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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------



|                                     |  |                                  
|------------------------------------ |  | ---------------------------------
|For the quarter ended March 29, 2009 |  | Commission file number 333-142081





SBARRO, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|NEW YORK                                                       |  | 11-2501939                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|401 Broad Hollow Road, Melville, New York                      |  | 11747-4714                          
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code: (631) 715-4100





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes   ̈    No   ̈

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

Large accelerated filer   ̈    Accelerated filer   ̈    Non-accelerated filer  x    Smaller
reporting company   ̈

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

The number of shares of Common Stock of the registrant outstanding as of May 13, 2009 was 100.







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SBARRO, INC.

FORM 10-Q INDEX



|                              |  |                                                                                       |  |      
|----------------------------- |  | ------------------------------------------------------------------------------------- |  | -----
|                              |  |                                                                                       |  | PAGES
|PART I. FINANCIAL INFORMATION |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Consolidated Financial Statements (unaudited):                                        |  |      
|                              |  |                                                                                      
|                              |  | Balance Sheets (unaudited)March 29, 2009 and December 28, 2008                       |  | 3-4  
|                              |  |                                                                                      
|                              |  | Statements of Operations (unaudited)Quarter ended March 29, 2009 and March 30, 2008  |  | 5    
|                              |  |                                                                                      
|                              |  | Statement of Shareholders Equity (unaudited)Quarter ended March 29, 2009            |  | 6    
|                              |  |                                                                                      
|                              |  | Statements of Cash Flows (unaudited)Quarter ended March 29, 2009 and March 30, 2008  |  | 7    
|                              |  |                                                                                      
|                              |  | Notes to Unaudited Consolidated Financial Statements                                  |  | 8    
|                              |  |                                                                                      
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 23   
|                              |  |                                                                                      
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 31   
|                              |  |                                                                                      
|Item 4T.                      |  | Controls and Procedures                                                               |  | 32   
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Legal Proceedings                                                                     |  | 33   
|                              |  |                                                                                      
|Item 1A.                      |  | Risk Factors                                                                          |  | 33   
|                              |  |                                                                                      
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 33   
|                              |  |                                                                                      
|Item 3.                       |  | Defaults Upon Senior Securities                                                       |  | 33   
|                              |  |                                                                                      
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                   |  | 33   
|                              |  |                                                                                      
|Item 5.                       |  | Other Information                                                                     |  | 33   
|                              |  |                                                                                      
|Item 6.                       |  | Exhibits                                                                              |  | 34   



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Part I  Financial Information

Item 1. Consolidated Financial Statements

SBARRO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

(UNAUDITED)

(In thousands)



|                                                                                                              |  |                |         |                   |   |        
|------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ----------------- | - | -------
|                                                                                                              |  | March 29, 2009 |         | December 28, 2008
|Current assets:                                                                                               |  |                |         |                   |   |        
|Cash and cash equivalents                                                                                     |  | $              | 17,848  |                   | $ | 38,286 
|Receivables, net of allowance for doubtful accounts of $498 and $446 at March 29, 2009 and December 28, 2008: |  |                |         |                   |   |        
|Franchise                                                                                                     |  |                | 3,679   |                   |   | 3,845  
|Other                                                                                                         |  |                | 3,468   |                   |   | 3,948  
|                                                                                                              |  |                |         |                   |   |        
|                                                                                                              |  |                | 7,147   |                   |   | 7,793  
|                                                                                                              |  |               
|Inventories                                                                                                   |  |                | 2,777   |                   |   | 3,083  
|Prepaid expenses                                                                                              |  |                | 2,233   |                   |   | 2,953  
|                                                                                                              |  |                |         |                   |   |        
|Total current assets                                                                                          |  |                | 30,005  |                   |   | 52,115 
|                                                                                                              |  |               
|Property and equipment, net                                                                                   |  |                | 64,157  |                   |   | 65,640 
|                                                                                                              |  |               
|Intangible assets:                                                                                            |  |                |         |                   |   |        
|Goodwill                                                                                                      |  |                | 201,460 |                   |   | 201,460
|Trademarks                                                                                                    |  |                | 195,000 |                   |   | 195,000
|Other intangible assets                                                                                       |  |                | 23,230  |                   |   | 23,539 
|                                                                                                              |  |               
|Deferred financing costs, net                                                                                 |  |                | 10,100  |                   |   | 8,934  
|Other assets                                                                                                  |  |                | 1,234   |                   |   | 1,080  
|                                                                                                              |  |                |         |                   |   |        
|Total assets                                                                                                  |  | $              | 525,186 |                   | $ | 547,768
|                                                                                                              |  |                |         |                   |   |        

See notes to unaudited consolidated financial statements.



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SBARRO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES & SHAREHOLDERS EQUITY
(DEFICIT)

(UNAUDITED)

(In thousands except share data)

(CONTINUED)



|                                                                                                                  |  |                |         |   |                   |   |         |  
|----------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                  |  | March 29, 2009 |         |   | December 28, 2008 |  
|Current liabilities:                                                                                              |  |                |         |   |                   |   |         |  
|Accounts payable                                                                                                  |  | $              | 7,172   |   |                   | $ | 11,621  |  
|Accrued expenses                                                                                                  |  |                | 21,888  |   |                   |   | 22,972  |  
|Accrued interest payable                                                                                          |  |                | 3,192   |   |                   |   | 7,291   |  
|Due to former shareholders                                                                                        |  |                | 714     |   |                   |   | 2,993   |  
|Insurance premium financing                                                                                       |  |                | 273     |   |                   |   | 1,087   |  
|Current portion of debt                                                                                           |  |                |        |   |                   |   | 3,958   |  
|                                                                                                                  |  |                |         |   |                   |   |         |  
|Total current liabilities                                                                                         |  |                | 33,239  |   |                   |   | 49,922  |  
|                                                                                                                  |  |               
|Deferred rent                                                                                                     |  |                | 5,434   |   |                   |   | 5,189   |  
|Deferred tax liability                                                                                            |  |                | 87,238  |   |                   |   | 87,238  |  
|Due to former shareholders                                                                                        |  |                | 11,043  |   |                   |   | 11,043  |  
|Long-term debt                                                                                                    |  |                | 339,962 |   |                   |   | 346,297 |  
|                                                                                                                  |  |               
|Commitments and contingencies                                                                                     |  |                |         |   |                   |   |         |  
|                                                                                                                  |  |               
|Shareholders equity:                                                                                             |  |                |         |   |                   |   |         |  
|Common stock                                                                                                      |  |                |         |   |                   |   |         |  
|Authorized 1,000 shares; $.01 par value issued and outstanding 100 shares at March 29, 2009 and December 28, 2008 |  |                |        |   |                   |   |        |  
|Additional paid-in capital                                                                                        |  |                | 133,000 |   |                   |   | 133,000 |  
|Additional paid-in capital warrants                                                                               |  |                | 6,340   |   |                   |   |        |  
|Currency translation adjustments                                                                                  |  |                | 141     |   |                   |   | 135     |  
|Advances to MidOcean SBR Holdings                                                                                 |  |                | (305    | ) |                   |   | (305    | )
|Accumulated deficit                                                                                               |  |                | (94,349 | ) |                   |   | (88,639 | )
|                                                                                                                  |  |                |         |   |                   |   |         |  
|Total shareholders equity                                                                                        |  |                | 44,827  |   |                   |   | 44,191  |  
|Noncontrolling interests                                                                                          |  |                | 3,443   |   |                   |   | 3,888   |  
|                                                                                                                  |  |                |         |   |                   |   |         |  
|Total shareholders equity, including noncontrolling interests                                                    |  |                | 48,270  |   |                   |   | 48,079  |  
|                                                                                                                  |  |                |         |   |                   |   |         |  
|Total liabilities and shareholders equity                                                                        |  | $              | 525,186 |   |                   | $ | 547,768 |  
|                                                                                                                  |  |                |         |   |                   |   |         |  

See notes to unaudited consolidated financial statements.



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SBARRO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands)



|                                                    |  |                                         |        |   |                                         |   |        |  
|--------------------------------------------------- |  | --------------------------------------- | ------ | - | --------------------------------------- | - | ------ | -
|                                                    |  | For the three monthsendedMarch 29, 2009 |        |   | For the three monthsendedMarch 30, 2008 |  
|Revenues:                                           |  |                                         |        |   |                                         |   |        |  
|Restaurant sales                                    |  | $                                       | 76,283 |   |                                         | $ | 79,753 |  
|Franchise related income                            |  |                                         | 3,299  |   |                                         |   | 3,485  |  
|                                                    |  |                                         |        |   |                                         |   |        |  
|Total revenues                                      |  |                                         | 79,582 |   |                                         |   | 83,238 |  
|Costs and expenses:                                 |  |                                         |        |   |                                         |   |        |  
|Cost of food and paper products                     |  |                                         | 15,498 |   |                                         |   | 17,382 |  
|Payroll and other employee benefits                 |  |                                         | 21,239 |   |                                         |   | 22,313 |  
|Other operating costs                               |  |                                         | 29,844 |   |                                         |   | 29,786 |  
|Other income, net                                   |  |                                         | (1,176 | ) |                                         |   | (1,219 | )
|Depreciation and amortization                       |  |                                         | 4,201  |   |                                         |   | 4,118  |  
|General and administrative                          |  |                                         | 8,567  |   |                                         |   | 7,235  |  
|Asset impairment, restaurant closings/remodels      |  |                                         | 714    |   |                                         |   | 167    |  
|                                                    |  |                                         |        |   |                                         |   |        |  
|Total costs and expenses, net                       |  |                                         | 78,887 |   |                                         |   | 79,782 |  
|                                                    |  |                                         |        |   |                                         |   |        |  
|Operating income                                    |  |                                         | 695    |   |                                         |   | 3,456  |  
|                                                    |  |                                         |        |   |                                         |   |        |  
|Other (expense) income:                             |  |                                         |        |   |                                         |   |        |  
|Interest expense                                    |  |                                         | (5,841 | ) |                                         |   | (7,736 | )
|Write-off of deferred financing costs               |  |                                         | (423   | ) |                                         |   |       |  
|Interest income                                     |  |                                         | 32     |   |                                         |   | 73     |  
|                                                    |  |                                         |        |   |                                         |   |        |  
|Net other expense                                   |  |                                         | (6,232 | ) |                                         |   | (7,663 | )
|                                                    |  |                                         |        |   |                                         |   |        |  
|Loss before income taxes and equity investments     |  |                                         | (5,537 | ) |                                         |   | (4,207 | )
|Income tax expense (benefit)                        |  |                                         | 104    |   |                                         |   | (1,829 | )
|                                                    |  |                                         |        |   |                                         |   |        |  
|Loss before equity investments                      |  |                                         | (5,641 | ) |                                         |   | (2,378 | )
|Loss from equity investments                        |  |                                         | (55    | ) |                                         |   | (150   | )
|                                                    |  |                                         |        |   |                                         |   |        |  
|Net loss                                            |  |                                         | (5,696 | ) |                                         |   | (2,528 | )
|Net income attributable to noncontrolling interests |  |                                         | (14    | ) |                                         |   | (223   | )
|                                                    |  |                                         |        |   |                                         |   |        |  
|Net loss attributable to Sbarro, Inc.               |  | $                                       | (5,710 | ) |                                         | $ | (2,751 | )
|                                                    |  |                                         |        |   |                                         |   |        |  

See notes to unaudited consolidated financial statements.



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SBARRO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

(UNAUDITED)

(In thousands except share data)



|                                                  |  |                 |  |                          |   |                                    |   |                                |  |   |                                      |  |   |                                     |   |                        |   |         |       |  |   |     |  |   |       |   |  |   |        |  
|------------------------------------------------- |  | --------------- |  | ------------------------ | - | ---------------------------------- | - | ------------------------------ |  | - | ------------------------------------ |  | - | ----------------------------------- | - | ---------------------- | - | ------- | ----- |  | - | --- |  | - | ----- | - |  | - | ------ | -
|                                                  |  | Common Stock    |  | Additionalpaid-incapital |   | Additionalpaid-incapital -warrants |   | Advances toMidOceanSBRHoldings |  |   | RetainedEarnings(AccumulatedDeficit) |  |   | AccumulatedOtherComprehensiveIncome |   | NoncontrollingInterest |   |         | Total | 
|                                                  |  | Number ofShares |  | Amount                   |   |                                    |   |                                |  |   |                                     
|Balance at December 28, 2008                      |  | 100             |  | $                        |  |                                    | $ | 133,000                        |  | $ |                                     |  | $ | (305                                | ) |                        | $ | (88,639 | )     |  | $ | 135 |  | $ | 3,888 |   |  | $ | 48,079 |  
|Components of comprehensive income:               |  |                 |  |                          |   |                                    |   |                                |  |   |                                      |  |   |                                     |   |                        |   |         |       |  |   |     |  |   |       |   |  |   |        |  
|Net (loss) income                                 |  |                 |  |                          |   |                                    |   |                               |  |   |                                     |  |   |                                    |   |                        |   | (5,710  | )     |  |   |    |  |   | 14    |   |  |   | (5,696 | )
|Currency translation adjustments                  |  |                 |  |                          |   |                                    |   |                               |  |   |                                     |  |   |                                    |   |                        |   |        |       |  |   | 6   |  |   | 14    |   |  |   | 20     |  
|                                                  |  |                 |  |                          |   |                                    |   |                                |  |   |                                      |  |   |                                     |   |                        |   |         |       |  |   |     |  |   |       |   |  |   |        |  
|Comprehensive income                              |  |                 |  |                          |   |                                    |   |                                |  |   |                                      |  |   |                                     |   |                        |   |         |       |  |   |     |  |   |       |   |  |   | (5,676 | )
|Additional paid-in capital warrants               |  |                 |  |                          |   |                                    |   |                               |  |   | 6,340                                |  |   |                                    |   |                        |   |        |       |  |   |    |  |   |      |   |  |   | 6,340  |  
|Capital contribution from noncontrolling interest |  |                 |  |                          |   |                                    |   |                               |  |   |                                     |  |   |                                    |   |                        |   |        |       |  |   |    |  |   | 170   |   |  |   | 170    |  
|Distribution of earnings                          |  |                 |  |                          |   |                                    |   |                               |  |   |                                     |  |   |                                    |   |                        |   |        |       |  |   |    |  |   | (418  | ) |  |   | (418   | )
|Short-term loan payment                           |  |                 |  |                          |   |                                    |   |                               |  |   |                                     |  |   |                                    |   |                        |   |        |       |  |   |    |  |   | (225  | ) |  |   | (225   | )
|                                                  |  |                 |  |                          |   |                                    |   |                                |  |   |                                      |  |   |                                     |   |                        |   |         |       |  |   |     |  |   |       |   |  |   |        |  
|Balance at March 29, 2009                         |  | 100             |  | $                        |  |                                    | $ | 133,000                        |  | $ | 6,340                                |  | $ | (305                                | ) |                        | $ | (94,349 | )     |  | $ | 141 |  | $ | 3,443 |   |  | $ | 48,270 |  
|                                                  |  |                 |  |                          |   |                                    |   |                                |  |   |                                      |  |   |                                     |   |                        |   |         |       |  |   |     |  |   |       |   |  |   |        |  

See notes to unaudited consolidated financial statements.



