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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 28, 2006
 Commission file number: 333-116897
 BUFFETS HOLDINGS, INC.
  Delaware
    
    22-3754018(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)1460 Buffet WayEagan, Minnesota
    
    55121(Address of principal
    
    (Zip Code)executive offices)
 (651) 994-8608
   o þ
 þ o
 þ o
 þ
  o o þ
 o þ




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TABLE OF CONTENTS
 Item
    
    
    
    PagePART I1.
    
    Business
    
    
    11A.
    
    Risk Factors/Forward-Looking Statements
    
    
    61B.
    
    Unresolved Staff Comments
    
    
    122.
    
    Properties
    
    
    123.
    
    Legal Proceedings
    
    
    144.
    
    Submission of Matters to a Vote of Security Holders
    
    
    15PART II5.
    
    Market for the Registrants Common Stock and Related Stockholder Matters
    
    
    166.
    
    Selected Financial Data
    
    
    177.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    187A.
    
    Quantitative and Qualitative Disclosures About Market Risks
    
    
    368.
    
    Financial Statements and Supplementary Data
    
    
    379.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    779A.
    
    Controls and Procedures
    
    
    77PART III10.
    
    Directors and Executive Officers of the Registrant
    
    
    7811.
    
    Executive Compensation
    
    
    8112.
    
    Security Ownership of Certain Beneficial Owners and Management
    
    
    8513.
    
    Certain Relationships and Related Transactions
    
    
    8614.
    
    Principal Accountant Fees and Services
    
    
    87PART IV15.
    
    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
    
    
    88Certification of Principal Executive Officer Pursuant to Section 302Certification of Principal Financial Officer Pursuant to Section 302




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PART I
 
 ITEM 1. BUSINESS
 Unless the context indicates or requires otherwise, (i) the term Buffets Holdings refers to
Buffets Holdings, Inc.; (ii) the term Buffets refers to Buffets, Inc., our principal operating
subsidiary; and (iii) the terms we, our, ours, us and the company refer collectively to
Buffets Holdings and its subsidiaries. The use of these terms is not intended to imply that
Buffets Holdings and Buffets are not separate and distinct legal entities.
 Our Company
 â â
  â
   1




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Our Background
 â
  7 ¤ 8 7 ¤ 8
 Recent Developments
  2




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Restaurant Operations and Controls
   â
  Management Training
    3




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Research and Development, Menu Selection and Purchasing
    Franchising and Joint Ventures
 â â
 Advertising and Promotion
   4




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Competition
  Regulation
    â
 5




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Environmental Matters
  Employees
   
 ITEM 1A. RISK FACTORS/FORWARD-LOOKING STATEMENTS
  6




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Our core buffet restaurants are a maturing restaurant concept and face intense competition.
    We are dependent on attracting and retaining qualified employees while controlling labor costs .
  7




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We are dependent on timely delivery of fresh ingredients by our suppliers.
  Our restaurant sales are subject to seasonality and major world events.
  8




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We face risks associated with government regulations.
 â
  â
 Negative publicity relating to one of our restaurants, including our franchised restaurants, could
reduce sales at some or all of our other restaurants.
  Food-borne illness incidents could result in liability to us and could reduce our restaurant sales.
  9




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Any negative development relating to our self-service food service approach would have a material
adverse impact on our primary business.
  We face risks associated with environmental laws.
  We face risks because of the number of restaurants that we lease.
  We may not be able to protect our trademarks and other proprietary rights.
  10




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â
 The consummation of the Merger is subject to a number of significant closing conditions. We cannot
be sure that these conditions will be met or that the Merger will be consummated.
  We may not realize the anticipated benefits of our acquisition of Ryans and we may face certain
challenges regarding the integration of Ryans.
   11




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
 Restaurant Locations
   12




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Number ofCompany-
    
    Number of
    
    TotalOperated
    
    Franchised
    
    Number ofState
    
    Restaurants
    
    Restaurants
    
    RestaurantsArizona
    
    
    5
    
    
    
    8
    
    
    
    13California
    
    
    95
    
    
    
    1
    
    
    
    96Colorado
    
    
    12
    
    
    
    1
    
    
    
    13Connecticut
    
    
    6
    
    
    
    
    
    
    
    6Delaware
    
    
    1
    
    
    
    
    
    
    
    1Florida
    
    
    2
    
    
    
    
    
    
    
    2Georgia
    
    
    1
    
    
    
    
    
    
    
    1Idaho
    
    
    1
    
    
    
    
    
    
    
    1Illinois
    
    
    31
    
    
    
    
    
    
    
    31Indiana
    
    
    6
    
    
    
    
    
    
    
    6Iowa
    
    
    3
    
    
    
    
    
    
    
    3Kansas
    
    
    2
    
    
    
    
    
    
    
    2Kentucky
    
    
    3
    
    
    
    
    
    
    
    3Maine
    
    
    1
    
    
    
    
    
    
    
    1Maryland
    
    
    9
    
    
    
    
    
    
    
    9Massachusetts
    
    
    9
    
    
    
    
    
    
    
    9Michigan
    
    
    20
    
    
    
    
    
    
    
    20Minnesota
    
    
    15
    
    
    
    
    
    
    
    15Missouri
    
    
    10
    
    
    
    
    
    
    
    10Nebraska
    
    
    
    
    
    
    3
    
    
    
    3New Jersey
    
    
    8
    
    
    
    
    
    
    
    8New Mexico
    
    
    
    
    
    
    2
    
    
    
    2New York
    
    
    15
    
    
    
    
    
    
    
    15Ohio
    
    
    12
    
    
    
    
    
    
    
    12Oklahoma
    
    
    2
    
    
    
    
    
    
    
    2Oregon
    
    
    7
    
    
    
    
    
    
    
    7Pennsylvania
    
    
    22
    
    
    
    
    
    
    
    22Rhode Island
    
    
    1
    
    
    
    
    
    
    
    1Tennessee
    
    
    1
    
    
    
    
    
    
    
    1Texas
    
    
    2
    
    
    
    
    
    
    
    2Utah
    
    
    
    
    
    
    2
    
    
    
    2Virginia
    
    
    7
    
    
    
    
    
    
    
    7Washington
    
    
    16
    
    
    
    
    
    
    
    16Wisconsin
    
    
    12
    
    
    
    
    
    
    
    12Wyoming
    
    
    1
    
    
    
    1
    
    
    
    2Total
    
    
    338
    
    
    
    18
    
    
    
    356
  13




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Location
    
    Acres
    
    Use and OwnershipCoon Rapids, Minnesota
    
    
    2.49
    
    
    Buffet restaurant property owned by OCB
Restaurant Company, LLC.Marshfield, Wisconsin
    
    
    5.04
    
    
    Cabinet shop owned by OCB Restaurant
Company, LLC.
 New Restaurant Development
  Improvement of Existing Restaurants
  
 ITEM 3. LEGAL PROCEEDINGS
   14




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  15




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PART II
 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS
     (a)
    
    On June 30, 2005, we granted options to purchase an aggregate of 81 shares of our common
stock to certain of our employees, each at an exercise price of $0.11 per share.(b)
    
    On September 22, 2005, we granted options to purchase an aggregate of 1,043 shares of our
common stock to certain of our employees, each at an exercise price of $0.11 per share.
  16




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ITEM 6. SELECTED FINANCIAL DATA
 26-WeekTransitional28 Weeks
    
    
    Period
    
    
    50 Weeks
    
    
    Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal YearEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    EndedJuly 18,
    
    
    July 3,
    
    
    July 3,
    
    
    July 2,
    
    
    June 30,
    
    
    June 29,
    
    
    June 28,2001
    
    
    2002
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006(Dollars in thousands, except average guest check and average weekly sales)Operating Data:Restaurant sales
    
    $
    567,821
    
    
    $
    527,084
    
    
    $
    1,003,997
    
    
    $
    985,286
    
    
    $
    942,831
    
    
    $
    926,781
    
    
    $
    963,161Restaurant costs
    
    
    481,679
    
    
    
    444,345
    
    
    
    848,011
    
    
    
    850,195
    
    
    
    811,577
    
    
    
    805,333
    
    
    
    829,576Advertising expenses
    
    
    15,869
    
    
    
    14,478
    
    
    
    26,526
    
    
    
    28,794
    
    
    
    25,918
    
    
    
    24,166
    
    
    
    30,637General and
administrative
expenses
    
    
    26,539
    
    
    
    25,558
    
    
    
    49,311
    
    
    
    45,177
    
    
    
    42,658
    
    
    
    43,706
    
    
    
    44,198Shareholders rights
repurchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    757Closed restaurant costs
    
    
    153
    
    
    
    572
    
    
    
    1,143
    
    
    
    645
    
    
    
    1,085
    
    
    
    2,909
    
    
    
    6,023Goodwill amortization
    
    
    5,975
    
    
    
    
    
    
    
    4,967
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impairment of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,803
    
    
    
    1,878
    
    
    
    3,609
    
    
    
    5,964Gain on sale of
Original Roadhouse
Grill restaurants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,088
    )
    
    
    
    
    
    
    
    
    
    
    Loss on sale leaseback
transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,856
    
    
    
    
    
    
    
    
    
    
    
    Financing-related
compensation expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,240
    
    
    
    
    
    
    
    Operating income
    
    $
    37,606
    
    
    $
    42,131
    
    
    $
    74,039
    
    
    $
    56,904
    
    
    $
    57,475
    
    
    $
    47,058
    
    
    $
    46,006Net income (loss)
    
    $
    5,801
    
    
    $
    (7,517
    )
    
    $
    (763
    )
    
    $
    11,927
    
    
    $
    7,970
    
    
    $
    (2,184
    )
    
    $
    (4,772
    )Cash Flow and Other
Financial Data:Capital expenditures
    
    $
    20,352
    
    
    $
    14,280
    
    
    $
    32,318
    
    
    $
    25,722
    
    
    $
    33,007
    
    
    $
    29,131
    
    
    $
    31,346Depreciation and
amortization
    
    
    29,007
    
    
    
    20,409
    
    
    
    44,808
    
    
    
    36,885
    
    
    
    33,807
    
    
    
    32,247
    
    
    
    32,067Cash flow from
operating activities
    
    
    35,521
    
    
    
    39,250
    
    
    
    72,564
    
    
    
    57,656
    
    
    
    50,490
    
    
    
    52,675
    
    
    
    49,305Cash flow from (used
in) investing
activities
    
    
    (21,190
    )
    
    
    (11,337
    )
    
    
    12,428
    
    
    
    26,662
    
    
    
    (28,383
    )
    
    
    (28,471
    )
    
    
    (32,722
    )Cash flow from (used
in) financing
activities
    
    
    (14,000
    )
    
    
    (47,164
    )
    
    
    (92,754
    )
    
    
    (76,825
    )
    
    
    (11,890
    )
    
    
    (29,614
    )
    
    
    (17,026
    )Balance Sheet Data (at
end of period)Total assets
    
    $
    670,268
    
    
    $
    615,672
    
    
    $
    615,672
    
    
    $
    552,986
    
    
    $
    567,531
    
    
    $
    545,023
    
    
    $
    538,496Total debt(1)
    
    
    392,172
    
    
    
    493,981
    
    
    
    493,981
    
    
    
    421,122
    
    
    
    498,339
    
    
    
    466,194
    
    
    
    462,514Supplemental Data(2):Number of
company-owned
restaurants (at end of
period)
    
    
    408
    
    
    
    393
    
    
    
    393
    
    
    
    372
    
    
    
    360
    
    
    
    354
    
    
    
    338Average guest check
    
    $
    6.84
    
    
    $
    7.03
    
    
    $
    7.00
    
    
    $
    7.13
    
    
    $
    7.22
    
    
    $
    7.42
    
    
    $
    7.89Average weekly sales
    
    $
    49,822
    
    
    $
    51,044
    
    
    $
    49,973
    
    
    $
    48,953
    
    
    $
    49,949
    
    
    $
    50,273
    
    
    $
    53,381Same store sales change
    
    
    2.4
    %
    
    
    0.2
    %
    
    
    (0.9
    )%
    
    
    (4.2
    )%
    
    
    1.3
    %
    
    
    (0.6
    )%
    
    
    4.6
    %
 
 (1)
    
    Total debt represents the amount of our long-term debt, including current maturities.(2)
    
    Reflects data relating to all of our company-owned restaurants. 17




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 You should read the following discussion in conjunction with Selected Financial Data and
our consolidated financial statements and related notes included elsewhere in this report. Some
of the statements in the following discussion are forward-looking statements. See Risk
Factors/Forward-Looking Statements.
 Overview
 â â
 â â
    18




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
    
    We recognize as restaurant sales the proceeds from the sale of food and beverages at
our company-owned restaurants at the time of such sale. We recognize the proceeds from
the sale of gift certificates/cards when the gift certificates/cards are redeemed at
our restaurants. Until redemption, the unearned revenue from the sale of gift
certificates/cards is included in accrued liabilities on our consolidated balance
sheets. Our franchise income includes royalty fees and initial franchise fees received
from our franchisee. We recognize royalty fees as other income based on the sales
reported at the franchise restaurants.
    
    Restaurant costs reflect only direct restaurant operating costs, including food,
labor and direct and occupancy costs. Labor costs include compensation and benefits for
both hourly and restaurant management employees. Direct and occupancy costs consist
primarily of costs of supplies, maintenance, utilities, rent, real estate taxes,
insurance, depreciation and amortization.
    
    Advertising expenses reflect all advertising and promotional costs.
    
    General and administrative expenses reflect all costs, other than advertising
expenses, not directly related to the operation of restaurants. These expenses consist
primarily of corporate administrative compensation and overhead, district and regional
management compensation and related management expenses and the costs of recruiting,
training and supervising restaurant management personnel.
    
    Goodwill amortization reflects the amortization of the excess of cost over fair
market value of assets and was recognized on a straight line basis over a 30-year life
through January 2, 2002. Effective January 3, 2002, we changed our method of accounting
for goodwill in accordance with Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets.
    
    Shareholders rights repurchase reflects the costs associated with the repurchase of
certain rights associated with shares of common stock previously held by former
management shareholders who separated from the company.
    
    Closed restaurant costs represents costs associated with store closure of
underperforming restaurants, including, but not limited to lease termination costs and
obligations and employee termination costs.
    
    Impairment of assets reflects fair market adjustments to the carrying value of
long-lived assets, primarily comprised of leasehold improvements and equipment.
 19




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
    
    Financing-related compensation expenses reflect payments to holders of stock options
and cash incentive plan units in conjunction with the issuance of our
137¤8% senior discount notes in May 2004.
    
