |  
|                                         |  | As Previously           |         |   | As                      |   |         | As Previously |  |   | As       |  
|                                         |  | Reported                |         |   | Restated                |   |         | Reported      |  |   | Restated |  
|                                         |  |                         |         |   |                         |   |         |               |  |   |          |  
|Selected Statement of Income Data:       |  |                         |         |   |                         |   |         |               |  |   |          |   |  |   |         |  
|Occupancy                                |  | $                       | 25,457  |   |                         | $ | 24,129  |               |  | $ | 30,559   |   |  | $ | 28,914  |  
|Total restaurant operating costs         |  |                         | 328,049 |   |                         |   | 326,721 |               |  |   | 433,435  |   |  |   | 431,790 |  
|General and administrative               |  |                         | 20,590  |   |                         |   | 20,513  |               |  |   | 28,768   |   |  |   | 28,692  |  
|Depreciation and amortization            |  |                         | 13,959  |   |                         |   | 15,847  |               |  |   | 19,255   |   |  |   | 21,817  |  
|Preopening expense                       |  |                         | 6,334   |   |                         |   | 6,428   |               |  |   | 8,654    |   |  |   | 8,790   |  
|Income from operations                   |  |                         | 31,879  |   |                         |   | 31,302  |               |  |   | 45,609   |   |  |   | 44,632  |  
|Income before provision for income taxes |  |                         | 26,677  |   |                         |   | 26,100  |               |  |   | 38,188   |   |  |   | 37,211  |  
|Provision for income taxes               |  |                         | (9,097  | ) |                         |   | (8,875  | )             |  |   | (12,800  | ) |  |   | (12,424 | )
|Net income                               |  |                         | 17,580  |   |                         |   | 17,225  |               |  |   | 25,388   |   |  |   | 24,787  |  
|Basic net income per share               |  | $                       | 0.71    |   |                         | $ | 0.70    |               |  | $ | 1.00     |   |  | $ | 0.98    |  
|Diluted net income per share             |  | $                       | 0.68    |   |                         | $ | 0.66    |               |  | $ | 0.97     |   |  | $ | 0.94    |  



|                                                  |  |                   |         |  |          |   |         | 
|------------------------------------------------- |  | ----------------- | ------- |  | -------- | - | ------- | 
|                                                  |  | December 29, 2003 |        
|                                                  |  |                   |        
|                                                  |  | As Previously     |         |  | As       |  
|                                                  |  | Reported          |         |  | Restated |  
|                                                  |  |                   |         |  |          |  
|Selected Balance Sheet Data:                      |  |                   |         |  |          |   |         | 
|Property and equipment, net                       |  | $                 | 198,291 |  |          | $ | 228,170 | 
|Deferred income tax assets                        |  |                   | 2,695   |  |          |   | 3,560   | 
|Total assets                                      |  |                   | 273,077 |  |          |   | 303,821 | 
|Accrued expenses                                  |  |                   | 29,222  |  |          |   | 27,918  | 
|Lease obligations                                 |  |                   |        |  |          |   | 33,427  | 
|Retained earnings                                 |  |                   | 66,046  |  |          |   | 64,667  | 
|Total common stockholders equity                 |  |                   | 205,711 |  |          |   | 204,332 | 
|Total liabilities and common stockholders equity |  |                   | 273,077 |  |          |   | 303,821 | 



|                                          |  |                         |         |   |                         |   |         |               |  |   |          |   |  |   |         |  
|----------------------------------------- |  | ----------------------- | ------- | - | ----------------------- | - | ------- | ------------- |  | - | -------- | - |  | - | ------- | -
|                                          |  | Year Ended December 30, |         |   | Year Ended December 29, |  
|                                          |  | 2002                    |         |   | 2003                    |  
|                                          |  |                         |         |   |                         |  
|                                          |  | As Previously           |         |   | As                      |   |         | As Previously |  |   | As       |  
|                                          |  | Reported                |         |   | Restated                |   |         | Reported      |  |   | Restated |  
|                                          |  |                         |         |   |                         |   |         |               |  |   |          |  
|Selected Cash Flow Data:                  |  |                         |         |   |                         |   |         |               |  |   |          |   |  |   |         |  
|Net income                                |  | $                       | 17,580  |   |                         | $ | 17,225  |               |  | $ | 25,388   |   |  | $ | 24,787  |  
|Depreciation and amortization             |  |                         | 13,959  |   |                         |   | 15,847  |               |  |   | 19,255   |   |  |   | 21,817  |  
|Deferred income taxes                     |  |                         | (1,173  | ) |                         |   | (1,395  | )             |  |   | (2,932   | ) |  |   | (3,308  | )
|Accrued expenses                          |  |                         | (785    | ) |                         |   | (785    | )             |  |   | 13,725   |   |  |   | 12,421  |  
|Lease obligations                         |  |                         |        |   |                         |   | 6,447   |               |  |   |         |   |  |   | 6,476   |  
|Net cash provided by operating activities |  |                         | 53,842  |   |                         |   | 61,600  |               |  |   | 74,928   |   |  |   | 81,685  |  
|Capital expenditures                      |  |                         | (43,471 | ) |                         |   | (51,229 | )             |  |   | (64,075  | ) |  | $ | (70,832 | )
|Net cash used in investing activities     |  |                         | (33,924 | ) |                         |   | (41,682 | )             |  |   | (65,297  | ) |  | $ | (72,054 | )

40



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|   |                                           
|-- | ------------------------------------------
|2. | Summary of Significant Accounting Policies



| |                                      
| | -------------------------------------
| | Organization and Nature of Operations





| |                         
| | ------------------------
| | Revenue Reclassification





| |             
| | ------------
| | Modification



Accounting for Certain
Transactions Involving Stock Compensation and Interpretation of
APB Opinion No. 25






| |            
| | -----------
| | Fiscal Year





| |                 
| | ----------------
| | Use of Estimates



41



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




| |                                             
| | --------------------------------------------
| | Principles of Consolidation and Presentation







| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |            
| | -----------
| | Investments





| |            
| | -----------
| | Receivables





| |            
| | -----------
| | Inventories





| |                       
| | ----------------------
| | Property and Equipment



42



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)








| |                         
| | ------------------------
| | Goodwill and Intangibles









| |                  
| | -----------------
| | Accrued Insurance





| |                  
| | -----------------
| | Lease Obligations



43



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)










| |                 
| | ----------------
| | Unearned Revenue





| |                      
| | ---------------------
| | Unearned Compensation





| |                    
| | -------------------
| | Revenue Recognition





| |            
| | -----------
| | Advertising





| |                               
| | ------------------------------
| | Partner Bonus Expense, Imputed





| |                   
| | ------------------
| | Preopening Expense



44



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






| |                           
| | --------------------------
| | Partner Investment Expense

,






| |             
| | ------------
| | Income Taxes







| |                         
| | ------------------------
| | Stock-Based Compensation



