##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedApril 20, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from __________ to __________.
 Commission file number 333-57925
 Perkins & Marie Callenders Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    62-1254388(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. employer identification no.)6075 Poplar Avenue, Suite 800, Memphis, TN
    
    38119(Address of principal executive offices)
    
    (Zip code)
  
  þ  þ o
  Large accelerated filer oAccelerated filer oNon-accelerated filer þ(Do not check if a smaller reporting company)Smaller reporting company o þ  o þ




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##### 



TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements:Consolidated Statements of Operations (Unaudited)  First Quarters Ended April 20, 2008 and April 22, 2007
    
    
    2Consolidated Balance Sheets  April 20, 2008 (Unaudited) and December 30, 2007
    
    
    3Consolidated Statements of Cash Flows (Unaudited)  First Quarters Ended April 20, 2008 and April 22, 2007
    
    
    5Consolidated Statements of Stockholders Investment (Unaudited)  For the Period from December 31, 2006 through April 20, 2008
    
    
    6Notes to Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    35PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    36Item 1a. Risk Factors
    
    
    36Item 6. Exhibits
    
    
    36SIGNATURE
    
    
    37Ex-31.1 Section 302 Certification of the CEOEx-31.2 Section 302 Certification of the CFOEx-32.1 Section 906 Certification of the CEOEx-32.2 Section 906 Certification of the CFO




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##### Table of Contents



First Quarter
    
    
    First QuarterEnded
    
    
    EndedApril 20, 2008
    
    
    April 22, 2007REVENUES:Food sales
    
    $
    173,468
    
    
    
    168,888Franchise and other revenue
    
    
    8,932
    
    
    
    9,398Total revenues
    
    
    182,400
    
    
    
    178,286COSTS AND EXPENSES:Cost of sales (excluding depreciation shown below):Food cost
    
    
    50,402
    
    
    
    47,323Labor and benefits
    
    
    59,489
    
    
    
    58,321Operating expenses
    
    
    46,953
    
    
    
    44,094General and administrative
    
    
    15,017
    
    
    
    14,224Transaction costs
    
    
    
    
    
    
    184Depreciation and amortization
    
    
    7,606
    
    
    
    7,121Interest, net
    
    
    10,277
    
    
    
    9,481Asset impairments and closed store expenses
    
    
    76
    
    
    
    155Other, net
    
    
    (59
    )
    
    
    (30
    )Total costs and expenses
    
    
    189,761
    
    
    
    180,873Loss before income taxes and minority interests
    
    
    (7,361
    )
    
    
    (2,587
    )Provision for income taxes
    
    
    (181
    )
    
    
    Minority interests
    
    
    (46
    )
    
    
    (162
    )NET LOSS
    
    $
    (7,588
    )
    
    
    (2,749
    )
  2




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##### Table of Contents



April 20,
    
    
    December 30,2008
    
    
    2007(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    2,942
    
    
    
    19,032Restricted cash
    
    
    9,306
    
    
    
    10,098Receivables, less allowances for doubtful accounts of $710
and $1,542 in 2008 and 2007, respectively
    
    
    17,933
    
    
    
    17,221Inventories
    
    
    13,165
    
    
    
    13,239Prepaid expenses and other current assets
    
    
    5,231
    
    
    
    5,732Total current assets
    
    
    48,577
    
    
    
    65,322PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of $115,526 and $109,441 in
2008 and 2007, respectively
    
    
    97,978
    
    
    
    99,311INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS
    
    
    55
    
    
    
    53GOODWILL
    
    
    30,038
    
    
    
    30,038INTANGIBLE ASSETS, net of accumulated amortization of
$18,255 and $17,494 in 2008 and 2007, respectively
    
    
    152,556
    
    
    
    153,316DEFERRED INCOME TAXES
    
    
    242
    
    
    
    242OTHER ASSETS
    
    
    14,713
    
    
    
    14,660TOTAL ASSETS
    
    $
    344,159
    
    
    
    362,942
  3




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##### Table of Contents



April 20,
    
    
    December 30,2008
    
    
    2007(Unaudited)LIABILITIES AND STOCKHOLDERS INVESTMENTCURRENT LIABILITIES:Accounts payable
    
    $
    20,840
    
    
    
    25,559Accrued expenses
    
    
    46,703
    
    
    
    52,621Accrued income taxes
    
    
    170
    
    
    
    Franchise advertising contributions
    
    
    6,522
    
    
    
    5,940Current maturities of long-term debt and capital lease obligations
    
    
    8,938
    
    
    
    9,464Total current liabilities
    
    
    83,173
    
    
    
    93,584CAPITAL LEASE OBLIGATIONS, less current maturities
    
    
    13,171
    
    
    
    11,987LONG-TERM DEBT, less current maturities
    
    
    297,604
    
    
    
    298,009DEFERRED RENT
    
    
    13,891
    
    
    
    13,467OTHER LIABILITIES
    
    
    13,848
    
    
    
    15,520MINORITY
INTERESTS IN CONSOLIDATED PARTNERSHIPS
    
    
    211
    
    
    
