##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 28, 2008
 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 333-116310
 
 Real Mex Restaurants, Inc.
  DELAWARE
    
    13-4012902(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)5660 Katella Avenue, Suite 100, Cypress, CA
    
    90630(Address of principal executive offices)
    
    (Zip Code)
 (562) 346-1200
 Securities registered pursuant to Section 12(b) of the Act: NONE
 Securities registered pursuant to Section 12(g) of the Act: NONE
 o þ
 o þ
 þ o
 þ
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer þ
    
    Smaller Reporting Company o
 o þ
   None




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMConsolidated Balance SheetsConsolidated Statements of OperationsConsolidated Statements of Stockholders EquityConsolidated Statements of Cash FlowsNotes to Consolidated Financial StatementsITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCEITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESEXHIBIT INDEXExhibit 3.1Exhibit 3.2Exhibit 10.2Exhibit 12.1Exhibit 21.1Exhibit 31.1Exhibit 32.1    Table of Contents  FORWARD-LOOKING STATEMENTS
 This report includes forward looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act).
Forward looking statements are those that do not relate solely to historical fact. They include,
but are not limited to, any statement that may predict, forecast, indicate or imply future results,
performance, achievements or events. They may contain words such as believe, anticipate,
expect, estimate, intend, project, plan, will, should, may, or could or words or
phrases of similar meaning. They may relate to, among other things: our liquidity and capital
resources; legal proceedings and regulatory matters involving our Company; food-borne illness
incidents; increases in the cost of ingredients; our dependence upon frequent deliveries of food
and other supplies; our vulnerability to changes in consumer preferences and economic conditions;
our ability to compete successfully with other casual dining restaurants; our ability to expand;
and anticipated growth in the restaurant industry and our markets.
 These forward looking statements reflect our current views with respect to future events and
are based on assumptions and subject to risks and uncertainties, including, but not limited to,
economic, competitive, governmental and technological factors outside of our control, that may
cause actual results to differ materially from trends, plans or expectations set forth in the
forward looking statements. These risks and uncertainties may include these factors and the risks
and uncertainties described in Item 1A Risk Factors of this report and elsewhere in this report.
Given these risks and uncertainties, we urge you to read this report completely and with the
understanding that actual future results may be materially different from what we plan or expect.
All of the forward-looking statements made in this Form 10-K are qualified by these cautionary
statements and we cannot assure you that the actual results or developments anticipated by our
Company will be realized or, even if substantially realized, that they will have the expected
consequences to or effects on our Company or its business or operations. In addition, these
forward-looking statements present our estimates and assumptions only as of the date of this
report. Except for any ongoing obligation to disclose material information as required by federal
securities laws, we do not intend to update you concerning any future revisions to any forward
looking statements to reflect events or circumstances occurring after the date of this report.
 Unless otherwise provided in this report, references to we, us, Real Mex and our
Company refer to Real Mex Restaurants, Inc. and our consolidated subsidiaries.
 
 
 PART I
 
 
  Our Company
 ® ® ® ®
  Merger Agreement
   2




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Exchange Agreement
     Cash and cash equivalents
    
    $
    1,417Trade and other accounts receivable
    
    
    12,100Inventories
    
    
    12,938Other current assets
    
    
    5,692Property and equipment
    
    
    113,154Other assets
    
    
    41,841Trademark and other intangibles
    
    
    68,900Goodwill
    
    
    43,178Total assets acquired
    
    
    299,220Accounts payable and accrued liabilities
    
    
    60,614Long-term debt
    
    
    166,028Deferred tax liability
    
    
    31,549Other liabilities
    
    
    13,854Total liabilities assumed
    
    
    272,045Net assets acquired
    
    $
    27,175
   3




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##### Table of Contents



Our Restaurant Concepts
 El Torito and El Torito Grill (42.2% of Fiscal Year 2008 restaurant revenues)
    Chevys (37.9% of Fiscal Year 2008 restaurant revenues).
  Acapulco (14.8% of Fiscal Year 2008 restaurant revenues).
   Other Restaurant Concepts (5.1% of Fiscal Year 2008 restaurant revenues).
  4




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Business Strengths
 Fresh, Authentic, Mexican Food.
 Service
 Internal Production, Purchasing and Distribution Facilities ®
 Business Strategy
  Same store sales and store margin improvements
 New Restaurant Openings
 Expansion of the Chevys franchise network
  5




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Growth in outside sales by Real Mex Foods ®
 Purchasing and Distribution
  Employees
  Restaurant Staffing.
 Turnover.
 Competition
  Government Regulation
   6




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Environmental Matters
  
 
  Our results of operations and financial condition can be adversely affected by numerous risks.
You should carefully consider the risk factors detailed below in conjunction with the other
information contained in this report. If any of the following risks actually occur, our business,
financial condition, operating results, cash flows and/or future prospects could be materially
adversely affected.
 Food-borne illness incidents could reduce our restaurant sales.
   7




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Increases in the cost of ingredients could materially adversely affect our business, financial
condition, and results of operations and cash flows.
  We depend upon frequent deliveries of food and other supplies.
   We are vulnerable to changes in consumer preferences and economic and other conditions that could
harm our business, financial condition, and results of operations and cash flows
  The U.S. economic crisis adversely impacted our business and financial results in fiscal 2008 and a
prolonged recession could materially affect us in the future.
   8




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Our business is highly sensitive to events and conditions in the State of California.
  There is intense competition in the restaurant industry.
  Negative publicity relating to one of our restaurants could reduce sales at some or all of our
other restaurants.
  Uninsured losses could occur.
  Changes in employment laws may adversely affect our business.
  
    
    minimum wage;
 
    
    paid leaves of absence;
 
    
    provision to employees of mandatory health insurance; and
 
    
    tax reporting; and
 
    
    revisions in the tax payment requirements for employees who receive gratuities.
  9




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If we face labor shortages or increased labor costs, our growth and operating results could be
adversely affected.
   We may be locked into long-term and non-cancelable leases and may be unable to renew leases at the
end of their terms.
  The current economic crisis could have a material adverse impact on our landlords or other tenants
in shopping centers in which we are located, which in turn could negatively affect our financial
results.
  We face risks associated with government regulations.
     10




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We may be subject to significant liability should the consumption of any of our specialty products
cause injury, illness or death.
  The failure to enforce and maintain our trademarks could materially adversely affect our ability to
establish and maintain brand awareness.
 ® ® ® ® ®
  We face risks associated with environmental laws.
  
    
    govern activities or operations that may have adverse environmental effects,
such as discharges to air and water, as well as handling and disposal practices
for solid and hazardous wastes; and
 
    
    impose liability for the costs of cleaning up, and damage resulting from,
sites of past spills, disposals or other releases of hazardous materials.
   11




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We depend on the services of key executives, whose loss could materially harm our business.
  Compliance with regulation of corporate governance and public disclosure will result in additional
expenses.
  We may
make acquisitions or enter into similar transactions
  Our substantial level of indebtedness could adversely affect our financial condition.
  
    
    our ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes may be impaired;
 
    
    we must use a substantial portion of our cash flow from operations to pay
interest on our indebtedness, which will reduce the funds available to use for
operations and other purposes;
 
    
    our high level of indebtedness could place us at a competitive disadvantage
compared to those of our competitors that may have proportionately less debt;
 
    
    our flexibility in planning for, or reacting to, changes in our business and
the industry in which we operate may be limited; and
 
    
    our high level of indebtedness makes us more vulnerable to economic downturns
and adverse developments in our business.
   12




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The indenture for our senior secured notes and our senior secured and unsecured credit facilities
impose significant operating and financial restrictions, which may prevent us from pursuing certain
business opportunities and taking certain actions.
  
    
    incur additional indebtedness;
 
    
    repay indebtedness before stated maturity dates;
 
    
    pay dividends on, redeem or repurchase our stock or make other distributions;
 
    
    make acquisitions or investments;
 
    
    create or incur liens;
 
    
    transfer or sell certain assets or merge or consolidate with or into other companies;
 
    
    enter into certain transactions with affiliates;
 
    
    sell stock in our subsidiaries;
 
    
    restrict dividends, distributions or other payments from our subsidiaries; and
 
    
    otherwise conduct necessary corporate activities.
  We have a material amount of goodwill and other indefinite lived intangible assets which, if
impaired, would result in a reduction in our net income.
  The interests of the stockholders of the voting stock of our parent, RM Restaurant Holding Corp,
may conflict with the interests of the holders of our indebtedness.
   13




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Future changes in financial accounting standards may cause adverse unexpected operating results and
affect our reported results of operations.
  
 
   
 
   Restaurant Locations
   ConceptsState
    
    El Torito(1)
    
    
    Chevys
    
    
    Acapulco
    
    
    Franchised
    
    
    Other(2)
    
    
    TotalCalifornia
    
    
    76
    
    
    
    47
    
    
    
    31
    
    
    
    1
    
    
    
    2
    
    
    
    157Missouri
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    4
    
    
    
    13Illinois
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    4
    
    
    
    1
    
    
    
    6Arizona
    
    
    2
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5New Jersey
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    5Oregon
    
    
    1
    
    
    
    3
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    5Maryland
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    4New York
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    4Virginia
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    4Washington
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    3Florida
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    4Louisiana
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Nevada
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Indiana
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Minnesota
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1South Dakota
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Total domestic
    
    
    82
    
    
    
    68
    
    
    
    32
    
    
    
    27
    
    
    
    8
    
    
    
    217Japan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    6Turkey
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Total including International
    
    
    82
    
    
    
    68
    
    
    
    32
    
    
    
    35
    
    
    
    8
    
    
    
    225
 
 (1)
    
    Includes El Torito Grill and Sinigual restaurants.(2)
    
    Includes Las Brisas, Who ·Song&Larrys, El
Paso Cantina and Casa Gallardo restaurants.    14




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PART II
 
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
 Market Information
  Holders
   Dividends
  Securities Authorized For Issuance under Equity Compensation Plans
  Recent Sales of Unregistered Securities and Repurchases of Equity Securities
   15




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Successor
    
    
    PredecessorNovember
    
    
    December
    
    
    Fiscal
    
    
    August
    
    
    December14, 2008 to
    
    
    31, 2007 to
    
    
    Year
    
    
    21, 2006 to
    
    
    26, 2005 to
    
    
    PredecessorDecember
    
    
    November
    
    
    Ended
    
    
    December
    
    
    August
    
    
    Fiscal Year Ended28, 2008
    
    
    13, 2008
    
    
    2007
    
    
    31, 2006
    
    
    20, 2006
    
    
    2005(4)
    