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SBARRO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)



|                                                                            |  |                                         |         |   |                                         |   |         |  
|--------------------------------------------------------------------------- |  | --------------------------------------- | ------- | - | --------------------------------------- | - | ------- | -
|                                                                            |  | For the three monthsendedMarch 29, 2009 |         |   | For the three monthsendedMarch 30, 2008 |  
|Operating Activities:                                                       |  |                                         |         |   |                                         |   |         |  
|Net loss                                                                    |  | $                                       | (5,696  | ) |                                         | $ | (2,528  | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                                         |         |   |                                         |   |         |  
|Depreciation and amortization                                               |  |                                         | 4,201   |   |                                         |   | 4,118   |  
|Amortization of deferred financing costs                                    |  |                                         | 308     |   |                                         |   | 275     |  
|Increase in deferred rent, net of tenant allowance                          |  |                                         | 431     |   |                                         |   | 252     |  
|Asset impairment and restaurant closings/remodels                           |  |                                         | 341     |   |                                         |   | 167     |  
|Change in deferred income taxes, net                                        |  |                                         |        |   |                                         |   | (1,917  | )
|Write-off of deferred financing costs                                       |  |                                         | 423     |   |                                         |   |        |  
|Equity in net loss of unconsolidated affiliates                             |  |                                         | 55      |   |                                         |   | 150     |  
|Changes in operating assets and liabilities                                 |  |                                         |         |   |                                         |   |         |  
|Decrease (increase) in receivables                                          |  |                                         | 646     |   |                                         |   | (151    | )
|Decrease in inventories                                                     |  |                                         | 306     |   |                                         |   | 148     |  
|(Increase) decrease in prepaid expenses                                     |  |                                         | (94     | ) |                                         |   | 1,061   |  
|Increase in other assets                                                    |  |                                         | (67     | ) |                                         |   | (25     | )
|Decrease in accounts payable, accrued expenses & other liabilities          |  |                                         | (8,455  | ) |                                         |   | (7,659  | )
|Decrease in accrued interest payable                                        |  |                                         | (4,099  | ) |                                         |   | (3,894  | )
|                                                                            |  |                                         |         |   |                                         |   |         |  
|Net cash used in operating activities                                       |  |                                         | (11,700 | ) |                                         |   | (10,003 | )
|                                                                            |  |                                         |         |   |                                         |   |         |  
|                                                                            |  |                                        
|Investing Activities:                                                       |  |                                         |         |   |                                         |   |         |  
|Purchases of property and equipment                                         |  |                                         | (2,679  | ) |                                         |   | (3,623  | )
|Purchase of franchises and other locations                                  |  |                                         |        |   |                                         |   | (425    | )
|Investment in joint ventures                                                |  |                                         | (130    | ) |                                         |   | (260    | )
|                                                                            |  |                                         |         |   |                                         |   |         |  
|Net cash used in investing activities                                       |  |                                         | (2,809  | ) |                                         |   | (4,308  | )
|                                                                            |  |                                         |         |   |                                         |   |         |  
|                                                                            |  |                                        
|Financing Activities:                                                       |  |                                         |         |   |                                         |   |         |  
|Proceeds from second lien                                                   |  |                                         | 25,000  |   |                                         |   |        |  
|Debt issue costs                                                            |  |                                         | (1,498  | ) |                                         |   |        |  
|Repayment of secured term loan and revolver                                 |  |                                         | (28,958 | ) |                                         |   | (458    | )
|Capital contribution from noncontrolling interests                          |  |                                         | 170     |   |                                         |   |        |  
|Repayment of short term loan to noncontrolling interests                    |  |                                         | (225    | ) |                                         |   |        |  
|Distribution of earnings to noncontrolling interests                        |  |                                         | (418    | ) |                                         |   | (654    | )
|                                                                            |  |                                         |         |   |                                         |   |         |  
|Net cash used in financing activities                                       |  |                                         | (5,929  | ) |                                         |   | (1,112  | )
|                                                                            |  |                                         |         |   |                                         |   |         |  
|                                                                            |  |                                        
|Decrease in cash and cash equivalents                                       |  |                                         | (20,438 | ) |                                         |   | (15,423 | )
|Cash and cash equivalents at beginning of period                            |  |                                         | 38,286  |   |                                         |   | 28,867  |  
|                                                                            |  |                                         |         |   |                                         |   |         |  
|Cash and cash equivalents at end of period                                  |  | $                                       | 17,848  |   |                                         | $ | 13,444  |  
|                                                                            |  |                                         |         |   |                                         |   |         |  

See notes to unaudited consolidated financial statements



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SBARRO INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

1. Description of business:

Basis of financial statement presentation:

On January 31, 2007, entities controlled by MidOcean Partners III, LP, a private equity firm, and certain of its affiliates (MidOcean) acquired the Company, pursuant to an
agreement and plan of merger (Merger Agreement). MidOcean SBR Acquisition Corp., a wholly-owned subsidiary of Sbarro Holdings, LLC, merged with and into the Company (the Merger), with the Company surviving the Merger. Sbarro
Holdings, LLC is a wholly-owned subsidiary of MidOcean SBR Holdings, LLC (Holdings). Sbarro Holdings, LLC owns 100% of our outstanding common stock and Holdings owns 100% of the limited liability company interests of Sbarro Holdings,
LLC.

MidOcean owns approximately 76% of Holdings and thus acquired control of the Company in the Merger. Certain of our senior managers
acquired approximately 5% of the outstanding equity of Holdings in connection with the Merger, with the balance of the equity of Holdings being owned by other investors.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and Regulation S-X related to interim period financial statements and, therefore, do
not include all information and footnotes required by generally accepted accounting principles. However, in the opinion of our management, all adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair
presentation of the consolidated financial position of Sbarro and our subsidiaries at March 29, 2009, and our consolidated results of operations and cash flows for the three months ended March 29, 2009 have been included. The results of
operations for interim periods are not necessarily indicative of the results that may be expected for the entire year. Reference should be made to our annual financial statements, including footnotes thereto, included in our Annual Report on Form
10-K for the year ended December 28, 2008.

Liquidity

We are highly leveraged and a substantial portion of our liquidity needs arise from debt service on indebtedness incurred in connection with the Merger, and from funding our costs of operations, working capital and
capital expenditures. Cash flow generated during our fourth quarter is critical to achieving positive annual operating cash flow. Adverse macroeconomic factors, including reduced mall traffic during the holiday shopping season and a decline in
consumer spending among other factors, negatively impacted achieving our projected operating cash flow.

Our ability to borrow funds under
our revolver is subject to our compliance with our debt covenant requirements. Prior to the amendment to our Senior Credit Facilities, such covenants included a interest coverage ratio and a total net leverage ratio. As of year end, we were in
violation of our total net leverage ratio covenant under the credit agreement governing our Senior Facilities. On March 26, 2009, we entered into an amendment to the Senior Credit Facilities. The amendment permitted the Company to refinance a
portion of our Term Loan by entering into a new Second Lien Facility, permanently waived a breach of our total net leverage ratio covenant for the fiscal quarter ended December 28, 2008, replaced our total net leverage ratio covenant and
interest coverage ratio covenant with a minimum EBITDA covenant and a maximum capital expenditure covenant, increased the margin on our Term Loan and Revolving Facility by 200 basis points, required prepayment of $25.0 million of the Term Loan from
the proceeds of the Second Lien Facility, required prepayment of $3.5 million of the Revolving Facility from cash on hand and simultaneously reduced the Revolving Facilitys amount outstanding and commitment to $21.5 million, and restricted
payment of MidOceans annual management fee so that such fee will accrue but not be paid until the Companys EBITDA is at least $55.0 million and after such goal is obtained, a maximum of $2.0 million of such fees may be paid each year.
See note 3Long Term Debt for additional information regarding the amendment to the Senior Credit Facilities and the new Second Lien Facility.

In response to the economic downturn in 2008, we began to implement aggressive strategic initiatives to reduce costs and improve our liquidity. These initiatives, which will be on-going, include closing unprofitable stores, renegotiating
store lease terms, reducing headcount, revising our recipes without affecting our customers, as well as other expense controls. We believe these actions will enhance our liquidity going forward and will enable us to be in compliance with our debt
covenants under the amended credit agreement and that cash generated from operations, together with cash on hand and amounts available under the Senior Credit Facilities will be adequate to permit us to meet our debt service obligations, ongoing
costs of operations, working capital needs and capital expenditure requirements for at least the next year. Our future financial and operating performance, ability to service or refinance our debt and ability to comply with covenants and
restrictions contained in our debt agreements will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

Certain reclassifications have been made to the prior periods financial statements to conform to current classifications as a result of the Companys adoption of SFAS No. 160 as
discussed in Note 2 below.



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##### Table of Contents

SBARRO INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(Continued)



2. Recent Accounting Pronouncements:

SFAS 157:

In September 2006, FASB issued Statement SFAS No. 157, Fair Value
Measurements (SFAS No. 157). This statement defines fair value, establishes a framework for using fair value to measure assets and liabilities, and expands disclosures about fair value measurements. The statement applies
whenever other statements require or permit assets or liabilities to be measured at fair value. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. This statement does not require any new fair value measurements,
but rather applies to all other accounting pronouncements that require or permit fair value measurements. The FASB issued FASB 157-1 to exclude FASB Statement No. 13 and its related interpretive accounting pronouncements that address leasing
transactions. In October 2008, the FASB issued FSP 157-3 which clarifies the application of SFAS No. 157 in an inactive market and illustrates how an entity would determine fair value when the market for a financial asset is not active. We
adopted SFAS No. 157 which did not have a material effect on our consolidated financial statements.

SFAS 141 (R):

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (FAS 141(R)), which is effective for
annual periods beginning on or after December 15, 2008. In FAS 141(R), the FASB retained the fundamental requirements of Statement No. 141 to account for all business combinations using the acquisition method (formerly the purchase method)
and for an acquiring entity to be identified in all business combinations. However, the new standard requires the acquiring entity in a business combination to recognize the assets acquired and liabilities assumed in the transaction; establishes the
acquisition date for value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and
financial effect of the business combination. The Company will apply the provisions of this statement prospectively to business combinations for which the acquisition date is on or after December 29, 2008. We evaluated SFAS No. 141(R) and
did not have any business combinations; therefore, the adoption of SFAS 141 (R) on our consolidated financial statements had no impact.

SFAS 160:

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements  an
amendment to ARB No. 51 (SFAS No. 160) which is effective for fiscal years beginning on or after December 15, 2008. SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as
equity in the consolidated financial statements, but separate from the equity of the parent company. The statement further requires that consolidated net income be reported at amounts attributable to the parent and the noncontrolling interest,
rather than expensing the income attributable to the minority interest holder. This statement also requires that companies provide sufficient disclosures to clearly identify and distinguish between the interest of the parent company and the interest
of the noncontrolling interest holder. On December 29, 2009, we adopted SFAS 160 and now present noncontrolling interests as a component of equity, a separate net income attributable to/from noncontrolling interests and a classification of
distributions to/from noncontrolling interests in the consolidated financial statements. Prior period amounts have been reclassified to conform with the current presentation. The adoption of SFAS No. 160 did not have any other material impacts
on our consolidated financial statements.

SFAS 115-2:

In April 2009, the FASB issued SFAS 115-2, SFAS 124-2 and EITF 99-20-2, Recognition and Presentation of Other-Than-Temporary Impairments (SFAS 115-2). SFAS 115-2 provides new guidance on the
recognition and presentation of an other-than-temporary impairment for debt securities classified as available-for-sale and held-to-maturity and provides some new disclosure requirements for both debt and equity securities. SFAS 115-2 is effective
for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. We will adopt SFAS 115-2 in the second quarter of 2009. We do not expect the adoption will have a material
impact on our consolidated financial statements.

SFAS 157-4:

In April 2009, the FASB issued SFAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability has Significantly Decreased and Identifying Transactions that are Not
Orderly (SFAS 157-4). SFAS 157-4 provides additional guidance for estimating the fair value of assets and liabilities within the scope of SFAS No. 157 in markets that have experienced a significant reduction in volume and
activity in relation to normal activity. SFAS 157-4 is



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SBARRO INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(Continued)



effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. We will
adopt SFAS 157-4 in the second quarter of 2009. We do not expect the adoption will have a material impact on our consolidated financial statements.

SFAS 107-1:

In April 2009, the FASB issued SFAS 107-1 and APB 28-1, Interim Disclosures About Fair Value of Financial
Instruments (SFAS 107-1). SFAS 107-1 amends SFAS No. 107, Disclosures about Fair Values of Financial Instruments and Accounting Principles Board Opinion No. 28, Interim Financial Reporting, to
require disclosures about fair value of financial instruments in interim financial statements. SFAS 107-1 is effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.
We will adopt the disclosure requirements of SFAS 107-1 in the second quarter of 2009. We do not expect the adoption will have a material impact on our consolidated financial statements.

3. Long Term Debt:

Indenture:

In connection with the Merger, we issued $150.0 million of senior notes at 10.375% due 2015 (Senior Notes). The interest is payable on February 1 and August 1 of each year.

The Senior Notes are senior unsecured obligations of ours and are guaranteed by all of our current and future domestic subsidiaries and rank equally in
right of payment with all existing and future senior indebtedness of ours. The Senior Notes are effectively subordinated to all secured indebtedness of ours to the extent of the collateral securing such indebtedness, including the Senior Credit
Facilities and Second Lien Facility (both defined below). In the event of any distribution or payment of our assets in any foreclosure, dissolution, winding-up, liquidation, reorganization, or other bankruptcy proceeding, holders of secured
indebtedness will have prior claim to those of our assets that constitute their collateral. The Senior Notes are structurally subordinated to all existing and future indebtedness, claims of holders of preferred stock and other liabilities of our
subsidiaries that do not guarantee the Senior Notes. In the event of a bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries, holders of their indebtedness and their trade creditors will generally be entitled to payment
of their claims in full from the assets of those subsidiaries before any assets are made available for distribution to us. The Senior Notes are senior in right of payment to any future subordinated obligations of ours.

The indenture governing the notes contains certain events of default and restrictive covenants which are customary with respect to non-investment grade
debt securities, including limitations on the incurrence of additional indebtedness, dividends, repurchases of capital stock, sales of assets, liens, mergers and transactions with affiliates.

Senior Credit Facilities:

In connection with the
Merger, we entered into senior secured credit facilities. The senior secured credit facilities originally provided for loans of $208.0 million under a $183.0 million senior secured term loan facility (the Term Loan) and a $25.0 million
senior secured revolving facility (the Revolving Facility, and collectively with the Term Loan, the Senior Credit Facilities). The Revolving Facility also provides for the issuance of letters of credit not to exceed $10.0
million at any one time outstanding and swing-line loans not to exceed $5.0 million at any one time outstanding. In connection with the Merger, we borrowed the entire $183.0 million available under the Term Loan. On October 17, 2008 and
November 18, 2008, we borrowed $8.0 million and $12.0 million, respectively, under the Revolving Facility. The Term Loan matures in 2014 and the Revolving Facility is scheduled to terminate and come due in 2013.

On March 26, 2009, we entered into an amendment to the Senior Credit Facilities. The amendment permitted the Company to refinance a portion of the
Term Loan by entering into a new Second Lien Facility (defined and discussed below), permanently waived a breach of our total net leverage ratio covenant for the fiscal quarter ended December 28, 2008, permanently replaced our total net
leverage ratio covenant and interest coverage ratio covenant with a minimum EBITDA covenant and a maximum capital expenditure covenant, increased the margin on our Term Loan and Revolving Facility by 200 basis points, required prepayment of $25.0
million of the Term Loan from the proceeds of the Second Lien Facility, required prepayment of $3.5 million of the Revolving Facility from cash on hand and simultaneously reduced the Revolving Facilitys amount outstanding and commitment to
$21.5 million, and restricted payment of MidOceans annual management fee so that such fee will accrue but not be paid until the Companys EBITDA is at least $55.0 million and after such goal is obtained, a maximum of $2.0 million of such
fees may be paid each year. In the first quarter of 2009, we wrote off



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SBARRO INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(Continued)



$.4 million of deferred financing costs related to the prepayment of the Term Loan. There were $3.6 million of letters of credit outstanding as of
March 29, 2009. The letters of credit were issued instead of cash security deposits under our operating leases or to guarantee construction costs of our locations, and for run-out claims under our medical plan. As a result, as of March 29,
2009, our remaining borrowing availability under the Senior Credit Facilities was $1.4 million.

In general, borrowings under the Senior
Credit Facilities bear interest based, at our option, at either the Eurodollar rate or an alternate base rate (ABR), in each case plus a margin. Our rate of interest for borrowings under the Senior Credit Facilities, as amended, is LIBOR
plus 4.50% or ABR plus 3.50%. In addition to paying interest on outstanding principal under the Senior Credit Facilities, we are required to pay an unused line fee to the lenders with respect to the unutilized revolving commitments at a rate that
shall not exceed 50 basis points per annum.