    333STOCKHOLDERS INVESTMENT:Common stock, $.01 par value; 100,000 shares authorized;
10,820 issued and outstanding
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    137,738
    
    
    
    137,923Other comprehensive income
    
    
    78
    
    
    
    86Accumulated deficit
    
    
    (215,556
    )
    
    
    (207,968
    )Total stockholders investment
    
    
    (77,739
    )
    
    
    (69,958
    )TOTAL LIABILITIES AND STOCKHOLDERS INVESTMENT
    
    $
    344,159
    
    
    
    362,942
  4




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First Quarter
    
    
    First QuarterEnded
    
    
    EndedApril 20, 2008
    
    
    April 22, 2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (7,588
    )
    
    
    (2,749
    )Adjustments
to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    7,606
    
    
    
    7,121Amortization of debt discount
    
    
    102
    
    
    
    99Other non-cash income and expense items
    
    
    (223
    )
    
    
    166(Gain) loss on disposition of assets
    
    
    (156
    )
    
    
    9Asset write-down
    
    
    232
    
    
    
    146Minority interests
    
    
    46
    
    
    
    162Equity in net income of unconsolidated partnerships
    
    
    (2
    )
    
    
    (14
    )Net changes in operating assets and liabilities
    
    
    (9,349
    )
    
    
    (13,421
    )Total adjustments
    
    
    (1,744
    )
    
    
    (5,732
    )Net cash used in operating activities
    
    
    (9,332
    )
    
    
    (8,481
    )CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (5,728
    )
    
    
    (5,418
    )Proceeds from sale of assets
    
    
    
    
    
    
    3Net cash used in investing activities
    
    
    (5,728
    )
    
    
    (5,415
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (157
    )
    
    
    (241
    )Lessor financing
    
    
    1,542
    
    
    
    Payments on long-term debt
    
    
    (506
    )
    
    
    (256
    )(Payments on) proceeds from revolver, net
    
    
    (500
    )
    
    
    9,600Distributions to minority partners
    
    
    (168
    )
    
    
    (152
    )Debt issuance costs
    
    
    (1,056
    )
    
    
    Return of capital
    
    
    (185
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (1,030
    )
    
    
    8,951Net decrease in cash and cash equivalents
    
    
    (16,090
    )
    
    
    (4,945
    )CASH AND CASH EQUIVALENTS:Balance, beginning of period
    
    
    19,032
    
    
    
    9,069Balance, end of period
    
    $
    2,942
    
    
    
    4,124
  5




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AccumulatedAdditional
    
    
    OtherCommon
    
    
    Paid-in
    
    
    Comprehensive
    
    
    RetainedStock
    
    
    Capital
    
    
    Income
    
    
    Deficit
    
    
    TotalBalances at December 31, 2006
    
    $
    1
    
    
    
    136,131
    
    
    
    13
    
    
    
    (191,816
    )
    
    
    (55,671
    )Cumulative adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183
    
    
    
    183Capital contribution
    
    
    
    
    
    
    1,792
    
    
    
    
    
    
    
    
    
    
    
    1,792Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,335
    )
    
    
    (16,335
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    73Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,262
    )Balances at December 30, 2007
    
    
    1
    
    
    
    137,923
    
    
    
    86
    
    
    
    (207,968
    )
    
    
    (69,958
    )Return of capital
    
    
    
    
    
    
    (185
    )
    
    
    
    
    
    
    
    
    
    
    (185
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,588
    )
    
    
    (7,588
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,596
    )Balances at April 20, 2008
    
    $
    1
    
    
    
    137,738
    
    
    
    78
    
    
    
    (215,556
    )
    
    
    (77,739
    )
  6




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##### Table of Contents



(1) Organization
     (2) Basis of Presentation
   (3) Accounting Reporting Period
  (4) Commitments, Contingencies and Concentrations
  7




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##### Table of Contents



(5) Supplemental Cash Flow Information
  First Quarter
    
    
    First QuarterEnded
    
    
    EndedApril 20, 2008
    
    
    April 22, 2007(Increase) decrease in:Receivables
    
    $
    (503
    )
    
    
    1,432Inventories
    
    
    74
    
    
    
    (1,300
    )Prepaid expenses and other current assets
    
    
    501
    
    
    
    (680
    )Other assets
    
    
    1,017
    
    
    
    598Increase (decrease) in:Accounts payable
    
    
    (4,731
    )
    
    
    (3,807
    )Accrued expenses and other current liabilities
    
    
    (3,753
    )
    
    
    (6,942
    )Other liabilities
    
    
    (1,954
    )
    
    
    (2,722
    )Net change in operating assets and liabilities
    
    $
    (9,349
    )
    
    
    (13,421
    )
 8




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##### Table of Contents



(6) Accrued Expenses
  April 20,
    
    
    December 30,2008
    
    
    2007Payroll and related benefits
    
    $
    15,364
    
    
    
    16,016Property, real estate and sales taxes
    
    
    6,475
    
    
    
    4,325Gift cards and gift certificates
    
    
    5,702
    
    
    