    
    2004(in thousands)Statement of Operations Data:Restaurant revenues
    
    $
    52,448
    
    
    $
    456,587
    
    
    $
    523,352
    
    
    $
    179,630
    
    
    $
    351,591
    
    
    $
    510,013
    
    
    $
    314,157Other revenue
    
    
    4,571
    
    
    
    37,110
    
    
    
    38,164
    
    
    
    11,094
    
    
    
    18,358
    
    
    
    20,532
    
    
    
    10,787Total revenues
    
    
    57,316
    
    
    
    496,429
    
    
    
    565,191
    
    
    
    192,098
    
    
    
    372,552
    
    
    
    534,296
    
    
    
    326,810Cost of sales
    
    
    14,255
    
    
    
    123,878
    
    
    
    140,824
    
    
    
    46,883
    
    
    
    87,388
    
    
    
    127,126
    
    
    
    80,839Labor
    
    
    21,210
    
    
    
    178,962
    
    
    
    199,843
    
    
    
    67,729
    
    
    
    125,748
    
    
    
    186,390
    
    
    
    118,888Direct operating and occupancy expense
    
    
    14,886
    
    
    
    133,351
    
    
    
    148,088
    
    
    
    51,127
    
    
    
    94,422
    
    
    
    140,648
    
    
    
    76,760Total operating costs
    
    
    50,351
    
    
    
    436,191
    
    
    
    488,755
    
    
    
    165,739
    
    
    
    307,558
    
    
    
    454,164
    
    
    
    276,487General and administrative expenses
    
    
    3,234
    
    
    
    26,493
    
    
    
    31,718
    
    
    
    11,414
    
    
    
    18,893
    
    
    
    28,346
    
    
    
    17,725Depreciation and amortization
    
    
    3,750
    
    
    
    21,724
    
    
    
    23,961
    
    
    
    10,323
    
    
    
    12,230
    
    
    
    18,498
    
    
    
    11,837Goodwill impairment
    
    
    
    
    
    
    163,196
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating (loss) income
    
    
    (19
    )
    
    
    (158,668
    )
    
    
    6,854
    
    
    
    3,379
    
    
    
    18,150
    
    
    
    31,433
    
    
    
    20,299Interest expense
    
    
    4,108
    
    
    
    16,407
    
    
    
    19,326
    
    
    
    10,481
    
    
    
    16,005
    
    
    
    22,973
    
    
    
    12,528Debt termination costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,677(Loss) income before income tax provision
    
    
    (4,103
    )
    
    
    (173,061
    )
    
    
    (10,802
    )
    
    
    (8,238
    )
    
    
    2,787
    
    
    
    8,677
    
    
    
    4,546Net (loss) income
    
    
    (4,103
    )
    
    
    (173,113
    )
    
    
    (23,546
    )
    
    
    (5,047
    )
    
    
    1,480
    
    
    
    13,386
    
    
    
    13,616Redeemable preferred stock accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,126
    )
    
    
    (14,583
    )
    
    
    (11,862
    )Net (loss) income attributable to common
stockholders(1)
    
    $
    (4,103
    )
    
    $
    (173,113
    )
    
    $
    (23,546
    )
    
    $
    (5,047
    )
    
    $
    (8,646
    )
    
    $
    (1,197
    )
    
    $
    1,754Balance Sheet Data:Cash and cash equivalents
    
    
    2,099
    
    
    
    
    
    
    
    2,323
    
    
    
    2,710
    
    
    
    
    
    
    
    14,871
    
    
    
    10,690Property and equipment, net
    
    
    110,505
    
    
    
    
    
    
    
    96,179
    
    
    
    90,802
    
    
    
    
    
    
    
    82,592
    
    
    
    36,589Total assets
    
    
    298,328
    
    
    
    
    
    
    
    434,455
    
    
    
    447,135
    
    
    
    
    
    
    
    310,889
    
    
    
    186,951Total debt(2)
    
    
    161,813
    
    
    
    
    
    
    
    186,187
    
    
    
    183,905
    
    
    
    
    
    
    
    182,031
    
    
    
    106,503Total stockholders equity
    
    
    23,044
    
    
    
    
    
    
    
    163,113
    
    
    
    184,077
    
    
    
    
    
    
    
    50,584
    
    
    
    29,849Other Financial Data:Capital expenditures
    
    $
    736
    
    
    
    
    
    
    $
    34,404
    
    
    $
    23,545
    
    
    
    
    
    
    $
    23,408
    
    
    $
    9,982Ratio of earnings to fixed charges(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2
    x
    
    
    1.2
    x
 
 (1)
    
    Net (loss) income attributable to common stockholders includes the effect of the accretion of
the liquidation preference on the redeemable preferred stock which reduces net income or increases
net loss attributable to common stockholders for the relevant periods through August 20, 2006.(2)
    
    Total debt includes long-term debt, obligations under capital leases and unamortized debt
premium/discount.(3)
    
    For purposes of calculating the ratio of earnings to fixed charges, earnings consist of net
income before income taxes plus fixed charges. Fixed charges consist of interest expense on all
indebtedness, plus one-third of rental expense (the portion deemed representative of the interest
factor). For periods with a net loss before income taxes, this calculation is not performed since
the ratio is not meaningful.(4)
    
    Includes the results of Chevys since January 12, 2005, the date of acquisition.  16




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following Managements Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements as a result of certain factors, including those set
forth under the heading Forward-Looking Statements above and elsewhere in this report. Unless
otherwise provided below, references to we, us and our Company refer to Real Mex
Restaurants, Inc. and our consolidated subsidiaries. The following discussion should be read in
conjunction with our consolidated financial statements and related notes thereto included elsewhere
in this report.
 Overview
  ·
           17




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Results of Operations
  Successor (1)
    
    
    Predecessor (1)November
    
    
    December
    
    
    Fiscal
    
    
    August
    
    
    December14, 2008 to
    
    
    31, 2007 to
    
    
    Year
    
    
    21, 2006 to
    
    
    26, 2005 toDecember
    
    
    November
    
    
    Ended
    
    
    December
    
    
    August28, 2008
    
    
    13, 2008
    
    

2007
(5)
    
    
    31, 2006
    
    
    20, 2006Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    24.9
    
    
    
    25.0
    
    
    
    24.9
    
    
    
    24.4
    
    
    
    23.5Labor
    
    
    37.0
    
    
    
    36.0
    
    
    
    35.4
    
    
    
    35.3
    
    
    
    33.8Direct operating and occupancy expense
    
    
    26.0
    
    
    
    26.9
    
    
    
    26.2
    
    
    
    26.6
    
    
    
    25.3Total operating costs
    
    
    87.8
    
    
    
    87.9
    
    
    
    86.5
    
    
    
    86.3
    
    
    
    82.6General and administrative expense
    
    
    5.6
    
    
    
    5.3
    
    
    
    5.6
    
    
    
    5.9
    
    
    
    5.1Depreciation and amortization
    
    
    5.8
    
    
    
    4.0
    
    
    
    3.9
    
    
    
    4.4
    
    
    
    3.3Goodwill impairment
    
    
    
    
    
    
    32.9
    
    
    
    1.8
    
    
    
    
    
    
    
    Operating (loss) income
    
    
    
    
    
    
    (32.0
    )
    
    
    1.2
    
    
    
    1.8
    
    
    
    4.9Interest expense
    
    
    7.2
    
    
    
    3.3
    
    
    
    3.4
    
    
    
    5.5
    
    
    
    4.3(Loss) income before income tax provision
    
    
    (7.2
    )
    
    
    (34.9
    )
    
    
    (1.9
    )
    
    
    (4.3
    )
    
    
    0.7Net (loss) income
    
    
    (7.2
    )
    
    
    (34.9
    )
    
    
    (4.2
    )
    
    
    (2.6
    )
    
    
    0.4
 
 (1)
    
    When combined, Fiscal Years 2008 and 2007 are comprised of 52 weeks and Fiscal Year 2006 is
comprised of 53 weeks.  18




---



##### Table of Contents



Fiscal Year 2008 Compared to Fiscal Year 2007
 Total Revenues
 Cost of Sales
 Labor
 Direct Operating and Occupancy Expense
 General and Administrative Expense
 Depreciation and Amortization
 Goodwill Impairment.
 Interest Expense
  19




---



##### Table of Contents



Income tax provision.
 Fiscal Year 2007 Compared to Fiscal Year 2006
 Total Revenues
 Cost of Sales
 Labor
 Direct Operating and Occupancy Expense
 General and Administrative Expense
 Depreciation and Amortization
 Goodwill Impairment.
  20




---



##### Table of Contents



Interest Expense
 Income tax provision.
 Liquidity and Capital Resources
  Working Capital and Cash Flows
  Operating Activities
 Investing Activities
   21




---



##### Table of Contents



Financing Activities
 Debt and Other Obligations
 Senior Secured Notes due 2010
   Senior Secured Revolving Credit Facilities
    22




---



##### Table of Contents



Senior Unsecured Credit Facility
   23




---



##### Table of Contents



Mortgage.
 Capital Leases
  Less than
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Years($ in thousands)Contractual ObligationsLong Term Debt Obligations(1)
    
    $
    178,833
    
    
    $
    8,313
    
    
    $
    170,166
    
    
    $
    199
    
    
    $
    155Capital Lease Obligations
    
    
    1,794
    
    
    
    565
    
    
    
    702
    
    
    
    223
    
    
    
    304Operating Lease Obligations(2)
    
    
    251,670
    
    
    
    41,389
    
    
    
    68,976
    
    
    
    52,301
    
    
    
    89,004Purchase Obligations
    
    
    43,810
    
    
    
    27,244
    
    
    
    5,522
    
    
    
    5,522
    
    
    
    5,522Total
    
    $
    476,107
    
    
    $
    77,511
    
    
    $
    245,366
    
    
    $
    58,245
    
    
    $
    94,985
 
 (1)
    
    Includes our Senior Secured Notes, unsecured term loan, New Senior Secured Revolving Credit
Facility, mortgage and an obligation to a vendor. We have not included any scheduled interest
payments in this table. Please see discussion of terms for each significant component of long
term debt above.(2)
    
    In addition to the base rent, many of our leases contain percentage rent clauses, which
obligate us to pay additional rents based on a percentage of sales, when sales levels exceed a
contractually defined base. We recorded such additional rent expenses of $198 in Successor
2008, $1,926 in Predecessor 2008, $2,164 in Predecessor 2007, $907 in Predecessor 2006-2 and
$1,755 in Predecessor 2006-1. Operating Lease Obligations do not reflect potential renewals
or replacements of expiring leases. Off-Balance Sheet Arrangements
  Inflation
    24




---



##### Table of Contents



Critical Accounting Policies
   Property and Equipment
  Long-Lived Asset Impairment
    Goodwill and Intangible Assets
   25




---



##### Table of Contents



Self-Insurance
   Income Taxes
   Revenue Recognition
   26




---



##### Table of Contents



Recent Accounting Pronouncements
    
 
       27




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
  28




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
  29




---



##### Table of Contents



Real Mex Restaurants, Inc.
 
