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	•	We are offering to exchange $300,000,000 of our outstanding 121/2% Senior Notes due 2014, which were issued on November 1, 2006 and which we refer to as the initial notes, for a like aggregate amount of our registered 121/2% Senior Notes due 2014, which we refer to as the exchange notes. The exchange notes will be issued under an indenture dated as of November 1, 2006.
	•	The exchange notes will mature on November 1, 2014. We will pay interest on the exchange notes on January 1 and July 1, beginning on January 1, 2007.
	•	The exchange notes are unconditionally guaranteed on a senior unsecured basis by our parent, Buffets Holdings, Inc., and certain of our current and future domestic subsidiaries.
	•	The exchange notes will be our senior unsecured obligations and will rank equally in right of payment with all of our existing and future senior unsecured indebtedness, senior to all of our existing and future subordinated indebtedness and effectively junior to all our existing and future secured indebtedness, including our new senior secured credit facilities, to the extent of the value of the assets securing such indebtedness.

	•	It will expire at 5:00 p.m., New York City time, on January 31, 2007, unless we extend it.
	•	If all the conditions to this exchange offer are satisfied, we will exchange all of the initial notes that are validly tendered and not withdrawn for the exchange notes.
	•	You may withdraw your tender of initial notes at any time before the expiration of this exchange offer.
	•	The exchange notes that we will issue you in exchange for your initial notes will be substantially identical to your initial notes except that, unlike your initial notes, the exchange notes will have no transfer restrictions or registration rights.
	•	The exchange notes that we will issue you in exchange for your initial notes are new securities with no established market for trading.

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		Page
Prospectus Summary			1
Risk Factors			21
Industry and Market Data			31
Trademarks			31
Disclosure Regarding Forward-Looking Statements			32
The Ryan’s Acquisition and Related Transactions			33
Use of Proceeds			35
Capitalization			37
Unaudited Pro Forma Condensed Combined Financial Information			38
Selected Historical Financial Data			44
Management’s Discussion and Analysis of Financial Condition and Results of Operations			48
Business			66
Management			81
Related Party Transactions			88
Principal Stockholders			91
The Exchange Offer			93
Description of the Notes			101
Book-Entry, Delivery and Form			141
Description of Credit Facility			144
U.S. Federal Income Tax Considerations			146
Plan of Distribution			151
Legal Matters			152
Experts			152
Where You Can Find More Information			152
Index to Financial Statements			F-1

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	Our core buffet restaurants are a maturing restaurant concept and face intense competition.

	We are dependent on attracting and retaining qualified employees while controlling labor costs.

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	We are dependent on timely delivery of fresh ingredients by our suppliers. We are also substantially dependent on a single food supplier.

	Our restaurant sales are subject to seasonality and major world events.

	Our business is affected by changes in consumer preferences and consumer discretionary spending.

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	Current restaurant locations may become unattractive, and attractive new locations may not be available for a reasonable price, if at all.

	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.

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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.

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	We may not realize the anticipated benefits of our acquisition of Ryan’s and we may face certain challenges regarding the integration of Ryan’s.

	Complaints or litigation may hurt us.

	We are controlled by a single shareholder and its interests may conflict with yours.

	Our indebtedness may limit our cash flow available to invest in our business, which could prevent us from fulfilling our obligations under the notes.

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	•	the impairment of our ability to obtain additional financing in the future for working capital, capital expenditures, for, among other items, restaurant development and refurbishment, acquisitions, general corporate purposes or other purposes,
	•	a significant portion of our cash flow from operations must be dedicated to the payment of principal and interest on our debt, which reduces the funds available to us for our operations,
	•	some of our debt is, and will continue to be, at variable rates of interest, which may result in higher interest expense in the event of increases in interest rates, and
	•	our debt contains, and any refinancing of our debt likely will contain, financial and restrictive covenants, the failure to comply with which may result in an event of default which, if not cured or waived, could have a material adverse effect on us.

	The indenture governing the notes and the terms of our New Credit Facility contain various covenants which limit the discretion of our management in operating our business and could prevent us from engaging in some beneficial activities.

	•	dividends on, and redemptions and repurchases of, capital stock,
	•	liens and sale-leaseback transactions,
	•	loans and investments,
	•	debt and hedging arrangements,
	•	mergers, acquisitions and asset sales,
	•	transactions with affiliates, and
	•	changes in business activities conducted by us and our subsidiaries.

	We have substantial operating lease obligations. Our operating leases contain terms that could limit our ability to manage our business and result in the termination of our leases.

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	We may not be able to generate sufficient cash flow to meet our debt service and operating lease obligations, including payments on the notes.

	The exchange notes are unsecured and effectively subordinated to our secured indebtedness.

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	Increases in market interest rates will increase our debt service obligations.

	There is no established trading market for the exchange notes.

	•	changes in the overall market for high yield securities,
	•	changes in our financial performance or prospects,
	•	the prospects for companies in our industry generally,
	•	the number of holders of the notes,
	•	the interest of securities dealers in making a market for the notes, and
	•	prevailing interest rates.

	We may not be able to fulfill our repurchase obligations in the event of a change of control.

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	It may be difficult for the holders of exchange notes to ascertain that a change of control has occurred, leading to uncertainty as to whether a holder of exchange notes may require us to repurchase the exchange notes.

	We may enter into certain transactions that would not constitute a change of control but that result in an increase of our indebtedness.

	Fraudulent conveyance laws could void our obligations under the exchange notes.

	•	were insolvent,
	•	were rendered insolvent by the issuance of the exchange notes,
	•	were engaged in a business or transaction for which our remaining assets constituted unreasonably small capital, or
	•	intended to incur, or believed that we would incur, debts beyond our ability to repay those debts as they matured.

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	The issuance of the exchange notes may adversely affect the market for the initial notes.

	Some persons who participate in the exchange offer must deliver a prospectus in connection with resales of the exchange notes.

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	•	general business and economic conditions,
	•	negative publicity,
	•	the impact of competition,
	•	the seasonality of our business,
	•	adverse weather conditions,
	•	future commodity prices,
	•	fuel and utility costs,
	•	changes in minimum wage rates,
	•	availability of food products,
	•	labor availability, retention and costs,
	•	employment and environmental laws,
	•	public health developments including avian flu and E. coli,
	•	developments affecting the public’s perception of buffet-style restaurants,
	•	real estate availability,
	•	interest rate fluctuations,
	•	political environment (including acts of terrorism and wars),
	•	governmental regulations, and
	•	inflation.

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	•	pay the Ryan’s Acquisition Consideration;
	•	repay all existing indebtedness of Ryan’s;
	•	repay all of our existing indebtedness under the Existing Credit Facility;
	•	repurchase or redeem the 11.25% Notes and repurchase the 13.875% Notes; and
	•	pay premium costs, accrued interests and transactions fees and expenses incurred in connection with the Transactions.

Sources of Funds:
				(Dollars in
				millions)
Cash on hand				$	9.0
New Credit Facility:(1)
	Revolver				5.0
	Term loan				530.0
Proceeds from Sale-Leaseback Transaction					566.8
Proceeds from the offering of the initial notes					300.0
		Total sources		$	1,410.8

Uses of Funds:
			(Dollars in
			millions)
Payment of the Ryan’s Acquisition Consideration(2)			$	704.6
Repayment of existing indebtedness of Ryan’s(3)				146.9
Repayment of existing indebtedness under the Existing Credit Facility(4)				196.4
Repurchase of the 11.25% Notes(5)				195.3
Repurchase of the 13.875% Notes(5)				121.5
Transaction fees and expenses(6)(7)				46.1
	Total uses		$	1,410.8

(1)	The New Credit Facility consists of a senior secured term loan facility in an aggregate principal amount of $530.0 million that matures on November 1, 2013, a senior secured revolving credit facility in an aggregate principal amount of $40.0 million that matures on November 1, 2011 (of which up to $20.0 million will be available through a subfacility in the form of letters of credit) and a senior secured pre-funded synthetic letter of credit facility in an aggregate amount of $70.0 million that matures on May 1, 2003. See “Description of Credit Facility — New Credit Facility” for further description of the New Credit Facility.
(2)	For a full description of the Ryan’s Acquisition Consideration, see “The Ryan’s Acquisition and Related Transactions.”
(3)	Ryan’s existing indebtedness consisted of a revolving credit facility due December 2009 in the aggregate principal amount of $145.0 million, of which $7.5 million was outstanding and accruing interest at 6.57% as of November 1, 2006, 9.02% senior notes due January 2008 in the aggregate principal amount of

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	$37.5 million and 4.65% senior notes due July 2013 in the aggregate principal amount of $100.0 million, accrued interest of $1.0 million, and break fees of $0.9 million.
(4)	The Existing Credit Facility provided for total borrowings of up to $310.0 million, including (i) a $230.0 million term loan, (ii) a $30.0 million revolving credit facility, (iii) a $20.0 million letter of credit facility, and (iv) a $30.0 million synthetic letter of credit facility. The terms of the Existing Credit Facility permitted us to borrow, subject to availability and certain conditions, incremental term loans or to issue additional notes in an aggregate amount up to $25.0 million. The borrowings under the term loan facility bore interest, at our option, at either adjusted LIBOR plus 3.50% or at an alternate base rate plus 2.50%, subject to a leverage-based pricing grid. The term loan and the synthetic letter of credit facility would have matured on June 28, 2009, while the revolving facility and the letter of credit facilities would have matured on June 28, 2007.
(5)	See “The Ryan’s Acquisition and Related Transactions — Financing Transactions — Tender Offers and Consent Solicitations.”
(6)	We paid approximately $40.2 million in commitment, placement and transaction related fees in connection with the New Credit Facility, the offering of the initial notes and the Sale-Leaseback Transaction and approximately $5.9 million in financial advisory fees for both Buffets and Ryan’s on November 1, 2006, the closing date of the Ryan’s acquisition.
(7)	Within 90 days after the closing of the Ryan’s acquisition, we plan to pay approximately $37.0 million in fees and related costs associated with the Transactions, including approximately $6.8 million in fees and costs relating to the redemption of the 11.25% Notes, approximately $16.8 million in advisory fees payable to Caxton-Iseman Capital and approximately $13.4 million in consulting, advisory or professional fees relating to legal or accounting services. We expect to pay these fees with cash on hand and additional borrowings from the revolving portion of the New Credit Facility.

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	•	on an actual basis; and
	•	on a pro forma basis to reflect the offering of the initial notes and other Transactions and the application of the related net proceeds to us therefrom as described in “Use of Proceeds.”

					As of September 20, 2006
					Actual				Pro Forma
					(Dollars in thousands)
Cash and cash equivalents					$	8,061			$	6,721
Indebtedness:
	Existing Credit Facility				$	187,587			$	—
	11.25% senior subordinated notes due 2010					180,675				—
	13.875% senior discount notes due 2010					103,534				—
	New Credit Facility:(1)
		Revolver				—				5,000
		Term loan				—				530,000
	Notes(2)					—				300,000
		Total Indebtedness				471,796				835,000
		Total Shareholders’ deficit				(84,291	)			(133,121	)
			Total Capitalization		$	387,505			$	701,879

(1)	The New Credit Facility consists of a senior secured term loan facility in an aggregate principal amount of $530.0 million that matures on November 1, 2013, a senior secured revolving credit facility in an aggregate principal amount of $40.0 million that matures on November 1, 2011 (of which up to $20.0 million will be available through a subfacility in the form of letters of credit) and a senior secured pre-funded synthetic letter of credit facility in an aggregate amount of $70.0 million that matures on May 1, 2013. See “Description of Credit Facility — New Credit Facility” for further description of the New Credit Facility.
(2)	We are offering to exchange $300 million of our exchange notes in exchange for a like aggregate amount of our initial notes.

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	•	the offering of the initial notes;
	•	the Ryan’s acquisition;
	•	the New Credit Facility;
	•	the Sale-Leaseback Transaction; and
	•	the application of the proceeds from the offering of the initial notes, together with cash on hand, the borrowings from the New Credit Facility and the proceeds from the Sale-Leaseback Transaction, to pay the consideration of the Ryan’s acquisition, repay all existing indebtedness of Ryan’s, repay all outstanding indebtedness under the Existing Credit Facility, repurchase or redeem the 11.25% Notes and repurchase the 13.875% Notes, and pay premiums and prepayment costs, accrued interests and transactions fees and expenses incurred in connection with the Transactions.

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				Buffets				Ryan’s
				Holdings,				Restaurant				Pro Forma				Pro Forma
				Inc.				Group, Inc.				Adjustment				Combined
				(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents				$	8,061			$	18,432			$	(19,772	) (1)		$	6,721
Receivables					4,485				5,932				—				10,417
Inventories					18,820				5,045				—				23,865
	Prepaid expenses and other current assets				4,563				2,398				5,143	(2)			12,104
	Deferred income taxes				10,324				7,320				—				17,644
		Total current assets			46,253				39,127				(14,629	)			70,751
Property and equipment, net					143,172				648,968				(494,525	) (3)			297,615
Goodwill and other intangibles					312,163				—				269,660	(4)			581,823
Deferred income taxes					13,683				—				(5,248	) (5)			8,435
Other assets, net					15,326				9,165				24,878	(6)			49,369
		Total assets		$	530,597			$	697,260			$	(219,864	)		$	1,007,993
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
	Accounts payable			$	43,315			$	5,637			$	—			$	48,952
	Accrued liabilities				62,686				47,246				17,407	(7)			127,339
	Income taxes payable				2,014				2,110				(3,609	) (8)			515
	Current maturities of long-term debt				7,862				33,036				(30,598	) (9)			10,300
		Total current liabilities			115,877				88,029				(16,800	)			187,106
Long-term debt, net of current maturities					463,934				113,964				246,802	(10)			824,700
Deferred lease obligations					28,435				—				—				28,435
Deferred income taxes					—				38,504				48,382	(11)			86,886
Other long-term liabilities					6,642				7,345				—				13,987
Total liabilities					614,888				247,842				278,384				1,141,114
Total shareholders’ equity (deficit)					(84,291	)			449,418				(498,248	) (12)			(133,121	)
	Total liabilities and shareholders’ equity (deficit)			$	530,597			$	697,260			$	(219,864	)		$	1,007,993

(1)	Reflects the following:

	•	($704,591) for the purchase of approximately 42.4 million shares of outstanding common stock at the merger consideration of $16.25 per share and approximately 2.8 million common stock options at the excess, if any, of the merger consideration of $16.25 per share over the exercise price per share of common stock underlying such option.
	•	$566,770 of gross proceeds from the Sale-Leaseback Transaction. In the Sale-Leaseback Transaction, we sold the land (or, in certain cases, assigned our interest in the ground leased properties pursuant to an assignment of the underlying ground leases) and related improvements with respect to approximately 275 Ryan’s restaurants and seven Buffets restaurants and simultaneously leased these properties back.

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	•	$830,000 of gross proceeds from the offering of the initial notes and borrowings under the New Credit Facility. This includes $530,000 under the New Credit Facility plus $300,000 under the initial notes. See “Description of the Notes” and “Description of Credit Facility — New Credit Facility.”
	•	($617,989) due to the repayment of our and Ryan’s existing debt and accrued interest as of September 20, 2006, net of revolver drawdown and cash prepayments.
	•	($93,962) of transaction fees and expenses. Transaction fees and expenses include commitment fees and expenses for the new Sale-Leaseback facility, the New Credit Facility, the initial notes, advisory, legal and accounting fees plus break fees on the existing indebtedness that was repaid at close.

(2)	Reflects $5,143 of rent pertaining to properties associated with the Sale Leaseback Transaction prepaid at the close of the transaction.
(3)	Reflects the book value of $494,525 of assets sold in the Sale-Leaseback Transaction. In the Sale-Leaseback Transaction, we sold the land (or, in certain cases, assigned our interest in the ground leased properties pursuant to an assignment of the underlying ground leases) and related improvements with respect to approximately 275 Ryan’s restaurants and seven Buffets restaurants and simultaneously leased these properties back.
(4)	Reflects $269,660 of transaction goodwill and other intangibles associated with the Ryan’s acquisition including a fair market value adjustment to property and equipment of $9,239. The allocation of the purchase price to goodwill and other intangibles is based on management’s preliminary estimates. Fair value adjustments related to property and equipment and other amounts will impact the final allocation of the purchase price to goodwill.
(5)	Reflects deferred income taxes of ($5,248) arising as a result of the transaction adjustments.
(6)	Reflects the following:

	•	($8,894) adjustment to write-off our existing debt issuance costs,
	•	($129) of adjustment to write-off Ryan’s existing debt issuance costs, and
	•	$33,901 adjustment to record new debt issuance costs related to the initial notes, the New Credit Facility and the Sale-Leaseback Transaction.

(7)	Reflects the following:

	•	$10,000 of accrued severance costs for Ryan’s senior executives and other merger related costs,
	•	($1,467) of Ryan’s accrued interest as of September 20, 2006,
	•	($7,926) due to the repayment of our accrued interest, and
	•	$16,800 in advisory fees payable to Caxton-Iseman after the close of the transaction.

(8)	Reflects $(3,557) and $(52) of reduction of income tax payable associated with loss on early extinguishment of Ryan’s and our debt, respectively.
(9)	Reflects:

	•	($40,898) of repayment of our and Ryan’s existing debt and accrued interest as of September 20, 2006,
	•	$5,000 representing as of September 20, 2006, the gross proceeds from borrowings under the New Credit Facility, and
	•	$5,300 representing the current portion of the New Credit Facility.

(10)	Reflects:

	•	($577,898) of repayment of our and Ryan’s existing debt less current maturities as of September 20, 2006, and

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	•	$824,700 representing $524,700, which is net of $10,300 current portion of long-term debt under the New Credit Facility, plus $300,000 under the initial notes. See “Description of the Notes” and “Description of Credit Facility — New Credit Facility.”

(11)	Reflects the recording of the deferred tax liability of $48,382 from difference in book and tax basis of the assets acquired in the Ryan’s acquisition. These assets were sold in the Sale-Leaseback Transaction.
(12)	Reflects adjustments to shareholders’ equity (deficit) as follows:

Elimination of Ryan’s equity including:
	Common stock		$	(42,396	)
	Additional paid in capital			(8,942	)
	Retained earnings			(398,080	)
Other acquisition based expenses, net of tax				(43,416	)
Adjustment to the write-off of our existing debt issuance cost, net of tax of $3,723				(5,337	)
Loss related to early extinguishment of Ryan’s debt, net of tax of $52				(77	)
Net adjustment to shareholders’ equity (deficit)			$	(498,248	)

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			Year Ended June 28, 2006																Twelve Weeks Ended September 20, 2006
							Ryan’s																Ryan’s
			Buffets				Restaurant												Buffets				Restaurant
			Holdings,				Group,				Pro Forma				Pro Forma				Holdings,				Group,				Pro Forma				Pro Forma
			Inc.				Inc.				Adjustments				Combined				Inc.				Inc.				Adjustments				Combined
			(Dollars in thousands)
Restaurant sales			$	963,161			$	822,425			$	—			$	1,785,586			$	221,276			$	193,175				—			$	414,451
Restaurant costs:
	Food			327,244				282,669				—				609,913				76,554				66,619				—				143,173
	Labor			274,652				269,061				—				543,713				62,693				64,984				—				127,677
	Direct and occupancy			227,680				167,394				41,319	(1)			436,393				53,486				39,559				9,150	(6)			102,195
Total restaurant costs				829,576				719,124				41,319				1,590,019				192,733				171,162				9,150				373,045
Advertising expenses				30,637				—				—				30,637				7,227				—				—				7,227
General and administrative expenses				44,198				54,907				(2,340	)(2)			96,765				9,728				11,926				(540	)(7)			21,114
Shareholders’ rights repurchase				757				—				—				757				—				—				—				—
Closed restaurant costs				6,023				—				—				6,023				742				—				—				742
Impairment of assets				5,964				5,686				—				11,650				—				3,109				—				3,109
Merger Integration costs				—				—				—				—				440				—				—				440
Operating income				46,006				42,708				(38,979	)			49,735				10,406				6,978				(8,610	)			8,774
Interest expense				52,242				9,392				26,871	(3)			88,505				13,228				1,928				5,268	(8)			20,424
Interest income				(375	)			—				253	(4)			(122	)			(28	)			—				5	(9)			(23	)
Loss related to refinancing				647				—				—				647				243				—				—				243
Revenues from franchised restaurants				—				(35	)			—				(35	)			—				—				—				—
Other income				(994	)			(5,062	)			—				(6,056	)			(202	)			(1,342	)			—				(1,544	)
Income (loss) before income taxes				(5,514	)			38,413				(66,103	)			(33,204	)			(2,835	)			6,392				(13,883	)			(10,326	)
Income tax expense (benefit)				(742	)			12,447				(24,987	)(5)			(13,282	)			(1,695	)			2,189				(5,248	)(10)			(4,754	)
Net income (loss)			$	(4,772	)		$	25,966			$	(41,116	)		$	(19,922	)		$	(1,140	)		$	4,203			$	(8,635	)		$	(5,572	)

(1)	Reflects pro forma rent expense from the Sale-Leaseback Transaction of $57,527, less a depreciation elimination of ($16,208). In the Sale-Leaseback Transaction, we sold the land (or, in certain cases, assigned our interest in the ground leased properties pursuant to an assignment of the underlying ground leases) and related improvements with respect to approximately 275 Ryan’s restaurants and seven Buffets restaurants and simultaneously leased these properties back under lease terms averaging 20 years.
(2)	Reflects reductions in costs due to the following:

	•	Duplicate separate entity public reporting costs and expenses at Ryan’s and duplicate board of directors fees and expenses at Ryan’s totaling approximately $800,
	•	Elimination of certain senior executives and direct benefit and other compensation costs of $800,
	•	Reduction in net worth taxes at Ryan’s in the amount of $340, and
	•	Elimination of duplicate directors and officers liability insurance costs at Ryan’s upon the close of the transaction of $400.

(3)	Reflects the elimination of historical interest expense of $61,634 and adjustment to pro forma interest expense related to the Transactions of $88,505. If the blended interest rate on total variable rate debt

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	were 0.125% higher, it would increase our total interest expense by approximately $0.7 million for the year ended June 28, 2006.
(4)	Reflects the adjustment for historical interest income.
(5)	Reflects taxes on the pro forma income before income taxes at an assumed tax rate of 37.8%.
(6)	Reflects pro forma rent expense from the Sale-Leaseback Transaction of $13,275, less a depreciation elimination of ($4,125). In the Sale-Leaseback Transaction, we sold the land (or, in certain cases, assigned our interest in the ground leased properties pursuant to an assignment of the underlying ground leases) and related improvements with respect to approximately 275 Ryan’s restaurants and seven Buffets restaurants and simultaneously leased these properties back under lease terms averaging 20 years.
(7)	Reflects reductions in costs due to the following:

	•	Duplicate separate entity public reporting cost and expenses at Ryan’s and duplicate board of directors fees and expenses at Ryan’s totaling approximately $185.
	•	Elimination of certain senior executives and direct benefit and other compensation costs of $185.
	•	Reduction in net worth taxes at Ryan’s in the amount of $78, and
	•	Elimination of duplicate directors and officers liability insurance costs at Ryan’s upon the close of the transaction of $92.