    7,099Interest
    
    
    3,012
    
    
    
    6,310Insurance
    
    
    1,403
    
    
    
    1,539Advertising
    
    
    1,463
    
    
    
    937Management fees
    
    
    2,080
    
    
    
    4,065Other
    
    
    11,204
    
    
    
    12,330Total accrued expenses
    
    $
    46,703
    
    
    
    52,621
 (7) Segment Reporting
   9




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First Quarter
    
    
    First QuarterEnded
    
    
    EndedApril 20, 2008
    
    
    April 22, 2007RevenuesRestaurant operations
    
    $
    159,035
    
    
    
    156,352Franchise operations
    
    
    7,432
    
    
    
    8,029Foxtail
    
    
    19,776
    
    
    
    18,583Intersegment revenue
    
    
    (5,343
    )
    
    
    (6,047
    )Other
    
    
    1,500
    
    
    
    1,369Total
    
    $
    182,400
    
    
    
    178,286Segment net income (loss)Restaurant operations
    
    
    8,190
    
    
    
    10,791Franchise operations
    
    
    6,821
    
    
    
    7,223Foxtail
    
    
    (76
    )
    
    
    1,507Other
    
    
    (22,523
    )
    
    
    (22,270
    )Total
    
    $
    (7,588
    )
    
    
    (2,749
    )
 April 20, 2008
    
    
    December 30, 2007Segment AssetsRestaurant operations
    
    
    138,136
    
    
    
    140,848Franchise operations
    
    
    122,075
    
    
    
    121,199Foxtail
    
    
    40,690
    
    
    
    42,329Other
    
    
    43,258
    
    
    
    58,566Total
    
    $
    344,159
    
    
    
    362,942
 10




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##### Table of Contents



First Quarter
    
    
    First QuarterEnded
    
    
    EndedApril 20, 2008
    
    
    April 22, 2007General and administrative expenses
    
    $
    12,384
    
    
    
    12,574Depreciation and amortization expenses
    
    
    1,010
    
    
    
    903Interest expense, net
    
    
    10,277
    
    
    
    9,481Gain on disposition of assets, net
    
    
    (156
    )
    
    
    9Asset write-down
    
    
    232
    
    
    
    146Transaction costs
    
    
    
    
    
    
    184Provision for income taxes
    
    
    181
    
    
    
    Minority
interests
    
    
    46
    
    
    
    162Licensing revenue
    
    
    (1,417
    )
    
    
    (1,229
    )Other
    
    
    (34
    )
    
    
    40Total other segment loss
    
    $
    22,523
    
    
    
    22,270
 (8) Long-Term Debt
    11




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##### Table of Contents



(9) Income Tax
    (10) Employee Subscription Agreements and Strip Subscription Agreements
     Class A Units
    
    Class C UnitsUnits outstanding as of December 30, 2007
    
    
    1,122,262
    
    
    
    17,673Granted
    
    
    
    
    
    
    Forfeited
    
    
    (1,841
    )
    
    
    (1,841
    )Units outstanding as of April 20, 2008
    
    
    1,120,421
    
    
    
    15,832
   12




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##### Table of Contents



Time VestingUnvested
    
    VestedClass C Units as of December 30, 2007
    
    
    112,725
    
    
    
    Granted
    
    
    10,973
    
    
    
    Purchased
    
    
    
    
    
    
    Vested
    
    
    (25,104
    )
    
    
    25,104Forfeited
    
    
    (19,660
    )
    
    
    Class C Units as of April 20, 2008
    
    
    78,934
    
    
    
    25,104
 (11) Recent Accounting Pronouncements
        13




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##### Table of Contents



(12) Condensed Consolidated Financial Information
   14




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##### Table of Contents



Consolidating Statement of Operations for the First Quarter ended April 20, 2008 (unaudited; in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCIREVENUES:Food sales
    
    $
    108,309
    
    
    
    56,416
    
    
    
    
    
    
    
    8,743
    
    
    
    
    
    
    
    173,468Franchise and other revenue
    
    
    6,036
    
    
    
    2,896
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,932Total revenues
    
    
    114,345
    
    
    
    59,312
    
    
    
    
    
    
    
    8,743
    
    
    
    
    
    
    
    182,400COSTS AND EXPENSES:Cost of sales (excluding depreciation shown
below):Food cost
    
    
    30,988
    
    
    
    16,954
    
    
    
    
    
    
    
    2,460
    
    
    
    
    
    
    
    50,402Labor and benefits
    
    
    36,315
    
    
    
    20,152
    
    
    
    
    
    
    
    3,022
    
    
    
    
    
    
    
    59,489Operating expenses
    
    
    28,289
    
    
    
    15,729
    
    
    
    
    
    
    
    2,935
    
    
    
    
    
    
    
    46,953General and administrative
    
    
    13,154
    
    
    
    1,863
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,017Transaction costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    5,426
    
    
    
    1,980
    
    
    
    
    
    
    
    200
    
    
    
    
    
    
    
    7,606Interest, net
    
    
    9,994
    
    
    
    283
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,277Asset impairments and closed store expenses
    
