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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 29, 2005
 Commission file number: 333-116897
 BUFFETS HOLDINGS, INC.
  Delaware
    
    22-3754018(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)
 1460 Buffet Way
Eagan, Minnesota
    
    55121(Address of principal
executive offices)
    
    (Zip Code)
 (651) 994-8608
 þ o
 o þ
 o þ




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TABLE OF CONTENTS
 Item
    
    PagePART I1. Business
    
    
    12. Properties
    
    
    103. Legal Proceedings
    
    
    134. Submission of Matters to a Vote of Security Holders
    
    
    13PART II5. Market for the Registrants Common Stock and Related Stockholder Matters
    
    
    146. Selected Financial Data
    
    
    157. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    167A. Quantitative and Qualitative Disclosures About Market Risks
    
    
    288. Financial Statements and Supplementary Data
    
    
    319. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    679A. Controls and Procedures
    
    
    67PART III10. Directors and Executive Officers of the Registrant
    
    
    6811. Executive Compensation
    
    
    7012. Security Ownership of Certain Beneficial Owners and Management
    
    
    7213. Certain Relationships and Related Transactions
    
    
    7314. Principal Accountant Fees and Services
    
    
    74PART IV15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
    
    
    75Severance Protection AgreementsStatement of Computation of Ratios of Earnings to Fixed ChargesCertification of Principal Executive Officer Pursuant to Section 302Certification of Principal Financial Officer Pursuant to Section 302Certification of Principal Executive Officer Pursuant to Section 906Certification of Principal Financial Officer Pursuant to Section 906




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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
      1




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Our Background
   Restaurant Operations and Controls
     Management Training
  2




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Research and Development, Menu Selection and Purchasing
    Franchising and Joint Ventures
  3




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Advertising and Promotion
    Competition
  Regulation
   4




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Environmental Matters
  Employees
   5




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Risk Factors/Forward-Looking Statements
  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 .
  6




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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.
  7




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We face risks associated with government regulations.
    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.
   8




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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.
  9




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ITEM 2. PROPERTIES
 Restaurant Locations
   10




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##### Table of Contents



Number ofCompany-
    
    
    Number ofOperated
    
    
    Franchised
    
    
    Total Number ofState
    
    Restaurants
    
    
    Restaurants
    
    
    RestaurantsArizona
    
    
    5
    
    
    
    8
    
    
    
    13California
    
    
    95
    
    
    
    1
    
    
    
    96Colorado
    
    
    11
    
    
    
    1
    
    
    
    12Connecticut
    
    
    6
    
    
    
    
    
    
    
    6Delaware
    
    
    1
    
    
    
    
    
    
    
    1Florida
    
    
    2
    
    
    
    
    
    
    
    2Georgia
    
    
    1
    
    
    
    
    
    
    
    1Idaho
    
    
    1
    
    
    
    
    
    
    
    1Illinois
    
    
    32
    
    
    
    
    
    
    
    32Indiana
    
    
    11
    
    
    
    
    
    
    
    11Iowa
    
    
    5
    
    
    
    
    
    
    
    5Kansas
    
    
    2
    
    
    
    
    
    
    
    2Kentucky
    
    
    3
    
    
    
    
    
    
    
    3Maine
    
    
    1
    
    
    
    
    
    
    
    1Maryland
    
    
    9
    
    
    
    
    
    
    
    9Massachusetts
    
    
    9
    
    
    
    
    
    
    
    9Michigan
    
    
    20
    
    
    
    
    
    
    
    20Minnesota
    
    
    15
    
    
    
    
    
    
    
    15Missouri
    
    
    10
    
    
    
    
    
    
    
    10Montana
    
    
    1
    
    
    
    
    
    
    
    1Nebraska
    
    
    
    
    
    
    3
    
    
    
    3New Jersey
    
    
    8
    
    
    
    
    
    
    
    8New Mexico
    
    
    
    
    
    
    2
    
    
    
    2New York
    
    
    16
    
    
    
    
    
    
    
    16Ohio*
    
    
    16
    
    
    
    
    
    
    
    16Oklahoma
    
    
    2
    
    
    
    
    
    
    
    2Oregon
    
    
    7
    
    
    
    
    
    
    
    7Pennsylvania
    
    
    20
    
    
    
    
    
    
    
    20Rhode Island
    
    
    1
    
    
    
    
    
    
    
    1Tennessee
    
    
    1
    
    
    
    
    
    
    
    1Texas
    
    
    5
    
    
    
    
    
    
    
    5Utah
    
    
    
    
    
    
    2
    
    
    
    2Virginia
    
    
    9
    
    
    
    
    
    
    
    9Washington
    
    
    16
    
    
    
    
    
    
    
    16Wisconsin
    
    
    12
    
    
    
    
    
    
    
    12Wyoming
    
    
    1
    
    
    
    1
    
    
    
    2Total
    
    
    354
    
    
    
    18
    
    
    
    372
 
 *
    
    One restaurant closed for remodeling as of June 29, 2005.  11




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Location
    
    Acres
    
    Use and OwnershipCoon Rapids, Minnesota
    
    
    2.49
    
    
    Buffet restaurant property owned by OCB
Restaurant Co.Marshfield, Wisconsin
    
    
    5.04
    
    
    Cabinet shop owned by OCB Restaurant Co.
 New Restaurant Development
  Improvement of Existing Restaurants
  Trademarks and Other Intellectual Property
  
    
    Old Country Buffet® (169),
    
    HomeTown Buffet® (162),
    
    Soup N Salad Unlimited® (1) (this restaurant was
closed for remodeling as of June 29, 2005).
 TM SM SM
  12




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ITEM 3. LEGAL PROCEEDINGS
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  13




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PART II
 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS
     (a)
    
    On November 4, 2004, we granted options to purchase an aggregate of 7,393 shares of our
common stock to certain of our employees, each at an exercise price of $0.11 per share.(b)
    
    On December 13, 2004, we issued an aggregate of 112,275 shares of common stock to certain
of our employees.(c)
    
    On December 14, 2004, we issued an aggregate of 3,875 shares of common stock to certain
of our employees.(d)
    
    On December 15, 2004, we issued an aggregate of 5,000 shares of common stock to certain
of our employees.(e)
    
    On December 16, 2004, we granted options to purchase an aggregate of 2,743 shares of our
common stock to certain of our employees, each at an exercise price of $0.11 per share.(f)
    
    On December 17, 2004 we issued an aggregate of 23,000 shares of our common stock to
certain of our employees.(g)
    
    On April 7, 2005, we granted options to purchase an aggregate of 1,535 shares of our
common stock to certain of our employees, each at an exercise price of $0.11 per share.
   14




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ITEM 6. SELECTED FINANCIAL DATA
 Period fromOctober 2,
    
    
    
    
    
    
    
    
    
    
    26-Week2000
    
    
    
    
    
    
    
    
    
    
    Transitional(Inception)
    
    
    Fiscal Year
    
    
    28 Weeks
    
    
    Period
    
    
    50 Weeks
    
    
    Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal Yearthrough
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    EndedJanuary 3,
    
    
    January 2,
    
    
    July 18,
    
    
    July 3,
    
    
    July 3,
    
    
    July 2,
    
    
    June 30,
    
    
    June 29,2001
    
    
    2002
    
    
    2001
    
    
    2002
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005(Dollars in thousands, except average guest check and average weekly sales)Operating Data:Restaurant sales
    
    $
    239,370
    
    
    $
    1,044,734
    
    
    $
    567,821
    
    
    $
    527,084
    
    
    $
    1,003,997
    
    
    $
    985,286
    
    
    $
    942,831
    
    
    $
    926,781Restaurant costs
    
    
    204,379
    
    
    
    886,069
    
    
    
    481,832
    
    
    
    444,917
    
    
    
    849,154
    
    
    
    850,840
    
    
    
    812,662
    
    
    
    808,588Advertising expenses
    
    
    5,726
    
    
    
    27,640
    
    
    
    15,708
    
    
    
    14,349
    
    
    
    26,281
    
    
    
    28,589
    
    
    
    25,854
    
    
    
    24,014General and
administrative
expenses
    
    
    12,204
    
    
    
    50,569
    
    
    
    26,700
    
    
    
    25,687
    
    
    
    49,556
    
    
    
    45,382
    
    
    
    42,722
    
    
    
    43,512Goodwill amortization
    
    
    2,543
    
    
    
    10,942
    
    
    
    5,975
    
    
    
    
    
    
    
    4,967
    
    
    
    
    
    
    
    
    
    
    
    Impairment of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,803
    
    
    
    1,878
    
    
    
    3,609Gain on sale of
Original Roadhouse
Grill restaurants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,088
    )
    
    
    
    
    
    
    Loss on sale leaseback
transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,856
    
    
    
    
    
    
    
    Financing-related
compensation expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,240
    
    
    
    Operating income
    
    $
    14,518
    
    
    $
    69,514
    
    
    $
    37,606
    
    
    $
    42,131
    
    
    $
    74,039
    
    
    $
    56,904
    
    
    $
    57,475
    
    
    $
    47,058Net income (loss)
    
    $
    579
    
    
    $
    12,555
    
    
    $
    5,801
    
    
    $
    (7,517
    )
    
    $
    (763
    )
    
    $
    11,927
    
    
    $
    7,970
    
    
    $
    (2,184
    )Cash Flow and Other
Financial Data:Capital expenditures
    
    $
    14,389
    
    
    $
    38,096
    
    
    $
    20,352
    
    
    $
    14,280
    
    
    $
    32,318
    
    
    $
    25,722
    
    
    $
    33,007
    
    
    $
    29,131Depreciation and
amortization
    
    
    11,311
    
    
    