(8)	Reflects the elimination of historical interest expense of $15,156 and adjustment to pro forma interest expense related to the Transactions of $20,424. If the blended interest rate on total variable rate debt were 0.125% higher, it would increase our total interest expense by approximately $0.2 million for the 12 weeks ended September 20, 2006.
(9)	Reflects the adjustment for historical interest income.

(10)	Reflects taxes on the pro forma income before income taxes at an assumed tax rate of 37.8%.

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							26-Week
							Transitional
			28 Weeks				Period				50 Weeks				Fiscal Year Ended																Twelve Weeks Ended
			Ended				Ended				Ended
			July 18,				July 3,				July 3,				July 2,				June 30,				June 29,				June 28,				September 21,				September 20,
			2001				2002				2002(1)				2003				2004				2005				2006				2005				2006
			(Dollars in thousands, except average guest check and average weekly sales)
Operating Data
	Restaurant sales		$	567,821			$	527,084			$	1,003,997			$	985,286			$	942,831			$	926,781			$	963,161			$	226,738			$	221,276
	Restaurant costs			481,679				444,345				848,011				850,195				811,577				805,333				829,576				192,016				192,733
	Advertising expenses			15,869				14,478				26,526				28,794				25,918				24,166				30,637				7,183				7,227
	General and administrative expenses			26,539				25,558				49,311				45,177				42,658				43,706				44,198				10,046				9,728
	Shareholders’ rights repurchase			—				—				—				—				—				—				757				—				—
	Closed restaurant costs			153				572				1,143				645				1,085				2,909				6,023				256				742
	Goodwill amortization			5,975				—				4,967				—				—				—				—				—				—
	Merger integration costs			—				—				—				—				—				—				—				—				440
	Impairment of assets			—				—				—				4,803				1,878				3,609				5,964				—				—
	Gain on sale of Original Roadhouse Grill restaurants			—				—				—				(7,088	)			—				—				—				—				—
	Loss on sale-leaseback transactions			—				—				—				5,856				—				—				—				—				—
	Financing-related compensation expenses			—				—				—				—				2,240				—				—				—				—
	Operating income		$	37,606			$	42,131			$	74,039			$	56,904			$	57,475			$	47,058			$	46,006			$	17,237			$	10,406
	Net income (loss)		$	5,801			$	(7,517	)		$	(763	)		$	11,927			$	7,970			$	(2,184	)		$	(4,772	)		$	3,124			$	(1,140	)

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							26-Week
							Transitional
			28 Weeks				Period				50 Weeks				Fiscal Year Ended																Twelve Weeks Ended
			Ended				Ended				Ended
			July 18,				July 3,				July 3,				July 2,				June 30,				June 29,				June 28,				September 21,				September 20,
			2001				2002				2002(1)				2003				2004				2005				2006				2005				2006
			(Dollars in thousands, except average guest check and average weekly sales)
Cash Flow and Other Financial Data:
	Capital expenditures		$	20,352			$	14,280			$	32,318			$	25,722			$	33,007			$	29,131			$	31,346			$	5,751			$	6,836
	Depreciation and amortization			29,007				20,409				44,808				36,885				33,807				32,247				32,067				7,275				7,384
	Cash flow from operating activities			35,521				39,250				72,564				57,656				50,490				52,675				49,305				5,749				(4,674	)
	Cash flow from (used in) investing activities			(21,190	)			(11,337	)			12,428				26,662				(28,383	)			(28,471	)			(32,722	)			(6,006	)			(13,018	)
	Cash flow from (used in) financing activities			(14,000	)			(47,164	)			(92,754	)			(76,825	)			(11,890	)			(29,614	)			(17,026	)			(504	)			5,534
	Rate of earnings to fixed charges(2)			1.5	x			—				1.1	x			1.4	x			1.2	x			—				—				1.4	x			—
Balance Sheet Data (at end of period)
	Total assets		$	670,268			$	615,672			$	615,672			$	552,986			$	567,531			$	545,023			$	538,496			$	541,458			$	530,597
	Total debt(3)			392,172				493,981				493,981				421,122				498,339				466,194				462,514				468,762				471,796
Supplemental Data(4):
	Number of company-owned restaurants (at end of period)			408				393				393				372				360				354				338				355				340
	Average guest check		$	6.84			$	7.03			$	7.00			$	7.13			$	7.22			$	7.42			$	7.89			$	7.76			$	8.02
	Average weekly sales		$	49,822			$	51,044			$	49,973			$	48,953			$	49,949			$	50,273			$	53,381			$	53,451			$	54,596
	Same-store sales change			2.4	%			0.2	%			(0.9	)%			(4.2	)%			1.3	%			(0.6	)%			4.6	%			4.2	%			(0.4	)%

(1)	Beginning with the transitional period ended July 3, 2002, we changed our fiscal year so that it ends on the Wednesday nearest June 30 of each year. The fiscal year 2002 transition period consisted of 26 weeks and was divided into two periods of sixteen and ten weeks. Prior to that, our fiscal year ended on the Wednesday nearest December 31 of each year.
(2)	“Fixed charges” is the sum of our interest expense, less interest income, less original issue discount amortization, less debt issuance cost amortization, plus capitalized interest, plus amortized premiums, discounts and capitalized expenses related to indebtedness, plus interest in rental expense. “Earnings” is the sum of our pre-tax income before minority interest, plus fixed charges, plus amortization of capitalized interest, less capitalized interest, less minority interest in pre-tax income of subsidiaries that had not incurred fixed charges. Earnings were insufficient to cover fixed charges by $11.2 million in the 26-week transitional period ended July 3, 2002, $2.8 million in the year ended June 29, 2005, $5.6 million in the year ended June 28, 2006 and $2.8 million in the twelve weeks ended September 20, 2006. Other companies may calculate earnings to fixed charges ratio differently and accordingly our earnings to fixed charges ratio may not be directly comparable to the earnings to fixed charges ratio of other companies.
(3)	Total debt represents the amount of our long-term debt, including current maturities.
(4)	Reflects data relating to all of our company-owned restaurants.

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				Fiscal Year Ended																				Nine Months Ended
				January 2,				January 1,				December 31,				December 29,				December 28,				September 28,				September 27,
				2002				2003				2003				2004				2005				2005				2006
				(Dollars in thousands, except average guest check and average weekly sales)
Consolidated Statement of Earnings Data
Restaurant sales				$	745,163			$	773,817			$	805,009			$	827,015			$	824,986			$	628,116			$	615,763
Cost of sales:
	Food and beverage				270,155				275,674				283,535				288,083				286,833				219,133				211,419
	Payroll and benefits				226,950				242,191				256,574				267,698				272,043				206,422				200,115
	Depreciation				30,238				30,146				32,047				32,685				33,651				25,133				25,117
	Impairment charges				3,601				1,607				1,414				1,539				6,527				4,065				3,556
	Other restaurant expenses				97,805				102,810				111,914				117,199				132,916				98,610				96,197
		Total cost of sales			628,749				652,428				685,484				707,204				731,970				553,363				536,404
General and administrative expenses					38,447				37,263				38,600				41,416				49,369				37,501				43,695
Interest expense					11,687				9,302				10,216				10,640				9,696				7,143				6,389
Royalties from franchised restaurants					(1,281	)			(1,663	)			(1,503	)			(1,161	)			(344	)			(344	)			—
Other income, net					(2,824	)			(2,486	)			(2,709	)			(2,602	)			(4,430	)			(2,889	)			(3,736	)
		Earnings before income taxes			70,385				78,973				74,921				71,518				38,725				33,342				33,011
Income taxes					25,339				28,588				25,098				24,592				12,345				11,105				11,149
		Net earnings		$	45,046			$	50,385			$	49,823			$	46,926			$	26,380			$	22,237			$	21,862

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			Fiscal Year Ended																				Nine Months Ended
			January 2,				January 1,				December 31,				December 29,				December 28,				September 28,				September 27,
			2002				2003				2003				2004				2005				2005				2006
			(Dollars in thousands, except average guest check and average weekly sales)
Earnings per share:
	Basic		$	.98			$	1.15			$	1.18			$	1.12			$	.63				.53				.52
	Diluted			.95				1.11				1.14				1.09				.62				.52				.51
Weighted-average shares:
	Basic			45,881				43,680				42,210				41,803				41,969				41,941				42,255
	Diluted			47,519				45,518				43,754				43,235				42,689				42,742				42,715
Selected Other Consolidated Data
Cash provided by operating activities			$	85,338			$	82,514			$	94,012			$	89,542			$	69,534			$	61,642			$	40,058
Property and equipment additions				52,376				74,208				76,353				75,483				76,455				61,998				18,307
Total assets				583,129				613,079				651,689				684,346				706,828				706,828				697,260
Long-term debt (including current portion)				178,000				202,000				196,000				183,000				173,250				173,250				147,000
Shareholders’ equity				316,754				320,481				356,940				395,606				423,634				423,634				449,418
Company-owned restaurants open at end of year				313				324				334				341				338				339				333
Average guest check			$	7.16			$	7.45			$	7.66			$	7.95			$	8.17			$	8.23			$	8.37
Average weekly sales				46,618				47,067				47,582				47,397				46,588				47,369				46,990
Same-store sales change				2.3	%			(0.7	)%			0.1	%			(0.7	)%			(2.6	)%			(3.6	)%			(1.1	)%

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	•	We recognize as restaurant sales the proceeds from the sale of food and beverages at our company-owned restaurants at the time of such sale. We recognize the proceeds from the sale of gift certificates/cards when the gift certificates/cards are redeemed at our restaurants. Until redemption, the unearned revenue from the sale of gift certificates/cards is included in accrued liabilities on our consolidated balance sheets. Our franchise income includes royalty fees and initial franchise fees received from our franchisee. We recognize royalty fees as other income based on the sales reported at the franchise restaurants.
	•	Restaurant costs reflect only direct restaurant operating costs, including food, labor and direct and occupancy costs. Labor costs include compensation and benefits for both hourly and restaurant management employees. Direct and occupancy costs consist primarily of costs of supplies, maintenance, utilities, rent, real estate taxes, insurance, depreciation and amortization.
	•	Advertising expenses reflect all advertising and promotional costs.
	•	General and administrative expenses reflect all costs, other than advertising expenses, not directly related to the operation of restaurants. These expenses consist primarily of corporate administrative compensation and overhead, district and regional management compensation and related management expenses and the costs of recruiting, training and supervising restaurant management personnel.
	•	Goodwill amortization reflects the amortization of the excess of cost over fair market value of assets and was recognized on a straight line basis over a 30-year life through January 2, 2002. Effective January 3, 2002, we changed our method of accounting for goodwill in accordance with Statement of Financial Accounting Standards No. (SFAS) 142, “Goodwill and Other Intangible Assets.”
	•	Shareholders’ rights repurchase reflects the costs associated with the repurchase of certain rights associated with shares of common stock previously held by former management shareholders who separated from the company.
	•	Closed restaurant costs represents costs associated with store closure of underperforming restaurants, including, but not limited to lease termination costs and obligations and employee termination costs.
	•	Impairment of assets reflects fair market adjustments to the carrying value of long-lived assets, primarily comprised of leasehold improvements and equipment.
	•	Financing-related compensation expenses reflect payments to holders of stock options and cash incentive plan units in conjunction with the issuance of our 13.875% Notes in May 2004.
	•	Merger integration costs represent professional fees and employee travel and expenses related to integration activities associated with the merger with Ryan’s.
	•	Interest expense reflects interest costs associated with our debt, amortization of debt issuance cost and accretion of original issuance discount on our 11.25% Notes and 13.875% Notes.
	•	Interest income reflects interest earned on our short-term investments.
	•	Loss related to refinancing for fiscal 2004 reflects transaction and other costs associated with the amendment and restatement of our credit agreement on February 20, 2004 and a refinancing that we postponed due to market conditions. Loss related to refinancing for fiscal 2005 represents costs associated with an initial public offering of Income Deposit Securities that was withdrawn due to unfavorable market conditions. Loss related to refinancing for fiscal 2006 represents transaction fees incurred in conjunction with an amendment to our Existing Credit Facility.

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	•	Loss related to the early extinguishment of debt reflects the costs associated with redeeming a portion of Buffets’ 11.25% Notes prior to their maturity during fiscal years 2004 and 2005.
	•	Other income primarily reflects franchise fees earned, less minority interest associated with our Tahoe Joe’s subsidiary. During fiscal 2004, we exercised our call option to acquire the remaining 20% interest in Tahoe Joe’s, Inc. from the minority holder.
	•	Income tax expense (benefit) reflects the current and deferred tax provision (benefit) determined in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 109, “Accounting for Income Taxes.”

	The Ryan’s Acquisition

	Long-Lived Assets

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	Goodwill

	Insurance Reserves

	Closed Restaurant Reserve

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	Income Taxes

	Gift Cards

	Share-Based Compensation

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	Twelve Week Period Ended September 21, 2005 Compared With Twelve Week Period Ended September 20, 2006

		Twelve Weeks Ended
		September 21,				September 20,
		2005				2006
		(Dollars in thousands)
Significant items that impacted results of operations:
Closed restaurant costs(1)		$	256			$	742
Merger integration costs(2)			—				440

(1)	Closed restaurant costs were $0.7 million during the first quarter of fiscal 2007 as compared to $0.3 million for the comparable prior year period. The increase was due in large part due to the closure of three under performing restaurants in the first twelve weeks of fiscal 2007 compared with zero store closures in the comparable prior year period. We incurred cash charges related to these closures of approximately $0.9 million. These charges included approximately $0.7 million related to lease termination costs and obligations, $0.1 million related to employee termination costs and $0.1 million related to other associated costs. The prior year costs represent charges related to stores that had previously closed.
(2)	Merger integration costs represent professional fees and employee travel and expenses related to integration activities associated with the merger with Ryan’s.

		Twelve Weeks Ended
		September 21, 2005								September 20, 2006
		(Dollars in thousands)
Restaurant sales		$	226,738				100.0	%		$	221,276				100.0	%
Restaurant costs			192,016				84.7				192,733				87.1
Advertising expenses			7,183				3.2				7,227				3.3
General and administrative expenses			10,046				4.4				9,728				4.4
Closed restaurant costs			256				0.1				742				0.3
Merger integration costs			—				—				440				0.2
Operating income			17,237				7.6				10,406				4.7
Interest expense			11,868				5.2				13,228				6.0
Interest income			(82	)			(0.0	)			(28	)			(0.0	)
Loss related to refinancing			647				0.3				243				0.1
Other income			(197	)			(0.1	)			(202	)			(0.1	)
Income (loss) before income taxes			5,001				2.2				(2,835	)			(1.3	)
Income tax expense (benefit)			1,877				0.8				(1,695	)			(0.8	)
Net income loss		$	3,124				1.4			$	(1,140	)			(0.5	)

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		Year Ended
		June 29,				June 28,
		2005				2006
		(dollars in
		thousands)
Significant items that impacted results of operations:
Credit card claim settlement(1)		$	—			$	(715	)
Shareholders’ rights repurchase(2)			—				757
Closed restaurant costs(3)			2,909				6,023
Impairment of assets(4)			3,609				5,964
Loss related to refinancing(5)			856				647
Loss related to early extinguishment of debt(6)			1,923				—

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(1)	Credit card claim settlement reflects funds received from the Visa Check/ MasterMoney Antitrust Litigation class action lawsuit. The settlement was recorded in direct and occupancy costs within the restaurant costs section of the consolidated statement of operations.
(2)	Shareholders’ rights repurchase reflects the costs of the repurchase of certain rights associated with shares of common stock previously held by former management shareholders who separated from the company.
(3)	Closed restaurant costs were $6.0 million for fiscal 2006 as compared to $2.9 million for the fiscal 2005. The increase was in large part due to the closure of nineteen under performing restaurants in fiscal 2006 compared with eleven store closures in fiscal 2005. We incurred charges related to these store closures of approximately $4.5 million and $2.1 million in fiscal 2006 and fiscal 2005, respectively. In addition, we incurred charges of approximately $1.5 million and $0.8 million in fiscal 2006 and fiscal 2005, respectively, related to the termination of sublease agreements and other related costs.
(4)	We test property and equipment for impairment annually or whenever events or circumstances indicate that the carrying amount of a restaurant’s assets may not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows, namely as individual restaurants. During fiscal 2006 and 2005, we recognized losses of approximately $6.0 million and $3.6 million, respectively, related to impairments of the carrying value of our long-lived assets for 33 and 29 under performing restaurants, respectively, as the carrying value of these long-lived assets exceeded their fair value.
(5)	We incurred approximately $0.9 million of costs related to an initial public offering of Income Deposit Securities that was withdrawn due to unfavorable market conditions during the second quarter of fiscal 2005. Effective as of July 28, 2005, we entered into an amendment to Buffets’ credit agreement and incurred $0.6 million in transaction fees in the first quarter of fiscal 2006.
(6)	During the first quarter of fiscal 2005, we paid approximately $15.7 million to repurchase approximately $14.3 million of Buffets’ 11.25% Notes at an average price of 106.7%. The difference between the premium purchase price and the discounted carrying value of the 11.25% Notes, as well as the associated write-off of debt issuance costs, was recognized as a loss related to the early extinguishment of debt.

		Year Ended								Year Ended
		June 29, 2005								June 28, 2006
		(dollars in thousands)
Restaurant sales		$	926,781				100.0	%*		$	963,161				100.0	%*
Restaurant costs			805,333				86.9				829,576				86.1
Advertising expenses			24,166				2.6				30,637				3.2
General and administrative expenses			43,706				4.7				44,198				4.6
Shareholders’ rights repurchase			—				—				757				0.1
Closed restaurant costs			2,909				0.3				6,023				0.6
Impairment of assets			3,609				0.4				5,964				0.6
Operating income			47,058				5.1				46,006				4.8
Interest expense			48,100				5.2				52,242				5.4
Interest income			(515	)			(0.1	)			(375	)			(0.0	)
Loss related to refinancing			856				0.1				647				0.1
Loss related to early extinguishment of debt			1,923				0.2				—				—
Other income			(935	)			(0.1	)			(994	)			(0.1	)
Loss before income taxes			(2,371	)			(0.3	)			(5,514	)			(0.6	)
Income tax benefit			(187	)			—				(742	)			(0.1	)
Net loss		$	(2,184	)			(0.2	)		$	(4,772	)			(0.5	)

*	Certain percentage amounts do not sum to total due to rounding.

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	2004 Compared With 2005

		Year Ended
		June 30,				June 29,
		2004				2005
		(dollars in
		thousands)
Significant items that impacted results of operations:
Closed restaurant costs(1)		$	1,085			$	2,909
Impairment of assets(2)			1,878				3,609
Financing-related compensation expenses(3)			2,240				—
Loss related to refinancing(4)			4,776				856
Loss related to early extinguishment of debt(5)		$	5,275			$	1,923

(1)	Closed restaurant costs were $2.9 million during fiscal 2005 primarily related to the closure of eleven restaurants as compared to $1.1 million for fiscal 2004 related to the closure of fifteen restaurants. We incurred charges related to these closures of approximately $2.1 million and $0.8 million in fiscal 2005 and fiscal 2004, respectively. In addition, we incurred charges of approximately $0.8 million and $0.3 million related to the termination of sublease agreements and other related costs.
(2)	We test property and equipment for impairment annually or whenever events or circumstances indicate that the carrying amount of a restaurant’s assets may not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows, namely as individual restaurants. During fiscal 2005 and 2004, we recognized losses of approximately $3.6 million and $1.9 million, respectively, related to impairments of the carrying value of our long-lived assets for 29 and 17 under performing restaurants, respectively, as the carrying value of these long-lived assets exceeded their fair value.
(3)	On May 18, 2004, Buffets Holdings issued 13.875% Notes due 2010 in a Rule 144A offering with a stated aggregate principal amount at maturity (including accreted amounts) of $132.0 million. As part of the transaction fees and expenses related to the offering, we recognized approximately $2.2 million of bonus payments to certain restaurant and corporate employees as financing-related compensation expenses.
(4)	During fiscal 2005, we incurred approximately $0.9 million in costs associated with an initial public offering of Income Deposit Securities that was withdrawn due to unfavorable market conditions. During

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	fiscal 2004, Buffets entered into an amended and restated credit facility. In connection with this bank refinancing, we wrote off $4.2 million of debt issuance costs related to the predecessor credit facility. In addition, we incurred $0.6 million in transaction fees associated with an uncompleted senior discount note offering.

(5)

During the first quarter of fiscal 2005, we redeemed approximately $14.3 million of Buffets’ 11.25% Notes at an average price of 106.7%. During the second half of fiscal 2004, we repurchased $29.6 million of 11.25% Notes at an average price of 110.4%. The difference between the premium purchase price and the discounted carrying value of the 11.25% Notes, as well as the associated write-off of debt issuance costs, was recognized as a loss related to the early extinguishment of debt.

		Year Ended								Year Ended
		June 30, 2004								June 29, 2005
		(dollars in thousands)
Restaurant sales		$	942,831				100.0	%*		$	926,781				100.0	%*
Restaurant costs			811,577				86.1				805,333				86.9
Advertising expenses			25,918				2.7				24,166				2.6
General and administrative expenses			42,658				4.5				43,706				4.7
Closed restaurant costs			1,085				0.1				2,909				0.3
Impairment of assets			1,878				0.2				3,609				0.4
Financing-related compensation expenses			2,240				0.2				—				—
Operating income			57,475				6.1				47,058				5.1
Interest expense			39,609				4.2				48,100				5.2
Interest income			(424	)			—				(515	)			(0.1	)
Loss related to refinancing			4,776				0.5				856				0.1
Loss related to early extinguishment of debt			5,275				0.6				1,923				0.2
Other (income)			(1,379	)			(0.1	)			(935	)			(0.1	)
Income before income taxes			9,618				1.0				(2,371	)			(0.3	)
Income tax expense			1,648				0.2				(187	)			—
Net income		$	7,970				0.8			$	(2,184	)			(0.2	)

*	Certain percentage amounts do not sum to total due to rounding.

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	Historical

	Cash Flow for the Twelve Weeks ended September 20, 2006 and Twelve Weeks ended September 21, 2005

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	Cash Flow for Fiscal 2006, 2005 and 2004

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	•	Open one new restaurant with capital outlay of approximately $2.5 million;
	•	Spend approximately $16.0 million on remodeling and improvement costs that will be capitalized. Remodels incorporate design elements to update the décor of our existing facilities including a lighter, more contemporary interior design and expanded dessert displays. Other improvement costs include a variety of outlays such as new carpet, equipment and minor leasehold improvements and display grill installations;
	•	Spend approximately $1.0 million on miscellaneous corporate and information systems investments;
	•	Spend approximately $15.0 million on the repair and maintenance of our existing restaurant locations that will be expensed. This will encompass expenditures to keep equipment in good working order and leasehold improvements in good condition, without substantially extending the economic lives of the underlying assets;
	•	On August 1, 2006, our subsidiary, OCB Restaurant Company, LLC, acquired certain assets and liabilities of North’s Restaurants, Inc., primarily comprised of five buffet restaurants in California and Oregon. The purchase price was $3.3 million. In addition, we incurred $0.2 million of transaction costs. During the remainder of fiscal 2007, we plan to spend approximately $3.0 million to convert three of these units to HomeTown Buffet® restaurants and one unit to a Tahoe Joe’s Famous Steakhouse® restaurant; and
	•	Spend approximately $10.0 million to $12.0 million on the integration of Ryan’s and approximately $25.0 million on capital improvements specifically related to the restaurants we acquired in the Ryan’s acquisition.

