##### 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 22, 2007
 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
 þ
 o o þ
 þ  o þ




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
    
    
    2ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    20ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    32ITEM 4. CONTROLS AND PROCEDURES
    
    
    33PART II  OTHER INFORMATIONITEM 6. EXHIBITS
    
    
    34Signature
    
    
    35Ex-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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First Quarter
    
    
    First QuarterEnded
    
    
    EndedApril 22, 2007
    
    
    April 16, 2006REVENUES:Food sales
    
    $
    168,888
    
    
    $
    160,613Franchise and other revenue
    
    
    9,398
    
    
    
    9,033Total Revenues
    
    
    178,286
    
    
    
    169,646COSTS AND EXPENSES:Cost of sales (excluding depreciation shown below):Food cost
    
    
    47,323
    
    
    
    48,037Labor and benefits
    
    
    58,321
    
    
    
    54,234Operating expenses
    
    
    44,094
    
    
    
    40,295General and administrative
    
    
    14,224
    
    
    
    13,570Transaction costs
    
    
    184
    
    
    
    554Depreciation and amortization
    
    
    7,121
    
    
    
    6,093Interest, net
    
    
    9,481
    
    
    
    11,748Asset impairments and closed store expenses
    
    
    155
    
    
    
    320Other, net
    
    
    (30
    )
    
    
    (55
    )Total Costs and Expenses
    
    
    180,873
    
    
    
    174,796Loss before income taxes and minority interests
    
    
    (2,587
    )
    
    
    (5,150
    )Provision for income taxes
    
    
    
    
    
    
    Minority interests
    
    
    (162
    )
    
    
    (74
    )NET LOSS
    
    $
    (2,749
    )
    
    $
    (5,224
    )
  2




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April 22, 2007
    
    
    December 31, 2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    4,124
    
    
    $
    9,069Restricted cash
    
    
    9,489
    
    
    
    11,193Receivables, less allowances for doubtful
accounts of $1,476 and $1,624 in 2007 and
2006, respectively
    
    
    16,915
    
    
    
    18,316Inventories
    
    
    12,296
    
    
    
    10,996Prepaid expenses and other current assets
    
    
    5,504
    
    
    
    4,824Total current assets
    
    
    48,328
    
    
    
    54,398PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization
of $101,423 and $96,458 in 2007 and 2006,
respectively
    
    
    90,286
    
    
    
    91,044INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS
    
    
    252
    
    
    
    238GOODWILL
    
    
    30,038
    
    
    
    30,038INTANGIBLE ASSETS, net of accumulated
amortization of $14,828 and $14,018 in
2007 and 2006, respectively
    
    
    155,982
    
    
    
    156,792DEFERRED INCOME TAXES
    
    
    708
    
    
    
    708OTHER ASSETS
    
    
    13,194
    
    
    
    13,627$
    338,788
    
    
    $
    346,845
  3




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April 22, 2007
    
    
    December 31, 2006LIABILITIES AND STOCKHOLDERS INVESTMENTCURRENT LIABILITIES:Accounts payable
    
    $
    18,992
    
    
    $
    22,799Accrued expenses
    
    
    48,967
    
    
    
    58,288Accrued income taxes
    
    
    37
    
    
    
    75Franchise advertising contributions
    
    
    5,438
    
    
    
    5,392Current maturities of long-term debt and capital lease obligations
    
    
    1,657
    
    
    
    1,706Total current liabilities
    
    
    75,091
    
    
    
    88,260CAPITAL LEASE OBLIGATIONS, less current maturities
    
    
    6,515
    
    
    
    6,249LONG-TERM DEBT, less current maturities
    
    
    295,822
    
    
    
    286,379DEFERRED RENT
    
    
    10,259
    
    
    
    9,768OTHER LIABILITIES
    
    
    9,239
    
    
    
    11,785MINORITY INTEREST IN CONSOLIDATED PARTNERSHIPS
    
    
    85
    
    
    
    75STOCKHOLDERS INVESTMENT:Common stock, $.01 par value, 100,000 shares authorized,
10,820 issued and outstanding
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    136,131
    
    
    
    136,131Other comprehensive income
    
    
    27
    
    
    
    13Accumulated deficit
    
    
    (194,382
    )
    
    
    (191,816
    )Total stockholders investment
    
    
    (58,223
    )
    
    
    (55,671
    )$
    338,788
    
    
    $
    346,845
  4




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First Quarter
    
    
    First QuarterEnded
    
    
    EndedApril 22, 2007
    
    
    April 16, 2006CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (2,749
    )
    