    53,404
    
    
    
    29,007
    
    
    
    20,409
    
    
    
    44,808
    
    
    
    36,885
    
    
    
    33,807
    
    
    
    32,247Cash flow from
operating activities
    
    
    25,401
    
    
    
    68,835
    
    
    
    35,521
    
    
    
    39,250
    
    
    
    72,564
    
    
    
    57,656
    
    
    
    50,490
    
    
    
    52,675Cash flow from (used
in) investing
activities
    
    
    4,540
    
    
    
    2,575
    
    
    
    (21,190
    )
    
    
    (11,337
    )
    
    
    12,428
    
    
    
    26,662
    
    
    
    (28,383
    )
    
    
    (28,471
    )Cash flow from (used
in) financing
activities
    
    
    (138,751
    )
    
    
    (59,590
    )
    
    
    (14,000
    )
    
    
    (47,164
    )
    
    
    (92,754
    )
    
    
    (76,825
    )
    
    
    (11,890
    )
    
    
    (29,614
    )Balance Sheet Data (at
end of period)Total assets
    
    $
    683,866
    
    
    $
    637,701
    
    
    $
    670,268
    
    
    $
    615,672
    
    
    $
    615,672
    
    
    $
    552,986
    
    
    $
    567,531
    
    
    $
    545,023Total debt(1)
    
    
    405,074
    
    
    
    348,220
    
    
    
    392,172
    
    
    
    493,981
    
    
    
    493,981
    
    
    
    421,122
    
    
    
    498,339
    
    
    
    466,194Supplemental Data(2):Number of
company-owned
restaurants (at end of
period)
    
    
    406
    
    
    
    401
    
    
    
    408
    
    
    
    393
    
    
    
    393
    
    
    
    372
    
    
    
    360
    
    
    
    354Average guest check
    
    $
    6.73
    
    
    $
    6.89
    
    
    $
    6.84
    
    
    $
    7.03
    
    
    $
    7.00
    
    
    $
    7.13
    
    
    $
    7.22
    
    
    $
    7.42Average weekly sales
    
    $
    45,464
    
    
    $
    49,368
    
    
    $
    49,822
    
    
    $
    51,044
    
    
    $
    49,973
    
    
    $
    48,953
    
    
    $
    49,949
    
    
    $
    50,273Same store sales change
    
    
    0.2
    %
    
    
    2.1
    %
    
    
    2.4
    %
    
    
    0.2
    %
    
    
    (0.9
    )%
    
    
    (4.2
    )%
    
    
    1.3
    %
    
    
    (0.6
    )%
 
 (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. 15




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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
      16




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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 franchisees. 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.
    
    Impairment of assets reflects fair market adjustments to the carrying value of
long-lived assets, primarily comprised of leasehold improvements and equipment.
    
    Gain on sale of Original Roadhouse Grill restaurants reflects the net proceeds from
the sale of 13 Original Roadhouse Grill restaurants net of the related carrying value
of these restaurants.
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
    
    Loss on sale-leaseback transactions reflects transaction costs and impairment losses
associated with the sale and leaseback of the leasehold interests and leasehold
improvements.
    
    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 reflects transaction and other costs associated with our
recapitalization on June 28, 2002 and a refinancing that we postponed due to market
conditions and the amendment and restatement of our credit agreement on February 20,
2004. Loss related to refinancing for fiscal 2005 represents cost associated with an
initial public offering of Income Deposit Securities that was withdrawn due to
unfavorable market conditions.
    
    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 August 2003, 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.
 Critical Accounting Policies
   18




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Long-Lived Assets
    Goodwill
  Self-Insurance Reserves
  19




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Store Closing Reserve
  Income Taxes
   Gift Cards
  20




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Results of Operations
 The following discussion reflects our historical results for the fiscal years ended July 2,
2003, June 30, 2004 and June 29, 2005.
 Our future results may not be consistent with our historical results. Our fiscal 2003 results
included the operating results for 13 Original Roadhouse Grill restaurants that were sold in June
2003, as well as the impact of sale and leaseback transactions with respect to 30 restaurants
completed during the year. Our fiscal 2004 results included the impact of a sale and leaseback
transaction with respect to one restaurant completed in December 2003, a loss related to a
refinancing that we postponed due to market conditions and the amendment and restatement of our
senior credit agreement in February 2004 and the issuance of our
137/8% senior discount notes due 2010 in May 2004, and a loss
related to the redemption of approximately $29.6 million of 111/4% senior subordinated notes due
2010. Our fiscal 2005 results included a loss related to refinancing associated with an initial
public offering of Income Deposit Securities that was withdrawn due to unfavorable market
conditions, a loss related to the redemption of approximately $14.3 million of 111/4% Senior
Subordinated notes due 2010, and charges for the impairment of long-lived assets and severance
costs. The following discussion should be read in conjunction with our consolidated financial
statements and related notes included elsewhere in this report.
 For the Year Ended June 29, 2005 Compared to the Year Ended June 30, 2004
  Year EndedJune 30, 2004
    
    
    June 29, 2005(Dollars in thousands)Restaurant sales
    
    $
    942,831
    
    
    
    100.0
    %
    
    $
    926,781
    
    
    
    100.0
    %Restaurant costs
    
    
    812,662
    
    
    
    86.2
    
    
    
    808,588
    
    
    
    87.2Advertising expenses
    
    
    25,854
    
    
    
    2.7
    
    
    
    24,014
    
    
    
    2.6General and administrative expenses
    
    
    42,722
    
    
    
    4.5
    
    
    
    43,512
    
    
    
    4.7Impairment 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 (loss) before income taxes
    
    
    9,618
    
    
    
    1.0
    
    
    
    (2,371
    )
    
    
    (0.3
    )Income tax expense (benefit)
    
    
    1,648
    
    
    
    0.2
    
    
    
    (187
    )
    
    
    Net income (loss)
    
    $
    7,970
    
    
    
    0.8
    
    
    $
    (2,184
    )
    
    
    (0.2
    )
 
 Certain percentage amounts do not sum to total due to rounding. Restaurant Sales.
 21




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Restaurant Costs.
 Advertising Expenses.
 General and Administrative Expenses.
 Impairment of Assets.
 Interest Expense. 7 8
 Loss Related to Refinancing.
 22




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Loss Related to the Early Extinguishment of Debt. 1 4 1 4
 Income Taxes.
 For the Year Ended June 30, 2004 Compared to the Year Ended July 2, 2003
  Year EndedJuly 2, 2003
    
    
    June 30, 2004(Dollars in thousands)Restaurant sales
    
    $
    985,286
    
    
    
    100.0
    %
    
    $
    942,831
    
    
    
    100.0
    %Restaurant costs
    
    
    850,840
    
    
    
    86.4
    
    
    
    812,662
    
    
    
    86.2Advertising expenses
    
    
    28,589
    
    
    
    2.9
    
    
    
    25,854
    
    
    
    2.7General and administrative expenses
    
    
    45,382
    
    
    
    4.6
    
    
    
    42,722
    
    
    
    4.5Impairment of assets
    
    
    4,803
    
    
    
    0.5
    
    
    
    1,878
    
    
    
    0.2Gain on sale of Original Roadhouse Grill Restaurants
    
    
    (7,088
    )
    
    
    (0.7
    )
    
    
    
    
    
    
    Loss on sale leaseback transactions
    
    
    5,856
    
    
    
    0.6
    
    
    
    
    
    
    
    Financing-related compensation expenses
    
    
    
    
    
    
    
    
    
    
    2,240
    
    
    
    0.2Operating income
    
    
    56,904
    
    
    
    5.8
    
    
    
    57,475
    
    
    
    6.1Interest expense
    
    
    41,235
    
    
    
    4.2
    
    
    
    39,609
    
    
    
    4.2Interest income
    
    
    (307
    )
    
    
    
    
    
    
    (424
    )
    
    
    Loss related to refinancing
    
    
    
    
    
    
    
    
    
    
    4,776
    
    
    
    0.5Loss related to early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    5,275
    
    
    
    0.6Other (income)
    
    
    (1,270
    )
    
    
    (0.1
    )
    
    
    (1,379
    )
    
    
    (0.1
    )Income before income taxes
    
    
    17,246
    
    
    
    1.8
    
    
    
    9,618
    
    
    
    1.0Income tax expense
    
    
    5,319
    
    
    
    0.5
    
    
    
    1,648
    
    
    
    0.2Net income
    
    $
    11,927
    
    
    
    1.2
    
    
    $
    7,970
    
    
    
    0.8
 
 Certain percentage amounts do not sum to total due to rounding. Restaurant Sales.
 23




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##### Table of Contents



Restaurant Costs.
 Advertising Expenses.
 General and Administrative Expenses.
 Impairment of Assets.
 Gain on Sale of Original Roadhouse Grill Restaurants.
 Loss on Sale and Leaseback Transactions.
  24




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##### Table of Contents



Interest Expense.
 Loss Related to Refinancing.
 Loss Related to the Early Extinguishment of Debt. 1 4 1 4
 Income Taxes.
 Liquidity and Capital Resources
    Operating Activities.
 25




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##### Table of Contents



Investing Activities.
 Financing
Activities.
 Future Capital Expenditures.
 §
    
    Open two new restaurants with capital outlay of approximately $4 million.§
    
    Spend approximately $21 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.§
    
    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.§
    
    Spend approximately $1 million on miscellaneous corporate and information systems investments.
  26




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##### Table of Contents



Credit Facilities and Other Long Term Debt
    1 4 1 4 1 4
 7 8 7 8 7 8 7 8 7 8 7 8
 Seasonality and Quarterly Fluctuations
  27