		Payments Due by Fiscal Year
		2007				2008				2009				2010				2011				Thereafter				Total
		(In thousands)
Long-term debt(1)		$	1,862			$	2,328			$	177,863			$	—			$	316,665			$	—			$	498,718
Interest(2)			20,775				20,775				29,933				39,090				26,413				—				136,986
Operating leases(3)			53,211				51,640				47,986				41,369				34,382				214,621				443,209
Advisory fees(4)			2,100				2,000				2,000				2,000				2,000				—				10,100
Purchase obligations(5)			11,337				—				—				—				—				—				11,337
Total contractual cash obligations		$	89,285			$	76,743			$	257,782			$	82,459			$	379,460			$	214,621			$	1,100,350

(1)

Long-term debt payments for fiscal years 2007 through 2009 represent the required principal payments on our variable-rate credit facility. Long-term debt payments in fiscal year 2011 represent the aggregate principal amounts due on Buffets’ 11.25% Notes and our 13.875% Notes, at face value, including aggregate carrying value of $280.5 million as of June 28, 2006 and aggregate accretion from that date through maturity of $36.2 million. Debt payments could be accelerated upon violation of debt covenants. We believe the likelihood of debt covenant violations to be remote. See Note 5 to our consolidated financial statements included elsewhere in this prospectus for details of our long-term obligations.

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(2)	Amounts represent contractual interest payments on our fixed-rate debt instruments. Interest payments on our variable-rate term loan facility are excluded. The borrowings under the term loan facility bear interest, at Buffets, Inc.’s option, at either adjusted LIBOR plus 3.50% or at an alternate base rate plus 2.50%, subject to a leverage-based pricing grid. The base rate is the greater of Credit Suisse First Boston’s prime rate, or the federal funds effective rate plus one-half of one percent. The term loan facility matures on June 28, 2009. Interest payments are due quarterly. The interest rate, at LIBOR plus 3.50%, was 8.2% as of June 28, 2006. The borrowings due under the term loan facility are payable in equal quarterly installments in an annual amount equal to 1% of the term loan during each of the first four and a half years of the loan, with the remaining balance payable due in equal quarterly installments during the last year of the loan. See Note 5 to our consolidated financial statements for the period ended June 28, 2006 included elsewhere in this prospectus for details of our long-term obligations.
(3)	Operating leases is comprised of minimum rents and contingent rents. Operating leases have not been reduced by minimum sublease rentals of approximately $11.6 million. See Note 10 to our consolidated financial statements included elsewhere in this prospectus for details of our operating lease obligations.

(4)

The advisory fees comprise our contractual obligation to pay annual advisory fees to each of Roe H. Hatlen, Sentinel Capital Partners, L.L.C. and Caxton-Iseman Capital. See “Related Party Transactions.” Under the terms of these agreements, Mr. Hatlen and Sentinel Capital are each paid a fixed annual fee. The fee of Caxton-Iseman is calculated as a percentage of our earnings before interest, taxes, depreciation and amortization, which in fiscal 2005 resulted in a payment of $1.8 million. This figure has been used as an estimate for our obligations under that agreement for fiscal 2007 and each fiscal year thereafter. The agreements with Caxton-Iseman and Sentinel Capital are of perpetual duration, and hence no estimate of the aggregate amount of future obligations (represented in the “Thereafter” column, above) is provided.

(5)

In determining purchase obligations for this table we used our interpretation of the definition set forth in the Commission 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.

		Amount of Commitment Expiration by Fiscal Year
		2007				2008				2009				2010				Thereafter				Total
		(In thousands)
Letters of credit(1)		$	38,617			$	118			$	—			$	—			$	—			$	38,735
Total commercial commitments		$	38,617			$	118			$	—			$	—			$	—			$	38,735

(1)	Our outstanding letters of credit expire at various times with final expirations in November 2007. As of June 28, 2006, total borrowing availability was $41.3 million, which is comprised of a revolving credit facility of $30.0 million and letter of credit facilities of $11.3 million.

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	•	Complementary brands and businesses;
	•	Benefits of scale from combined entity;
	•	Enhanced geographic footprint;
	•	Potential for significant cost savings;
	•	Additional upside opportunities primarily from cross-fertilization of best practices; and
	•	Strong management team.

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	•	Broad Demographic Appeal. 64% of our customers are in the 25-60 age bracket, which represents approximately 65% of the U.S. population. 53% of our customers are in the 45-60+ age bracket, the fastest growing segment of the U.S. population.

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	•	Geographically Balanced. We have more than 600 restaurants across the United States in 39 states, excluding franchised locations. Other than California, which accounts for 18% of our revenues, no single state comprises more than 6% of our revenues on a pro forma basis.
	•	Diversified Food Costs. As a buffet style restaurant with a broad selection of food, we are able to quickly modify our menu in response to changes in customer preferences and rising food costs. Our total food costs represented approximately 34% of our revenues in fiscal 2006, with no individual food product purchase cost accounting for more than 5% of our revenues. Ryan’s total food costs represented approximately 35% of its revenues in its fiscal year ended December 28, 2005, with no individual food product purchase cost accounting for more than 7% of its revenues. In the event of an increase in the cost of a particular food product, we and Ryan’s are generally able to shift the menu offering to other foods in order to reduce consumption of the higher cost item.
	•	Attractive Unit Level Economics. Our existing restaurants generated average weekly restaurant sales of approximately $53,000 per restaurant for fiscal 2006 and increased average weekly sales per restaurant at a CAGR of 1.7% over the five year period ended June 28, 2006. We believe that the increased sales volume is due to the introduction of new food offerings and more effective advertising. Our AUVs in fiscal 2006 increased 6.2% compared to our AUVs in fiscal 2005.

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	•	Menu Enhancements. We have recently introduced new food products, including fresh steak, breakfast omelets, shrimp and baby-back ribs to our menu in all restaurants and will continue to offer new food products. We have historically instituted modest price increases alongside menu enhancements and the installation of display grills to our restaurants. In fiscal 2006, we increased prices by 6.3% versus the comparable period in fiscal 2005. We typically observe an increase in guest counts as a result of new food introductions.
	•	Display Grill Installation. The display grill features a display-style cooking area in the dining room that is highly visible and easily accessible by our customers. A variety of meats and vegetables are grilled daily and available to customers as part of the buffet price. Customers go to the grill and can select “hot off-the-grill” steak, chicken, seafood or other grilled items. We began installing the display grill in 2005 and have 12 display grills in operation in our restaurants. From the time we installed our display grills in 2005 through September 20, 2006, we have observed favorable guest count increases in our restaurants in which we have display grills. As of September 20, 2006, Ryan’s has over 200 display grills in operation.
	•	Marketing Initiatives. We recently implemented an enhanced marketing campaign that focuses on quarterly food-specific promotions. Recent promotions have featured six or seven day steak, breakfast omelets, “Shrimp 5 Ways,” and steak and baby back ribs. In the past year, we also have refocused our marketing media mix to achieve a more efficient combination of television, radio and billboard advertising. We believe that the new media plan is achieving a rate of market penetration similar to our prior efforts but at a lower media cost.
	•	Vigilant Cost Management. We intend to continue to refine our operations, with a focus on increasing our labor productivity and food cost management while continuing to offer a positive guest experience.
	•	Continuous Focus on Guest Experience. We have placed significant emphasis on improving the guest experience at our restaurants, including improvements in ambiance, food quality and service. We employ a toll-free number that collects in excess of 100,000 guest comments and responses per year. These guest responses are tabulated into guest satisfaction scores that our senior management uses to measure overall customer experience at its restaurants. We have seen a steady rise in these scores since we implemented the toll free number in April 2004. Management has observed that improvement in guest satisfaction scores are typically a leading indicator of same-store sales growth. Our commitment to improved service is reflected in our incentive plan, as store-level bonus programs are tied to the achievement of various service metrics. We plan on monitoring guest experience at Ryan’s under the same system.
	•	Breakfast Daypart Expansion. Breakfast is a profitable Saturday and Sunday daypart segment that is offered in all Buffets restaurants and is currently being implemented in the Ryan’s system. We intend on continuing the rollout of breakfast at all Ryan’s restaurants with completion anticipated by March 2007. With a minimal capital investment of approximately $5,000 per store, the breakfast daypart generates average incremental annual revenues per store of approximately $125,000.

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		Number of								Number of
		Buffets				Number of				Buffets
		Company-Owned				Ryan’s				Franchised				Total Number of
State		Restaurants				Restaurants				Restaurants				Units
Alabama							22								22
Arizona			5								8				13
Arkansas							11								11
California*			99								1				100
Colorado			12								1				13
Connecticut			6												6
Delaware			1												1
Florida			2				4								6
Georgia			1				37								38
Idaho			1												1
Illinois			31				10								41
Indiana			6				16								22
Iowa			3				3								6
Kansas			2				4								6
Kentucky			3				13								16
Louisiana							21								21
Maine			1												1
Maryland			8				1								9
Massachusetts			9												9
Michigan			20				7								27
Minnesota			15												15
Mississippi							12								12
Missouri			10				18								28
Nebraska											3				3
New Jersey			8												8
New Mexico											2				2
New York			15												15
North Carolina							24								24
Ohio			12				18								30
Oklahoma			2				6								8
Oregon			8												8
Pennsylvania			21				6								27
Rhode Island			1												1
South Carolina							33								33
Tennessee			1				27								28
Texas			2				25								27
Utah											2				2
Virginia			6				9								15
Washington			16												16
West Virginia							6								6
Wisconsin			12												12
Wyoming			1								1				2
Total			340				333				18				691

*	Includes nine Tahoe Joe’s restaurants.

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Location		Acres				Use & Ownership
Marshfield, WI			5.0				Cabinet shop owned by OCB Restaurant Company, LLC
Anderson, SC			2.4				Ryan’s restaurant owned by Ryan’s
Riverdale, GA			1.4				Ryan’s restaurant owned by Fire Mountain, Inc.
Anniston, AL			1.7				Ryan’s restaurant owned by Fire Mountain, Inc.
Indianapolis, IN			1.0				Ryan’s restaurant owned by Fire Mountain, Inc.
Columbus, OH			3.0				Ryan’s restaurant owned by Fire Mountain, Inc.
Independence, MO			2.2				Ryan’s restaurant owned by Fire Mountain, Inc.
Lynchburg, VA			4.4				Ryan’s restaurant owned by Fire Mountain, Inc.
Lincolnton, NC			4.0				Ryan’s restaurant owned by Fire Mountain, Inc.
Marrero, LA			1.4				Ryan’s restaurant owned by Fire Mountain, Inc.
Natchez, MS			2.2				Ryan’s restaurant owned by Fire Mountain, Inc.
Union City, TN			2.6				Ryan’s restaurant owned by Fire Mountain, Inc.
Thomson, GA			2.3				Ryan’s restaurant owned by Fire Mountain, Inc.
Lebanon, TN			2.0				Ryan’s restaurant owned by Fire Mountain, Inc.
Sterling, IL			2.3				Ryan’s restaurant owned by Ryan’s
Lovejoy, GA			2.5			Fire Mountain restaurant owned by Fire Mountain, Inc.

	•	Old Country Buffet® (168)
	•	HomeTown Buffet® (144)
	•	Granny’s Buffet® (1)
	•	Tahoe Joe’s Famous Steakhouse® (9)
	•	Country Buffet® (13)

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	•	Ryan’s®/ Ryan’s Family Steak House® (261)
	•	Fire Mountain® (72)

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Name		Age				Position*
Frederick J. Iseman			54			Chairman of the Board and Director
Roe H. Hatlen			62			Vice Chairman of the Board and Director
R. Michael Andrews, Jr.			43			Chief Executive Officer and Director
Mario O. Lee			46			Executive Vice President of Operations
A. Keith Wall			54			Executive Vice President and Chief Financial Officer
Karlin A. Linhardt			44			Executive Vice President of Marketing
Fred P. Williams			49			Executive Vice President — Development
H. Thomas Mitchell			49			Executive Vice President, General Counsel and Secretary
Jane L. Binzak			40			Executive Vice President of Human Resources
Linda J. Allison			52			Executive Vice President — Culinary and Training
Steven M. Lefkowitz			42			Director
Robert A. Ferris			64			Director
David S. Lobel			53			Director
Robert M. Rosenberg			68			Director
Ankur A. Vora			30			Director

*	These directors and officers hold the same positions in Buffets and Buffets Holdings.

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			Annual Compensation
			Fiscal												Other Annual				All Other
Name and Principal Position			Year				Salary($)				Bonus($)				Compensation($)(1)				Compensation($)
Current
R. Michael Andrews, Jr.				2006				364,618				—				—				—
	Current Chief Executive Officer			2005				284,806				—				31,152	(3)			—
	and Director(2)			2004				224,640				—				—				—
Karlin A. Linhardt				2006				210,462				97,513				91,083	(5)			—
	Executive Vice President			2005				—				—				—				—
	of Marketing(4)			2004				—				—				—				—
Mario O. Lee				2006				176,615				47,828				36,770	(7)			—
	Executive Vice President			2005				117,007				80,394				21,870	(8)			—
	of Operations(6)			2004				113,507				95,454				17,261				—
Fred P. Williams				2006				220,000				—				65,434	(10)			—
	Executive Vice President of			2005				191,346				—				21,267	(11)			—
	Concept Development and			2004				—				—				—				—
	Real Estate(9)
H. Thomas Mitchell				2006				203,154				—				—				—
	Executive Vice President,			2005				200,154				—				—				—
	General Counsel and Secretary			2004				194,324				—				—				—
Former
Roe H. Hatlen				2006				141,539				—				18,486	(13)			243,462	(14)
	Former President, Chief			2005				261,539				—				—				238,000	(14)
	Executive Officer and Director(12)			2004				—				—				—				257,000	(14)
Glenn D. Drasher				2006				37,401				—				—				—
	Former Executive Vice President of			2005				231,530				—				—				237,796	(16)
	Marketing(15)			2004				224,786				—				—				—
Dale W. Maxfield				2006				163,457				—				—				695,726	(18)
	Former Executive Vice President of			2005				223,754				—				—				—
	Operations(17)			2004				186,849				16,000				63,510	(19)			—

(1)	In accordance with rules established by the Securities and Exchange Commission, this column includes perquisites exceeding the smaller of $50,000 or ten percent of the total annual salary and bonus for the named executive officer.
(2)	Mr. Andrews was promoted from Executive Vice President and Chief Operating Officer to Chief Executive Officer in November 2005. Mr. Andrews was promoted from Executive Vice President and Chief Financial Officer to Executive Vice President and Chief Operating Officer in November 2004.
(3)	Amount includes $15,813 of car allowance.
(4)	Mr. Linhardt joined the company in September 2005 as Executive Vice President of Marketing.
(5)	Amount includes $75,832 of relocation allowance.
(6)	Mr. Lee was promoted from Regional Vice President to Executive Vice President of Operations in January 2006.
(7)	Amount includes $12,533 of auto allowance and $14,403 of commuting allowance.
(8)	Amount includes $13,503 of auto allowance and $6,001 of health insurance allowance.

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(9)	Mr. Williams rejoined the company in July 2004 as Divisional Vice President of Operations. He was promoted to Executive Vice President of Concept Development in November 2004 and became Executive Vice President of Concept Development and Real Estate in July 2005.

(10)	Amount includes $44,314 of commuting allowance.
(11)	Amount includes $13,000 of auto allowance.
(12)	Mr. Hatlen replaced Kerry A. Kramp as President and Chief Executive Officer in November 2004. Mr. Hatlen was replaced as Chief Executive Officer by R. Michael Andrews, Jr. in November 2005.
(13)	Amount includes $10,000 of auto expense allowance and $5,134 of health insurance allowance.
(14)	Amount is related to an advisory agreement as summarized below and discussed in Item 13 Certain Relationships and Related Transactions.
(15)	Mr. Drasher separated from the company in August 2005. His separation was communicated in fiscal 2005 and related severance was accrued in that fiscal year.
(16)	Amount represents severance pay accrued as of June 29, 2005.
(17)	Mr. Maxfield separated from the company in January 2006. Mr. Maxfield was promoted from Senior Vice President of Operations to Executive Vice President of Operations in November 2004.
(18)	Amount represents compensation expense recognized in conjunction with the repurchase of certain rights associated with shares of common stock held by Mr. Maxfield at the time of his separation from the company.
(19)	Amount includes $46,206 of relocation expense allowance.

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		Amount of Series A				Amount of Series B
		Senior				Junior
Name of Beneficial Owner		Subordinated Notes				Subordinated Notes
Caxton-Iseman Investments L.P.(1)		$	6,847,427			$	14,470,628
Sentinel Capital Partners II, L.P.			616,197				1,303,378
Frederick Iseman(1)			6,847,427				14,470,628
Kerry A. Kramp			—				595,941
R. Michael Andrews, Jr.			—				186,232
Roe H. Hatlen(2)			244,167				552,078
David Goronkin			—				223,478
Glenn D. Drasher			6,162				87,526
Harold T. Mitchell			—				74,493
K. Michael Shrader			—				74,493
Lars C. Hatlen Trust(2)			—				130,195
Erik R. Hatlen(2)			—				130,195
Kari E. Hatlen(2)			—				130,195
Beverly J. Hatlen(2)			23,856				—
Eventyr Investments L.P.(2)			125,324				175,989

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(1)	By virtue of Mr. Iseman’s indirect control of Caxton-Iseman Investments L.P., he was deemed to beneficially own the $6,847,427 of series A senior subordinated notes and $14,470,628 of series B junior subordinated notes held by that entity.
(2)	Mr. Hatlen had sole ownership over $118,843 of series A senior subordinated notes and $376,089 of series B junior subordinated notes. Mr. Hatlen may have been deemed to be the beneficial owner of the series B junior subordinated notes held by the Lars C. Hatlen Trust, Erik R. Hatlen and Kari E. Hatlen, each such entity or person having owned $130,195 of series B junior subordinated notes. By virtue of Mr. Hatlen’s control over Eventyr Investments, he was deemed to beneficially own the $125,324 of series A senior subordinated notes and $175,989 of series B junior subordinated notes held by that entity.

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Name of Beneficial Owner		Shares				Percentage
Caxton-Iseman Investments L.P.(1)			2,501,438				80.6
Sentinel Capital Partners II, L.P.(2)			225,106				7.3
Frederick J. Iseman(1)			2,501,438				80.6
David S. Lobel(2)			225,106				7.3
Roe H. Hatlen(3)			195,452				6.3
R. Michael Andrews, Jr.(4)			89,375				2.9
H. Thomas Mitchell			20,000				0.6
Fred P. Williams(5)			20,000				0.6
Mario O. Lee(6)			5,000				0.2
Robert M. Rosenberg(7)			4,610				0.1
Glenn D. Drasher(8)			2,251				0.1
Karlin A. Linhardt(9)			—				—
Dale W. Maxfield			—				—
Steven M. Lefkowitz			—				—
Robert A. Ferris			—				—
Ankur Vora			—				—
All executive officers and directors as a group (17 persons)			3,068,857				98.9

(1)	By virtue of Mr. Iseman’s indirect control of Caxton-Iseman Investments L.P., he is deemed to beneficially own the 2,501,438 shares of common stock of Buffets Restaurants Holdings held by that entity. The address of Caxton-Iseman Investments L.P. and Mr. Iseman is c/o Caxton-Iseman Capital, Inc., 500 Park Avenue, 8th Floor, New York, New York, 10022. By virtue of Caxton-Iseman Investments L.P.’s direct ownership interest in Buffets Restaurants Holdings, Mr. Iseman is deemed to beneficially own the same number of shares of Buffets Holdings.
(2)	By virtue of Mr. Lobel’s indirect control of Sentinel Capital Partners II, L.P., he is deemed to beneficially own the 225,106 shares of common stock of Buffets Restaurants Holdings held by that entity. The address of Sentinel Capital Partners II, L.P. is 330 Madison Avenue, 27th Floor, New York, New York, 10017. By virtue of Sentinel Capital Partners II, L.P.’s direct ownership interest in Buffets Restaurants Holdings, Mr. Lobel is deemed to beneficially own the same number of shares of Buffets Holdings.
(3)	Mr. Hatlen has sole voting and dispositive power over 65,012 shares of common stock of Buffets Restaurants Holdings. Mr. Hatlen may be deemed to be the beneficial owner of 33,340 shares of common stock of Buffets Restaurants Holdings held by Kari E. Hatlen, 33,339 shares of common stock of Buffets Restaurants Holdings held by Erik R. Hatlen, 22,506 shares of common stock of Buffets Restaurants Holdings owned by Lars C. Hatlen Trust and 10,833 shares of common stock of Buffets Restaurants Holdings owned by Lars C. Hatlen. By virtue of Mr. Hatlen’s control over Eventyr Investments, he is deemed to beneficially own the 30,422 shares of common stock of Buffets Restaurants Holdings held by

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	that entity. By virtue of Mr. Hatlen’s direct and beneficial ownership interests in Buffets Restaurants Holdings, Mr. Hatlen is deemed to beneficially own the same number of shares of Buffets Holdings.
(4)	Mr. Andrews also holds 32,500 phantom stock units of Buffets Holdings.
(5)	Mr. Williams also owned options to purchase 2,500 shares of common stock of Buffets Holdings and holds 7,500 phantom stock units of Buffets Holdings.
(6)	Mr. Lee also owned options to purchase 2,500 shares of common stock of Buffets Holdings and holds 2,500 phantom stock units of Buffets Holdings.
(7)	Mr. Rosenberg also owned options to purchase 12,600 shares of common stock of Buffets Holdings.
(8)	Mr. Drasher separated from the company in August 2005.
(9)	Mr. Linhardt holds 32,500 phantom stock units of Buffets Holdings.

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	Proper Execution and Delivery of Letters of Transmittal

	(1)	Regular delivery procedure: Complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal. Have the signatures on the letter of transmittal guaranteed if required by the letter of transmittal. Mail or otherwise deliver the letter of transmittal or the facsimile together with

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		the certificates representing the initial notes being tendered and any other required documents to the exchange agent on or before 5:00 p.m., New York City time, on the expiration date.
	(2)	Book-entry delivery procedure: Send a timely confirmation of a book-entry transfer of your initial notes, if this procedure is available, into the exchange agent’s account at The Depository Trust Company in accordance with the procedures for book-entry transfer described under “— Book-Entry Delivery Procedure” below, on or before 5:00 p.m., New York City time, on the expiration date.
	(3)	Guaranteed delivery procedure: If time will not permit you to complete your tender by using the procedures described in (1) or (2) above before the expiration date and this procedure is available, comply with the guaranteed delivery procedures described under “— Guaranteed Delivery Procedure” below.