    $
    (5,224
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation and amortization
    
    
    7,121
    
    
    
    6,093Amortization of debt discount
    
    
    99
    
    
    
    99Other non-cash income and expense items
    
    
    166
    
    
    
    3,460(Gain) loss on disposition of assets
    
    
    9
    
    
    
    (55
    )Asset write-down
    
    
    146
    
    
    
    9Minority interests
    
    
    162
    
    
    
    74Equity in
net (income) loss of unconsolidated partnerships
    
    
    (14
    )
    
    
    44Net changes in operating assets and liabilities
    
    
    (13,421
    )
    
    
    (10,996
    )Total adjustments
    
    
    (5,732
    )
    
    
    (1,272
    )Net cash used in operating activities
    
    
    (8,481
    )
    
    
    (6,496
    )CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (5,418
    )
    
    
    (3,634
    )Proceeds from sale of assets
    
    
    3
    
    
    
    1,114Net cash used in investing activities
    
    
    (5,415
    )
    
    
    (2,520
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (241
    )
    
    
    (236
    )Payments on long-term debt
    
    
    (256
    )
    
    
    (600
    )Payments on revolver
    
    
    (21,400
    )
    
    
    Proceeds from revolver
    
    
    31,000
    
    
    
    1,060Distributions to minority partners
    
    
    (152
    )
    
    
    (74
    )Capital contribution from parent
    
    
    
    
    
    
    8,815Net cash provided by financing activities
    
    
    8,951
    
    
    
    8,965Net decrease in cash and cash equivalents
    
    
    (4,945
    )
    
    
    (51
    )CASH AND CASH EQUIVALENTS:Balance, beginning of period
    
    
    9,069
    
    
    
    3,988Balance, end of period
    
    $
    4,124
    
    
    $
    3,937
  5




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AccumulatedAdditional
    
    
    Notes
    
    
    Other
    
    
    RetainedCommon
    
    
    Paid-in
    
    
    Secured
    
    
    Comprehensive
    
    
    EarningsStock
    
    
    Capital
    
    
    By Stock
    
    
    Income
    
    
    (Deficit)
    
    
    TotalBalance at December 25, 2005
    
    $
    1
    
    
    $
    123,907
    
    
    $
    (1,308
    )
    
    $
    14
    
    
    $
    (182,444
    )
    
    $
    (59,830
    )Capital contribution
    
    
    
    
    
    
    12,545
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,545Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,372
    )
    
    
    (9,372
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,373
    )Note forgiveness
    
    
    
    
    
    
    (321
    )
    
    
    1,308
    
    
    
    
    
    
    
    
    
    
    
    987Balance at December 31, 2006
    
    
    1
    
    
    
    136,131
    
    
    
    
    
    
    
    13
    
    
    
    (191,816
    )
    
    
    (55,671
    )Cumulative adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183
    
    
    
    183Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,749
    )
    
    
    (2,749
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,735
    )Balance at April 22, 2007
    
    $
    1
    
    
    $
    136,131
    
    
    $
    
    
    
    $
    27
    
    
    $
    (194,382
    )
    
    $
    (58,223
    )
  6




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(1) Organization
             (2) Basis of Presentation
  7




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(3) Accounting Reporting Period
   (4) Comprehensive Loss
  (5) Combination of Companies Under Common Control
   (6) Commitments and Contingencies
   8




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(7) Supplemental Cash Flow Information
  First Quarter
    
    
    First QuarterEnded
    
    
    EndedApril 22, 2007
    
    
    April 16, 2006(Increase) Decrease in:Receivables
    
    $
    1,432
    
    
    $
    726Inventories
    
    
    (1,300
    )
    
    
    (188
    )Prepaid expenses and other current assets
    
    
    (680
    )
    
    
    (1,310
    )Other assets
    
    
    598
    
    
    
    (970
    )Increase (Decrease) in:Accounts payable
    
    
    (3,807
    )
    
    
    (1,913
    )Accrued expenses and other current liabilities
    
    
    (6,942
    )
    
    
    (7,815
    )Other liabilities
    
    
    (2,722
    )
    
    
    474$
    (13,421
    )
    
    $
    (10,996
    )
 (8) Accrued Expenses
  April 22, 2007
    
    
    December 31, 2006Payroll and related benefits
    
    $
    16,222
    
    
    $
    18,209Property, real estate and sales taxes
    
    
    5,159
    
    
    