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##### Table of Contents



New Accounting Standards
 Accounting Changes Reporting Accounting Changes in
Interim Financial Statements,
  
 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.
 28




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##### Table of Contents



Contractual Obligations
  Payments Due by Fiscal Year2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    Total(in thousands)Long-term debt(1)
    
    $
    2,016
    
    
    $
    2,016
    
    
    $
    2,520
    
    
    $
    192,517
    
    
    $
    
    
    
    $
    316,665
    
    
    $
    515,734Operating leases(2)
    
    
    54,069
    
    
    
    52,725
    
    
    
    50,579
    
    
    
    46,929
    
    
    
    40,268
    
    
    
    248,819
    
    
    
    493,389Advisory fees(3)
    
    
    2,153
    
    
    
    2,040
    
    
    
    2,040
    
    
    
    2,040
    
    
    
    2,040
    
    
    
    
    
    
    
    10,313Purchase
obligations(4)
    
    
    6,975
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,975Total
contractual
cash
obligations
    
    $
    65,213
    
    
    $
    56,781
    
    
    $
    55,139
    
    
    $
    241,486
    
    
    $
    42,308
    
    
    $
    565,484
    
    
    $
    1,026,411
 
 (1)
    
    Long-term debt payments for fiscal years 2006 through 2009 represent the required
principal payments on our variable-rate credit facility. Long-term debt payments in the
thereafter column represent the aggregate principal amounts due on Buffets 111/4%
senior subordinated notes and our 137/8% senior discount notes,
at face value. See Note 5 to our consolidated financial statements included elsewhere in this
report for details of our long-term obligations.(2)
    
    Operating leases is comprised of minimum rents and contingent rents. Operating leases have
not been reduced by minimum sublease rentals of approximately $15.1 million. See Note 10 to
our consolidated financial statements included elsewhere in this report for details of our
operating lease obligations.(3)
    
    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-price 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 2006 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.(4)
    
    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. 29




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##### Table of Contents



Other Commercial Commitments
  Amount of Commitment Expiration by Fiscal Year2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    Thereafter
    
    
    Total(in thousands)Letters of credit(1)
    
    $
    38,295
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    38,295Total commercial commitments
    
    $
    38,295
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    38,295
 
 (1)
    
    Our outstanding letters of credit expire at various times with final expirations in April
2006. As of June 29, 2005, the total borrowing availability under the revolving credit
facility was $30.0 million and the total borrowing capacity under the letter of credit
facilities was $11.7 million. 30




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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
    
    32Consolidated Balance Sheets as of June 30, 2004 and June 29, 2005
    
    33Consolidated Statements of Operations for the Years Ended July 2, 2003, June 30, 2004 and June 29, 2005
    
    34Consolidated Statements of Shareholders Equity (Deficit) for the Years Ended July 2, 2003, June 30,
2004 and June 29, 2005
    
    35Consolidated Statements of Cash Flows for the Years Ended July 2, 2003, June 30, 2004 and June 29, 2005
    
    36Notes to Consolidated Financial Statements
    
    38
 31




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     /s/ Deloitte & ToucheMinneapolis, MinnesotaSeptember 9, 2005
 32




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BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    June 29,2004
    
    
    2005(In thousands, except share data)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    26,072
    
    
    $
    20,662Restricted cash and cash equivalents
    
    
    16,228
    
    
    
    Receivables
    
    
    6,963
    
    
    
    6,632Inventories
    
    
    18,673
    
    
    
    18,957Prepaid expenses and other current assets
    
    
    5,244
    
    
    
    6,318Deferred income taxes
    
    
    15,915
    
    
    
    12,533Total current assets
    
    
    89,095
    
    
    
    65,102PROPERTY AND EQUIPMENT, net
    
    
    149,618
    
    
    
    146,653GOODWILL, net
    
    
    312,163
    
    
    
    312,163DEFERRED INCOME TAXES
    
    
    1,033
    
    
    
    8,195OTHER ASSETS, net
    
    
    15,622
    
    
    
    12,910Total assets
    
    $
    567,531
    
    
    $
    545,023LIABILITIES AND SHAREHOLDERS DEFICITCURRENT LIABILITIES:Accounts payable
    
    $
    43,280
    
    
    $
    44,883Accrued liabilities (Note 4)
    
    
    68,663
    
    
    
    70,219Income taxes payable
    
    
    4,531
    
    
    
    6,990Current maturities of long-term debt
    
    
    2,300
    
    
    
    2,016Total current liabilities
    
    
    118,774
    
    
    
    124,108LONG-TERM DEBT, net of current maturities
    
    
    496,039
    
    
    
    464,178DEFERRED LEASE OBLIGATIONS
    
    
    21,621
    
    
    
    28,375OTHER LONG-TERM LIABILITIES
    
    
    7,013
    
    
    
    6,731Total liabilities
    
    
    643,447
    
    
    
    623,392COMMITMENTS AND CONTINGENCIES (Note 10)SHAREHOLDERS DEFICIT:Preferred stock, $.01 par value; 1,100,000 shares
authorized; none issued and outstanding as of June
30, 2004 and June 29, 2005
    
    
    
    
    
    
    Common stock, $.01 par value; 3,600,000 shares
authorized; shares issued and outstanding of
3,185,672 as of June 30, 2004 and 3,175,135 as of
June 29, 2005
    
    
    32
    
    
    
    32Additional paid in capital
    
    
    
    
    
    
    14Accumulated deficit
    
    
    (75,948
    )
    
    
    (78,415
    )Total shareholders deficit
    
    
    (75,916
    )
    
    
    (78,369
    )Total liabilities and shareholders deficit
    
    $
    567,531
    
    
    $
    545,023
  33




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BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Year EndedJuly 2,
    
    
    June 30,
    
    
    June 29,2003
    
    
    2004
    
    
    2005(In thousands)RESTAURANT SALES
    
    $
    985,286
    
    
    $
    942,831
    
    
    $
    926,781RESTAURANT COSTS:Food
    
    
    311,891
    
    
    
    307,807
    
    
    
    307,087Labor
    
    
    313,532
    
    
    
    287,467
    
    
    
    279,214Direct and occupancy
    
    
    225,417
    
    
    
    217,388
    
    
    
    222,287Total restaurant costs
    
    
    850,840
    
    
    
    812,662
    
    
    
    808,588ADVERTISING EXPENSES
    
    
    28,589
    
    
    
    25,854
    
    
    
    24,014GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    45,382
    
    
    
    42,722
    
    
    
    43,512IMPAIRMENT OF ASSETS
    
    
    4,803
    
    
    
    1,878
    
    
    
    3,609GAIN ON SALE OF ORIGINAL
ROADHOUSE GRILL RESTAURANTS
    
    
    (7,088
    )
    
    
    
    
    
    
    LOSS ON SALE LEASEBACK
TRANSACTIONS
    
    
    5,856
    
    
    
    
    
    
    
    FINANCING-RELATED
COMPENSATION EXPENSES
    
    
    
    
    
    
    2,240
    
    
    
    OPERATING INCOME
    
    
    56,904
    
    
    
    57,475
    
    
    
    47,058INTEREST EXPENSE
    
    
    41,235
    
    
    
    39,609
    
    
    
    48,100INTEREST INCOME
    
    
    (307
    )
    
    
    (424
    )
    
    
    (515
    )LOSS RELATED TO REFINANCING
    
    
    
    
    
    
    4,776
    
    
    
    856LOSS RELATED TO EARLY
EXTINGUISHMENT OF DEBT
    
    
    
    
    
    
    5,275
    
    
    
    1,923OTHER INCOME
    
    
    (1,270
    )
    
    
    (1,379
    )
    
    
    (935
    )INCOME (LOSS) BEFORE INCOME
TAXES
    
    
    17,246
    
    
    
    9,618
    
    
    
    (2,371
    )INCOME TAX EXPENSE (BENEFIT)
    
    
    5,319
    
    
    
    1,648
    
    
    
    (187
    )Net income (loss)
    
    $
    11,927
    
    
    $
    7,970
    
    
    $
    (2,184
    )
  34




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT)
 RetainedAdditional
    
    
    EarningsPreferred Stock
    
    
    Common Stock
    
    
    Paid-In
    
    
    (AccumulatedShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    


    Capital
    
    
     
    Deficit)
    
    Total(In thousands, except share data)BALANCE, July 3, 2002
    
    
    
    
    
    
    
    
    
    
    3,228,610
    
    
    
    32
    
    
    
    
    
    
    
    (34,643
    )
    
    
    (34,611
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    14,625
    
    
    
    
    
    
    
    450
    
    
    
    
    
    
    
    450Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (55,250
    )
    
    
    
    
    
    
    (450
    )
    
    
    (126
    )
    
    
    (576
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,927
    
    
    
    11,927BALANCE, 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
    )
  35




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Year EndedJuly 2,
    
    
    June 30,
    
    
    June 29,2003
    
    
    2004
    
    
    2005(In thousands)OPERATING ACTIVITIES:Net income (loss)
    
    $
    11,927
    
    
    $
    7,970
    
    
    $
    (2,184
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    36,885
    
    
    
    33,807
    
    
    
    32,247Amortization of debt issuance costs
    
    
    1,182
    
    
    
    1,370
    
    
    
    1,386Write-off of debt issuance costs
    
    
    
    
    
    
    4,201
    
    
    
    Accretion of original issue discount
    
    
    739
    
    
    
    2,049
    
    
    
    11,906Loss related to early extinguishment of debt
    
    
    
    
    
    
    5,275
    
    
    
    1,923Impairment of assets
    
    
    4,803
    
    
    
    1,878
    
    
    