	(1)	a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc.,
	(2)	a commercial bank or trust company having an office or correspondent in the United States, or
	(3)	an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Exchange Act, unless the initial notes are tendered:

	(1)	by a registered holder or by a participant in The Depository Trust Company whose name appears on a security position listing as the owner, who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal and only if the exchange notes are being issued directly to this registered holder or deposited into this participant’s account at The Depository Trust Company, or
	(2)	for the account of a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934.

	(1)	the recordholder(s) of the initial notes tendered: the signature must correspond with the name(s) written on the face of the initial notes without alteration, enlargement or any change whatsoever.

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	(2)	a participant in The Depository Trust Company: the signature must correspond with the name as it appears on the security position listing as the holder of the initial notes.
	(3)	a person other than the registered holder of any initial notes: these initial notes must be endorsed or accompanied by bond powers and a proxy that authorize this person to tender the initial notes on behalf of the registered holder, in satisfactory form to us as determined in our sole discretion, in each case, as the name of the registered holder or holders appears on the initial notes.
	(4)	trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity: these persons should so indicate when signing. Unless waived by us, evidence satisfactory to us of their authority to so act must also be submitted with the letter of transmittal.

	(1)	you are authorized to tender, sell, assign and transfer the initial notes tendered and to acquire exchange notes issuable upon the exchange of such tendered initial notes, and that we will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by us,
	(2)	any exchange notes acquired by you pursuant to the exchange offer are being acquired in the ordinary course of business, whether or not you are the holder,
	(3)	you or any other person who receives exchange notes, whether or not such person is the holder of the exchange notes, has an arrangement or understanding with any person to participate in a distribution of such exchange notes within the meaning of the Securities Act and is not participating in, and does not intend to participate in, the distribution of such exchange notes within the meaning of the Securities Act,
	(4)	you or such other person who receives exchange notes, whether or not such person is the holder of the exchange notes, is not an “affiliate,” as defined in Rule 405 of the Securities Act, of ours, or if you or such other person is an affiliate, you or such other person will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable,
	(5)	if you are not a broker-dealer, you represent that you are not engaging in, and do not intend to engage in, a distribution of exchange notes, and
	(6)	if you are a broker-dealer that will receive exchange notes for your own account in exchange for initial notes, you represent that the initial notes to be exchanged for the exchange notes were acquired by you as a result of market-making or other trading activities and acknowledge that you will deliver a prospectus in connection with any resale, offer to resell or other transfer of such exchange notes.

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	Book-Entry Delivery Procedure

	Guaranteed Delivery Procedure

	(1)	you tender through a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Exchange Act,
	(2)	on or before the expiration date, the exchange agent receives a properly completed and duly executed letter of transmittal or facsimile of the letter of transmittal, and a notice of guaranteed delivery, substantially in the form provided by us, with your name and address as holder of the initial notes and the amount of notes tendered, stating that the tender is being made by that letter and notice and guaranteeing that within three New York Stock Exchange trading days after the expiration date the certificates for all the initial notes tendered, in proper form for transfer, or a book-entry confirmation with an agent’s message, as the case may be, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent, and
	(3)	the certificates for all your tendered initial notes in proper form for transfer or a book-entry confirmation as the case may be, and all other documents required by the letter of transmittal are received by the exchange agent within three New York Stock Exchange trading days after the expiration date.

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	(1)	specify the name of the person having tendered the initial notes to be withdrawn,
	(2)	identify the notes to be withdrawn, including, if applicable, the registration number or numbers and total principal amount of these notes,
	(3)	be signed by the person having tendered the initial notes to be withdrawn in the same manner as the original signature on the letter of transmittal by which these notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to permit the trustee for the initial notes to register the transfer of these notes into the name of the person having made the original tender and withdrawing the tender,
	(4)	specify the name in which any of these initial notes are to be registered, if this name is different from that of the person having tendered the initial notes to be withdrawn, and
	(5)	if applicable because the initial notes have been tendered through the book-entry procedure, specify the name and number of the participant’s account at The Depository Trust Company to be credited, if different than that of the person having tendered the initial notes to be withdrawn.

	(1)	there is no change in the laws and regulations which would reasonably be expected to impair our ability to proceed with this exchange offer,
	(2)	there is no change in the current interpretation of the staff of the Commission which permits resales of the exchange notes,
	(3)	there is no stop order issued by the Commission or any state securities authority suspending the effectiveness of the registration statement which includes this prospectus or the qualification of the indenture for our exchange notes under the Trust Indenture Act of 1939 and there are no proceedings initiated or, to our knowledge, threatened for that purpose,
	(4)	there is no action or proceeding instituted or threatened in any court or before any governmental agency or body that would reasonably be expected to prohibit, prevent or otherwise impair our ability to proceed with this exchange offer, and
	(5)	we obtain all governmental approvals that we deem in our sole discretion necessary to complete this exchange offer.

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	(1)	refuse to accept and return to their holders any initial notes that have been tendered,
	(2)	extend the exchange offer and retain all notes tendered before the expiration date, subject to the rights of the holders of these notes to withdraw their tenders, or
	(3)	waive any condition that has not been satisfied and accept all properly tendered notes that have not been withdrawn or otherwise amend the terms of this exchange offer in any respect as provided under the section in this prospectus entitled “— Expiration Date; Extensions; Amendments; Termination.”

	By mail:
	U.S. Bank National Association
	60 Livingston Avenue
	St. Paul, MN 55107
	Attn: Specialized Finance Dept.
	By hand/overnight delivery:
	U.S. Bank National Association
	60 Livingston Avenue
	St. Paul, MN 55107
	Attn: Specialized Finance Dept.
	Facsimile Transmission: (651) 495-8158
	Confirm by Telephone: (800) 934-6802
	Attention: Specialized Finance Dept.

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	(1)	certificates representing exchange notes or initial notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the notes tendered,
	(2)	tendered initial notes are registered in the name of any person other than the person signing the letter of transmittal, or
	(3)	a transfer tax is payable for any reason other than the exchange of the initial notes in this exchange offer.

	(1)	the initial purchasers request us to register initial notes that are not eligible to be exchanged for exchange notes in the exchange offer; or
	(2)	you are not eligible to participate in the exchange offer or do not receive freely tradable exchange notes in the exchange offer,

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	•	are unsecured senior obligations of the Company;
	•	are pari passu in right of payment with all existing and future Senior Indebtedness (including the Credit Agreement) of the Company;
	•	are effectively subordinated to all secured Indebtedness of the Company (including the Credit Agreement), to the extent of the collateral securing such Indebtedness;
	•	are structurally subordinated to all existing and future Indebtedness, claims of holders of Preferred Stock and other liabilities of Subsidiaries of the Company that do not guarantee the Notes;
	•	are senior in right of payment to any future Subordinated Obligation of the Company;
	•	are initially guaranteed on a senior unsecured basis by Parent and each Restricted Subsidiary that guarantees the Credit Agreement; and
	•	are subject to registration with the SEC pursuant to the Registration Rights Agreement.

	Interest

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	Additional Interest

	Payments

		Redemption
Year		Price
2010			106.250	%
2011			103.125	%
2012 and thereafter			100.000	%

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	(1)	upon the sale or other disposition (including by way of consolidation or merger) of a Subsidiary Guarantor;
	(2)	upon the sale or disposition of all or substantially all the assets of a Subsidiary Guarantor;
	(3)	the designation of such Subsidiary Guarantor as an Unrestricted Subsidiary pursuant to the terms of the Indenture; or
	(4)	at such time as such Subsidiary Guarantor no longer Guarantees any other Indebtedness of the Company or another Subsidiary Guarantor that would have required it to become a Subsidiary Guarantor under “— Certain Covenants — Future Guarantors”;

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	(5)	in connection with any sale or other disposition (including by way of merger or consolidation) of Capital Stock of a Subsidiary Guarantor to a Person in accordance with the Indenture that results in the Subsidiary Guarantor no longer being a Restricted Subsidiary; provided, however, that such Subsidiary Guarantor is also released from its Guaranty under the Credit Agreement;
	(6)	upon defeasance of the notes as described under “— Defeasance;” or
	(7)	upon satisfaction of the conditions set forth under “— Satisfaction and Discharge,”

	Senior Secured Indebtedness versus Notes and Guarantees

	(1)	the Company’s senior Secured Indebtedness would have been approximately $535.0 million, all of which would have been outstanding under the Credit Agreement; and
	(2)	the senior Secured Indebtedness of the Parent and the Subsidiary Guarantors would have been approximately $535.0 million, virtually all of which would have consisted of their respective guaranties under the Credit Agreement.

	Liabilities of Subsidiaries versus Notes

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	(1)	any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company; provided, however, that such event shall not be deemed to be a Change of Control so long as one or more of the Permitted Holders has the right or ability by voting power, contract or otherwise, to elect or designate for election a majority of the Board of Directors of the Company;
	(2)	individuals who on the Issue Date constituted the Board of Directors of the Company or, so long as Parent owns a majority of the total voting power of the Voting Stock of the Company, the Parent Board (together with any new directors whose election by such Board of Directors of the Company or the Parent Board or whose nomination for election by the shareholders of the Company or Parent, as the case may be, was approved by a vote of a majority of the directors of the Company or of Parent, as the case may be, then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved or whose election was approved by the Permitted Holders) cease for any reason to constitute a majority of the Board of Directors of the Company or the Parent Board then in office; or
	(3)	the merger or consolidation of Parent or the Company with or into another Person or the merger of another Person with or into Parent or the Company, or the sale of all or substantially all the assets of Parent or the Company (determined on a consolidated basis) to another Person (other than, in all such cases, a Person that is a Permitted Holder or is controlled by the Permitted Holders or is a Wholly Owned Subsidiary of the Company), other than a transaction following which (A) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of Parent or the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and (B) in the case of a sale of assets transaction, the transferee Person becomes the obligor in respect of the Notes and a Subsidiary of the transferor of such assets; provided, however, that (i) it shall not constitute a Change of Control under this clause (3) if, after giving effect to such transaction, the Permitted Holders beneficially own (as defined in clause (1) above) 35% or more of the total voting power of the Voting Stock of the surviving Person in such transaction immediately after such transaction and (ii) this clause (3) shall not apply to Parent if at the time of the transaction, Parent owns less than a majority of the total voting power of the Voting Stock of the Company.

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	(1)	that a Change of Control has occurred and that such Holder has the right to require us to purchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, or premium, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date);
	(2)	the circumstances and relevant facts regarding such Change of Control;
	(3)	the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and
	(4)	the instructions, as determined by us, consistent with the covenant described hereunder, that a Holder must follow in order to have its Notes purchased.

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	Limitation on Indebtedness

	(1)	Indebtedness Incurred by the Company and its Restricted Subsidiaries pursuant to any Revolving Credit Facility; provided, however, that, immediately after giving effect to any such Incurrence, the sum of the aggregate principal amount of all Indebtedness Incurred under this clause (1) and then outstanding and the aggregate face amount of reimbursement obligations Incurred under clause (13) below and then outstanding does not exceed $135 million;

	(2)	Indebtedness Incurred by the Company and its Restricted Subsidiaries pursuant to any Term Loan Facility; provided, however, that, after giving effect to any such Incurrence, the aggregate principal amount of all Indebtedness Incurred under this clause (2) and then outstanding does not exceed $530 million less the sum of all principal payments with respect to such Indebtedness pursuant to paragraph (a)(3)(A) of the covenant described under “— Limitation on Sales of Assets and Subsidiary Stock”;
	(3)	Indebtedness owed to and held by the Company or a Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital Stock which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon and (B) if the Company is the obligor on such Indebtedness owed to a Restricted Subsidiary, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes;
	(4)	the Notes and the Exchange Notes (other than any Additional Notes);
	(5)	Indebtedness outstanding on the Issue Date (other than Indebtedness described in clause (1), (2), (3), (4) or (13) of this covenant);
	(6)	Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (4) or (5) (other than any Existing Notes outstanding on the Issue Date) or this clause (6);
	(7)	Hedging Obligations of the Company or any Restricted Subsidiary entered into not for the purpose of speculation;

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	(8)	obligations in respect of one or more standby letters of credit, performance, bid and surety bonds, workers compensation claims, self insurance obligations, bankers’ acceptances and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;
	(9)	Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of its Incurrence;

	(10)	(A) Indebtedness (including Capital Lease Obligations) Incurred by the Company or any of its Restricted Subsidiaries to finance the purchase, lease, construction or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets) within 180 days after such purchase, lease or improvement or (B) Indebtedness attributable to Permitted Equipment Lease Financings, in the case of (A) and (B), in an aggregate principal amount which, when added together with the amount of Indebtedness previously Incurred pursuant to this clause (10) and then outstanding (including any Refinancing Indebtedness with respect thereto) does not exceed $25 million;
	(11)	the Guarantee or co-issuance of any Indebtedness otherwise permitted to be Incurred pursuant to the Indenture;
	(12)	Indebtedness of the Company or any Restricted Subsidiary consisting of indemnification, adjustment of purchase price, earn-out or similar obligations, in each case incurred in connection with the acquisition or disposition of any assets, including shares of Capital Stock or divisions or lines of business, of the Company or any Restricted Subsidiary;
	(13)	reimbursement obligations Incurred by the Company and its Restricted Subsidiaries in respect of letters of credit or synthetic letters of credit outstanding pursuant to the Credit Agreement; provided, however, that after giving effect to any such Incurrence, the sum of the aggregate face amount of such reimbursement obligations Incurred under this clause (13) and then outstanding and the principal aggregate amount of Indebtedness Incurred under clause (1) above and then outstanding does not exceed $135 million; and
	(14)	Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount which, when taken together with all other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the date of such Incurrence (other than Indebtedness permitted by clauses (1) through (13) above or paragraph (a)) does not exceed $35 million; provided, however that after giving effect to any such Incurrence by a Restricted Subsidiary that is not a Subsidiary Guarantor, the principal aggregate amount of Indebtedness Incurred by all Restricted Subsidiaries that are not Subsidiary Guarantors pursuant to this clause (14) and then outstanding does not exceed $15 million.

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	Limitation on Restricted Payments

	(1)	a Default shall have occurred and be continuing (or would result therefrom);
	(2)	the Company is not entitled to Incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under “— Limitation on Indebtedness”; or
	(3)	the aggregate amount of such Restricted Payment and all other Restricted Payments since the Issue Date would exceed the sum of (without duplication):

	(A)	50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter during which the Issue Date occurs to the end of the most recent fiscal quarter for which internal financial statements are then available prior to the date of such Restricted Payment (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); plus

	(B)	100% of the aggregate Net Cash Proceeds received by the Company from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of the Company and other than an issuance or sale to an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees), 100% of any cash capital contribution received by the Company from its shareholders subsequent to the Issue Date and 100% of the fair market value (as determined in good faith by resolution of the Board of Directors of the Company) of property (other than cash that would constitute Temporary Cash Investments) received by the Company or a Restricted Subsidiary subsequent to the Issue Date as a contribution to its common equity capital or from the issuance of its Capital Stock (other than from a Subsidiary or that was financed with loans from the Company or any of its Restricted Subsidiaries unless such loans have been paid off on or prior to the date of determination); plus
	(C)	the amount by which Indebtedness of the Company or a Restricted Subsidiary is reduced on the Company’s consolidated balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Issue Date of any Indebtedness of the Company or a Restricted Subsidiary convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair value of any other property, distributed by the Company upon such conversion or exchange); plus

	(D)	an amount equal to the sum of (x) the net reduction in the Investments (other than Permitted Investments) made by the Company or any Restricted Subsidiary in any Person resulting from repurchases, repayments or redemptions of such Investments by such Person, proceeds realized on the sale of such Investment and proceeds representing the return of capital (excluding dividends and distributions), in each case received by the Company or any Restricted Subsidiary, and (y) to the extent such Person is an Unrestricted Subsidiary, the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary is

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		designated a Restricted Subsidiary; provided, however, that the foregoing sum shall not exceed, in the case of any such Person or Unrestricted Subsidiary, the amount of Investments (excluding Permitted Investments) previously made (and treated as a Restricted Payment) by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary.

	(b)	The preceding provisions will not prohibit:

	(1)	any Restricted Payment made out of the Net Cash Proceeds of the substantially concurrent sale of, or made by exchange for, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) or a substantially concurrent cash capital contribution received by the Company from its shareholders; provided, however, that (A) such Restricted Payment shall be excluded in the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such sale or such cash capital contribution (to the extent so used for such Restricted Payment) shall be excluded from the calculation of amounts under clause (3)(B) of paragraph (a) above;
	(2)	any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Company or any Subsidiary Guarantor made (a) by exchange for, or out of the proceeds of the substantially concurrent sale of, Indebtedness which is permitted to be Incurred pursuant to the covenant described under “— Limitation on Indebtedness” or (b) upon a Change of Control or in connection with an Asset Disposition to the extent required by the agreement governing such Subordinated Obligations but only if the Company shall have complied with the covenants described under “— Change of Control” and “— Limitations on Sale of Assets and Subsidiary Stock” and purchased all Notes validly tendered pursuant to the relevant offer prior to redeeming such Subordinated Obligation ; provided, however, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value shall be excluded in the calculation of the amount of Restricted Payments;
	(3)	dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with this covenant; provided, however, that such dividend shall be included in the calculation of the amount of Restricted Payments;
	(4)	so long as no Default has occurred and is continuing, the repurchase or other acquisition of shares of Capital Stock of Buffets Restaurants, the Parent or the Company or any of its Subsidiaries (or any Restricted Payment to the extent necessary to fund such repurchase or acquisition) from employees, former employees, directors or former directors of Buffets Restaurants, the Parent or the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment, severance, compensation or shareholder agreements) or plans (or amendments thereto) approved by the Board of Directors of Buffets Restaurants, the Parent or the Company, as the case may be, under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such Capital Stock; provided, however, that the aggregate amount of such repurchases and other acquisitions shall not exceed in any calendar year the sum of (A) $5.0 million (with unused amounts in any calendar year being carried over to the next succeeding calendar year subject to a maximum (without giving effect to the following clauses (B) and (C)) of $10.0 million in any calendar year) plus (B) the aggregate Net Cash Proceeds received by the Company from the issuance of such Capital Stock to, or the exercise of options to purchase such Capital Stock by, employees or directors of the Company or any of its Subsidiaries that occurs after the Issue Date (to the extent the Net Cash Proceeds from the sale of such Capital Stock have not otherwise been applied to the payment of Restricted Payments by virtue of clause (3)(B) of paragraph (a) above or applied pursuant to clause (b)(1) above) plus (C) the Net Cash Proceeds actually received by the Company after the Issue Date from insurance proceeds paid in respect of the death or disability of any employee or director; provided further, however, that such repurchases and other acquisitions shall be excluded in the calculation of the amount of Restricted Payments;

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	(5)	dividends, distributions or advances to Buffets Restaurants or Parent to be used by Buffets Restaurants or Parent to pay Federal, state and local taxes payable by Parent or Buffets Restaurants and directly attributable to (or arising as a result of) the operations of the Company and its Restricted Subsidiaries; provided, however, that the amount of such dividends shall not exceed the amount that the Company and its Restricted Subsidiaries would be required to pay in respect of such Federal, state and local taxes were the Company to pay such taxes as a stand-alone taxpayer; provided further, however, that such dividends shall be excluded in the calculation of the amount of Restricted Payments;
	(6)	any Restricted Payment made to (i) the Parent to pay the interest on, or repurchase or redeem the Parent Notes and (ii) Buffets Restaurants or the Parent to be used by Buffets Restaurants or the Parent solely (A) to pay its franchise taxes and other fees required to maintain its corporate existence, (B) to pay for general corporate, overhead and other expenses of Parent and Buffets Restaurants (including salaries and other compensation of the employees and directors, board activities, insurance, legal (including litigation, judgments and settlements), accounting, corporate reporting, administrative and other operating and non-operating expenses) and (C) to pay expenses incurred in connection with offerings of securities, debt financings or acquisition or disposition transactions; provided, however, that all such Restricted Payments under the preceding clause (ii) shall not exceed in the aggregate $3.0 million per year; provided further, however, that such Restricted Payments pursuant to this clause (6) shall be excluded in the calculation of the amount of Restricted Payments;
	(7)	Permitted Closing Date Payments; provided, however, that such payments shall be excluded in the calculation of the amount of Restricted Payments;
	(8)	payments of intercompany subordinated debt, the Incurrence of which was permitted under clause (3) of paragraph (b) of the covenant described under “— Limitation on Indebtedness”; provided, however, that no Default or Event of Default has occurred and is continuing or would otherwise result therefrom, provided further, however, that such payments shall be excluded in the calculation of the amount of Restricted Payments;
	(9)	repurchases of Capital Stock deemed to occur upon exercise of stock options if such Capital Stock represents a portion of the exercise price of such options; provided, however, that such Restricted Payments shall be excluded in the calculation of the amount of Restricted Payments;

	(10)	the purchase of fractional shares by the Company upon conversion of any securities of the Company into Capital Stock of the Company; provided, however, that such purchase shall be excluded in the calculation of the amount of Restricted Payments;
	(11)	payments to Parent in an aggregate amount not to exceed $5.0 million in any calendar year (with unused amounts in any calendar year being carried over to the next succeeding calendar year subject to a maximum of $10.0 million in any calendar year) to be used solely to redeem, purchase or otherwise acquire warrants outstanding on the Issue Date to acquire Capital Stock of Parent; provided, however, that such payments shall not be made prior to September 29, 2008; provided, further, however that such payments shall be excluded in the calculation in the amount of Restricted Payments; or
	(12)	Restricted Payments not exceeding $25 million in the aggregate; provided, however, that (A) at the time of such Restricted Payments, no Default shall have occurred and be continuing (or result therefrom) and (B) such Restricted Payments shall be excluded in the calculation of the amount of Restricted Payments.

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	Limitation on Restrictions on Distributions from Restricted Subsidiaries

	(1)	with respect to clauses (a), (b) and (c),

	(i)	any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date;
	(ii)	any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company) and outstanding on such date;
	(iii)	any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (i) or (ii) of clause (1) of this covenant or this clause (iii) or contained in any amendment to an agreement referred to in clause (i) or (ii) of clause (1) of this covenant or this clause (iii); provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such refinancing agreement or amendment are no less favorable, taken as a whole, to the Noteholders than encumbrances and restrictions with respect to such Restricted Subsidiary contained in such predecessor agreements;
	(iv)	any encumbrance or restriction consisting of any restriction on the sale or other disposition of assets or property securing Indebtedness as a result of a Lien permitted to be Incurred under the Indenture on such asset or property;
	(v)	any encumbrance or restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or a portion of the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;
	(vi)	any encumbrance or restriction arising under applicable law, regulation or order;
	(vii)	any restriction on cash or other deposits or net worth imposed by suppliers or landlords under contracts entered into in the ordinary course of business;
	(viii)	any restriction in any agreement that is not materially more restrictive than the restrictions under the terms of the Credit Agreement as in effect on the Issue Date;
	(ix)	any encumbrances or restrictions created with respect to (A) Indebtedness of the Company or Subsidiary Guarantors permitted to be Incurred subsequent to the Issue Date pursuant to the provisions of the covenant described under the caption “— Limitation on Indebtedness” and (B) Indebtedness of other Restricted Subsidiaries permitted to be Incurred subsequent to the Issue Date pursuant to the provisions of the covenant described under the caption “— Limitation on Indebtedness”; provided, however, that the Board of Directors of the Company determines (as evidenced by a resolution of the Board of Directors of the Company) in good faith at the time such encumbrances or restrictions are created that such encumbrances or restrictions would not reasonably be expected to impair the ability of the Company to make payments of interest and of principal on the Notes in each case as and when due; and

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	(x)	non-assignment provisions of any contract or any lease entered into in the ordinary course of business; and
	(xi)	provisions with respect to dividends, the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business.