45



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                                             |                                                                                                                                                |                                          |        |        |              |   |        |            |  |   |        |        | 
|-------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ------ | ------ | ------------ | - | ------ | ---------- |  | - | ------ | ------ | 
|                                             |                                                                                                                                                | Year Ended                               |        |        | Year Ended   |   |        | Year Ended | 
|                                             |                                                                                                                                                | December 29,                             |        |        | December 28, |   |        | January 2, | 
|                                             |                                                                                                                                                | 2002                                     |        |        | 2003         |   |        | 2005       | 
|                                             |                                                                                                                                                |                                          |        |        |              |   |        |            | 
|                                             |                                                                                                                                                | (In thousands, except per share amounts) |       
|                                             |                                                                                                                                                | (Restated)                               |        |        | (Restated)   |   |        |           
|Net income, as reported                      |                                                                                                                                                | $                                        | 17,225 |        |              | $ | 24,787 |            |  | $ | 26,054 |       
|                                             | Deduct: Total stock-based employee compensation expense
    determined under fair value methods for all awards, net of
    related tax effects |                                          |        | 2,232  |              |   |        | 3,482      |  |   |        | 5,074  | 
|                                             |                                                                                                                                                |                                          |        |        |              |   |        |            | 
|Pro forma net income                         |                                                                                                                                                | $                                        | 14,993 |        |              | $ | 21,305 |            |  | $ | 20,980 |       
|                                             |                                                                                                                                                |                                          |        |        |              |   |        |            | 
|Net income per share:                        |                                                                                                                                                |                                          |        |        |              |   |        |            |  |   |        |       
|                                             | Basic, as reported                                                                                                                             |                                          | $      | 0.70   |              |   | $      | 0.98       |  |   | $      | 1.01   | 
|                                             |                                                                                                                                                |                                          |        |        |              |   |        |            | 
|                                             | Basic, pro forma                                                                                                                               |                                          | $      | 0.61   |              |   | $      | 0.84       |  |   | $      | 0.82   | 
|                                             |                                                                                                                                                |                                          |        |        |              |   |        |            | 
|                                             | Diluted, as reported                                                                                                                           |                                          | $      | 0.66   |              |   | $      | 0.94       |  |   | $      | 0.98   | 
|                                             |                                                                                                                                                |                                          |        |        |              |   |        |            | 
|                                             | Diluted, pro forma                                                                                                                             |                                          | $      | 0.58   |              |   | $      | 0.81       |  |   | $      | 0.79   | 
|                                             |                                                                                                                                                |                                          |        |        |              |   |        |            | 
|Weighted average shares used in computation: |                                                                                                                                                |                                          |        |        |              |   |        |            |  |   |        |       
|                                             | Basic                                                                                                                                          |                                          |        | 24,688 |              |   |        | 25,345     |  |   |        | 25,727 | 
|                                             |                                                                                                                                                |                                          |        |        |              |   |        |            | 
|                                             | Diluted                                                                                                                                        |                                          |        | 25,924 |              |   |        | 26,250     |  |   |        | 26,575 | 
|                                             |                                                                                                                                                |                                          |        |        |              |   |        |            | 





| |                     
| | --------------------
| | Net Income Per Share

Earnings per Share.


46



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                                                                                                                |                                                                                                        |                                          |        |        |              |  |        |            |     |  |        |        |     | 
|--------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ---------------------------------------- | ------ | ------ | ------------ |  | ------ | ---------- | --- |  | ------ | ------ | --- | 
|                                                                                                                |                                                                                                        | Year Ended                               |        |        | Year Ended   |  |        | Year Ended |    
|                                                                                                                |                                                                                                        | December 29,                             |        |        | December 28, |  |        | January 2, |    
|                                                                                                                |                                                                                                        | 2002                                     |        |        | 2003         |  |        | 2005       |    
|                                                                                                                |                                                                                                        |                                          |        |        |              |  |        |            |    
|                                                                                                                |                                                                                                        | (In thousands, except per share amounts) |       
|                                                                                                                |                                                                                                        | (Restated)                               |        |        | (Restated)   |  |        |           
|Numerator:                                                                                                      |                                                                                                        |                                          |        |        |              |  |        |            |     |  |        |       
|                                                                                                                | Numerator for basic and diluted net income per share 
    net income available to common stockholders |                                          | $      | 17,225 |              |  | $      | 24,787     |     |  | $      | 26,054 |    
|                                                                                                                |                                                                                                        |                                          |        |        |              |  |        |            |    
|Denominator:                                                                                                    |                                                                                                        |                                          |        |        |              |  |        |            |     |  |        |       
|                                                                                                                | Denominator for basic net income per share 
    weighted-average shares                               |                                          |        | 24,688 |              |  |        | 25,345     |     |  |        | 25,727 |    
|                                                                                                                | Effect of dilutive securities:                                                                         |                                          |        |        |              |  |        |            |     |  |        |        |    
|                                                                                                                |                                                                                                        | Employee and director stock options      |        |        | 1,236        |  |        |            | 905 |  |        |        | 848 | 
|                                                                                                                |                                                                                                        |                                          |        |        |              |  |        |            |    
|Denominator for diluted net income per share 
    adjusted for weighted average shares and assumed conversions |                                                                                                        |                                          | 25,924 |        |              |  | 26,250 |            |     |  | 26,575 |       
|                                                                                                                |                                                                                                        |                                          |        |        |              |  |        |            |    
|Net income per share:                                                                                           |                                                                                                        |                                          |        |        |              |  |        |            |     |  |        |       
|                                                                                                                | Basic                                                                                                  |                                          | $      | 0.70   |              |  | $      | 0.98       |     |  | $      | 1.01   |    
|                                                                                                                |                                                                                                        |                                          |        |        |              |  |        |            |    
|                                                                                                                | Diluted                                                                                                |                                          | $      | 0.66   |              |  | $      | 0.94       |     |  | $      | 0.98   |    
|                                                                                                                |                                                                                                        |                                          |        |        |              |  |        |            |    



| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments





| |                  
| | -----------------
| | Segment Reporting

Disclosure about Segments of an Enterprise and Related
Information.




| |                              
| | -----------------------------
| | Concentrations of Credit Risk



47



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements

Share-Based Payment Statement of Cash Flows.






|   |                       
|-- | ----------------------
|3. | Property and Equipment



|                                               |  |                |         |  |            |   |         | 
|---------------------------------------------- |  | -------------- | ------- |  | ---------- | - | ------- | 
|                                               |  | December 28,   |         |  | January 2, |  
|                                               |  | 2003           |         |  | 2005       |  
|                                               |  |                |         |  |            |  
|                                               |  | (In thousands) |        
|                                               |  | (Restated)     |         |  |           
|Leasehold improvements                         |  | $              | 212,224 |  |            | $ | 268,548 | 
|Furniture, fixtures and equipment              |  |                | 57,397  |  |            |   | 74,568  | 
|China and smallwares                           |  |                | 5,761   |  |            |   | 7,184   | 
|                                               |  |                |         |  |            |  
|                                               |  |                | 275,382 |  |            |   | 350,300 | 
|Less accumulated depreciation and amortization |  |                | 63,657  |  |            |   | 89,104  | 
|                                               |  |                |         |  |            |  
|                                               |  |                | 211,725 |  |            |   | 261,196 | 
|Construction in progress                       |  |                | 16,445  |  |            |   | 19,445  | 
|                                               |  |                |         |  |            |  
|                                               |  | $              | 228,170 |  |            | $ | 280,641 | 
|                                               |  |                |         |  |            |  