    4,692Insurance
    
    
    4,826
    
    
    
    5,086Gift cards and gift certificates
    
    
    5,725
    
    
    
    8,233Advertising
    
    
    1,251
    
    
    
    1,262Interest
    
    
    2,978
    
    
    
    6,085Management fees
    
    
    2,196
    
    
    
    2,210Other
    
    
    10,610
    
    
    
    12,511$
    48,967
    
    
    $
    58,288
 9




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(9) Segment Reporting
   10




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First Quarter
    
    
    First QuarterEnded
    
    
    EndedRevenue
    
    April 22, 2007
    
    
    April 16, 2006Perkins Restaurants
    
    $
    91,082
    
    
    $
    90,726Marie Callenders Restaurants
    
    
    65,270
    
    
    
    52,277Perkins Franchise
    
    
    6,416
    
    
    
    6,649Marie Callenders Franchise
    
    
    1,613
    
    
    
    1,277Foxtail
    
    
    18,583
    
    
    
    19,857Intersegment revenue
    
    
    (6,047
    )
    
    
    (2,247
    )Other
    
    
    1,369
    
    
    
    1,107Total
    
    $
    178,286
    
    
    $
    169,646
 First Quarter
    
    
    First QuarterEnded
    
    
    EndedSegment net income (loss)
    
    April 22, 2007
    
    
    April 16, 2006Perkins Restaurants
    
    $
    7,737
    
    
    $
    7,445Marie Callenders Restaurants
    
    
    3,054
    
    
    
    1,949Perkins Franchise
    
    
    5,610
    
    
    
    6,032Marie Callenders Franchise
    
    
    1,613
    
    
    
    1,277Foxtail
    
    
    1,507
    
    
    
    2,543Other
    
    
    (22,270
    )
    
    
    (24,470
    )Total
    
    $
    (2,749
    )
    
    $
    (5,224
    )
 Segment Assets
    
    April 22, 2007
    
    
    December 31, 2006Perkins Restaurants
    
    $
    95,482
    
    
    $
    94,146Marie Callenders Restaurants
    
    
    35,437
    
    
    
    36,393Perkins Franchise
    
    
    123,359
    
    
    
    123,392Marie Callenders Franchise
    
    
    375
    
    
    
    386Foxtail
    
    
    41,531
    
    
    
    41,715Other
    
    
    42,604
    
    
    
    50,813Total
    
    $
    338,788
    
    
    $
    346,845
 11




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First Quarter
    
    
    First QuarterEnded
    
    
    EndedApril 22, 2007
    
    
    April 16, 2006General and administrative expenses
    
    $
    12,574
    
    
    $
    12,150Depreciation and amortization expenses
    
    
    903
    
    
    
    768Interest expense, net
    
    
    9,481
    
    
    
    11,748(Gain) loss on disposition of assets, net
    
    
    9
    
    
    
    (55
    )Asset write-down
    
    
    146
    
    
    
    9Lease termination
    
    
    
    
    
    
    366Transaction costs
    
    
    184
    
    
    
    554Provision for (benefit from) income taxes
    
    
    
    
    
    
    Minority interest
    
    
    162
    
    
    
    74Licensing revenue
    
    
    (1,229
    )
    
    
    (945
    )Other
    
    
    40
    
    
    
    (199
    )$
    22,270
    
    
    $
    24,470
 (10) Long-Term Debt
    (11) Income Tax
   12




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(12) Recent Accounting Pronouncements
   13




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##### Table of Contents



(13) Condensed Consolidated Financial Information
   Consolidating Statement of Operations for the quarter ended April 22, 2007 (unaudited; in
thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCIRevenueFood 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
    
    
    
    
    
    
    
    178,286Cost and expensesCost 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
    )Benefit from (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
    )
 14




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Consolidating Statement of Operations for the quarter ended April 16, 2006 (unaudited; in
thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    PMCM
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    PMCIRevenueFood sales
    
    $
    80,463
    
    
    $
    24,496
    
    
    $
    47,988
    
    
    $
    
    
    
    $
    7,666
    
    
    $
    
    
    
    $
    160,613Franchise and other revenue
    
    
    4,109
    
    
    
    4,637
    
    
    
    2,384
    
    
    
    15
    
    
    
    
    
    
    
    (2,112
    )
    
    
    9,033Total revenues
    
    
    84,572
    
    
    
    29,133
    
    
    
    50,372
    
    
    
    15
    
    
    
    7,666
    
    
    
    (2,112
    )
    