    
    144
    
    
    
    (78
    )
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    76Other, net
    
    
    (59
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59
    )Total costs and expenses
    
    
    124,251
    
    
    
    56,883
    
    
    
    
    
    
    
    8,627
    
    
    
    
    
    
    
    189,761(Loss) income before income taxes and
minority interests
    
    
    (9,906
    )
    
    
    2,429
    
    
    
    
    
    
    
    116
    
    
    
    
    
    
    
    (7,361
    )Provision for income taxes
    
    
    (181
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (181
    )Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46
    )
    
    
    
    
    
    
    (46
    )Equity in earnings (loss) of subsidiaries
    
    
    2,499
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,499
    )
    
    
    NET (LOSS) INCOME
    
    $
    (7,588
    )
    
    
    2,429
    
    
    
    
    
    
    
    70
    
    
    
    (2,499
    )
    
    
    (7,588
    )
 15




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##### Table of Contents



Consolidating Statement of Operations for the First Quarter ended April 22, 2007 (unaudited; in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCIREVENUES:Food sales
    
    $
    101,939
    
    
    
    57,972
    
    
    
    
    
    
    
    8,977
    
    
    
    
    
    
    
    168,888Franchise and other revenue
    
    
    6,416
    
    
    
    2,982
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,398Total revenues
    
    
    108,355
    
    
    
    60,954
    
    
    
    
    
    
    
    8,977
    
    
    
    
    
    
    
    178,286COSTS AND EXPENSES:Cost of sales (excluding depreciation shown
below):Food cost
    
    
    27,802
    
    
    
    16,971
    
    
    
    
    
    
    
    2,550
    
    
    
    
    
    
    
    47,323Labor and benefits
    
    
    34,923
    
    
    
    20,624
    
    
    
    
    
    
    
    2,774
    
    
    
    
    
    
    
    58,321Operating expenses
    
    
    26,053
    
    
    
    14,985
    
    
    
    
    
    
    
    3,056
    
    
    
    
    
    
    
    44,094General and administrative
    
    
    12,397
    
    
    
    1,827
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,224Transaction costs
    
    
    47
    
    
    
    137
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    184Depreciation and amortization
    
    
    4,993
    
    
    
    1,739
    
    
    
    
    
    
    
    389
    
    
    
    
    
    
    
    7,121Interest, net
    
    
    9,144
    
    
    
    334
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    9,481Asset impairments and closed store expenses
    
    
    12
    
    
    
    142
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    155Other, net
    
    
    (11
    )
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30
    )Total costs and expenses
    
    
    115,360
    
    
    
    56,740
    
    
    
    
    
    
    
    8,773
    
    
    
    
    
    
    
    180,873(Loss) income before income taxes and
minority interests
    
    
    (7,005
    )
    
    
    4,214
    
    
    
    
    
    
    
    204
    
    
    
    
    
    
    
    (2,587
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (162
    )
    
    
    
    
    
    
    (162
    )Equity in earnings (loss) of subsidiaries
    
    
    4,256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,256
    )
    
    
    NET (LOSS) INCOME
    
    $
    (2,749
    )
    
    
    4,214
    
    
    
    
    
    
    
    42
    
    
    
    (4,256
    )
    
    
    (2,749
    )
 16




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##### Table of Contents



Consolidating Balance Sheet as of April 20, 2008 (unaudited; in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCIASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    2,476
    
    
    
    2,183
    
    
    
    
    
    
    
    (1,717
    )
    
    
    
    
    
    
    2,942Restricted cash
    
    
    9,306
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,306Trade receivables, less allowance for
doubtful accounts
    
    
    12,335
    
    
    
    5,565
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    17,933Inventories
    
    
    8,831
    
    
    
    4,143
    
    
    
    
    
    
    
    191
    
    
    
    
    
    
    
    13,165Prepaid expenses and other current assets
    
    
    4,641
    
    
    
    591
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    5,231Total current assets
    
    
    37,589
    
    
    
    12,482
    
    
    
    
    
    
    
    (1,494
    )
    
    
    
    
    
    
    48,577PROPERTY AND EQUIPMENT, net
    
    
    66,649
    
    
    
    28,820
    
    
    
    
    
    
    
    2,509
    
    
    
    
    
    
    
    97,978INVESTMENTS IN UNCONSOLIDATED
PARTNERSHIPS
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    55GOODWILL
    
    
    30,038
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,038INTANGIBLE ASSETS, net
    
    
    152,338
    
    
    
    218
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152,556INVESTMENTS IN SUBSIDIARIES
    
    
    (90,240
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,240
    
    
    
    DUE FROM SUBSIDIARIES
    
    
    93,361
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (93,361
    )
    
    
    DEFERRED INCOME TAXES
    
    
    242
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    242OTHER ASSETS
    
    
    13,277
    
    
    
    1,226
    
    
    
    
    
    
    
    210
    
    
    
    
    
    
    
    14,713TOTAL ASSETS
    
    $
    303,254
    
    
    
    42,792
    
    
    
    
    
    
    
    1,234
    
    
    