    Interest expense reflects interest costs associated with our debt, amortization of
debt issuance cost and accretion of original issuance discount on our subordinated
notes and bonds.
    
    Interest income reflects interest earned on our short-term investments.
    
    Loss related to refinancing for fiscal 2004 reflects transaction and other costs
associated with the amendment and restatement of our credit agreement on February 20,
2004 and a refinancing that we postponed due to market conditions. Loss related to
refinancing for fiscal 2005 represents costs associated with an initial public offering
of Income Deposit Securities that was withdrawn due to unfavorable market conditions.
Loss related to refinancing for fiscal 2006 represents transaction fees incurred in
conjunction with an amendment to our Credit Facility.
    
    Loss related to the early extinguishment of debt reflects the costs associated with
redeeming a portion of Buffets 111/4% senior subordinated notes prior to their maturity
during fiscal years 2004 and 2005.
    
    Other income primarily reflects franchise fees earned, less minority interest
associated with our Tahoe Joes subsidiary. During fiscal 2004, we exercised our call
option to acquire the remaining 20% interest in Tahoe Joes, Inc. from the minority
holder.
    
    Income tax expense (benefit) reflects the current and deferred tax provision
(benefit) determined in accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes.
 Recent Developments
   20




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Litigation Challenging the Merger
   Critical Accounting Policies
  21




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Long-Lived Assets
    Goodwill
  Insurance Reserves
  22




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Closed Restaurant Reserve
   Income Taxes
   23




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Gift Cards
  Results of Operations
 The following discussion reflects our historical results for the fiscal years ended June 29, 2005
and June 28, 2006. If the acquisition of Ryans is consummated, future results will not be
consistent with our historical results. The following discussion should be read in conjunction
with our consolidated financial statements and related notes included elsewhere in this report.
 Year EndedJune 29,
    
    June 28,2005
    
    2006(Dollars in thousands)Significant items that impacted results of operations:Credit card claim settlement (1)
    
    $
    
    
    
    $
    (715
    )Shareholders rights repurchase (2)
    
    
    
    
    
    
    757Closed restaurant costs (3)
    
    
    2,909
    
    
    
    6,023Impairment of assets (4)
    
    
    3,609
    
    
    
    5,964Loss related to refinancing (5)
    
    
    856
    
    
    
    647Loss related to early extinguishment of debt (6)
    
    
    1,923
    
    
    
    
 
 (1)
    
    Credit card claim settlement reflects funds received from the Visa Check/MasterMoney
Antitrust Litigation class action lawsuit. The settlement was recorded in direct and occupancy
costs within the restaurant costs section of the consolidated statement of operations.(2)
    
    Shareholders rights repurchase reflects the costs of the repurchase of certain rights
associated with shares of common stock previously held by former management shareholders who
separated from the Company.(3)
    
    Closed restaurant costs were $6.0 million for fiscal 2006 as compared to $2.9 million for the
fiscal 2005. The increase was in large part due to the closure of nineteen under performing
restaurants in fiscal 2006 compared with eleven store closures in fiscal 2005. We incurred
charges related to these store closures of approximately $4.5 million and $2.1 million in
fiscal 2006 and fiscal 2005, respectively. In addition, we incurred charges of approximately
$1.5 million and $0.8 million in fiscal 2006 and fiscal 2005, respectively, related to the
termination of sublease agreements and other related costs.(4)
    
    We test property and equipment for impairment annually or whenever events or circumstances
indicate that the carrying amount of a restaurants assets may not be recoverable. Assets are
grouped and evaluated for impairment at the lowest level for which there are identifiable cash
flows, namely as individual restaurants. During fiscal 2006 and 2005,
we recognized losses of approximately 24




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$6.0 million and $3.6 million, respectively, related to impairments of the
carrying value of our long-lived assets for 33 and 29 under performing restaurants,
respectively, as the carrying value of these long-lived assets exceeded their fair value.(5)
    
    We incurred approximately $0.9 million of costs related to an initial public offering of
Income Deposit Securities that was withdrawn due to unfavorable market conditions during the
second quarter of fiscal 2005. Effective as of July 28, 2005, we entered into an amendment to
Buffets credit agreement and incurred $0.6 million in transaction fees in the first quarter of
fiscal 2006.(6)
    
    During the first quarter of fiscal 2005, we paid approximately $15.7 million to repurchase
approximately $14.3 million of Buffets 111/4% senior subordinated notes at an average price of
106.7%. The difference between the premium purchase price and the discounted carrying value of
the senior subordinated notes, as well as the associated write-off of debt issuance costs, was
recognized as a loss related to the early extinguishment of debt.  Year Ended
    
    Year EndedJune 29, 2005
    
    June 28, 2006(Dollars in thousands)Restaurant sales
    
    $
    926,781
    
    
    
    100.0
    %
    
    $
    963,161
    
    
    
    100.0
    %Restaurant costs
    
    
    805,333
    
    
    
    86.9
    
    
    
    829,576
    
    
    
    86.1Advertising expenses
    
    
    24,166
    
    
    
    2.6
    
    
    
    30,637
    
    
    
    3.2General and administrative expenses
    
    
    43,706
    
    
    
    4.7
    
    
    
    44,198
    
    
    
    4.6Shareholders rights repurchase
    
    
    
    
    
    
    
    
    
    
    757
    
    
    
    0.1Closed restaurant costs
    
    
    2,909
    
    
    
    0.3
    
    
    
    6,023
    
    
    
    0.6Impairment of assets
    
    
    3,609
    
    
    
    0.4
    
    
    
    5,964
    
    
    
    0.6Operating income
    
    
    47,058
    
    
    
    5.1
    
    
    
    46,006
    
    
    
    4.8Interest expense
    
    
    48,100
    
    
    
    5.2
    
    
    
    52,242
    
    
    
    5.4Interest income
    
    
    (515
    )
    
    
    (0.1
    )
    
    
    (375
    )
    
    
    (0.0
    )Loss related to refinancing
    
    
    856
    
    
    
    0.1
    
    
    
    647
    
    
    
    0.1Loss related to early extinguishment of debt
    
    
    1,923
    
    
    
    0.2
    
    
    
    
    
    
    
    Other income
    
    
    (935
    )
    
    
    (0.1
    )
    
    
    (994
    )
    
    
    (0.1
    )Loss before income taxes
    
    
    (2,371
    )
    
    
    (0.3
    )
    
    
    (5,514
    )
    
    
    (0.6
    )Income tax benefit
    
    
    (187
    )
    
    
    
    
    
    
    (742
    )
    
    
    (0.1
    )Net loss
    
    $
    (2,184
    )
    
    
    (0.2
    )
    
    $
    (4,772
    )
    
    
    (0.5
    )
 
 Certain percentage amounts do not sum to total due to rounding. The following narrative should be read in conjunction with the significant items that impacted
results of operations discussed above.
 Restaurant Sales.
 25




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##### Table of Contents



Restaurant Costs.
   Advertising Expenses.
 General and Administrative Expenses.
 Interest Expense. 7 ¤ 8
 26




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##### Table of Contents



Income Taxes. 7 ¤ 8
 27




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##### Table of Contents



Year EndedJune 30,
    
    June 29,2004
    
    2005(Dollars in thousands)Significant items that impacted results of operations:Closed restaurant costs (1)
    
    
    1,085
    
    
    
    2,909Impairment of assets (2)
    
    
    1,878
    
    
    
    3,609Financing-related compensation expenses (3)
    
    
    2,240
    
    
    
    Loss related to refinancing (4)
    
    
    4,776
    
    
    
    856Loss related to early extinguishment of debt (5)
    
    
    5,275
    
    
    
    1,923
 
 (1)
    
    Closed restaurant costs were $2.9 million during fiscal 2005 primarily related to the
closure of eleven restaurants as compared to $1.1 million for fiscal 2004 related to the
closure of fifteen restaurants. We incurred charges related to these closures of
approximately $2.1 million and $0.8 million in fiscal 2005 and fiscal 2004, respectively. In
addition, we incurred charges of approximately $0.8 million and $0.3 million related to the
termination of sublease agreements and other related costs.(2)
    
    We test property and equipment for impairment annually or whenever events or circumstances
indicate that the carrying amount of a restaurants assets may not be recoverable. Assets are
grouped and evaluated for impairment at the lowest level for which there are identifiable cash
flows, namely as individual restaurants. During fiscal 2005 and 2004, we recognized losses of
approximately $3.6 million and $1.9 million, respectively, related to impairments of the
carrying value of our long-lived assets for 29 and 17 under performing restaurants,
respectively, as the carrying value of these long-lived assets exceeded their fair value.(3)
    
    On May 18, 2004, Buffets Holdings issued
137¤8% senior
discount notes due 2010 in a Rule 144A offering with a stated aggregate principal amount at
maturity (including accreted amounts) of $132.0 million. As part of the transaction fees and
expenses related to the offering, we recognized approximately $2.2 million of bonus payments
to certain restaurant and corporate employees as financing-related compensation expenses.(4)
    
    During fiscal 2005, we incurred approximately $0.9 million in costs associated with an
initial public offering of Income Deposit Securities that was withdrawn due to unfavorable
market conditions. During fiscal 2004, Buffets, Inc. entered into an amended and restated
credit facility. In connection with this bank refinancing, we wrote off $4.2 million of debt
issuance costs related to the predecessor Credit Facility. In addition, we incurred $0.6
million in transaction fees associated with an uncompleted senior discount note offering.(5)
    
    During the first quarter of fiscal 2005, we redeemed approximately $14.3 million of Buffets
111/4% senior subordinated notes at an average price of 106.7%. During the second half of fiscal
2004, we repurchased $29.6 million of 111/4% senior subordinated notes at an average price of
110.4%. The difference between the premium purchase price and the discounted carrying value
of the senior subordinated notes, as well as the associated write-off of debt issuance costs,
was recognized as a loss related to the early extinguishment of debt. 28




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##### Table of Contents



Year Ended
    
    
    Year EndedJune 30, 2004
    
    
    June 29, 2005(Dollars in thousands)Restaurant sales
    
    $
    942,831
    
    
    
    100.0
    %
    
    $
    926,781
    
    
    
    100.0
    %Restaurant costs
    
    
    811,577
    
    
    
    86.1
    
    
    
    805,333
    
    
    
    86.9Advertising expenses
    
    
    25,918
    
    
    
    2.7
    
    
    
    24,166
    
    
    
    2.6General and administrative expenses
    
    
    42,658
    
    
    
    4.5
    
    
    
    43,706
    
    
    
    4.7Closed restaurant costs
    
    
    1,085
    
    
    
    0.1
    
    
    
    2,909
    
    
    
    0.3Impairment of assets
    
    
    1,878
    
    
    
    0.2
    
    
    
    3,609
    
    
    
    0.4Financing-related compensation expenses
    
    
    2,240
    
    
    
    0.2
    
    
    
    
    
    
    
    Operating income
    
    
    57,475
    
    
    
    6.1
    
    
    
    47,058
    
    
    
    5.1Interest expense
    
    
    39,609
    
    
    
    4.2
    
    
    
    48,100
    
    
    
    5.2Interest income
    
    
    (424
    )
    
    
    
    
    
    
    (515
    )
    
    
    (0.1
    )Loss related to refinancing
    
    
    4,776
    
    
    
    0.5
    
    
    
    856
    
    
    
    0.1Loss related to early extinguishment of debt
    
    
    5,275
    
    
    
    0.6
    
    
    
    1,923
    
    
    
    0.2Other (income)
    
    
    (1,379
    )
    
    
    (0.1
    )
    
    
    (935
    )
    
    
    (0.1
    )Income before income taxes
    
    
    9,618
    
    
    
    1.0
    
    
    
    (2,371
    )
    
    
    (0.3
    )Income tax expense
    
    
    1,648
    
    
    
    0.2
    
    
    
    (187
    )
    
    
    Net income
    
    $
    7,970
    
    
    
    0.8
    
    
    $
    (2,184
    )
    
    
    (0.2
    )
 
 Certain percentage amounts do not sum to total due to rounding. The following narrative should be read in conjunction with the significant items that
impacted results of operations discussed above.
 Restaurant Sales.
 Restaurant Costs.
 Advertising Expenses.
 29




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##### Table of Contents



General and Administrative Expenses.
 Interest Expense. 7 8
 Income Taxes. 7 8 7 8
 Liquidity and Capital Resources
 7 8 7 8
   30




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##### Table of Contents



Operating Activities.
 Investing Activities.
 Financing Activities.
 Future Capital Expenditures.
 §
    
    Open one new restaurant with capital outlay of approximately $2.5 million.§

    
    Spend approximately $23 million on remodeling and improvement costs that will be capitalized. Remodels incorporate
design elements to update the décor of our existing facilities including a lighter, more contemporary interior design
and expanded dessert displays. Other improvement costs include a variety of outlays such as new carpet, equipment and
minor leasehold improvements and display grill installations.§

    
    Spend approximately $1 million on miscellaneous
corporate and information systems investments.
 31




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##### Table of Contents



§

    
    Spend approximately $20 million on the repair and maintenance of our existing restaurant
locations that will be expensed. This will encompass expenditures to keep equipment in good
working order and leasehold improvements in good condition, without substantially extending the
economic lives of the underlying assets.§

    
    On August 1, 2006, our subsidiary, OCB Restaurant Company, LLC,
acquired certain assets and liabilities of Norths Restaurants,
Inc. (Norths), primarily comprised of five buffet restaurants
in California and Oregon. The purchase price was $3.3 million.
During the remainder of fiscal 2007, we plan to spend
approximately $3.0 million to convert three of these units to
HomeTown Buffet® restaurants and one unit to a Tahoe Joes Famous
Steakhouse® restaurant.§

    
    Spend approximately $8 million to $12 million on the integration
of Ryans and approximately $25 million on capital improvements
specifically related to the restaurants we gain in the Ryans
acquisition.
  Tender Offer
 7 8 1 4 7 8 7 8
  Credit Facilities and Other Long Term Debt
    32




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##### Table of Contents



1 4
 7 8 7 8 7 8
 Contractual Obligations
  Payments Due by Fiscal Year
 2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    Total(in thousands)Long-term debt(1)
    
    $
    1,862
    
    
    $
    2,328
    
    
    $
    177,863
    
    
    $
    
    
    
    $
    316,665
    
    
    $
    
    
    
    $
    498,718Interest (2)
    
    
    20,775
    
    
    
    20,775
    
    
    
    29,933
    
    
    
    39,090
    
    
    
    26,413
    
    
    
    
    
    
    
    136,986Operating leases(3)
    
    
    53,211
    
    
    