Our obligations under the Senior Credit Facilities are unconditionally and irrevocably
guaranteed by our domestic subsidiaries. In addition, the Senior Credit Facilities are secured by first priority perfected security interests in substantially all of our and our domestic subsidiaries capital stock, and up to 65% of the
outstanding capital stock of our foreign subsidiaries.

The credit agreement governing the Senior Credit Facilities contains certain events
of default and restrictive covenants which are customary with respect to facilities of this type, including limitations on the incurrence of additional indebtedness, dividends, investments, repayment of certain indebtedness, sales of assets, liens,
mergers and transactions with affiliates. In addition, the credit agreement, as amended, requires compliance with certain financial and operating covenants, including a minimum EBITDA covenant and a maximum capital expenditure covenant.

Second Lien Facility

On March 26, 2009, we
entered into a new Second Lien Facility. The Second Lien Facility provides for a $25.5 million secured term loan facility. The loan under the Second Lien Facility was made by Column Investments S.a.r.l., an affiliate of MidOcean. In connection with
closing the Second Lien Facility, we borrowed the entire $25.5 million available under the facility which provided for cash proceeds of $25.0 million (representing a 1.96% discount). The Second Lien Facility matures in 2014.

Borrowings under the Second Lien Facility bears interest at 15% per annum payable quarterly in arrears. The Second Lien Facility requires no
principal payments until maturity. Interest is payable quarterly as follows: (i) prior to the third anniversary, interest is only payable in kind and (ii) after the third anniversary, interest is payable in cash so long as the Senior
Credit Facilities leverage ratio is less than or equal to 2.75:1.00.

Our obligations under the Second Lien Facility are unconditionally
and irrevocably guaranteed by our domestic subsidiaries. In addition, the Second Lien Facility is secured by a second priority perfected security interest in substantially all of our and our domestic subsidiaries capital stock, and up to 65%
of the outstanding capital stock of our foreign subsidiaries.

The credit agreement governing the Second Lien Facility contains certain
events of default and restrictive covenants which are customary with respect to facilities of this type, including limitations on the incurrence of indebtedness, dividends, investments, prepayment of certain indebtedness, sales of assets, liens,
mergers and transactions with affiliates. In addition, the credit agreement contains (i) cross-acceleration provisions tied to the Senior Credit Facilities and cross-default provisions tied to the Senior Notes and (ii) compliance with
certain financial and operating covenants, including a minimum EBITDA covenant and a maximum capital expenditure covenant, which are based on the covenants contained in the Senior Credit Facilities with less restrictive thresholds by approximately
15%. The credit agreement also contains a make-whole provision for any prepayment prior to the scheduled maturity date.

In connection with
the closing of the Second Lien Facility, Holdings issued immediately exercisable warrants to certain MidOcean entities to acquire 5% of Holdings Units issued and outstanding on the dates of exercise. The fair value of the warrants issued in
connection with the credit agreement governing the Second Lien Facility was $6.3 million and was recorded as paid-in capital with the offset recorded as a discount on the Second Lien Facility.

In connection with the amendment to the Senior Credit Facilities and entry into the new Second Lien Facility, we recorded deferred financing costs of $2.3 million. Long-term debt of $16.5 million
is scheduled to mature in 2013 and $330.3 million is scheduled to mature in 2014 and thereafter.



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SBARRO INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(Continued)



4. Income Taxes:

We provide for income taxes using the liability method. Deferred taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting and income tax
purposes as determined under enacted tax laws and rates. The effect of changes in tax laws or rates is accounted for in the period of enactment.

We adopted the provisions of FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes  An Interpretation of FASB 109 (FIN 48). FIN 48 prescribes a recognition threshold and a related
measurement model. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by the taxing authorities. The adoption of the provisions of FIN 48 did not have a material impact on our
consolidated financial statements and we do not expect the change to have a significant impact on our results of operations or financial position during the next twelve months.

In assessing the realizability of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will be realized. Ultimately,
the realization of the deferred tax asset is dependent upon the generation of sufficient future taxable income during those periods in which temporary differences become deductible and/or net operating loss and tax credit carryforwards can be
utilized. Management considers the level of historical taxable income, scheduled reversal of taxable temporary differences, projected future taxable income and impairment of other assets.

Based on these considerations and the uncertainty surrounding the future economic climate, management believes that it is more likely than not that our net operating loss carryforward, foreign
tax credit carryforward, and other deferred tax assets will not be realized. In the first quarter 2009, we recorded an addition to our valuation allowance against these deferred tax assets of $2.0 million. The balance of the valuation allowance as
of March 29, 2009 was $37.0 million.

5. Fair Value Measurement

SFAS No. 157 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent
sources, while unobservable inputs reflect our market assumptions. These two types of inputs create the following fair value hierarchy:



| |  |  | Level 1  Quoted prices for identical instruments in active markets.
| | - |  | --------------------------------------------------------------------



| |  |  | Level 2  Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and
model-derived valuations in which all significant inputs are observable in active markets.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------

In addition, SFAS No. 157 requires disclosures about the use of fair value to measure assets and liabilities to
enable the assessment of inputs used to develop fair value measures, and for unobservable inputs to determine the effects of the measurements on earnings.

The fair values of cash and cash equivalents, accounts receivables-net, and accounts payable approximate carrying amounts because of the short maturities of these instruments.

Based on the quoted market price and trades, the estimated fair value of our Senior Notes as of March 29, 2009 approximated $56 million. Fair value
of the Senior Credit Facility was obtained from an independent source of composite bid prices from multiple dealers (level 2 input) and approximated $103 million as of March 29, 2009. Fair value of the Second Lien Facility is assumed to
approximate the $25.5 million value of Second Lien Facility entered into on March 26, 2009. Fair value of the warrants issued in connection with the credit agreement governing the Second Lien Facility was $6.3 million. Fair value was determined
by calculating the enterprise value less the fair value of the debt less a marketability discount of 20%. The fair value of the enterprise was determined by using a weighted average approach of 25% each of two different level 2 inputs and 50% of one
level 3 input. The level 2 inputs were the Guideline Company Approach and Guideline Transaction Approach. Both of these approaches utilize observable market inputs or transactions which can be validated through external sources, including
third-party pricing services, brokers and market transactions, to calculate the business enterprise value.



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SBARRO INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(Continued)



The Level 3 fair value was determined using the income approach (discounted cash flow). Under the
discounted cash flow approach, we determined fair value based on estimated future cash flows discounted at a rate commensurate with the Companys risk characteristics of a reporting unit. Determining the fair value of a reporting unit is
judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and operating margins, discount rates and future market conditions, among others. Solely for purposes of establishing inputs for the
fair value calculations described above related to determining the fair value of the warrants, we assumed that the current economic downturn would continue through second quarter 2009 with slight improvements in the second half of 2009, followed by
moderate growth in future years consistent with our growth prior to the recent downturn in the economy. We applied gross margin assumptions consistent with the Companys current trends and used a 15% discount rate.

The fair value of our debt on the transaction date was established in a manner consistent with that used to determine the fair value on the reporting
date for disclosure purposes.

6. Business Segment Information:

We operate our business through two segments. Our company-owned restaurant segment is comprised of the operating activities of our company-owned QSRs and other concept restaurants. Our franchise restaurant
segment is comprised of our franchised restaurants which offer opportunities worldwide for qualified operators to conduct business under the Sbarro name and other trade names owned by Sbarro. Revenue from our franchised restaurant segment is
generated from initial franchise fees, ongoing royalties and other franchising revenue. We do not allocate indirect corporate charges to our operating segments. Such costs are managed on an entity-wide basis, and the information to reasonably
allocate such costs is not readily available. We do not allocate assets by segment because our chief operating decision makers do not review the assets by segment to assess performance, as the assets are managed on an entity-wide basis. Our
operating segments are discussed inNote 1Summary of Significant Accounting Policies and Note 13Business Segment Information to ourConsolidated Financial Statementsincluded in our Annual Report on Form 10-K for the year
ended December 28, 2008.

The following table sets forth the information concerning the revenue and operating income before
unallocated costs of each of our company-owned and franchised restaurant segments:



|                                          |  |                          |        |                       |   |        |  |   |       
|----------------------------------------- |  | ------------------------ | ------ | --------------------- | - | ------ |  | - | ------
|                                          |  | Company-OwnedRestaurants |        | FranchisedRestaurants |   | Totals
|                                          |  | (In thousands)          
|1stQuarter 2009                           |  |                          |        |                       |   |        |  |   |       
|Total revenue                             |  | $                        | 76,283 |                       | $ | 3,299  |  | $ | 79,582
|                                          |  |                          |        |                       |   |        |  |   |       
|Operating income before unallocated costs |  |                          | 5,965  |                       |   | 2,099  |  |   | 8,064 
|                                          |  |                          |        |                       |   |        |  |   |       
|Unallocated costs and expenses(1)         |  |                          |        |                       |   |        |  |   | 7,369 
|                                          |  |                          |        |                       |   |        |  |   |       
|Operating income                          |  |                          |        |                       |   |        |  | $ | 695   
|                                          |  |                          |        |                       |   |        |  |   |       
|1stQuarter 2008                           |  |                          |        |                       |   |        |  |   |       
|Total revenue                             |  | $                        | 79,753 |                       | $ | 3,485  |  | $ | 83,238
|                                          |  |                          |        |                       |   |        |  |   |       
|Operating income before unallocated costs |  |                          | 7,207  |                       |   | 2,181  |  |   | 9,388 
|                                          |  |                          |        |                       |   |        |  |   |       
|Unallocated costs and expenses(1)         |  |                          |        |                       |   |        |  |   | 5,932 
|                                          |  |                          |        |                       |   |        |  |   |       
|Operating income                          |  |                          |        |                       |   |        |  | $ | 3,456 
|                                          |  |                          |        |                       |   |        |  |   |       



|(1) | Represents certain general and administrative expenses that are not allocated by segment.
|--- | -----------------------------------------------------------------------------------------

Geographic Information

The Company recorded revenues of $77.8 million and $1.8 million and $81.4
million and $1.8 million in the United States and all other foreign countries in the first quarter of 2009 and the first quarter of 2008, respectively.



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SBARRO INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(Continued)



7. Guarantor and non-guarantor financial statements:

Certain subsidiaries have guaranteed amounts outstanding under our credit facilities. Each of the guaranteeing subsidiaries is a direct or indirect wholly-owned subsidiary of the Company and each
has fully and unconditionally guaranteed the Senior Notes, the Senior Credit Facilities, and the Second Lien Facility on a joint and several basis.

The following condensed consolidating financial information presents:



| | (1) | Condensed unaudited consolidating balance sheets as of March 29, 2009 and December 28, 2008 and unaudited statements of operations and cash flows for
the three months ended March 29, 2009 and March 30, 2008: (a) Sbarro, (the Parent), (b) the guarantor subsidiaries as a group, (c) the nonguarantor subsidiaries as a group, and (d) Sbarro on a consolidated
basis.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Elimination entries necessary to consolidate the Parent with the guarantor and nonguarantor subsidiaries.
| | --- | ---------------------------------------------------------------------------------------------------------

The principal elimination entries eliminate intercompany balances and transactions. Investments in subsidiaries are accounted for by the Parent on the
cost method.



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##### Table of Contents

SBARRO, INC. AND SUBSIDIARIES

Notes To Unaudited Consolidated Financial Statements

Consolidating Balance
Sheet

As of March 29, 2009

ASSETS

(In thousands)

(Continued)



|                              |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|----------------------------- |  | ------ | ------- | - | --------------------- | - | ------------------------ |  | - | ------------ | - |  | ----------------- | ------- | - |  | - | -------
|                              |  | Parent |         |   | GuarantorSubsidiaries |   | NonguarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedTotal
|Current assets:               |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|                              |  |        |         |   |                      
|Cash and cash equivalents     |  | $      | 15,819  |   |                       | $ | 1,616                    |  | $ | 413          |   |  | $                 |        |   |  | $ | 17,848 
|Receivables                   |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|Franchise                     |  |        | 3,679   |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   | 3,679  
|Other                         |  |        | 2,798   |   |                       |   | 600                      |  |   | 558          |   |  |                   | (488    | ) |  |   | 3,468  
|                              |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|                              |  |        | 6,477   |   |                       |   | 600                      |  |   | 558          |   |  |                   | (488    | ) |  |   | 7,147  
|Inventories                   |  |        | 1,100   |   |                       |   | 1,544                    |  |   | 133          |   |  |                   |        |   |  |   | 2,777  
|Prepaid expenses              |  |        | 1,653   |   |                       |   | 520                      |  |   | 60           |   |  |                   |        |   |  |   | 2,233  
|                              |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|Total current assets          |  |        | 25,049  |   |                       |   | 4,280                    |  |   | 1,164        |   |  |                   | (488    | ) |  |   | 30,005 
|                              |  |        |         |   |                      
|Intercompany receivables      |  |        | (28,177 | ) |                       |   | 29,752                   |  |   | (1,995       | ) |  |                   | 420     |   |  |   |       
|                              |  |        |         |   |                      
|Investment in subsidiaries    |  |        | 64,899  |   |                       |   |                         |  |   | 1,240        |   |  |                   | (66,139 | ) |  |   |       
|                              |  |        |         |   |                      
|Property and equipment, net   |  |        | 23,091  |   |                       |   | 40,307                   |  |   | 989          |   |  |                   | (230    | ) |  |   | 64,157 
|Goodwill                      |  |        | 201,460 |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   | 201,460
|Trademarks                    |  |        | 195,000 |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   | 195,000
|Other intangible assets       |  |        | 23,230  |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   | 23,230 
|Deferred financing costs, net |  |        | 10,100  |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   | 10,100 
|Other assets                  |  |        | 1,295   |   |                       |   | 183                      |  |   | 473          |   |  |                   | (717    | ) |  |   | 1,234  
|                              |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|Total assets                  |  | $      | 515,947 |   |                       | $ | 74,522                   |  | $ | 1,871        |   |  | $                 | (67,154 | ) |  | $ | 525,186
|                              |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        



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##### Table of Contents

SBARRO, INC. AND SUBSIDIARIES

Notes To Unaudited Consolidated Financial Statements

Consolidating Balance
Sheet

As of March 29, 2009

LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)

(In thousands)