	(2)	with respect to clause (c) only,

	(i)	any such encumbrance or restriction consisting of customary nonassignment provisions in leases governing leasehold interests to the extent such provisions restrict the transfer of the lease or the property leased thereunder; and

	(ii)	encumbrance or restrictions contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such security agreements or mortgages.

	Limitation on Sales of Assets and Subsidiary Stock

	(1)	the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the fair market value (including as to the value of all non-cash consideration), as determined in good faith by the Board of Directors of the Company or the chief financial or accounting Officer of the Company, of the shares and assets subject to such Asset Disposition;
	(2)	at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash or cash equivalents (provided that such 75% requirement shall not apply to any Asset Disposition in which the cash or cash equivalents portion of the consideration received therefor is no less than an amount equal to the product of (x) 4.5 and (y) the amount of EBITDA for the previously completed four fiscal quarters directly attributable to the assets or Capital Stock included in such Asset Disposition); and
	(3)	an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be)

	(A)	first, to the extent the Company elects (or is required by the terms of any Indebtedness), to prepay, repay, redeem or purchase Senior Indebtedness of the Company or of a Subsidiary Guarantor or Indebtedness (other than any Disqualified Stock) of a Wholly Owned Subsidiary (in each case other than Indebtedness owed to the Company or a Subsidiary of the Company) within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash;

	(B)	second, to the extent of the balance of such Net Available Cash after application in accordance with clause (A), to the extent the Company elects, to acquire Additional Assets within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that the Company or such Restricted Subsidiary shall be deemed to have applied Net Available Cash in accordance with this clause (B) within such one-year period if, within such one-year period, it has entered into a binding commitment or agreement to invest such Net Available Cash and continues to use all reasonable efforts to so apply such Net Available Cash as soon as practicable thereafter; provided further, however, that such Net Available Cash is applied on the earlier of (x) a date that is 18 months from the later of the date of such Asset Disposition or the receipt of such Net Available Cash or (y) promptly upon any abandonment or termination of such commitment or agreement;

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	(C)	third, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B), to make an offer to the holders of the Notes (and to holders of other Senior Indebtedness of the Company designated by the Company) to purchase Notes (and such other Senior Indebtedness of the Company) pursuant to and subject to the conditions contained in the Indenture; and

	(D)	fourth, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A), (B) and (C), for any purpose not prohibited by the terms of the Indenture;

	provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (A) or (C) above, the Company or such Restricted Subsidiary shall permanently retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased.

	(1)	the assumption of Indebtedness of the Company or any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition; and
	(2)	the amount of any obligations or securities received by the Company or any Restricted Subsidiary from the transferee that are converted by the Company or such Restricted Subsidiary into cash within 90 days of receipt thereof.

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	Limitation on Affiliate Transactions

	(1)	the terms of the Affiliate Transaction are no less favorable to the Company or such Restricted Subsidiary than those that could be obtained at the time of the Affiliate Transaction in arm’s-length dealings with a Person who is not an Affiliate;
	(2)	if such Affiliate Transaction involves an amount in excess of $5.0 million, the material terms of the Affiliate Transaction are set forth in writing and a majority of the directors of the Company disinterested with respect to such Affiliate Transaction have determined in good faith that the criteria set forth in clause (1) are satisfied and have approved the relevant Affiliate Transaction as evidenced by a Board resolution; and
	(3)	if such Affiliate Transaction involves an amount in excess of $20.0 million, the Board of Directors of the Company shall also have received a written opinion from an Independent Qualified Party to the effect that the financial terms of such Affiliate Transaction are fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or not less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm’s-length transaction with a Person who was not an Affiliate.

	(b)	The provisions of the preceding paragraph (a) will not prohibit:
	(1)	any Investment (other than a Permitted Investment described in clause (a) or (b) of the definition thereof) or other Restricted Payment, in each case permitted to be made pursuant to, or not prohibited by, the covenant described under “— Limitation on Restricted Payments”;
	(2)	any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment, compensation or severance arrangements, stock options and stock ownership plans approved by the Board of Directors of the Company;
	(3)	loans or advances to employees in the ordinary course of business in accordance with the past practices of the Company or its Restricted Subsidiaries or otherwise approved by the Board of Directors of the Company, but in any event not to exceed $2.5 million in the aggregate outstanding at any one time;
	(4)	the payment of reasonable compensation or employee benefit arrangements to and indemnity provided for the benefit of directors, officers or employees of the Company or its Restricted Subsidiaries in the ordinary course of business;

	(5)	the payment of reasonable fees to directors of the Company and its Restricted Subsidiaries who are not employees of the Company or its Restricted Subsidiaries;
	(6)	the payment of fees to Caxton-Iseman Capital, Inc. or its affiliates pursuant to the terms of the advisory agreement with Caxton-Iseman Capital, Inc. or its affiliates, as in effect on the Issue Date; provided, however, that in connection with an Equity Offering, the Company may terminate the advisory agreement with Caxton-Iseman Capital, Inc. and pay a termination fee from the proceeds of such Equity Offering;

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	(7)	any transaction with a Restricted Subsidiary or joint venture or similar entity which would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns an equity interest in or otherwise controls such Restricted Subsidiary, joint venture or similar entity;
	(8)	the entering into of a registration rights agreement with the stockholders or debtholders of the Company;
	(9)	the issuance or sale of any Capital Stock (other than Disqualified Stock) of the Company;

	(10)	any merger, consolidation or reorganization with (i) Parent or Buffets Restaurants, solely for the purposes of reorganizing to facilitate the initial public offering of the Company, Parent or Buffets Restaurants or (ii) with an Affiliate solely for the purpose and with the sole effect of forming a holding company or reincorporating the Company in a new jurisdiction;
	(11)	the entering into of a tax sharing agreement, or payments pursuant thereto, between the Company and one or more Subsidiaries, on the one hand, and any other Person with which the Company and such Subsidiaries are required or permitted to file a consolidated tax return or with which the Company and such Subsidiaries are part of a consolidated group for tax purposes, on the other hand, which payments by the Company and the Restricted Subsidiaries are not in excess of the payments described in clause (b)(5) under “— Limitation on Restricted Payments”;
	(12)	indemnification agreements with, and the payment of the fees and indemnities to, directors, officers and employees of the Company and its Restricted Subsidiaries, in each case in the ordinary course of business;
	(13)	any employment, deferred compensation, consulting, noncompetition, confidentiality or similar agreement entered into by the Company and its Restricted Subsidiaries with its employees or directors in the ordinary course of business; and
	(14)	any agreement as in effect on the Issue Date and described in the offering circular or any renewals or extensions of any such agreement (so long as such renewals or extensions are not less favorable to the Company or the Restricted Subsidiaries) and the transactions evidenced thereby.

	Limitation on Liens

	Merger and Consolidation

	(1)	the resulting, surviving or transferee Person (the “Successor Company”) shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Company under the Notes and the Indenture;
	(2)	immediately after giving pro forma effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary as a result of such transaction as

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		having been Incurred by such Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;
	(3)	immediately after giving pro forma effect to such transaction, (A) the Successor Company would be able to Incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under “— Limitation on Indebtedness” or (B) the Consolidated Coverage Ratio for the Successor Company and its Restricted Subsidiaries would be equal to or greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction; and
	(4)	the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture;

	(1)	the resulting, surviving or transferee Person (if not such Subsidiary) shall be a Person organized and existing under the laws of the jurisdiction under which such Subsidiary was organized or under the laws of the United States of America, or any State thereof or the District of Columbia, and such Person shall expressly assume, by a Guaranty Agreement, in a form reasonably satisfactory to the Trustee, all the obligations of such Subsidiary, if any, under its Subsidiary Guaranty, except that the foregoing requirements of this clause (1) shall not apply in the case of a Subsidiary Guarantor that has been disposed of in its entirety to another Person (other than to the Company or a Subsidiary of the Company) or otherwise ceases to be a Subsidiary Guarantor as a result of such transaction or series of transactions, whether through a merger, consolidation or sale of Capital Stock or assets, if in connection therewith the Company provides an Officers’ Certificate to the Trustee to the effect that the Company will comply with its obligations under the covenant described under “— Limitation on Sales of Assets and Subsidiary Stock” in respect of such disposition;
	(2)	immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at the time of such transaction), no Default shall have occurred and be continuing; and
	(3)	the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Guaranty Agreement, if any, complies with the Indenture.

	(1)	the resulting, surviving or transferee Person (if not Parent) shall be a Person organized and existing under the laws of the jurisdiction under which Parent was organized or under the laws of the

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		United States of America, or any State thereof or the District of Columbia, and such Person shall expressly assume all the obligations of Parent, if any, under the Parent Guaranty;
	(2)	immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at the time of such transaction), no Default shall have occurred and be continuing; and
	(3)	the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and execution of such Guaranty Agreement, if any, complies with the Indenture.

	Future Guarantors

	(1)	a default in the payment of interest on the Notes when due, continued for 30 days;
	(2)	a default in the payment of principal of any Note when due at its Stated Maturity, upon optional redemption, upon required purchase, upon declaration of acceleration or otherwise;
	(3)	the failure by the Company or Parent to comply with its obligations under “— Certain Covenants — Merger and Consolidation” above;
	(4)	the failure by the Company to comply for 30 days after notice with any of its obligations in the covenants described above under “Change of Control” (other than a failure to purchase Notes) or under “— Certain Covenants” under “— Limitation on Indebtedness”, “— Limitation on Restricted

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		Payments”, “— Limitation on Restrictions on Distributions from Restricted Subsidiaries”, “— Limitation on Sales of Assets and Subsidiary Stock” (other than a failure to purchase Notes), “— Limitation on Affiliate Transactions”, “— Limitation on Liens”, “— Future Guarantors”, or “— SEC Reports”;
	(5)	the failure by the Company or a Subsidiary Guarantor to comply for 60 days after notice with its other agreements contained in the Indenture;
	(6)	Indebtedness of the Company, any Subsidiary Guarantor or any Significant Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $25.0 million (the “cross acceleration provision”);
	(7)	certain events of bankruptcy, insolvency or reorganization of the Company, a Subsidiary Guarantor or a Significant Subsidiary (the “bankruptcy provisions”);
	(8)	any judgment or decree for the payment of money in excess of $25.0 million is entered against the Company, a Subsidiary Guarantor or a Significant Subsidiary, remains outstanding for a period of 60 consecutive days following such judgment and is not discharged, waived or stayed within 10 days after notice (the “judgment default provision”); or
	(9)	the Parent Guaranty or any Subsidiary Guaranty ceases to be in full force and effect (other than in accordance with the terms of such Guaranty) and such default continues for 10 days or any Guarantor denies or disaffirms its obligations under its Guaranty.

	(1)	such holder has previously given the Trustee notice that an Event of Default is continuing;
	(2)	holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy;
	(3)	such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense;
	(4)	the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and
	(5)	holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

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	(1)	reduce the amount of Notes whose holders must consent to an amendment;
	(2)	reduce the rate of or extend the time for payment of interest on any Note;
	(3)	reduce the principal of or extend the Stated Maturity of any Note;
	(4)	reduce the amount payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under “— Optional Redemption” above;
	(5)	make any Note payable in money other than that stated in the Note;
	(6)	impair the right of any holder of the Notes to receive payment of principal of and interest on such holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s Notes;
	(7)	make any change in the amendment provisions which require each holder’s consent or in the waiver provisions;
	(8)	make any change in the ranking or priority of any Note or any Guaranty that would adversely affect the Noteholders; or
	(9)	make any change in any Guaranty that would adversely affect the Noteholders in any material respect.

	(1)	to cure any ambiguity, omission, defect or inconsistency;
	(2)	to provide for the assumption by a successor person of the obligations of the Company or any Guarantor under the Indenture;
	(3)	to provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code);

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	(4)	to add guarantees with respect to the Notes, including any Subsidiary Guaranties, or to secure the Notes;
	(5)	to add to the covenants of the Parent, the Company or a Subsidiary Guarantor for the benefit of the holders of the Notes or to surrender any right or power conferred upon the Company or a Subsidiary Guarantor;
	(6)	to make any change that does not adversely affect the rights of any holder of the Notes;
	(7)	to conform the text of the Indenture, the Notes, the Parent Guaranty and the Subsidiary Guaranties to any provision of this “Description of the Notes” to the extent that such provision in this “Description of the Notes” was intended to be a verbatim recitation of a provision of the Indenture, the Notes, the Parent Guaranty and the Subsidiary Guaranties; or
	(8)	to comply with any requirement of the SEC in connection with the qualification of the Indenture under the Trust Indenture Act.

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	(1)	any property, plant or equipment useful in a Related Business;
	(2)	the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or
	(3)	Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;

	(1)	1.0% of the principal amount of such Note; and
	(2)	the excess, if any, of (a) the present value at such redemption date of (i) the redemption price of such Note at November 1, 2010 (each such redemption price being set forth in the table appearing above under the caption “Optional Redemption”), plus (ii) all required interest payments due on such Note through November 1, 2010 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate, as of such redemption date, plus 50 basis points; over (b) the principal amount of such Note.

	(1)	any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary);
	(2)	all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary; or
	(3)	any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary;

	(A)	a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to another Restricted Subsidiary;
	(B)	for purposes of the covenant described under “— Certain Covenants — Limitation on Sales of Assets and Subsidiary Stock” only, (x) a disposition that constitutes a Restricted Payment permitted by the covenant described under “— Certain Covenants — Limitation on Restricted

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		Payments” or a Permitted Investment and (y) a disposition of all or substantially all the assets of the Company in accordance with the covenant described under “— Certain Covenants — Merger and Consolidation”;
	(C)	a disposition of assets with a fair market value of less than $2.5 million;
	(D)	entering into Hedging Obligations;
	(E)	the granting of a Lien permitted under the Indenture;
	(F)	the disposition of cash or Temporary Cash Investments;
	(G)	the disposition of inventory or obsolete, damaged or worn out equipment or assets in the ordinary course of business;
	(H)	the disposition of property or assets that is a surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind; and
	(I)	sales or grants of licenses or sublicenses to use the patents, trade secrets, know-how and other intellectual property, and licenses, leases or subleases of other assets, of the Company or any Restricted Subsidiary to the extent not materially interfering with the business of the Company and the Restricted Subsidiaries.

	(1)	the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of or redemption or similar payment with respect to such Indebtedness multiplied by the amount of such payment by
	(2)	the sum of all such payments.

	(1)	if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such

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		Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that, in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation shall be computed based on (A) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period when such facility was outstanding or (B) if such facility was created after the end of such four fiscal quarters, the average balance of such Indebtedness during the period from the date of creation of such facility to the date of the computation);
	(2)	if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period and as if the Company or such Restricted Subsidiary has not earned the interest income actually earned during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness;
	(3)	if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, EBITDA for such period shall be reduced by an amount equal to EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to EBITDA (if negative), directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);
	(4)	if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction requiring a calculation to be made hereunder, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and
	(5)	if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) or (4) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period.

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	(1)	interest expense attributable to capital leases;
	(2)	amortization of debt discount and debt issuance cost;
	(3)	capitalized interest;
	(4)	non-cash interest expenses;
	(5)	commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;
	(6)	net payments pursuant to Hedging Obligations;
	(7)	dividends paid in cash or Disqualified Stock in respect of all Preferred Stock of Restricted Subsidiaries and Disqualified Stock of the Company held by Persons other than the Company or a Wholly Owned Subsidiary;
	(8)	interest incurred in connection with Investments in discontinued operations;
	(9)	interest actually paid by the Company or a Restricted Subsidiary under a Guarantee of Indebtedness of any other Person; and

	(10)	the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than Buffets Restaurants, the Parent or the Company) in connection with Indebtedness Incurred by such plan or trust;

	(1)	any net income of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that:

	(A)	subject to the exclusion contained in clause (4) below, the Company’s equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (3) below); and

	(B)	the Company’s equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income but only to the extent the Company or a Restricted Subsidiary funded such net loss with cash and such funding did not constitute a Restricted Payment that reduced the amount of permitted Restricted Payments under the “— Certain Covenants — Limitation on Restricted Payments”;

	(2)	solely for purposes of determining the aggregate amount available for Restricted Payments under clause (a)(3) of the covenant described under “Certain Covenants — Limitation on Restricted

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		Payments”, any net income (or loss) of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition;
	(3)	any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that:

	(A)	subject to the exclusion contained in clause (4) below, the Company’s equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause); and

	(B)	the Company’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income;

	(4)	any gain or loss realized upon the sale or other disposition of any assets of the Company, its consolidated Subsidiaries or any other Person (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain or loss realized upon the sale or other disposition of any Capital Stock of any Person;
	(5)	any extraordinary or nonrecurring gain (or extraordinary or nonrecurring loss), together with any related provision for taxes on any such extraordinary or nonrecurring gain (or the tax effect of any such extraordinary or nonrecurring loss), realized by the Company or any Restricted Subsidiary during such period;
	(6)	to the extent included in total interest expense, any amortization or write-offs of debt issuance costs and prepayment penalties realized during such period to the extent attributable to the Indebtedness being Refinanced in connection with the Transactions;
	(7)	non-cash compensation charges or other non-cash expenses or charges arising from the grant of or issuance or repricing of stock, stock options or other equity-based awards or any amendment, modification, substitution or change of any such stock, stock options or other equity-based awards;
	(8)	any non-cash goodwill impairment charges subsequent to the Issue Date;
	(9)	gains and losses realized upon the repayment or Refinancing of any Indebtedness of the Company or any Restricted Subsidiary;

	(10)	gains and losses due solely to fluctuations in currency values and the related tax effects;
	(11)	unrealized gains and losses with respect to Hedging Obligations;
	(12)	the impact of any dividends or accretion of liquidation preference on any Capital Stock of the Company that is not Disqualified Stock;
	(13)	any amortization or write-offs of debt issuance or deferred financing costs and premiums and prepayment penalties, in each case, to the extent attributable to the Indebtedness being Refinanced or Incurred in connection with the Transactions;
	(14)	so long as the Company is part of a consolidated group for tax purposes with the Parent, Buffets Restaurants or another parent company, the excess (if any) of (a) the provision for income taxes of the Company and its consolidated Subsidiaries over (b) the sum of (x) the aggregate payments to the Parent or Buffets Restaurants (or any other parent company) made pursuant to clause (b)(5) under “— Limitation on Restricted Payment” and (y) the amount of any income taxes that the Company or its Subsidiaries paid directly to a taxing authority;
	(15)	losses, expenses and charges incurred in connection with restructuring within the Company and/or one or more Restricted Subsidiaries, including in connection with integration of acquired businesses

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		or Persons, disposition of one or more Subsidiaries or businesses, exiting of one or more lines of businesses and relocation or consolidation of facilities, including severance, lease termination and other non-ordinary-course, non-operating costs and expenses in connection therewith; and
	(16)	the cumulative effect of a change in accounting principles.

	(1)	matures or is mandatorily redeemable (other than redeemable only for Capital Stock of such Person which is not itself Disqualified Stock) pursuant to a sinking fund obligation or otherwise;
	(2)	is convertible or exchangeable at the option of the holder for Indebtedness or Disqualified Stock; or
	(3)	is mandatorily redeemable or must be purchased upon the occurrence of certain events or otherwise, in whole or in part;

	(1)	the “asset sale” or “change of control” provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the terms applicable to the Notes and described under “— Certain Covenants — Limitation on Sales of Assets and Subsidiary Stock” and “— Certain Covenants — Change of Control”; and
	(2)	any such requirement only becomes operative after compliance with such terms applicable to the Notes, including the purchase of any Notes tendered pursuant thereto.

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	(1)	all income tax expense of the Company and its consolidated Restricted Subsidiaries;
	(2)	Consolidated Interest Expense;
	(3)	depreciation and amortization expense of the Company and its consolidated Restricted Subsidiaries (excluding amortization expense attributable to a prepaid operating activity item that was paid in cash in a prior period);
	(4)	all other non-cash charges of the Company and its consolidated Restricted Subsidiaries (including, without limitation, deferred rental expense, but excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period); and
	(5)	any payment of fees to Caxton-Iseman Capital, Inc. or its affiliates in accordance with clause (b)(6) of the covenant described in “Limitation on Affiliate Transactions” above.

	(1)	the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants;
	(2)	statements and pronouncements of the Financial Accounting Standards Board; and
	(3)	such other statements by such other entity as approved by a significant segment of the accounting profession.

	(1)	to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by virtue of partnership arrangements, or by agreements to

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		keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or
	(2)	entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

	(1)	the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable;
	(2)	all Capital Lease Obligations of such Person;
	(3)	all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business);
	(4)	all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following payment on the letter of credit);
	(5)	the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock of such Person or, with respect to any Preferred Stock of any Restricted Subsidiary of such Person, the principal amount of such Preferred Stock to be determined in accordance with the Indenture (but excluding, in each case, any accrued dividends);

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	(6)	all obligations of the type referred to in clauses (1) through (5) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee;
	(7)	all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets and the amount of the obligation so secured; and
	(8)	to the extent not otherwise included in this definition, Hedging Obligations of such Person.

	(1)	“Investment” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and

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	(2)	any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.

	(1)	all legal, title and recording tax expenses, underwriting discounts, commissions, investment bankers fees, and other fees and expenses incurred (including, without limitation, fees and expenses of counsel, brokers, finders, consultants, placement agents, accountants and investment bankers), and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Disposition;
	(2)	all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition;
	(3)	all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Disposition;
	(4)	the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against adjustment in the sale price of such property or assets or any liabilities associated with the property or other assets disposed in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition including tax liabilities, pensions or other post-employment benefits liabilities and liabilities related thereto;
	(5)	payments of unassumed liabilities (not constituting Indebtedness) relating to assets sold at the time of, or within 30 days after the date of, such Asset Disposition; and
	(6)	any portion of the purchase price from an Asset Disposition placed in escrow, whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Asset Disposition or otherwise in connection with that Asset Disposition; provided, however, that upon the termination of such escrow, Net Available Cash will be increased by any portion of funds in the escrow that are released to the Company or any Restricted Subsidiary.