    
    169,646Cost and expensesCost of sales (excluding depreciation shown below):Food cost
    
    
    24,393
    
    
    
    5,763
    
    
    
    15,647
    
    
    
    
    
    
    
    2,234
    
    
    
    
    
    
    
    48,037Labor and benefits
    
    
    26,442
    
    
    
    8,908
    
    
    
    16,553
    
    
    
    
    
    
    
    2,331
    
    
    
    
    
    
    
    54,234Operating expenses
    
    
    19,775
    
    
    
    7,365
    
    
    
    11,573
    
    
    
    15
    
    
    
    2,664
    
    
    
    (1,097
    )
    
    
    40,295General and administrative
    
    
    9,914
    
    
    
    1,019
    
    
    
    3,652
    
    
    
    
    
    
    
    
    
    
    
    (1,015
    )
    
    
    13,570Transaction costs
    
    
    554
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    554Depreciation and amortization
    
    
    2,414
    
    
    
    1,675
    
    
    
    1,671
    
    
    
    
    
    
    
    333
    
    
    
    
    
    
    
    6,093Interest, net
    
    
    6,369
    
    
    
    (182
    )
    
    
    5,561
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,748Asset impairments and closed store expenses
    
    
    319
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    320Other, net
    
    
    (55
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55
    )Total costs and expenses
    
    
    90,125
    
    
    
    24,548
    
    
    
    54,658
    
    
    
    15
    
    
    
    7,562
    
    
    
    (2,112
    )
    
    
    174,796(Loss) income before income taxes and minority
interests
    
    
    (5,553
    )
    
    
    4,585
    
    
    
    (4,286
    )
    
    
    
    
    
    
    104
    
    
    
    
    
    
    
    (5,150
    )(Benefit
from) provision for income taxes
    
    
    (1,705
    )
    
    
    1,705
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74
    )
    
    
    
    
    
    
    (74
    )Equity in earnings (loss) of subsidiaries
    
    
    (1,376
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,376
    
    
    
    NET (LOSS) INCOME
    
    $
    (5,224
    )
    
    $
    2,880
    
    
    $
    (4,286
    )
    
    $
    
    
    
    $
    30
    
    
    $
    1,376
    
    
    $
    (5,224
    )
 15




---



##### Table of Contents



Consolidating Balance Sheet as of April 22, 2007 (unaudited; in thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    ConsolidatedTRC
    
    WRG
    
    Other
    
    Non-Guarantors
    
    Eliminations
    
    TRCCURRENT ASSETS:Cash and cash equivalents
    
    $
    3,155
    
    
    $
    3,642
    
    
    $
    
    
    
    $
    (2,673
    )
    
    $
    
    
    
    $
    4,124Restricted cash
    
    
    9,489
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,489Trade receivables, less allowance for doubtful
accounts
    
    
    11,134
    
    
    
    5,737
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    16,915Inventories
    
    
    8,199
    
    
    
    3,868
    
    
    
    
    
    
    
    229
    
    
    
    
    
    
    
    12,296Prepaid expenses and other current assets
    
    
    4,923
    
    
    
    577
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    5,504Total current assets
    
    
    36,900
    
    
    
    13,824
    
    
    
    
    
    
    
    (2,396
    )
    
    
    
    
    
    
    48,328PROPERTY AND EQUIPMENT, net
    
    
    55,045
    
    
    
    32,672
    
    
    
    
    
    
    
    2,569
    
    
    
    
    
    
    
    90,286INVESTMENTS IN CONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    242
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    252GOODWILL
    
    
    30,038
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,038INTANGIBLE ASSETS, net
    
    
    155,982
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,982INVESTMENTS IN SUBSIDIARIES
    
    
    (99,421
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,421
    
    
    
    DUE FROM SUBSIDIARIES
    
    
    107,550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107,550
    )
    
    
    DEFERRED INCOME TAXES
    
    
    708
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    708OTHER ASSETS
    
    
    11,125
    
    
    
    (811
    )
    
    
    
    
    
    
    2,880
    
    
    
    
    
    
    
    13,194$
    297,927
    
    
    $
    45,927
    
    
    $
    
    
    
    $
    3,063
    
    
    $
    (8,129
    )
    
    $
    338,788LIABILITIES AND STOCKHOLDERS INVESTMENTCURRENT LIABILITIES:Accounts payable
    
    $
    13,954
    
    
    $
    4,712
    
    
    $
    
    
    
    $
    326
    
    
    $
    
    
    