 Consolidated Balance Sheets
 (In Thousands, Except For Share Data)
 Successor
    
    
    PredecessorDecember 28,
    
    
    December 30,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,099
    
    
    $
    2,323Trade receivables, net
    
    
    9,102
    
    
    
    10,160Other receivables
    
    
    873
    
    
    
    2,594Inventories, net
    
    
    13,563
    
    
    
    12,049Deferred compensation plan assets
    
    
    1,848
    
    
    
    3,115Prepaid expenses and other current assets
    
    
    7,253
    
    
    
    7,186Current portion of favorable lease asset, net
    
    
    5,902
    
    
    
    3,454Total current assets
    
    
    40,640
    
    
    
    40,881Property and equipment, net
    
    
    110,505
    
    
    
    96,179Goodwill, net
    
    
    43,200
    
    
    
    160,621Trademarks and other intangibles
    
    
    68,900
    
    
    
    113,000Deferred charges
    
    
    1,404
    
    
    
    3,115Favorable lease asset, less current portion, net
    
    
    25,382
    
    
    
    11,313Other assets
    
    
    8,297
    
    
    
    9,346Total assets
    
    $
    298,328
    
    
    $
    434,455Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    23,198
    
    
    $
    22,692Accrued self-insurance reserves
    
    
    15,619
    
    
    
    15,479Accrued compensation and benefits
    
    
    16,216
    
    
    
    17,402Other accrued liabilities
    
    
    15,426
    
    
    
    14,014Related party payables
    
    
    
    
    
    
    2,505Current portion of long-term debt
    
    
    8,313
    
    
    
    12,579Current portion of capital lease obligations
    
    
    453
    
    
    
    433Total current liabilities
    
    
    79,225
    
    
    
    85,104Long-term debt, less current portion
    
    
    152,105
    
    
    
    172,057Capital lease obligations, less current portion
    
    
    942
    
    
    
    1,118Deferred tax liabilities
    
    
    31,549
    
    
    
    Unfavorable lease liability, less current portion, net
    
    
    8,445
    
    
    
    4,394Other liabilities
    
    
    3,018
    
    
    
    8,669Total liabilities
    
    
    275,284
    
    
    
    271,342Commitments and contingencies
    
    
    
    
    
    
    Stockholders equity:Common stock, $.001 par value, 1,000 shares
authorized, issued and outstanding at December 28,
2008 and December 30, 2007
    
    
    
    
    
    
    Additional paid-in capital
    
    
    27,147
    
    
    
    201,706Accumulated deficit
    
    
    (4,103
    )
    
    
    (38,593
    )Total stockholders equity
    
    
    23,044
    
    
    
    163,113Total liabilities and stockholders equity
    
    $
    298,328
    
    
    $
    434,455
 See notes to consolidated financial statements.
  30




---



##### Table of Contents



Real Mex Restaurants, Inc.
 
 Consolidated Statements of Operations
 (In Thousands)
 Successor
    
    
    PredecessorNovember 14,
    
    
    December 31,
    
    
    Fiscal
    
    
    August 21,
    
    
    December 26,2008 to
    
    
    2007 to
    
    
    Year Ended
    
    
    2006 to
    
    
    2005 toDecember 28,
    
    
    November 13,
    
    
    December 30,
    
    
    December 31,
    
    
    August 20,2008
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2006Revenues:Restaurant revenues
    
    $
    52,448
    
    
    $
    456,587
    
    
    $
    523,352
    
    
    $
    179,630
    
    
    $
    351,591Other revenues
    
    
    4,571
    
    
    
    37,110
    
    
    
    38,164
    
    
    
    11,094
    
    
    
    18,358Franchise revenues
    
    
    297
    
    
    
    2,732
    
    
    
    3,675
    
    
    
    1,374
    
    
    
    2,603Total revenues
    
    
    57,316
    
    
    
    496,429
    
    
    
    565,191
    
    
    
    192,098
    
    
    
    372,552Costs and expenses:Cost of sales
    
    
    14,255
    
    
    
    123,878
    
    
    
    140,824
    
    
    
    46,883
    
    
    
    87,388Labor
    
    
    21,210
    
    
    
    178,962
    
    
    
    199,843
    
    
    
    67,729
    
    
    
    125,748Direct operating and occupancy expense
    
    
    14,886
    
    
    
    133,337
    
    
    
    148,088
    
    
    
    51,127
    
    
    
    94,422General and administrative expense
    
    
    3,219
    
    
    
    25,726
    
    
    
    31,718
    
    
    
    11,414
    
    
    
    18,893Depreciation and amortization
    
    
    3,750
    
    
    
    21,724
    
    
    
    23,961
    
    
    
    10,323
    
    
    
    12,230Legal settlement costs
    
    
    15
    
    
    
    781
    
    
    
    402
    
    
    
    19
    
    
    
    4,180Merger costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    307
    
    
    
    9,434Pre-opening costs
    
    
    
    
    
    
    2,342
    
    
    
    2,139
    
    
    
    917
    
    
    
    910Impairment of goodwill and intangible assets
    
    
    
    
    
    
    163,196
    
    
    
    10,000
    
    
    
    
    
    
    
    Impairment of property and equipment
    
    
    
    
    
    
    5,151
    
    
    
    1,362
    
    
    
    
    
    
    
    1,197Operating (loss) income
    
    
    (19
    )
    
    
    (158,668
    )
    
    
    6,854
    
    
    
    3,379
    
    
    
    18,150Other income (expense):Interest expense
    
    
    (4,108
    )
    
    
    (16,407
    )
    
    
    (19,326
    )
    
    
    (10,481
    )
    
    
    (16,005
    )Other income (expense), net
    
    
    24
    
    
    
    2,014
    
    
    
    1,670
    
    
    
    (1,136
    )
    
    
    642Total other expense, net
    
    
    (4,084
    )
    
    
    (14,393
    )
    
    
    (17,656
    )
    
    
    (11,617
    )
    
    
    (15,363
    )(Loss) income before income tax provision
    
    
    (4,103
    )
    
    
    (173,061
    )
    
    
    (10,802
    )
    
    
    (8,238
    )
    
    
    2,787Income tax provision (benefit)
    
    
    
    
    
    
    52
    
    
    
    12,744
    
    
    
    (3,191
    )
    
    
    1,307Net (loss) income before redeemable
preferred stock accretion
    
    
    (4,103
    )
    
    
    (173,113
    )
    
    
    (23,546
    )
    
    
    (5,047
    )
    
    
    1,480Redeemable preferred stock accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,126
    )Net loss attributable to common stockholders
    
    $
    (4,103
    )
    
    $
    (173,113
    )
    
    $
    (23,546
    )
    
    $
    (5,047
    )
    
    $
    (8,646
    )
 See notes to consolidated financial statements.
  31




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##### Table of Contents



Real Mex Restaurants, Inc.
 
 Consolidated Statements of Stockholders Equity
(In Thousands, Except For Share Data)
  PredecessorSeries A
    
    
    Series B
    
    
    Series CRedeemable
    
    
    Redeemable
    
    
    Redeemable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AdditionalPreferred
    
    
    Preferred
    
    
    Preferred
    
    
    Common Stock
    
    
    
    
    
    
    Paid-in
    
    
    AccumulatedStock
    
    
    Stock
    
    
    Stock
    
    
    Shares
    
    
    Amount
    
    
    Warrants
    
    
    Capital
    
    
    Deficit
    
    
    TotalBalance at December 25, 2005
    
    $
    35,646
    
    
    $
    25,365
    
    
    $
    58,080
    
    
    
    316,290
    
    
    $
    
    
    
    $
    4,027
    
    
    $
    16,203
    
    
    $
    (88,737
    )
    
    $
    50,584Issuance of Series A
Redeemable Preferred
Stock
    
    
    1,897
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,897Issuance of Series B
Redeemable Preferred
Stock
    
    
    
    
    
    
    1,433
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,433Issuance of Series D
Redeemable Preferred
Stock
    
    
    
    
    
    
    
    
    
    
    2,352
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,352Tax benefit from
employee stock option
exercise
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,800
    
    
    
    
    
    
    
    1,800Accretion on redeemable
preferred stock
    
    
    2,861
    
    
    
    2,177
    
    
    
    5,089
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,127
    )
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,480
    
    
    
    1,480Balance at August 20, 2006
    
    
    40,404
    
    
    
    28,975
    
    
    
    65,521
    
    
    
    316,290
    
    
    
    
    
    
    
    4,027
    
    
    
    18,003
    
    
    
    (97,384
    )
    
    
    59,546Initial capitalization
of the Company, August
21, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    199,124
    
    
    
    
    
    
    
    199,124Dividend distribution to
parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,000
    )
    
    
    (10,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,047
    )
    
    
    (5,047
    )Balance at December 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    199,124
    
    
    
    (15,047
    )
    
    
    184,077Contribution from parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,743
    
    
    
    
    
    
    
    1,743Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    839
    
    
    
    
    
    
    
    839Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,546
    )
    
    
    (23,546
    )Balance at December 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    201,706
    
    
    
    (38,593
    )
    
    
    163,113Contribution from parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,554
    
    
    
    
    
    
    
    5,554Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    406
    
    
    
    
    
    
    
    406Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (173,113
    )
    
    
    (173,113
    )Balance at November 13, 2008
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    1,000
    
    
    $
    
    
    
    $
    
    
    
    $
    207,666
    
    
    $
    (211,706
    )
    
    $
    (4,040
    )SuccessorSeries A
    
    
    Series B
    
    
    Series CRedeemable
    
    
    Redeemable
    
    
    Redeemable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AdditionalPreferred
    
    
    Preferred
    
    
    Preferred
    
    
    Common Stock
    
    
    
    
    
    
    Paid-in
    
    
    AccumulatedStock
    
    
    Stock
    
    
    Stock
    
    
    Shares
    
    
    Amount
    
    
    Warrants
    
    
    Capital
    
    
    Deficit
    
    
    TotalRecapitalization of the
Company, November 14, 2008
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    1,000
    
    
    $
    
    
    
    $
    
    
    
    $
    27,175
    
    
    $
    
    
    
    $
    27,175Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28
    )
    
    
    
    
    
    
    (28
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,103
    )
    
    
    (4,103
    )Balance at December 28, 2008
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    1,000
    
    
    $
    
    
    
    $
    
    
    
    $
    27,147
    
    
    $
    (4,103
    )
    
    $
    23,044
 See notes to consolidated financial statements.
  32




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##### Table of Contents



Real Mex Restaurants, Inc.
 