    3,609Deferred income taxes
    
    
    677
    
    
    
    1,200
    
    
    
    (3,780
    )Gain on sale of Original Roadhouse Grill restaurants
    
    
    (7,088
    )
    
    
    
    
    
    
    Loss on disposal of assets
    
    
    565
    
    
    
    305
    
    
    
    2,280Loss on sale leaseback transactions
    
    
    5,856
    
    
    
    
    
    
    
    Changes in assets and liabilities:Receivables
    
    
    2,346
    
    
    
    (235
    )
    
    
    331Inventories
    
    
    170
    
    
    
    (674
    )
    
    
    (683
    )Prepaid expenses and other assets
    
    
    2,047
    
    
    
    2,795
    
    
    
    (1,074
    )Accounts payable
    
    
    8,350
    
    
    
    (497
    )
    
    
    1,704Accrued and other liabilities
    
    
    (12,690
    )
    
    
    (8,698
    )
    
    
    2,551Income taxes payable
    
    
    1,887
    
    
    
    (256
    )
    
    
    2,459Net cash provided by operating activities
    
    
    57,656
    
    
    
    50,490
    
    
    
    52,675INVESTING ACTIVITIES:Proceeds from sale leaseback transactions
    
    
    26,117
    
    
    
    2,710
    
    
    
    Proceeds from sale of Original Roadhouse Grill restaurants
    
    
    25,850
    
    
    
    
    
    
    
    Purchase of property and equipment
    
    
    (25,722
    )
    
    
    (33,007
    )
    
    
    (29,131
    )Acquisition of 20% minority interest in Tahoe Joes Inc.
    
    
    
    
    
    
    (370
    )
    
    
    Proceeds from sale of other assets
    
    
    417
    
    
    
    2,284
    
    
    
    660Net cash provided by (used in ) investing activities
    
    
    26,662
    
    
    
    (28,383
    )
    
    
    (28,471
    )
 36




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##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 For the Year EndedJuly 2,
    
    
    June 30,
    
    
    June 29,2003
    
    
    2004
    
    
    2005(In thousands)FINANCING ACTIVITIES:Repayment of debt
    
    $
    (73,198
    )
    
    $
    (172,953
    )
    
    $
    (29,781
    )Redemption of subordinated notes
    
    
    (400
    )
    
    
    (27,364
    )
    
    
    Repurchase of common stock
    
    
    (576
    )
    
    
    (380
    )
    
    
    (284
    )Proceeds from issuance of common stock
    
    
    450
    
    
    
    241
    
    
    
    15Proceeds 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
    
    
    
    
    
    
    
    
    
    
    16,228Use 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
    
    
    (3,101
    )
    
    
    (5,570
    )
    
    
    (56
    )Net cash used in financing activities
    
    
    (76,825
    )
    
    
    (11,890
    )
    
    
    (29,614
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    7,493
    
    
    
    10,217
    
    
    
    (5,410
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    8,362
    
    
    
    15,855
    
    
    
    26,072CASH AND CASH EQUIVALENTS, end of period
    
    $
    15,855
    
    
    $
    26,072
    
    
    $
    20,662SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid during the period for:Interest (net of capitalized interest of $288, $280 and
$538, respectively)
    
    $
    26,956
    
    
    $
    37,286
    
    
    $
    32,530Income taxes
    
    $
    3,351
    
    
    $
    700
    
    
    $
    1,130Non-cash investing activities during the period for-Note receivable on sale of Original Roadhouse Grill
restaurants
    
    $
    2,500
    
    
    $
    
    
    
    $
    
  37




---



##### Table of Contents



BUFFETS HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1 Nature of Organization
 Company Background
  1 4 1 4
  7 8
 38




---



##### Table of Contents



7 8 7 8
 Description of Business
  Principles of Consolidation
  Fiscal Year
  Reclassifications
  2 Summary of Significant Accounting Policies
 Cash and Cash Equivalents
  Restricted Cash and Cash Equivalents
 1 4
 39




---



##### Table of Contents



Receivables
  Inventories
  Property and Equipment
 1 2
   June 30,
    
    
    June 29,2004
    
    
    2005Land
    
    $
    1,137
    
    
    $
    762Buildings
    
    
    2,999
    
    
    
    3,082Equipment
    
    
    130,938
    
    
    
    139,791Leasehold improvements
    
    
    134,215
    
    
    
    148,681Less- Accumulated depreciation and amortization
    
    
    119,671
    
    
    
    145,663$
    149,618
    
    
    $
    146,653
  40




---



##### 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 3, 2002
    
    $
    69
    
    
    $
    (30
    )
    
    $
    34
    
    
    $
    (14
    )
    
    $
    457
    
    
    $
    (25
    )
    
    $
    560
    
    
    $
    (69
    )FY 2003Activity:Amortization
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21
    )Reductions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (140
    )
    
    
    
    
    
    
    (140
    )
    
    
    BALANCE, July 2, 2003
    
    
    69
    
    
    
    (44
    )
    
    
    34
    
    
    
    (21
    )
    
    
    317
    
    
    
    (25
    )
    
    
    420
    
    
    
    (90
    )FY 2004Activity:Amortization
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )Additions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    28
    
    
    
    BALANCE, June 30, 2004
    
    
    69
    
    
    
    (56
    )
    
    
    34
    
    
    
    (29
    )
    
    
    345
    
    
    
    (25
    )
    
    
    448
    
    
    
    (110
    )FY 2005Activity:Amortization
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )Additions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BALANCE, June 29, 2005
    
    $
    69
    
    
    $
    (65
    )
    
    $
    34
    
    
    $
    (34
    )
    
    $
    345
    
    
    $
    (25
    )
    
    $
    448
    
    
    $
    (124
    )
 41




---



##### Table of Contents



Long-Lived Assets
    Self-Insurance Reserves
  Store Closing Reserve
  42




---



##### Table of Contents



Pre-opening Costs
  Advertising Expenses
  Income Taxes
   Revenue Recognition
    43




---



##### Table of Contents



Use of Estimates
  Fair Value Disclosure of Financial Instruments
   Segment Reporting
  Stock-Based Compensation
  44




---



##### Table of Contents



For the Year EndedJuly 2,
    
    
    June 30,
    
    
    June 29,2003
    
    
    2004
    
    
    2005Net income (loss) as reported
    
    $
    11,927
    
    
    $
    7,970
    
    
    $
    (2,184
    )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
    
    
    (5
    )
    
    
    (9
    )
    
    
    Pro forma
    
    $
    11,922
    
    
    $
    7,961
    
    
    $
    (2,184
    )Weighted-average fair
value per share of options
granted
    
    $
    0.81
    
    
    $
    0.32
    
    
    $
    
  For the Year EndedJuly 2,
    
    June 30,
    
    June 29,2003
    
    2004
    
    2005Risk-free interest rate
    
    
    2.07
    %
    
    
    1.32
    %
    
    
    3.07
    %Expected volatility
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected life in years
    
    
    2.8
    
    
    
    1.8
    
    
    
    0.8
  3 Recent Accounting Pronouncements
 Accounting Changes Reporting Accounting Changes in
Interim Financial Statements,
  45




---



##### Table of Contents



4 Accrued Liabilities
  June 30,
    
    
    June 29,2004
    
    
    2005Accrued compensation
    
    $
    18,030
    
    
    $
    17,417Accrued workers compensation
    
    
    16,916
    
    
    
    17,388Accrued interest
    
    
    10,282
    
    
    
    13,100Accrued insurance
    
    
    6,793
    
    
    
    6,427Accrued sales, use and property taxes
    
    
    5,815
    
    
    
    6,105Unearned revenue
    
    
    4,378
    
    
    
    4,053Accrued store closing costs
    
    
    1,442
    
    
    
    1,499Accrued other
    
    
    5,007
    
    
    
    4,230$
    68,663
    
    
    $
    70,219
   46




---



##### Table of Contents



For the Year EndedJune 30,
    
    
    June 29,2004
    
    
    2005BALANCE, beginning of period
    
    $
    2,782
    
    
    $
    1,442Additions:Lease obligations charged to earnings (as
direct and occupancy costs)
    
    
    467
    
    
    
    1,177Employee termination benefits charged
to earnings (as labor costs)
    
    
    16
    
    
    
    115Reductions:Cash payments:Lease termination costs and obligations
    
    
    1,807
    
    
    
    1,120Employee severance benefits
    
    
    16
    
    
    
    115BALANCE, end of period
    
    $
    1,442
    
    
    $
    1,499
  For the Year EndedJune 30,
    
    
    June 29,2004
    
    
    2005Number of stores:Expected to close as of the beginning of the period
    
    
    3
    
    
    
    7Closed during the period
    
    
    15
    
    
    
    11Identified for closure during the period
    
    
    19
    
    
    
    8Expected to close as of the end of the period
    
    
    7
    
    
    
    4Number of employees:Expected to be terminated as of the beginning of the
period
    
    
    105
    
    
    
    245Terminated during the period
    
    
    455
    
    
    
    385Identified for termination during the period
    
    
    595
    
    
    
    280Expected to be terminated as of the end of the period
    
    
    245
    
    
    
    140
  2006
    
    $
    8612007
    
    
    2142008
    
    
    1892009
    
    
    1472010
    
    
    70Thereafter
    
    
    18$
    1,499
 47




---



##### Table of Contents



5 Long-Term Debt
  June 30,
    
    
    June 29,2004
    
    
    2005Buffets, Inc.Credit Facility:Revolving credit facility
    
    $
    
    
    
    $
    Term loan, interest at LIBOR plus 3.50%, due
Quarterly through June 28, 2009 (interest rate at
6.3% as of June 29, 2005)
    
    
    228,850
    
    
    
    199,069Total Credit Facility
    
    
    228,850
    
    
    
    199,069Senior subordinated notes, interest at 11.25%,
due July 15, 2010, net of discount of $6,226 at
June 30, 2004 and $4,979 at June 29, 2005
    
    
    193,189
    
    
    
    179,686Total long-term debt at Buffets, Inc.
    