    (3,121
    )
    
    
    344,159LIABILITIES AND STOCKHOLDERS INVESTMENTCURRENT LIABILITIES:Accounts payable
    
    
    13,855
    
    
    
    6,562
    
    
    
    
    
    
    
    423
    
    
    
    
    
    
    
    20,840Accrued expenses
    
    
    30,915
    
    
    
    14,513
    
    
    
    
    
    
    
    1,275
    
    
    
    
    
    
    
    46,703Accrued income taxes
    
    
    170
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170Franchise advertising contributions
    
    
    6,522
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,522Current maturities of long term debt and
capital lease obligations
    
    
    8,652
    
    
    
    286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,938Total current liabilities
    
    
    60,114
    
    
    
    21,361
    
    
    
    
    
    
    
    1,698
    
    
    
    
    
    
    
    83,173CAPITAL LEASE OBLIGATIONS, less
current maturities
    
    
    7,643
    
    
    
    5,528
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,171LONG-TERM DEBT, less current
maturities
    
    
    297,574
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    297,604DEFERRED RENT
    
    
    8,533
    
    
    
    5,277
    
    
    
    
    
    
    
    81
    
    
    
    
    
    
    
    13,891OTHER LIABILITIES
    
    
    7,129
    
    
    
    6,719
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,848DUE TO PARENT
    
    
    
    
    
    
    94,774
    
    
    
    
    
    
    
    4,038
    
    
    
    (98,812
    )
    
    
    MINORITY
INTERESTS IN
CONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211
    
    
    
    
    
    
    
    211STOCKHOLDERS INVESTMENT:Common stock
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital in excess of par
    
    
    
    
    
    
    72,478
    
    
    
    
    
    
    
    
    
    
    
    (72,478
    )
    
    
    Additional paid-in capital
    
    
    137,738
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,738Treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Retained (deficit) earnings
    
    
    (215,556
    )
    
    
    (163,375
    )
    
    
    
    
    
    
    (4,794
    )
    
    
    168,169
    
    
    
    (215,556
    )Total stockholders investment
    
    
    (77,739
    )
    
    
    (90,897
    )
    
    
    
    
    
    
    (4,794
    )
    
    
    95,691
    
    
    
    (77,739
    )TOTAL LIABILITIES AND
STOCKHOLDERS INVESTMENT
    
    $
    303,254
    
    
    
    42,792
    
    
    
    
    
    
    
    1,234
    
    
    
    (3,121
    )
    
    
    344,159
 17




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##### Table of Contents



Consolidating Balance Sheet as of December 30, 2007 (in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCIASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    19,391
    
    
    
    428
    
    
    
    
    
    
    
    (787
    )
    
    
    
    
    
    
    19,032Restricted cash
    
    
    10,098
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,098Trade receivables, less allowance for
doubtful accounts
    
    
    12,000
    
    
    
    5,180
    
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    17,221Inventories
    
    
    8,108
    
    
    
    4,839
    
    
    
    
    
    
    
    292
    
    
    
    
    
    
    
    13,239Prepaid expenses and other current assets
    
    
    5,053
    
    
    
    679
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,732Total current assets
    
    
    54,650
    
    
    
    11,126
    
    
    
    
    
    
    
    (454
    )
    
    
    
    
    
    
    65,322PROPERTY AND EQUIPMENT, net
    
    
    66,956
    
    
    
    29,530
    
    
    
    
    
    
    
    2,825
    
    
    
    
    
    
    
    99,311INVESTMENTS IN
UNCONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    53GOODWILL
    
    
    30,038
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,038INTANGIBLE ASSETS, net
    
    
    153,077
    
    
    
    239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153,316INVESTMENTS IN SUBSIDIARIES
    
    
    (92,739
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,739
    
    
    
    DUE FROM SUBSIDIARIES
    
    
    89,283
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (89,283
    )
    
    
    DEFERRED INCOME TAXES
    
    
    242
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    242OTHER ASSETS
    
    
    12,777
    
    
    
    (497
    )
    
    
    
    
    
    
    2,380
    
    
    
    
    
    
    
    14,660TOTAL ASSETS
    
    $
    314,284
    
    
    
    40,441
    
    
    
    
    
    
    
    4,761
    
    
    
    3,456
    
    
    
    362,942LIABILITIES AND STOCKHOLDERS INVESTMENTCURRENT LIABILITIES:Accounts payable
    
    
    16,369
    
    
    
    8,420
    
    
    
    
    
    
    
    770
    
    
    
    
    
    
    
    25,559Accrued expenses
    
    
    33,569
    
    
    
    17,221
    
    
    
    
    
    
    
    1,831
    
    
    
    
    
    
    
    52,621Franchise advertising contributions
    
    
    5,940
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,940Current maturities of long term debt and
capital lease obligations
    
    
    9,134
    
    
    
    330
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,464Total current liabilities
    
    
    65,012
    
    
    
    25,971
    
    
    
    
    
    
    
    2,601
    
    
    
    
    
    
    
    93,584CAPITAL LEASE OBLIGATIONS, less
current maturities
    
    
    6,147
    
    
    