(Continued)



|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|------------------------------------------------------------------------------ |  | ------ | ------- | - | --------------------- | - | ------ | ------------------------ |  | - | ------------ | - |  | ----------------- | ------- | - |  | - | ------- | -
|                                                                               |  | Parent |         |   | GuarantorSubsidiaries |   |        | NonguarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedTotal |        
|Current liabilities:                                                           |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Accounts payable                                                               |  | $      | 6,902   |   |                       | $ | 155    |                          |  | $ | 115          |   |  | $                 |        |   |  | $ | 7,172   |  
|Accrued expenses                                                               |  |        | 20,318  |   |                       |   | 1,632  |                          |  |   | 1,069        |   |  |                   | (1,131  | ) |  |   | 21,888  |  
|Accrued interest payable                                                       |  |        | 3,192   |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 3,192   |  
|Due to former shareholders                                                     |  |        | 714     |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 714     |  
|Insurance premium financing                                                    |  |        | 273     |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 273     |  
|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Total current liabilities                                                      |  |        | 31,399  |   |                       |   | 1,787  |                          |  |   | 1,184        |   |  |                   | (1,131  | ) |  |   | 33,239  |  
|                                                                               |  |        |         |   |                      
|Deferred rent                                                                  |  |        | 380     |   |                       |   | 5,054  |                          |  |   |             |   |  |                   |        |   |  |   | 5,434   |  
|Deferred tax liability                                                         |  |        | 87,238  |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 87,238  |  
|Due to former shareholders                                                     |  |        | 11,352  |   |                       |   | (309   | )                        |  |   |             |   |  |                   |        |   |  |   | 11,043  |  
|Long-term debt                                                                 |  |        | 339,962 |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 339,962 |  
|                                                                               |  |        |         |   |                      
|Shareholders equity:                                                          |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Common stock, $.01 par value, 1000 shares authorized, 100 issued & outstanding |  |        |        |   |                       |   |       |                          |  |   | 183          |   |  |                   | (183    | ) |  |   |        |  
|Additional paid-in capital                                                     |  |        | 133,000 |   |                       |   | 68,301 |                          |  |   | 834          |   |  |                   | (69,135 | ) |  |   | 133,000 |  
|Additional paid-in capital warrants                                            |  |        | 6,340   |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 6,340   |  
|Currency translation adjustments                                               |  |        | 141     |   |                       |   |       |                          |  |   | 215          |   |  |                   | (215    | ) |  |   | 141     |  
|Advances to MidOcean SBR Holdings                                              |  |        | (305    | ) |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | (305    | )
|(Accumulated deficit) retained earnings                                        |  |        | (94,349 | ) |                       |   | (2,212 | )                        |  |   | (1,298       | ) |  |                   | 3,510   |   |  |   | (94,349 | )
|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Total shareholders equity                                                     |  |        | 44,827  |   |                       |   | 66,089 |                          |  |   | (66          | ) |  |                   | (66,023 | ) |  |   | 44,827  |  
|Noncontrolling interest                                                        |  |        | 789     |   |                       |   | 1,901  |                          |  |   | 753          |   |  |                   |        |   |  |   | 3,443   |  
|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Total shareholders equity, including noncontrolling interests                 |  |        | 45,616  |   |                       |   | 67,990 |                          |  |   | 687          |   |  |                   | (66,023 | ) |  |   | 48,270  |  
|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Total liabilities and shareholders equity                                     |  | $      | 515,947 |   |                       | $ | 74,522 |                          |  | $ | 1,871        |   |  | $                 | (67,154 | ) |  | $ | 525,186 |  
|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  



16



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##### Table of Contents

SBARRO, INC. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

Consolidating Balance Sheet

As of December 28, 2008

ASSETS

(In thousands)

(Continued)



|                              |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|----------------------------- |  | ------ | ------- | - | --------------------- | - | ------------------------ |  | - | ------------ | - |  | ----------------- | ------- | - |  | - | -------
|                              |  | Parent |         |   | GuarantorSubsidiaries |   | NonguarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedTotal
|Current assets:               |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|                              |  |        |         |   |                      
|Cash and cash equivalents     |  | $      | 34,249  |   |                       | $ | 3,468                    |  | $ | 569          |   |  | $                 |        |   |  | $ | 38,286 
|Receivables                   |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|Franchise                     |  |        | 3,845   |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   | 3,845  
|Other                         |  |        | 3,346   |   |                       |   | 531                      |  |   | 442          |   |  |                   | (371    | ) |  |   | 3,948  
|                              |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|                              |  |        | 7,191   |   |                       |   | 531                      |  |   | 442          |   |  |                   | (371    | ) |  |   | 7,793  
|Inventories                   |  |        | 1,243   |   |                       |   | 1,720                    |  |   | 120          |   |  |                   |        |   |  |   | 3,083  
|Prepaid expenses              |  |        | 2,050   |   |                       |   | 590                      |  |   | 313          |   |  |                   |        |   |  |   | 2,953  
|Deferred tax asset            |  |        |        |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   |       
|                              |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|Total current assets          |  |        | 44,733  |   |                       |   | 6,309                    |  |   | 1,444        |   |  |                   | (371    | ) |  |   | 52,115 
|                              |  |        |         |   |                      
|Intercompany receivables      |  |        | (27,269 | ) |                       |   | 28,887                   |  |   | (2,038       | ) |  |                   | 420     |   |  |   |       
|                              |  |        |         |   |                      
|Investment in subsidiaries    |  |        | 66,447  |   |                       |   |                         |  |   |             |   |  |                   | (66,447 | ) |  |   |       
|                              |  |        |         |   |                      
|Property and equipment, net   |  |        | 24,199  |   |                       |   | 40,685                   |  |   | 986          |   |  |                   | (230    | ) |  |   | 65,640 
|Goodwill                      |  |        | 201,460 |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   | 201,460
|Trademarks                    |  |        | 195,000 |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   | 195,000
|Other intangible assets       |  |        | 23,539  |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   | 23,539 
|Deferred financing costs, net |  |        | 8,934   |   |                       |   |                         |  |   |             |   |  |                   |        |   |  |   | 8,934  
|Other assets                  |  |        | 1,080   |   |                       |   | 183                      |  |   | 1,479        |   |  |                   | (1,662  | ) |  |   | 1,080  
|                              |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        
|Total assets                  |  | $      | 538,123 |   |                       | $ | 76,064                   |  | $ | 1,871        |   |  | $                 | (68,290 | ) |  | $ | 547,768
|                              |  |        |         |   |                       |   |                          |  |   |              |   |  |                   |         |   |  |   |        



17



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##### Table of Contents

SBARRO, INC. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

Consolidating Balance Sheet

As of December 28, 2008

LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)

(In thousands)

(Continued)



|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|------------------------------------------------------------------------------ |  | ------ | ------- | - | --------------------- | - | ------ | ------------------------ |  | - | ------------ | - |  | ----------------- | ------- | - |  | - | ------- | -
|                                                                               |  | Parent |         |   | GuarantorSubsidiaries |   |        | NonguarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedTotal |        
|Current liabilities:                                                           |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Accounts payable                                                               |  | $      | 11,255  |   |                       | $ | 219    |                          |  | $ | 147          |   |  | $                 |        |   |  | $ | 11,621  |  
|Accrued expenses                                                               |  |        | 21,358  |   |                       |   | 1,647  |                          |  |   | 504          |   |  |                   | (537    | ) |  |   | 22,972  |  
|Accrued interest payable                                                       |  |        | 7,291   |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 7,291   |  
|Due to former shareholders                                                     |  |        | 2,993   |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 2,993   |  
|Insurance premium financing                                                    |  |        | 1,087   |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 1,087   |  
|Current portion of debt                                                        |  |        | 3,958   |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 3,958   |  
|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Total current liabilities                                                      |  |        | 47,942  |   |                       |   | 1,866  |                          |  |   | 651          |   |  |                   | (537    | ) |  |   | 49,922  |  
|                                                                               |  |        |         |   |                      
|Deferred rent                                                                  |  |        | 500     |   |                       |   | 4,689  |                          |  |   |             |   |  |                   |        |   |  |   | 5,189   |  
|Deferred tax liability                                                         |  |        | 87,238  |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 87,238  |  
|Due to former shareholders                                                     |  |        | 11,043  |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 11,043  |  
|Long-term debt                                                                 |  |        | 346,297 |   |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | 346,297 |  
|                                                                               |  |        |         |   |                      
|Shareholders equity:                                                          |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Common stock, $.01 par value, 1000 shares authorized, 100 issued & outstanding |  |        |        |   |                       |   |       |                          |  |   | 148          |   |  |                   | (148    | ) |  |   |        |  
|Additional paid-in capital                                                     |  |        | 133,000 |   |                       |   | 68,301 |                          |  |   | 699          |   |  |                   | (69,000 | ) |  |   | 133,000 |  
|Currency translation adjustments                                               |  |        | 135     |   |                       |   |       |                          |  |   | 169          |   |  |                   | (169    | ) |  |   | 135     |  
|Advances to MidOcean SBR Holding                                               |  |        | (305    | ) |                       |   |       |                          |  |   |             |   |  |                   |        |   |  |   | (305    | )
|(Accumulated deficit) retained earnings                                        |  |        | (88,639 | ) |                       |   | (856   | )                        |  |   | (708         | ) |  |                   | 1,564   |   |  |   | (88,639 | )
|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Total shareholders equity                                                     |  |        | 44,191  |   |                       |   | 67,445 |                          |  |   | 308          |   |  |                   | (67,753 | ) |  |   | 44,191  |  
|Noncontrolling interest                                                        |  |        | 912     |   |                       |   | 2,064  |                          |  |   | 912          |   |  |                   |        |   |  |   | 3,888   |  
|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Total shareholders equity, including noncontrolling interests                 |  |        | 45,103  |   |                       |   | 69,509 |                          |  |   | 1,220        |   |  |                   | (67,753 | ) |  |   | 48,079  |  
|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  
|Total liabilities and shareholders equity                                     |  | $      | 538,123 |   |                       | $ | 76,064 |                          |  | $ | 1,871        |   |  | $                 | (68,290 | ) |  | $ | 547,768 |  
|                                                                               |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |         |   |  |   |         |  



18



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##### Table of Contents

SBARRO, INC. AND SUBSIDIARIES

Notes To Unaudited Consolidated Financial Statements

Consolidating Statement
of Operations

For the three months ended March 29, 2009

(In thousands)

(Continued)



|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|---------------------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------ | ------------------------ |  | - | ------------ | - | ----------------- | - | ----- |  | - | ------ | -
|                                                           |  | Parent |        |   | GuarantorSubsidiaries |   |        | NonguarantorSubsidiaries |  |   | Eliminations |   | ConsolidatedTotal |  
|Revenues:                                                  |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Restaurant sales                                           |  | $      | 31,856 |   |                       | $ | 44,039 |                          |  | $ | 388          |   |                   | $ |      |  | $ | 76,283 |  
|Franchise related income                                   |  |        | 3,299  |   |                       |   |       |                          |  |   |             |   |                   |   |      |  |   | 3,299  |  
|Intercompany charges                                       |  |        | 6,396  |   |                       |   | (6,360 | )                        |  |   | (36          | ) |                   |   |      |  |   |       |  
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Total revenues                                             |  |        | 41,551 |   |                       |   | 37,679 |                          |  |   | 352          |   |                   |   |      |  |   | 79,582 |  
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Costs and expenses:                                        |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Cost of food and paper products                            |  |        | 7,548  |   |                       |   | 7,811  |                          |  |   | 139          |   |                   |   |      |  |   | 15,498 |  
|Payroll and other employee benefits                        |  |        | 8,504  |   |                       |   | 12,551 |                          |  |   | 184          |   |                   |   |      |  |   | 21,239 |  
|Other operating costs                                      |  |        | 12,834 |   |                       |   | 16,684 |                          |  |   | 326          |   |                   |   |      |  |   | 29,844 |  
|Other income, net                                          |  |        | (105   | ) |                       |   | (1,041 | )                        |  |   | (30          | ) |                   |   |      |  |   | (1,176 | )
|Depreciation and amortization                              |  |        | 1,797  |   |                       |   | 2,390  |                          |  |   | 14           |   |                   |   |      |  |   | 4,201  |  
|General and administrative                                 |  |        | 8,567  |   |                       |   |       |                          |  |   |             |   |                   |   |      |  |   | 8,567  |  
|Asset impairment, restaurant closings                      |  |        | 204    |   |                       |   | 510    |                          |  |   |             |   |                   |   |      |  |   | 714    |  
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Total costs and expenses, net                              |  |        | 39,349 |   |                       |   | 38,905 |                          |  |   | 633          |   |                   |   |      |  |   | 78,887 |  
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|                                                           |  |        |        |   |                      
|Operating income                                           |  |        | 2,202  |   |                       |   | (1,226 | )                        |  |   | (281         | ) |                   |   |      |  |   | 695    |  
|                                                           |  |        |        |   |                      
|Other (expense) income:                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Interest expense                                           |  |        | (5,841 | ) |                       |   |       |                          |  |   |             |   |                   |   |      |  |   | (5,841 | )
|Write-off of deferred financing costs                      |  |        | (423   | ) |                       |   |       |                          |  |   |             |   |                   |   |      |  |   | (423   | )
|Interest income                                            |  |        | 32     |   |                       |   |       |                          |  |   |             |   |                   |   |      |  |   | 32     |  
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Net other (expense) income                                 |  |        | (6,232 | ) |                       |   |       |                          |  |   |             |   |                   |   |      |  |   | (6,232 | )
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Equity in loss of subsidiaries                             |  |        | (1,575 | ) |                       |   |       |                          |  |   |             |   |                   |   | 1,575 |  |   |       |  
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Loss before income taxes and equity investments            |  |        | (5,605 | ) |                       |   | (1,226 | )                        |  |   | (281         | ) |                   |   | 1,575 |  |   | (5,537 | )
|Income tax expense (benefit)                               |  |        | 104    |   |                       |   |       |                          |  |   |             |   |                   |   |      |  |   | 104    |  
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Loss before equity investments                             |  |        | (5,709 | ) |                       |   | (1,226 | )                        |  |   | (281         | ) |                   |   | 1,575 |  |   | (5,641 | )
|Loss from equity investments                               |  |        |       |   |                       |   |       |                          |  |   | (55          | ) |                   |   |      |  |   | (55    | )
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Net loss                                                   |  |        | (5,709 | ) |                       |   | (1,226 | )                        |  |   | (336         | ) |                   |   | 1,575 |  |   | (5,696 | )
|Net (income) loss attributable to noncontrolling interests |  |        | (1     | ) |                       |   | (130   | )                        |  |   | 117          |   |                   |   |      |  |   | (14    | )
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  
|Net loss attributable to Sbarro, Inc.                      |  | $      | (5,710 | ) |                       | $ | (1,356 | )                        |  | $ | (219         | ) |                   | $ | 1,575 |  | $ | (5,710 | )
|                                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |       |  |   |        |  



19



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##### Table of Contents

SBARRO, INC. AND SUBSIDIARIES

Notes To Unaudited Consolidated Financial Statements

Consolidating Statement
of Operations

For the three months ended March 30, 2008

(In thousands)

(Continued)



|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|--------------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------ | ------------------------ |  | - | ------------ | - | ----------------- | - | --- |  | - | ------ | -
|                                                    |  | Parent |        |   | GuarantorSubsidiaries |   |        | NonguarantorSubsidiaries |  |   | Eliminations |   | ConsolidatedTotal |  
|Revenues:                                           |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Restaurant sales                                    |  | $      | 33,844 |   |                       | $ | 45,569 |                          |  | $ | 340          |   |                   | $ |    |  | $ | 79,753 |  
|Franchise related income                            |  |        | 3,485  |   |                       |   |       |                          |  |   |             |   |                   |   |    |  |   | 3,485  |  
|Intercompany charges                                |  |        | 5,934  |   |                       |   | (5,891 | )                        |  |   | (43          | ) |                   |   |    |  |   |       |  
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Total revenues                                      |  |        | 43,263 |   |                       |   | 39,678 |                          |  |   | 297          |   |                   |   |    |  |   | 83,238 |  
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|                                                    |  |        |        |   |                      
|Costs and expenses:                                 |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Cost of food and paper products                     |  |        | 8,271  |   |                       |   | 9,025  |                          |  |   | 86           |   |                   |   |    |  |   | 17,382 |  
|Payroll and other employee benefits                 |  |        | 9,152  |   |                       |   | 13,075 |                          |  |   | 86           |   |                   |   |    |  |   | 22,313 |  
|Other operating costs                               |  |        | 12,999 |   |                       |   | 16,636 |                          |  |   | 151          |   |                   |   |    |  |   | 29,786 |  
|Other income, net                                   |  |        | (543   | ) |                       |   | (676   | )                        |  |   |             |   |                   |   |    |  |   | (1,219 | )
|Depreciation and amortization                       |  |        | 2,138  |   |                       |   | 1,979  |                          |  |   | 1            |   |                   |   |    |  |   | 4,118  |  
|General and administrative                          |  |        | 7,235  |   |                       |   |       |                          |  |   |             |   |                   |   |    |  |   | 7,235  |  
|Asset impairment, restaurant closings               |  |        |       |   |                       |   | 167    |                          |  |   |             |   |                   |   |    |  |   | 167    |  
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Total costs and expenses, net                       |  |        | 39,252 |   |                       |   | 40,206 |                          |  |   | 324          |   |                   |   |    |  |   | 79,782 |  
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|                                                    |  |        |        |   |                      
|Operating income (loss)                             |  |        | 4,011  |   |                       |   | (528   | )                        |  |   | (27          | ) |                   |   |    |  |   | 3,456  |  
|                                                    |  |        |        |   |                      
|Other (expense) income:                             |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Interest expense                                    |  |        | (7,735 | ) |                       |   | (1     | )                        |  |   |             |   |                   |   |    |  |   | (7,736 | )
|Interest income                                     |  |        | 71     |   |                       |   | 2      |                          |  |   |             |   |                   |   |    |  |   | 73     |  
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Net other (expense) income                          |  |        | (7,664 | ) |                       |   | 1      |                          |  |   |             |   |                   |   |    |  |   | (7,663 | )
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Equity in loss of subsidiaries                      |  |        | (713   | ) |                       |   |       |                          |  |   |             |   |                   |   | 713 |  |   |       |  
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Loss before income taxes and equity investments     |  |        | (4,366 | ) |                       |   | (527   | )                        |  |   | (27          | ) |                   |   | 713 |  |   | (4,207 | )
|Income tax expense (benefit)                        |  |        | (1,829 | ) |                       |   |       |                          |  |   |             |   |                   |   |    |  |   | (1,829 | )
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Loss before equity investments                      |  |        | (2,537 | ) |                       |   | (527   | )                        |  |   | (27          | ) |                   |   | 713 |  |   | (2,378 | )
|Loss from equity investments                        |  |        | (150   | ) |                       |   |       |                          |  |   |             |   |                   |   |    |  |   | (150   | )
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Net loss                                            |  |        | (2,687 | ) |                       |   | (527   | )                        |  |   | (27          | ) |                   |   | 713 |  |   | (2,528 | )
|Net income attributable to noncontrolling interests |  |        | (64    | ) |                       |   | (159   | )                        |  |   |             |   |                   |   |    |  |   | (223   | )
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  
|Net loss attributable to Sbarro, Inc.               |  | $      | (2,751 | ) |                       | $ | (686   | )                        |  | $ | (27          | ) |                   | $ | 713 |  | $ | (2,751 | )
|                                                    |  |        |        |   |                       |   |        |                          |  |   |              |   |                   |   |     |  |   |        |  