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	(1)	the Company, a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Related Business;
	(2)	another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person’s primary business is a Related Business;
	(3)	cash and Temporary Cash Investments;
	(4)	receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;
	(5)	payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;
	(6)	loans or advances to employees made in the ordinary course of business of the Company or such Restricted Subsidiary;
	(7)	stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments;
	(8)	any Person to the extent such Investment represents the non-cash portion of the consideration received for an Asset Disposition as permitted pursuant to the covenant described under “— Certain Covenants — Limitation on Sales of Assets and Subsidiary Stock”;
	(9)	any Person where such Investment was acquired by the Company or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (b) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

	(10)	any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business by the Company or any Restricted Subsidiary;

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	(11)	any Person to the extent such Investment consists of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;
	(12)	any Person to the extent such Investment consists of loans and advances to suppliers, licensees, franchisees or customers of the Company or any of the Restricted Subsidiaries made in the ordinary course of business; provided, however, that the amount of Investments made pursuant to this clause (12) do not exceed $5.0 million at any time outstanding;
	(13)	Persons to the extent such Investments are in existence on the Issue Date;
	(14)	Lease, utility and other similar deposits in the ordinary course of business;
	(15)	any Person to the extent such Investment consists of Guarantees of Indebtedness to the extent permitted under the covenant described under “—Certain Covenants — Limitations on Indebtedness”; provided, however, that any actual payment made by the Company or any Restricted Subsidiary under such Guarantees of Indebtedness shall not be a Permitted Investment under this clause (15);
	(16)	additional Investments made after the Issue Date in an aggregate amount which, together with all other Investments made pursuant to this clause (16) that are then outstanding, do not exceed the greater of (a) $25 million and (b) 2.5% of Total Assets.

	(1)	pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business;
	(2)	Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet overdue for a period of more than 30 days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or be proceeding with an appeal or other proceedings for review if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;
	(3)	Liens for taxes, assessments or other governmental charges not yet overdue for a period of more than 30 days or payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;
	(4)	Liens in favor of issuers of performance and surety bonds or bid bonds or with respect to other regulatory requirements or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business;
	(5)	minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental, to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
	(6)	Liens securing Indebtedness and other obligations permitted to be Incurred pursuant to clauses (b)(1), (b)(2), (b)(13) and (b)(14) of the covenant described under “Certain Covenants — Limitation on Indebtedness”;

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	(7)	Liens existing on the Issue Date and any additional Liens under the terms of agreements in effect on the Issue Date;
	(8)	Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary, and Liens Incurred in connection with the acquisition of such Person; provided, however, that such Liens may not extend to any other property owned by the Company or any of its Restricted Subsidiaries and the Indebtedness (other than any interest thereon) secured by the Lien may not be Incurred more than 180 days after the time such other Person becomes a Subsidiary of such Person;
	(9)	Liens on property at the time the Company or a Restricted Subsidiary acquired the property, and Liens Incurred in connection with the acquisition of such property, including any acquisition by means of a merger or consolidation with or into the Company or any of its Restricted Subsidiaries; provided, however, that the Liens may not extend to any other property owned by the Company or any of its Restricted Subsidiaries and the Indebtedness (other than any interest thereon) secured by the Lien may not be Incurred more than 180 days after the acquisition of the property subject to such Lien;

	(10)	Liens securing Indebtedness or other obligations of a Restricted Subsidiary permitted to be Incurred in accordance with the covenant described under “Certain Covenants — Limitation on Indebtedness”;
	(11)	Liens securing Hedging Obligations permitted to be incurred under the covenant described in “— Limitation on Indebtedness” above;
	(12)	Liens on specific items of inventory of other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
	(13)	leases, subleases, licenses or sublicenses granted to others in the ordinary course of business which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;
	(14)	Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;
	(15)	Liens in favor of the Company or any Subsidiary Guarantor;
	(16)	Liens to secure any refinancing as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (7), (8) and (9); provided, however, that (a) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property), and (b) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (7), (8) and (9) at the time the original Lien became a Permitted Lien under the Indenture, and (ii) an amount necessary to pay accrued interest on the Indebtedness being Refinanced and pay any fees and expenses, including any premium and defeasance or discharge costs, related to such refinancing, refunding, extension, renewal or replacement;
	(17)	deposits made in the ordinary course of business to secure liability to insurance carriers;
	(18)	Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Company or any of its Restricted Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Issuer and its Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Company or any of its Restricted Subsidiaries in the ordinary course of business; and

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	(19)	Liens on Capital Stock or other securities or assets of any Unrestricted Subsidiary that secure Indebtedness of such Unrestricted Subsidiary.

	(1)	directly attributable to an asset acquisition and calculated on a basis that is consistent with Regulation S-X under the Securities Act in effect and as applied as of the Issue Date, or
	(2)	implemented by the Company or the business that was the subject of any such asset acquisition, in each case, within one year after the date of the asset acquisition (or, in the case of the business that was the subject of any such acquisition, prior to the date of the asset acquisition) and that are supportable and quantifiable by the underlying accounting records of the Company or such business, or
	(3)	in connection with any acquisition of restaurants or a Person engaged in a Related Business, (i) the EBITDA reasonably estimated by the Company’s chief financial officer associated with any such acquired restaurants that were operated for at least three months but no longer than twelve months by the business that was the subject of any such acquisition and (ii) cost savings reasonably estimated by the Company’s chief financial officer and reasonably expected by such chief financial officer to be implemented within 12 months (and fully realized within 24 months) of the consummation of such acquisition directly attributable to closing such acquired restaurants, the headquarters, back office and support consolidation, including consolidation of functions, reductions in employees and staff, marketing initiatives, elimination of redundant costs and activities, economies of scale and shifting to best practices in purchasing, in-house production or other functions, labor scheduling and changes to benefits and integration of practices of the acquired business to those of the Company.

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	(1)	such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced;
	(2)	such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced; and
	(3)	such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding or committed (plus (i) accrued interest on the Indebtedness being Refinanced and (ii) fees and expenses, including any premium and defeasance or discharge costs) under the Indebtedness being Refinanced;

	(1)	the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its Capital Stock (other than dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and dividends or distributions payable solely to the Company or a Restricted Subsidiary, and other than pro rata dividends or other distributions made by a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or owners of an equivalent interest in the case of a Subsidiary that is an entity other than a corporation));
	(2)	the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Company held by any Person or of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the Company (other than a Restricted Subsidiary), including the exercise of any option to exchange any Capital Stock (other than into Capital Stock of the Company that is not Disqualified Stock);
	(3)	the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations of such Person (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or

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		final maturity, in each case due within one year of the date of such purchase, repurchase or other acquisition); or
	(4)	the making of any Investment (other than a Permitted Investment) in any Person.

	(1)	Indebtedness of such Person, whether outstanding on the Issue Date or thereafter Incurred; and
	(2)	accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable

	(1)	any obligation of such Person to any Subsidiary;
	(2)	any liability for Federal, state, local or other taxes owed or owing by such Person;
	(3)	any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities);
	(4)	any Indebtedness of such Person (and any accrued and unpaid interest in respect thereof) that is subordinate or junior in right of payment to any other Indebtedness or other obligation of such Person; or
	(5)	that portion of any Indebtedness that at the time of Incurrence is Incurred in violation of the Indenture (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (5) if the holders of such obligation or their representative shall have received an Officers’ Certificate of the Company to the effect that the Incurrence of such Indebtedness does not (or, in the case of revolving credit indebtedness, that the Incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of the Indenture).

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	(1)	such Person;
	(2)	such Person and one or more Subsidiaries of such Person; or
	(3)	one or more Subsidiaries of such Person.

	(1)	any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof;

	(2)	investments in time deposit accounts, certificates of deposit and money market deposits maturing within one year of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $50.0 million (or the foreign currency equivalent thereof) and has outstanding debt which is rated “A” (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor;

	(3)	repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above entered into with a bank meeting the qualifications described in clause (2) above;
	(4)	investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a person (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of “P-1” (or higher) according to Moody’s Investors Service, Inc. or “A-1” (or higher) according to Standard and Poor’s, a division of the McGraw-Hill Companies; and
	(5)	investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least “A” by Standard & Poor’s a division of the McGraw-Hill Companies or “A” by Moody’s Investors Service, Inc.

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	(1)	any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and
	(2)	any Subsidiary of an Unrestricted Subsidiary.

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	Depository Trust Company Procedures

	(1)	upon deposit of the global notes, The Depository Trust Company will credit the accounts of participants designated by the initial purchasers with portions of the principal amount of the global notes; and
	(2)	ownership of these interests in the global notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by The Depository Trust Company (with respect to the participants) or by the participants and the indirect participants (with respect to other owners of beneficial interests in the global notes).

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	(1)	any aspect of The Depository Trust Company’s records or any participant’s or indirect participant’s records relating to or payments made on account of beneficial ownership interests in the global notes or for maintaining, supervising or reviewing any of The Depository Trust Company’s records or any participant’s or indirect participant’s records relating to the beneficial ownership interests in the global notes; or
	(2)	any other matter relating to the actions and practices of The Depository Trust Company or any of its participants or indirect participants.

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	Exchange of Global Notes for Certificated Notes

	(1)	The Depository Trust Company (A) notifies Buffets that it is unwilling or unable to continue as depositary for the global notes or (B) has ceased to be a clearing agency registered under the Exchange Act and, in each case, a successor depositary is not appointed;
	(2)	Buffets, at its option, notifies the trustee in writing that it elects to cause the issuance of the certificated notes; or
	(3)	there has occurred and is continuing a default with respect to the notes entitling the holder to accelerate the maturity of the notes.

	Exchange of Certificated Notes for Global Notes

	Same Day Settlement and Payment

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	Structure

	Interest and Expenses

	Maturity and Amortization

	Security and Guarantees

	Covenants

	•	dividends on, and redemptions and repurchases of, equity interests and other restricted payments,
	•	prepayments, redemptions and repurchases of debt,
	•	liens and sale-leaseback transactions,

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	•	loans and investments,
	•	debt, guarantees and hedging arrangements,
	•	mergers, acquisitions and asset sales,
	•	transactions with affiliates,
	•	changes in business activities conducted by us,
	•	restrictions on ability of subsidiaries to pay dividends or make distributions,
	•	amendments of debt and other material agreements, and
	•	capital expenditures.

	Events of Default

	•	nonpayment of principal, interest, fees or other amounts when due,
	•	violation of covenants,
	•	incorrectness of representations or warranties in any material respect,
	•	cross acceleration and cross default,
	•	change of control,
	•	bankruptcy events,
	•	material judgments, and
	•	actual or asserted invalidity of the guarantees or security documents.

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	•	an individual that is a citizen or resident of the United States;
	•	a corporation, or other entity treated as a corporation, created or organized in or under the laws of the United States or any of its political subdivisions;
	•	an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
	•	a trust if either (A) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more “U.S. persons” within the meaning of the Code have the authority to control all substantial decisions of the trust or (B) the trust has a valid election in effect to be treated as a “U.S. person” within the meaning of the Code.

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	Exchange Of Notes for Exchange Notes

	Payments of Interest

	Sale, Exchange or Disposition of the Exchange Notes

	•	the amount of cash plus the fair market value of any property received (other than any amount received attributable to accrued but unpaid interest not previously included in income, which will be taxable as ordinary interest income); and
	•	such U.S. holder’s adjusted tax basis in the exchange note.

	Information Reporting and Backup Withholding

	•	fails to provide a correct taxpayer identification number (which, for an individual, would generally be his or her Social Security Number);
	•	is notified by the IRS that it is subject to backup withholding because it has failed to report interest income in full;
	•	fails to certify that the holder is exempt from withholding; or
	•	otherwise fails to comply with applicable requirements of the backup withholding rules.

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	Payments of Interest

	•	the Non-U.S. holder does not own directly or indirectly, actually or constructively, for U.S. federal income tax purposes, 10% or more of the total combined voting power of all classes of our voting stock;
	•	the Non-U.S. holder is not, for U.S. federal income tax purposes, a “controlled foreign corporation” related, directly or indirectly, to us through stock ownership under applicable rules of the Code;
	•	the Non-U.S. holder is not a bank receiving such payment “on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business (within the meaning of Section 881(c)(3)(A) of the Code); and
	•	the certification requirement, as described below, has been fulfilled with respect to the beneficial owner.

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	Sale, Exchange or Disposition of the Exchange Notes

	•	such holder is an individual who is present in the U.S. for 183 days or more in the taxable year of disposition, and certain other conditions are met (in which case, the Non-U.S. holder will be subject to U.S. federal income tax at a rate of 30% (or a reduced rate under an applicable treaty) on the amount by which capital gains allocable to U.S. sources exceed capital losses allocable to U.S. sources);
	•	such gain represents accrued but unpaid interest not previously included in income, in which case the rules regarding interest would apply; or
	•	such gain is effectively connected with the conduct by such Non-U.S. holder of a trade or business in the U.S. and, if required by an applicable treaty, is attributable to a U.S. permanent establishment maintained by such Non-U.S. Holder (in which case, the Non-U.S. holder will generally be taxed on its net gain derived from the disposition at the regular graduated U.S. federal income tax rates and in much the same manner applicable to U.S. persons and, if the Non-U.S. holder is a foreign corporation, the “branch profits tax” described above may also apply).

149

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150

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151

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152

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			Page
Buffets Holdings, Inc.
	Condensed Consolidated Balance Sheets (Unaudited) as of June 28, 2006 and September 20, 2006		F-2
	Condensed Consolidated Statements of Operations (Unaudited) — 12 Weeks Ended September 21, 2005 and September 20, 2006		F-3
	Condensed Consolidated Statements of Cash Flows (Unaudited) — 12 Weeks Ended September 21, 2005 and September 20, 2006		F-4
	Notes to the Condensed Consolidated Financial Statements (Unaudited)		F-5
	Report of Independent Registered Public Accounting Firm		F-24
	Consolidated Balance Sheets as of June 29, 2005 and June 28, 2006		F-25
	Consolidated Statements of Operations for the Year Ended June 30, 2004, for the Year Ended June 29, 2005 and for the Year Ended June 28, 2006		F-26
	Consolidated Statements of Shareholders’ Equity (Deficit) for the Year Ended July 2, 2003, for the Year Ended June 30, 2004, for the Year Ended June 29, 2005 and for the Year Ended June 28, 2006		F-27
	Consolidated Statements of Cash Flows for the Year Ended June 30, 2004, for the Year Ended June 29, 2005, and for the Year Ended June 28, 2006		F-28
	Notes to Consolidated Financial Statements		F-29
Ryan’s Restaurant Group, Inc.
	Consolidated Statements of Earnings (Unaudited) — Quarters Ended September 27, 2006 and September 28, 2005		F-61
	Consolidated Statements of Earnings (Unaudited) — Nine Months Ended September 27, 2006 and September 28, 2005		F-62
	Consolidated Balance Sheets — September 27, 2006 (Unaudited) and December 28, 2005		F-63
	Consolidated Statements of Cash Flows (Unaudited) — Nine Months Ended September 27, 2006 and September 28, 2005		F-64
	Consolidated Statement of Shareholders’ Equity (Unaudited) — Nine Months Ended September 27, 2006		F-65
	Notes to Consolidated Financial Statements (Unaudited)		F-66
	Report of Independent Registered Public Accounting Firm		F-71
	Consolidated Statements of Earnings for the Years Ended December 28, 2005, December 29, 2004 and December 31, 2003		F-72
	Consolidated Balance Sheets as of December 28, 2005 and December 29, 2004		F-73
	Consolidated Statements of Cash Flows for the Years Ended December 28, 2005, December 29, 2004 and December 31, 2003		F-74
	Notes to Consolidated Financial Statements		F-75

F-1

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Table of Contents

		June 28,				September 20,
		2006				2006
		(Unaudited)
		(In thousands,
		except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	20,219			$	8,061
Receivables			4,879				4,485
Inventories			18,926				18,820
Prepaid expenses and other current assets			5,384				4,563
Deferred income taxes			10,324				10,324
Total current assets			59,732				46,253
PROPERTY AND EQUIPMENT, net			141,404				143,172
GOODWILL			312,163				312,163
DEFERRED INCOME TAXES			13,683				13,683
OTHER ASSETS, net			11,514				15,326
Total assets		$	538,496			$	530,597
LIABILITIES AND SHAREHOLDER’S DEFICIT
CURRENT LIABILITIES:
Accounts payable		$	48,101			$	43,315
Accrued liabilities			68,344				62,686
Income taxes payable			6,977				2,014
Current maturities of long-term debt			1,862				7,862
Total current liabilities			125,284				115,877
LONG-TERM DEBT, net of current maturities			460,652				463,934
DEFERRED LEASE OBLIGATIONS			28,356				28,435
OTHER LONG-TERM LIABILITIES			7,355				6,642
Total liabilities			621,647				614,888
SHAREHOLDER’S DEFICIT:
Preferred stock; $.01 par value, 1,100,000 shares authorized; none issued and outstanding as of June 28, 2006 and September 20, 2006			—				—
Common stock; $.01 par value, 3,600,000 shares authorized; 3,104,510 shares issued and outstanding as of June 28, 2006 and 3,104,510 as of September 20, 2006			31				31
Additional paid in capital			5				5
Accumulated deficit			(83,187	)			(84,327	)
Total shareholder’s deficit			(83,151	)			(84,291	)
Total liabilities and shareholder’s deficit		$	538,496			$	530,597

F-2

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Table of Contents

		Twelve Weeks Ended
		September 21,				September 20,
		2005				2006
		(Unaudited)
		(In thousands)
RESTAURANT SALES		$	226,738			$	221,276
RESTAURANT COSTS:
Food			74,775				76,554
Labor			64,142				62,693
Direct and occupancy			53,099				53,486
Total restaurant costs			192,016				192,733
ADVERTISING EXPENSES			7,183				7,227
GENERAL AND ADMINISTRATIVE EXPENSES			10,046				9,728
CLOSED RESTAURANT COSTS			256				742
MERGER INTEGRATION COSTS			—				440
OPERATING INCOME			17,237				10,406
INTEREST EXPENSE			11,868				13,228
INTEREST INCOME			(82	)			(28	)
LOSS RELATED TO REFINANCING			647				243
OTHER INCOME			(197	)			(202	)
INCOME (LOSS) BEFORE INCOME TAXES			5,001				(2,835	)
INCOME TAX EXPENSE (BENEFIT)			1,877				(1,695	)
Net income (loss)		$	3,124			$	(1,140	)

F-3

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Table of Contents

		Twelve Weeks Ended
		September 21,				September 20,
		2005				2006
		(Unaudited)
		(In thousands)
OPERATING ACTIVITIES:
Net income (loss)		$	3,124			$	(1,140	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			7,275				7,384
Amortization of debt issuance cost			353				413
Accretion of original issue discount			3,072				3,748
Loss on disposal of assets			24				249
Changes in assets and liabilities:
Receivables			(105	)			394
Inventories			(11	)			172
Prepaid expenses and other current assets			1,274				190
Accounts payable			(4,631	)			(4,786	)
Accrued and other liabilities			(4,303	)			(6,335	)
Income taxes payable			(323	)			(4,963	)
Net cash provided by (used in) operating activities			5,749				(4,674	)
INVESTING ACTIVITIES:
Acquisitions, net of liabilities assumed			—				(3,468	)
Purchase of property and equipment			(5,751	)			(6,836	)
Collections on notes receivable			183				697
Purchase of other assets			(438	)			(3,411	)
Net cash used in investing activities			(6,006	)			(13,018	)
FINANCING ACTIVITIES:
Repayment of debt			(504	)			(466	)
Proceeds from revolving credit facility			—				6,000
Net cash provided by (used in) financing activities			(504	)			5,534
NET CHANGE IN CASH AND CASH EQUIVALENTS			(761	)			(12,158	)
CASH AND CASH EQUIVALENTS, beginning of period			20,662				20,219
CASH AND CASH EQUIVALENTS, end of period		$	19,901			$	8,061
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for —
Interest (net of capitalized interest of $73 and $77)		$	14,088			$	14,769
Income taxes		$	2,199			$	3,268

F-4

---

Table of Contents

1.	Nature of Organization

	Company Background

	Description of Business

	Interim Financial Information

F-5

---

Table of Contents

	Principles of Consolidation

	Fiscal Year

2.	Recent Accounting Pronouncements

3.	Stock-Based Compensation

F-6

---

Table of Contents

	Equity Participation Plan

F-7

---

Table of Contents

	Cash and Phantom Incentive Unit Award Agreements

F-8

---

Table of Contents

	Cash Appreciation Plan

4.	Other Assets

F-9

---

Table of Contents

		Franchise Fees								Trademarks								Liquor Licenses								Total
		Gross								Gross								Gross								Gross
		Carrying				Accumulated				Carrying				Accumulated				Carrying				Accumulated				Carrying				Accumulated
		Amount				Amortization				Amount				Amortization				Amount				Amortization				Amount				Amortization
BALANCE, June 28, 2006		$	69			$	(69	)		$	34			$	(34	)		$	345			$	(25	)		$	448			$	(128	)
FY 2007 Activity:
Additions			—				—				—				—				48				—				48				—
Amortization			—				—				—				—				—				—				—				—
BALANCE, September 20, 2006		$	69			$	(69	)		$	34			$	(34	)		$	393			$	(25	)		$	496			$	(128	)

5.	Accrued Liabilities

		June 28,				September 20,
		2006				2006
Accrued compensation		$	17,634			$	16,036
Accrued workers’ compensation			12,520				12,126
Accrued interest			13,552				7,926
Accrued insurance			8,178				8,402
Accrued sales, use and property taxes			6,348				8,713
Unearned revenue			3,998				3,475
Closed restaurant reserve			1,685				1,184
Accrued other			4,429				4,824
		$	68,344			$	62,686

F-10

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Table of Contents

6.	Long-Term Debt

Credit Facility:
Revolving credit facility, interest at LIBOR plus 3.25%, due September 29, 2006 (interest rate at 8.58% as of September 20, 2006)		$	6,000
Term loan, interest at LIBOR plus 3.50%, due quarterly through June 28, 2009 (interest rate at 8.99% as of September 20, 2006)			181,587
Total Credit Facility			187,587
Senior subordinated notes, interest at 11.25%, due July 15, 2010, net of discount of $3,990			180,675
Total long-term debt at Buffets, Inc.			368,262

Senior discount notes, interest at 13.875%, due December 15, 2010, net of discount of $28,466			103,534
Grand total long-term debt			471,796
Less — Current maturities			7,862
		$	463,934