    
    422,039
    
    
    
    378,755Buffets Holdings, Inc.Senior discount notes, interest at 13.875%, due
December 15, 2010, net of discount of $55,700 at
June 30, 2004 and $44,561 at June 29, 2005
    
    
    76,300
    
    
    
    87,439Grand total long-term debt
    
    
    498,339
    
    
    
    466,194Less  Current maturities
    
    
    2,300
    
    
    
    2,016$
    496,039
    
    
    $
    464,178
  2006
    
    $
    2,0162007
    
    
    2,0162008
    
    
    2,5202009
    
    
    192,5172010
    
    
    Thereafter
    
    
    316,665$
    515,734
 Credit Facility
   48




---



##### Table of Contents



111/4% Senior Subordinated Notes
 1 4
 137/8% Senior Discount Notes
 7 8 7 8
 49




---



##### Table of Contents



7 8
 6 Shareholders Equity (Deficit)
 Authorized Shares
  Stock Warrants
  Call Rights and Put Rights
  Stock Option Plan
  50




---



##### Table of Contents



For the Year EndedJuly 2, 2003
    
    June 30, 2004
    
    June 29, 2005Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-Avg
    
    
    
    
    
    Avg
    
    
    
    
    
    AvgExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseShares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding at
beginning of year
    
    
    59,310
    
    
    $
    19.08
    
    
    
    65,822
    
    
    $
    17.93
    
    
    
    98,142
    
    
    $
    16.42Granted
    
    
    10,218
    
    
    
    11.64
    
    
    
    44,305
    
    
    
    13.08
    
    
    
    11,671
    
    
    
    0.11Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Canceled
    
    
    (3,706
    )
    
    
    19.10
    
    
    
    (11,985
    )
    
    
    12.14
    
    
    
    (12,784
    )
    
    
    16.05Outstanding at
end of year
    
    
    65,822
    
    
    $
    17.93
    
    
    
    98,142
    
    
    $
    16.42
    
    
    
    97,029
    
    
    $
    14.51
  Options OutstandingWeighted-AvgRemainingNumber

    
    Option Term

    
    Weighted-AvgRange of Exercise Price
    
    Outstanding
    
    (in years)

    
    Exercise Price$  0  $10
    
    
    46,276
    
    
    
    11.77
    
    
    $
    7.43$11  $20
    
    
    32,136
    
    
    
    13.51
    
    
    
    14.53$21  $30
    
    
    10,355
    
    
    
    11.35
    
    
    
    25.45$31  $40
    
    
    787
    
    
    
    11.52
    
    
    
    32.09$41  $50
    
    
    7,475
    
    
    
    11.83
    
    
    
    41.07$  0  $50
    
    
    97,029
    
    
    
    12.30
    
    
    $
    14.51
  7 Retirement Plan
  51




---



##### Table of Contents



8 Income Taxes
  For the Year EndedJuly 2,
    
    
    June 30,
    
    
    June 29,2003
    
    
    2004
    
    
    2005Federal:Current
    
    $
    3,209
    
    
    $
    (710
    )
    
    $
    2,665Deferred
    
    
    1,130
    
    
    
    1,050
    
    
    
    (3,308
    )4,339
    
    
    
    340
    
    
    
    (643
    )State:Current
    
    
    1,433
    
    
    
    1,158
    
    
    
    928Deferred
    
    
    (453
    )
    
    
    150
    
    
    
    (472
    )980
    
    
    
    1,308
    
    
    
    456Income tax expense (benefit)
    
    $
    5,319
    
    
    $
    1,648
    
    
    $
    (187
    )
  June 30, 2004
    
    June 29, 2005Non-
    
    
    
    
    
    
    Non-Current
    
    
    current
    
    
    Current
    
    
    currentAsset
    
    
    Asset
    
    
    Asset
    
    
    AssetProperty and equipment
    
    $
    
    
    
    $
    (6,336
    )
    
    $
    
    
    
    $
    (819
    )Deferred rent
    
    
    
    
    
    
    8,325
    
    
    
    
    
    
    
    8,711Self-insurance reserve
    
    
    2,986
    
    
    
    
    
    
    
    1,157
    
    
    
    Accrued workers
compensation
    
    
    6,223
    
    
    
    
    
    
    
    6,131
    
    
    
    Accrued payroll and
related benefits
    
    
    1,943
    
    
    
    
    
    
    
    2,020
    
    
    
    Accrued store closing costs
    
    
    555
    
    
    
    
    
    
    
    577
    
    
    
    Net operating loss and tax
credit carryforwards
    
    
    3,719
    
    
    
    
    
    
    
    2,168
    
    
    
    Deferred gain on sale
leaseback transaction
    
    
    
    
    
    
    1,298
    
    
    
    
    
    
    
    1,112Goodwill
    
    
    
    
    
    
    (1,348
    )
    
    
    
    
    
    
    (2,122
    )Other
    
    
    489
    
    
    
    (906
    )
    
    
    480
    
    
    
    1,313Total
    
    $
    15,915
    
    
    $
    1,033
    
    
    $
    12,533
    
    
    $
    8,195
  52




---



##### Table of Contents



For the Year EndedJuly 2,
    
    
    June 30,
    
    
    June 29,2003
    
    
    2004
    
    
    2005Federal income tax expense
(benefit) at statutory rate of
35%
    
    $
    6,417
    
    
    $
    3,367
    
    
    $
    (830
    )State income taxes, net of
federal benefit
    
    
    666
    
    
    
    850
    
    
    
    296General business credits
    
    
    (1,769
    )
    
    
    (1,396
    )
    
    
    (1,591
    )Non-deductible interest on
high-yield notes
    
    
    
    
    
    
    
    
    
    
    1,316Other
    
    
    5
    
    
    
    (1,173
    )
    
    
    622Income tax expense (benefit)
    
    $
    5,319
    
    
    $
    1,648
    
    
    $
    (187
    )
  9 Related-Party Transactions
    53




---



##### Table of Contents



10 Commitments and Contingencies
 Litigation
   54




---



##### Table of Contents



Operating Leases
   2006
    
    $
    54,0692007
    
    
    52,7252008
    
    
    50,5792009
    
    
    46,9292010
    
    
    40,268Thereafter
    
    
    248,819Total future minimum lease payments
    
    $
    493,389
   For the Year EndedJuly 2,
    
    
    June 30,
    
    
    June 29,2003
    
    
    2004
    
    
    2005Minimum rents
    
    $
    49,315
    
    
    $
    49,911
    
    
    $
    50,111Contingent rents
    
    
    2,207
    
    
    
    2,983
    
    
    
    3,522Less: Sublease rents
    
    
    (1,388
    )
    
    
    (2,739
    )
    
    
    (2,844
    )Deferred rents
    
    
    1,530
    
    
    
    2,381
    
    
    
    1,482Percentage rents
    
    
    1,955
    
    
    
    1,954
    
    
    
    1,617$
    53,619
    
    
    $
    54,490
    
    
    $
    53,888
 55




---



##### Table of Contents



11 Condensed Consolidating Financial Statements
 1 4
 56




---



##### Table of Contents



Condensed Consolidating Balance Sheet
As of June 30, 2004
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    96
    
    
    $
    19,771
    
    
    $
    6,205
    
    
    $
    
    
    
    $
    26,072Restricted cash and cash equivalents
    
    
    
    
    
    
    16,228
    
    
    
    
    
    
    
    
    
    
    
    16,228Receivables
    
    
    
    
    
    
    41,056
    
    
    
    318,430
    
    
    
    (352,523
    )
    
    
    6,963Inventories
    
    
    
    
    
    
    789
    
    
    
    17,884
    
    
    
    
    
    
    
    18,673Income taxes receivable
    
    
    1,619
    
    
    
    
    
    
    
    
    
    
    
    (1,619
    )
    
    
    Prepaid expenses and other current
assets
    
    
    
    
    
    
    4,711
    
    
    
    533
    
    
    
    
    
    
    
    5,244Deferred income taxes
    
    
    
    
    
    
    14,429
    
    
    
    1,486
    
    
    
    
    
    
    
    15,915Total current assets
    
    
    1,715
    
    
    
    96,984
    
    
    
    344,538
    
    
    
    (354,142
    )
    
    
    89,095PROPERTY AND EQUIPMENT, net
    
    
    
    
    
    
    8,206
    
    
    
    141,412
    
    
    
    
    
    
    
    149,618GOODWILL, net
    
    
    
    
    
    
    18,730
    
    
    
    293,433
    
    
    
    
    
    
    
    312,163DEFERRED INCOME TAXES
    
    
    
    
    
    
    1,033
    
    
    
    
    
    
    
    
    
    
    
    1,033OTHER ASSETS, net
    
    
    2,847
    
    
    
    410,013
    
    
    
    5,264
    
    
    
    (402,502
    )
    
    
    15,622Total assets
    
    $
    4,562
    
    
    $
    534,966
    
    
    $
    784,647
    
    
    $
    (756,644
    )
    
    $
    567,531LIABILITIES AND SHAREHOLDERS EQUITY
(DEFICIT)CURRENT LIABILITIES:Accounts payable
    
    
    180
    
    
    
    395,799
    
    
    
    2,519
    
    
    
    (355,218
    )
    