    5,840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,987LONG-TERM DEBT, less current
maturities
    
    
    297,972
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298,009DEFERRED RENT
    
    
    7,827
    
    
    
    5,556
    
    
    
    
    
    
    
    84
    
    
    
    
    
    
    
    13,467OTHER LIABILITIES
    
    
    7,284
    
    
    
    8,235
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    15,520DUE TO PARENT
    
    
    
    
    
    
    92,192
    
    
    
    
    
    
    
    (2,909
    )
    
    
    (89,283
    )
    
    
    MINORITY
INTERESTS IN
CONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333
    
    
    
    
    
    
    
    333STOCKHOLDERS INVESTMENT:Common stock
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Preferred stock
    
    
    
    
    
    
    63,277
    
    
    
    
    
    
    
    
    
    
    
    (63,277
    )
    
    
    Capital in excess of par
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    9,515
    
    
    
    (9,338
    )
    
    
    Additional paid-in capital
    
    
    137,923
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,923Treasury stock
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    Other comprehensive income
    
    
    86
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86Retained (deficit) earnings
    
    
    (207,968
    )
    
    
    (160,353
    )
    
    
    
    
    
    
    (4,864
    )
    
    
    165,217
    
    
    
    (207,968
    )Total stockholders investment
    
    
    (69,958
    )
    
    
    (97,390
    )
    
    
    
    
    
    
    4,651
    
    
    
    92,739
    
    
    
    (69,958
    )TOTAL LIABILITIES AND
STOCKHOLDERS INVESTMENT
    
    $
    314,284
    
    
    
    40,441
    
    
    
    
    
    
    
    4,761
    
    
    
    3,456
    
    
    
    362,942
 18




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##### Table of Contents



Consolidating Statement of Cash Flows for the First Quarter ended April 20, 2008 (unaudited; in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCICASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (7,588
    )
    
    
    2,429
    
    
    
    
    
    
    
    70
    
    
    
    (2,499
    )
    
    
    (7,588
    )Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:Equity in the earnings of subsidiaries
    
    
    (2,499
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,499
    
    
    
    Depreciation and amortization
    
    
    5,426
    
    
    
    1,980
    
    
    
    
    
    
    
    200
    
    
    
    
    
    
    
    7,606Amortization of debt discount
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Other non-cash income and expense items
    
    
    (240
    )
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (223
    )Gain on disposition of assets
    
    
    6
    
    
    
    (162
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (156
    )Asset write-down
    
    
    138
    
    
    
    84
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    232Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    46Equity in
net income of unconsolidated partnerships
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Net changes in operating assets and liabilities
    
    
    (2,950
    )
    
    
    (7,773
    )
    
    
    
    
    
    
    1,374
    
    
    
    
    
    
    
    (9,349
    )Total adjustments
    
    
    (17
    )
    
    
    (5,856
    )
    
    
    
    
    
    
    1,630
    
    
    
    2,499
    
    
    
    (1,744
    )Net cash (used in) provided by operating activities
    
    
    (7,605
    )
    
    
    (3,427
    )
    
    
    
    
    
    
    1,700
    
    
    
    
    
    
    
    (9,332
    )CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (4,485
    )
    
    
    (1,349
    )
    
    
    
    
    
    
    106
    
    
    
    
    
    
    
    (5,728
    )Proceeds from sale of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash (used in) provided by investing activities
    
    
    (4,485
    )
    
    
    (1,349
    )
    
    
    
    
    
    
    106
    
    
    
    
    
    
    
    (5,728
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (48
    )
    
    
    (109
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (157
    )Proceeds under capital lease obligations
    
    
    1,542
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,542Payments on long-term debt
    
    
    (500
    )
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (506
    )Payments on revolver, net
    
    
    (500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (500
    )Debt issuance costs
    
    
    (1,056
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,056
    )Intercompany financing
    
    
    (4,078
    )
    
    
    6,646
    
    
    
    
    
    
    
    (2,568
    )
    
    
    
    
    
    
    Distributions to minority partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (168
    )
    
    
    
    
    
    
    (168
    )Return of
capital
    
    
    (185
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (185
    )Net cash (used in) provided by financing activities
    
    
    (4,825
    )
    
    
    6,531
    
    
    
    
    
    
    
    (2,736
    )
    
    
    
    
    
    
    (1,030
    )Net (decrease) increase in cash and cash equivalents
    
    
    (16,915
    )
    
    
    1,755
    
    
    
    
    
    
    
    (930
    )
    
    
    
    
    
    
    (16,090
    )CASH AND CASH EQUIVALENTS:Balance, beginning of period
    
    
    19,391
    
    
    
    428
    
    
    
    
    
    
    
    (787
    )
    
    
    
    
    
    
    19,032Balance, end of period
    
    $
    2,476
    
    
    
    2,183
    
    
    
    
    
    
    
    (1,717
    )
    
    
    
    
    
    
    2,942
 19




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##### Table of Contents



Consolidating Statement of Cash Flows for the First Quarter ended April 22, 2007 (unaudited; in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCICASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (2,749
    )
    