    51,640
    
    
    
    47,986
    
    
    
    41,369
    
    
    
    34,382
    
    
    
    214,621
    
    
    
    443,209Advisory fees(4)
    
    
    2,100
    
    
    
    2,000
    
    
    
    2,000
    
    
    
    2,000
    
    
    
    2,000
    
    
    
    
    
    
    
    10,100Purchase
obligations(5)
    
    
    11,337
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,337Total
contractual
cash
obligations
    
    $
    89,285
    
    
    $
    76,743
    
    
    $
    257,782
    
    
    $
    82,459
    
    
    $
    379,460
    
    
    $
    214,621
    
    
    $
    1,100,350
 
 (1)
    
    Long-term debt payments for fiscal years 2007 through 2009 represent the required
principal payments on our variable-rate credit facility. Long-term debt payments in fiscal
year 2011 represent the aggregate principal amounts due on Buffets 111/4% senior
subordinated notes and our 137¤8% senior discount notes, at face
value, including aggregate carrying value of $280.5 million as of June 28, 2006 and aggregate
accretion from that date through maturity of $36.2 million. Debt payments could be
accelerated upon violation of debt covenants. We believe the likelihood of debt covenant
violations to be remote. See Note 5 to our consolidated
financial statements included elsewhere in this report for details of our long-term obligations. 33




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##### Table of Contents



(2)
    
    Amounts represent contractual interest payments on our fixed-rate debt instruments. Interest
payments on our variable-rate term loan facility are excluded. The borrowings under the term
loan facility bear interest, at Buffets, Inc.s option, at either adjusted LIBOR plus 3.50% or
at an alternate base rate plus 2.50%, subject to a leverage-based pricing grid. The base rate
is the greater of Credit Suisse First Bostons prime rate, or the federal funds effective rate
plus one-half of one percent. The term loan facility matures on June 28, 2009. Interest
payments are due quarterly. The interest rate, at LIBOR plus 3.50%, was 8.2% as of June 28,
2006. The borrowings due under the term loan facility are payable in equal quarterly
installments in an annual amount equal to 1% of the term loan during each of the
first four and a half years of the loan, with the remaining balance payable due in equal
quarterly installments during the last year of the loan. See Note 5 to our consolidated financial
statements included elsewhere in this report for details of our long-term obligations.(3)
    
    Operating leases is comprised of minimum rents and contingent rents. Operating leases have
not been reduced by minimum sublease rentals of approximately $11.6 million. See Note 10 to
our consolidated financial statements included elsewhere in this report for details of our
operating lease obligations.(4)
    
    The advisory fees comprise our contractual obligation to pay annual advisory fees to each of
Roe H. Hatlen, Sentinel Capital Partners, L.L.C. and Caxton-Iseman Capital. See Certain
Relationships and Related Transactions. Under the terms of these agreements, Mr. Hatlen and
Sentinel Capital are each paid a fixed annual fee. The fee of Caxton-Iseman is calculated as a
percentage of our earnings before interest, taxes, depreciation and amortization, which in
fiscal 2005 resulted in a payment of $1.8 million. This figure has been used as an estimate
for our obligations under that agreement for fiscal 2007 and each fiscal year thereafter. The
agreements with Caxton-Iseman and Sentinel Capital are of perpetual duration, and hence no
estimate of the aggregate amount of future obligations (represented in the Thereafter
column, above) is provided.(5)
    
    In determining purchase obligations for this table we used our interpretation of the
definition set forth in the SEC Final Rule, Disclosure in Managements Discussion and Analysis
about Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, which states, a
purchase obligation is defined as an agreement to purchase goods or services that is
enforceable and legally binding on the registrant and that specifies all significant terms,
including: fixed minimum quantities to be purchased; fixed, minimum or variable/price
provisions, and the approximate timing of the transaction. In applying this definition, we
have only included purchase obligations to the extent the failure to perform would result in
formal recourse against the Company. Accordingly, certain procurement arrangements that
indicate we are to purchase future items are included, but only to the extent they include a
recourse provision for our failure to purchase. Other Commercial Commitments
  Amount of Commitment Expiration by Fiscal Year
 2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    Total(in thousands)Letters of credit(1)
    
    $
    38,617
    
    
    $
    118
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    38,735Total commercial commitments
    
    $
    38,617
    
    
    $
    118
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    38,735
 
 (1)
    
    Our outstanding letters of credit expire at various times with final expirations in
November 2007. As of June 28, 2006, total borrowing availability was $41.3 million, which is
comprised of a revolving credit facility of $30.0 million and letter of credit facilities of
$11.3 million. Seasonality and Quarterly Fluctuations
  34




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##### Table of Contents



New Accounting Standards
 Accounting Changes, Reporting Accounting Changes in
Interim Financial Statements,
 Exchanges of Nonmonetary Assets Accounting for Nonmonetary Transactions,
 Accounting for Stock Issued to Employees.
 35




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 Quantitative and Qualitative Disclosures about Market Risk
 Interest Rate Risks. 1 4 7 8
 Food Commodity Risks.
 36




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO FINANCIAL STATEMENTS
BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 PageReport of Independent Registered Public Accounting Firm
    
    
    38Consolidated Balance Sheets as of June 29, 2005 and June 28, 2006
    
    
    39Consolidated Statements of Operations for the Years Ended June
30, 2004, June 29, 2005 and June 28, 2006
    
    
    40Consolidated Statements of Shareholders Equity (Deficit) for
the Years Ended June 30, 2004, June 29, 2005 and June 28, 2006
    
    
    41Consolidated Statements of Cash Flows for the Years Ended June
30, 2004, June 29, 2005 and June 28, 2006
    
    
    42Notes to Consolidated Financial Statements
    
    
    44
 37




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      
 38




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 June 29,
    
    
    June 28,2005
    
    
    2006(In thousands, except share data)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    20,662
    
    
    $
    20,219Receivables
    
    
    6,632
    
    
    
    4,879Inventories
    
    
    18,957
    
    
    
    18,926Prepaid expenses and other current assets
    
    
    6,318
    
    
    
    5,384Deferred income taxes
    
    
    12,533
    
    
    
    10,324Total current assets
    
    
    65,102
    
    
    
    59,732PROPERTY AND EQUIPMENT, net
    
    
    146,653
    
    
    
    141,404GOODWILL
    
    
    312,163
    
    
    
    312,163DEFERRED INCOME TAXES
    
    
    8,195
    
    
    
    13,683OTHER ASSETS, net
    
    
    12,910
    
    
    
    11,514Total assets
    
    $
    545,023
    
    
    $
    538,496LIABILITIES AND SHAREHOLDERS DEFICITCURRENT LIABILITIES:Accounts payable
    
    $
    44,883
    
    
    $
    48,101Accrued liabilities (Note 4)
    
    
    69,581
    
    
    
    68,344Income taxes payable
    
    
    6,990
    
    
    
    6,977Current maturities of long-term debt
    
    
    2,016
    
    
    
    1,862Total current liabilities
    
    
    123,470
    
    
    
    125,284LONG-TERM DEBT, net of current maturities
    
    
    464,178
    
    
    
    460,652DEFERRED LEASE OBLIGATIONS
    
    
    28,375
    
    
    
    28,356OTHER LONG-TERM LIABILITIES
    
    
    7,369
    
    
    
    7,355Total liabilities
    
    
    623,392
    
    
    
    621,647COMMITMENTS AND CONTINGENCIES (Note 10)SHAREHOLDERS DEFICIT:Preferred stock, $.01 par value; 1,100,000 shares
authorized; none issued and outstanding as of June
29, 2005 and June 28, 2006
    
    
    
    
    
    
    Common stock, $.01 par value; 3,600,000 shares
authorized; shares issued and outstanding of
3,175,135 as of June 29, 2005 and 3,104,510 as of
June 28, 2006
    
    
    32
    
    
    
    31Additional paid in capital
    
    
    14
    
    
    
    5Accumulated deficit
    
    
    (78,415
    )
    
    
    (83,187
    )Total shareholders deficit
    
    
    (78,369
    )
    
    
    (83,151
    )Total liabilities and shareholders deficit
    
    $
    545,023
    
    
    $
    538,496
  39




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Year EndedJune 30,
    
    
    June 29,
    
    
    June 28,2004
    
    
    2005
    
    
    2006(In thousands)RESTAURANT SALES
    
    $
    942,831
    
    
    $
    926,781
    
    
    $
    963,161RESTAURANT COSTS:Food
    
    
    307,807
    
    
    
    307,087
    
    
    
    327,244Labor
    
    
    287,203
    
    
    
    278,991
    
    
    
    274,652Direct and occupancy
    
    
    216,567
    
    
    
    219,255
    
    
    
    227,680Total restaurant costs
    
    
    811,577
    
    
    
    805,333
    
    
    
    829,576ADVERTISING EXPENSES
    
    
    25,918
    
    
    
    24,166
    
    
    
    30,637GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    42,658
    
    
    
    43,706
    
    
    
    44,198SHAREHOLDERS RIGHTS
REPURCHASE
    
    
    
    
    
    
    
    
    
    
    757CLOSED RESTAURANT COSTS
    
    
    1,085
    
    
    
    2,909
    
    
    
    6,023IMPAIRMENT OF ASSETS
    
    
    1,878
    
    
    
    3,609
    
    
    
    5,964FINANCING-RELATED
COMPENSATION EXPENSES
    
    
    2,240
    
    
    
    
    
    
    
    OPERATING INCOME
    
    
    57,475
    
    
    
    47,058
    
    
    
    46,006INTEREST EXPENSE
    
    
    39,609
    
    
    
    48,100
    
    
    
    52,242INTEREST INCOME
    
    
    (424
    )
    
    
    (515
    )
    
    
    (375
    )LOSS RELATED TO REFINANCING
    
    
    4,776
    
    
    
    856
    
    
    
    647LOSS RELATED TO EARLY
EXTINGUISHMENT OF DEBT
    
    
    5,275
    
    
    
    1,923
    
    
    
    OTHER INCOME
    
    
    (1,379
    )
    
    
    (935
    )
    
    
    (994
    )INCOME (LOSS) BEFORE INCOME
TAXES
    
    
    9,618
    
    
    
    (2,371
    )
    
    
    (5,514
    )INCOME TAX EXPENSE (BENEFIT)
    
    
    1,648
    
    
    
    (187
    )
    
    
    (742
    )Net income (loss)
    
    $
    7,970
    
    
    $
    (2,184
    )
    
    $
    (4,772
    )
  40




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT)
 RetainedAdditional
    
    
    EarningsPreferred Stock
    
    
    Common Stock
    
    
    Paid-In
    
    
    (AccumulatedShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit)
    
    
    Total(In thousands, except share data)BALANCE, July 2, 2003
    
    
    
    
    
    $
    
    
    
    
    3,187,985
    
    
    $
    32
    
    
    $
    
    
    
    $
    (22,842
    )
    
    $
    (22,810
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    21,250
    
    
    
    
    
    
    
    241
    
    
    
    
    
    
    
    241Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (23,563
    )
    
    
    
    
    
    
    (209
    )
    
    
    (171
    )
    
    
    (380
    )Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32
    )
    
    
    (60,905
    )
    
    
    (60,937
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,970
    
    
    
    7,970BALANCE, June 30, 2004
    
    
    
    
    
    
    
    
    
    
    3,185,672
    
    
    
    32
    
    
    
    
    
    
    
    (75,948
    )
    
    
    (75,916
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    144,150
    
    
    
    1
    
    
    
    14
    
    
    
    
    
    
    
    15Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (154,687
    )
    
    
    (1
    )
    
    
    
    
    
    
    (283
    )
    
    
    (284
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,184
    )
    
    
    (2,184
    )BALANCE, June 29, 2005
    
    
    
    
    
    
    
    
    
    
    3,175,135
    
    
    
    32
    
    
    
    14
    
    
    
    (78,415
    )
    
    
    (78,369
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (70,625
    )
    
    
    (1
    )
    
    
    (9
    )
    
    
    
    
    
    
    (10
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,772
    )
    
    
    (4,772
    )BALANCE, June 28, 2006
    
    
    
    
    
    $
    
    
    
    
    3,104,510
    
    
    $
    31
    
    
    $
    5
    
    
    $
    (83,187
    )
    
    $
    (83,151
    )
  41




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Year EndedJune 30,
    
    
    June 29,
    
    
    June 28,2004
    
    
    2005
    
    
    2006(In thousands)OPERATING ACTIVITIES:Net income (loss)
    
    $
    7,970
    
    
    $
    (2,184
    )
    
    $
    (4,772
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    33,807
    
    
    
    32,247
    
    
    
    32,067Amortization of debt issuance costs
    
    
    1,370
    
    
    
    1,386
    
    
    
    1,532Write-off of debt issuance costs
    
    
    4,201
    
    
    
    
    
    
    
    Accretion of original issue discount
    
    
    2,049
    
    
    
    11,906
    
    
    
    13,336Loss related to early extinguishment of debt
    
    
    5,275
    
    
    
    1,923
    
    
    
    Deferred income taxes
    
    
    1,200
    
    
    
    (3,780
    )
    
    
    (3,279
    )Loss on disposal of assets
    
    
    305
    
    
    
    2,280
    
    
    
    1,218Impairment of assets
    
    
    1,878
    
    
    
    3,609
    
    
    
    5,964Changes in assets and liabilities:Receivables
    
    
    (235
    )
    
    
    331
    
    
    
    1,753Inventories
    
    
    (674
    )
    
    
    (683
    )
    
    
    (703
    )Prepaid expenses and other current assets
    
    
    2,795
    
    
    
    (1,074
    )
    
    
    1,283Accounts payable
    
    
    (497
    )
    
    
    1,704
    
    
    
    2,189Accrued and other liabilities
    
    
    (8,698
    )
    
    
    2,551
    
    
    
    (1,270
    )Income taxes payable
    
    
    (256
    )
    
    
    2,459
    
    
    
    (13
    )Net cash provided by operating activities
    
    
    50,490
    
    
    
    52,675
    
    
    
    49,305INVESTING ACTIVITIES:Proceeds from sale leaseback transactions
    
    
    2,710
    
    
    
    
    
    
    
    Purchase of property and equipment
    
    
    (33,007
    )
    
    
    (29,131
    )
    
    
    (31,346
    )Collections on notes receivable
    
    
    813
    
    
    
    733
    
    
    
    1,062Acquisition of 20% minority interest in Tahoe Joes Inc.
    