    $
    18,992Accrued expenses
    
    
    29,129
    
    
    
    18,419
    
    
    
    
    
    
    
    1,419
    
    
    
    
    
    
    
    48,967Accrued income taxes
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37Franchise advertising contributions
    
    
    5,438
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,438Current
maturities of long term debt and capital lease obligations
    
    
    1,201
    
    
    
    456
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,65749,759
    
    
    
    23,587
    
    
    
    
    
    
    
    1,745
    
    
    
    
    
    
    
    75,091CAPITAL LEASE OBLIGATIONS, less current
maturities
    
    
    468
    
    
    
    6,047
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,515LONG-TERM DEBT, less current maturities
    
    
    295,774
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    295,822DEFERRED INCOME TAXES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DEFERRED RENT
    
    
    6,035
    
    
    
    4,008
    
    
    
    
    
    
    
    216
    
    
    
    
    
    
    
    10,259OTHER LIABILITIES
    
    
    4,114
    
    
    
    5,123
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    9,239DUE TO PARENT
    
    
    
    
    
    
    110,975
    
    
    
    10
    
    
    
    (3,435
    )
    
    
    (107,550
    )
    
    
    MINORITY INTERESTS IN CONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    85STOCKHOLDER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
    
    
    136,131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136,131Treasury stock
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    Other comprehensive income
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27Retained earnings (deficit)
    
    
    (194,382
    )
    
    
    (166,824
    )
    
    
    (10
    )
    
    
    (5,065
    )
    
    
    171,899
    
    
    
    (194,382
    )(58,223
    )
    
    
    (103,861
    )
    
    
    (10
    )
    
    
    4,450
    
    
    
    99,421
    
    
    
    (58,223
    )$
    297,927
    
    
    $
    45,927
    
    
    $
    
    
    
    $
    3,063
    
    
    $
    (8,129
    )
    
    $
    338,788
 16




---



##### Table of Contents



Consolidating
Balance Sheet as of December 31, 2006 (in thousands):
 Guarantors
                     
    
    
    
    
    
    ConsolidatedPMCI
    
    
    PMCM
    
    
    WRG
    
    
    Other
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    PMCICURRENT ASSETS:Cash and cash equivalents
    
    $
    3,132
    
    
    $
    201
    
    
    $
    7,158
    
    
    $
    
    
    
    $
    (1,422
    )
    
    $
    
    
    
    $
    9,069Restricted cash
    
    
    4,209
    
    
    
    6,984
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,193Trade receivables, less
allowance for doubtful
accounts
    
    
    12,662
    
    
    
    43
    
    
    
    5,576
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    18,316Inventories
    
    
    6,364
    
    
    
    481
    
    
    
    3,882
    
    
    
    
    
    
    
    269
    
    
    
    
    
    
    
    10,996Prepaid expenses and other
current assets
    
    
    3,781
    
    
    
    316
    
    
    
    693
    
    
    
    
    
    
    
    34
    
    
    
    
    
    
    
    4,824Total current assets
    
    
    30,148
    
    
    
    8,025
    
    
    
    17,309
    
    
    
    
    
    
    
    (1,084
    )
    
    
    
    
    
    
    54,398PROPERTY AND EQUIPMENT, net
    
    
    44,762
    
    
    
    10,885
    
    
    
    32,755
    
    
    
    
    
    
    
    2,642
    
    
    
    
    
    
    
    91,044INVESTMENTS IN
CONSOLIDATED PARTNERSHIPS
    
    
    
    
    
    
    
    
    
    
    228
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    238GOODWILL
    
    
    30,038
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,038INTANGIBLE ASSETS, net
    
    
    45,885
    
    
    
    110,600
    
    
    
    307
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156,792INVESTMENTS IN SUBSIDIARIES
    
    
    31,105
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,105
    )
    
    
    DUE FROM PMCI
    
    
    
    
    
    
    14,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,494
    )
    
    
    DUE FROM SUBSIDIARIES
    
    
    105,884
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105,884
    )
    
    
    DEFERRED INCOME TAXES
    
    
    708
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    
    
    
    708OTHER ASSETS
    
    
    11,560
    
    
    
    
    
    
    
    (1,008
    )
    
    
    
    
    
    
    3,075
    
    
    
    
    
    
    
    13,627$
    300,090
    
    
    $
    144,004
    
    
    $
    49,591
    
    
    $
    
    
    
    $
    4,643
    
    
    $
    (151,483
    )
    