    
    4,214
    
    
    
    
    
    
    
    42
    
    
    
    (4,256
    )
    
    
    (2,749
    )Adjustments to reconcile net (loss) income to net cash
used in operating activities:Equity in the earnings of subsidiaries
    
    
    (4,256
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,256
    
    
    
    Depreciation and amortization
    
    
    4,993
    
    
    
    1,739
    
    
    
    
    
    
    
    389
    
    
    
    
    
    
    
    7,121Amortization of discount
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99Other non-cash income and expense items
    
    
    159
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166(Gain) loss on disposition of assets
    
    
    12
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Asset write-down
    
    
    
    
    
    
    145
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    146Change in partnerships minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162
    
    
    
    
    
    
    
    162Equity in net income of unconsolidated partnerships
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )Net changes in operating assets and liabilities
    
    
    (3,808
    )
    
    
    (8,624
    )
    
    
    
    
    
    
    (989
    )
    
    
    
    
    
    
    (13,421
    )Total adjustments
    
    
    (2,801
    )
    
    
    (6,750
    )
    
    
    
    
    
    
    (437
    )
    
    
    4,256
    
    
    
    (5,732
    )Net cash used in operating activities
    
    
    (5,550
    )
    
    
    (2,536
    )
    
    
    
    
    
    
    (395
    )
    
    
    
    
    
    
    (8,481
    )CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (3,321
    )
    
    
    (1,780
    )
    
    
    
    
    
    
    (317
    )
    
    
    
    
    
    
    (5,418
    )Proceeds from sale of assets
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Net cash used in investing activities
    
    
    (3,321
    )
    
    
    (1,777
    )
    
    
    
    
    
    
    (317
    )
    
    
    
    
    
    
    (5,415
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (49
    )
    
    
    (192
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (241
    )Payments on long-term debt
    
    
    (250
    )
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (256
    )Proceeds from revolver, net
    
    
    9,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,600Intercompany financing
    
    
    (608
    )
    
    
    943
    
    
    
    
    
    
    
    (335
    )
    
    
    
    
    
    
    Distributions to minority partners
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    (204
    )
    
    
    
    
    
    
    (152
    )Net cash provided by (used in) financing activities
    
    
    8,693
    
    
    
    797
    
    
    
    
    
    
    
    (539
    )
    
    
    
    
    
    
    8,951Net decrease in cash and cash equivalents
    
    
    (178
    )
    
    
    (3,516
    )
    
    
    
    
    
    
    (1,251
    )
    
    
    
    
    
    
    (4,945
    )CASH AND CASH EQUIVALENTS:Balance, beginning of period
    
    
    3,333
    
    
    
    7,158
    
    
    
    
    
    
    
    (1,422
    )
    
    
    
    
    
    
    9,069Balance, end of period
    
    $
    3,155
    
    
    
    3,642
    
    
    
    
    
    
    
    (2,673
    )
    
    
    
    
    
    
    4,124
 20




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 GENERAL
  OUR COMPANY
          21




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KEY FACTORS AFFECTING OUR RESULTS
   22




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SUMMARY OF CRITICAL ACCOUNTING POLICIES
          23




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24




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RESULTS OF OPERATIONS
     Percentage of Total RevenuesFirst Quarter
    
    First QuarterEnded
    
    EndedApril 20, 2008
    
    April 22, 2007Restaurant operations
    
    
    87.2
    %
    
    
    87.7
    %Franchise operations
    
    
    4.1
    %
    
    
    4.5
    %Foxtail
    
    
    7.9
    %
    
    
    7.0
    %Other
    
    
    0.8
    %
    
    
    0.8
    %Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
 25




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##### Table of Contents



Consolidated Results
    
    Restaurant Operations
    
    Franchise OperationsFirst Quarter Ended
    
    First Quarter Ended
    
    First Quarter EndedApril 20, 2008
    
    April 22, 2007
    
    April 20, 2008
    
    April 22, 2007
    
    April 20, 2008
    
    April 22, 2007Food sales
    
    $
    178,811
    
    
    
    174,935
    
    
    
    159,035
    
    
    
    156,352
    
    
    
    
    
    
    
    Franchise and other
revenue
    
    
    8,932
    
    
    
    9,398
    
    
    
    
    
    
    
    
    
    
    
    7,432
    
    
    
    8,029Intersegment revenue
    
    
    (5,343
    )
    
    
    (6,047
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    
    182,400
    
    
    
    178,286
    
    
    
    159,035
    
    
    
    156,352
    
    
    
    7,432
    
    
    
    8,029Food cost
    
    
    29.1
    %
    
    
    28.0
    %
    
    
    27.1
    %
    
    
    27.4
    %
    
    
    0.0
    %
    
    
    0.0
    %Labor and benefits
    
    
    32.6
    %
    
    
    32.7
    %
    
    
    35.7
    %
    
    
    35.5
    %
    
    
    0.0
    %
    
    
    0.0
    %Operating expenses
    
    
    25.7
    %
    
    
    24.7
    %
    
    
    28.2
    %
    
    
    26.6
    %
    
    
    8.2
    %
    
    
    10.0
    %Segment (loss) profit
    
    $
    (7,588
    )
    