    
    (370
    )
    
    
    
    
    
    
    Sale (purchase) of other assets
    
    
    1,471
    
    
    
    (73
    )
    
    
    (2,438
    )Net cash used in investing activities
    
    
    (28,383
    )
    
    
    (28,471
    )
    
    
    (32,722
    )
 42




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 For the Year EndedJune 30,
    
    
    June 29,
    
    
    June 28,2004
    
    
    2005
    
    
    2006(In thousands)FINANCING ACTIVITIES:Repayment of debt
    
    $
    (172,953
    )
    
    $
    (29,781
    )
    
    $
    (17,016
    )Redemption of subordinated notes
    
    
    (27,364
    )
    
    
    
    
    
    
    Repurchase of common stock
    
    
    (380
    )
    
    
    (284
    )
    
    
    (10
    )Proceeds from issuance of common stock
    
    
    241
    
    
    
    15
    
    
    
    Proceeds from issuance of senior discount notes
    
    
    75,073
    
    
    
    
    
    
    
    Unrestricted cash proceeds from credit facility
    
    
    195,300
    
    
    
    
    
    
    
    Initial restricted cash proceeds from credit facility
    
    
    34,700
    
    
    
    
    
    
    
    Restricted cash proceeds from credit facility available
as of year end
    
    
    (16,228
    )
    
    
    
    
    
    
    Reduction of restricted cash available for early
extinguishment of debt
    
    
    
    
    
    
    16,228
    
    
    
    Use of restricted cash for early extinguishment of debt
    
    
    (18,472
    )
    
    
    (15,736
    )
    
    
    Use of unrestricted cash for early extinguishment of debt
    
    
    (15,300
    )
    
    
    
    
    
    
    Dividends
    
    
    (60,937
    )
    
    
    
    
    
    
    Debt issuance costs
    
    
    (5,570
    )
    
    
    (56
    )
    
    
    Net cash used in financing activities
    
    
    (11,890
    )
    
    
    (29,614
    )
    
    
    (17,026
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    10,217
    
    
    
    (5,410
    )
    
    
    (433
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    15,855
    
    
    
    26,072
    
    
    
    20,662CASH AND CASH EQUIVALENTS, end of period
    
    $
    26,072
    
    
    $
    20,662
    
    
    $
    20,219SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid during the period for:Interest (net of capitalized interest of $280, $538 and
$330, respectively)
    
    $
    37,286
    
    
    $
    32,530
    
    
    $
    37,242Income taxes
    
    $
    700
    
    
    $
    1,130
    
    
    $
    2,549
  43




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Nature of Organization
 Company Background
  Description of Business
 â â â SM â
 Principles of Consolidation
  Fiscal Year
  Reclassifications
  44




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##### Table of Contents



2. Summary of Significant Accounting Policies
 Cash and Cash Equivalents
  Receivables
  Inventories
  Property and Equipment
 1 ¤
   June 29,
    
    
    June 28,2005
    
    
    2006Land
    
    $
    762
    
    
    $
    762Buildings
    
    
    3,082
    
    
    
    3,082Equipment
    
    
    139,791
    
    
    
    151,622Leasehold improvements
    
    
    148,681
    
    
    
    155,034Accumulated depreciation and amortization
    
    
    (145,663
    )
    
    
    (169,096
    )$
    146,653
    
    
    $
    141,404
 45




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##### Table of Contents



Goodwill
  Other Assets
   Franchise Fees
    
    
    Trademarks
    
    
    Liquor Licenses
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationBALANCE, July 2, 2003
    
    
    69
    
    
    
    (44
    )
    
    
    34
    
    
    
    (21
    )
    
    
    317
    
    
    
    (25
    )
    
    
    420
    
    
    
    (90
    )FY 2004 Activity:Amortization
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )Additions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    28
    
    
    
    BALANCE, June 30, 2004
    
    
    69
    
    
    
    (56
    )
    
    
    34
    
    
    
    (29
    )
    
    
    345
    
    
    
    (25
    )
    
    
    448
    
    
    
    (110
    )FY 2005 Activity:Amortization
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )Additions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BALANCE, June 29, 2005
    
    $
    69
    
    
    $
    (65
    )
    
    $
    34
    
    
    $
    (34
    )
    
    $
    345
    
    
    $
    (25
    )
    
    $
    448
    
    
    $
    (124
    )FY 2006 Activity:Amortization
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Additions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BALANCE, June 28, 2006
    
    $
    69
    
    
    $
    (69
    )
    
    $
    34
    
    
    $
    (34
    )
    
    $
    345
    
    
    $
    (25
    )
    
    $
    448
    
    
    $
    (128
    )
 46




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##### Table of Contents



Long-Lived Assets
    Insurance Reserves
  Closed Restaurant Reserve
  47




---



##### Table of Contents



Pre-opening Costs
  Advertising Expenses
  Income Taxes
   Revenue Recognition
    48




---



##### Table of Contents



Use of Estimates
  Fair Value Disclosure of Financial Instruments
     Segment Reporting
  49




---



##### Table of Contents



Stock-Based Compensation
   For the Year EndedJune 30,
    
    
    June 29,
    
    
    June 28,2004
    
    
    2005
    
    
    2006Net income (loss) as reported
    
    $
    7,970
    
    
    $
    (2,184
    )
    
    $
    (4,772
    )Compensation expense
recorded in the financial
statements, net of tax
effect
    
    
    
    
    
    
    
    
    
    
    Pro forma compensation
expense under the provisions
of SFAS No. 123, net of tax
effect
    
    
    (9
    )
    
    
    
    
    
    
    Pro forma
    
    $
    7,961
    
    
    $
    (2,184
    )
    
    $
    (4,772
    )Weighted-average fair
value per share of options
granted
    
    $
    0.32
    
    
    $
    
    
    
    $
    
  For the Year EndedJune 30,
    
    June 29,
    
    June 28,2004
    
    2005
    
    2006Risk-free interest rate
    
    
    1.32
    %
    
    
    3.07
    %
    
    
    3.93
    %Expected volatility
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected life in years
    
    
    1.8
    
    
    
    0.8
    
    
    
    0.3
  3. Recent Accounting Pronouncements
 Accounting Changes, Reporting Accounting Changes in
Interim Financial Statements,
 50




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##### Table of Contents



Exchanges of Nonmonetary Assets Accounting for Nonmonetary Transactions,
 Accounting for Stock Issued to Employees.
 4. Accrued Liabilities
  June 29,
    
    
    June 28,2005
    
    
    2006Accrued compensation
    
    $
    17,417
    
    
    $
    17,634Accrued workers compensation
    
    
    17,388
    
    
    
    12,520Accrued interest
    
    
    13,100
    
    
    
    13,552Accrued insurance
    
    
    6,427
    
    
    
    8,178Accrued sales, use and property taxes
    
    
    6,105
    
    
    
    6,348Unearned revenue
    
    
    4,053
    
    
    
    3,998Closed restaurant reserve, current portion
    
    
    861
    
    
    
    1,685Accrued other
    
    
    4,230
    
    
    
    4,429$
    69,581
    
    
    $
    68,344
 Accrued Workers Compensation Liability
  51




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##### Table of Contents



Closed Restaurant Reserve
    For the Year EndedJune 29,
    
    
    June 28,2005
    
    
    2006BALANCE, beginning of period (current and noncurrent in
aggregate)
    
    $
    1,442
    
    
    $
    1,499Additions:Lease obligations charged to earnings
    
    
    1,177
    
    
    
    4,847Employee termination benefits charged to earnings
    
    
    223
    
    
    
    444Reductions:Cash payments:Lease termination costs and obligations
    
    
    1,120
    
    
    
    3,570Employee severance benefits
    
    
    223
    
    
    
    444BALANCE, end of period (current and noncurrent in
aggregate)
    
    $
    1,499
    
    
    $
    2,776
   For the Year EndedJune 29,
    
    June 28,2005
    
    2006Number of restaurants:Expected to close as of the beginning of the period
    
    
    7
    
    
    
    4Closed during the period
    
    
    11
    
    
    
    19Identified for closure during the period
    
    
    8
    
    
    
    16Expected to close as of the end of the period
    
    
    4
    
    
    
    1
 52




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##### Table of Contents



For the Year EndedJune 29,
    
    June 28,2005
    
    2006Number of employees:Expected to be terminated as of the beginning of the
period
    
    
    245
    
    
    
    140Terminated during the period
    
    
    385
    
    
    
    665Identified for termination during the period
    
    
    280
    
    
    
    560Expected to be terminated as of the end of the period
    
    
    140
    
    
    
    35
  2007
    
    $
    1,6852008
    
    
    5332009
    
    
    3652010
    
    
    1772011
    
    
    15Thereafter
    
    
    1$
    2,776
  5. Long-Term Debt
  June 29,
    
    
    June 28,2005
    
    
    2006Buffets, Inc.Credit Facility:Revolving credit facility
    
    $
    
    
    
    $
    Term loan, interest at LIBOR plus 3.50%, due
Quarterly through June 28, 2009 (interest rate at
8.2% as of June 28, 2006)
    
    
    199,069
    
    
    
    182,053Total Credit Facility
    
    
    199,069
    
    
    
    182,053Senior subordinated notes, interest at 11.25%,
due July 15, 2010, net of discount of $4,979 at
June 29, 2005 and $4,195 at June 28, 2006
    
    
    179,686
    
    
    
    180,470Total long-term debt at Buffets, Inc.
    
    
    378,755
    
    
    
    362,523Buffets Holdings, Inc.Senior discount notes, interest at 13.875%, due
December 15, 2010, net of discount of $44,561 at
June 29, 2005 and $32,009 at June 28, 2006
    
    
    87,439
    
    
    
    99,991Grand total long-term debt
    
    
    466,194
    
    
    
    462,514Less  Current maturities
    
    
    2,016
    
    
    
    1,862$
    464,178
    
    
    $
    460,652
 53




---



##### Table of Contents



2007
    
    $
    1,8622008
    
    
    2,3282009
    
    
    177,8632010
    
    
    2011
    
    
    316,665Thereafter
    
    
    $
    498,718
 Credit Facility
 1 4 1 4
   54




---



##### Table of Contents



1 2
 111/4% Senior Subordinated Notes
 1 4
 13 7 ¤8% Senior Discount Notes
 7 ¤ 8
 55




---



##### Table of Contents



7 ¤ 8 7 ¤ 8 7 ¤ 8 7 ¤ 8
 6. Shareholders Equity (Deficit)
 Stock Shares
  Stock Warrants
  Call Rights and Put Rights
  56




---



##### Table of Contents



Equity Participation Plan
   For the Year EndedJune 30, 2004
    
    June 29, 2005
    
    June 28, 2006Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-Avg
    
    
    
    
    
    Avg
    
    
    
    
    
    AvgExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseShares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding at
beginning of year
    
    
    65,822
    
    
    $
    17.93
    
    
    
    98,142
    
    
    $
    16.42
    
    
    
    97,029
    
    
    $
    14.51Granted
    
    
    44,305
    
    
    
    13.08
    
    
    
    11,671
    
    
    
    0.11
    
    
    
    1,124
    
    
    
    0.11Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Canceled
    
    
    (11,985
    )
    
    
    12.14
    
    
    
    12,784
    
    
    
    16.05
    
    
    
    20,330
    
    
    
    14.36Outstanding at
end of year
    
    
    98,142
    
    
    $
    16.42
    
    
    
    97,029
    
    
    $
    14.51
    
    
    
    77,823
    
    
    $
    14.34
  Options OutstandingWeighted-AvgRemainingNumber
    
    
    Option Term
    
    
    Weighted-AvgRange of Exercise Price
    
    Outstanding
    
    
    (in years)
    
    
    Exercise Price$0   - $10
    
    
    35,188
    
    
    
    10.74
    
    
    $
    7.19$11 - $20
    
    
    29,099
    
    
    
    12.49
    
    
    
    14.43$21 - $30
    
    
    6,824
    
    
    
    10.32
    
    
    
    25.45$31 - $40
    
    
    537
    
    
    
    10.53
    
    
    
    32.09$41 - $50
    
    
    6,175
    
    
    
    10.83
    
    
    
    41.07$0   - $50
    
    
    77,823
    
    
    
    11.36
    
    
    $
    14.34
  57




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##### Table of Contents



Cash and Phantom Incentive Unit Award Agreements
     7. Retirement Plan
  58




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##### Table of Contents



8. Income Taxes
  For the Year EndedJune 30,
    
    
    June 29,
    
    
    June 28,2004
    
    
    2005
    
    
    2006Federal:Current
    
    $
    (710
    )
    
    $
    2,665
    
    
    $
    1,776Deferred
    
    
    1,050
    
    
    
    (3,308
    )
    
    
    (2,606
    )340
    
    
    
    (643
    )
    
    
    (830
    )State:Current
    
    
    1,158
    
    
    
    928
    
    
    
    761Deferred
    
    
    150
    
    
    
    (472
    )
    
    
    (673
    )1,308
    
    
    
    456
    
    
    
    88Income tax expense (benefit)
    
    $
    1,648
    
    
    $
    (187
    )
    
    $
    (742
    )
  June 29, 2005
    
    
    June 28, 2006Non-
    
    
    
    
    
    
    Non-Current
    
    
    current
    
    
    Current
    
    
    currentAsset
    
    
    Asset
    
    
    Asset
    
    
    AssetProperty and equipment
    
    $
    
    
    
    $
    (819
    )
    
    $
    
    
    
    $
    2,595Deferred rent
    
    
    
    
    
    
    8,711
    
    
    
    
    
    
    
    8,716Self-insurance reserve
    
    
    1,157
    
    
    
    
    
    
    
    1,759
    
    
    
    Accrued workers
compensation
    
    
    6,131
    
    
    
    
    
    
    
    4,481
    
    
    
    Accrued payroll and
related benefits
    
    
    2,020
    
    
    
    
    
    
    
    2,031
    
    
    
    Accrued store closing costs
    
    
    577
    
    
    
    
    
    
    
    1,049
    
    
    
    Net operating loss and tax
credit carryforwards
    
    
    2,168
    
    
    
    
    
    
    
    807
    
    
    
    Deferred gain on sale
leaseback transaction
    
    
    
    
    
    
    1,112
    
    
    
    
    
    
    
    936Goodwill
    
    
    
    
    
    
    (2,122
    )
    
    
    
    
    
    
    (2,242
    )Other
    
    
    480
    
    
    
    1,313
    
    
    
    197
    
    
    
    3,678Total
    
    $
    12,533
    
    
    $
    8,195
    
    
    $
    10,324
    
    
    $
    13,683
  59




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##### Table of Contents



For the Year EndedJune 30,
    
    
    June 29,
    
    
    June 28,2004
    
    
    2005
    
    
    2006Federal income tax expense
(benefit) at statutory rate
of 35%
    
    $
    3,367
    
    
    $
    (830
    )
    