	Credit Facility

F-11

---

Table of Contents

	111/4% Senior Subordinated Notes

	137/8% Senior Discount Notes

F-12

---

Table of Contents

7.	Acquisition

8.	Related-Party Transactions

F-13

---

Table of Contents

9.	Litigation

10.	Condensed Consolidating Financial Statements

F-14

---

Table of Contents

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

F-15

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Table of Contents

						Subsidiary				Subsidiary
		Parent				Issuer				Guarantors				Eliminations				Consolidated
		(Unaudited)
		(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	37			$	4,560			$	3,464			$	—			$	8,061
Receivables			1,777				2,431				283,865				(283,588	)			4,485
Inventories			—				844				17,976				—				18,820
Prepaid expenses and other current assets			2				2,880				1,681				—				4,563
Deferred income taxes			64				10,260				—				—				10,324
Total current assets			1,880				20,975				306,986				(283,588	)			46,253
PROPERTY AND EQUIPMENT, net			—				4,746				138,426				—				143,172
GOODWILL, net			—				18,730				293,433				—				312,163
DEFERRED INCOME TAXES			6,140				7,543				—				—				13,683
OTHER ASSETS, net			2,109				143,978				6,541				(137,302	)			15,326
Total assets		$	10,129			$	195,972			$	745,386			$	(420,890	)		$	530,597
LIABILITIES AND SHAREHOLDER’S EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable			—				327,829				3,213				(287,727	)			43,315
Accrued liabilities			—				38,142				24,544				—				62,686
Income taxes payable			(2,032	)			4,046				—				—				2,014
Current maturities of long-term debt			—				472				7,390				—				7,862
Total current liabilities			(2,032	)			370,489				35,147				(287,727	)			115,877
LONG-TERM DEBT, net of current maturities			103,534				21,624				338,776				—				463,934
DEFERRED LEASE OBLIGATIONS			—				2,038				26,397				—				28,435
OTHER LONG-TERM LIABILITIES			—				2,976				3,666				—				6,642
Total liabilities			101,502				397,127				403,986				(287,727	)			614,888
COMMITMENTS AND CONTINGENCIES SHAREHOLDER’S EQUITY (DEFICIT)
Common stock			31				—				—				—				31
Additional paid in capital			5				82,311				199,244				(281,555	)			5
Retained earnings (accumulated deficit)			(91,409	)			(283,466	)			142,156				148,392				(84,327	)
Total shareholder’s equity (deficit)			(91,373	)			(201,155	)			341,400				(133,163	)			(84,291	)
Total liabilities and shareholder’s equity (deficit)		$	10,129			$	195,972			$	745,386			$	(420,890	)		$	530,597

F-16

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Table of Contents

						Subsidiary				Subsidiary
		Parent				Issuer				Guarantors				Eliminations				Consolidated
		(In thousands)
RESTAURANT SALES		$	—			$	10,531			$	216,207			$	—			$	226,738
RESTAURANT COSTS:
Food			—				3,744				71,031				—				74,775
Labor			—				3,100				61,042				—				64,142
Direct and occupancy			—				1,501				51,598				—				53,099
Total restaurant costs			—				8,345				183,671				—				192,016
ADVERTISING EXPENSES			—				334				6,849				—				7,183
GENERAL AND ADMINISTRATIVE EXPENSES			1				467				9,578				—				10,046
CLOSED RESTAURANT COSTS			—				—				256				—				256
OPERATING INCOME (LOSS)			(1	)			1,385				15,853				—				17,237
INTEREST EXPENSE			2,979				533				8,356				—				11,868
INTEREST INCOME			—				(82	)			—				—				(82	)
LOSS RELATED TO REFINANCING			—				647				—				—				647
OTHER INCOME			—				(197	)			—				—				(197	)
INCOME (LOSS) BEFORE INCOME TAXES			(2,980	)			484				7,497				—				5,001
INCOME TAX EXPENSE (BENEFIT)			(579	)			149				2,307				—				1,877
Net income (loss)		$	(2,401	)		$	335			$	5,190			$	—			$	3,124

F-17

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Table of Contents

						Subsidiary				Subsidiary
		Parent				Issuer				Guarantors				Eliminations				Consolidated
		(Unaudited)
		(In thousands)
RESTAURANT SALES		$	—			$	10,493			$	210,783			$	—			$	221,276
RESTAURANT COSTS:
Food			—				3,761				72,793				—				76,554
Labor			—				3,074				59,619				—				62,693
Direct and occupancy			—				1,491				51,995				—				53,486
Total restaurant costs			—				8,326				184,407				—				192,733
ADVERTISING EXPENSES			—				343				6,884				—				7,227
GENERAL AND ADMINISTRATIVE EXPENSES			1				461				9,266				—				9,728
CLOSED RESTAURANT COSTS			—				—				742				—				742
MERGER INTEGRATION COSTS			—				440				—				—				440
OPERATING INCOME (LOSS)			(1	)			923				9,484				—				10,406
INTEREST EXPENSE			3,637				575				9,016				—				13,228
INTEREST INCOME			—				(28	)			—				—				(28	)
LOSS RELATED TO REFINANCING			—				243				—				—				243
OTHER INCOME			—				(202	)			—				—				(202	)
INCOME (LOSS) BEFORE INCOME TAXES			(3,638	)			335				468				—				(2,835	)
INCOME TAX EXPENSE (BENEFIT)			(1,996	)			126				175				—				(1,695	)
Net income (loss)		$	(1,642	)		$	209			$	293			$	—			$	(1,140	)

F-18

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Table of Contents

						Subsidiary				Subsidiary
		Parent				Issuer				Guarantors				Eliminations				Consolidated
		(In thousands)
OPERATING ACTIVITIES:
Net income (loss)		$	(2,401	)		$	335			$	5,190			$	—			$	3,124
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			—				649				6,626				—				7,275
Amortization of debt issuance costs			82				16				255				—				353
Accretion of original issue discount			2,896				11				165				—				3,072
Loss on disposal of assets			—				—				24				—				24
Changes in assets and liabilities:
Receivables			—				20,432				(20,385	)			(152	)			(105	)
Inventories			—				(4	)			(7	)			—				(11	)
Prepaid expenses and other current assets			2				2,547				(1,275	)			—				1,274
Accounts payable			—				(4,597	)			(34	)			—				(4,631	)
Accrued and other liabilities			—				(4,893	)			590				—				(4,303	)
Income taxes payable/refundable			(579	)			256				—				—				(323	)
Net cash provided by (used in) operating activities			—				14,752				(8,851	)			(152	)			5,749
INVESTING ACTIVITIES:
Purchase of property and equipment			—				(339	)			(5,412	)			—				(5,751	)
Collection of notes receivable			—				183				—				—				183
Corporate cash advances (payments)			—				(12,308	)			12,156				152				—
Proceeds from sale (purchase) of other assets			—				(183	)			(255	)			—				(438	)
Net cash provided by (used in) investing activities			—				(12,647	)			6,489				152				(6,006	)
FINANCING ACTIVITIES:
Repayment of debt			—				(30	)			(474	)			—				(504	)
Net cash used in financing activities			—				(30	)			(474	)			—				(504	)
NET CHANGE IN CASH AND CASH EQUIVALENTS			—				2,075				(2,836	)			—				(761	)
CASH AND CASH EQUIVALENTS, beginning of period			49				14,154				6,459				—				20,662
CASH AND CASH EQUIVALENTS, end of period		$	49			$	16,229			$	3,623			$	—			$	19,901

F-19

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Table of Contents

						Subsidiary				Subsidiary
		Parent				Issuer				Guarantors				Eliminations				Consolidated
		(Unaudited)
		(In thousands)
OPERATING ACTIVITIES:
Net income (loss)		$	(1,642	)		$	209			$	293			$	—			$	(1,140	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			—				684				6,700				—				7,384
Amortization of debt issuance costs			94				19				300				—				413
Accretion of original issue discount			3,543				12				193				—				3,748
Loss on disposal of assets			—				—				249				—				249
Changes in assets and liabilities:
Receivables			—				9,205				(8,659	)			(152	)			394
Inventories			—				1				171				—				172
Prepaid expenses and other current assets			1				1,195				(1,006	)			—				190
Accounts payable			—				(5,211	)			425				—				(4,786	)
Accrued and other liabilities			—				(5,829	)			(506	)			—				(6,335	)
Income taxes payable/refundable			(1,996	)			(2,967	)			—				—				(4,963	)
Net cash provided by (used in) operating activities			—				(2,682	)			(1,840	)			(152	)			(4,674	)
INVESTING ACTIVITIES:
Acquisitions, net of liabilities assumed			—				—				(3,468	)			—				(3,468	)
Purchase of property and equipment			—				(123	)			(6,713	)			—				(6,836	)
Collection of notes receivable			—				697				—				—				697
Corporate cash advances (payments)			—				(4,835	)			4,683				152				—
Proceeds from sale (purchase) of other assets			—				(2,897	)			(514	)			—				(3,411	)
Net cash provided by (used in) investing activities			—				(7,158	)			(6,012	)			152				(13,018	)
FINANCING ACTIVITIES:
Repayment of debt			—				(28	)			(438	)			—				(466	)
Proceeds from revolving credit facility			—				360				5,640				—				6,000
Net cash provided by (used in) financing activities			—				332				5,202				—				5,534
NET CHANGE IN CASH AND CASH EQUIVALENTS			—				(9,508	)			(2,560	)			—				(12,158	)
CASH AND CASH EQUIVALENTS, beginning of period			37				14,068				6,114				—				20,219
CASH AND CASH EQUIVALENTS, end of period		$	37			$	4,560			$	3,464			$	—			$	8,061

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F-21

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F-22

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F-23

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	/s/ Deloitte & Touche

F-24

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

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

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																							Retained
			Preferred Stock								Common Stock								Additional				Earnings
																			Paid-In				(Accumulated
			Shares				Amount				Shares				Amount				Capital				Deficit)				Total
			(In thousands, except share data)
BALANCE, July 2, 2003				—			$	—				3,187,985			$	32			$	—			$	(22,842	)		$	(22,810	)
	Issuance of stock			—				—				21,250				—				241				—				241
	Purchase of treasury stock			—				—				(23,563	)			—				(209	)			(171	)			(380	)
	Dividends			—				—				—				—				(32	)			(60,905	)			(60,937	)
	Net income			—				—				—				—				—				7,970				7,970
BALANCE, June 30, 2004				—				—				3,185,672				32				—				(75,948	)			(75,916	)
	Issuance of stock			—				—				144,150				1				14				—				15
	Purchase of treasury stock			—				—				(154,687	)			(1	)			—				(283	)			(284	)
	Net loss			—				—				—				—				—				(2,184	)			(2,184	)
BALANCE, June 29, 2005				—				—				3,175,135				32				14				(78,415	)			(78,369	)
	Purchase of treasury stock			—				—				(70,625	)			(1	)			(9	)			—				(10	)
	Net loss			—				—				—				—				—				(4,772	)			(4,772	)
BALANCE, June 28, 2006				—			$	—				3,104,510			$	31			$	5			$	(83,187	)		$	(83,151	)

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						For the Year Ended
						June 30,				June 29,				June 28,
						2004				2005				2006
						(In thousands)
OPERATING ACTIVITIES:
	Net income (loss)					$	7,970			$	(2,184	)		$	(4,772	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization					33,807				32,247				32,067
		Amortization of debt issuance costs					1,370				1,386				1,532
		Write-off of debt issuance costs					4,201				—				—
		Accretion of original issue discount					2,049				11,906				13,336
		Loss related to early extinguishment of debt					5,275				1,923				—
		Deferred income taxes					1,200				(3,780	)			(3,279	)
		Loss on disposal of assets					305				2,280				1,218
		Impairment of assets					1,878				3,609				5,964
		Changes in assets and liabilities:
			Receivables				(235	)			331				1,753
			Inventories				(674	)			(683	)			(703	)
			Prepaid expenses and other current assets				2,795				(1,074	)			1,283
			Accounts payable				(497	)			1,704				2,189
			Accrued and other liabilities				(8,698	)			2,551				(1,270	)
			Income taxes payable				(256	)			2,459				(13	)
				Net cash provided by operating activities			50,490				52,675				49,305
INVESTING ACTIVITIES:
	Proceeds from sale leaseback transactions						2,710				—				—
	Purchase of property and equipment						(33,007	)			(29,131	)			(31,346	)
	Collections on notes receivable						813				733				1,062
	Acquisition of 20% minority interest in Tahoe Joe’s Inc.						(370	)			—				—
	Sale (purchase) of other assets						1,471				(73	)			(2,438	)
			Net cash used in investing activities				(28,383	)			(28,471	)			(32,722	)
FINANCING ACTIVITIES:
	Repayment of debt					$	(172,953	)		$	(29,781	)		$	(17,016	)
	Redemption of subordinated notes						(27,364	)			—				—
	Repurchase of common stock						(380	)			(284	)			(10	)
	Proceeds from issuance of common stock						241				15				—
	Proceeds from issuance of senior discount notes						75,073				—				—
	Unrestricted cash proceeds from credit facility						195,300				—				—
	Initial restricted cash proceeds from credit facility						34,700				—				—
	Restricted cash proceeds from credit facility available as of year end						(16,228	)			—				—
	Reduction of restricted cash available for early extinguishment of debt						—				16,228				—
	Use of restricted cash for early extinguishment of debt						(18,472	)			(15,736	)			—
	Use of unrestricted cash for early extinguishment of debt						(15,300	)			—				—
	Dividends						(60,937	)			—				—
	Debt issuance costs						(5,570	)			(56	)			—
	Net cash used in financing activities						(11,890	)			(29,614	)			(17,026	)
NET CHANGE IN CASH AND CASH EQUIVALENTS							10,217				(5,410	)			(433	)
CASH AND CASH EQUIVALENTS, beginning of period							15,855				26,072				20,662
CASH AND CASH EQUIVALENTS, end of period						$	26,072			$	20,662			$	20,219
SUPPLEMENTAL CASH FLOW INFORMATION:
	Cash paid during the period for:
		Interest (net of capitalized interest of $280, $538 and $330, respectively)				$	37,286			$	32,530			$	37,242
		Income taxes				$	700			$	1,130			$	2,549

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1.	Nature of Organization

	Company Background

	Description of Business

	Principles of Consolidation

	Fiscal Year

	Reclassifications

2.	Summary of Significant Accounting Policies

	Cash and Cash Equivalents

	Receivables

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	Inventories

	Property and Equipment

		June 29,				June 28,
		2005				2006
Land		$	762			$	762
Buildings			3,082				3,082
Equipment			139,791				151,622
Leasehold improvements			148,681				155,034
Accumulated depreciation and amortization			(145,663	)			(169,096	)
		$	146,653			$	141,404

	Goodwill

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	Other Assets

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

	Long-Lived Assets

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	Insurance Reserves

	Closed Restaurant Reserve

	Pre-opening Costs

	Advertising Expenses

	Income Taxes

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	Revenue Recognition

	Use of Estimates

	Fair Value Disclosure of Financial Instruments

For cash equivalents, receivables and accounts payable, the carrying amounts approximate fair value because of the short duration of these financial instruments. The fair value of notes receivable is estimated based on the present value of expected future cash flows discounted at the interest rate currently offered by the Company, which approximates rates currently being offered by local lending institutions for loans of similar terms to companies of comparable credit risk. The carrying value of notes receivable approximates fair value.

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	The fair value of the Company’s variable interest rate debt is estimated by discounting future cash flows for these instruments using the Company’s expected borrowing rate for debt of comparable risk and maturity. The rate on the Company’s variable interest rate debt approximates rates currently being offered by lending institutions for loans of similar terms to companies of comparable credit risk. The fair value of fixed interest rate debt is estimated based on quoted prices for those or similar instruments.
	The fair value of the Company’s long-term debt, including current portion, was $469.2 million and $476.1 million as of June 29, 2005 and June 28, 2006, respectively.

	Segment Reporting

	Stock-Based Compensation

		For the Year Ended
		June 30,				June 29,				June 28,
		2004				2005				2006
Net income (loss) as reported		$	7,970			$	(2,184	)		$	(4,772	)
Compensation expense recorded in the financial statements, net of tax effect			—				—				—
Pro forma compensation expense under the provisions of SFAS No. 123, net of tax effect			(9	)			—				—
Pro forma		$	7,961			$	(2,184	)		$	(4,772	)
Weighted-average fair value per share of options granted		$	0.32			$	—			$	—

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		For the Year Ended
		June 30,				June 29,				June 28,
		2004				2005				2006
Risk-free interest rate			1.32%				3.07%				3.93%
Expected volatility			0.0	%			0.0	%			0.0	%
Expected dividend yield			0.0	%			0.0	%			0.0	%
Expected life in years			1.8				0.8				0.3

3.	Recent Accounting Pronouncements

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4.	Accrued Liabilities

		June 29,				June 28,
		2005				2006
Accrued compensation		$	17,417			$	17,634
Accrued workers’ compensation			17,388				12,520
Accrued interest			13,100				13,552
Accrued insurance			6,427				8,178
Accrued sales, use and property taxes			6,105				6,348
Unearned revenue			4,053				3,998
Closed restaurant reserve, current portion			861				1,685
Accrued other			4,230				4,429
		$	69,581			$	68,344

	Accrued Workers’ Compensation Liability

	Closed Restaurant Reserve

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				For the Year Ended
				June 29,				June 28,
				2005				2006
BALANCE, beginning of period (current and noncurrent in aggregate)				$	1,442			$	1,499
Additions:
	Lease obligations charged to earnings				1,177				4,847
	Employee termination benefits charged to earnings				223				444
Reductions:
	Cash payments:
		Lease termination costs and obligations			1,120				3,570
		Employee severance benefits			223				444
BALANCE, end of period (current and noncurrent in aggregate)				$	1,499			$	2,776

				For the Year Ended
				June 29,				June 28,
				2005				2006
Number of restaurants:
	Expected to close as of the beginning of the period				7				4
		Closed during the period			11				19
		Identified for closure during the period			8				16
	Expected to close as of the end of the period				4				1

			For the Year Ended
			June 29,				June 28,
			2005				2006
Number of employees:
	Expected to be terminated as of the beginning of the period			245				140
	Terminated during the period			385				665
	Identified for termination during the period			280				560
Expected to be terminated as of the end of the period				140				35

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2007		$	1,685
2008			533
2009			365
2010			177
2011			15
Thereafter			1
		$	2,776

5.	Long-Term Debt

				June 29,				June 28,
				2005				2006
Buffets, Inc.
Credit Facility:
	Revolving credit facility			$	—			$	—
	Term loan, interest at LIBOR plus 3.50%, due Quarterly through June 28, 2009 (interest rate at 8.2% as of June 28, 2006)				199,069				182,053
		Total Credit Facility			199,069				182,053
	Senior subordinated notes, interest at 11.25%, due July 15, 2010, net of discount of $4,979 at June 29, 2005 and $4,195 at June 28, 2006				179,686				180,470
		Total long-term debt at Buffets, Inc.			378,755				362,523
Buffets Holdings, Inc.
	Senior discount notes, interest at 13.875%, due December 15, 2010, net of discount of $44,561 at June 29, 2005 and $32,009 at June 28, 2006				87,439				99,991
		Grand total long-term debt			466,194				462,514
	Less — Current maturities				2,016				1,862
				$	464,178			$	460,652

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2007		$	1,862
2008			2,328
2009			177,863
2010			—
2011			316,665
Thereafter			—
		$	498,718

	Credit Facility

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	111/4% Senior Subordinated Notes

	137/8% Senior Discount Notes

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6.	Shareholders’ Equity (Deficit)

	Stock Shares

	Stock Warrants

	Call Rights and Put Rights

	Equity Participation Plan

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			For the Year Ended
			June 30, 2004								June 29, 2005								June 28, 2006
							Weighted-Avg								Weighted-Avg								Weighted-Avg
			Shares				Exercise Price				Shares				Exercise Price				Shares				Exercise Price
Outstanding at beginning of year				65,822			$	17.93				98,142			$	16.42				97,029			$	14.51
	Granted			44,305				13.08				11,671				0.11				1,124				0.11
	Exercised			—				—				—				—				—				—
	Canceled			(11,985	)			12.14				12,784				16.05				20,330				14.36
Outstanding at end of year				98,142			$	16.42				97,029			$	14.51				77,823			$	14.34

		Options Outstanding
						Weighted-Avg
						Remaining
		Number				Option Term				Weighted-Avg
Range of Exercise Price		Outstanding				(In Years)				Exercise Price
$  0 - $10			35,188				10.74			$	7.19
$11 - $20			29,099				12.49				14.43
$21 - $30			6,824				10.32				25.45
$31 - $40			537				10.53				32.09
$41 - $50			6,175				10.83				41.07
$  0 - $50			77,823				11.36			$	14.34

	Cash and Phantom Incentive Unit Award Agreements

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7.	Retirement Plan

8.	Income Taxes

			For the Year Ended
			June 30,				June 29,				June 28,
			2004				2005				2006
Federal:
	Current		$	(710	)		$	2,665			$	1,776
	Deferred			1,050				(3,308	)			(2,606	)
				340				(643	)			(830	)
State:
	Current			1,158				928				761
	Deferred			150				(472	)			(673	)
				1,308				456				88
	Income tax expense (benefit)		$	1,648			$	(187	)		$	(742	)

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			June 29, 2005								June 28, 2006
							Non-								Non-
			Current				Current				Current				Current
			Asset				Asset				Asset				Asset
Property and equipment			$	—			$	(819	)		$	—			$	2,595
Deferred rent				—				8,711				—				8,716
Self-insurance reserve				1,157				—				1,759				—
Accrued workers’ compensation				6,131				—				4,481				—
Accrued payroll and related benefits				2,020				—				2,031				—
Accrued store closing costs				577				—				1,049				—
Net operating loss and tax credit carryforwards				2,168				—				807				—
Deferred gain on sale leaseback transaction				—				1,112				—				936
Goodwill				—				(2,122	)			—				(2,242	)
Other				480				1,313				197				3,678
	Total		$	12,533			$	8,195			$	10,324			$	13,683

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

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9.	Related-Party Transactions

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10.	Commitments and Contingencies

	Litigation

	Operating Leases

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2007			$	53,211
2008				51,640
2009				47,986
2010				41,369
2011				34,382
Thereafter				214,621
	Total future minimum lease payments		$	443,209

		For the Year Ended
		June 30,				June 29,				June 28,
		2004				2005				2006
Minimum rents		$	49,911			$	50,111			$	50,192
Contingent rents			2,983				3,522				3,708
Less: Sublease rents			(2,739	)			(2,844	)			(2,357	)
Deferred rents			2,381				1,482				1,123
Percentage rents			1,954				1,617				2,296
		$	54,490			$	53,888			$	54,962

	VISA Settlement

	Buffets Restaurants Holdings’ Option Agreements and Buffets Holdings’ Tender Offer