48



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|   |                 
|-- | ----------------
|4. | Accrued Expenses



|                          |  |                |        |  |            |   |        | 
|------------------------- |  | -------------- | ------ |  | ---------- | - | ------ | 
|                          |  | December 28,   |        |  | January 2, |  
|                          |  | 2003           |        |  | 2005       |  
|                          |  |                |        |  |            |  
|                          |  | (In thousands) |       
|Accrued payroll           |  | $              | 7,220  |  |            | $ | 11,064 | 
|Sales and use tax payable |  |                | 3,233  |  |            |   | 4,787  | 
|Property tax payable      |  |                | 2,389  |  |            |   | 1,850  | 
|Accrued insurance         |  |                | 4,184  |  |            |   | 8,536  | 
|Accrued rent              |  |                | 1,718  |  |            |   | 2,475  | 
|Income taxes payable      |  |                | 6,731  |  |            |   |       | 
|Other accrued expenses    |  |                | 2,443  |  |            |   | 3,586  | 
|                          |  |                |        |  |            |  
|                          |  | $              | 27,918 |  |            | $ | 32,298 | 
|                          |  |                |        |  |            |  



|   |                
|-- | ---------------
|5. | Credit Facility





|   |               
|-- | --------------
|6. | Long-Term Debt



|                                                                                                                                                                                                                                                         |                      |                |       |       |            |   |       |     | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | -------------- | ----- | ----- | ---------- | - | ----- | --- | 
|                                                                                                                                                                                                                                                         |                      | December 28,   |       |       | January 2, |  
|                                                                                                                                                                                                                                                         |                      | 2003           |       |       | 2005       |  
|                                                                                                                                                                                                                                                         |                      |                |       |       |            |  
|                                                                                                                                                                                                                                                         |                      | (In thousands) |      
|$3.0 million in unsecured promissory notes, payable to
    related parties from the sale of minority partner interests, in
    annual installments of $1.5 million plus interest, with a
    rate of 225 basis points over LIBOR, until August 2005      |                      | $              | 1,590 |       |            | $ | 136   |    
|$0.1 million in unsecured promissory notes, payable to
    related parties from the sale of minority partner interests, in
    annual installments of $60,000 plus interest, with a rate of
    200 basis points over LIBOR, until October 2006          |                      |                |      |       |            |   | 123   |    
|$0.8 million in unsecured promissory notes, payable to
    non-related parties from the sale of minority partner interests,
    in annual installments of $0.4 million plus interest, with
    a rate of 200 basis points over LIBOR, until October 2006 |                      |                |      |       |            |   | 827   |    
|Other                                                                                                                                                                                                                                                    |                      |                |      |       |            |   | 72    |    
|                                                                                                                                                                                                                                                         |                      |                |       |       |            |  
|                                                                                                                                                                                                                                                         |                      |                | 1,590 |       |            |   | 1,158 |    
|                                                                                                                                                                                                                                                         | Less current portion |                |       | 1,454 |            |   |       | 613 | 
|                                                                                                                                                                                                                                                         |                      |                |       |       |            |  
|                                                                                                                                                                                                                                                         |                      | $              | 136   |       |            | $ | 545   |    
|                                                                                                                                                                                                                                                         |                      |                |       |       |            |  

49



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|           |  |   |       | 
|---------- |  | - | ----- | 
|2005       |  | $ | 613   | 
|2006       |  |   | 477   | 
|2007       |  |   | 2     | 
|2008       |  |   | 3     | 
|2009       |  |   | 3     | 
|Thereafter |  |   | 60    | 
|           |  |   |      
|           |  | $ | 1,158 | 
|           |  |   |      





|   |       
|-- | ------
|7. | Leases





|                   |  |                |        |  |              |   |        |            |  |   |        | 
|------------------ |  | -------------- | ------ |  | ------------ | - | ------ | ---------- |  | - | ------ | 
|                   |  | December 29,   |        |  | December 28, |   |        | January 2, | 
|                   |  | 2002           |        |  | 2003         |   |        | 2005       | 
|                   |  |                |        |  |              |   |        |            | 
|                   |  | (In thousands) |       
|                   |  | (Restated)     |        |  | (Restated)   |   |        |           
|Minimum rentals    |  | $              | 11,372 |  |              | $ | 14,657 |            |  | $ | 19,227 | 
|Contingent rentals |  |                | 5,348  |  |              |   | 6,380  |            |  |   | 7,723  | 
|                   |  |                |        |  |              |   |        |            | 
|                   |  | $              | 16,720 |  |              | $ | 21,037 |            |  | $ | 26,950 | 
|                   |  |                |        |  |              |   |        |            | 



|           |                              |   |         |         | 
|---------- | ---------------------------- | - | ------- | ------- | 
|2005       |                              | $ | 26,118  |        
|2006       |                              |   | 26,764  |        
|2007       |                              |   | 26,314  |        
|2008       |                              |   | 25,902  |        
|2009       |                              |   | 25,607  |        
|Thereafter |                              |   | 147,350 |        
|           |                              |   |        
|           | Total minimum lease payments |   | $       | 278,055 | 
|           |                              |   |        

50



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






|   |                                                
|-- | -----------------------------------------------
|8. | Preferred Stock and Common Stockholders Equity



| |                
| | ---------------
| | Preferred Stock





| |             
| | ------------
| | Common Stock





| |                   
| | ------------------
| | Stock Option Plans





51



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






|                                         |  |      |      |   |      |  |      |      |  |  |      |  
|---------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                         |  | 2002 |      |   | 2003 |  |      | 2004 | 
|                                         |  |      |      |   |      |  |      |      | 
|Weighted average risk-free interest rate |  |      | 4.0  | % |      |  | 3.3  | %    |  |  | 3.6  | %
|Expected life of options (years)         |  |      | 5.00 |   |      |  | 5.00 |      |  |  | 5.00 |  
|Expected stock volatility                |  |      | 49.3 | % |      |  | 46.4 | %    |  |  | 43.7 | %
|Expected dividend yield                  |  |      | 0.0  | % |      |  | 0.0  | %    |  |  | 0.0  | %