    $
    346,845CURRENT LIABILITIES:Accounts payable
    
    $
    10,756
    
    
    $
    2,310
    
    
    $
    8,324
    
    
    $
    
    
    
    $
    1,409
    
    
    $
    
    
    
    $
    22,799Accrued expenses
    
    
    28,455
    
    
    
    7,547
    
    
    
    20,707
    
    
    
    
    
    
    
    1,579
    
    
    
    
    
    
    
    58,288Accrued income taxes
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    
    
    
    75Franchise advertising
contributions
    
    
    5,392
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,392Current maturities of long
term debt and capital
lease obligations
    
    
    1,166
    
    
    
    
    
    
    
    540
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,70645,844
    
    
    
    9,857
    
    
    
    29,571
    
    
    
    
    
    
    
    2,988
    
    
    
    
    
    
    
    88,260CAPITAL LEASE OBLIGATIONS,
less current maturities
    
    
    94
    
    
    
    
    
    
    
    6,155
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,249LONG-TERM DEBT, less
current maturities
    
    
    286,325
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    286,379DEFERRED RENT
    
    
    5,384
    
    
    
    
    
    
    
    4,164
    
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    9,768OTHER LIABILITIES
    
    
    4,095
    
    
    
    
    
    
    
    7,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,785DUE TO PMCM / PMCR
    
    
    14,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,494
    )
    
    
    DUE TO PARENT
    
    
    
    
    
    
    
    
    
    
    108,974
    
    
    
    10
    
    
    
    (3,100
    )
    
    
    (105,884
    )
    
    
    MINORITY INTERESTS IN
CONSOLIDATED PARTNERSHIPS
    
    
    (475
    )
    
    
    
    
    
    
    423
    
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    75STOCKHOLDERS INVESTMENT:Common Stock
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    1Preferred Stock
    
    
    
    
    
    
    
    
    
    
    63,277
    
    
    
    
    
    
    
    
    
    
    
    (63,277
    )
    
    
    Capital in excess of par
    
    
    
    
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    9,515
    
    
    
    (9,338
    )
    
    
    Additional paid-in capital
    
    
    136,131
    
    
    
    121,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (121,300
    )
    
    
    136,131Treasury stock
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    Other comprehensive income
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Retained earnings (deficit)
    
    
    (191,816
    )
    
    
    12,846
    
    
    
    (170,403
    )
    
    
    (10
    )
    
    
    (5,107
    )
    
    
    162,674
    
    
    
    (191,816
    )(55,671
    )
    
    
    134,147
    
    
    
    (107,440
    )
    
    
    (10
    )
    
    
    4,408
    
    
    
    (31,105
    )
    
    
    (55,671
    )$
    300,090
    
    
    $
    144,004
    
    
    $
    49,591
    
    
    $
    
    
    
    $
    4,643
    
    
    $
    (151,483
    )
    
    $
    346,845
 17




---



##### Table of Contents



Consolidating Statement of Cash Flows for the 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 income to net cash
provided by 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
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
    )Payments on revolver
    
    
    (21,400
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,400
    )Proceeds
from revolver
    
    
    31,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,000Intercompany 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
 18




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##### Table of Contents



Consolidating Statement of Cash Flows for the quarter ended April 16, 2006 (unaudited; in
thousands):
 Guarantors
    
    
    
    
    
    
    
    
    
    
    ConsolidatedPMCI
    
    
    PMCM
    
    
    WRG
    
    
    Other
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    PMCICASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (5,224
    )
    
    $
    2,880
    
    
    $
    (4,286
    )
    
    $
    
    
    
    $
    30
    
    
    $
    1,376
    
    
    $
    (5,224
    )Adjustments to reconcile net income to net cash
provided by operating activities:Equity in the earnings of subsidiaries
    
    
    1,376
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,376
    )
    
    
    Depreciation and amortization
    
    
    2,414
    
    
    
    1,675
    
    
    
    1,671
    
    
    
    
    
    
    
    333
    
    
    
    
    
    
    
    6,093Amortization of discount
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99Other non-cash income and expense items
    
    
    107
    
    
    
    
    
    
    
    3,353
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,460Gain on disposition of assets
    
    
    (48
    )
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55
    )Asset write-down
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Change in partnerships minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    
    
    
    
    74Equity in net loss of unconsolidated partnerships
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44Net changes in operating assets and liabilities
    
    
    (10,177
    )
    
    
    (244
    )
    
    
    (897
    )
    
    
    23
    
    
    
    299
    
    
    
    
    
    
    