 Consolidated Statements of Cash Flows
 (In Thousands)
  Successor
    
    
    PredecessorNovember 14,
    
    
    December 31,
    
    
    
    
    
    
    August 21,
    
    
    December 26,2008
    
    
    2007
    
    
    Fiscal Year
    
    
    2006
    
    
    2005to
    
    
    to
    
    
    Ended
    
    
    to
    
    
    toDecember 28,
    
    
    November 13,
    
    
    December 30,
    
    
    December 31,
    
    
    August 20,2008
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2006Operating activitiesNet (loss) income
    
    $
    (4,103
    )
    
    $
    (173,113
    )
    
    $
    (23,546
    )
    
    $
    (5,047
    )
    
    $
    1,480Adjustments to reconcile net (loss) income to
net cash provided by (used in) operating
activities:Depreciation
    
    
    3,334
    
    
    
    19,780
    
    
    
    22,254
    
    
    
    8,505
    
    
    
    12,230Amortization of:Favorable lease asset and unfavorable
lease liability, net
    
    
    416
    
    
    
    1,944
    
    
    
    1,707
    
    
    
    1,818
    
    
    
    Deferred financing costs
    
    
    169
    
    
    
    1,571
    
    
    
    1,828
    
    
    
    2,286
    
    
    
    1,179Debt discount/(premium)
    
    
    1,535
    
    
    
    (1,050
    )
    
    
    (1,563
    )
    
    
    
    
    
    
    Impairment of goodwill and intangible assets
    
    
    
    
    
    
    163,196
    
    
    
    10,000
    
    
    
    
    
    
    
    (Gain) loss on disposal of property and
equipment
    
    
    
    
    
    
    (402
    )
    
    
    (877
    )
    
    
    706
    
    
    
    (19
    )Gain on lease termination
    
    
    
    
    
    
    (600
    )
    
    
    
    
    
    
    
    
    
    
    Impairment of property and equipment
    
    
    
    
    
    
    5,151
    
    
    
    1,362
    
    
    
    
    
    
    
    1,197Stock-based compensation expense
    
    
    (28
    )
    
    
    406
    
    
    
    839
    
    
    
    
    
    
    
    1,800Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    12,731
    
    
    
    (3,218
    )
    
    
    (1,108
    )Other
    
    
    
    
    
    
    
    
    
    
    231
    
    
    
    
    
    
    
    Changes in operating assets and liabilities:Trade and other receivables
    
    
    2,125
    
    
    
    654
    
    
    
    (2,578
    )
    
    
    1,449
    
    
    
    (1,071
    )Inventories
    
    
    (625
    )
    
    
    (889
    )
    
    
    (1,484
    )
    
    
    (553
    )
    
    
    (35
    )Deferred compensation plan assets
    
    
    (51
    )
    
    
    1,347
    
    
    
    (745
    )
    
    
    (755
    )
    
    
    (573
    )Prepaid expenses and other current
assets
    
    
    (3,358
    )
    
    
    3,291
    
    
    
    544
    
    
    
    (3,310
    )
    
    
    (952
    )Related party receivable/payable
    
    
    
    
    
    
    (66
    )
    
    
    6,096
    
    
    
    (3,591
    )
    
    
    Deferred charges, net
    
    
    
    
    
    
    35
    
    
    
    (148
    )
    
    
    (80
    )
    
    
    (301
    )Other assets
    
    
    6
    
    
    
    66
    
    
    
    73
    
    
    
    (107
    )
    
    
    912Accounts payable and accrued liabilities
    
    
    7,342
    
    
    
    (7,551
    )
    
    
    (6,519
    )
    
    
    (2,151
    )
    
    
    14,235Other liabilities
    
    
    424
    
    
    
    3,959
    
    
    
    5,225
    
    
    
    629
    
    
    
    1,484Net cash provided by (used in) operating
activities
    
    
    7,186
    
    
    
    17,729
    
    
    
    25,430
    
    
    
    (3,419
    )
    
    
    30,458Investing activitiesPurchases of property and equipment
    
    
    (736
    )
    
    
    (23,332
    )
    
    
    (34,404
    )
    
    
    (10,495
    )
    
    
    (15,885
    )Exchange transaction costs
    
    
    (20
    )
    
    
    (1,153
    )
    
    
    
    
    
    
    
    
    
    
    Sale of Fuzio trademark
    
    
    
    
    
    
    
    
    
    
    1,200
    
    
    
    
    
    
    
    Proceeds from lease termination
    
    
    
    
    
    
    600
    
    
    
    
    
    
    
    
    
    
    
    Net proceeds from disposal of property and
equipment
    
    
    
    
    
    
    302
    
    
    
    4,789
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (756
    )
    
    
    (23,583
    )
    
    
    (28,415
    )
    
    
    (10,495
    )
    
    
    (15,885
    )Financing activitiesNet (payment) borrowing under revolving credit
facility
    
    
    (5,900
    )
    
    
    2,500
    
    
    
    3,050
    
    
    
    7,950
    
    
    
    Borrowings under long-term debt agreements
    
    
    466
    
    
    
    1,375
    
    
    
    981
    
    
    
    437
    
    
    
    Payments on long-term debt agreements and
capital lease obligations
    
    
    (314
    )
    
    
    (1,449
    )
    
    
    (577
    )
    
    
    (10,148
    )
    
    
    (174
    )Payment of financing costs
    
    
    
    
    
    
    (500
    )
    
    
    (856
    )
    
    
    (885
    )
    
    
    Dividend paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,000
    )
    
    
    Capital contributions
    
    
    
    
    
    
    3,022
    
    
    
    
    
    
    
    
    
    
    
    Net cash (used in) provided by financing
activities
    
    
    (5,748
    )
    
    
    4,948
    
    
    
    2,598
    
    
    
    (12,646
    )
    
    
    (174
    )Net increase (decrease) in cash and cash
equivalents
    
    
    682
    
    
    
    (906
    )
    
    
    (387
    )
    
    
    (26,560
    )
    
    
    14,399Cash and cash equivalents at beginning of
period
    
    
    1,417
    
    
    
    2,323
    
    
    
    2,710
    
    
    
    29,270
    
    
    
    14,871Cash and cash equivalents at end of period
    
    $
    2,099
    
    
    $
    1,417
    
    
    $
    2,323
    
    
    $
    2,710
    
    
    $
    29,270Supplemental disclosure of cash flow
informationInterest paid
    
    $
    873
    
    
    $
    16,910
    
    
    $
    19,722
    
    
    $
    11,225
    
    
    $
    11,405Income taxes paid
    
    $
    
    
    
    $
    52
    
    
    $
    38
    
    
    $
    17
    
    
    $
    44Supplemental disclosure of noncash investing
and financing activitiesPreferred
and common stock issued as consideration for the Chevys Acquisition
    
     $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,682
 See notes to consolidated financial statements.
  33




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##### Table of Contents



Real Mex Restaurants, Inc.
 
 
 Notes to Consolidated Financial Statements
 December 28, 2008
(In Thousands, Except For Share Data)
 1. Description of Business
 ® ® ®
 Basis of Presentation
   Liquidity
   2. Acquisitions
 Exchange Agreement
   34




---



##### Table of Contents



Cash and cash equivalents
    
    $
    1,417Trade and other accounts receivable
    
    
    12,100Inventories
    
    
    12,938Other current assets
    
    
    5,692Property and equipment
    
    
    113,154Other assets
    
    
    41,841Trademark and other intangibles
    
    
    68,900Goodwill
    
    
    43,178Total assets acquired
    
    
    299,220Accounts payable and accrued liabilities
    
    
    60,616Long-term debt
    
    
    166,026Deferred tax liability
    
    
    31,549Other liabilities
    
    
    13,854Total liabilities assumed
    
    
    272,045Net assets acquired
    
    $
    27,175
  Merger Agreement
   35




---



##### Table of Contents



3. Summary of Accounting Policies
 Principles of Consolidation
  Use of Estimates
  Cash and Cash Equivalents
  Receivables
  Inventories
  Supplies and Expendable Equipment
  Pre-Opening Costs
  Property and Equipment
  Impairment of Long-Lived Assets
   36




---



##### Table of Contents



Impairment of Goodwill and Intangible Assets
    Intangible Assets
  Successor
    
    
    PredecessorDecember 28,
    
    
    December 30,2008
    
    
    2007Trademarks
    
    $
    55,900
    
    
    $
    101,500Franchise agreements
    
    
    13,000
    
    
    
    11,500$
    68,900
    
    
    $
    113,000
  37




---



##### Table of Contents



Deferred Charges
  2009
    
    
    2010Financing and lease acquisition costs
    
    $
    1,074
    
    
    $
    330
 Favorable Lease Asset and Unfavorable Lease Liability
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    ThereafterFavorable lease asset
    
    $
    5,902
    
    
    $
    5,511
    
    
    $
    4,855
    
    
    $
    4,404
    
    
    $
    3,710
    
    
    $
    6,902Unfavorable lease liability
    
    
    (2,286
    )
    
    
    (2,017
    )
    
    
    (1,532
    )
    
    
    (1,380
    )
    
    
    (833
    )
    
    
    (2,683
    )Net amortization expense
    
    $
    3,616
    
    
    $
    3,494
    
    
    $
    3,323
    
    
    $
    3,024
    
    
    $
    2,877
    
    
    $
    4,219
 Liquor Licenses
  Income Taxes
    Revenue Recognition
  Self Insurance
   38




---



##### Table of Contents



Gift Certificates and Gift Cards
  Segment Information
  Promotion and Advertising Expense
  Operating Leases
  Concentration of Credit Risk
  Fair Value of Financial Instruments
  Recent Accounting Pronouncements
   39




---



##### Table of Contents



4. Property and Equipment
  Successor
    
    
    PredecessorDecember 28,
    
    
    December 30,2008
    
    
    2007Land and land improvements
    
    $
    1,530
    
    
    $
    2,079Buildings and improvements
    
    
    939
    
    
    
    1,201Furniture, fixtures and equipment
    
    
    43,789
    
    
    
    51,240Leasehold improvements and leasehold rights
    
    
    79,193
    
    
    
    73,207Property and equipment, total
    
    
    125,451
    
    
    