|                                       |                      |                     |         |           |        |  |           |            |   |   |       |       | 
|-------------------------------------- | -------------------- | ------------------- | ------- | --------- | ------ |  | --------- | ---------- | - | - | ----- | ----- | 
|                                       |                      | Outstanding Options |        
|                                       |                      |                     |        
|                                       |                      |                     |         | Weighted- |       
|                                       |                      | Shares              |         |           |        |  | Average   |           
|                                       |                      | Available           |         |           |        |  | Exercise  |           
|                                       |                      | for Options         |         |           | Shares |  |           | Price      |  
|                                       |                      |                     |         |           |        |  |           |            |  
|Outstanding at December 30, 2001       |                      |                     | 355,920 |           |        |  | 3,041,740 |            |   | $ | 8.92  |      
|                                       | Authorized           |                     |         | 1,000,000 |        |  |           |           |   |   |       |      | 
|                                       | Granted              |                     |         | (485,750  | )      |  |           | 485,750    |   |   |       | 30.55 | 
|                                       | Exercised            |                     |         |          |        |  |           | (1,055,371 | ) |   |       | 4.60  | 
|                                       | Forfeited (canceled) |                     |         | 85,192    |        |  |           | (85,192    | ) |   |       | 19.44 | 
|                                       |                      |                     |         |           |        |  |           |            |  
|Outstanding at December 29, 2002       |                      |                     | 955,362 |           |        |  | 2,386,927 |            |   |   | 14.88 |      
|                                       | Authorized           |                     |         |          |        |  |           |           |   |   |       |      | 
|                                       | Granted              |                     |         | (602,000  | )      |  |           | 602,000    |   |   |       | 43.34 | 
|                                       | Exercised            |                     |         |          |        |  |           | (464,535   | ) |   |       | 11.38 | 
|                                       | Forfeited (canceled) |                     |         | 96,198    |        |  |           | (96,198    | ) |   |       | 18.92 | 
|                                       |                      |                     |         |           |        |  |           |            |  
|Outstanding at December 28, 2003       |                      |                     | 449,560 |           |        |  | 2,428,194 |            |   |   | 22.46 |      
|                                       | Authorized           |                     |         | 1,000,000 |        |  |           |           |   |   |       |      | 
|                                       | Granted              |                     |         | (602,200  | )      |  |           | 602,200    |   |   |       | 45.33 | 
|                                       | Exercised            |                     |         |          |        |  |           | (509,833   | ) |   |       | 11.59 | 
|                                       | Forfeited (canceled) |                     |         | 49,331    |        |  |           | (49,331    | ) |   |       | 36.52 | 
|                                       |                      |                     |         |           |        |  |           |            |  
|Outstanding at January 2, 2005         |                      |                     | 896,691 |           |        |  | 2,471,230 |            |   | $ | 29.92 |      
|                                       |                      |                     |         |           |        |  |           |            |  
|Options exercisable at January 2, 2005 |                      |                     |         |           |        |  | 1,268,214 |            |   | $ | 21.90 |      
|                                       |                      |                     |         |           |        |  |           |            |  

52



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                         |  |                     |         |           |                     |  |           |          |  |   |             |           |  |          |         |  |  |   |       | 
|------------------------ |  | ------------------- | ------- | --------- | ------------------- |  | --------- | -------- |  | - | ----------- | --------- |  | -------- | ------- |  |  | - | ----- | 
|                         |  | Options Outstanding |         |           |                    
|                         |  |                     |         |           | Options Exercisable | 
|                         |  |                     |         | Weighted- |                     |  |           |          |  |  
|                         |  |                     |         | Average   |                     |  | Weighted- |          |  |   |             | Weighted- | 
|                         |  |                     |         | Remaining |                     |  | Average   |          |  |   |             | Average   | 
|                         |  | Number              |         |           | Contractual         |  |           | Exercise |  |   | Number      |           |  | Exercise |        
|Range of Exercise Prices |  | Outstanding         |         |           | Life                |  |           | Price    |  |   | Exercisable |           |  | Price    |        
|                         |  |                     |         |           |                     |  |           |          |  |   |             |           |  |          |        
|$ 1.20  $ 5.00          |  |                     | 198,746 |           |                     |  | 2.1 years |          |  | $ | 2.34        |           |  |          | 198,746 |  |  | $ | 2.34  | 
|$ 5.01  $10.00          |  |                     | 59,659  |           |                     |  | 4.5 years |          |  |   | 8.92        |           |  |          | 59,659  |  |  |   | 8.92  | 
|$10.01  $15.00          |  |                     | 296,110 |           |                     |  | 5.0 years |          |  |   | 13.12       |           |  |          | 272,276 |  |  |   | 12.96 | 
|$15.01  $20.00          |  |                     | 427,402 |           |                     |  | 6.3 years |          |  |   | 18.60       |           |  |          | 282,638 |  |  |   | 18.48 | 
|$20.01  $25.00          |  |                     | 13,645  |           |                     |  | 7.0 years |          |  |   | 24.39       |           |  |          | 5,637   |  |  |   | 24.39 | 
|$25.01  $30.00          |  |                     | 38,019  |           |                     |  | 7.7 years |          |  |   | 29.21       |           |  |          | 10,318  |  |  |   | 29.17 | 
|$30.01  $35.00          |  |                     | 367,904 |           |                     |  | 7.6 years |          |  |   | 31.40       |           |  |          | 176,030 |  |  |   | 31.75 | 
|$35.01  $40.00          |  |                     | 95,774  |           |                     |  | 8.2 years |          |  |   | 38.39       |           |  |          | 71,749  |  |  |   | 39.04 | 
|$40.01  $45.00          |  |                     | 467,639 |           |                     |  | 9.5 years |          |  |   | 43.93       |           |  |          | 3,869   |  |  |   | 44.86 | 
|$45.01  $51.45          |  |                     | 506,332 |           |                     |  | 8.8 years |          |  |   | 47.18       |           |  |          | 187,292 |  |  |   | 48.14 | 







| |                                 
| | --------------------------------
| | Key Employee Stock Purchase Plan





| |                             
| | ----------------------------
| | Employee Stock Purchase Plan



53



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






|   |             
|-- | ------------
|9. | Benefit Plan





|    |                      
|--- | ---------------------
|10. | Employment Agreements









|    |                      
|--- | ---------------------
|11. | Partnership Structure



54



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)








|    |             
|--- | ------------
|12. | Income Taxes



|         |          |                |       |        |              |   |        |            |   |   |        |       |  
|-------- | -------- | -------------- | ----- | ------ | ------------ | - | ------ | ---------- | - | - | ------ | ----- | -
|         |          | Year Ended     |       |        | Year Ended   |   |        | Year Ended |  
|         |          | December 29,   |       |        | December 28, |   |        | January 2, |  
|         |          | 2002           |       |        | 2003         |   |        | 2005       |  
|         |          |                |       |        |              |   |        |            |  
|         |          | (In thousands) |      
|         |          | (Restated)     |       |        | (Restated)   |   |        |           
|Federal: |          |                |       |        |              |   |        |            |   |   |        |      
|         | Current  |                | $     | 8,094  |              |   | $      | 12,987     |   |   | $      | 8,539 |  
|         | Deferred |                |       | (1,186 | )            |   |        | (2,800     | ) |   |        | (165  | )
|         |          |                |       |        |              |   |        |            |  
|         |          |                | 6,908 |        |              |   | 10,187 |            |   |   | 8,374  |      
|State:   |          |                |       |        |              |   |        |            |   |   |        |      
|         | Current  |                |       | 2,176  |              |   |        | 2,745      |   |   |        | 2,312 |  
|         | Deferred |                |       | (209   | )            |   |        | (508       | ) |   |        | (30   | )
|         |          |                |       |        |              |   |        |            |  
|         |          |                | 1,967 |        |              |   | 2,237  |            |   |   | 2,282  |      
|         |          |                |       |        |              |   |        |            |  
|         |          | $              | 8,875 |        |              | $ | 12,424 |            |   | $ | 10,656 |      
|         |          |                |       |        |              |   |        |            |  