F-47

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Table of Contents

11.	Condensed Consolidating Financial Statements

F-48

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Table of Contents

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

F-49

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Table of Contents

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

F-50

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Table of Contents

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

F-51

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Table of Contents

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

F-52

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

F-53

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Table of Contents

									Subsidiary				Subsidiary
					Parent				Issuer				Guarantors				Eliminations				Consolidated
					(In thousands)
OPERATING ACTIVITIES:
	Net income (loss)				$	(2,586	)		$	(4,391	)		$	14,947			$	—			$	7,970
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
	Depreciation and amortization					—				3,655				30,152				—				33,807
	Amortization of debt issuance costs					—				82				1,288				—				1,370
	Net loss related to refinancing:
		Write-off of debt issuance costs				—				4,201				—				—				4,201
	Accretion of original issue discount					1,227				49				773				—				2,049
	Loss related to early extinguishment of debt					—				5,275				—				—				5,275
	Impairment of assets					—				—				1,878				—				1,878
	Deferred income taxes					—				—				1,200				—				1,200
	Loss on disposal of assets					—				72				233				—				305
	Changes 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				—				2,795
		Accounts payable				180				(287	)			(390	)			—				(497	)
		Accrued and other liabilities				(1,101	)			(4,592	)			(3,005	)			—				(8,698	)
		Income taxes payable/refundable				(1,619	)			1,130				233				—				(256	)
			Net cash provided by (used in) operating activities			(3,899	)			46,165				10,083				(1,859	)			50,490
INVESTING ACTIVITIES:
	Proceeds from sale leaseback transactions					—				—				2,710				—				2,710
	Purchase of property and equipment					—				(1,432	)			(31,575	)			—				(33,007	)
	Collections on notes receivable					—				237				576				—				813
	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 (purchase) of other assets					—				(237	)			1,708				—				1,471
		Net 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				—				—				—				241
	Proceeds from issuance of senior discount notes					75,073				—				—				—				75,073
	Unrestricted cash proceeds from credit facility					—				11,718				183,582				—				195,300
	Initial restricted cash proceeds from credit facility					—				2,082				32,618				—				34,700
	Restricted cash proceeds from credit facility available as of year end					—				(974	)			(15,254	)			—				(16,228	)
	Use of restricted cash for early extinguishment of debt					—				(1,108	)			(17,364	)			—				(18,472	)
	Use of unrestricted cash for early extinguishment of debt					—				(918	)			(14,382	)			—				(15,300	)
	Dividends					(40,836	)			(20,101	)			—				—				(60,937	)
	Debt issuance costs					(2,847	)			(163	)			(2,560	)			—				(5,570	)
		Net cash provided by (used in) investing activities				3,887				(19,841	)			4,064				—				(11,890	)
NET CHANGE IN CASH AND CASH EQUIVALENTS						(12	)			11,261				(1,032	)			—				10,217
CASH AND CASH EQUIVALENTS, beginning of period						108				8,511				7,236				—				15,855
CASH AND CASH EQUIVALENTS, end of period					$	96			$	19,772			$	6,204			$	—			$	26,072

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

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

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12.	Interim Financial Results (Unaudited)

			For the Year Ended June 28, 2006
			First				Second				Third				Fourth
			Quarter				Quarter				Quarter				Quarter
Revenues			$	226,738			$	218,274			$	292,584			$	225,565
Operating income				17,237				5,745				11,189				11,835
Income (loss) before income taxes				5,001				(5,760	)			(4,702	)			(53	)
	Net income (loss)		$	3,124			$	(3,919	)		$	(1,289	)		$	(2,688	)

		For the Year Ended June 29, 2005
		First				Second				Third				Fourth
		Quarter				Quarter				Quarter				Quarter
Revenues		$	217,208			$	205,175			$	277,567			$	226,831
Operating income			14,391				9,084				14,070				9,513
Income (loss) before income taxes			1,909				(2,457	)			(588	)			(1,235	)
Net income (loss)		$	1,096			$	(1,389	)		$	(332	)		$	(1,559	)

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13.	Significant Events

	Appointment of Chief Executive Officer

	New Holding Company

	Shareholders’ Rights Repurchase

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14.	Subsequent Events

	Entry into a Material Definitive Agreement

	Asset Acquisition

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	Tender Offer

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				Quarter Ended
				September 27,				September 28,
				2006				2005
				(Unaudited)
				(In thousands, except
				per share data)
Restaurant sales				$	193,175			$	202,967
Cost of sales:
	Food and beverage				66,619				70,169
	Payroll and benefits				64,984				68,309
	Depreciation				8,310				8,447
	Impairment charges				3,109				2,777
	Other restaurant expenses				31,249				34,368
		Total cost of sales			174,271				184,070
General and administrative expenses					11,926				11,270
Interest expense					1,928				2,378
Revenues from franchised restaurants					—				(35	)
Other income, net					(1,342	)			(1,127	)
Earnings before income taxes					6,392				6,411
Income taxes					2,189				2,247
		Net earnings		$	4,203			$	4,164
Net earnings per common share:
	Basic			$	.10			$	.10
	Diluted				.10				.10
Weighted-average shares:
	Basic				42,359				41,934
	Diluted				42,929				42,592

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				Nine Months Ended
				September 27,				September 28,
				2006				2005
				(Unaudited)
				(In thousands, except
				per share data)
Restaurant sales				$	615,763			$	628,116
Cost of sales:
	Food and beverage				211,419				219,133
	Payroll and benefits				200,115				206,422
	Depreciation				25,117				25,133
	Impairment charges				3,556				4,065
	Other restaurant expenses				96,197				98,610
		Total cost of sales			536,404				553,363
General and administrative expenses					43,695				37,501
Interest expense					6,389				7,143
Revenues from franchised restaurants					—				(344	)
Other income, net					(3,736	)			(2,889	)
Earnings before income taxes					33,011				33,342
Income taxes					11,149				11,105
		Net earnings		$	21,862			$	22,237
Net earnings per common share:
	Basic			$	.52			$	.53
	Diluted				.51				.52
Weighted-average shares:
	Basic				42,255				41,941
	Diluted				42,715				42,742

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					September 27,				December 28,
					2006				2005
					(Unaudited)
					(In thousands)
ASSETS
Current assets:
	Cash and cash equivalents				$	18,432			$	5,120
	Receivables					5,932				5,007
	Inventories					5,045				5,176
	Prepaid expenses					2,398				985
	Deferred income taxes					7,320				7,417
			Total current assets			39,127				23,705
Property and equipment:
	Land and improvements					168,739				170,424
	Buildings					511,191				513,932
	Equipment					285,032				287,581
	Construction in progress					16,591				23,405
						981,553				995,342
	Less accumulated depreciation					332,585				323,012
			Net property and equipment			648,968				672,330
Other assets						9,165				10,793
			Total assets		$	697,260			$	706,828
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable					5,637				6,468
	Current portion of long-term debt					33,036				18,750
	Income taxes payable					2,110				4,118
	Accrued liabilities					47,246				46,691
		Total current liabilities				88,029				76,027
Long-term debt						113,964				154,500
Deferred income taxes						38,504				46,768
Other long-term liabilities						7,345				5,899
		Total liabilities				247,842				283,194
Shareholders’ equity:
	Common stock of $1.00 par value; authorized 100,000,000 shares; issued 42,396,000 in 2006 and 42,122,000 shares in 2005					42,396				42,122
	Additional paid-in capital					8,942				5,294
	Retained earnings					398,080				376,218
		Total shareholders’ equity				449,418				423,634
Commitments and contingencies
		Total liabilities and shareholders’ equity			$	697,260			$	706,828

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					Nine Months Ended
					September 27,				September 28,
					2006				2005
					(Unaudited)
					(In thousands)
Cash flows from operating activities:
	Net earnings				$	21,862			$	22,237
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization				26,558				26,485
		Impairment charges				3,556				4,065
		Gain on sale of property and equipment				(3,157	)			(1,132	)
		Tax benefit from exercise of stock options				—				789
		Stock option compensation				984				—
		Deferred income taxes				(8,167	)			985
		Decrease (increase) in:
			Receivables			(925	)			(61	)
			Inventories			131				(52	)
			Prepaid expenses			(1,413	)			(553	)
			Other assets			1,467				(94	)
		Increase (decrease) in:
			Accounts payable			(831	)			718
			Income taxes payable			(2,008	)			1,147
			Accrued liabilities			555				9,086
			Other long-term liabilities			1,446				(1,978	)
Net cash provided by operating activities						40,058				61,642
Cash flows from investing activities:
	Proceeds from sale of property and equipment					14,873				7,073
	Capital expenditures					(18,307	)			(61,998	)
Net cash used in investing activities						(3,434	)			(54,925	)
Cash flows from financing activities:
	Net borrowing from (repayment of) revolving credit facility					(7,500	)			16,000
	Repayment of senior notes					(18,750	)			(18,750	)
	Proceeds from stock options exercised					2,470				1,648
	Tax benefit from exercise of stock options					468				—
	Purchase of common stock					—				(1,852	)
Net cash used in financing activities						(23,312	)			(2,954	)
Net increase in cash and cash equivalents						13,312				3,763
Cash and cash equivalents — beginning of period						5,120				7,354
Cash and cash equivalents — end of period					$	18,432			$	11,117
Supplemental disclosures
Cash paid during the period for:
	Interest, net of amount capitalized				$	8,044				9,032
	Income taxes					21,401				8,751

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			Nine Months ended September 27, 2006
			$1 Par Value				Additional
			Common				Paid-In				Retained
			Stock				Capital				Earnings				Total
			(Unaudited)
			(In thousands)
Balances at December 28, 2005			$	42,122			$	5,294			$	376,218			$	423,634
	Net earnings			—				—				21,862				21,862
	Issuance of common stock under stock option plans			274				2,196				—				2,470
	Tax benefit from exercise of stock options			—				468				—				468
	Stock option compensation			—				984				—				984
Balances at September 27, 2006			$	42,396			$	8,942			$	398,080			$	449,418

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									Nine Months
					Quarter Ended				Ended
					September 27,				September 27,
					2006				2006
					(In thousands)
Compensation expense charged to:
		Payroll and benefits			$	87			$	262
		General and administrative expenses				97				722
Compensation expense before income taxes						184				984
			Income tax benefit			67				288
	Compensation expense, net of income taxes				$	117			$	696

								Nine Months
				Quarter Ended				Ended
				September 28,				September 28,
				2005				2005
				(In thousands, except
				earnings per share)
Net earnings, as reported				$	4,164			$	22,237
Less total stock-based compensation expense determined under fair value based method, net of related tax effects					(197	)			(1,076	)
Pro forma net earnings				$	3,967			$	21,161
Earnings per share
	Basic:
		As reported		$	.10				.53
		Pro forma			.09				.50
	Diluted:
		As reported			.10				.52
		Pro forma			.09				.50

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										Weighted
						Weighted				Average
						Average				Remaining
						Exercise				Contractual				Aggregate
		Shares				Price				Term				Intrinsic Value
		(in thousands)								(in years)				(In thousands)
Outstanding at 12/28/05			3,215			$	10.51
Granted			3				13.23
Exercised			(275	)			9.00
Forfeited			(177	)			8.73
Outstanding at 9/27/06			2,766				10.58				5.6			$	14,732
Exercisable at 9/27/06			2,321				10.32				5.4				12,989

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				Year Ended
				December 28,				December 29,				December 31,
				2005				2004				2003
				(In thousands, except earnings per share)
Restaurant sales				$	824,986				827,015				805,009
Cost of sales:
	Food and beverage				286,833				288,083				283,535
	Payroll and benefits				272,043				267,698				256,574
	Depreciation				33,651				32,685				32,047
	Impairment charges				6,527				1,539				1,414
	Other restaurant expenses				132,916				117,199				111,914
		Total cost of sales			731,970				707,204				685,484
General and administrative expenses					49,369				41,416				38,600
Interest expense					9,696				10,640				10,216
Royalties from franchised restaurants					(344	)			(1,161	)			(1,503	)
Other income, net					(4,430	)			(2,602	)			(2,709	)
		Earnings before income taxes			38,725				71,518				74,921
Income taxes					12,345				24,592				25,098
		Net earnings		$	26,380				46,926				49,823
Earnings per share:
	Basic			$	.63				1.12				1.18
	Diluted				.62				1.09				1.14
Weighted-average shares:
	Basic				41,969				41,803				42,210
	Diluted				42,689				43,235				43,754

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				December 28,				December 29,
				2005				2004
				(In thousands)
ASSETS
Current assets:
	Cash and cash equivalents			$	5,120				7,354
	Receivables				5,007				4,639
	Inventories				5,176				5,611
	Prepaid expenses				985				1,016
	Deferred income taxes				7,417				5,110
		Total current assets			23,705				23,730
Property and equipment:
	Land and improvements				170,424				162,082
	Buildings				513,932				480,781
	Equipment				287,581				271,431
	Construction in progress				23,405				31,531
					995,342				945,825
	Less accumulated depreciation				323,012				295,852
		Net property and equipment			672,330				649,973
Other assets					10,793				10,643
		Total assets		$	706,828				684,346
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				6,468				5,963
	Current portion of long-term debt				18,750				18,750
	Income taxes payable				4,118				1,842
	Accrued liabilities				46,691				42,569
		Total current liabilities			76,027				69,124
Long-term debt					154,500				164,250
Deferred income taxes					46,768				47,674
Other long-term liabilities					5,899				7,692
		Total liabilities			283,194				288,740
Shareholders’ equity:
	Common stock of $1.00 par value; authorized 100,000,000 shares; issued 42,122,000 in 2005 and 41,890,000 in 2004				42,122				41,890
	Additional paid-in capital				5,294				3,878
	Retained earnings				376,218				349,838
		Total shareholders’ equity			423,634				395,606
Commitments and contingencies
		Total liabilities and shareholders’ equity		$	706,828				684,346

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					Year Ended
					December 28,				December 29,				December 31,
					2005				2004				2003
					(In thousands)
Cash flows from operating activities:
	Net earnings				$	26,380				46,926				49,823
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization				35,611				34,459				33,989
		Impairment charges				6,527				1,539				1,414
		Gain on sale of property and equipment				(1,803	)			(1,977	)			(1,608	)
		Tax benefit from exercise of stock options				1,082				3,337				1,412
		Deferred income taxes				(3,213	)			4,890				2,975
		Decrease (increase) in:
			Receivables			(368	)			(346	)			717
			Inventories			435				37				(529	)
			Prepaid expenses			31				742				(492	)
			Income taxes receivable			—				—				2,739
			Other assets			(258	)			(2,206	)			(1,130	)
		Increase (decrease) in:
			Accounts payable			505				(617	)			(2,090	)
			Income taxes payable			2,276				554				1,288
			Accrued liabilities			4,122				643				4,447
			Other long-term liabilities			(1,793	)			1,561				1,057
Net cash provided by operating activities						69,534				89,542				94,012
Cash flows from investing activities:
	Proceeds from sale of property and equipment					14,077				9,877				9,240
	Capital expenditures					(76,455	)			(75,483	)			(76,353	)
Net cash used in investing activities						(62,378	)			(65,606	)			(67,113	)
Cash flows from financing activities:
	Net proceeds from (repayment of) revolving credit facility					9,000				(13,000	)			(106,000	)
	Repayment of senior notes					(18,750	)			—				—
	Proceeds from issuance of senior notes					—				—				100,000
	Debt issuance costs					(206	)			(602	)			(160	)
	Proceeds from stock options exercised					2,418				6,611				3,688
	Repurchases of common stock					(1,852	)			(18,208	)			(18,464	)
Net cash used in financing activities						(9,390	)			(25,199	)			(20,936	)
Net increase (decrease) in cash and cash equivalents						(2,234	)			(1,263	)			5,963
Cash and cash equivalents — beginning of period						7,354				8,617				2,654
Cash and cash equivalents — end of period					$	5,120				7,354				8,617
Supplemental disclosure
Cash paid during the year for:
	Interest, net of amount capitalized				$	10,333				10,760				9,914
	Income taxes					12,767				16,488				17,262

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Note 1.	Description of Business and Summary of Significant Accounting Policies

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				2005				2004				2003
				(In thousands, except earnings
				per share)
Net earnings, as reported				$	26,380				46,926				49,823
Less total stock-based compensation expense determined under fair value based method, net of related tax effects					(1,714	)			(1,095	)			(1,486	)
Pro forma net earnings				$	24,666				45,831				48,337
Earnings per share:
	Basic:
		As reported		$	.63				1.12				1.18
		Pro forma			.59				1.10				1.15
	Diluted:
		As reported			.62				1.09				1.14
		Pro forma			.58				1.06				1.10

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Note 2.	Income Taxes

			2005				2004				2003
			(In thousands)
Current:
	U.S. Federal		$	14,739				17,663				20,853
	State and local			819				2,039				1,270
Total current				15,558				19,702				22,123
Deferred:
	U.S. Federal			(3,170	)			4,282				3,909
	State and local			(43	)			608				(934	)
Total deferred				(3,213	)			4,890				2,975
Total income taxes			$	12,345				24,592				25,098

		2005				2004				2003
		(In thousands)
Tax at Federal statutory rate		$	13,554				25,031				26,222
Increase (decrease) in taxes due to:
State income taxes, net of Federal income tax benefit			504				1,721				218
Federal tax credits, net			(1,702	)			(1,743	)			(1,568	)
Other			(11	)			(417	)			226
Total income taxes		$	12,345				24,592				25,098

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			2005				2004
			(In thousands)
Deferred tax assets:
	Self-insurance liabilities		$	4,888				4,509
	Accrued legal costs			2,322				255
	Deferred compensation			2,130				2,458
	Other			208				346
Total gross deferred tax assets				9,548				7,568
	Less valuation allowance			—				—
Net deferred tax assets				9,548				7,568
Deferred tax liabilities:
	Building and equipment			(48,899	)			(50,132	)
Total gross deferred tax liabilities				(48,899	)			(50,132	)
Net deferred taxes			$	(39,351	)			(42,564	)

Note 3.	Long-Term Debt

		2005				2004
		(In thousands)
Revolving credit facility with banks due December 2009, with weighted average interest of 5.94% at December 28, 2005; secured by the common stock of the Company’s wholly- owned subsidiaries		$	17,000				8,000
Senior notes payable bearing interest at 9.02%; payable in annual installments of $18,750,000 commencing January 2005, final installment due January 2008; secured by the common stock of the Company’s wholly-owned subsidiaries			56,250				75,000
Senior notes payable bearing interest at 4.65%; payable in annual installments of $14,285,714 commencing July 2007, final installment due July 2013; secured by the common stock of the Company’s wholly-owned subsidiaries			100,000				100,000
			173,250				183,000
Less current installments			18,750				18,750
Total long-term debt			154,500				164,250

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		Fair				Book
		Value				Value
		(In thousands)
9.02% senior notes		$	60,500				56,250
4.65% senior notes			97,300				100,000

Note 4.	Interest Cost

		2005				2004				2003
		(In thousands)
Interest cost capitalized		$	1,798				1,630				1,676
Interest cost charged to income			9,696				10,640				10,216
Total interest cost incurred		$	11,494				12,270				11,892

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Note 5.	Leases

		(In thousands)
Year End:
2006		$	1,277
2007			1,159
2008			939
2009			882
2010			699
Later years, through 2025			4,779
Future minimum lease payments		$	9,735

Note 6.	Accrued Liabilities

		2005				2004
		(In thousands)
Self-insurance liabilities		$	14,441				13,466
Accrued compensation			9,765				10,677
Accrued taxes (other than income)			7,752				8,106
Accrued legal costs			6,375				703
Outstanding gift certificates			3,436				3,288
Accrued interest			3,122				3,760
Accrued team member benefits			947				1,532
Other accrued expenses			853				1,037
Total accrued liabilities		$	46,691				42,569

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Note 7.	Shareholders’ Equity

		$1 Par Value				Additional				Retained
		Common Stock				Paid-in Capital				Earnings
		(In thousands)
Balances at January 1, 2003		$	42,745				2,066				275,670
Net earnings			—				—				49,823
Issuance of common stock under Stock Option Plans			614				3,074				—
Tax benefit from exercise of nonqualified stock options			—				1,412				—
Repurchases of common stock			(1,516	)			(5,140	)			(11,808	)
Balances at December 31, 2003			41,843				1,412				313,685
Net earnings			—				—				46,926
Issuance of common stock under Stock Option Plans			1,079				5,532				—
Tax benefit from exercise of nonqualified stock options			—				3,337				—
Repurchases of common stock			(1,032	)			(6,403	)			(10,773	)
Balances at December 29, 2004			41,890				3,878				349,838
Net earnings			—				—				26,380
Issuance of common stock under Stock Option Plans			365				2,053				—
Tax benefit from exercise of nonqualified stock options			—				1,082				—
Repurchases of common stock			(133	)			(1,719	)			—
Balances at December 28, 2005		$	42,122				5,294				376,218

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Note 8.	Team Member Retirement Plans

Note 9.	Stock Option Plan

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			2005								2004								2003
							Weighted-Average								Weighted-Average								Weighted-Average
			Shares				Exercise Price				Shares				Exercise Price				Shares				Exercise Price
			(Shares in thousands)
Outstanding at beginning of year				3,085			$	9.73				4,414			$	9.01				4,592			$	8.10
	Granted			675				12.18				25				13.99				731				12.72
	Exercised			(365	)			6.77				(1,079	)			7.50				(614	)			6.85
	Forfeited			(180	)			9.45				(275	)			7.32				(295	)			8.31
Outstanding at end of year				3,215				10.51				3,085				9.73				4,414				9.01
Exercisable at year-end				2,445								2,360								2,851

		Options Outstanding												Options Exercisable
		Number												Number
		Outstanding				Remaining				Weighted-Average				Exercisable				Weighted-Average
Range of Exercise Prices		at 12/28/05				Contractual Life				Exercise Price				at 12/28/05				Exercise Price
		(Shares in thousands)
$4 to $6			383				3.8 years			$	5.14				383			$	5.14
$6 to $9			392				3.5				7.00				392				7.00
$9 to $13			2,024				6.1				11.48				1,401				11.62
$13 to $18			416				7.8				14.01				269				14.04
$4 to $18			3,215				5.7				10.51				2,445				10.13

		2005				2004				2003
Risk-free interest rate			3.9	%			3.8	%			3.3	%
Expected life (years)			4.4				7.4				5.1
Expected volatility			.25				.24				.22
Expected dividend yield			0	%			0	%			0	%

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Note 10.	Earnings Per Share

		2005						2004				2003
		(In thousands, except
		earnings per share)
Net earnings		a		$	26,380				46,926				49,823
Weighted-average common shares		b			41,969				41,803				42,210
Dilutive stock options					720				1,432				1,544
Adjusted weighted-average common shares		c			42,689				43,235				43,754
Basic EPS		a/b		$	.63				1.12				1.18
Diluted EPS		a/c			.62				1.09				1.14

Note 11.	Quarterly Consolidated Financial Data (Unaudited)

			Quarter
			First				Second				Third				Fourth				Total Year
			(In thousands, except earnings per share)
2005:
Restaurant sales			$	209,639				215,510				202,967				196,870				824,986
Net earnings				11,813				6,260				4,164				4,143				26,380
Earnings per share:
	Basic		$	.28				.15				.10				.10				.63
	Diluted			.28				.15				.10				.10				.62
2004:
Restaurant sales			$	211,657				216,546				205,331				193,481				827,015
Net earnings				15,360				14,170				9,226				8,170				46,926
Earnings per share:
	Basic		$	.37				.34				.22				.20				1.12
	Diluted			.35				.33				.22				.19				1.09

Note 12.	Disclosures About the Fair Value of Financial Instruments

Note 13.	Legal Contingencies

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Note 14.	Subsequent Events

F-85

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