20



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##### Table of Contents

SBARRO, INC. AND SUBSIDIARIES

Notes To Unaudited Consolidated Financial Statements

Consolidating Statement
of Cash Flows

For the three months ended March 29, 2009

(In thousands)

(Continued)



|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------ | ------------------------ |  | - | ------------ | - |  | ----------------- | ------ | - |  | - | ------- | -
|                                                                                                   |  | Parent |         |   | GuarantorSubsidiaries |   |        | NonguarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedTotal |       
|                                                                                                   |  |        |         |  
|Operating Activities:                                                                              |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|Net (loss) income                                                                                  |  | $      | (5,709  | ) |                       | $ | (1,226 | )                        |  | $ | (336         | ) |  | $                 | 1,575  |   |  | $ | (5,696  | )
|Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|Depreciation and amortization                                                                      |  |        | 1,797   |   |                       |   | 2,390  |                          |  |   | 14           |   |  |                   |       |   |  |   | 4,201   |  
|Amortization of deferred financing costs                                                           |  |        | 308     |   |                       |   |       |                          |  |   |             |   |  |                   |       |   |  |   | 308     |  
|Increase in deferred rent, net of tenant allowance                                                 |  |        | 160     |   |                       |   | 271    |                          |  |   |             |   |  |                   |       |   |  |   | 431     |  
|Asset impairment, restaurant closings/remodels                                                     |  |        | 158     |   |                       |   | 183    |                          |  |   |             |   |  |                   |       |   |  |   | 341     |  
|Equity in net loss of unconsolidated affiliates                                                    |  |        |        |   |                       |   |       |                          |  |   |             |   |  |                   | 55     |   |  |   | 55      |  
|Write-off of deferred financing costs                                                              |  |        | 423     |   |                       |   |       |                          |  |   |             |   |  |                   |       |   |  |   | 423     |  
|                                                                                                   |  |        |         |   |                      
|Changes in operating assets and liabilities:                                                       |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|Decrease (increase) in receivables                                                                 |  |        | 742     |   |                       |   | (97    | )                        |  |   | (116         | ) |  |                   | 117    |   |  |   | 646     |  
|Decrease (increase) in inventories                                                                 |  |        | 143     |   |                       |   | 176    |                          |  |   | (13          | ) |  |                   |       |   |  |   | 306     |  
|(Increase) decrease in prepaid expenses                                                            |  |        | (417    | ) |                       |   | 70     |                          |  |   | 253          |   |  |                   |       |   |  |   | (94     | )
|Increase in other assets                                                                           |  |        | (67     | ) |                       |   |       |                          |  |   |             |   |  |                   |       |   |  |   | (67     | )
|(Decrease) increase in accounts payable and accrued expenses                                       |  |        | (7,673  | ) |                       |   | (734   | )                        |  |   | 1,009        |   |  |                   | (1,057 | ) |  |   | (8,455  | )
|Decrease in accrued interest payable                                                               |  |        | (4,099  | ) |                       |   |       |                          |  |   |             |   |  |                   |       |   |  |   | (4,099  | )
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|Net cash (used in) provided by operating activities                                                |  |        | (14,234 | ) |                       |   | 1,033  |                          |  |   | 811          |   |  |                   | 690    |   |  |   | (11,700 | )
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|                                                                                                   |  |        |         |   |                      
|Investing Activities:                                                                              |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|Purchases of property and equipment                                                                |  |        | (477    | ) |                       |   | (2,170 | )                        |  |   | (32          | ) |  |                   |       |   |  |   | (2,679  | )
|Investment in joint ventures                                                                       |  |        | (130    | ) |                       |   |       |                          |  |   |             |   |  |                   |       |   |  |   | (130    | )
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|Net cash used in investing activities                                                              |  |        | (607    | ) |                       |   | (2,170 | )                        |  |   | (32          | ) |  |                   |       |   |  |   | (2,809  | )
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|                                                                                                   |  |        |         |   |                      
|Financing Activities:                                                                              |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|Proceeds from second lien                                                                          |  |        | 25,000  |   |                       |   |       |                          |  |   |             |   |  |                   |       |   |  |   | 25,000  |  
|Repayment of secured term loan and revolver                                                        |  |        | (28,958 | ) |                       |   |       |                          |  |   |             |   |  |                   |       |   |  |   | (28,958 | )
|Debt issue costs                                                                                   |  |        | (1,498  | ) |                       |   |       |                          |  |   |             |   |  |                   |       |   |  |   | (1,498  | )
|Capital contribution from noncontrolling interests                                                 |  |        |        |   |                       |   |       |                          |  |   | 170          |   |  |                   |       |   |  |   | 170     |  
|Repayment of short term loan to noncontrolling interests                                           |  |        |        |   |                       |   |       |                          |  |   | (225         | ) |  |                   |       |   |  |   | (225    | )
|Distribution of earnings to noncontrolling interests                                               |  |        | (418    | ) |                       |   |       |                          |  |   |             |   |  |                   |       |   |  |   | (418    | )
|Intercompany balances                                                                              |  |        | 2,285   |   |                       |   | (715   | )                        |  |   | (880         | ) |  |                   | (690   | ) |  |   |        |  
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|Net cash used in by financing activities                                                           |  |        | (3,589  | ) |                       |   | (715   | )                        |  |   | (935         | ) |  |                   | (690   | ) |  |   | (5,929  | )
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|Decrease in cash and cash equivalents                                                              |  |        | (18,430 | ) |                       |   | (1,852 | )                        |  |   | (156         | ) |  |                   |       |   |  |   | (20,438 | )
|Cash and cash equivalents at beginning of period                                                   |  |        | 34,249  |   |                       |   | 3,468  |                          |  |   | 569          |   |  |                   |       |   |  |   | 38,286  |  
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  
|Cash and cash equivalents at end of period                                                         |  | $      | 15,819  |   |                       | $ | 1,616  |                          |  | $ | 413          |   |  | $                 |       |   |  | $ | 17,848  |  
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |        |   |  |   |         |  



21



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##### Table of Contents

SBARRO, INC. AND SUBSIDIARIES

Notes To Unaudited Consolidated Financial Statements

Consolidating Statement
of Cash Flows

For the three months ended March 30, 2008

(In thousands)

(Continued)



|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------ | ------------------------ |  | - | ------------ | - |  | ----------------- | ---- | - |  | - | ------- | -
|                                                                                                   |  | Parent |         |   | GuarantorSubsidiaries |   |        | NonguarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedTotal |     
|Operating Activities:                                                                              |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|Net (loss) income                                                                                  |  | $      | (2,687  | ) |                       | $ | (527   | )                        |  | $ | (27          | ) |  | $                 | 713  |   |  | $ | (2,528  | )
|Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|Depreciation and amortization                                                                      |  |        | 2,138   |   |                       |   | 1,979  |                          |  |   | 1            |   |  |                   |     |   |  |   | 4,118   |  
|Amortization of deferred financing costs                                                           |  |        | 275     |   |                       |   |       |                          |  |   |             |   |  |                   |     |   |  |   | 275     |  
|Increase in deferred rent, net of tenant allowance                                                 |  |        | 230     |   |                       |   | 22     |                          |  |   |             |   |  |                   |     |   |  |   | 252     |  
|Asset impairment, restaurant closings/remodels                                                     |  |        |        |   |                       |   | 167    |                          |  |   |             |   |  |                   |     |   |  |   | 167     |  
|Change in deferred income tax, net                                                                 |  |        | (1,917  | ) |                       |   |       |                          |  |   |             |   |  |                   |     |   |  |   | (1,917  | )
|Equity in net loss of unconsolidated affiliates                                                    |  |        | 150     |   |                       |   |       |                          |  |   |             |   |  |                   |     |   |  |   | 150     |  
|Equity in loss of subsidiaries                                                                     |  |        | 713     |   |                       |   |       |                          |  |   |             |   |  |                   | (713 | ) |  |   |        |  
|                                                                                                   |  |        |         |   |                      
|Changes in operating assets and liabilities:                                                       |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|(Increase) decrease in receivables                                                                 |  |        | (357    | ) |                       |   | 203    |                          |  |   | 3            |   |  |                   |     |   |  |   | (151    | )
|Decrease in inventories                                                                            |  |        | 91      |   |                       |   | 55     |                          |  |   | 2            |   |  |                   |     |   |  |   | 148     |  
|Decrease (increase) in prepaid expenses                                                            |  |        | 1,095   |   |                       |   | (35    | )                        |  |   | 1            |   |  |                   |     |   |  |   | 1,061   |  
|Increase in other assets                                                                           |  |        | (23     | ) |                       |   | (2     | )                        |  |   |             |   |  |                   |     |   |  |   | (25     | )
|(Decrease) increase in accounts payable and accrued expenses                                       |  |        | (7,748  | ) |                       |   | 111    |                          |  |   | (22          | ) |  |                   |     |   |  |   | (7,659  | )
|Decrease in accrued interest payable                                                               |  |        | (3,894  | ) |                       |   |       |                          |  |   |             |   |  |                   |     |   |  |   | (3,894  | )
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|Net cash (used in) provided by operating activities                                                |  |        | (11,934 | ) |                       |   | 1,973  |                          |  |   | (42          | ) |  |                   |     |   |  |   | (10,003 | )
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|                                                                                                   |  |        |         |   |                      
|Investing Activities:                                                                              |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|Purchases of property and equipment                                                                |  |        | (1,092  | ) |                       |   | (2,531 | )                        |  |   |             |   |  |                   |     |   |  |   | (3,623  | )
|Purchases of other locations                                                                       |  |        |        |   |                       |   | (425   | )                        |  |   |             |   |  |                   |     |   |  |   | (425    | )
|Investment in joint ventures                                                                       |  |        | (260    | ) |                       |   |       |                          |  |   |             |   |  |                   |     |   |  |   | (260    | )
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|Net cash used in investing activities                                                              |  |        | (1,352  | ) |                       |   | (2,956 | )                        |  |   |             |   |  |                   |     |   |  |   | (4,308  | )
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|                                                                                                   |  |        |         |   |                      
|Financing Activities:                                                                              |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|Repayment of secured term loan                                                                     |  |        | (458    | ) |                       |   |       |                          |  |   |             |   |  |                   |     |   |  |   | (458    | )
|Distribution of earnings to noncontrolling interests                                               |  |        | (654    | ) |                       |   |       |                          |  |   |             |   |  |                   |     |   |  |   | (654    | )
|Intercompany balances                                                                              |  |        | (241    | ) |                       |   | 231    |                          |  |   | 10           |   |  |                   |     |   |  |   |        |  
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|Net cash (used in) provided by financing activities                                                |  |        | (1,353  | ) |                       |   | 231    |                          |  |   | 10           |   |  |                   |     |   |  |   | (1,112  | )
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|                                                                                                   |  |        |         |   |                      
|Decrease in cash and cash equivalents                                                              |  |        | (14,639 | ) |                       |   | (752   | )                        |  |   | (32          | ) |  |                   |     |   |  |   | (15,423 | )
|                                                                                                   |  |        |         |   |                      
|Cash and cash equivalents at beginning of period                                                   |  |        | 25,693  |   |                       |   | 2,893  |                          |  |   | 281          |   |  |                   |     |   |  |   | 28,867  |  
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  
|Cash and cash equivalents at end of period                                                         |  | $      | 11,054  |   |                       | $ | 2,141  |                          |  | $ | 249          |   |  | $                 |     |   |  | $ | 13,444  |  
|                                                                                                   |  |        |         |   |                       |   |        |                          |  |   |              |   |  |                   |      |   |  |   |         |  



22



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##### Table of Contents

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

Forward-Looking Statements

We make statements in this Quarterly Report that are considered
forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. The words anticipate, believe, estimate, intend, may, will, expect
and similar words often indicate that a statement is a forward-looking statement. Statements about non-historic results also are considered to be forward-looking statements. None of these forward-looking statements are guarantees of
future performance or events, and they are subject to numerous risks, uncertainties and other factors. These risks, uncertainties and other factors include, but are not limited to:



| |  |  | general economic, inflation, national security, weather and business conditions;
| | - |  | --------------------------------------------------------------------------------



| |  |  | decrease in mall traffic, and other events arising from the downturn in the economy, such as continued increases in energy and commodity costs that negatively
affect consumer spending;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the availability of suitable restaurant sites in appropriate regional shopping malls and other locations on reasonable rental terms;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in consumer tastes;
| | - |  | ---------------------------



| |  |  | changes in population and traffic patterns, including the effects that military action and terrorism or other events may have on the willingness of consumers to
frequent malls, airports or downtown areas which are the predominant areas in which our restaurants are located;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to continue to attract franchisees;
| | - |  | -----------------------------------------------



| |  |  | the success of our present, and any future, joint ventures and other expansion opportunities;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | changes in commodity and commodity related prices (particularly cheese and flour), beverage and paper products;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | our ability to pass along cost increases to our customers;
| | - |  | ----------------------------------------------------------



| |  |  | increases in the Federal minimum wage;
| | - |  | --------------------------------------



| |  |  | the continuity of services of members of our senior management team;
| | - |  | --------------------------------------------------------------------



| |  |  | our ability to attract and retain competent restaurant and executive managerial personnel;
| | - |  | ------------------------------------------------------------------------------------------



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



| |  |  | the level of, and our ability to comply with, government regulations;
| | - |  | ---------------------------------------------------------------------



| |  |  | our ability to generate sufficient cash flow to make interest payments under our borrowing agreements;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | our ability to comply with financial covenants and ratios and the effects the restrictions imposed by those financial covenants and ratios may have on our
ability to operate our business; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to repurchase and/or repay amounts under our borrowing agreements to the extent required in the event of certain circumstances as defined in our
borrowing agreements.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of
the date of this report. We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, we do not
undertake any responsibility to update you on the occurrence of any unanticipated events which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this report.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited consolidated
financial statements, the notes thereto and other data and information appearing elsewhere in this report.

Executive Overview

For the purposes of managements discussion and analysis, the first quarter of 2009 is the thirteen weeks ended March 29, 2009 and the first
quarter of 2008 is the thirteen weeks ended March 30, 2008.