    127,727Less accumulated depreciation and amortization
    
    
    (14,946
    )
    
    
    (31,548
    )Property and equipment, net
    
    $
    110,505
    
    
    $
    96,179
 5. Accounts Payable and Other Accrued Liabilities
  Successor
    
    
    PredecessorDecember 28,
    
    
    December 30,2008
    
    
    2007Trade accounts payable
    
    $
    20,329
    
    
    $
    19,445Gift cards and gift certificates
    
    
    2,869
    
    
    
    3,247$
    23,198
    
    
    $
    22,692
  Successor
    
    
    PredecessorDecember 28,
    
    
    December 30,2008
    
    
    2007Rent and occupancy expenses
    
    $
    1,500
    
    
    $
    1,345Sales taxes
    
    
    3,960
    
    
    
    4,378Accrued interest
    
    
    3,444
    
    
    
    2,937Other
    
    
    6,522
    
    
    
    5,354$
    15,426
    
    
    $
    14,014
  40




---



##### Table of Contents



6. Long-Term Debt
  Successor
    
    
    PredecessorDecember 28,
    
    
    December 30,2008
    
    
    2007Senior Secured Notes due 2010
    
    $
    105,000
    
    
    $
    105,000Senior Secured Notes unamortized debt (discount)/premium
    
    
    (18,415
    )
    
    
    2,637Senior Secured Revolving Credit Facility
    
    
    7,600
    
    
    
    11,000Senior Unsecured Credit Facility  Related Party
    
    
    65,000
    
    
    
    65,000Mortgage
    
    
    591
    
    
    
    656Other
    
    
    642
    
    
    
    343160,418
    
    
    
    184,636Less current portion
    
    
    (8,313
    )
    
    
    (12,579
    )$
    152,105
    
    
    $
    172,057
 Senior Secured Notes due 2010
   Senior Secured Revolving Credit Facilities
   41




---



##### Table of Contents



Senior Unsecured Credit Facility
   42




---



##### Table of Contents



Mortgage.
  Successor
    
    PredecessorDecember 28,
    
    December 30,2008
    
    2007Senior Secured Notes due 2010
    
    10.25%
    
    10.00%Senior Secured Revolving Credit Facilities
    
    7.11 to 7.94%
    
    7.02 to 8.00%Senior Unsecured Credit Facility
    
    12.50%
    
    9.83%Mortgage
    
    9.28%
    
    9.28%Other
    
    3.98 to 4.70%
    
    6.45 to 7.75%
  UnamortizedDebtPrincipal
    
    
    Discount
    
    
    Total2009
    
    $
    8,313
    
    
    $
    (14,732
    )
    
    $
    (6,419
    )2010
    
    
    170,079
    
    
    
    (3,683
    )
    
    
    166,3962011
    
    
    87
    
    
    
    
    
    
    
    872012
    
    
    95
    
    
    
    
    
    
    
    952013
    
    
    104
    
    
    
    
    
    
    
    104Thereafter
    
    
    155
    
    
    
    
    
    
    
    155$
    178,833
    
    
    $
    (18,415
    )
    
    $
    160,418
 7. Capitalization
 Common Stock-Successor
  Redeemable Preferred Stock-Predecessor
    43




---



##### Table of Contents



Stock Option Plans
      Successor
    
    
    Predecessor2008
    
    
    2007Weighted average fair value of grants
    
    $
    3,942.64
    
    
    $
    3,942.64Risk-free interest rate
    
    
    4.52
    %
    
    
    4.52
    %Expected volatility
    
    
    42.28
    %
    
    
    42.28
    %Expected life in years
    
    
    7.67
    
    
    
    6.15
  44




---



##### Table of Contents



WeightedAverageShares
    
    
    Exercise PriceOutstanding at December 31, 2006  Predecessor
    
    
    
    
    
    
    Granted
    
    
    808
    
    
    $
    8,150Exercised
    
    
    
    
    
    
    Forfeited/expired
    
    
    (9
    )
    
    
    8,150Outstanding at December 30, 2007  Predecessor
    
    
    799
    
    
    $
    8,150Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited/expired
    
    
    (169
    )
    
    
    8,150Outstanding at November 13, 2008  Predecessor
    
    
    630
    
    
    $
    8,150Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited/expired
    
    
    (300
    )
    
    
    8,150Outstanding at December 28, 2008  Successor
    
    
    330
    
    
    $
    8,150Vested and expected to vest at December 28, 2008
    
    
    314
    
    
    $
    8,150Exercisable at December 28, 2008
    
    
    129
    
    
    $
    8,150
   8. Income Taxes
  Successor
    
    
    PredecessorDecember 28,
    
    
    November 13,
    
    
    December 30,
    
    
    December 31,
    
    
    August 20,2008
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2006Current:Federal
    
    $
    
    
    
    $
    28
    
    
    $
    
    
    
    $
    
    
    
    $
    1,570State
    
    
    
    
    
    
    24
    
    
    
    58
    
    
    
    61
    
    
    
    344
    
    
    
    52
    
    
    
    58
    
    
    
    61
    
    
    
    1,914Deferred:Federal
    
    
    
    
    
    
    
    
    
    
    (467
    )
    
    
    (2,729
    )
    
    
    (367
    )State
    
    
    
    
    
    
    
    
    
    
    (129
    )
    
    
    (523
    )
    
    
    (240
    )
    
    
    
    
    
    
    
    (596
    )
    
    
    (3,252
    )
    
    
    (607
    )
    
    
    
    
    
    
    
    (538
    )
    
    
    (3,191
    )
    
    
    1,307
    )Change in valuation allowance
    
    
    
    
    
    
    
    
    
    
    13,282
    
    
    
    
    
    
    
    $
    
    
    
    $
    52
    
    
    $
    12,744
    
    
    $
    (3,191
    )
    
    $
    1,307
  45




---



##### Table of Contents



Successor
    
    
    PredecessorDecember 28,
    
    
    December 30,2008
    
    
    2007Deferred tax assets:Federal net operating loss carry-forwards
    
    $
    
    
    
    $
    9,481State net operating loss carry-forwards
    
    
    
    
    
    
    1,805Goodwill and other intangibles
    
    
    24,808
    
    
    
    4,398Accrued expenses not currently deductible
    
    
    6,470
    
    
    
    3,394Tax credit carry-forwards
    
    
    
    
    
    
    592Property and equipment basis difference
    
    
    7,144
    
    
    
    17,455Deferred rent
    
    
    72
    
    
    
    1,006Gift certificates and other deferred income
    
    
    537
    
    
    
    692Unamortized debt premium
    
    
    
    
    
    
    1,729Deferred compensation
    
    
    1,262
    
    
    
    1,640State taxes
    
    
    1,872
    
    
    
    Other
    
    
    5,204
    
    
    
    784Total deferred tax assets
    
    
    47,369
    
    
    
    42,976Deferred tax liabilities:Prepaid expenses
    
    
    (397
    )
    
    
    (504
    )Trademarks and other indefinite lived intangibles
    
    
    (31,549
    )
    
    
    (17,170
    )Lease amortization
    
    
    (12,732
    )
    
    
    (10,279
    )State taxes
    
    
    
    
    
    
    (631
    )Unamortized landlord allowance
    
    
    (3,097
    )
    
    
    (1,110
    )Unamortized debt discount
    
    
    (8,019
    )
    
    
    Total deferred tax liabilities
    
    
    (55,794
    )
    
    
    (29,694
    )Valuation allowance
    
    
    (23,124
    )
    
    
    (13,282
    )Net deferred tax liability
    
    $
    (31,549
    )
    
    $
    
   Successor
    
    
    PredecessorDecember 28,
    
    
    December 30,
    
    
    December 31,
    
    
    August 20,2008
    
    
    2007
    
    
    2006
    
    
    2006Income tax at U.S. federal statutory tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State income tax, net of federal benefit
    
    
    0.0
    
    
    
    4.7
    
    
    
    5.8
    
    
    
    5.7Valuation allowance
    
    
    (13.0
    )
    
    
    (123.0
    )
    
    
    
    
    
    
    Non-deductible transaction costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.2Impairment
of goodwill and intangibles
    
    
    (92.1
    )
    
    
    
    
    
    
    
    
    
    
    Purchase accounting adjustment
    
    
    71.2
    
    
    
    
    
    
    
    
    
    
    
    Permanent true-ups
    
    
    
    
    
    
    (33.3
    )
    
    
    
    
    
    
    Other
    
    
    (0.1
    )
    
    
    (0.4
    )
    
    
    (1.1
    )
    
    
    (4.0
    )Effective tax rate
    
    
    (0.0
    )%
    
    
    (118.0
    )%
    
    
    38.7
    %
    
    
    46.9
    %
     46




---



##### Table of Contents



9. Fair Value Measurement
   Level 1:
    
    Quoted prices are available in active markets for identical
assets or liabilities as of the reporting date. Active markets
are those in which transactions for the asset or liability occur
in sufficient frequency and volume to provide pricing information
on an ongoing basis. Level 1 primarily consists of financial
instruments such as exchange-traded derivatives, listed equities
and U.S. government treasury securities.Level 2:
    
    Pricing inputs are other than quoted prices in active markets
included in Level 1, which are either directly or indirectly
observable as of the reporting date. Level 2 includes those
financial instruments that are valued using models or other
valuation methodologies. These models are primarily
industry-standard models that consider various assumptions,
including quoted forward prices for commodities, time value,
volatility factors, and current market and contractual prices for
the underlying instruments, as well as other relevant economic
measures. Substantially all of these assumptions are observable
in the marketplace throughout the full term of the instrument,
can be derived from observable data or are supported by
observable levels at which transactions are executed in the
marketplace. Instruments in this category include
non-exchange-traded derivatives such as over the counter
forwards, options and repurchase agreements.Level 3:
    
    Pricing inputs include significant inputs that are generally less
observable from objective sources. These inputs may be used with
internally developed methodologies that result in managements
best estimate of fair value. At each balance sheet date, we
perform an analysis of all instruments subject to SFAS 157
and include in Level 3 all of those whose fair value is based on
significant unobservable inputs.
  Level 1: Quoted Prices in Active Markets
   47




---



##### Table of Contents



Level 2: Significant Other Observable Inputs
    Level 3: Significant Unobservable Inputs
  10. Commitments and Contingencies
 Leases
    Capital
    
    
    Minimum
    
    
    
    
    
    
    NetLease
    
    
    Lease
    
    
    Sublease
    
    
    LeaseObligations
    
    
    Commitments
    
    
    Income
    
    
    Commitments2009
    
    $
    565
    
    
    $
    41,389
    
    
    $
    (678
    )
    