    
    43,280Accrued liabilities
    
    
    
    
    
    
    44,126
    
    
    
    24,537
    
    
    
    
    
    
    
    68,663Income taxes payable
    
    
    
    
    
    
    4,531
    
    
    
    1,619
    
    
    
    (1,619
    )
    
    
    4,531Current maturities of long-term debt
    
    
    
    
    
    
    138
    
    
    
    2,162
    
    
    
    
    
    
    
    2,300Total current liabilities
    
    
    180
    
    
    
    444,594
    
    
    
    30,837
    
    
    
    (356,837
    )
    
    
    118,774LONG-TERM DEBT, net of current maturities
    
    
    76,300
    
    
    
    25,184
    
    
    
    659,555
    
    
    
    (265,000
    )
    
    
    496,039DEFERRED LEASE OBLIGATIONS
    
    
    
    
    
    
    1,143
    
    
    
    20,478
    
    
    
    
    
    
    
    21,621OTHER LONG-TERM LIABILITIES
    
    
    
    
    
    
    3,476
    
    
    
    3,537
    
    
    
    
    
    
    
    7,013Total liabilities
    
    
    76,480
    
    
    
    474,397
    
    
    
    714,407
    
    
    
    (621,837
    )
    
    
    643,447COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS EQUITY (DEFICIT)Common stock
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32Additional paid in capital
    
    
    
    
    
    
    82,311
    
    
    
    199,494
    
    
    
    (281,805
    )
    
    
    Retained earnings (accumulated deficit)
    
    
    (71,950
    )
    
    
    (21,742
    )
    
    
    (129,254
    )
    
    
    146,998
    
    
    
    (75,948
    )Total shareholders equity (deficit)
    
    
    (71,918
    )
    
    
    60,569
    
    
    
    70,240
    
    
    
    (134,807
    )
    
    
    (75,916
    )Total liabilities and shareholders
equity (deficit)
    
    $
    4,562
    
    
    $
    534,966
    
    
    $
    784,647
    
    
    $
    (756,644
    )
    
    $
    567,531
 57




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##### 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
    
    
    
    
    
    
    591
    
    
    
    288,145
    
    
    
    (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
    
    
    
    32,417
    
    
    
    314,549
    
    
    
    (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
    
    
    $
    205,422
    
    
    $
    753,419
    
    
    $
    (419,406
    )
    
    $
    545,023LIABILITIES AND SHAREHOLDERS EQUITY
(DEFICIT)CURRENT LIABILITIES:Accounts payable
    
    
    
    
    
    
    327,351
    
    
    
    2,859
    
    
    
    (285,327
    )
    
    
    44,883Accrued liabilities
    
    
    
    
    
    
    45,634
    
    
    
    24,585
    
    
    
    
    
    
    
    70,219Income taxes payable
    
    
    (1,877
    )
    
    
    8,867
    
    
    
    
    
    
    
    
    
    
    
    6,990Current maturities of long-term debt
    
    
    
    
    
    
    121
    
    
    
    1,895
    
    
    
    
    
    
    
    2,016Total current liabilities
    
    
    (1,877
    )
    
    
    381,973
    
    
    
    29,339
    
    
    
    (285,327
    )
    
    
    124,108LONG-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
    
    
    
    3,504
    
    
    
    
    
    
    
    6,731Total 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
    )
    
    
    (286,364
    )
    
    
    140,493
    
    
    
    147,476
    
    
    
    (78,415
    )Total shareholders equity (deficit)
    
    
    (79,974
    )
    
    
    (204,053
    )
    
    
    339,737
    
    
    
    (134,079
    )
    
    
    (78,369
    )Total liabilities and shareholders
equity (deficit)
    
    $
    5,588
    
    
    $
    205,422
    
    
    $
    753,419
    
    
    $
    (419,406
    )
    
    $
    545,023
 58




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##### Table of Contents



Condensed Consolidating Statement of Operations
For the Year Ended July 2, 2003
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)RESTAURANT SALES
    
    $
    
    
    
    $
    38,983
    
    
    $
    946,303
    
    
    $
    
    
    
    $
    985,286RESTAURANT COSTS:Food
    
    
    
    
    
    
    13,122
    
    
    
    298,769
    
    
    
    
    
    
    
    311,891Labor
    
    
    
    
    
    
    12,570
    
    
    
    300,962
    
    
    
    
    
    
    
    313,532Direct and occupancy
    
    
    
    
    
    
    5,189
    
    
    
    220,228
    
    
    
    
    
    
    
    225,417Total restaurant costs
    
    
    
    
    
    
    30,881
    
    
    
    819,959
    
    
    
    
    
    
    
    850,840ADVERTISING EXPENSES
    
    
    
    
    
    
    1,131
    
    
    
    27,458
    
    
    
    
    
    
    
    28,589GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    
    
    
    
    1,796
    
    
    
    43,586
    
    
    
    
    
    
    
    45,382IMPAIRMENT OF ASSETS
    
    
    
    
    
    
    
    
    
    
    4,803
    
    
    
    
    
    
    
    4,803GAIN ON SALE OF ORIGINAL
ROADHOUSE GRILL RESTAURANTS
    
    
    
    
    
    
    
    
    
    
    (7,088
    )
    
    
    
    
    
    
    (7,088
    )LOSS ON SALE LEASEBACK
TRANSACTIONS
    
    
    
    
    
    
    
    
    
    
    5,856
    
    
    
    
    
    
    
    5,856OPERATING INCOME
    
    
    
    
    
    
    5,175
    
    
    
    51,729
    
    
    
    
    
    
    
    56,904INTEREST EXPENSE
    
    
    1,089
    
    
    
    2,409
    
    
    
    37,737
    
    
    
    
    
    
    
    41,235INTEREST INCOME
    
    
    
    
    
    
    (307
    )
    
    
    
    
    
    
    
    
    
    
    (307
    )OTHER INCOME
    
    
    
    
    
    
    (1,270
    )
    
    
    
    
    
    
    
    
    
    
    (1,270
    )INCOME (LOSS) BEFORE
INCOME TAXES
    
    
    (1,089
    )
    
    
    4,343
    
    
    
    13,992
    
    
    
    
    
    
    
    17,246INCOME TAX EXPENSE
    
    
    
    
    
    
    955
    
    
    
    4,364
    
    
    
    
    
    
    
    5,319Net income (loss)
    
    $
    (1,089
    )
    
    $
    3,388
    
    
    $
    9,628
    
    
    $
    
    
    
    $
    11,927
 59




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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
    
    
    
    274,923
    
    
    
    
    
    
    
    287,467Direct and occupancy
    
    
    
    
    
    
    5,393
    
    
    
    211,995
    
    
    
    
    
    
    
    217,388Total restaurant costs
    
    
    
    
    
    
    32,009
    
    
    
    780,653
    
    
    
    
    
    
    
    812,662ADVERTISING EXPENSES
    
    
    
    
    
    
    1,093
    
    
    
    24,761
    
    
    
    
    
    
    
    25,854GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    
    
    
    
    1,806
    
    
    
    40,916
    
    
    
    
    
    
    
    42,722IMPAIRMENT OF ASSETS
    
    
    
    
    
    
    
    
    
    
    1,878
    
    
    
    
    
    
    
    1,878FINANCING-RELATED
COMPENSATION EXPENSES
    
    
    1,466
    
    
    
    774
    
    
    
    
    
    
    
    
    
    
    
    2,240OPERATING INCOME (LOSS)
    
    
    (1,466
    )
    
    
    4,169
    
    
    
    54,772
    
    
    
    
    
    
    
    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
    )
    
    
    (5,751
    )
    
    
    19,574
    
    
    
    
    
    
    
    9,618INCOME TAX EXPENSE
(BENEFIT)
    
    
    (1,619
    )
    
    
    (1,359
    )
    
    
    4,626
    
    
    
    
    
    
    
    1,648Net income (loss)
    
    $
    (2,586
    )
    
    $
    (4,392
    )
    
    $
    14,948
    
    
    $
    
    
    
    $
    7,970
 60




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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
    
    
    
    266,596
    
    
    
    
    
    
    
    279,214Direct and occupancy
    
    
    
    
    
    
    7,169
    
    
    
    215,118
    
    
    
    
    
    
    
    222,287Total restaurant costs
    
    
    
    
    
    
    34,381
    
    
    
    774,207
    
    
    
    
    
    
    
    808,588ADVERTISING EXPENSES
    
    
    
    
    
    
    1,051
    
    
    
    22,963
    
    
    
    
    
    
    
    24,014GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    5
    
    
    
    1,904
    
    
    
    41,603
    
    
    
    
    
    
    
    43,512IMPAIRMENT OF ASSETS
    
    
    
    
    
    
    
    
    
    
    3,609
    
    
    
    
    
    
    
    3,609OPERATING INCOME (LOSS)
    
    
    (5
    )
    
    
    3,214
    
    
    
    43,849
    
    
    
    
    
    
    
    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
    )
    
    
    542
    
    
    
    9,401
    
    
    
    
    
    
    
    (2,371
    )INCOME TAX EXPENSE
(BENEFIT)
    
    
    (3,237
    )
    
    
    166
    
    
    
    2,884
    
    
    
    
    
    
    
    (187
    )Net income (loss)
    
    $
    (9,077
    )
    
    $
    376
    
    
    $
    6,517
    
    
    $
    
    
    
    $
    (2,184
    )
 61




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##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the Year Ended July 2, 2003
 Subsidiary
    
    
    SubsidiaryParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Eliminations
    
    
    Consolidated(In thousands)OPERATING ACTIVITIES:Net income (loss)
    
    $
    (1,089
    )
    