|                                             |  |                |        |   |              |   |        |            |  |   |        |  
|-------------------------------------------- |  | -------------- | ------ | - | ------------ | - | ------ | ---------- |  | - | ------ | -
|                                             |  | Year Ended     |        |   | Year Ended   |   |        | Year Ended | 
|                                             |  | December 29,   |        |   | December 28, |   |        | January 2, | 
|                                             |  | 2002           |        |   | 2003         |   |        | 2005       | 
|                                             |  |                |        |   |              |   |        |            | 
|                                             |  | (In thousands) |       
|                                             |  | (Restated)     |        |   | (Restated)   |   |        |           
|Income tax expense at federal statutory rate |  | $              | 9,135  |   |              | $ | 13,024 |            |  | $ | 12,849 |  
|State taxes, net of federal expense          |  |                | 945    |   |              |   | 1,454  |            |  |   | 1,483  |  
|FICA tip credit                              |  |                | (967   | ) |              |   | (2,816 | )          |  |   | (3,702 | )
|Increase (decrease) in valuation allowance   |  |                | (1,158 | ) |              |   |       |            |  |   |       |  
|Other, net                                   |  |                | 920    |   |              |   | 762    |            |  |   | 26     |  
|                                             |  |                |        |   |              |   |        |            | 
|                                             |  | $              | 8,875  |   |              | $ | 12,424 |            |  | $ | 10,656 |  
|                                             |  |                |        |   |              |   |        |            | 

55



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                                      |                                        |                |        |       |            |   |        |        |  
|------------------------------------- | -------------------------------------- | -------------- | ------ | ----- | ---------- | - | ------ | ------ | -
|                                      |                                        | As of          |        |       | As of      |  
|                                      |                                        | December 28,   |        |       | January 2, |  
|                                      |                                        | 2003           |        |       | 2005       |  
|                                      |                                        |                |        |       |            |  
|                                      |                                        | (In thousands) |       
|                                      |                                        | (Restated)     |        |       |           
|Deferred tax assets:                  |                                        |                |        |       |            |   |        |       
|                                      | Preopening expenses                    |                | $      | 1,333 |            |   | $      | 1,218  |  
|                                      | FICA tip and AMT credit carryforward   |                |        | 5,184 |            |   |        | 8,503  |  
|                                      | Buyout intangible                      |                |        | 2,529 |            |   |        | 7,786  |  
|                                      | Unearned compensation                  |                |        | 2,942 |            |   |        | 2,367  |  
|                                      | Other                                  |                |        | 1,052 |            |   |        | 2,324  |  
|                                      | Straight line rent                     |                |        | 124   |            |   |        | 405    |  
|                                      |                                        |                |        |       |            |  
|                                      |                                        |                | 13,164 |       |            |   | 22,603 |       
|Deferred tax liabilities:             |                                        |                |        |       |            |   |        |       
|                                      | Depreciation on property and equipment |                |        | 8,810 |            |   |        | 20,330 |  
|                                      | Goodwill amortization                  |                |        | 794   |            |   |        | (1,482 | )
|                                      |                                        |                |        |       |            |  
|                                      |                                        |                | 9,604  |       |            |   | 18,848 |       
|Net deferred tax liabilities (assets) |                                        | $              | (3,560 | )     |            | $ | (3,755 | )     
|                                      |                                        |                |        |       |            |  









|    |                              
|--- | -----------------------------
|13. | Commitments and Contingencies



| |                     
| | --------------------
| | Purchase Obligations



56



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




| |           
| | ----------
| | Litigation





|    |                  
|--- | -----------------
|14. | Segment Reporting





|                               |                                   |                |   |         |        |  |   |         |  |  |   |        |  
|------------------------------ | --------------------------------- | -------------- | - | ------- | ------ |  | - | ------- |  |  | - | ------ | -
|                               |                                   | Total          |   |         | Bistro |  |   | Pei Wei | 
|                               |                                   |                |   |         |        |  |   |         | 
|                               |                                   | (In thousands) |  
|Fiscal Year 2004:              |                                   |                |   |         |        |  |   |         |  |  |   |       
|                               | Revenues                          |                | $ | 706,941 |        |  | $ | 611,468 |  |  | $ | 95,473 |  
|                               | Income (loss) before income taxes |                |   | 36,710  |        |  |   | 37,194  |  |  |   | (484   | )
|                               | Capital expenditures              |                |   | 84,146  |        |  |   | 67,533  |  |  |   | 16,613 |  
|                               | Total assets                      |                |   | 383,515 |        |  |   | 341,374 |  |  |   | 42,141 |  
|                               | Goodwill                          |                |   | 6,819   |        |  |   | 6,566   |  |  |   | 253    |  
|                               | Depreciation and amortization     |                |   | 29,155  |        |  |   | 24,778  |  |  |   | 4,377  |  
|Fiscal Year 2003, as restated: |                                   |                |   |         |        |  |   |         |  |  |   |       
|                               | Revenues                          |                | $ | 539,917 |        |  | $ | 486,609 |  |  | $ | 53,308 |  
|                               | Income (loss) before income taxes |                |   | 37,211  |        |  |   | 37,505  |  |  |   | (294   | )
|                               | Capital expenditures              |                |   | 70,832  |        |  |   | 56,945  |  |  |   | 13,887 |  
|                               | Total assets                      |                |   | 303,821 |        |  |   | 275,021 |  |  |   | 28,800 |  
|                               | Goodwill                          |                |   | 6,819   |        |  |   | 6,566   |  |  |   | 253    |  
|                               | Depreciation and amortization     |                |   | 21,817  |        |  |   | 19,414  |  |  |   | 2,403  |  
|Fiscal Year 2002, as restated: |                                   |                |   |         |        |  |   |         |  |  |   |       
|                               | Revenues                          |                | $ | 406,609 |        |  | $ | 385,036 |  |  | $ | 21,573 |  
|                               | Income (loss) before income taxes |                |   | 26,100  |        |  |   | 28,847  |  |  |   | (2,747 | )
|                               | Capital expenditures              |                |   | 51,229  |        |  |   | 39,509  |  |  |   | 11,720 |  
|                               | Total assets                      |                |   | 238,850 |        |  |   | 223,840 |  |  |   | 15,010 |  
|                               | Goodwill                          |                |   | 6,819   |        |  |   | 6,566   |  |  |   | 253    |  
|                               | Depreciation and amortization     |                |   | 15,847  |        |  |   | 14,755  |  |  |   | 1,092  |  



|    |                                      
|--- | -------------------------------------
|15. | Interim Financial Results (Unaudited)