    $
    (1,930
    )State income taxes, net
of federal benefit
    
    
    850
    
    
    
    296
    
    
    
    57General business credits
    
    
    (1,396
    )
    
    
    (1,591
    )
    
    
    (1,546
    )Non-deductible interest
on high-yield notes
    
    
    
    
    
    
    1,316
    
    
    
    1,497Other
    
    
    (1,173
    )
    
    
    622
    
    
    
    1,180Income tax expense
(benefit)
    
    $
    1,648
    
    
    $
    (187
    )
    
    $
    (742
    )
  9. Related-Party Transactions
   60




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61




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##### Table of Contents



10. Commitments and Contingencies
 Litigation
   Operating Leases
   2007
    
    $
    53,2112008
    
    
    51,6402009
    
    
    47,9862010
    
    
    41,3692011
    
    
    34,382Thereafter
    
    
    214,621Total future minimum lease payments
    
    $
    443,209
  62




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##### Table of Contents



For the Year EndedJune 30,
    
    
    June 29,
    
    
    June 28,2004
    
    
    2005
    
    
    2006Minimum rents
    
    $
    49,911
    
    
    $
    50,111
    
    
    $
    50,192Contingent rents
    
    
    2,983
    
    
    
    3,522
    
    
    
    3,708Less: Sublease rents
    
    
    (2,739
    )
    
    
    (2,844
    )
    
    
    (2,357
    )Deferred rents
    
    
    2,381
    
    
    
    1,482
    
    
    
    1,123Percentage rents
    
    
    1,954
    
    
    
    1,617
    
    
    
    2,296$
    54,490
    
    
    $
    53,888
    
    
    $
    54,962
 VISA Settlement
  Buffets Restaurants Holdings Option Agreements and Buffets Holdings Tender Offer
 7 8 7 8 7 8 7 8 7 8 7 8
 11. Condensed Consolidating Financial Statements
 1 4
 63




---



##### Table of Contents



64




---



##### Table of Contents



Condensed Consolidating Balance Sheet
As of June 29, 2005
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    49
    
    
    $
    14,154
    
    
    $
    6,459
    
    
    $
    
    
    
    $
    20,662Receivables
    
    
    
    
    
    
    245
    
    
    
    288,491
    
    
    
    (282,104
    )
    
    
    6,632Inventories
    
    
    
    
    
    
    827
    
    
    
    18,130
    
    
    
    
    
    
    
    18,957Prepaid expenses and other current
assets
    
    
    4
    
    
    
    5,985
    
    
    
    329
    
    
    
    
    
    
    
    6,318Deferred income taxes
    
    
    187
    
    
    
    10,860
    
    
    
    1,486
    
    
    
    
    
    
    
    12,533Total current assets
    
    
    240
    
    
    
    32,071
    
    
    
    314,895
    
    
    
    (282,104
    )
    
    
    65,102PROPERTY AND EQUIPMENT, net
    
    
    
    
    
    
    6,453
    
    
    
    140,200
    
    
    
    
    
    
    
    146,653GOODWILL, net
    
    
    
    
    
    
    18,730
    
    
    
    293,433
    
    
    
    
    
    
    
    312,163DEFERRED INCOME TAXES
    
    
    2,792
    
    
    
    5,403
    
    
    
    
    
    
    
    
    
    
    
    8,195OTHER ASSETS, net
    
    
    2,556
    
    
    
    142,419
    
    
    
    5,237
    
    
    
    (137,302
    )
    
    
    12,910Total assets
    
    $
    5,588
    
    
    $
    205,076
    
    
    $
    753,765
    
    
    $
    (419,406
    )
    
    $
    545,023LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIES:Accounts payable
    
    
    
    
    
    
    327,351
    
    
    
    2,859
    
    
    
    (285,327
    )
    
    
    44,883Accrued liabilities
    
    
    
    
    
    
    45,634
    
    
    
    23,947
    
    
    
    
    
    
    
    69,581Income taxes payable
    
    
    (1,877
    )
    
    
    8,867
    
    
    
    
    
    
    
    
    
    
    
    6,990Current maturities of long-term debt
    
    
    
    
    
    
    121
    
    
    
    1,895
    
    
    
    
    
    
    
    2,016Total current liabilities
    
    
    (1,877
    )
    
    
    381,973
    
    
    
    28,701
    
    
    
    (285,327
    )
    
    
    123,470LONG-TERM DEBT, net of current maturities
    
    
    87,439
    
    
    
    22,604
    
    
    
    354,135
    
    
    
    
    
    
    
    464,178DEFERRED LEASE OBLIGATIONS
    
    
    
    
    
    
    1,671
    
    
    
    26,704
    
    
    
    
    
    
    
    28,375OTHER LONG-TERM LIABILITIES
    
    
    
    
    
    
    3,227
    
    
    
    4,142
    
    
    
    
    
    
    
    7,369Total liabilities
    
    
    85,562
    
    
    
    409,475
    
    
    
    413,682
    
    
    
    (285,327
    )
    
    
    623,392COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS EQUITY (DEFICIT)Common stock
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32Additional paid in capital
    
    
    14
    
    
    
    82,311
    
    
    
    199,244
    
    
    
    (281,555
    )
    
    
    14Retained earnings (accumulated deficit)
    
    
    (80,020
    )
    
    
    (286,710
    )
    
    
    140,839
    
    
    
    147,476
    
    
    
    (78,415
    )Total shareholders equity (deficit)
    
    
    (79,974
    )
    
    
    (204,399
    )
    
    
    340,083
    
    
    
    (134,079
    )
    
    
    (78,369
    )Total liabilities and shareholders
equity (deficit)
    
    $
    5,588
    
    
    $
    205,076
    
    
    $
    753,765
    
    
    $
    (419,406
    )
    
    $
    545,023
 65




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##### Table of Contents



Condensed Consolidating Balance Sheet
As of June 28, 2006
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    37
    
    
    $
    14,068
    
    
    $
    6,114
    
    
    $
    
    
    
    $
    20,219Receivables
    
    
    1,777
    
    
    
    485
    
    
    
    278,857
    
    
    
    (276,240
    )
    
    
    4,879Inventories
    
    
    
    
    
    
    845
    
    
    
    18,081
    
    
    
    
    
    
    
    18,926Prepaid expenses and other current
assets
    
    
    3
    
    
    
    4,772
    
    
    
    609
    
    
    
    
    
    
    
    5,384Deferred income taxes
    
    
    64
    
    
    
    8,774
    
    
    
    1,486
    
    
    
    
    
    
    
    10,324Total current assets
    
    
    1,881
    
    
    
    28,944
    
    
    
    305,147
    
    
    
    (276,240
    )
    
    
    59,732PROPERTY AND EQUIPMENT, net
    
    
    
    
    
    
    5,307
    
    
    
    136,097
    
    
    
    
    
    
    
    141,404GOODWILL, net
    
    
    
    
    
    
    18,730
    
    
    
    293,433
    
    
    
    
    
    
    
    312,163DEFERRED INCOME TAXES
    
    
    6,140
    
    
    
    7,543
    
    
    
    
    
    
    
    
    
    
    
    13,683OTHER ASSETS, net
    
    
    2,203
    
    
    
    141,401
    
    
    
    5,212
    
    
    
    (137,302
    )
    
    
    11,514Total assets
    
    $
    10,224
    
    
    $
    201,925
    
    
    $
    739,889
    
    
    $
    (413,542
    )
    
    $
    538,496LIABILITIES AND SHAREHOLDERS EQUITY
(DEFICIT)CURRENT LIABILITIES:Accounts payable
    
    
    
    
    
    
    325,540
    
    
    
    2,788
    
    
    
    (280,227
    )
    
    
    48,101Accrued liabilities
    
    
    
    
    
    
    44,013
    
    
    
    24,331
    
    
    
    
    
    
    
    68,344Income taxes payable
    
    
    (36
    )
    
    
    7,013
    
    
    
    
    
    
    
    
    
    
    
    6,977Current maturities of long-term debt
    
    
    
    
    
    
    112
    
    
    
    1,750
    
    
    
    
    
    
    
    1,862Total current liabilities
    
    
    (36
    )
    
    
    376,678
    
    
    
    28,869
    
    
    
    (280,227
    )
    
    
    125,284LONG-TERM DEBT, net of current maturities
    
    
    99,991
    
    
    
    21,640
    
    
    
    339,021
    
    
    
    
    
    
    
    460,652DEFERRED LEASE OBLIGATIONS
    
    
    
    
    
    
    1,948
    
    
    
    26,408
    
    
    
    
    
    
    
    28,356OTHER LONG-TERM LIABILITIES
    
    
    
    
    
    
    3,024
    
    
    
    4,331
    
    
    
    
    
    
    
    7,355Total liabilities
    
    
    99,955
    
    
    
    403,290
    
    
    
    398,629
    
    
    
    (280,227
    )
    
    
    621,647COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS EQUITY (DEFICIT)Common stock
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31Additional paid in capital
    
    
    5
    
    
    
    82,311
    
    
    
    199,244
    
    
    
    (281,555
    )
    
    
    5Retained earnings (accumulated deficit)
    
    
    (89,767
    )
    
    
    (283,676
    )
    
    
    142,016
    
    
    
    148,240
    
    
    
    (83,187
    )Total shareholders equity (deficit)
    
    
    (89,731
    )
    
    
    (201,365
    )
    
    
    341,260
    
    
    
    (133,315
    )
    
    
    (83,151
    )Total liabilities and shareholders
equity (deficit)
    
    $
    10,224
    
    
    $
    201,925
    
    
    $
    739,889
    
    
    $
    (413,542
    )
    
    $
    538,496
 66




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##### Table of Contents



Condensed Consolidating Statement of Operations
For the Year Ended June 30, 2004
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)RESTAURANT SALES
    
    $
    
    
    
    $
    39,851
    
    
    $
    902,980
    
    
    $
    
    
    
    $
    942,831RESTAURANT COSTS:Food
    
    
    
    
    
    
    14,072
    
    
    
    293,735
    
    
    
    
    
    
    
    307,807Labor
    
    
    
    
    
    
    12,544
    
    
    
    274,659
    
    
    
    
    
    
    
    287,203Direct and occupancy
    
    
    
    
    
    
    5,393
    
    
    
    211,174
    
    
    
    
    
    
    
    216,567Total restaurant costs
    
    
    
    
    
    
    32,009
    
    
    
    779,568
    
    
    
    
    
    
    
    811,577ADVERTISING EXPENSES
    
    
    
    
    
    
    1,095
    
    
    
    24,823
    
    
    
    
    
    
    
    25,918GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    
    
    
    
    1,803
    
    
    
    40,855
    
    
    
    
    
    
    
    42,658CLOSED RESTAURANT COSTS
    
    
    
    
    
    
    
    
    
    
    1,085
    
    
    
    
    
    
    
    1,085IMPAIRMENT OF ASSETS
    
    
    
    
    
    
    
    
    
    
    1,878
    
    
    
    
    
    
    
    1,878FINANCING-RELATED
COMPENSATION EXPENSES
    
    
    1,466
    
    
    
    774
    
    
    
    
    
    
    
    
    
    
    
    2,240OPERATING INCOME (LOSS)
    
    
    (1,466
    )
    
    
    4,170
    
    
    
    54,771
    
    
    
    
    
    
    
    57,475INTEREST EXPENSE
    
    
    2,164
    
    
    
    2,247
    
    
    
    35,198
    
    
    
    
    
    
    
    39,609INTEREST INCOME
    
    
    
    
    
    
    (424
    )
    
    
    
    
    
    
    
    
    
    
    (424
    )LOSS RELATED TO REFINANCING
    
    
    575
    
    
    
    4,201
    
    
    
    
    
    
    
    
    
    
    
    4,776LOSS RELATED TO EARLY
EXTINGUISHMENT OF DEBT
    
    
    
    
    
    
    5,275
    
    
    
    
    
    
    
    
    
    
    
    5,275OTHER INCOME
    
    
    
    
    
    
    (1,379
    )
    
    
    
    
    
    
    
    
    
    
    (1,379
    )INCOME (LOSS) BEFORE
INCOME TAXES
    
    
    (4,205
    )
    
    
    (5,750
    )
    
    
    19,573
    
    
    
    
    
    
    
    9,618INCOME TAX EXPENSE
(BENEFIT)
    
    
    (1,619
    )
    
    
    (1,359
    )
    
    
    4,626
    
    
    
    
    
    
    
    1,648Net income (loss)
    
    $
    (2,586
    )
    
    $
    (4,391
    )
    
    $
    14,947
    
    
    $
    
    
    
    $
    7,970
 67




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##### Table of Contents



Condensed Consolidating Statement of Operations
For the Year Ended June 29, 2005
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)RESTAURANT SALES
    
    $
    
    
    
    $
    40,550
    
    
    $
    886,231
    
    
    $
    
    
    
    $
    926,781RESTAURANT COSTS:Food
    
    
    
    
    
    
    14,594
    
    
    
    292,493
    
    
    
    
    
    
    
    307,087Labor
    
    
    
    
    
    
    12,618
    
    
    
    266,373
    
    
    
    
    
    
    
    278,991Direct and occupancy
    
    
    
    
    
    
    7,169
    
    
    
    212,086
    
    
    
    
    
    
    
    219,255Total restaurant costs
    
    
    
    
    
    
    34,381
    
    
    
    770,952
    
    
    
    
    
    
    
    805,333ADVERTISING EXPENSES
    
    
    
    
    
    
    1,057
    
    
    
    23,109
    
    
    
    
    
    
    
    24,166GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    5
    
    
    
    1,912
    
    
    
    41,789
    
    
    
    
    
    
    
    43,706CLOSED RESTAURANT COSTS
    
    
    
    
    
    
    
    
    
    
    2,909
    
    
    
    
    
    
    
    2,909IMPAIRMENT OF ASSETS
    
    
    
    
    
    
    
    
    
    
    3,609
    
    
    
    
    
    
    
    3,609OPERATING INCOME (LOSS)
    
    
    (5
    )
    
    
    3,200
    
    
    
    43,863
    
    
    
    
    
    
    
    47,058INTEREST EXPENSE
    
    
    11,453
    
    
    
    2,199
    
    
    
    34,448
    
    
    
    
    
    
    
    48,100INTEREST INCOME
    
    
    
    
    
    
    (515
    )
    
    
    
    
    
    
    
    
    
    
    (515
    )LOSS RELATED TO REFINANCING
    
    
    856
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    856LOSS RELATED TO EARLY
EXTINGUISHMENT OF DEBT
    
    
    