    $
    41,2762010
    
    
    433
    
    
    
    36,742
    
    
    
    (505
    )
    
    
    36,6702011
    
    
    269
    
    
    
    32,234
    
    
    
    (420
    )
    
    
    32,0832012
    
    
    194
    
    
    
    28,561
    
    
    
    (345
    )
    
    
    28,4102013
    
    
    29
    
    
    
    23,740
    
    
    
    (240
    )
    
    
    23,529Thereafter
    
    
    304
    
    
    
    89,004
    
    
    
    (559
    )
    
    
    88,749Total minimum lease payments
    
    
    1,794
    
    
    $
    251,670
    
    
    $
    (2,747
    )
    
    $
    250,717Less: Amount representing interest
    
    
    (399
    )Present value of net minimum capital lease payments
    
    
    1,395Less: Current maturities of capital lease obligations
    
    
    (453
    )Long-term capital lease obligations
    
    $
    942
   Successor
    
    
    PredecessorDecember 28,
    
    
    November 13,
    
    
    December 30,
    
    
    December 31,
    
    
    August 20,2008
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2006Rental expense
    
    $
    4,997
    
    
    $
    41,935
    
    
    $
    45,369
    
    
    $
    14,893
    
    
    $
    30,003Percentage rent expense above minimum rent
(included in rental expense)
    
    
    198
    
    
    
    1,926
    
    
    
    2,164
    
    
    
    907
    
    
    
    1,755Net sublease income
    
    
    45
    
    
    
    344
    
    
    
    227
    
    
    
    122
    
    
    
    289
  48




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##### Table of Contents



Purchase Obligations
  Litigation
  Self-Insurance
   11. Related Party Transactions
 Successor Transactions
     49




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##### Table of Contents



Predecessor Transactions
 Net Income
   12. Employee Benefit Plan
  13. Other Events
    50




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##### Table of Contents



14. Condensed Consolidating Financial Statements
  15. Quarterly Results of Operations (Unaudited)
  Predecessor
    
    
    SuccessorPredecessor
    
    
    Predecessor
    
    
    Predecessor
    
    
    Period from
    
    
    Period from13 weeks ended
    
    
    13 weeks ended
    
    
    13 weeks ended
    
    
    September 29, 2008
    
    
    November 14, 2008March 30,
    
    
    June 29,
    
    
    September 28,
    
    
    to
    
    
    to2008
    
    
    2008
    
    
    2008
    
    
    November 13, 2008
    
    
    December 28, 2008Total revenues
    
    $
    137,577
    
    
    $
    152,528
    
    
    $
    137,461
    
    
    $
    68,863
    
    
    $
    57,316Operating income (loss)
    
    $
    2,242
    
    
    $
    (27,728
    )
    
    $
    1,931
    
    
    $
    (135,113
    )
    
    $
    (20
    )Net loss
    
    $
    (2,204
    )
    
    $
    (31,839
    )(1)
    
    $
    (1,080
    )
    
    $
    (137,990
    )(2)
    
    $
    (4,103
    )
 Predecessor13 weeks ended
    
    
    13 weeks ended
    
    
    13 weeks ended
    
    
    13 weeks endedApril 1,
 2007
    
    
    July 1,
 2007
    
    
    September 30, 
2007
    
    
    December 30,
 2007Total revenues
    
    $
    138,511
    
    
    $
    149,575
    
    
    $
    142,510
    
    
    $
    134,595Operating income (loss)
    
    $
    5,593
    
    
    $
    7,813
    
    
    $
    4,070
    
    
    $
    (10,622
    )Net income (loss)
    
    $
    380
    
    
    $
    2,973
    
    
    $
    (591
    )
    
    $
    (26,679
    )(3)
 
 (1)
    
    Includes goodwill impairment of $34,000.(2)
    
    Includes goodwill impairment of $129,196.(3)
    
    Includes goodwill impairment charge of $10,000 and a deferred tax valuation allowance of
$13,300.  51




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 
  Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
   Changes in Internal Control Over Financial Reporting
  
 
    52




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##### Table of Contents



PART III
 
 
  Directors, Executive Officers and Key Employees
  Name
        
    Age
    
    
    PositionSteven Tanner
    
    
    58
    
    
    Interim Chief Executive Officer, Chief Financial Officer and DirectorCarlos Angulo
    
    
    47
    
    
    President, Real Mex Foods, Inc.Roberto (Pepe) Lopez
    
    
    53
    
    
    Executive Chef and Senior Vice President, Research and DevelopmentRaymond Garcia
    
    
    54
    
    
    Senior Vice President of Operations  El Torito & AcapulcoNicholas Mayer
    
    
    46
    
    
    Senior Vice President of Operations  ChevysSteven K. Wallace
    
    
    52
    
    
    Senior Vice President of Human ResourcesAnatoly Bushler
    
    
    32
    
    
    Director*+Evan Geller
    
    
    32
    
    
    Director*+Michael Linn
    
    
    30
    
    
    Director*+Rajiv Patel
    
    
    37
    
    
    Director*+Anthony Polazzi
    
    
    33
    
    
    Director*+Douglas Tapley
    
    
    36
    
    
    Director*+
 
 *
    
    Member of our audit committee.+
    
    Member of our compensation committee. Steven Tanner
 Carlos Angulo
 Roberto (Pepe) Lopez
 Raymond Garcia
 Nicholas Mayer
 Steven K. Wallace
  53




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##### Table of Contents



Anatoly Bushler
 Evan Geller
 Michael Linn
 Rajiv Patel
 Douglas Tapley
 Anthony Polazzi
 Audit Committee Financial Expert
  Code of Ethics
  
 
  COMPENSATION DISCUSSION AND ANALYSIS
 Compensation Philosophy and Overall Objectives
  How is Compensation Determined
   54




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##### Table of Contents



Discussion of Specific Compensation Elements
  Base Salary
  Annual Bonus Plan
  Stock Option Plan
  Employment Agreements
    55




---



##### Table of Contents



Compensation Committee Interlocks and Insider Participation
  Compensation Committee Report
  
 Summary Compensation Table
   Change inPension ValueNon-
    
    
    andEquity
    
    
    NonqualifiedRestricted
    
    
    
    
    
    
    Incentive
    
    
    Deferred
    
    
    AllName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    Plan
    
    
    Compensation
    
    
    OtherPrincipal Position
    
    Year
    
    Salary
    
    
    Bonus
    
    
    Other
    
    
    Awards
    
    
    Awards(2)
    
    
    Compensation(5)
    
    
    Earnings(1)
    
    
    Compensation
    
    
    Total($)
    
    
    ($)
    
    
    
    
    
    
    (#)
    
    
    (#)
    
    
    ($)
    
    
    (#)
    
    
    ($)
    
    
    ($)Frederick F. Wolfe
    
    2008
    
    
    549,513
    (6)
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    150,832
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    700,345former CEO, President and
    
    2007
    
    
    490,974
    
    
    
    110,000
    
    
    
    *
    
    
    
    
    
    
    
    322,345
    
    
    
    
    
    
    
    
    
    
    
    45,394
    (3)
    
    
    968,713Director
    
    2006
    
    
    484,468
    
    
    
    836,499
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,267,988
    (3)
    
    
    3,588,955Steven Tanner
    
    2008
    
    
    296,587
    
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    86,371
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    382,958Interim CEO,
CFO and
    
    2007
    
    
    283,841
    
    
    
    40,000
    
    
    
    *
    
    
    
    
    
    
    
    118,193
    
    
    
    
    
    
    
    
    
    
    
    19,433
    (3)
    
    
    461,467Director
    
    2006
    
    
    269,135
    
    
    
    462,676
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,290,320
    (3)
    
    
    2,022,131Carlos Angulo
    
    2008
    
    
    260,000
    
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    86,371
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    346,371President
    
    2007
    
    
    244,600
    
    
    
    40,000
    
    
    
    *
    
    
    
    
    
    
    
    118,193
    
    
    
    
    
    
    
    
    
    
    
    20,281
    (4)
    
    
    423,074Real Mex
Foods, Inc.
    
    2006
    
    
    233,292
    
    
    
    375,120
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    683,427
    (4)
    
    
    1,291,839Roberto (Pepe) Lopez
    
    2008
    
    
    210,330
    
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    15,703
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    226,033Executive Chef and
    
    2007
    
    
    209,309
    
    
    
    25,000
    
    
    
    *
    
    
    
    
    
    
    
    21,490
    
    
    
    
    
    
    
    
    
    
    
    7,606
    (4)
    
    
    263,405Senior Vice
President, R&D
    
    2006
    
    
    198,162
    
    
    
    142,794
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256,317
    (4)
    
    
    597,273Raymond Garcia
    
    2008
    
    
    205,000
    
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    22,299
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227,299Senior Vice President,
    
    2007
    
    
    201,963
    
    
    
    28,000
    
    
    
    *
    
    
    
    
    
    
    
    29,548
    
    
    
    
    
    
    
    
    
    
    
    8,478
    (4)
    
    
    267,989Operations
 El Torito & Acapulco
    
    2006
    
    
    190,745
    
    
    
    140,813
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    282,195
    (4)
    
    
    613,753Steven K. Wallace,
    
    2008
    
    
    200,000
    
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    14,447
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214,447Senior Vice President
    
    2007
    
    
    204,781
    
    
    
    23,000
    
    
    
    *
    
    
    
    
    
    
    
    18,803
    
    
    
    
    
    
    
    
    
    
    
    5,071
    (4)
    
    
    251,655of Human
Resources
    
    2006
    
    
    186,506
    
    
    
    135,944
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170,878
    (4)
    
    
    493,328
 
 *
    
    Represents less than $50,000 or 10% of the total salary and bonus for the year indicated.(1)
    
    The Company does not have a pension plan and does not pay above market or preferential
earnings on deferred compensation plans. (2)
    
    Represents compensation expense recorded related to options to acquire shares of RM
Restaurant Holding, parent of the Company. These amounts do not reflect the amount of
compensation actually received by the named executive officer during the fiscal year. For a
description of the assumptions used in calculating the fair value of the equity awards under
SFAS No. 123 (R), see our financial statements Notes to Consolidated Financial Statements.(3)
    
    Amounts for Mr. Wolfe and Mr. Tanner include restricted stock award payments and the exercise
of stock option awards related to the Merger.(4)
    
    Represents the exercise of stock option awards. No stock-based employee compensation cost is
reflected in net income, as all options granted under the Plans had an exercise price equal to
the market value as of the underlying common stock on the date of grant.(5)
    
    The Company does not have a Non-Equity Incentive Plan.(6)
    