57



---



##### Table of Contents



P.F. CHANGS CHINA BISTRO, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                                                |  |                                       |         |  |                            |   |         |            |  |   |            |  |  |            |         |  |            |   |         |            |  |   |         |  |  |   |         |  |  |   |         | 
|----------------------------------------------- |  | ------------------------------------- | ------- |  | -------------------------- | - | ------- | ---------- |  | - | ---------- |  |  | ---------- | ------- |  | ---------- | - | ------- | ---------- |  | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                                |  | Year Ended December 28, 2003          |         |  | Year Ended January 2, 2005 |  
|                                                |  |                                       |         |  |                            |  
|                                                |  | First                                 |         |  | Second                     |   |         | Third      |  |   | Fourth     |  |  | First      |         |  | Second     |   |         | Third      |  |   |        
|                                                |  | Quarter                               |         |  | Quarter                    |   |         | Quarter    |  |   | Quarter    |  |  | Quarter    |         |  | Quarter    |   |         | Quarter    |  |   | Fourth  | 
|                                                |  | (1)(2)                                |         |  | (1)(2)                     |   |         | (1)(2)     |  |   | (1)(2)     |  |  | (1)(2)(3)  |         |  | (1)(2)     |   |         | (2)        |  |   | Quarter | 
|                                                |  |                                       |         |  |                            |   |         |            |  |   |            |  |  |            |         |  |            |   |         |            |  |   |         | 
|                                                |  | (Restated)                            |         |  | (Restated)                 |   |         | (Restated) |  |   | (Restated) |  |  | (Restated) |         |  | (Restated) |   |         | (Restated) |  |   |        
|                                                |  | (In thousands, except per share data) |        
|Revenues                                        |  | $                                     | 126,953 |  |                            | $ | 131,905 |            |  | $ | 134,926    |  |  | $          | 146,133 |  |            | $ | 164,056 |            |  | $ | 169,602 |  |  | $ | 174,013 |  |  | $ | 199,270 | 
|Restaurant operating profit                     |  |                                       | 25,821  |  |                            |   | 26,384  |            |  |   | 26,559     |  |  |            | 29,363  |  |            |   | 31,062  |            |  |   | 32,133  |  |  |   | 34,340  |  |  |   | 38,124  | 
|Income (loss) before provision for income taxes |  |                                       | 9,567   |  |                            |   | 9,801   |            |  |   | 7,992      |  |  |            | 9,851   |  |            |   | (2,185  | )          |  |   | 12,240  |  |  |   | 11,903  |  |  |   | 14,752  | 
|Net income (loss)                               |  |                                       | 6,348   |  |                            |   | 6,510   |            |  |   | 5,370      |  |  |            | 6,559   |  |            |   | (678    | )          |  |   | 8,396   |  |  |   | 8,171   |  |  |   | 10,165  | 
|Basic net income (loss) per share               |  |                                       | 0.25    |  |                            |   | 0.26    |            |  |   | 0.21       |  |  |            | 0.26    |  |            |   | (0.03   | )          |  |   | 0.33    |  |  |   | 0.32    |  |  |   | 0.39    | 
|Diluted net income (loss) per share             |  |                                       | 0.24    |  |                            |   | 0.25    |            |  |   | 0.20       |  |  |            | 0.25    |  |            |   | (0.03   | )          |  |   | 0.32    |  |  |   | 0.31    |  |  |   | 0.38    | 
|Basic weighted average shares outstanding       |  |                                       | 25,137  |  |                            |   | 25,338  |            |  |   | 25,414     |  |  |            | 25,491  |  |            |   | 25,559  |            |  |   | 25,605  |  |  |   | 25,768  |  |  |   | 25,977  | 
|Diluted weighted average shares outstanding     |  |                                       | 26,038  |  |                            |   | 26,228  |            |  |   | 26,331     |  |  |            | 26,402  |  |            |   | 25,559  |            |  |   | 26,475  |  |  |   | 26,589  |  |  |   | 26,786  | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company has reclassified certain of its restaurant costs
    relating to complimentary and employee meals from operating
    expenses to contra-revenue accounts as discussed in Note 2.
    This reclassification has no effect on net income. The total
    amount reclassified is reflected as a reduction of operating
    expenses and a corresponding reduction of revenues in the same
    amount in each quarter affected. The reclassification totaled
    $4.6 million, $4.7 million, $4.8 million and
    $5.2 million for the first, second, third and fourth
    quarter of fiscal 2003 and $5.7 million and
    $5.7 million for the first and second quarter of fiscal
    2004, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(2) | The Company has restated its previously reported consolidated
    financial statements for changes in Occupancy, General and
    administrative, Preopening and Depreciation expenses for all
    previous years presented due to the treatment of lease
    accounting as discussed in Note 1. The effect of the
    restatement on net income (loss) is a decrease of approximately
    $50,000, approximately $77,000, $0.2 million and
    $0.3 million for the first, second, third and fourth
    quarter of fiscal 2003 and $0.1 million, $0.1 million
    and $0.2 million for the first, second and third quarter of
    fiscal 2004, respectively. The effect on reported quarterly
    basic net income (loss) per share is a decrease of $0.01 for
    both the third and fourth quarter of fiscal 2003 and $0.01 for
    the first quarter of fiscal 2004. There was no effect on our
    reported quarterly basic net income (loss) per share for first
    and second quarter of fiscal 2003 and second and third quarter
    of fiscal 2004. The effect on reported quarterly diluted net
    income (loss) per share is a decrease of $0.01 for the first,
    third and fourth quarter of fiscal 2003 and $0.01 for the first
    quarter of fiscal 2004, respectively. There was no effect on our
    reported quarterly diluted net income (loss) per share for
    second quarter of fiscal 2003 and second and third quarter of
    fiscal 2004.
|   
|(3) | Partner investment expense increased during first quarter of
    2004 as a result of a $12.5 million modification of certain
    partnership agreements as discussed in Note 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

58



---



##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Disclosure Controls and Procedures




Managements Annual Report on Internal Control over
Financial Reporting


Internal Control 
Integrated Framework.






59



---



##### Table of Contents



Internal Control 
Integrated Framework




Remediation Steps to Address Material
Weakness


Change in Internal Control Over Financial
Reporting


60



---



##### Table of Contents



Report of Independent Registered Public Accounting Firm on
Internal Control over Financial Reporting
















61



---



##### Table of Contents







| |                      
| | ---------------------
| | /s/ Ernst & Young LLP





62



---



##### Table of Contents






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters

Securities Authorized for Issuance Under Equity Compensation
Plans.