    
    
    
    1,923
    
    
    
    
    
    
    
    
    
    
    
    1,923OTHER INCOME
    
    
    
    
    
    
    (935
    )
    
    
    
    
    
    
    
    
    
    
    (935
    )INCOME (LOSS) BEFORE
INCOME TAXES
    
    
    (12,314
    )
    
    
    528
    
    
    
    9,415
    
    
    
    
    
    
    
    (2,371
    )INCOME TAX EXPENSE
(BENEFIT)
    
    
    (3,237
    )
    
    
    162
    
    
    
    2,888
    
    
    
    
    
    
    
    (187
    )Net income (loss)
    
    $
    (9,077
    )
    
    $
    366
    
    
    $
    6,527
    
    
    $
    
    
    
    $
    (2,184
    )
 68




---



##### Table of Contents



Condensed Consolidating Statement of Operations
For the Year Ended June 28, 2006
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)RESTAURANT SALES
    
    $
    
    
    
    $
    44,287
    
    
    $
    918,874
    
    
    $
    
    
    
    $
    963,161RESTAURANT COSTS:Food
    
    
    
    
    
    
    15,788
    
    
    
    311,456
    
    
    
    
    
    
    
    327,244Labor
    
    
    
    
    
    
    13,194
    
    
    
    261,458
    
    
    
    
    
    
    
    274,652Direct and occupancy
    
    
    
    
    
    
    6,335
    
    
    
    221,345
    
    
    
    
    
    
    
    227,680Total restaurant costs
    
    
    
    
    
    
    35,317
    
    
    
    794,259
    
    
    
    
    
    
    
    829,576ADVERTISING EXPENSES
    
    
    
    
    
    
    1,409
    
    
    
    29,228
    
    
    
    
    
    
    
    30,637GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    6
    
    
    
    2,032
    
    
    
    42,160
    
    
    
    
    
    
    
    44,198SHAREHOLDERS RIGHTS
REPURCHASE
    
    
    757
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    757CLOSED RESTAURANT COSTS
    
    
    
    
    
    
    
    
    
    
    6,023
    
    
    
    
    
    
    
    6,023IMPAIRMENT OF ASSETS
    
    
    
    
    
    
    
    
    
    
    5,964
    
    
    
    
    
    
    
    5,964OPERATING INCOME (LOSS)
    
    
    (763
    )
    
    
    5,529
    
    
    
    41,240
    
    
    
    
    
    
    
    46,006INTEREST EXPENSE
    
    
    12,907
    
    
    
    2,360
    
    
    
    36,975
    
    
    
    
    
    
    
    52,242INTEREST INCOME
    
    
    
    
    
    
    (375
    )
    
    
    
    
    
    
    
    
    
    
    (375
    )LOSS RELATED TO REFINANCING
    
    
    
    
    
    
    647
    
    
    
    
    
    
    
    
    
    
    
    647OTHER INCOME
    
    
    
    
    
    
    (994
    )
    
    
    
    
    
    
    
    
    
    
    (994
    )INCOME (LOSS) BEFORE
INCOME TAXES
    
    
    (13,670
    )
    
    
    3,891
    
    
    
    4,265
    
    
    
    
    
    
    
    (5,514
    )INCOME TAX EXPENSE
(BENEFIT)
    
    
    (3,261
    )
    
    
    1,202
    
    
    
    1,317
    
    
    
    
    
    
    
    (742
    )Net income (loss)
    
    $
    (10,409
    )
    
    $
    2,689
    
    
    $
    2,948
    
    
    $
    
    
    
    $
    (4,772
    )
 69




---



##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the Year Ended June 30, 2004
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)OPERATING ACTIVITIES:Net income (loss)
    
    $
    (2,586
    )
    
    $
    (4,391
    )
    
    $
    14,947
    
    
    $
    
    
    
    $
    7,970Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    
    
    
    
    3,655
    
    
    
    30,152
    
    
    
    
    
    
    
    33,807Amortization of debt issuance costs
    
    
    
    
    
    
    82
    
    
    
    1,288
    
    
    
    
    
    
    
    1,370Net loss related to refinancing:Write-off of debt issuance costs
    
    
    
    
    
    
    4,201
    
    
    
    
    
    
    
    
    
    
    
    4,201Accretion of original issue discount
    
    
    1,227
    
    
    
    49
    
    
    
    773
    
    
    
    
    
    
    
    2,049Loss related to early extinguishment of debt
    
    
    
    
    
    
    5,275
    
    
    
    
    
    
    
    
    
    
    
    5,275Impairment of assets
    
    
    
    
    
    
    
    
    
    
    1,878
    
    
    
    
    
    
    
    1,878Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    1,200
    
    
    
    
    
    
    
    1,200Loss on disposal of assets
    
    
    
    
    
    
    72
    
    
    
    233
    
    
    
    
    
    
    
    305Changes in assets and liabilities:Receivables
    
    
    
    
    
    
    43,129
    
    
    
    (41,505
    )
    
    
    (1,859
    )
    
    
    (235
    )Inventories
    
    
    
    
    
    
    (428
    )
    
    
    (246
    )
    
    
    
    
    
    
    (674
    )Prepaid expenses and other assets
    
    
    
    
    
    
    (1,730
    )
    
    
    4,525
    
    
    
    
    
    
    
    2,795Accounts payable
    
    
    180
    
    
    
    (287
    )
    
    
    (390
    )
    
    
    
    
    
    
    (497
    )Accrued and other liabilities
    
    
    (1,101
    )
    
    
    (4,592
    )
    
    
    (3,005
    )
    
    
    
    
    
    
    (8,698
    )Income taxes payable/refundable
    
    
    (1,619
    )
    
    
    1,130
    
    
    
    233
    
    
    
    
    
    
    
    (256
    )Net cash provided by (used in) operating activities
    
    
    (3,899
    )
    
    
    46,165
    
    
    
    10,083
    
    
    
    (1,859
    )
    
    
    50,490INVESTING ACTIVITIES:Proceeds from sale leaseback transactions
    
    
    
    
    
    
    
    
    
    
    2,710
    
    
    
    
    
    
    
    2,710Purchase of property and equipment
    
    
    
    
    
    
    (1,432
    )
    
    
    (31,575
    )
    
    
    
    
    
    
    (33,007
    )Collections on notes receivable
    
    
    
    
    
    
    237
    
    
    
    576
    
    
    
    
    
    
    
    813Corporate cash advances (payments)
    
    
    
    
    
    
    (13,631
    )
    
    
    11,772
    
    
    
    1,859
    
    
    
    Acquisition of 20% minority interest in Tahoe Joes Inc
    
    
    
    
    
    
    
    
    
    
    (370
    )
    
    
    
    
    
    
    (370
    )Proceeds from sale (purchase) of other assets
    
    
    
    
    
    
    (237
    )
    
    
    1,708
    
    
    
    
    
    
    
    1,471Net cash provided by (used in) investing activities
    
    
    
    
    
    
    (15,063
    )
    
    
    (15,179
    )
    
    
    1,859
    
    
    
    (28,383
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    (10,377
    )
    
    
    (162,576
    )
    
    
    
    
    
    
    (172,953
    )Redemption of subordinated notes
    
    
    (27,364
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,364
    )Repurchase of common stock
    
    
    (380
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (380
    )Proceeds from issuance of common stock
    
    
    241
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    241Proceeds from issuance of senior discount notes
    
    
    75,073
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,073Unrestricted cash proceeds from credit facility
    
    
    
    
    
    
    11,718
    
    
    
    183,582
    
    
    
    
    
    
    
    195,300Initial restricted cash proceeds from credit facility
    
    
    
    
    
    
    2,082
    
    
    
    32,618
    
    
    
    
    
    
    
    34,700Restricted cash proceeds from credit facility available as
of year end
    
    
    
    
    
    
    (974
    )
    
    
    (15,254
    )
    
    
    
    
    
    
    (16,228
    )Use of restricted cash for early extinguishment of debt
    
    
    
    
    
    
    (1,108
    )
    
    
    (17,364
    )
    
    
    
    
    
    
    (18,472
    )Use of unrestricted cash for early extinguishment of debt
    
    
    
    
    
    
    (918
    )
    
    
    (14,382
    )
    
    
    
    
    
    
    (15,300
    )Dividends
    
    
    (40,836
    )
    
    
    (20,101
    )
    
    
    
    
    
    
    
    
    
    
    (60,937
    )Debt issuance costs
    
    
    (2,847
    )
    
    
    (163
    )
    
    
    (2,560
    )
    
    
    
    
    
    
    (5,570
    )Net cash provided by (used in) investing activities
    
    
    3,887
    
    
    
    (19,841
    )
    
    
    4,064
    
    
    
    
    
    
    
    (11,890
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (12
    )
    
    
    11,261
    
    
    
    (1,032
    )
    
    
    
    
    
    
    10,217CASH AND CASH EQUIVALENTS, beginning of period
    
    
    108
    
    
    
    8,511
    
    
    
    7,236
    
    
    
    
    
    
    
    15,855CASH AND CASH EQUIVALENTS, end of period
    
    $
    96
    
    
    $
    19,772
    
    
    $
    6,204
    
    
    $
    
    
    
    $
    26,072
 70




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##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the Year Ended June 29, 2005
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)OPERATING ACTIVITIES:Net income (loss)
    
    $
    (9,077
    )
    
    $
    366
    
    
    $
    6,527
    
    
    $
    
    
    
    $
    (2,184
    )Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    
    
    
    
    3,214
    
    
    
    29,033
    
    
    
    
    
    
    
    32,247Amortization of debt issuance costs
    
    
    315
    
    
    
    64
    
    
    
    1,007
    
    
    
    
    
    
    
    1,386Accretion of original issue discount
    
    
    11,139
    
    
    
    46
    
    
    
    721
    
    
    
    
    
    
    
    11,906Loss related to early extinguishment of debt
    
    
    
    
    
    
    1,923
    
    
    
    
    
    
    
    
    
    
    
    1,923Impairment of assets
    
    
    
    
    
    
    
    
    
    
    3,609
    
    
    
    
    
    
    
    3,609Deferred income taxes
    
    
    (2,979
    )
    
    
    (48
    )
    
    
    (753
    )
    
    
    
    
    
    
    (3,780
    )Loss on disposal of assets
    
    
    
    
    
    
    
    
    
    
    2,280
    
    
    
    
    
    
    
    2,280Changes in assets and liabilities:Receivables
    
    
    
    
    
    
    40,610
    
    
    
    (39,643
    )
    
    
    (636
    )
    
    
    331Inventories
    
    
    
    
    
    
    (38
    )
    
    
    (645
    )
    
    
    
    
    
    
    (683
    )Prepaid expenses and other assets
    
    
    (4
    )
    
    
    (1,274
    )
    
    
    204
    
    
    
    
    
    
    
    (1,074
    )Accounts payable
    
    
    (180
    )
    
    
    1,544
    
    
    
    340
    
    
    
    
    
    
    
    1,704Accrued and other liabilities
    
    
    
    
    
    
    1,787
    
    
    
    764
    
    
    
    
    
    
    
    2,551Income taxes payable/refundable
    
    
    (258
    )
    
    
    4,336
    
    
    
    (1,619
    )
    
    
    
    
    
    
    2,459Net cash provided by (used in) operating activities
    
    
    (1,044
    )
    
    
    52,530
    
    
    
    1,825
    
    
    
    (636
    )
    
    
    52,675INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    
    
    
    
    (1,601
    )
    
    
    (27,530
    )
    
    
    
    
    
    
    (29,131
    )Collections on notes receivable
    
    
    
    
    
    
    733
    
    
    
    
    
    
    
    
    
    
    
    733Corporate cash advances (payments)
    
    
    
    
    
    
    (53,499
    )
    
    
    52,863
    
    
    
    636
    
    
    
    (Purchase) sale of other assets
    
    
    32
    
    
    
    (733
    )
    
    
    628
    
    
    
    
    
    
    
    (73
    )Net cash provided by (used in) investing activities
    
    
    32
    
    
    
    (55,100
    )
    
    
    25,961
    
    
    
    636
    
    
    
    (28,471
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    (1,787
    )
    
    
    (27,994
    )
    
    
    
    
    
    
    (29,781
    )Redemption of subordinated notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase of common stock
    
    
    (284
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (284
    )Proceeds from issuance of common stock
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15Reduction of restricted cash available for early
extinguishment of debt
    
    
    
    
    
    
    974
    
    
    
    15,254
    
    
    
    
    
    
    
    16,228Use of restricted cash for early extinguishment of debt
    
    
    
    
    
    
    (944
    )
    
    
    (14,792
    )
    
    
    
    
    
    
    (15,736
    )Dividends
    
    
    1,290
    
    
    
    (1,290
    )
    
    
    
    
    
    
    
    
    
    
    Debt issuance costs
    
    
    (56
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56
    )Net cash provided by (used in) investing activities
    
    
    965
    
    
    
    (3,047
    )
    
    
    (27,532
    )
    
    
    
    
    
    
    (29,614
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (47
    )
    
    
    (5,617
    )
    
    
    254
    
    
    
    
    
    
    
    (5,410
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    96
    
    
    
    19,771
    
    
    
    6,205
    
    
    
    
    
    
    
    26,072CASH AND CASH EQUIVALENTS, end of period
    
    $
    49
    
    
    $
    14,154
    
    
    $
    6,459
    
    
    $
    
    
    
    $
    20,662
 71




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##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the Year Ended June 28, 2006
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)OPERATING ACTIVITIES:Net income (loss)
    
    $
    (10,409
    )
    
    $
    2,689
    
    
    $
    2,948
    
    
    $
    
    
    
    $
    (4,772
    )Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    
    
    
    
    2,907
    
    
    
    29,160
    
    
    
    
    
    
    
    32,067Amortization of debt issuance costs
    
    
    354
    
    
    
    71
    
    
    
    1,107
    
    
    
    
    
    
    
    1,532Accretion of original issue discount
    
    
    12,552
    
    
    
    47
    
    
    
    737
    
    
    
    
    
    
    
    13,336Impairment of assets
    
    
    
    
    
    
    
    
    
    
    5,964
    
    
    
    
    
    
    
    5,964Deferred income taxes
    
    
    (3,225
    )
    
    
    (3
    )
    
    
    (51
    )
    
    
    
    
    
    
    (3,279
    )Loss on disposal of assets
    
    
    
    
    
    
    
    
    
    
    1,218
    
    
    
    
    
    
    
    1,218Changes in assets and liabilities:Receivables
    
    
    (1,885
    )
    
    
    52,985
    
    
    
    (50,568
    )
    
    
    1,221
    
    
    
    1,753Inventories
    
    
    
    
    
    
    (18
    )
    
    
    (685
    )
    
    
    
    
    
    
    (703
    )Prepaid expenses and other assets
    
    
    1
    
    
    
    1,562
    
    
    
    (280
    )
    
    
    
    
    
    
    1,283Accounts payable
    
    
    
    
    
    
    4,137
    
    
    
    (71
    )
    
    
    (1,877
    )
    
    
    2,189Accrued and other liabilities
    
    
    
    
    
    
    (1,547
    )
    
    
    277
    
    
    
    
    
    
    
    (1,270
    )Income taxes payable/refundable
    
    
    1,841
    
    
    
    (1,854
    )
    
    
    
    
    
    
    
    
    
    
    (13
    )Net cash provided by (used in) operating activities
    
    
    (771
    )
    
    
    60,976
    
    
    
    (10,244
    )
    
    
    (656
    )
    
    
    49,305INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    
    
    
    
    (1,721
    )
    
    
    (29,625
    )
    
    
    
    
    
    
    (31,346
    )Collection on notes receivable
    
    
    
    
    
    
    1,062
    
    
    
    
    
    
    
    
    
    
    
    1,062Corporate cash advances (payments)
    
    
    
    
    
    
    (57,265
    )
    
    
    56,609
    
    
    
    656
    
    
    
    Purchase of other assets
    
    
    (1
    )
    
    
    (1,347
    )
    
    
    (1,090
    )
    
    
    
    
    
    
    (2,438
    )Net cash provided by (used in) investing activities
    
    
    (1
    )
    
    
    (59,271
    )
    
    
    25,894
    
    
    
    656
    
    
    
    (32,722
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    (1,021
    )
    
    
    (15,995
    )
    
    
    
    
    
    
    (17,016
    )Repurchase of common stock
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )Dividends
    
    
    770
    
    
    
    (770
    )
    
    
    
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities.
    