    Mr. Wolfe resigned from his position as an executive officer of the Company in December 2008.
His base salary includes $56,651 in accrued vacation paid upon termination. Mr. Wolfes
severance package includes one year of salary and did not begin until January 2009.  56




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##### Table of Contents



Option Grants in Fiscal Year Ended December 28, 2008
  Outstanding Equity Awards at Year End
   Option/Warrant Awards
    
    
    Stock AwardsEquityIncentiveEquity
    
    
    PlanIncentive
    
    
    Awards:Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan
    
    
    Market orIncentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Awards:
    
    
    PayoutPlan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number of
    
    
    Value ofAwards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unearned
    
    
    UnearnedNumber of
    
    
    Number of
    
    
    Number of
    
    
    
    
    
    
    
    
    
    
    Number of
    
    
    Market
    
    
    Shares
    
    
    SharesSecurities
    
    
    Securities
    
    
    Securities
    
    
    
    
    
    
    
    
    
    
    Shares or
    
    
    Value of
    
    
    Units or
    
    
    Units orUnderlying
    
    
    Underlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    Units of
    
    
    Shares or
    
    
    Other
    
    
    OtherUnexercised
    
    
    Unexercised
    
    
    Unexercised
    
    
    Option
    
    
    Option
    
    
    Stock That
    
    
    Unit That
    
    
    Rights That
    
    
    Rights ThatOptions (#)
    
    
    Options (#)
    
    
    Unearned
    
    
    Exercise
    
    
    Expiration
    
    
    Have Not
    
    
    Have Not
    
    
    Have Not
    
    
    Have NotName
    
    Exercisable
    
    
    Unexercisable
    
    
    Options (#)
    
    
    Price
    
    
    Date
    
    
    Vested (#)
    
    
    Vested
    
    
    Vested (#)
    
    
    VestedFredrick F. Wolfe
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Steven Tanner
    
    
    44
    
    
    
    66
    
    
    
    
    
    
    
    8,150
    
    
    
    8/16/2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Carlos Angulo
    
    
    44
    
    
    
    66
    
    
    
    
    
    
    
    8,150
    
    
    
    8/16/2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Roberto (Pepe) Lopez
    
    
    8
    
    
    
    12
    
    
    
    
    
    
    
    8,150
    
    
    
    8/16/2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Raymond Garcia
    
    
    11
    
    
    
    17
    
    
    
    
    
    
    
    8,150
    
    
    
    8/16/2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Steven K. Wallace
    
    
    7
    
    
    
    11
    
    
    
    
    
    
    
    8,150
    
    
    
    8/16/2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Potential Payments Upon Termination or Change in Control
  Compensation of Directors
   57




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##### Table of Contents



ITEM 12.

    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 Equity Compensation Plan Information
  Security Ownership of Certain Beneficial Owners and Management
  
    
    Each person (or group of affiliated persons) who is known by us to beneficially own
5% or more of Real Mex Restaurants, Inc.s common and preferred stock;
    
    Each of our Named Executive Officers;
    
    Each of our Directors; and
    
    All of our Directors and executive officers as a group.
  Number and Percent of Shares of
Stock of
Real Mex Restaurants, Inc.
 Common StockShares
    
    
    PercentageGreater than 5% StockholderRM Restaurant Holding Corp.(1)
    
    
    1,000
    
    
    
    100.00Named Executive Officers and DirectorsFredrick F. Wolfe
    
    
    
    
    
    
    Steven Tanner
    
    
    
    
    
    
    Carlos Angulo
    
    
    
    
    
    
    Roberto (Pepe) Lopez
    
    
    
    
    
    
    Raymond Garcia
    
    
    
    
    
    
    Nicholas Mayer
    
    
    
    
    
    
    Steven K. Wallace
    
    
    
    
    
    
    Anatoly Bushler
    
    
    
    
    
    
    Evan Geller
    
    
    
    
    
    
    Michael Linn
    
    
    
    
    
    
    Rajiv Patel
    
    
    
    
    
    
    Anthony Polazzi
    
    
    
    
    
    
    Douglas Tapley
    
    
    
    
    
    
    All executive officers and directors as a group
(13 persons)
    
    
    
    
    
    
    
 
 (1)
    
    RM Restaurant Holding Corp. is located at 5660 Katella Avenue, Cypress, California 90630.  58




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##### Table of Contents



Management Agreements
 Net
Income
 Other Related Party Transactions
     Director Independence
   59




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##### Table of Contents



Principal Accounting Fees and Services
  Fiscal Year
    
    
    Fiscal Year2008
    
    
    2007Audit Fees
    
    $
    362,200
    
    
    $
    372,000Audit Related Fees
    
    
    27,000
    
    
    
    26,000Tax Fees
    
    
    
    
    
    
    116,900All Other Fees
    
    
    
    
    
    
    218,150Total Fees
    
    $
    389,200
    
    
    $
    733,050
 Audit Fees
 Audit-Related Fees
 Tax Fees
 All Other Fees
 Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the
Independent Auditor
   60




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##### Table of Contents



PART IV
 
 
  (a)
  
    
    Consolidated Balance Sheets  December 28, 2008 and December 30, 2007
    
    Consolidated Statements of Operations  Successor Period November 14, 2008 to
December 28, 2008, Predecessor Period December 31, 2007 to November 13, 2008,
Predecessor Fiscal Year Ended December 30, 2007, Predecessor Period August 21, 2006
to December 31, 2006 and Predecessor Period December 26, 2005 to August 20, 2006
    
    Consolidated Statements of Stockholders Equity  Successor Period November 14,
2008 to December 28, 2008, Predecessor Period December 31, 2007 to November 13,
2008, Predecessor Fiscal Year Ended December 30, 2007, Predecessor Period
August 21, 2006 to December 31, 2006 and Predecessor Period December 26, 2005 to
August 20, 2006
    
    Consolidated Statements of Cash Flows  Successor Period November 14, 2008 to
December 28, 2008, Predecessor Period December 31, 2007 to November 13, 2008,
Predecessor Fiscal Year Ended December 30, 2007, Predecessor Period August 21, 2006
to December 31, 2006 and Predecessor Period December 26, 2005 to August 20, 2006
    
    Notes to Consolidated Financial Statements  December 28, 2008 and December 30, 2007
    61




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##### Table of Contents



EXHIBITNO.
    
    DESCRIPTION3.1
    
    
    Third Amended and Restated Certificate of Incorporation of Real Mex Restaurants, Inc. (Filed herewith)3.2
    
    
    Amended and Restated Bylaws of Real Mex Restaurants, Inc. (Filed herewith)3.3
    
    
    Certificate of Incorporation of Acapulco Restaurants, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.3 to the Companys Registration Statement on Form S-4 (File No. 333-116310)
on June 9, 2004 and incorporated by reference herewith)3.4
    
    
    Bylaws of Acapulco Restaurants, Inc. (Filed with the Securities and Exchange Commission as
Exhibit 3.4 to the Companys Registration Statement on Form S-4 (File No. 333-116310) on June 9, 2004
and incorporated by reference herewith)3.5
    
    
    Certificate of Incorporation of El Torito Restaurants, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.25 to the Companys Registration Statement on Form S-4 (File No. 333-116310)
on June 9, 2004 and incorporated by reference herewith)3.6
    
    
    Bylaws of El Torito Restaurants, Inc. (Filed with the Securities and Exchange Commission as
Exhibit 3.6 to the Companys Registration Statement on Form S-4 (File No. 333-116310) on June 9, 2004
and incorporated by reference herewith)3.7
    
    
    Certificate of Incorporation of El Torito Franchising Company (Filed with the Securities and Exchange
Commission as Exhibit 3.7 to the Companys Registration Statement on Form S-4 (File No. 333-116310)
on June 9, 2004 and incorporated by reference herewith)3.8
    
    
    Bylaws of El Torito Franchising Company (Filed with the Securities and Exchange Commission as
Exhibit 3.8 to Amendment No. 1 to the Companys Registration Statement on Form S-4 (File
No. 333-116310) on August 11, 2004 and incorporated by reference herewith)3.9
    
    
    Articles of Incorporation of Acapulco Restaurant of Ventura, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.9 to the Companys Registration Statement on Form S-4 (File
No. 333-116310) on June 9, 2004 and incorporated by reference herewith)3.10
    
    
    Bylaws of Acapulco Restaurant of Ventura, Inc. (Filed with the Securities and Exchange Commission as
Exhibit 3.10 to the Companys Registration Statement on Form S-4 (File No. 333-116310) on June 9,
2004 and incorporated by reference herewith)3.11
    
    
    Articles of Incorporation of Acapulco Restaurant of Westwood, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.11 to the Companys Registration Statement on Form S-4 (File
No. 333-116310) on June 9, 2004 and incorporated by reference herewith)3.12
    
    
    Bylaws of Acapulco Restaurant of Westwood, Inc. (Filed with the Securities and Exchange Commission as
Exhibit 3.12 to the Companys Registration Statement on Form S-4 (File No. 333-116310) on June 9,
2004 and incorporated by reference herewith)3.13
    
    
    Articles of Incorporation of Acapulco Restaurant of Downey, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.13 to the Companys Registration Statement on Form S-4 (File
No. 333-116310) on June 9, 2004 and incorporated by reference herewith)3.14
    
    
    Bylaws of Acapulco Restaurant of Downey, Inc. (Filed with the Securities and Exchange Commission as
Exhibit 3.14 to the Companys Registration Statement on Form S-4 (File No. 333-116310) on June 9,
2004 and incorporated by reference herewith)
  62




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##### Table of Contents



EXHIBITNO.
    