    
    (2,749
    )
    
    
    8,190
    
    
    
    10,791
    
    
    
    6,821
    
    
    
    7,223
 Foxtail
    
    Other (a)First Quarter Ended
    
    First Quarter EndedApril 20, 2008
    
    April 22, 2007
    
    April 20, 2008
    
    April 22, 2007Food sales
    
    $
    19,776
    
    
    
    18,583
    
    
    
    
    
    
    
    Franchise and other
revenue
    
    
    
    
    
    
    
    
    
    
    1,500
    
    
    
    1,369Intersegment revenue
    
    
    (5,343
    )
    
    
    (6,047
    )
    
    
    
    
    
    
    Total revenues
    
    
    14,433
    
    
    
    12,536
    
    
    
    1,500
    
    
    
    1,369Food cost
    
    
    63.8
    %
    
    
    56.9
    %
    
    
    0.0
    %
    
    
    0.0
    %Labor and benefits
    
    
    13.0
    %
    
    
    14.1
    %
    
    
    7.0
    %
    
    
    15.3
    %Operating expenses
    
    
    7.6
    %
    
    
    9.5
    %
    
    
    0.0
    %
    
    
    0.0
    %Segment
(loss) profit
    
    $
    (76
    )
    
    
    1,507
    
    
    
    (22,523
    )
    
    
    (22,270
    )
 
 (a)
    
    Licensing revenue of $1,417,000 and $1,229,000 for the first quarter of 2008 and 2007,
respectively, is included in the other segment revenues. The other segment loss includes
corporate general and administrative expenses, interest expense and other non-operational
expenses. For details of the other segment loss, see Note 7, Segment Reporting in the Notes
to Consolidated Financial Statements. Quarter Ended April 20, 2008 Compared to the Quarter Ended April 22, 2007
 Restaurant Operations Overview
   26




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Franchise Operations Overview
    Foxtail Overview
        27




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##### Table of Contents



Food Cost
   Labor and Benefits Expenses
  Operating Expenses
  General and Administrative Expenses
  Transaction Costs
  Depreciation and Amortization
  Interest, net
  28




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Taxes
    CAPITAL RESOURCES AND LIQUIDITY
     29




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##### Table of Contents



Working Capital and Cash Flows
   First Quarter
    
    First QuarterEnded
    
    EndedApril 20, 2008
    
    April 22, 2007Cash flows used in operating activities
    
    $
    (9,332
    )
    
    $
    (8,481
    )Cash flows used in investing activities
    
    
    (5,728
    )
    
    
    (5,415
    )Cash flows (used in) provided by financing activities
    
    
    (1,030
    )
    
    
    8,951
 Operating activities
  Investing activities
   First Quarter
    
    
    First QuarterEnded
    
    
    EndedApril 20, 2008
    
    
    April 22, 2007New restaurants
    
    $
    1,187
    
    
    $
    1,232Restaurant improvements
    
    
    2,284
    
    
    
    2,145Restaurant remodeling and reimaging
    
    
    970
    
    
    
    1,087Manufacturing plant improvements
    
    
    726
    
    
    
    332Other
    
    
    561
    
    
    
    622Total capital expenditures
    
    $
    5,728
    
    
    $
    5,418
 30




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Financing activities
  CASH CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
   RECENT ACCOUNTING PRONOUNCEMENTS
        31




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IMPACT OF INFLATION
  INFORMATION CONCERNING FORWARD LOOKING STATEMENTS
   32




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##### Table of Contents




    
    general economic conditions and demographic patterns;
    
    our substantial indebtedness;
    
    competitive pressures and trends in the restaurant industry;
    
    prevailing prices and availability of food, supplies and labor;
    
    relationships with franchisees and financial health of franchisees;
    
    our ability to integrate acquisitions;
    
    our development and expansion plans; and
    
    statements covering our business strategy.
  33




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
 Foreign Currency Exchange Rate Risk
 Commodity Price Risk
 34




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
    35




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##### Table of Contents



ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
  ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
  ITEM 3. Defaults Upon Senior Securities
  ITEM 4. Submission of Matters to a Vote of Security Holders.
  ITEM 5. Other Information
  
 ITEM 6. Exhibits
 31.1
    
    Chief Executive Officer Certification Pursuant to Sarbanes-Oxley Act of 2002, Section 302.31.2
    
    Chief Financial Officer Certification Pursuant to Sarbanes-Oxley Act of 2002, Section 302.32.1
    
    Chief Executive Officer Certification Pursuant to Sarbanes-Oxley Act of 2002, Section 906.32.2
    
    Chief Financial Officer Certification Pursuant to Sarbanes-Oxley Act of 2002, Section 906.
 36




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SIGNATURE
  PERKINS & MARIE CALLENDERS INC.DATE: June 4, 2008
    BY:
    /s/ Fred T. Grant, Jr.Fred T. Grant, Jr.Chief Financial Officer 37