    
    760
    
    
    
    (1,791
    )
    
    
    (15,995
    )
    
    
    
    
    
    
    (17,026
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (12
    )
    
    
    (86
    )
    
    
    (345
    )
    
    
    
    
    
    
    (443
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    49
    
    
    
    14,154
    
    
    
    6,459
    
    
    
    
    
    
    
    20,662CASH AND CASH EQUIVALENTS, end of period
    
    $
    37
    
    
    $
    14,068
    
    
    $
    6,114
    
    
    $
    
    
    
    $
    20,219
 72




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##### Table of Contents



12. Interim Financial Results (Unaudited)
  For the Year Ended June 28, 2006First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterRevenues
    
    $
    226,738
    
    
    $
    218,274
    
    
    $
    292,584
    
    
    $
    225,565Operating income
    
    
    17,237
    
    
    
    5,745
    
    
    
    11,189
    
    
    
    11,835Income (loss) before income taxes
    
    
    5,001
    
    
    
    (5,760
    )
    
    
    (4,702
    )
    
    
    (53
    )Net income (loss)
    
    $
    3,124
    
    
    $
    (3,919
    )
    
    $
    (1,289
    )
    
    $
    (2,688
    )
 For the Year Ended June 29, 2005First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterRevenues
    
    $
    217,208
    
    
    $
    205,175
    
    
    $
    277,567
    
    
    $
    226,831Operating income
    
    
    14,391
    
    
    
    9,084
    
    
    
    14,070
    
    
    
    9,513Income (loss) before income taxes
    
    
    1,909
    
    
    
    (2,457
    )
    
    
    (588
    )
    
    
    (1,235
    )Net income (loss)
    
    $
    1,096
    
    
    $
    (1,389
    )
    
    $
    (332
    )
    
    $
    (1,559
    )
    73




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##### Table of Contents



1 4
 13. Significant Events
 Appointment of Chief Executive Officer
  New Holding Company
  7 ¤ 8
 7 8 7 8 7 8 7 8 7 8 7 8
 74




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##### Table of Contents



Shareholders Rights Repurchase
  14. Subsequent Events
 Entry into a Material Definitive Agreement
     75




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##### Table of Contents



Asset Acquisition
  Tender Offer
 7 8 1 4 7 8
 76




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
   77




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  Name
    
    Age
    
    PositionFrederick J. Iseman
    
    
    53
    
    
    Chairman of the Board and Director of Buffets HoldingsRoe H. Hatlen
    
    
    62
    
    
    Vice Chairman of the Board and Director of Buffets HoldingsR. Michael Andrews, Jr.
    
    
    42
    
    
    Chief Executive OfficerMario O. Lee
    
    
    46
    
    
    Executive Vice President of OperationsA. Keith Wall
    
    
    54
    
    
    Executive Vice President and Chief Financial OfficerKarlin A. Linhardt
    
    
    44
    
    
    Executive Vice President of MarketingFred P. Williams
    
    
    49
    
    
    Executive Vice President of Concept Development and Real
EstateH. Thomas Mitchell
    
    
    49
    
    
    Executive Vice President, General Counsel and SecretaryJane L. Binzak
    
    
    39
    
    
    Executive Vice President of Human ResourcesLinda J. Allison
    
    
    52
    
    
    Executive Vice President of Operations ServicesSteven M. Lefkowitz
    
    
    42
    
    
    Director of Buffets HoldingsRobert A. Ferris
    
    
    64
    
    
    Director of Buffets HoldingsDavid S. Lobel
    
    
    53
    
    
    Director of Buffets HoldingsRobert M. Rosenberg
    
    
    68
    
    
    Director of Buffets Holdings
 Frederick J. Iseman
 Roe H. Hatlen
 R. Michael Andrews, Jr.
 78




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##### Table of Contents



Mario O. Lee
 A. Keith Wall
 Karlin A. Linhardt
 Fred P. Williams
 H. Thomas Mitchell
 Jane L. Binzak
 Linda J. Allison
 79




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##### Table of Contents



Steven M. Lefkowitz
 Robert A. Ferris
 David S. Lobel
 Robert M. Rosenberg
  Board of Directors
   80




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##### Table of Contents



Audit Committee Financial Expert
  
 ITEM 11. EXECUTIVE COMPENSATION
  Annual CompensationOther AnnualFiscal
    
    
    
    
    
    
    
    
    
    Compensation
    
    All OtherName and Principal Position
    
    Year
    
    Salary($)
    
    Bonus($)
    
    ($) (1)
    
    CompensationCurrentR. Michael Andrews, Jr.
    
    
    2006
    
    
    
    364,618
    
    
    
    
    
    
    
    
    
    
    
    Chief Executive Officer
    
    
    2005
    
    
    
    284,806
    
    
    
    
    
    
    
    31,152
    (3)
    
    
    and Director (2)
    
    
    2004
    
    
    
    224,640
    
    
    
    
    
    
    
    
    
    
    
    Karlin A. Linhardt
    
    
    2006
    
    
    
    210,462
    
    
    
    97,513
    
    
    
    91,083
    (5)
    
    
    Executive Vice President
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    of Marketing (4)
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mario O. Lee
    
    
    2006
    
    
    
    176,615
    
    
    
    47,828
    
    
    
    36,770
    (7)
    
    
    Executive Vice President
    
    
    2005
    
    
    
    117,007
    
    
    
    80,394
    
    
    
    21,870
    (8)
    
    
    of Operations (6)
    
    
    2004
    
    
    
    113,507
    
    
    
    95,454
    
    
    
    17,261
    
    
    
    Fred P. Williams
    
    
    2006
    
    
    
    220,000
    
    
    
    
    
    
    
    65,434
    (10)
    
    
    Executive Vice President of Concept
    
    
    2005
    
    
    
    191,346
    
    
    
    
    
    
    
    21,267
    (11)
    
    
    Development and Real Estate (9)
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    H. Thomas Mitchell
    
    
    2006
    
    
    
    203,154
    
    
    
    
    
    
    
    
    
    
    
    Executive Vice President,
    
    
    2005
    
    
    
    200,154
    
    
    
    
    
    
    
    
    
    
    
    General Counsel and Secretary
    
    
    2004
    
    
    
    194,324
    
    
    
    
    
    
    
    
    
    
    
    FormerRoe H. Hatlen
    
    
    2006
    
    
    
    141,539
    
    
    
    
    
    
    
    18,486
    (13)
    
    
    243,462
    (14)Former President, Chief Executive
    
    
    2005
    
    
    
    261,539
    
    
    
    
    
    
    
    
    
    
    
    238,000
    (14)Officer and Director (12)
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    257,000
    (14)Glenn D. Drasher
    
    
    2006
    
    
    
    37,401
    
    
    
    
    
    
    
    
    
    
    
    Former Executive Vice President
    
    
    2005
    
    
    
    231,530
    
    
    
    
    
    
    
    
    
    
    
    237,796
    (16)of Marketing (15)
    
    
    2004
    
    
    
    224,786
    
    
    
    
    
    
    
    
    
    
    
    Dale W. Maxfield
    
    
    2006
    
    
    
    163,457
    
    
    
    
    
    
    
    
    
    
    
    695,726
    (18)Former Executive Vice President
    
    
    2005
    
    
    
    223,754
    
    
    
    
    
    
    
    
    
    
    
    of Operations (17)
    
    
    2004
    
    
    
    186,849
    
    
    
    16,000
    
    
    
    63,510
    (19)
    
    
    
 
 (1)
    
    In accordance with SEC rules, this column includes perquisites exceeding the smaller of
$50,000 or ten percent of the total annual salary and bonus for the named executive officer. 81




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##### Table of Contents



(2)
    
    Mr. Andrews was promoted from Executive Vice President and Chief Operating Officer to Chief
Executive Officer in November 2005. Mr. Andrews was promoted from Executive Vice President
and Chief Financial Officer to Executive Vice President and Chief Operating Officer in
November 2004.(3)
    
    Amount includes $15,813 of car allowance.(4)
    
    Mr. Linhardt joined the company in September 2005 as Executive Vice President of Marketing.(5)
    
    Amount includes $75,832 of relocation allowance.(6)
    
    Mr. Lee was promoted from Regional Vice President to Executive Vice President of Operations
in January 2006.(7)
    
    Amount includes $12,533 of auto allowance and $14,403 of commuting allowance.(8)
    
    Amount includes $13,503 of auto allowance and $6,001 of health insurance allowance.(9)
    
    Mr. Williams rejoined the company in July 2004 as Divisional Vice President of Operations.
He was promoted to Executive Vice President of Concept Development in November 2004 and became
Executive Vice President of Concept Development and Real Estate in July 2005.(10)
    
    Amount includes $44,314 of commuting allowance.(11)
    
    Amount includes $13,000 of auto allowance.(12)
    
    Mr. Hatlen replaced Kerry A. Kramp as President and Chief Executive Officer in November 2004.
Mr. Hatlen was replaced as Chief Executive Officer by R. Michael Andrews, Jr. in November
2005.(13)
    
    Amount includes $10,000 of auto expense allowance and $5,134 of health insurance allowance.(14)
    
    Amount is related to an advisory agreement as summarized below and discussed in Item 13
Certain Relationships and Related Transactions.(15)
    
    Mr. Drasher separated from the company in August 2005. His separation was communicated in
fiscal 2005 and related severance was accrued in that fiscal year.(16)
    
    Amount represents severance pay accrued as of June 29, 2005.(17)
    
    Mr. Maxfield separated from the company in January 2006. Mr. Maxfield was promoted from
Senior Vice President of Operations to Executive Vice President of Operations in November
2004.(18)
    
    Amount represents compensation expense recognized in conjunction with the repurchase of
certain rights associated with shares of common stock held by Mr. Maxfield at the time of his
separation from the Company.(19)
    
    Amount includes $46,206 of relocation expense allowance. Employee Benefit Plans
  Severance Protection Agreements
  82




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Amendment to Advisory Agreement with Roe H. Hatlen
        83




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Cash and Phantom Incentive Unit Award Agreements
     Equity Participation Plan
  84




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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  Name of Beneficial Owner
    
    Shares
    
    PercentageCaxton-Iseman Investments L.P.(1)
    
    
    2,501,438
    
    
    
    80.6Sentinel Capital Partners II, L.P.(2)
    
    
    225,106
    
    
    
    7.3Frederick J. Iseman(1)
    
    
    2,501,438
    
    
    
    80.6David S. Lobel
    
    
    225,106
    
    
    
    7.3Roe H. Hatlen(3)
    
    
    195,452
    
    
    
    6.3R. Michael Andrews, Jr. (4)
    
    
    89,375
    
    
    
    2.9H. Thomas Mitchell
    
    
    20,000
    
    
    
    0.6Fred P. Williams (5)
    
    
    20,000
    
    
    
    0.6Mario O. Lee (6)
    
    
    5,000
    
    
    
    0.2Robert M. Rosenberg (4)
    
    
    4,610
    
    
    
    0.1Glenn D. Drasher (7)
    
    
    2,251
    
    
    
    0.1Karlin A. Linhardt
    
    
    
    
    
    
    Dale W. Maxfield
    
    
    
    
    
    
    Steven M. Lefkowitz
    
    
    
    
    
    
    Robert A. Ferris
    
    
    
    
    
    
    All executive officers and directors as a group (16 persons)
    
    
    3,068,857
    
    
    
    98.9
 
 (1)
    
    By virtue of Mr. Isemans indirect control of Caxton-Iseman Investments L.P., he is deemed
to beneficially own the 2,501,438 shares of common stock of Buffets Restaurants Holdings held
by that entity. The address of Caxton-Iseman Investments L.P. and Mr. Iseman is c/o
Caxton-Iseman Capital, Inc., 667 Madison Avenue, New York, New York, 10021. By virtue of
Caxton-Iseman Investments L.P.s direct ownership interest in Buffets Restaurants Holdings,
Mr. Iseman is deemed to beneficially own the same number of shares of Buffets Holdings.(2)
    
    By virtue of Mr. Lobels indirect control of Sentinel Capital Partners II, L.P., he is
deemed to beneficially own the 225,106 shares of common stock of Buffets Restaurants Holdings
held by that entity. The address of Sentinel Capital Partners II, L.P. is 777 Third Avenue,
32nd Floor, New York, New York, 10017. By virtue of Sentinel Capital Partners II, L.P.s
direct ownership interest in Buffets Restaurants Holdings, Mr. Lobel is deemed to beneficially
own the same number of shares of Buffets Holdings.(3)
    
    Mr. Hatlen has sole voting and dispositive power over 65,012 shares of common stock of
Buffets Restaurants Holdings. Mr. 85