    $
    3,388
    
    
    $
    9,628
    
    
    $
    
    
    
    $
    11,927Adjustments to reconcile net income (loss) to
net cash provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    3,510
    
    
    
    33,375
    
    
    
    
    
    
    
    36,885Amortization of debt issuance costs
    
    
    
    
    
    
    71
    
    
    
    1,111
    
    
    
    
    
    
    
    1,182Accretion of original issue discount
    
    
    
    
    
    
    44
    
    
    
    695
    
    
    
    
    
    
    
    739Impairment of assets
    
    
    
    
    
    
    
    
    
    
    4,803
    
    
    
    
    
    
    
    4,803Deferred income taxes
    
    
    
    
    
    
    41
    
    
    
    636
    
    
    
    
    
    
    
    677Gain on sale of Original Roadhouse Grill
Restaurants
    
    
    
    
    
    
    
    
    
    
    (7,088
    )
    
    
    
    
    
    
    (7,088
    )Loss on disposal of assets
    
    
    
    
    
    
    
    
    
    
    565
    
    
    
    
    
    
    
    565Loss on sale leaseback transactions
    
    
    
    
    
    
    
    
    
    
    5,856
    
    
    
    
    
    
    
    5,856Changes in assets and liabilities:Receivables
    
    
    96
    
    
    
    4,759
    
    
    
    (2,509
    )
    
    
    
    
    
    
    2,346Inventories
    
    
    
    
    
    
    (103
    )
    
    
    273
    
    
    
    
    
    
    
    170Prepaid expenses and other assets
    
    
    
    
    
    
    2,457
    
    
    
    (410
    )
    
    
    
    
    
    
    2,047Accounts payable
    
    
    
    
    
    
    7,684
    
    
    
    666
    
    
    
    
    
    
    
    8,350Accrued and other liabilities
    
    
    1,089
    
    
    
    (5,608
    )
    
    
    (8,171
    )
    
    
    
    
    
    
    (12,690
    )Income taxes payable/refundable
    
    
    (96
    )
    
    
    501
    
    
    
    1,482
    
    
    
    
    
    
    
    1,887Net cash provided by operating activities
    
    
    
    
    
    
    16,744
    
    
    
    40,912
    
    
    
    
    
    
    
    57,656INVESTING ACTIVITIES:Proceeds from sale leaseback transactions
    
    
    
    
    
    
    
    
    
    
    26,117
    
    
    
    
    
    
    
    26,117Proceeds from sale of Original Roadhouse Grill
Restaurants
    
    
    
    
    
    
    
    
    
    
    25,850
    
    
    
    
    
    
    
    25,850Purchase of property and equipment
    
    
    
    
    
    
    (2,423
    )
    
    
    (23,299
    )
    
    
    
    
    
    
    (25,722
    )Corporate cash advances (payments)
    
    
    
    
    
    
    (883
    )
    
    
    883
    
    
    
    
    
    
    
    Proceeds from sale of other assets
    
    
    
    
    
    
    
    
    
    
    417
    
    
    
    
    
    
    
    417Net cash provided by (used in) investing activities
    
    
    
    
    
    
    (3,306
    )
    
    
    29,968
    
    
    
    
    
    
    
    26,662FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    (4,392
    )
    
    
    (68,806
    )
    
    
    
    
    
    
    (73,198
    )Redemption of subordinated notes
    
    
    (400
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (400
    )Repurchase of common stock
    
    
    (576
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (576
    )Proceeds from issuance of common stock
    
    
    450
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    450Dividends
    
    
    576
    
    
    
    (576
    )
    
    
    
    
    
    
    
    
    
    
    Debt issuance costs
    
    
    
    
    
    
    (186
    )
    
    
    (2,915
    )
    
    
    
    
    
    
    (3,101
    )Net cash provided by (used in) investing activities
    
    
    50
    
    
    
    (5,154
    )
    
    
    (71,721
    )
    
    
    
    
    
    
    (76,825
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    50
    
    
    
    8,284
    
    
    
    (841
    )
    
    
    
    
    
    
    7,493CASH AND CASH EQUIVALENTS, beginning of period
    
    
    58
    
    
    
    227
    
    
    
    8,077
    
    
    
    
    
    
    
    8,362CASH AND CASH EQUIVALENTS, end of period
    
    $
    108
    
    
    $
    8,511
    
    
    $
    7,236
    
    
    $
    
    
    
    $
    15,855
 62




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##### 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
    )
    
    $
    (4,392
    )
    
    $
    14,948
    
    
    $
    
    
    
    $
    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
    )
    
    
    46,164
    
    
    
    10,084
    
    
    
    (1,859
    )
    
    
    50,490INVESTING ACTIVITIES:Proceeds from sale leaseback transactions
    
    
    
    
    
    
    
    
    
    
    2,710
    
    
    
    
    
    
    
    2,710Purchase of property and equipment
    
    
    
    
    
    
    (1,432
    )
    
    
    (31,575
    )
    
    
    
    
    
    
    (33,007
    )Corporate cash advances (payments)
    
    
    
    
    
    
    (13,631
    )
    
    
    11,772
    
    
    
    1,859
    
    
    
    Acquisition of 20% minority interest in Tahoe Joes Inc.
    
    
    
    
    
    
    
    
    
    
    (370
    )
    
    
    
    
    
    
    (370
    )Proceeds from sale of other assets
    
    
    
    
    
    
    
    
    
    
    2,284
    
    
    
    
    
    
    
    2,284Net 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
    )
    
    
    11,260
    
    
    
    (1,031
    )
    
    
    
    
    
    
    10,217CASH AND CASH EQUIVALENTS, beginning of period
    
    
    108
    
    
    
    8,511
    
    
    
    7,236
    
    
    
    
    
    
    
    15,855CASH AND CASH EQUIVALENTS, end of period
    
    $
    96
    
    
    $
    19,771
    
    
    $
    6,205
    
    
    $
    
    
    
    $
    26,072
 63




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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
    )
    
    $
    376
    
    
    $
    6,517
    
    
    $
    
    
    
    $
    (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
    
    
    
    
    
    
    40,264
    
    
    
    (39,297
    )
    
    
    (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
    )
    
    
    52,194
    
    
    
    2,161
    
    
    
    (636
    )
    
    
    52,675INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    
    
    
    
    (1,601
    )
    
    
    (27,530
    )
    
    
    
    
    
    
    (29,131
    )Corporate cash advances (payments)
    
    
    
    
    
    
    (53,163
    )
    
    
    52,527
    
    
    
    636
    
    
    
    Proceeds from sale of other assets
    
    
    32
    
    
    
    
    
    
    
    628
    
    
    
    
    
    
    
    660Net cash provided by (used in) investing activities
    
    
    32
    
    
    
    (54,764
    )
    
    
    25,625
    
    
    
    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
 64




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12 Interim Financial Results (Unaudited)
  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
    )
 For the Year Ended June 30, 2004First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterRevenues
    
    $
    219,608
    
    
    $
    211,275
    
    
    $
    287,573
    
    
    $
    224,375Operating income
    
    
    14,219
    
    
    
    12,090
    
    
    
    18,446
    
    
    
    12,720Income (loss) before income taxes
    
    
    6,067
    
    
    
    3,674
    
    
    
    (590
    )
    
    
    467Net income (loss)
    
    $
    3,967
    
    
    $
    2,554
    
    
    $
    (70
    )
    
    $
    1,519
  7 8 1 4
 1 4
 65




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1 4
 66




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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
   67




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PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  Name
    
    Age
    
    PositionFrederick J. Iseman
    
    
    52
    
    
    Chairman of the Board and Director of BuffetsRoe H. Hatlen
    
    
    61
    
    
    President, Chief Executive Officer, Vice Chairman of
the Board and Director of BuffetsR. Michael Andrews, Jr.
    
    
    41
    
    
    Executive Vice President and Chief Operating OfficerGlenn D. Drasher
    
    
    54
    
    
    Executive Vice President of MarketingH. Thomas Mitchell
    
    
    48
    
    
    Executive Vice President, General Counsel and SecretaryDale Maxfield
    
    
    46
    
    
    Executive Vice President of OperationsFred Williams
    
    
    47
    
    
    Executive Vice President of Development/Real EstateSteven M. Lefkowitz
    
    
    41
    
    
    Director of BuffetsRobert A. Ferris
    
    
    63
    
    
    Director of BuffetsDavid S. Lobel
    
    
    52
    
    
    Director of BuffetsRobert M. Rosenberg
    
    
    67
    
    
    Director of Buffets
 Frederick Iseman
 Roe H. Hatlen
 R. Michael Andrews, Jr.
 Glenn D. Drasher
 68




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##### Table of Contents



H. Thomas Mitchell
 Dale Maxfield
 Fred Williams
 Steven M. Lefkowitz
 Robert A. Ferris
 David S. Lobel
 Robert M. Rosenberg
  69




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Board of Directors
    Audit Committee Financial Expert
  
 ITEM 11. EXECUTIVE COMPENSATION
  70




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Annual CompensationOther AnnualFiscal
    
    
    
    
    
    
    
    
    
    
    Compensation
    
    
    All OtherName and Principal Position
    
    Year
    
    
    Salary($)
    
    
    Bonus($)
    
    
    ($)(1)
    
    
    CompensationRoe H. Hatlen
    
    
    2005
    
    
    
    261,539
    
    
    
    
    
    
    
    
    
    
    
    238,000
    (3)President, Chief Executive
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    257,000
    (3)Officer and Director (2)
    
    
    2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    283,000
    (3)Kerry A. Kramp
    
    
    2005
    
    
    
    200,491
    
    
    
    
    