    DESCRIPTION3.15
    
    
    Articles of Incorporation of Murray Pacific (Filed with the
Securities and Exchange Commission as Exhibit 3.15 to the
Companys Registration Statement on Form S-4 (File No. 333-116310)
on June 9, 2004 and incorporated by reference herewith)3.16
    
    
    Bylaws of Murray Pacific (Filed with the Securities and Exchange
Commission as Exhibit 3.16 to the Companys Registration Statement
on Form S-4 (File No. 333-116310) on June 9, 2004 and incorporated
by reference herewith)3.17
    
    
    Articles of Incorporation of Acapulco Restaurant of Moreno
Valley, Inc. (Filed with the Securities and Exchange Commission as
Exhibit 3.19 to the Companys Registration Statement on Form S-4
(File No. 333-116310) on June 9, 2004 and incorporated by
reference herewith)3.18
    
    
    Bylaws of Acapulco Restaurant of Moreno Valley, Inc. (Filed with
the Securities and Exchange Commission as Exhibit 3.20 to the
Companys Registration Statement on Form S-4 (File No. 333-116310)
on June 9, 2004 and incorporated by reference herewith)3.19
    
    
    Articles of Incorporation of El Paso Cantina, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.21 to the
Companys Registration Statement on Form S-4 (File No. 333-116310)
on June 9, 2004 and incorporated by reference herewith)3.20
    
    
    Bylaws of El Paso Cantina, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.22 to the Companys Registration
Statement on Form S-4 (File No. 333-116310) on June 9, 2004 and
incorporated by reference herewith)3.21
    
    
    Articles of Incorporation of Real Mex Foods, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.23 to the
Companys Registration Statement on Form S-4 (File No. 333-116310)
on June 9, 2004 and incorporated by reference herewith)3.22
    
    
    Bylaws of Real Mex Foods, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.24 to the Companys Registration
Statement on Form S-4 (File No. 333-116310) on June 9, 2004 and
incorporated by reference herewith)3.23
    
    
    Articles of Incorporation of TARV, Inc. (Filed with the Securities
and Exchange Commission as Exhibit 3.25 to the Companys
Registration Statement on Form S-4 (File No. 333-116310) on
June 9, 2004 and incorporated by reference herewith)3.24
    
    
    Bylaws of TARV, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.26 to the Companys Registration Statement
on Form S-4 (File No. 333-116310) on June 9, 2004 and incorporated
by reference herewith)3.25
    
    
    Articles of Incorporation of ALA Design, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.27 to the
Companys Registration Statement on Form S-4 (File No. 333-116310)
on June 9, 2004 and incorporated by reference herewith)3.26
    
    
    Bylaws of ALA Design, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.28 to the Companys Registration Statement
on Form S-4 (File No. 333-116310) on June 9, 2004 and incorporated
by reference herewith)3.27
    
    
    Articles of Incorporation of Acapulco Mark Corp. (Filed with the
Securities and Exchange Commission as Exhibit 3.29 to the
Companys Registration Statement on Form S-4 (File No. 333-116310)
on June 9, 2004 and incorporated by reference herewith)3.28
    
    
    Bylaws of Acapulco Mark Corp. (Filed with the Securities and
Exchange Commission as Exhibit 3.30 to the Companys Registration
Statement on Form S-4 (File No. 333-116310) on June 9, 2004 and
incorporated by reference herewith)
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EXHIBITNO.
    
    DESCRIPTION3.29
    
    
    Certificate of Incorporation of CKR Acquisition Corp. (Filed with the Securities and Exchange Commission as
Exhibit 3.31 to the Companys Annual Report on Form 10-K (File No. 333-116310) on March 24, 2005 and
incorporated by reference herewith)3.30
    
    
    Bylaws of CKR Acquisition Corp. (Filed with the Securities and Exchange Commission as Exhibit 3.32 to the
Companys Annual Report on Form 10-K (File No. 333-116310) on March 24, 2005 and incorporated by reference
herewith)3.31
    
    
    Articles of Formation of Chevys Restaurants, LLC (formerly known as Chevys Acquisition Company LLC). (Filed
with the Securities and Exchange Commission as Exhibit 3.33 to the Companys Annual Report on Form 10-K
(File No. 333-116310) on March 24, 2005 and incorporated by reference herewith)3.32
    
    
    Operating Agreement of Chevys Restaurants, LLC (formerly known as Chevys Acquisition Company LLC). (Filed
with the Securities and Exchange Commission as Exhibit 3.34 to the Companys Annual Report on Form 10-K
(File No. 333-116310) on March 24, 2005 and incorporated by reference herewith)4.1
    
    
    Indenture, dated as of March 31, 2004, among Real Mex Restaurants, Inc., the guarantors named therein and
Wells Fargo Bank, N.A., as trustee. (Filed with the Securities and Exchange Commission as Exhibit 4.1 to
the Companys Registration Statement on Form S-4 (File No. 333-116310) on June 9, 2004 and incorporated by
reference herewith)4.2
    
    
    First Supplemental Indenture, dated as of November 29, 2004, among CKR Acquisition Corp., Real Mex
Restaurants, Inc., the guarantors named therein and Wells Fargo Bank, N.A., as trustee. (Filed with the
Securities and Exchange Commission as Exhibit 4.2 to the Companys Annual Report on Form 10-K (File
No. 333-116310) on March 24, 2005 and incorporated by reference herewith)4.3
    
    
    Second supplemental Indenture, dated as of January 10, 2005, among Chevys Restaurants, LLC, Real Mex
Restaurants, Inc., the guarantors neared therein and Wells Fargo Bank, N.A., as trustee (Filed with the
Securities and Exchange Commission as Exhibit 4.4 to the Companys Registration Statement on Form S-4 (File
No. 333-124670) on May 5, 2005 and incorporated reference herewith)10.1
    
    
    Intercreditor Agreement dated as of March 31, 2004, by and between Wells Fargo Bank, N.A., as collateral
agent and as trustee, and Fleet National Bank, as administrative agent. (Filed with the Securities and
Exchange Commission as Exhibit 10.2 to the Companys Registration Statement on Form S-4 (File
No. 333-116310) on June 9, 2004 and incorporated by reference herewith)10.2
    
    
    Separation Agreement and General Release, dated December 19, 2008 by and between Real Mex Restaurants, Inc.
and Frederick Wolfe (Filed herewith)10.3
    
    
    Amended and Restated Executive Employment Agreement, dated February 28, 2008 by and between Real Mex
Restaurants, Inc. and Frederick Wolfe. (Filed with the Securities and Exchange Commission as Exhibit 10.1 to
the Companys Report on Form 8-K (File No. 333-116310) on March 5, 2008 and incorporated by reference
herewith)10.4
    
    
    Executive Employment Agreement, dated February 28, 2008 by and between Real Mex Restaurants, Inc. and
Steven Tanner. (Filed with the Securities and Exchange Commission as Exhibit 10.2 to the Companys Report
on Form 8-K (File No. 333-116310) on March 5, 2008 and incorporated by reference herewith)10.5
    
    
    Agreement and Plan of Merger, dated August 17, 2006 among Real Mex Restaurants, Inc., RM Restaurant Holding
Corp. and RM Integrated, Inc (Filed with the Securities and Exchange Commission as Exhibit 10.1 to the
Companys Report on Form 8-K (File No. 333-116310) on August 23, 2006 and incorporated by reference
herewith)10.6
    
    
    Fourth Amendment to Credit Agreement and Amendment to Loan Documents (Filed with the Securities and
Exchange Commission as Exhibit 10.2 to the Companys Report on Form 8-K (File No. 333-116310) on October 6,
2006 and incorporated by reference herewith)
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##### Table of Contents



EXHIBITNO.
    
    DESCRIPTION10.7
    
    
    Amended and Restated Credit Agreement (Filed with the Securities and
Exchange Commission as Exhibit 10.1 to the Companys Report on Form 8-K
(File No. 333-116310) on October 6, 2006 and incorporated by reference
herewith)10.8
    
    
    Limited Waiver, Consent and Amendment to Amended and Restated Credit
Agreement dated November 13, 2008 (Filed with the Securities and Exchange
Commission as Exhibit 10.2 to the Companys Report on Form 10-Q (File
No. 333-116310) on November 13, 2008 and incorporated by reference
herewith)10.9
    
    
    Amended and Restated Credit Agreement (Filed with the Securities and
Exchange Commission as Exhibit 10.2 to the Companys Report on Form 8-K
(File No. 333-116310) on February 2, 2007 and incorporated by reference
herewith)10.10
    
    
    Amendment No. 2 to Credit Agreement dated April 17, 2008. (Filed with the
Securities and Exchange Commission as Exhibit 10.1 to the Companys Current
Report on Form 8-K dated April 23, 2008 and incorporated by reference
herewith)10.11
    
    
    Limited Waiver, Consent and Amendment No. 3 to Second Amended and Restated
Credit Agreement dated November 13, 2008 (Filed with the Securities and
Exchange Commission as Exhibit 10.2 to the Companys Report on Form 10-Q
(File No. 333-116310) on November 13, 2008 and incorporated by reference
herewith)12.1
    
    
    Computation of Ratio of Earnings to Fixed Charges. (Filed herewith)14.1
    
    
    Code of Ethics adopted by the Company on February 7, 2007 (Filed with the
Securities and Exchange Commission as Exhibit 14.1 to the Companys Annual
Report on Form 10-K on March 20, 2007 and incorporated by reference
herewith)21.1
    
    
    Subsidiaries of the Company and the Additional Registrants. (Filed herewith)31.1
    
    
    Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934 of the Chief Executive and Chief Financial
Officer. (Filed herewith)32.1
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Executive and
Chief Financial Officer. (Filed herewith)
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##### Table of Contents



REAL MEX RESTAURANTS, INC.By:
    
    /s/ Steven TannerSteven TannerDate: March 27, 2009
    
    
    
    Interim Chief Executive Officer
  Signature
    
    Title
    
    Date/s/ Steven TannerSteven Tanner
    
    Interim Chief Executive Officer,
Chief Financial Officer and Director (Principal Executive Officer, Financial Officer and Accounting Officer)
    
    March 27, 2009/s/ Kathleen BurkettKathleen Burkett
    
    Controller
    
    March 27, 2009/s/ Anatoly BushlerAnatoly Bushler
    
    Director
    
    March 27, 2009/s/ Evan GellerEvan Geller
    
    Director
    
    March 27, 2009/s/ Michael LinnMichael Linn
    
    Director
    
    March 27, 2009/s/ Rajiv PatelRajiv Patel
    
    Director
    
    March 27, 2009/s/ Anthony PolazziAnthony Polazzi
    
    Director
    
    March 27, 2009/s/ Douglas TapleyDouglas Tapley
    
    Director
    
    March 27, 2009
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##### Table of Contents



EXHIBITNO.
    
    DESCRIPTION3.1
    
    
    Third Amended and Restated Certificate of Incorporation of Real Mex Restaurants, Inc. (Filed herewith)3.2
    
    
    Amended and Restated Bylaws of Real Mex Restaurants, Inc. (Filed herewith)10.2
    
    
    Separation Agreement and General Release, dated December 19, 2008 by and between Real Mex
Restaurants, Inc. and Frederick Wolfe (Filed herewith)12.1
    
    
    Computation of Ratio of Earnings to Fixed Charges. (Filed herewith)21.1
    
    
    Subsidiaries of the Company and the Additional Registrants. (Filed herewith)31.1
    
    
    Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of
the Chief Executive and Chief Financial Officer. (Filed herewith)32.1
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, of the Chief Executive and Chief Financial Officer. (Filed herewith)