    (10,996
    )Total adjustments
    
    
    (6,229
    )
    
    
    1,431
    
    
    
    4,173
    
    
    
    23
    
    
    
    706
    
    
    
    (1,376
    )
    
    
    (1,272
    )Net cash (used in) provided by operating activities
    
    
    (11,453
    )
    
    
    4,311
    
    
    
    (113
    )
    
    
    23
    
    
    
    736
    
    
    
    
    
    
    
    (6,496
    )CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for property and equipment
    
    
    (1,355
    )
    
    
    (1,215
    )
    
    
    (755
    )
    
    
    
    
    
    
    (309
    )
    
    
    
    
    
    
    (3,634
    )Proceeds from sale of assets
    
    
    1,103
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,114Intercompany activities
    
    
    4,464
    
    
    
    (4,464
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    4,212
    
    
    
    (5,679
    )
    
    
    (744
    )
    
    
    
    
    
    
    (309
    )
    
    
    
    
    
    
    (2,520
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments under capital lease obligations
    
    
    (85
    )
    
    
    
    
    
    
    (151
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (236
    )Payments on long-term debt
    
    
    
    
    
    
    
    
    
    
    (600
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (600
    )Proceeds
from revolver
    
    
    
    
    
    
    
    
    
    
    1,060
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,060Intercompany financing
    
    
    
    
    
    
    
    
    
    
    (164
    )
    
    
    
    
    
    
    164
    
    
    
    
    
    
    
    Distributions to minority partners
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    (74
    )Capital contribution from parent
    
    
    8,815
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,815Net cash provided by financing activities
    
    
    8,730
    
    
    
    
    
    
    
    147
    
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    8,965Net increase (decrease) in cash and cash equivalents
    
    
    1,489
    
    
    
    (1,368
    )
    
    
    (710
    )
    
    
    23
    
    
    
    515
    
    
    
    
    
    
    
    (51
    )CASH AND CASH EQUIVALENTS:Balance,
beginning of period
    
    
    1,591
    
    
    
    1,567
    
    
    
    2,609
    
    
    
    (23
    )
    
    
    (1,756
    )
    
    
    
    
    
    
    3,988Balance, end
of period
    
    $
    3,080
    
    
    $
    199
    
    
    $
    1,899
    
    
    $
    
    
    
    $
    (1,241
    )
    
    $
    
    
    
    $
    3,937
 19




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 GENERAL
  OUR COMPANY
          20




---



##### Table of Contents



OVERVIEW
      21




---



##### Table of Contents



KEY FACTORS AFFECTING OUR RESULTS
    SUMMARY OF CRITICAL ACCOUNTING POLICIES
    22




---



##### Table of Contents



23




---



##### Table of Contents



SUBSEQUENT EVENTS
    24




---



##### Table of Contents



RESULTS OF OPERATIONS
       Percent ofTotal RevenuesPerkins restaurants
    
    
    51.1
    %Marie Callenders restaurants
    
    
    36.6
    %Perkins franchisees
    
    
    3.6
    %Marie Callenders franchisees
    
    
    0.9
    %Foxtail
    
    
    7.0
    %Other
    
    
    0.8
    %Total
    
    
    100.0
    %
 25




---



##### Table of Contents



Marie CallendersConsolidated Results
    
    
    Perkins Restaurants
    
    
    Restaurants
    
    
    Perkins Franchise2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Food sales
    
    $
    174,935
    
    
    $
    162,860
    
    
    $
    91,082
    
    
    $
    90,726
    
    
    $
    65,270
    
    
    $
    52,277
    
    
    $
    
    
    
    $
    Franchise and other revenue
    
    
    9,398
    
    
    
    9,033
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,416
    
    
    
    6,649Intersegment revenue
    
    
    (6,047
    )
    
    
    (2,247
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Revenues
    
    
    178,286
    
    
    
    169,646
    
    
    
    91,082
    
    
    
    90,726
    
    
    
    65,270
    
    
    
    52,277
    
    
    
    6,416
    
    
    
    6,649Food cost
    
    
    28.0
    %
    
    
    29.9
    %
    
    
    25.4
    %
    
    
    25.7
    %
    
    
    30.2
    %
    
    
    30.3
    %
    
    
    
    
    
    
    Labor and benefits
    
    
    34.5
    %
    
    
    33.8
    %
    
    
    35.9
    %
    
    
    36.6
    %
    
    
    35.0
    %
    
    
    35.4
    %
    
    
    
    
    