|                                                          |  |                  |           |  |                  |           |       |               |  |  |           |    
|--------------------------------------------------------- |  | ---------------- | --------- |  | ---------------- | --------- | ----- | ------------- |  |  | --------- | ---
|                                                          |  |                  |           |  |                  | Number of |      
|                                                          |  | Number of Shares |           |  | Weighted         |           |       | Shares        | 
|                                                          |  | to be Issued     |           |  | Average Exercise |           |       | Remaining     | 
|                                                          |  | Upon Exercise of |           |  | Price of         |           |       | Available for | 
|                                                          |  | Outstanding      |           |  | Outstanding      |           |       | Future        | 
|Plan Category                                             |  | Options          |           |  | Options          |           |       | Issuance      | 
|                                                          |  |                  |           |  |                  |           |       |               | 
|Equity compensation plans approved by shareholders(a)     |  |                  | 2,022,901 |  |                  | $         | 30.74 |               |  |  | 1,612,184 | (c)
|Equity compensation plans not approved by shareholders(b) |  |                  | 448,329   |  |                  | $         | 26.23 |               |  |  | 204,218   |    
|                                                          |  |                  |           |  |                  |           |       |               | 
|Total                                                     |  |                  | 2,471,230 |  |                  |           |       |               |  |  | 1,816,402 |    
|                                                          |  |                  |           |  |                  |           |       |               | 






|    |                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Consists of four P.F. Changs stock plans: 1996 Stock
    Option Plan, 1997 Restaurant Management Stock Option Plan, 1998
    Stock Option Plan and 1998 Employee Stock Purchase Plan.



|    |  |                                                                                                                                                                  
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Consists of P.F. Changs China Bistro 1999 Nonstatutory
    Stock Option Plan. See Notes to Consolidated Financial
    Statements, Note 6  Stock Option Plans.
|   
|(c) |  | Includes 548,188 shares reserved for issuance under the
    1998 Employee Stock Purchase Plan.                                                                   



|                                                                                           |  |      |      |   |      |  |      |      |  |  |      |  
|------------------------------------------------------------------------------------------ |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                                                           |  | 2004 |      |   | 2003 |  |      | 2002 | 
|                                                                                           |  |      |      |   |      |  |      |      | 
|Net grants during the period as % of outstanding shares                                    |  |      | 2.1  | % |      |  | 2.0  | %    |  |  | 1.6  | %
|Grants to named executive officers* as % of total options granted                          |  |      | 23.2 | % |      |  | 24.9 | %    |  |  | 23.7 | %
|Grants to named executive officers* as % of outstanding shares                             |  |      | 0.5  | % |      |  | 0.6  | %    |  |  | 0.5  | %
|Cumulative options held by named executive officers* as % of
    total options outstanding |  |      | 37.9 | % |      |  | 44.8 | %    |  |  | 47.1 | %






|  |                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Named executive officers are defined by the SEC for inclusion in
    the Proxy Statement as the Chief Executive Officer and each of
    the four other most highly compensated executive officers.



63



---



##### Table of Contents








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services






PART IV







|         |                                        
|-------- | ---------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules







| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | Report of Independent Registered Public Accounting Firm;                                                                                    
| | Consolidated Balance Sheets at December 28, 2003 and
    January 2, 2005;                                                                   
| | Consolidated Statements of Income for the Years Ended
    December 29, 2002, December 28, 2003 and
    January 2, 2005;                     
| | Consolidated Statements of Common Stockholders Equity for
    the Years Ended December 29, 2002, December 28, 2003
    and January 2, 2005;
| | Consolidated Statements of Cash Flows for the Years Ended
    December 29, 2002, December 28, 2003 and
    January 2, 2005;                 
| | Notes to Consolidated Financial Statements.                                                                                                 





| |                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All financial statement schedules have been omitted because they
    are either inapplicable or the information required is provided
    in the Companys Consolidated Financial Statements and
    Notes thereto, included in Part II, Item 8 of this
    Annual Report on Form 10-K.



|        |     |                      |  |                                                                                                                      
|------- | --- | -------------------- |  | ---------------------------------------------------------------------------------------------------------------------
|Exhibit |     |                     
|Number  |     | Description Document
|        |     |                     
|        | 3   | .1(1)                |  | Amended and Restated Certificate of Incorporation.                                                                   
|       
|        | 3   | .2(2)                |  | Amended and Restated By-laws.                                                                                        
|       
|        | 4   | .1(3)                |  | Specimen Common Stock Certificate.                                                                                   
|       
|        | 4   | .2(3)                |  | Amended and Restated Registration Rights Agreement dated
    May 1, 1997.                                            
|       
|        | 10 | .1(3)                |  | Form of Indemnification Agreement for directors and executive
    officers.                                          
|       
|        | 10 | .2(3)                |  | 1998 Stock Option Plan and forms of agreement thereunder.                                                            
|       
|        | 10 | .3(3)                |  | 1997 Restaurant Manager Stock Option Plan and forms of Agreement
    thereunder.                                     
|       
|        | 10 | .4(3)                |  | 1996 Stock Option Plan and forms of Agreement thereunder.                                                            
|       
|        | 10 | .5(3)                |  | 1998 Employee Stock Purchase Plan.                                                                                   
|       
|        | 10 | .6(3)                |  | Employment Agreement between Paul M. Fleming and the Company
    dated January 1, 1996, as amended September 2, 1998.
|       
|        | 10  | .11(4)               |  | Office Lease between the Company and PHXAZ-Kierland Commons,
    LLC, dated September 17, 1999.                      
|       
|        | 10 | .13(5)               |  | 1999 Nonstatutory Stock Option Plan.                                                                                 
|       
|        | 10  | .15(6)               |  | First Amendment to Office Lease between the Company and
    PHXAZ-Kierland Commons, LLC, dated August 22, 2001.      

64



---



##### Table of Contents



|        |     |         |                      |                                                                                                                                                        
|------- | --- | ------- | -------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |         |                     
|Number  |     |         | Description Document
|        |     |         |                     
|        | 10  | .16(7)  |                      | Common Stock Purchase Agreement dated January 11, 2001.                                                                                                
|       
|        | 10 | .17(6)  |                      | Pei Wei Asian Diner, Inc. 2001 Stock Option Plan.                                                                                                      
|       
|        | 10 | .18(8)  |                      | Employment Agreement between Richard L. Federico and the Company
    dated August 3, 2002.                                                             
|       
|        | 10 | .19(8)  |                      | Employment Agreement between Robert T. Vivian and the Company
    dated August 2, 2002.                                                                
|       
|        | 10 | .20(8)  |                      | Employment Agreement by and among Russell Owens, Pei Wei Asian
    Diner, Inc. and the Company dated August 6, 2002.                                   
|       
|        | 10  | .21(9)  |                      | Second Amendment to office lease between the Company and
    PHXAZ-Kierland Commons, LLC, dated November 12, 2002.                                     
|       
|        | 10  | .22(9)  |                      | Line of Credit Agreement between the Company and Bank of America
    dated December 20, 2002.                                                          
|       
|        | 10 | .23(10) |                      | Key Employee Stock Purchase Plan and forms of Agreement
    thereunder.                                                                                
|       
|        | 21  | .1      |                      | List of Subsidiaries.                                                                                                                                  
|       
|        | 23  | .1      |                      | Consent of Ernst & Young, LLP, Independent Registered
    Public Accounting Firm.                                                                      
|       
|        | 31  | .1      |                      | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002 for Richard L. Federico.
|       
|        | 31  | .2      |                      | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002 for Kristina K. Cashman.
|       
|        | 32  | .1      |                      | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 for Richard L. Federico.
|       
|        | 32  | .2      |                      | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 for Kristina K. Cashman.