We are the worlds leading Italian Quick Service Restaurant
(QSR) concept and the largest shopping mall-focused restaurant concept in the world. We have a global base of 1,072 units in 45 countries, with 490 company-owned units, 566 franchised units and 16 joint venture units. Sbarro restaurants
feature a menu of popular Italian food, including pizza, a selection of pasta dishes and other hot and cold Italian entrees, salads, sandwiches, drinks and desserts.



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We operate our business through two segments. Our company-owned restaurant segment is comprised of the
operating activities of our company-owned QSRs and other concept restaurants. Our franchised restaurant segment is comprised of our franchised restaurants which offer opportunities worldwide for qualified operators to conduct business under
the Sbarro name and other trade names owned by Sbarro. Revenue from our franchised restaurant segment is generated from initial franchise fees, ongoing royalties and other franchising revenue. We do not allocate indirect corporate charges to our
operating segments. Such costs are managed on an entity-wide basis, and the information to reasonably allocate such costs is not readily available. We do not allocate assets by segment because our chief operating decision makers do not review the
assets by segment to assess performance, as the assets are managed on an entity-wide basis. Our operating segments are discussed inNote 1Summary of Significant Accounting Policies and Note 13Business Segment Information to ourConsolidated Financial Statementsincluded in our Annual Report on Form 10-K for the year ended December 28, 2008.

Our Restaurant Expansion

The following table summarizes the number of company-owned, franchised, and joint venture restaurants in operation during each
indicated period:



|                                  |  |                      |   |  |                      |  
|--------------------------------- |  | -------------------- | - |  | -------------------- | -
|                                  |  | 3 monthsended3/29/09 |   |  | 3 monthsended3/30/08 |  
|Company-owned Sbarro restaurants: |  |                      |   |  |                      |  
|Open at beginning of period       |  | 509                  |   |  | 506                  |  
|Opened during period              |  | 4                    |   |  | 4                    |  
|Closed during period              |  | (23                  | ) |  | (6                   | )
|                                  |  |                      |   |  |                      |  
|Open at end of period             |  | 490                  |   |  | 504                  |  
|                                  |  |                      |   |  |                      |  
|Franchised Sbarro restaurants:    |  |                      |   |  |                      |  
|Open at beginning of period       |  | 566                  |   |  | 524                  |  
|Opened during period              |  | 23                   |   |  | 19                   |  
|Closed during period              |  | (23                  | ) |  | (15                  | )
|                                  |  |                      |   |  |                      |  
|Open at end of period             |  | 566                  |   |  | 528                  |  
|                                  |  |                      |   |  |                      |  
|Joint venture Sbarro restaurants: |  |                      |   |  |                      |  
|Open at beginning of period       |  | 16                   |   |  | 7                    |  
|Opened during period              |  |                     |   |  | 1                    |  
|                                  |  |                      |   |  |                      |  
|Open at end of period             |  | 16                   |   |  | 8                    |  
|                                  |  |                      |   |  |                      |  
|All restaurants:                  |  |                      |   |  |                      |  
|Open at beginning of period       |  | 1,091                |   |  | 1,037                |  
|Opened during period              |  | 27                   |   |  | 24                   |  
|Closed during period              |  | (46                  | ) |  | (21                  | )
|                                  |  |                      |   |  |                      |  
|Open at end of period             |  | 1,072                |   |  | 1,040                |  
|                                  |  |                      |   |  |                      |  

Seasonality

Revenues are highest in our fourth quarter due primarily to increased traffic in shopping malls during the holiday shopping season. Our annual revenues and earnings can fluctuate due to the length of the holiday
shopping period between Thanksgiving and New Years Day.

Goodwill and Other Intangible Assets

Due to the seasonality of our business, until we determine the results of operations for our fourth quarter, we are not able to perform our annual test
for impairment on our goodwill and intangible assets with indefinite lives as required by SFAS No. 142, Goodwill and Other Intangible Assets, and fully evaluate the impairment of long-lived assets as required by SFAS No. 144,
Accounting for the Impairment and Disposal of Long-Lived Assets. Any required adjustments are recorded at that time unless our assumptions regarding forecasted revenue or margin growth rates are not achieved, then we may be required to
record an impairment charge prior to that if any such change constitutes a triggering event outside of the quarter from when the annual goodwill impairment test is performed.



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Noncontrolling Interests

We present minority interests as noncontrolling interests in the equity section of our consolidated balance sheets as a separate net loss attributable to noncontrolling interests in our consolidated statement of
operations, and as a distribution to/from noncontrolling interests in the consolidated statements of cash flows.

Summary Financial Information (Dollars
in millions)



|                                                                    |  |                                 |       |   |                                 |   |      |  
|------------------------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------- | - | ---- | -
|                                                                    |  | Three monthsendedMarch 29, 2009 |       |   | Three monthsendedMarch 30, 2008 |  
|Comparable sales-percentage change vs. prior comparable period(1):  |  |                                 |       |   |                                 |   |      |  
|QSR-owned locations                                                 |  |                                 | -4.8  | % |                                 |   | 0.3  | %
|Franchise locations:                                                |  |                                 |       |   |                                 |   |      |  
|Domestic Franchise                                                  |  |                                 | -4.3  | % |                                 |   | 0.1  | %
|International Franchise(4)                                          |  |                                 | -24.9 | % |                                 |   | 8.3  | %
|Cost of food and paper products as a percentage of restaurant sales |  |                                 | 20.3  | % |                                 |   | 21.8 | %
|Payroll and other benefits as a percentage of restaurant sales      |  |                                 | 27.8  | % |                                 |   | 28.0 | %
|Other operating expense as a percentage of restaurant sales         |  |                                 | 39.1  | % |                                 |   | 37.3 | %
|General and administrative costs as a percentage of revenues        |  |                                 | 10.8  | % |                                 |   | 8.7  | %
|EBITDA(2) (3)                                                       |  | $                               | 4.4   |   |                                 | $ | 7.2  |  



|(1) | Comparable and annual percentage changes are based on locations that were open during the entire period within the periods presented.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

|(2) | EBITDA represents earnings before interest income, interest expense, taxes, depreciation and amortization. EBITDA should not be considered in isolation from, or
as a substitute for, net income, cash flow from operations or other cash flow statement data prepared in accordance with generally accepted accounting principles (GAAP) or as a measure of a companys profitability or liquidity.
Rather, we believe that EBITDA provides relevant and useful information for analysts of, and investors in, our Senior Notes in that the Senior Credit Facilities and the Second Lien Facility each contain a minimum EBITDA covenant. EBITDA, as
calculated under our bank credit agreement, includes certain additional adjustments as discussed in our Senior Credit Facility amendment. We also internally use EBITDA to determine whether to continue operating restaurant units since it provides us
with a measurement of whether we are receiving an adequate cash return on our investment. Our calculation of EBITDA may not be comparable to a similarly titled measure reported by other companies, since all companies do not calculate this non-GAAP
measure in the same manner. Our EBITDA calculations are not intended to represent cash provided by (used in) operating activities since they do not include interest and taxes and changes in operating assets and liabilities, nor are they intended to
represent a net increase in cash since they do not include cash provided by (used in) investing and financing activities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Included in the calculation of EBITDA for the first quarter of 2009 is $.4 million related to the write-off of deferred financing costs and $.4 million of
professional fees related to the prepayment and amendment to the Senior Credit Facilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Approximately half the decline in the first quarter of 2009 International comparable sales related to the decline in the value of the U.S. dollar.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------

For each of the periods, the following table reconciles EBITDA to our net loss for each of the periods presented, which
we believe is the most direct comparable GAAP financial measure to EBITDA (dollars in thousands):



|                              |  |                                 |        |   |                                 |   |        |  
|----------------------------- |  | ------------------------------- | ------ | - | ------------------------------- | - | ------ | -
|                              |  | Three monthsendedMarch 29, 2009 |        |   | Three monthsendedMarch 30, 2008 |  
|EBITDA                        |  | $                               | 4,404  |   |                                 | $ | 7,201  |  
|Interest Expense              |  |                                 | (5,841 | ) |                                 |   | (7,736 | )
|Interest Income               |  |                                 | 32     |   |                                 |   | 73     |  
|Income Tax Benefit (Expense)  |  |                                 | (104   | ) |                                 |   | 1,829  |  
|Depreciation and Amortization |  |                                 | (4,201 | ) |                                 |   | (4,118 | )
|                              |  |                                 |        |   |                                 |   |        |  
|Net Loss                      |  | $                               | (5,710 | ) |                                 | $ | (2,751 | )
|                              |  |                                 |        |   |                                 |   |        |  



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The following table sets forth the information concerning the revenue and operating income before
unallocated costs of each of our company-owned and franchised restaurant segments:



|                                          |  |                          |        |                       |   |        |  |   |       
|----------------------------------------- |  | ------------------------ | ------ | --------------------- | - | ------ |  | - | ------
|                                          |  | Company-OwnedRestaurants |        | FranchisedRestaurants |   | Totals
|                                          |  | (In thousands)          
|1stQuarter 2009                           |  |                          |        |                       |   |        |  |   |       
|Total revenue                             |  | $                        | 76,283 |                       | $ | 3,299  |  | $ | 79,582
|                                          |  |                          |        |                       |   |        |  |   |       
|Operating income before unallocated costs |  |                          | 5,965  |                       |   | 2,099  |  |   | 8,064 
|                                          |  |                          |        |                       |   |        |  |   |       
|Unallocated costs and expenses(1)         |  |                          |        |                       |   |        |  |   | 7,369 
|                                          |  |                          |        |                       |   |        |  |   |       
|Operating income                          |  |                          |        |                       |   |        |  | $ | 695   
|                                          |  |                          |        |                       |   |        |  |   |       
|1stQuarter 2008                           |  |                          |        |                       |   |        |  |   |       
|Total revenue                             |  | $                        | 79,753 |                       | $ | 3,485  |  | $ | 83,238
|                                          |  |                          |        |                       |   |        |  |   |       
|Operating income before unallocated costs |  |                          | 7,207  |                       |   | 2,181  |  |   | 9,388 
|                                          |  |                          |        |                       |   |        |  |   |       
|Unallocated costs and expenses(1)         |  |                          |        |                       |   |        |  |   | 5,932 
|                                          |  |                          |        |                       |   |        |  |   |       
|Operating income                          |  |                          |        |                       |   |        |  | $ | 3,456 
|                                          |  |                          |        |                       |   |        |  |   |       



|(1) | Represents certain general and administrative expenses that are not allocated by segment.
|--- | -----------------------------------------------------------------------------------------

Sales by QSR and consolidated other concept restaurants were $76.3 million for the first quarter of 2009 compared to $79.8 million for the first quarter of 2008. The decrease in sales is due to a
decrease in comparable unit sales of 4.8% in our QSR restaurants, lost sales from stores strategically closed of $2.5 million, partially offset by sales generated by new stores opened in 2009 and 2008 of $2.3 million. The decrease in comparable unit
sales primarily reflects reduced mall traffic throughout the United States as a result of the current economic environment along with Easter week falling in the second quarter of 2009 versus the first quarter of 2008.

Franchise related revenues were $3.3 million for the first quarter of 2009 compared to $3.5 million for the first quarter of 2008. The decrease is due to
a decline in royalties on international and domestic comparable unit sales.

Cost of food and paper products as a percentage of restaurant
sales decreased to 20.3% for the first quarter of 2009 as compared to 21.8% for the first quarter of 2008. The cost of cheese in the first quarter of 2009 averaged $1.38 per pound compared to an average of $2.17 per pound in the first quarter of
2008. This $.79 per pound decrease in cheese costs accounted for $1.2 million or 1.6% of restaurant sales. The cost of flour in the first quarter of 2009 averaged $.30 compared to $.24 for the first quarter of 2008. This $.06 per pound increase
accounted for $.2 million or an increase of .2% of restaurant sales.

Payroll and other employee benefits as a percentage of restaurant
sales decreased to 27.8% in the first quarter of 2009 from 28.0% in the first quarter of 2008.

Other operating costs remained flat at
$29.8 million in the first quarter of 2009 and 2008. As a percentage of restaurant sales, operating costs increased to 39.1% in the first quarter of 2009 as compared to 37.3% in the first quarter of 2008 due to lower sales in 2009.

Other income, net remained consistent at $1.2 million in the first quarter of 2009 and 2008.

Depreciation and amortization increased to $4.2 million in the first quarter of 2009 compared to $4.1 million for the first quarter of 2008.

General and administrative expenses were $8.6 million in the first quarter of 2009 as compared to $7.2 million in the first quarter of 2008. The increase
is primarily related to severance and fees related to the amendment to the Senior Credit Facilities.

Asset impairment, restaurant closing
and remodeling costs were $.7 million in the first quarter of 2009 compared to $.2 million in the first quarter of 2008. The $.5 million increase is due to 23 stores strategically closed in the first quarter of 2009.

Interest expense of $5.8 million for the first quarter of 2009 and $7.7 million for the first quarter of 2008 relates primarily to the Senior Notes and
the Term Loan under our Senior Credit Facility. Included in interest expense in first quarter of 2009



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and the first quarter of 2008 was the amortization of deferred financing costs for the Senior Notes and Term Loan of $.3 million. The decrease in interest
expense is related to lower interest rates on the Senior Credit Facility in the first quarter of 2009 as compared to the first quarter of 2008.

Write-off of deferred financing costs of $.4 million in the first quarter of 2009 related to prepayment of the Senior Credit Facility.

Income tax expense was $.1 million for the first quarter of 2009 and our effective tax rate was -1.9%. During the first quarter of 2009, we recorded a $2.0 million increase to the valuation allowance on the deferred tax assets increasing
the valuation allowance to $37.0 million as of March 29, 2009. The income tax benefit was $1.8 million for the first quarter of 2008 and our effective tax rate was 39.9%.

Equity in net loss of unconsolidated affiliates relates to our joint venture in Beirut.

Net income attributable to
noncontrolling interests relates to our joint ventures in India and certain partnerships.

Net loss was $5.7 million in the first quarter
of 2009 as compared to a net loss of $2.8 million for the first quarter of 2008. The increase in the net loss is due to the items discussed above, primarily the decline in comparable sales of 4.8% partially offset by stores opened in 2009 and 2008
and cost controls implemented in 2009.

Liquidity and Capital Resources

Principal Cash Requirements and Sources

We are highly leveraged and a substantial portion of our
liquidity needs arise from debt service on indebtedness incurred in connection with the Merger, and from funding our costs of operations, working capital and capital expenditures. Cash flow generated during our fourth quarter is critical to
achieving positive annual operating cash flow. Adverse macroeconomic factors, including reduced mall traffic during the holiday shopping season and a decline in consumer spending among other factors, negatively impacted achieving our projected
operating cash flow.

Our ability to borrow funds under our revolver is subject to our compliance with our debt covenant requirements.
Prior to the amendment to our Senior Credit Facilities, such covenants included a interest coverage ratio and a total net leverage ratio. As of year end, we were in violation of our total net leverage ratio covenant under the credit agreement
governing our Senior Facilities. On March 26, 2009, we entered into an amendment to the Senior Credit Facilities. The amendment permitted the Company to refinance a portion of our Term Loan by entering into a new Second Lien Facility (defined
and discussed below), permanently waived a breach of our total net leverage ratio covenant for the fiscal quarter ended December 28, 2008, replaced our total net leverage ratio covenant and interest coverage ratio covenant with a minimum EBITDA
covenant and a maximum capital expenditure covenant, increased the margin on our Term Loan and Revolving Facility by 200 basis points, required prepayment of $25.0 million of the Term Loan from the proceeds of the Second Lien Facility, required
prepayment of $3.5 million of the Revolving Facility from cash on hand and simultaneously reduced the Revolving Facilitys amount outstanding and commitment to $21.5 million, and restricted payment of MidOceans annual management fee so
that such fee will accrue but not be paid until the Companys EBITDA is at least $55.0 million and after such goal is obtained, a maximum of $2.0 million of such fees may be paid each year.