    
    
    
    
    
    
    713,870
    (4)President, Chief Executive
    
    
    2004
    
    
    
    491,400
    
    
    
    
    
    
    
    
    
    
    
    Officer and Director (2)
    
    
    2003
    
    
    
    472,500
    
    
    
    50,000
    
    
    
    
    
    
    
    R. Michael Andrews, Jr.
    
    
    2005
    
    
    
    284,806
    
    
    
    
    
    
    
    31,152
    (6)
    
    
    Executive Vice President
    
    
    2004
    
    
    
    224,640
    
    
    
    
    
    
    
    
    
    
    
    and Chief Operating Officer (5)
    
    
    2003
    
    
    
    216,000
    
    
    
    75,000
    
    
    
    
    
    
    
    Glenn D. Drasher
    
    
    2005
    
    
    
    231,530
    
    
    
    
    
    
    
    
    
    
    
    237,796
    (8)Executive Vice President
    
    
    2004
    
    
    
    224,786
    
    
    
    
    
    
    
    
    
    
    
    of Marketing (7)
    
    
    2003
    
    
    
    222,560
    
    
    
    
    
    
    
    
    
    
    
    Dale Maxfield
    
    
    2005
    
    
    
    223,754
    
    
    
    
    
    
    
    
    
    
    
    Executive Vice President
    
    
    2004
    
    
    
    186,849
    
    
    
    16,000
    
    
    
    63,510
    (10)
    
    
    of Operations (9)
    
    
    2003
    
    
    
    164,115
    
    
    
    
    
    
    
    
    
    
    
    H. Thomas Mitchell
    
    
    2005
    
    
    
    200,154
    
    
    
    
    
    
    
    
    
    
    
    Executive Vice President,
    
    
    2004
    
    
    
    194,324
    
    
    
    
    
    
    
    
    
    
    
    General Counsel and Secretary
    
    
    2003
    
    
    
    192,400
    
    
    
    50,000
    
    
    
    
    
    
    
    
 
 (1)
    
    This column includes perquisites exceeding the smaller of $50,000 or ten percent of the
total annual salary and bonus for each named executive officer.(2)
    
    Mr. Hatlen replaced Mr. Kramp as President and Chief Executive Officer in November 2004.(3)
    
    Amount is related to an advisory agreement as discussed in Item 13 Certain Relationships and
Related Transactions.(4)
    
    Amount includes $536,966 of severance pay and $176,904 related to a consulting agreement as
discussed in Item 13 Certain Relationships and Related Transactions.(5)
    
    Mr. Andrews was promoted from Executive Vice President and Chief Financial Officer to
Executive Vice President and Chief Operating Officer in November 2004.(6)
    
    Amount includes $23,568 of car allowance.(7)
    
    Mr. Drasher separated from the company in August 2005.(8)
    
    Amount represents severance pay accrued as of June 29, 2005.(9)
    
    Mr. Maxfield was promoted from Senior Vice President of Operations to Executive Vice
President of Operations in November 2004.(10)
    
    Amount includes $46,206 of relocation expense allowance. Employee Benefit Plans
  Employment Agreements
  71




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##### Table of Contents



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  Name of Beneficial Owner
    
    Shares
    
    
    PercentageCaxton-Iseman Investments L.P. (1)
    
    
    2,501,438
    
    
    
    78.8
    %Sentinel
Capital Partners II, L.P. (2)
    
    
    225,106
    
    
    
    7.1Frederick J.
Iseman (1)
    
    
    2,501,438
    
    
    
    78.8David S.
Lobel (2)
    
    
    225,106
    
    
    
    7.1Roe H.
Hatlen (3)
    
    
    195,452
    
    
    
    6.2R. Michael Andrews, Jr.
    
    
    89,375
    
    
    
    2.8Dale Maxfield
    
    
    40,625
    
    
    
    1.3H. Thomas Mitchell
    
    
    20,000
    
    
    
    0.6Glenn D. Drasher (5)
    
    
    18,501
    
    
    
    0.6Robert M. Rosenberg (4)
    
    
    4,610
    
    
    
    0.1Steven M. Lefkowitz
    
    
    
    
    
    
    Robert A. Ferris
    
    
    
    
    
    
    All executive officers and directors as a group (11 persons)
    
    
    3,115,107
    
    
    
    98.1
 
 (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 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.(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 held by that entity. The
address of Sentinel Capital Partners II, L.P. is 777 Third Avenue, 32nd Floor, New York, New
York, 10017.(3)
    
    Mr. Hatlen has sole voting and dispositive power over 65,012 shares of common stock. Mr.
Hatlen may be deemed to be the beneficial owner of 33,340 shares of common stock held by Kari
E. Hatlen, 33,339 shares of common stock held by Erik R. Hatlen, 22,506 shares of common stock
owned by Lars C. Hatlen Trust and 10,833 shares of common stock owned by Lars C. Hatlen. By
virtue of Mr. Hatlens control over Eventyr Investments, he is deemed to beneficially own the
30,422 shares of common stock held by that entity.(4)
    
    Mr. Rosenberg also owned options to purchase 12,600 shares of common stock.(5)
    
    Mr. Drasher separated from the company in August 2005. 72




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##### Table of Contents



Equity Compensation Plan InformationNumber of
    
    
    Weighted-
    
    
    Number of securitiessecurities to be
    
    
    average exercise
    
    
    remaining available forissued upon exercise
    
    
    price of
    
    
    future issuance underof outstanding
    
    
    outstanding
    
    
    equity compensation plansoptions, warrants
    
    
    options, warrants
    
    
    (excluding securitiesPlan Category
    
    and rights
    
    
    and rights
    
    
    reflected in column (A))Equity compensation
plans approved by
security holders
    
    
    97,029
    
    
    $
    14.51
    
    
    
    16,721Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    97,029
    
    
    $
    14.51
    
    
    
    16,721
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 Founder Advisory Agreements
  Purchase of Property by Roe Hatlen
  Caxton-Iseman Capital Advisory Agreement
  Board of Directors Advisory Agreement
  Sentinel Capital Advisory Agreement
  73




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##### Table of Contents



Consulting Agreement
  Guarantees, Promissory Notes and Pledge Agreements
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  For the Year EndedJuly 2,
    
    
    June 30,
    
    
    June 29,2003
    
    
    2004
    
    
    2005Audit fees (1)
    
    $
    118,800
    
    
    $
    285,600
    
    
    $
    403,306Audit-related fees (2)
    
    
    243,686
    
    
    
    42,850
    
    
    
    10,000Tax fees (3)
    
    
    97,425
    
    
    
    57,600
    
    
    
    66,950All other fees
    
    
    
    
    
    
    
    
    
    
    Total fees
    
    $
    459,911
    
    
    $
    386,050
    
    
    $
    480,256
 
 (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 years 2003 and 2004 are comprised of annual audits and
quarterly reviews of our subsidiaries. Audit-related fees for fiscal 2005 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.  74




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##### Table of Contents



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:
       2.
    
    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.
 75




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##### Table of Contents



3.
    
    See Index to Exhibits on page 79 of this report.
 (b)
    
    Reports on Form 8-K:
 1.
    
    On August 25, 2005, we filed a current report on Form 8-K
(Items 2.02 and 901c) announcing our results for the fiscal year ended June 29,
2005 and our same store sale projections for the first quarter of 2006.
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##### Table of Contents



SIGNATURES
  BUFFETS HOLDINGS, INC.Date: September 23, 2005
    
    
    
    By:
    
    /s/ Roe H. HatlenRoe H. HatlenChief Executive Officer(Principal Executive Officer)By:
    
    /s/ R. Michael Andrews, Jr.R. Michael Andrews, Jr.Chief Operating Officer(Principal Financial andAccounting Officer)
 77




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##### Table of Contents



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

Roe H. Hatlen
    
    President, Chief
Executive Officer
(Principal Executive
Officer) and Director
    
    September 23, 2005/s/ R. Michael Andrews, Jr.

R. Michael Andrews, Jr.
    
    Executive Vice
President and Chief
Operating Officer
(Principal Financial
and Accounting Officer)
    
    September 23, 2005/s/ Robert A. Ferris

Robert A. Ferris
    
    Director
    
    September 23, 2005/s/ Frederick J. Iseman

Frederick J. Iseman
    
    Director (Chairman of
the Board of Directors)
    
    September 23, 2005/s/ Steven M. Lefkowitz

Steven M. Lefkowitz
    
    Director
    
    September 23, 2005/s/ David S. Lobel

David S. Lobel
    
    Director
    
    September 23, 2005/s/ Robert M. Rosenberg

Robert M. Rosenberg
    
    Director
    
    September 23, 2005
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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit Number
    
    Description3.1*
    
    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)).3.3*
    
    Articles of Incorporation of Buffets, Inc. (incorporated by
reference to Exhibit 3.1 to Buffets, Inc.s Registration
Statement on Form S-4, filed with the Commission on August 16,
2002 (SEC file No. 333-98301)).4.1*
    
    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)).
 79




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##### Table of Contents



Exhibit Number
    
    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 H. 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
    
    Severance Protection Agreements, dated September 29, 2000,
between Buffets, Inc. and each of Kerry A. Kramp, R. Michael
Andrews, Jr., Glenn D. Drasher, H. Thomas Mitchell and Dale
Maxfield12.1
    
    Statement of Computation of Ratios of Earnings of Fixed Charges.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 2002.32.1**
    
    Certification of Principal Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.32.2**
    
    Certification of Principal Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Previously provided or incorporated by reference.**
    
    Shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of
1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed
incorporated by reference into any filing under the Securities Act of 1933 or Securities
Exchange Act of 1934. 80