| |   |                                         
| | - | ----------------------------------------
| |  | Management Contract or Compensatory Plan



|    |                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q dated April 25, 2002.     
|   
|(2) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q dated October 24, 2001.   
|   
|(3) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (File No. 333-59749).
|   
|(4) | Incorporated by reference to the Registrants
    Form 10-K dated March 3, 2000.                          
|   
|(5) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K dated March 6, 2001.         
|   
|(6) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K dated February 19, 2002.     
|   
|(7) | Incorporated by reference to the Registrants
    Form 10-Q, dated April 1, 2001.                         
|   
|(8) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q dated October 23, 2002.   
|   
|(9) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K dated February 12, 2003.     



|     |                                                                                  
|---- | ---------------------------------------------------------------------------------
|(10) | Incorporated by reference to the Registrants Form S-8
    dated January 31, 2005

65



---



##### Table of Contents






SIGNATURES






| |                                    
| | -----------------------------------
| | P.F. CHANGS CHINA
    BISTRO, INC.



| |     |                        
| | --- | -----------------------
| | By: | /s/ RICHARD L. FEDERICO

| |                                     
| | ------------------------------------
| |                                     
| | Richard L. Federico                 
| | Chairman and Chief Executive Officer

POWER OF ATTORNEY






|          |  |                                                    |  |                                                                                  |  |              
|--------- |  | -------------------------------------------------- |  | -------------------------------------------------------------------------------- |  | -------------
|Signature |  | Title                                              |  | Date                                                                            
|          |  |                                                    |  |                                                                                 
|         
|By:       |  | /s/ RICHARD L. FEDERICORichard
    L. Federico     |  | Chairman, Chief Executive Officer and Director (Principal
    Executive Officer) |  | April 1, 2005
|         
|By:       |  | /s/ KRISTINA CASHMANKristina
    Cashman           |  | Chief Financial Officer and Secretary
    (Principal Accounting Officer)         |  | April 1, 2005
|         
|By:       |  | /s/ KENNETH J. WESSELSKenneth
    J. Wessels       |  | Director                                                                         |  | April 1, 2005
|         
|By:       |  | /s/ R. MICHAEL WELBORNR.
    Michael Welborn       |  | Director                                                                         |  | April 1, 2005
|         
|By:       |  | /s/ JAMES G. SHENNAN, JR.James
    G. Shennan, Jr. |  | Director                                                                         |  | April 1, 2005
|         
|By:       |  | /s/ F. LANE CARDWELL, JR.F.
    Lane Cardwell, Jr. |  | Director                                                                         |  | April 1, 2005

66



---



##### Table of Contents



|          |  |                                      |  |          |  |              
|--------- |  | ------------------------------------ |  | -------- |  | -------------
|Signature |  | Title                                |  | Date    
|          |  |                                      |  |         
|         
|By:       |  | /s/ M. ANN RHOADESM.
    Ann Rhoades |  | Director |  | April 1, 2005
|         
|By:       |  | /s/ LESLEY H. HOWELesley
    H. Howe |  | Director |  | April 1, 2005

67



---



##### Table of Contents






EXHIBIT INDEX


|        |     |                      |  |                                                                                                                                                        
|------- | --- | -------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |                     
|Number  |     | Description Document
|        |     |                     
|        | 3   | .1(1)                |  | Amended and Restated Certificate of Incorporation.                                                                                                     
|       
|        | 3   | .2(2)                |  | Amended and Restated By-laws.                                                                                                                          
|       
|        | 4   | .1(3)                |  | Specimen Common Stock Certificate.                                                                                                                     
|       
|        | 4   | .2(3)                |  | Amended and Restated Registration Rights Agreement dated
    May 1, 1997.                                                                              
|       
|        | 10 | .1(3)                |  | Form of Indemnification Agreement for directors and executive
    officers.                                                                            
|       
|        | 10 | .2(3)                |  | 1998 Stock Option Plan and forms of agreement thereunder.                                                                                              
|       
|        | 10 | .3(3)                |  | 1997 Restaurant Manager Stock Option Plan and forms of Agreement
    thereunder.                                                                       
|       
|        | 10 | .4(3)                |  | 1996 Stock Option Plan and forms of Agreement thereunder.                                                                                              
|       
|        | 10 | .5(3)                |  | 1998 Employee Stock Purchase Plan.                                                                                                                     
|       
|        | 10 | .6(3)                |  | Employment Agreement between Paul M. Fleming and the Company
    dated January 1, 1996, as amended September 2, 1998.                                  
|       
|        | 10  | .11(4)               |  | Office Lease between the Company and PHXAZ-Kierland Commons,LLC,
    dated September 17, 1999.                                                         
|       
|        | 10 | .13(5)               |  | 1999 Nonstatutory Stock Option Plan.                                                                                                                   
|       
|        | 10  | .15(6)               |  | First Amendment to Office Lease between the Company and
    PHXAZ-Kierland Commons, LLC, dated August 22, 2001.                                        
|       
|        | 10  | .16(7)               |  | Common Stock Purchase Agreement dated January 11, 2001.                                                                                                
|       
|        | 10 | .17(6)               |  | Pei Wei Asian Diner, Inc. 2001 Stock Option Plan.                                                                                                      
|       
|        | 10 | .18(8)               |  | Employment Agreement between Richard L. Federico and the Company
    dated August 3, 2002.                                                             
|       
|        | 10 | .19(8)               |  | Employment Agreement between Robert T. Vivian and the Company
    dated August 2, 2002.                                                                
|       
|        | 10 | .20(8)               |  | Employment Agreement by and among Russell Owens, Pei Wei Asian
    Diner, Inc. and the Company dated August 6, 2002.                                   
|       
|        | 10  | .21(9)               |  | Second Amendment to office lease between the Company and
    PHXAZ-Kierland Commons, LLC, dated November 12, 2002                                      
|       
|        | 10  | .22(9)               |  | Line of Credit Agreement between the Company and Bank of America
    dated December 20, 2002                                                           
|       
|        | 21  | .1                   |  | List of Subsidiaries.                                                                                                                                  
|       
|        | 23  | .1                   |  | Consent of Ernst & Young, LLP, Independent Registered
    Public Accounting Firm.                                                                      
|       
|        | 31  | .1                   |  | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002 for Richard L. Federico.
|       
|        | 31  | .2                   |  | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002 for Kristina K. Cashman.
|       
|        | 32  | .1                   |  | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 for Richard L. Federico.
|       
|        | 32  | .2                   |  | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 for Kristina K. Cashman.






| |   |                                         
| | - | ----------------------------------------
| |  | Management Contract or Compensatory Plan



|    |                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q dated April 25, 2002.     
|   
|(2) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q dated October 24, 2001.   
|   
|(3) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (File No. 333-59749).
|   
|(4) | Incorporated by reference to the Registrants
    Form 10-K dated March 3, 2000.                          
|   
|(5) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K dated March 6, 2001.         
|   
|(6) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K dated February 19, 2002.     
|   
|(7) | Incorporated by reference to the Registrants
    Form 10-Q, dated April 1, 2001.                         
|   
|(8) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q dated October 23, 2002.   
|   
|(9) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K dated February 12, 2003.     

68