    
    Operating expenses
    
    
    24.7
    %
    
    
    23.8
    %
    
    
    26.4
    %
    
    
    26.3
    %
    
    
    26.8
    %
    
    
    26.6
    %
    
    
    12.6
    %
    
    
    9.3
    %Segment Profit (Loss)
    
    $
    (2,749
    )
    
    $
    (5,224
    )
    
    $
    7,737
    
    
    $
    7,445
    
    
    $
    3,054
    
    
    $
    1,949
    
    
    $
    5,610
    
    
    $
    6,032
 Marie CallendersFranchise
    
    
    Foxtail
    
    
    Other (a)2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Food sales
    
    $
    
    
    
    $
    
    
    
    $
    18,583
    
    
    $
    19,857
    
    
    $
    
    
    
    $
    Franchise and other revenue
    
    
    1,613
    
    
    
    1,277
    
    
    
    
    
    
    
    
    
    
    
    1,369
    
    
    
    1,107Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    (6,047
    )
    
    
    (2,247
    )
    
    
    
    
    
    
    Total Revenues
    
    
    1,613
    
    
    
    1,277
    
    
    
    12,536
    
    
    
    17,610
    
    
    
    1,369
    
    
    
    1,107Food cost
    
    
    
    
    
    
    
    
    
    
    56.9
    %
    
    
    55.8
    %
    
    
    
    
    
    
    Labor and benefits
    
    
    
    
    
    
    
    
    
    
    14.1
    %
    
    
    12.1
    %
    
    
    15.3
    %
    
    
    10.3
    %Operating expenses
    
    
    
    
    
    
    
    
    
    
    9.5
    %
    
    
    10.1
    %
    
    
    
    
    
    
    -8.7
    %Segment Profit (Loss)
    
    $
    1,613
    
    
    $
    1,277
    
    
    $
    1,507
    
    
    $
    2,543
    
    
    $
    (22,270
    )
    
    $
    (24,470
    )
 
 (a)
    
    Licensing revenue of $1,229,000 and $945,000 for the first quarter of 2007 and 2006,
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 9, Segment Reporting in the Notes
to Consolidated Financial Statements. Quarter Ended April 22, 2007 Compared to the Quarter Ended April 16, 2006
 Restaurant Segments Overview
   26




---



##### Table of Contents



Foxtail Segment Overview
   Franchise Segments Overview
          27




---



##### Table of Contents



Food Cost
   Labor and Benefits Expenses
  Operating Expenses
   28




---



##### Table of Contents



General and Administrative Expenses
  Depreciation and Amortization
  Asset Impairments and Closed Store Expenses
  Interest, net
  Taxes
  CAPITAL RESOURCES AND LIQUIDITY
     29




---



##### Table of Contents



Working Capital and Cash Flows
   Quarter Ended
    
    Quarter EndedApril 22, 2007
    
    April 16, 2006Cash flows used in operating activities
    
    $
    (8,481
    )
    
    $
    (6,496
    )Cash flows used in investing activities
    
    
    (5,415
    )
    
    
    (2,520
    )Cash flows provided by financing activities
    
    
    8,951
    
    
    
    8,965
 Operating activities
  Investing activities
  Financing activities
   30




---



##### Table of Contents



Quarter Ended
    
    
    Quarter EndedApril 22, 2007
    
    
    April 16, 2006New restaurants
    
    $
    1,232
    
    
    $
    25Restaurant improvements
    
    
    2,145
    
    
    
    1,699Restaurant remodeling and reimaging
    
    
    1,087
    
    
    
    1,304Manufacturing plant improvements
    
    
    332
    
    
    
    239Other
    
    
    622
    
    
    
    367Total Capital Expenditures
    
    $
    5,418
    
    
    $
    3,634
  CASH CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
   RECENT ACCOUNTING PRONOUNCEMENTS
   IMPACT OF INFLATION
  INFORMATION CONCERNING FORWARD LOOKING STATEMENTS
  31




---



##### Table of Contents




    
    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;
    
    general economic conditions and demographic patterns;
    
    our substantial indebtedness;
    
    our ability to integrate acquisitions;
    
    our development and expansion plans; and
    
    statements covering our business strategy.
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
 Foreign Currency Exchange Rate Risk
 Commodity Price Risk
 32




---



##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
    33




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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.
 34




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##### Table of Contents



Signature
  PERKINS & MARIE CALLENDERS INC.DATE: July 18, 2007
    
    BY:
    
    /s/ James W. StrykerJames W. Stryker
Chief Financial Officer
 35