In response to the economic downturn in 2008, we began to implement aggressive strategic initiatives to reduce costs and improve our liquidity. These
initiatives, which will be ongoing, include closing unprofitable stores, renegotiating store lease terms, reducing headcount, revising our recipes without affecting our customers, as well as other expense controls. We believe these actions will
enhance our liquidity going forward and will enable us to be in compliance with our debt covenants under the amended credit agreement and that cash generated from operations, together with cash on hand and amounts available under the Senior Credit
Facilities, will be adequate to permit us to meet our debt service obligations, ongoing costs of operations, working capital needs and capital expenditure requirements for at least the next year. Our future financial and operating performance,
ability to service or refinance our debt and ability to comply with covenants and restrictions contained in our debt agreements will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our
control.

We estimate that our annual cash interest expense under the Senior Notes and the Senior Credit Facilities will be approximately
$26 million under the amended Senior Credit Facilities, assuming a 2% LIBOR rate. Borrowings under the Second Lien Facility bears interest at 15% per annum payable quarterly in arrears. The Second Lien Facility requires no principal payments
until maturity. Interest is payable quarterly as follows: (i) prior to the third anniversary, interest is only payable in kind and (ii) after the third anniversary, interest is payable in cash so long as the Senior Credit Facilities
leverage ratio is less than or equal to 2.75:1.00.

The amended Senior Credit Facilities require us to prepay outstanding borrowings,
subject to certain exceptions, with (a) 75% of our annual excess cash flow; (b) 100% of the net cash proceeds of certain asset sales or other dispositions of



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property (including casualty insurance and condemnations) if we do not commit to reinvest such proceeds in accordance with the terms of the Senior Credit
Facilities within 365 days of the event giving rise thereto (or, to the extent we have entered into a commitment to reinvest such proceeds within such time period to the extent such amounts are actually reinvested, within six months of the
expiration of such 365 days); and (c) 100% of the net cash proceeds of any incurrence of debt, other than debt permitted under the Senior Credit Facilities. We invested approximately $.1 million in joint ventures in the first quarter of 2009.
We repaid $3.5 million of the Revolving Facility. We repaid $.5 million in principal per the terms of our Term Loan. We prepaid $25.0 million of the Term Loan from the proceeds of the Second Lien Facility which satisfies our quarterly obligation for
further principal amortization payments on our Senior Credit Facilities. We are not required to make principal payments, absent the occurrence of certain events, on our Senior Notes until they mature in 2015. We believe that aggregate capital
expenditures for all of 2009 will approximate $11 million which we expect will be funded with operating cash. Based upon our current level of operations, we believe our cash flows generated from operations along with our cash on hand and borrowings
available under our Revolving Facility ($1.4 million) will be sufficient for us to meet our debt service requirements, fund working capital and capital expenditures for at least the next twelve months. If necessary, we may adjust the rate of capital
expenditures, acquisitions, or the timing and magnitude of other controllable expenditures to meet such requirements.

In April 2009,
Standard and Poors increased Sbarros credit ratings to CCC+ from CC on its Senior Credit Facility, to CCC- from C on its Senior Notes and to CCC+ from CC on Corporate.

Contractual Obligations

The following table presents our contractual obligations as of
March 29, 2009:



|                                        |  |      |      |      |   |       |  |      |       |      |   |            |  |       |       |  |   |       |  |   |        
|--------------------------------------- |  | ---- | ---- | ---- | - | ----- |  | ---- | ----- | ---- | - | ---------- |  | ----- | ----- |  | - | ----- |  | - | -------
|Dollars in millions                     |  | 2009 |      | 2010 |   | 2011  |  | 2012 |       | 2013 |   | Thereafter |  | Total
|10.375% senior notes(1)                 |  | $    |     |      | $ |      |  | $    |      |      | $ |           |  | $     |      |  | $ | 150.0 |  | $ | 150.0  
|Senior credit facility                  |  |      |     |      |   |      |  |      |      |      |   |           |  |       | 16.5  |  |   | 154.8 |  |   | 171.3  
|Second lien facility                    |  |      |     |      |   |      |  |      |      |      |   |           |  |       |      |  |   | 25.5  |  |   | 25.5   
|Estimated interest on long-term debt(2) |  |      | 14.8 |      |   | 25.6  |  |      | 26.4  |      |   | 44.0       |  |       | 31.4  |  |   | 20.4  |  |   | 162.6  
|Letters of credit(3)                    |  |      | 3.6  |      |   |      |  |      |      |      |   |           |  |       |      |  |   |      |  |   | 3.6    
|Operating leases(4)                     |  |      | 38.7 |      |   | 75.0  |  |      | 69.5  |      |   | 65.0       |  |       | 60.6  |  |   | 181.2 |  |   | 490.0  
|Due to former shareholders(5)           |  |      | .7   |      |   | 2.2   |  |      | 7.3   |      |   | 1.5        |  |       |      |  |   |      |  |   | 11.7   
|                                        |  |      |      |      |   |       |  |      |       |      |   |            |  |       |       |  |   |       |  |   |        
|                                        |  | $    | 57.8 |      | $ | 102.8 |  | $    | 103.2 |      | $ | 110.5      |  | $     | 108.5 |  | $ | 531.9 |  | $ | 1,014.7
|                                        |  |      |      |      |   |       |  |      |       |      |   |            |  |       |       |  |   |       |  |   |        



|(1) | There are no principal repayment obligations under the Senior Notes until 2015.
|--- | -------------------------------------------------------------------------------

|(2) | The Revolving Facility is due in 2013 and the Term Loan and the Second Lien is due in 2014. The estimated interest on long-term debt reflects the March 26,
2009 amendment to the Senior Credit Facilities. The amendment permitted the Company to enter into the new Second Lien Facility, increased the margin on our Term Loan and Revolving Facility by 200 basis points, required prepayment of $25.0 million of
the Term Loan from the proceeds of the Second Lien Facility, required prepayment of $3.5 million of the Revolving Facility from cash on hand. Interest on the Second Lien Facility is payable quarterly as follows: (i) prior to the third
anniversary, interest is only payable in kind and (ii) after the third anniversary, interest is payable in cash so long as the Senior Credit Facilities leverage ratio is less than or equal to 2.75:1.00.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents our maximum reimbursement obligations to the issuer of the letters of credit in the event the letters of credit are drawn upon. The letters of credit
generally are issued instead of cash security deposits under operating leases or to guarantee construction costs for our locations and for run out claims under our medical plan. All the standby letters of credit supporting leases are renewable
annually through the expiration of the related lease terms. If not renewed, the beneficiary may draw upon the letters of credit as long as the underlying obligation remains outstanding.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Does not reflect the impact of renewals of operating leases that are scheduled to expire during the periods indicated. Includes franchise lease guarantees and
the lease on our corporate headquarters.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Primarily represents the remaining amount we agreed to pay the former shareholders for any incremental tax benefit of deductions generated by the repurchase of
our 11% Notes or payment of the special event bonuses. The payment is due within 15 days of the filing of the U.S. tax return that claims these additional deductions.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Senior Credit Facilities:

In connection with the Merger, we entered into senior secured credit
facilities. The senior secured credit facilities originally provided for loans of $208.0 million under a $183.0 million senior secured term loan facility (the Term Loan) and a $25.0



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million senior secured revolving facility (the Revolving Facility, and collectively with the Term Loan, the Senior Credit
Facilities). The Revolving Facility also provides for the issuance of letters of credit not to exceed $10.0 million at any one time outstanding and swing-line loans not to exceed $5.0 million at any one time outstanding. In connection with the
Merger, we borrowed the entire $183.0 million available under the Term Loan. On October 17, 2008 and November 18, 2008, we borrowed $8.0 million and $12.0 million, respectively, under the Revolving Facility. The Term Loan Facility matures
in 2014 and the Revolving Facility is scheduled to terminate and come due in 2013.

On March 26, 2009, we entered into an amendment to
the Senior Credit Facilities. The amendment permitted the Company to refinance a portion of the Term Loan by entering into a new Second Lien Facility (defined and discussed below), permanently waived a breach of our total net leverage ratio covenant
for the fiscal quarter ended December 28, 2008, permanently replaced our total net leverage ratio covenant and interest coverage ratio covenant with a minimum EBITDA covenant and a maximum capital expenditure covenant, increased the margin on
our Term Loan and Revolving Facility by 200 basis points, required prepayment of $25.0 million of the Term Loan from the proceeds of the Second Lien Facility, required prepayment of $3.5 million of the Revolving Facility from cash on hand and
simultaneously reduced the Revolving Facilitys amount outstanding and commitment to $21.5 million, and restricted payment of MidOceans annual management fee so that such fee will accrue but not be paid until the Companys EBITDA is
at least $55.0 million and after such goal is obtained, a maximum of $2.0 million of such fees may be paid each year. In the first quarter of 2009, we recorded a $.4 million write-off of deferred financing costs related to the Senior Credit Facility
in connection with the Merger. There were $3.6 million of letters of credit outstanding as of March 29, 2009. The letters of credit were issued instead of cash security deposits under our operating leases or to guarantee construction costs of
our locations, and for run-out claims under our medical plan. As a result, as of March 29, 2009, our remaining borrowing availability under the Senior Credit Facilities was $1.4 million.

In general, borrowings under the Senior Credit Facilities bear interest based, at our option, at either the Eurodollar rate or an alternate base rate (ABR), in each case plus a
margin. Our rate of interest for borrowings under the Senior Credit Facilities, as amended, is LIBOR plus 4.50% or ABR plus 3.50%. In addition to paying interest on outstanding principal under the Senior Credit Facilities, we are required to pay an
unused line fee to the lenders with respect to the unutilized revolving commitments at a rate that shall not exceed 50 basis points per annum.

Our obligations under the Senior Credit Facilities are unconditionally and irrevocably guaranteed by our domestic subsidiaries. In addition, the Senior Credit Facilities are secured by first priority perfected security interests in
substantially all of our and our domestic subsidiaries capital stock, and up to 65% of the outstanding capital stock of our foreign subsidiaries.

The credit agreement governing the Senior Credit Facilities contains certain events of default and restrictive covenants which are customary with respect to facilities of this type, including limitations on the
incurrence of additional indebtedness, dividends, investments, repayment of certain indebtedness, sales of assets, liens, mergers and transactions with affiliates. In addition, the credit agreement, as amended, requires compliance with certain
financial and operating covenants, including a minimum EBITDA covenant and a maximum capital expenditure covenant.

Second Lien Facility

On March 26, 2009, we entered into a new Second Lien Facility. The Second Lien Facility provides for a $25.5 million secured term loan facility.
The loan under the Second Lien Facility was made by Column Investments S.a.r.l., an affiliate of MidOcean. In connection with closing the Second Lien Facility, we borrowed the entire $25.5 million available under the facility which provided for cash
proceeds of $25.0 million (representing a 1.96% discount). The Second Lien Facility matures in 2014.

Borrowings under the Second Lien
Facility bear interest at 15% per annum payable quarterly in arrears. The Second Lien Facility requires no principal payments until maturity. Interest is payable quarterly as follows: (i) prior to the third anniversary, interest is only
payable in kind and (ii) after the third anniversary, interest is payable in cash so long as the Senior Credit Facilities leverage ratio is less than or equal to 2.75:1.00.

Our obligations under the Second Lien Facility are unconditionally and irrevocably guaranteed by our domestic subsidiaries. In addition, the Second Lien Facility is secured by a second priority
perfected security interest in substantially all of our and our domestic subsidiaries capital stock, and up to 65% of the outstanding capital stock of our foreign subsidiaries.

The credit agreement governing the Second Lien Facility contains certain events of default and restrictive covenants which are customary with respect to facilities of this type, including
limitations on the incurrence of indebtedness, dividends, investments, prepayment of certain indebtedness, sales of assets, liens, mergers and transactions with affiliates. In addition, the credit agreement contains (i) cross-acceleration
provisions tied to the Senior Credit Facilities and cross-default provisions tied to the Senior Notes and (ii) compliance with certain financial and operating covenants, including a minimum EBITDA covenant and a maximum capital expenditure
covenant, which are based on the covenants contained in the Senior Credit



29



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##### Table of Contents

Facilities with less restrictive thresholds by approximately 15%. The credit agreement also contains a make-whole provision for any prepayment prior to the
scheduled maturity date.

In connection with the closing of the Second Lien Facility, Holdings issued immediately exercisable warrants to
certain MidOcean entities to acquire 5% of Holdings Units issued and outstanding on the dates of exercise. The fair value of the warrants issued in connection with the credit agreement governing the Second Lien Facility was $6.3 million and was
recorded as paid-in capital with the offset recorded as a discount on the Second Lien Facility.

In connection with the amendment to the
Senior Credit Facilities and entry into the new Second Lien Facility, we recorded deferred financing costs of $2.3 million. Long-term debt of $16.5 million is scheduled to mature in 2013 and $330.3 million is scheduled to mature in 2014 and
thereafter.

Sources and Uses of Cash

The following table summarizes our cash and cash equivalents and working capital as at the end of the first quarters of 2009 and 2008 and the sources and uses of our cash flows during the first quarters of each of those years (in millions):



|                               |  |                             |       |   |                             |   |       |  
|------------------------------ |  | --------------------------- | ----- | - | --------------------------- | - | ----- | -
|                               |  | Quarter EndedMarch 29, 2009 |       |   | Quarter EndedMarch 30, 2008 |  
|Liquidity at the end of period |  |                             |       |   |                             |   |       |  
|Cash and cash equivalents      |  | $                           | 17.8  |   |                             | $ | 13.4  |  
|Working capital                |  |                             | (3.2  | ) |                             |   | (7.6  | )
|                               |  |                            
|Net cash flows                 |  |                             |       |   |                             |   |       |  
|Used in operating activities   |  | $                           | (11.7 | ) |                             | $ | (10.0 | )
|Used in investing activities   |  |                             | (2.8  | ) |                             |   | (4.3  | )
|Used in financing activities   |  |                             | (5.9  | ) |                             |   | (1.1  | )
|                               |  |                             |       |   |                             |   |       |  
|Net decrease in cash           |  | $                           | (20.4 | ) |                             | $ | (15.4 | )
|                               |  |                             |       |   |                             |   |       |  

We have not historically required significant working capital to fund our existing operations and
have financed our capital expenditures and investments in joint ventures through cash generated from operations or our line of credit. Since restaurant businesses do not have large amounts of inventory and accounts receivable, there is generally no
need to finance such items. As a result, like many other restaurant businesses, we may operate with negative working capital. Working capital decreased by $5.4 million during the quarter ended March 29, 2009 as compared to working capital at the end
of 2008 due to our ongoing new store openings, capital expenditures and debt issue costs related to the amendment to the Senior Credit Facility. Cash flow from current operations and our line of credit supports our working capital needs.

Net cash used in operating activities was $11.7 million during the quarter ended March 29, 2009 as compared to $10.0 million used in operating
activities for the quarter ended March 30, 2008. The increase in net cash used in the quarter ended March 29, 2009 is mainly due to a $1.2 million net change in operating assets and liabilities, due primarily to the timing of payment of
our current operating liabilities and prepaids. We historically have our peak annual cash position and highest level of accounts payable and accrued expenses at the end of the holiday season, which coincides with our year end. These payables and
accrued expenses are paid during the first quarter of the ensuing year, predominantly using our year-end cash.

Net cash used in investing
activities was $2.8 million for the quarter ended March 29, 2009. Net cash used in investing activities was $4.3 million for the quarter ended March 30, 2008. Net cash used in the quarter ended March 29, 2009 and March 30, 2008
was mostly capital expenditures utilized primarily for restaurant openings and renovation activity.

Net cash used in financing activities
was $5.9 million for the quarter ended March 29, 2009. This net cash used primarily represents repayment of the Term Loan and Revolver, payment of fees related to the amendment net of the proceeds of the Second Lien Facility. The cash used in
financing activities was $1.1 million in the quarter ended March 30, 2008 and was for principal payments on our Term Loan and distributions to noncontrolling interests.