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Hatlen may be deemed to be the beneficial owner of 33,340
shares of common stock of Buffets Restaurants Holdings held by Kari E. Hatlen, 33,339 shares
of common stock of Buffets Restaurants Holdings held by Erik R. Hatlen, 22,506 shares of
common stock of Buffets Restaurants Holdings owned by Lars C. Hatlen Trust and 10,833 shares
of common stock of Buffets Restaurants Holdings owned by Lars C. Hatlen. By virtue of Mr.
Hatlens control over Eventyr Investments Limited Partnership, he is deemed to beneficially own the 30,422 shares
of common stock of Buffets Restaurants Holdings held by that entity. By virtue of Mr.
Hatlens direct and beneficial ownership interests
in Buffets Restaurants Holdings, Mr. Hatlen is deemed to beneficially own the same number of
shares of Buffets Holdings.(4)
    
    Mr. Andrews also holds 32,500 phantom stock units of Buffets Holdings.(5)
    
    Mr. Williams also owned options to purchase 2,500 shares of common stock of Buffets Holdings
and holds 7,500 phantom stock units of Buffets Holdings.(6)
    
    Mr. Lee also owned options to purchase 2,500 shares of common stock of Buffets Holdings and
holds 2,500 phantom stock units of Buffets Holdings.(7)
    
    Mr. Rosenberg also owned options to purchase 12,600 shares of common stock of Buffets
Holdings.(8)
    
    Mr. Linhardt holds 32,500 phantom stock units of Buffets Holdings.(9)
    
    Mr. Drasher separated from the company in August 2005.  Equity Compensation Plan InformationNumber of securitiesNumber of
    
    
    Weighted-
    
    
    remaining available forsecurities to be
    
    
    average exercise
    
    
    future issuance underissued upon exercise
    
    
    price of
    
    
    equity compensationof outstanding
    
    
    outstanding
    
    
    plans (excludingoptions, warrants
    
    
    options, warrants
    
    
    securities reflected inPlan Category
    
    and rights
    
    
    and rights
    
    
    column (A))Equity compensation
plans approved by
security holders
    
    
    77,823
    
    
    $
    14.34
    
    
    
    35,927Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    77,823
    
    
    $
    14.34
    
    
    
    35,927
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 Founder Advisory Agreements
  Caxton-Iseman Capital Advisory Agreement
  86




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Sentinel Capital Advisory Agreement
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  For the Year EndedJune 30,
    
    
    June 29,
    
    
    June 28,2004
    
    
    2005
    
    
    2006(In thousands)Audit fees (1)
    
    $
    286
    
    
    $
    403
    
    
    $
    265Audit-related fees (2)
    
    
    43
    
    
    
    10
    
    
    
    18Tax fees (3)
    
    
    57
    
    
    
    67
    
    
    
    61All other fees
    
    
    
    
    
    
    
    
    
    
    Total fees
    
    $
    386
    
    
    $
    480
    
    
    $
    344
 
 (1)
    
    Audit fees are comprised of annual audit fees, quarterly review fees, comfort letter fees,
consent fees, fees associated with the review of prospectuses and consultation fees on
accounting issues.(2)
    
    Audit-related fees for fiscal year 2004 are comprised of annual audits and quarterly reviews
of our subsidiaries. Audit-related fees for fiscal years 2005 and 2006 related to the
issuance of a separate audit report on the consolidated financial statements of Buffets, Inc.(3)
    
    Tax fees are comprised of tax compliance and consultation fees.   87




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PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 (a)
    
    Documents filed as part of this report:
 1.
    
    The following Financial Statements of the Company are included
in Part II, Item 8 of this Annual Report on Form 10-K:
 Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of June 29, 2005 and June 28, 2006.Consolidated Statements of Operations for the Year Ended June 30, 2004, for
the Year Ended June 29, 2005 and for the Year Ended June 28, 2006.Consolidated Statements of Shareholders Equity (Deficit) for the Year Ended
July 2, 2003, for the Year Ended June 30, 2004, for the Year Ended June 29,
2005 and for the Year Ended June 28, 2006Consolidated Statements of Cash Flows for the Year Ended June 30, 2004, for
the Year Ended June 29, 2005, and for the Year Ended June 28, 2006.Notes to Consolidated Financial Statements2.
    
    Schedules to Financial Statements:All financial statement schedules have been omitted because they are either
inapplicable or the information required is provided in the Companys
Consolidated Financial Statements and Notes thereto, included in Part II,
Item 8 of this Annual Report on Form 10-K.3.
    
    See Index to Exhibits on page 91 of this report.
 88




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SIGNATURES
  BUFFETS HOLDINGS, INC.Date: September 20, 2006
    By:
    /s/ R. Michael Andrews, Jr.R. Michael Andrews, Jr.Chief Executive Officer
(Principal Executive Officer)By:
    /s/ A. Keith WallA. Keith WallChief Financial Officer
(Principal Financial and
Accounting Officer) 89




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##### Table of Contents



POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/s/ Roe H. Hatlen

Roe H. Hatlen
    
    Vice Chairman and Director
    
    September 20, 2006/s/ R. Michael Andrews, Jr.

R. Michael Andrews, Jr.
    
    Chief Executive Officer
(Principal Executive Officer)
    
    September 20, 2006/s/ A. Keith Wall

A. Keith Wall
    
    Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
    
    September 20, 2006/s/ Robert A. Ferris

Robert A. Ferris
    
    Director
    
    September 20, 2006/s/ Frederick J. Iseman

Frederick J. Iseman
    
    Director (Chairman of the
Board of Directors)
    
    September 20, 2006/s/ Steven M. Lefkowitz

Steven M. Lefkowitz
    
    Director
    
    September 20, 2006/s/ David S. Lobel

David S. Lobel
    
    Director
    
    September 20, 2006/s/ Robert M. Rosenberg

Robert M. Rosenberg
    
    Director
    
    September 20, 2006
 90




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Description2.1*
    
    Agreement and Plan of Merger dated as of July 24, 2006 among
Ryans Restaurant Group, Inc., Buffets, Inc. and Buffets
Southeast, Inc. (incorporated by reference to Exhibit 2.1 to
Buffets Holdings, Inc.s Current Report on Form 8-K, filed with
the Commission on July 25, 2006 (SEC file No, 333-116897)).3.1*
    
    Amended Certificate of Incorporation of Buffets Holdings, Inc.
(incorporated by reference to Exhibit 3.1 to Buffets Holdings,
Inc.s Registration Statement on Form S-4, filed with the
Commission on June 25, 2004 (SEC file No. 333-116897)).3.2*
    
    By-Laws of Buffets Holdings, Inc. (incorporated by reference to
Exhibit 3.2 to Buffets Holdings, Inc.s Registration Statement
on Form S-4, filed with the Commission on June 25, 2004 (SEC
file No. 333-116897)).4.1*
    
    Indenture, dated as of June 28, 2002, among Buffets, Inc., the
Guarantors and U.S. Bank National Association, as Trustee
(incorporated by reference to Exhibit 4.1 to Buffets, Inc.s
Registration Statement on Form S-4, filed with the Commission on
August 16, 2002 (SEC file No. 333-98301)).4.2*
    
    Form of Exchange Note (incorporated by reference to Exhibit A to
Exhibit 4.1 to Buffets, Inc.s Registration Statement on Form
S-4, filed with the Commission on August 16, 2002 (SEC file No.
333-98301)).4.3*
    
    First Supplemental Indenture (Subsidiary Guaranty), dated as
of September 26, 2003, among HomeTown Buffet Merger Company,
Inc., Buffets, Inc. and U.S. Bank National Association, as
trustee (incorporated by reference to Exhibit 4.1 to Buffets,
Inc.s Quarterly Report on Form 10-Q filed with the Commission
on November 7, 2003 (SEC file No. 033-00171)).4.4*
    
    Second Supplemental Indenture, dated as of November 5, 2003,
between Tahoe Joes, Inc. and U.S. Bank National Association, as
trustee (incorporated by reference to Exhibit 4.2 to Buffets,
Inc.s Quarterly Report on Form 10-Q filed with the Commission
on November 7, 2003 (SEC file No. 033-00171)).4.5*
    
    Third Supplemental Indenture, dated as of December 10, 2003
among NSHE Bennington, LLC, Buffets, Inc. and U.S. Bank National
Association, as trustee (incorporated by reference to Exhibit
4.1 to Buffets, Inc.s Quarterly Report on Form 10-Q filed with
the Commission on January 27, 2004 (SEC file No. 033-00171)).4.6*
    
    Fourth Supplemental Indenture, dated as of February 20, 2004
among Buffets Holdings, Inc., Buffets, Inc., and U.S. Bank
National Association, as trustee (incorporated by reference to
Exhibit 4.1 to Buffets, Inc.s Quarterly Report on Form 10-Q
filed with the Commission on May 12, 2004 (SEC file No.
033-00171)).4.7*
    
    Indenture, dated as of May 18, 2004, between Buffets Holdings,
Inc. and U.S. Bank National Association, as Trustee
(incorporated by reference to Exhibit 4.1 to Buffets Holdings,
Inc.s Registration Statement on Form S-4, filed with the
Commission on June 25, 2004 (SEC file No. 333-116897)).4.8*
    
    Form of Exchange Security (incorporated by reference to Exhibit
B to Exhibit 4.1 to Buffets Holdings, Inc.s Registration
Statement on Form S-4, filed with the Commission on June 25,
2004 (SEC file No. 333-116897)).10.1*
    
    Credit Agreement, dated as of June 28, 2002, among Buffets,
Inc., Buffets Holdings, Inc., the lenders party thereto and
Credit Suisse First Boston, as administrative agent and as
collateral agent for the lenders (incorporated by reference to
Exhibit 10.1 to Buffets, Inc.s Registration Statement on Form
S-4, filed with the Commission on August 16, 2002 (SEC file No.
333-98301)).10.2*
    
    Amendment Agreement, dated as of February 20, 2004, to the
Credit Agreement dated as of July 28, 2002, among Buffets, Inc.,
Buffets Holdings, Inc., the Subsidiaries named therein, the
Lenders named therein and Credit Suisse First Boston, as
Administrative Agent and Collateral Agent (incorporated by
reference to Exhibit 10.1 to Buffets, Inc.s Quarterly Report on
Form 10-Q filed with the Commission on May 12, 2004 (SEC file
No. 033-00171)).
 91




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##### Table of Contents



ExhibitNumber
    
    Description10.3*
    
    Amendment No. 1, dated as of April 6, 2005, to the Amended and
Restated Credit Agreement dated as of February 20, 2004, among
Buffets, Inc., Buffets Holdings, Inc., the Lenders from time to
time party thereto and Credit Suisse (formerly known as Credit
Suisse First Boston), as Administrative Agent and Collateral
Agent (incorporated by reference to Exhibit 10.1 to Buffets
Holdings, Inc.s Current Report on Form 8-K, filed with the
Commission on July 28, 2005 (SEC File No. 333-116897)).10.4*
    
    Management and Fee Agreement, dated October 2, 2000, by and
among Buffets, Inc. and Caxton-Iseman Capital, Inc.
(incorporated by reference to Exhibit 10.2 to Buffets, Inc.s
Registration Statement on Form S-4, filed with the Commission on
August 16, 2002 (SEC file No. 333-98301)).10.5*
    
    Amended and Restated Management and Fee Agreement, dated as of
February 20, 2004, by and between Buffets, Inc. and CxCIC LLC
(the Amended Management Agreement) (incorporated by reference
to Exhibit 10.2 to Buffets Inc.s Quarterly Report on Form 10-Q
filed with the Commission on May 12, 2004 (SEC file No.
033-00171)).10.6*
    
    Management and Fee Agreement, dated October 2, 2000, by and
between Buffets, Inc. and Sentinel Capital Partners, L.L.C.
(incorporated by reference to Exhibit 10.3 to Buffets, Inc.s
Registration Statement on Form S-4, filed with the Commission on
August 16, 2002 (SEC file No. 333-98301)).10.7*
    
    Advisory Agreement, dated September 28, 2000, by and among
Buffets Holdings, Inc., Buffets, Inc. and Roe E. Hatlen
(incorporated by reference to Exhibit 10.4 to Buffets, Inc.s
Registration Statement on Form S-4, filed with the Commission on
August 16, 2002 (SEC file No. 333-98301)).10.8*
    
    Amendment No. 1, dated as of December 13, 2005, to the Advisory
Agreement between Buffets Holdings, Inc. and Roe H. Hatlen,
dated as of September 28, 2000 (incorporated by reference to
Exhibit 10.1 to Buffets Holdings, Inc.s Current Report on Form
8-K, filed with the Commission on December 16, 2005 (SEC file
No. 333-116897)).10.9*
    
    Description of Material Terms of Buffets, Inc.s fiscal 2006
Incentive Based Compensation Program for Executives
(incorporated by reference to Exhibit 10.1 to Buffets Holdings,
Inc.s Current Report on Form 8-K, filed with the Commission on
November 10, 2005 (SEC file No. 333-116897)).10.10*
    
    Form of Buffets Holdings, Inc. Cash and Phantom Incentive Unit
Award Agreement (incorporated by reference to Exhibit 10.2 to
Buffets Holdings, Inc.s Current Report on Form 8-K, filed with
the Commission on December 16, 2005 (SEC file No. 333-116897)).10.11*
    
    Form of Buffets Holdings, Inc. Severance Protection Agreement
(incorporated by reference to Buffets Holdings, Inc.s Current
Report on Form 8-K, filed with the Commission on December 16,
2005 (SEC file No. 333-116897)).10.12*
    
    Contribution Agreement, dated as of December 29, 2005, among
Buffets Holdings, Inc., Caxton-Iseman Investments, L.P.,
Sentinel Capital Partners II, L.P., members of Buffets Holdings
senior management and Buffets Restaurants Holdings, Inc.
(incorporated by reference to Exhibit 10.1 to Buffets Holdings,
Inc.s Current Report on Form 8-K, filed with the Commission on
December 30, 2005 (SEC file No. 333-116897)).14.1*
    
    Code of Ethics (incorporated by reference to Exhibit 14.1 to
Buffets Holdings, Inc.s Annual Report on Form 10-K, filed with
the Commission on September 28, 2004 (SEC File No.
333-116897)).21*
    
    List of Subsidiaries of Buffets Holdings, Inc. (incorporated by
reference to Exhibit 10.1 to Buffets Holdings, Inc.s Current
Report on Form 8-K, filed with the Commission on July 28, 2005
(SEC File No. 333-116897)).24
    
    Powers of Attorney (included on signature pages of this Part II).31.1
    
    Certification of Principal Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Principal Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Previously provided or incorporated by reference. 92