30



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##### Table of Contents

Critical Accounting Policies and Judgments

Accounting policies are an integral part of the preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America. Understanding
these policies, therefore, is a key factor in understanding our reported results of operations and financial position. Accounting policies often require us to make estimates and assumptions that affect the amounts of assets, liabilities, revenues
and expenses reported in our financial statements. Due to their nature, estimates involve judgments based upon available information. Therefore, actual results or amounts could differ from estimates and the difference could have a material impact on
our consolidated financial statements.

During the quarter ended March 29, 2009, there were no changes in the accounting policies
whose application may have the most significant effect on our reported results of financial position and that require judgments, estimates and assumptions by management that can affect their application and our results of operations and financial
position from those discussed under the heading Critical Accounting Policies and Judgments in Part II Item 7 of our Annual Report on Form 10-K for the year ended December 28, 2008.

Recent Accounting Pronouncements

Refer to Note 2 to
the Notes to Consolidated Financial Statements for information regarding recent accounting pronouncements.

Certain Relationships and Related
Transactions

During the first quarter of 2009, there were no related party transactions other than those discussed under the heading
Certain Relationships and Related Transactions in Part II, Item 13 of our Annual Report on Form 10-K for the year ended December 28, 2008.



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

The Company is exposed to certain risks which exist as part of our ongoing business operation.

We have not purchased future,
forward, option or other instruments to hedge against fluctuations in the prices of the commodities we purchase. As a result, our future commodities purchases are subject to changes in the prices of such commodities. We have entered and sometimes
will enter into short-term, fixed rate contracts for some products we purchase.

Interest Rate Risk

We currently invest our cash on hand in FDIC insured overnight cash management savings accounts earning interest based on the 91 day Treasury bill rates
or FDIC insured overnight money market savings accounts. The indenture governing the Senior Notes limits the nature of our investments to those of lower risk. Although our existing investments are not considered at risk with respect to changes in
interest rates or markets for these instruments, our rate of return on short-term investments could be affected at the time of reinvestment as a result of intervening events.

The interest rate on borrowings under our Senior Credit Facilities is floating and, therefore, is subject to fluctuations. In general, borrowings under the Senior Credit Facilities bear interest
based, at our option, at either a LIBOR rate or an alternative base rate (ABR), in each case plus a margin. Currently, our rate of interest for borrowings under the Senior Credit Facilities, as amended, is LIBOR plus 4.50% or ABR plus
3.50%. A 1% change in our current rate would have an annual effect of approximately $1.7 million. Subsequent to the Merger, we entered into an Interest Rate Cap Letter Agreement with a bank for a portion of our Senior Credit Facilities. This
agreement caps our LIBOR rate at 6.50% through February 2010.

Foreign Exchange Rate Risk

All of our transactions with foreign franchisees have been denominated in, and all payments have been made in, United States dollars, thereby reducing the risks in the changes of the values of
foreign currencies. As a result, we have not purchased future contracts, options or other instruments to hedge against changes in values of foreign currencies.



31



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##### Table of Contents

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

Disclosure Controls and Procedures

The Companys management, with the participation of the Companys Chief Executive Officer and Senior Vice President of Finance,
has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of l934, as amended (the Exchange Act), as of the end of the period
covered by this report. Based on such evaluation, the Companys Chief Executive Officer and Senior Vice President of Finance have concluded that the disclosure controls and procedures are effective to provide reasonable assurance that
information required to be disclosed in our periodic filings under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including those officers, to allow timely decisions regarding required disclosure.

Internal Controls

A control system, no matter how
well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. As there are inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues within our Company have been detected. Inherent limitations include human errors or misjudgments. Controls also can be circumvented by the intentional acts of individuals or groups.

Changes in Internal Controls Over Financial Reporting

There have not been any changes in the Companys internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during quarter ended March 29, 2009 that have materially
affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



32



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

Legal
proceedings included in our Annual Report on Form 10-K for the year ended December 28, 2008 in Note 8 to the Notes to Consolidated Financial Statements have not materially changed.



|Item 1A. | Risk Factors
|-------- | ------------

The risk factors
included in our Annual Report on Form 10-K for the year ended December 28, 2008 have not materially changed. You should consider carefully the risks described under Item 1A Risk Factors in our Annual Report on Form 10-K for the year
ended December 28, 2008. The risks and uncertainties described in our Annual Report on Form 10-K for the period ended December 28, 2008 are not the only ones that may affect us. If any of the events described actually occur, our business
and financial results could be materially adversely affected.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None.



|Item 3. | Default upon senior securities
|------- | ------------------------------

None.



|Item 4. | Submission of matters to a vote of security holders
|------- | ---------------------------------------------------

None.



|Item 5. | Other information
|------- | -----------------

None.



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##### Table of Contents

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



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|*3.1          |  | Restated Certificate of Incorporation of Sbarro, Inc. (Exhibit 3.1 to our Registration Statement on Form S-4, File No. 333-142081)                                                                                                                                                                                                                                                                                                                                                                                                                            
|              | 
|*3.2          |  | Amended and Restated Bylaws of Sbarro, Inc. (Exhibit 3.2 to our Registration Statement on Form S-4, File No. 333-142081)                                                                                                                                                                                                                                                                                                                                                                                                                                      
|              | 
|*4.1          |  | Indenture dated as of January 31, 2007 among MidOcean SBR Acquisition Corp., Sbarro, Inc., the subsidiary guarantors party thereto from time to time and the Bank of New York, as trustee.
(Exhibit 4.1 to our Registration Statement on Form S-4, File No. 333-142081)                                                                                                                                                                                                                                                                                       
|              | 
|*4.2          |  | Registration Rights Agreement dated January 31, 2007 among Sbarro, Inc., Credit Suisse Securities (USA) LLC and Banc of America Securities LLC, as Initial Purchasers. (Exhibit 4.2 to our
Registration Statement on Form S-4, File No. 333-142081)                                                                                                                                                                                                                                                                                                           
|              | 
|*4.3          |  | MidOcean SBR Holdings, LLC Unit Purchase Warrant dated as of March 26, 2009 issued to MidOcean Partners III, L.P. (Exhibit 4.3 to our Annual Report on Form 10-K for the year ended December 28,
2008)                                                                                                                                                                                                                                                                                                                                                        
|              | 
|*4.4          |  | MidOcean SBR Holdings, LLC Unit Purchase Warrant dated as of March 26, 2009 issued to MidOcean Partners III, L.P. (exhibit 4.4 to our Annual Report on Form 10-K for the year ended December 28,
2008)                                                                                                                                                                                                                                                                                                                                                        
|              | 
|*4.5          |  | MidOcean SBR Holdings, LLC Unit Purchase Warrant dated as of March 26, 2009 issued to MidOcean Partners III-D, L.P. (Exhibit 4.5 to our Annual Report on Form 10-K for the year ended December 28,
2008)                                                                                                                                                                                                                                                                                                                                                      
|              | 
|*10.1         |  | First Amendment to Credit Agreement dated as of March 26, 2009 among Sbarro, Inc., Sbarro Holdings, LLC, the lenders party thereto from time to time, Bank of America, N.A. as Administrative
Agent, Collateral Agent, Swing Line Lender and L/C Issuer, Credit Suisse, as Syndication Agent, Banc of America Securities LLC and Credit Suisse Securities (USA) LLC, as Joint Lead Arrangers and Book Managers, Natixis and Bank of Ireland, as
Co-Documentation Agents. (Exhibit 10.9 to our Annual Report on Form 10-K for the year ended December 28, 2008)
|              | 
|*10.2         |  | Second Lien Credit Agreement dated as of March 26, 2009 among Sbarro, Inc., Sbarro Holdings, LLC, the lenders party thereto from time to time, and Natixis, as Administrative Agent and Collateral
Agent. (Exhibit 10.10 to our Annual Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                              
|              | 
|*10.3         |  | Intercreditor Agreement dated as of March 26, 2009 between Bank of America, N.A., as Collateral Agent for first lien facility, and Natixis, as Collateral Agent for second lien facility. (Exhibit
10.11 to our Annual Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                                              
|              | 
|*10.4         |  | Security Agreement dated as of March 26, 2009 among Sbarro, Inc., Sbarro Holdings, LLC, the other loan parties thereto from time to time, and Natixis, as Collateral Agent. (Exhibit 10.12 to our
Annual Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                                                            
|              | 
|*10.5         |  | Guaranty dated as of March 26, 2009 among Sbarro Holdings, LLC, the subsidiary guarantors party thereto from time to time, and Natixis, as Administrative Agent. (Exhibit 10.13 to our Annual
Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                                                                       
|              | 
|*10.6         |  | Pledge Agreement dated as of March 26, 2009 among Sbarro, Inc., Sbarro Holdings, LLC, the other loan parties thereto from time to time, and Natixis, as Collateral Agent. (Exhibit 10.14 to our
Annual Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                                                              
|              | 
|*+10.7        |  | Corporate Office Employee Bonus Plan for 2009. (Exhibit 10.20 to our Annual Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                                                                                                                                                                                         
|              | 
|*+10.8        |  | Employment Agreement dated January 12, 2009 by and among MidOcean SBR Holdings, LLC, Sbarro, Inc. and Daniel G. Montgomery. (Exhibit 10.1 to our Current Report on Form 8-K dated January 12,
2009)                                                                                                                                                                                                                                                                                                                                                           
|              | 
|*+10.9        |  | Cooperation Letter Agreement dated January 12, 2009 by and among MidOcean SBR Holdings, LLC, Sbarro, Inc. and Anthony J. Puglisi. (Exhibit 10.2 to our Current Report on Form 8-K dated January
12, 2009)                                                                                                                                                                                                                                                                                                                                                     
|              | 
|31.01         |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|              | 
|31.02         |  | Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|              | 
|**32.01       |  | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|              | 
|**32.02       |  | Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                        



|* | Incorporated by reference to the document indicated.
|- | ----------------------------------------------------

|** | These certifications are being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are not being filed as part this Quarterly Report on Form 10-Q or
as a separate disclosure document.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|+ | Management contract or compensatory plan.
|- | -----------------------------------------



34



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SBARRO, INC.

Registrant



|                   |  |     |  |                                                                             |  | 
|------------------ |  | --- |  | --------------------------------------------------------------------------- |  | 
|Date: May 13, 2009 |  | By: |  | /s/ Peter Beaudrault                                                        |  | 
|                   |  |     |  | Peter Beaudrault,                                                           |  | 
|                   |  |     |  | Chairman of the Board of Directors, President and
Chief Executive Officer   |  | 
|                   |  |     | 
|Date: May 13, 2009 |  | By: |  | /s/ Carolyn M. Spatafora                                                    |  | 
|                   |  |     |  | Carolyn M. Spatafora                                                        |  | 
|                   |  |     |  | Senior Vice President of Finance Principal Financial and Accounting Officer



35



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##### Table of Contents

EXHIBIT INDEX



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



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|*3.1          |  | Restated Certificate of Incorporation of Sbarro, Inc. (Exhibit 3.1 to our Registration Statement on Form S-4, File No. 333-142081)                                                                                                                                                                                                                                                                                                                                                                                                                            
|              | 
|*3.2          |  | Amended and Restated Bylaws of Sbarro, Inc. (Exhibit 3.2 to our Registration Statement on Form S-4, File No. 333-142081)                                                                                                                                                                                                                                                                                                                                                                                                                                      
|              | 
|*4.1          |  | Indenture dated as of January 31, 2007 among MidOcean SBR Acquisition Corp., Sbarro, Inc., the subsidiary guarantors party thereto from time to time and the Bank of New York, as trustee.
(Exhibit 4.1 to our Registration Statement on Form S-4, File No. 333-142081)                                                                                                                                                                                                                                                                                       
|              | 
|*4.2          |  | Registration Rights Agreement dated January 31, 2007 among Sbarro, Inc., Credit Suisse Securities (USA) LLC and Banc of America Securities LLC, as Initial Purchasers. (Exhibit 4.2 to our
Registration Statement on Form S-4, File No. 333-142081)                                                                                                                                                                                                                                                                                                           
|              | 
|*4.3          |  | MidOcean SBR Holdings, LLC Unit Purchase Warrant dated as of March 26, 2009 issued to MidOcean Partners III, L.P. (Exhibit 4.3 to our Annual Report on Form 10-K for the year ended December 28,
2008)                                                                                                                                                                                                                                                                                                                                                        
|              | 
|*4.4          |  | MidOcean SBR Holdings, LLC Unit Purchase Warrant dated as of March 26, 2009 issued to MidOcean Partners III, L.P. (exhibit 4.4 to our Annual Report on Form 10-K for the year ended December 28,
2008)                                                                                                                                                                                                                                                                                                                                                        
|              | 
|*4.5          |  | MidOcean SBR Holdings, LLC Unit Purchase Warrant dated as of March 26, 2009 issued to MidOcean Partners III-D, L.P. (Exhibit 4.5 to our Annual Report on Form 10-K for the year ended December 28,
2008)                                                                                                                                                                                                                                                                                                                                                      
|              | 
|*10.1         |  | First Amendment to Credit Agreement dated as of March 26, 2009 among Sbarro, Inc., Sbarro Holdings, LLC, the lenders party thereto from time to time, Bank of America, N.A. as Administrative
Agent, Collateral Agent, Swing Line Lender and L/C Issuer, Credit Suisse, as Syndication Agent, Banc of America Securities LLC and Credit Suisse Securities (USA) LLC, as Joint Lead Arrangers and Book Managers, Natixis and Bank of Ireland, as
Co-Documentation Agents. (Exhibit 10.9 to our Annual Report on Form 10-K for the year ended December 28, 2008)
|              | 
|*10.2         |  | Second Lien Credit Agreement dated as of March 26, 2009 among Sbarro, Inc., Sbarro Holdings, LLC, the lenders party thereto from time to time, and Natixis, as Administrative Agent and Collateral
Agent. (Exhibit 10.10 to our Annual Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                              
|              | 
|*10.3         |  | Intercreditor Agreement dated as of March 26, 2009 between Bank of America, N.A., as Collateral Agent for first lien facility, and Natixis, as Collateral Agent for second lien facility. (Exhibit
10.11 to our Annual Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                                              
|              | 
|*10.4         |  | Security Agreement dated as of March 26, 2009 among Sbarro, Inc., Sbarro Holdings, LLC, the other loan parties thereto from time to time, and Natixis, as Collateral Agent. (Exhibit 10.12 to our
Annual Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                                                            
|              | 
|*10.5         |  | Guaranty dated as of March 26, 2009 among Sbarro Holdings, LLC, the subsidiary guarantors party thereto from time to time, and Natixis, as Administrative Agent. (Exhibit 10.13 to our Annual
Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                                                                       
|              | 
|*10.6         |  | Pledge Agreement dated as of March 26, 2009 among Sbarro, Inc., Sbarro Holdings, LLC, the other loan parties thereto from time to time, and Natixis, as Collateral Agent. (Exhibit 10.14 to our
Annual Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                                                              
|              | 
|*+10.7        |  | Corporate Office Employee Bonus Plan for 2009. (Exhibit 10.20 to our Annual Report on Form 10-K for the year ended December 28, 2008)                                                                                                                                                                                                                                                                                                                                                                                                                         
|              | 
|*+10.8        |  | Employment Agreement dated January 12, 2009 by and among MidOcean SBR Holdings, LLC, Sbarro, Inc. and Daniel G. Montgomery. (Exhibit 10.1 to our Current Report on Form 8-K dated January 12,
2009)                                                                                                                                                                                                                                                                                                                                                           
|              | 
|*+10.9        |  | Cooperation Letter Agreement dated January 12, 2009 by and among MidOcean SBR Holdings, LLC, Sbarro, Inc. and Anthony J. Puglisi. (Exhibit 10.2 to our Current Report on Form 8-K dated January
12, 2009)                                                                                                                                                                                                                                                                                                                                                     
|              | 
|31.01         |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|              | 
|31.02         |  | Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|              | 
|**32.01       |  | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|              | 
|**32.02       |  | Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                        



|* | Incorporated by reference to the document indicated.
|- | ----------------------------------------------------

|** | These certifications are being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are not being filed as part this Quarterly Report on Form 10-Q or
as a separate disclosure document.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|+ | Management contract or compensatory plan.
|- | -----------------------------------------



36