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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

OR

Commission File Number 333-57925

(901) 766-6400
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   [X]   No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes  [  ]  No  [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. Not Applicable.

Number of shares of common stock outstanding: 10,820.

Documents incorporated by reference: None.

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PART I

Item 1. Business

General. The Restaurant Company (the “Company,” “Perkins,” or “TRC”) is a wholly-owned subsidiary of The Restaurant Holding Corporation (“RHC”). TRC conducts business under the name “Perkins Restaurant and Bakery”. TRC is also the sole stockholder of TRC Realty LLC, The Restaurant Company of Minnesota (“TRCM”) and Perkins Finance Corp. RHC is owned principally by Donald N. Smith (“Mr. Smith”), TRC’s Chairman and Chief Executive Officer, and BancBoston Ventures, Inc (“BBV”). Mr. Smith is also the Chairman of Friendly Ice Cream Corporation (“FICC”), which operates and franchises 543 restaurants, located primarily in the northeastern United States. Additional information may be found on our website, www.perkinsrestaurants.com. We make available on our website our Annual Report on Form 10-K, our quarterly reports on Form 10-Q, current reports on Form 8-K and all exhibits to those reports free of charge as soon as reasonably practicable after they are electronically filed or furnished to the Securities and Exchange Commission.

Operations. We operate and franchise mid-scale full service restaurants, which serve a wide variety of high quality, moderately priced breakfast, lunch and dinner entrees. Our restaurants are open seven days a week except Christmas Day and some are open 24 hours a day. As of December 29, 2002, entrees served in Company-operated restaurants ranged in price from $3.59 to $10.99 for breakfast, $5.29 to $10.99 for lunch and $5.29 to $11.99 for dinner. On December 29, 2002, there were 498 full-service restaurants in our system, of which 155 were Company-operated restaurants and 343 were franchised restaurants. The restaurants operate under the names “Perkins Restaurant and Bakery,” “Perkins Family Restaurant,” “Perkins Family Restaurant and Bakery,” or “Perkins Restaurant” and the mark “Perkins”. The restaurants are located in 35 states with the largest number in Minnesota, Pennsylvania, Florida, Ohio and Wisconsin (see Significant Franchisees). We have fifteen franchised restaurants in Canada.

We offer our customers a “core menu” consisting of certain required menu offerings that each Company-operated and franchised restaurant must offer. Additional items are offered to meet regional and local tastes. We must approve all menu items at franchised restaurants. Menu offerings continually evolve to meet changing consumer tastes. We purchase television, radio, outdoor and print advertisements to encourage trial, to promote product lines and to increase customer traffic. We maintain a computerized labor scheduling and administrative system called PRISM in all Company-operated restaurants to improve our operating efficiency. PRISM is also available to franchisees and is currently utilized in approximately 75% of franchised restaurants.

We also offer cookie doughs, muffin batters, pancake mixes, pies and other food products for sale to our Company-operated and franchised restaurants and bakery and food service distributors through Foxtail Foods (“Foxtail”), our manufacturing division. During 2002, sales of products from this division to Perkins franchisees and outside third parties constituted approximately 10.0% of our total revenues.

Franchised restaurants operate pursuant to license agreements generally having an initial term of 20 years, and pursuant to which a royalty fee (4% of gross sales) and an advertising contribution (3% of gross sales) are paid. Franchisees pay a non-refundable license fee of $40,000 for each of their first two restaurants. Franchisees opening their third and subsequent restaurants pay a license fee of between $25,000 and $50,000 depending on the level of assistance provided by us in opening the restaurant. Typically, franchisees may terminate license agreements upon a minimum of 12 months prior notice and upon payment of specified liquidated damages. Franchisees do not typically have express renewal rights. In 2002, average annual royalties earned per franchised restaurant were approximately $61,000. The following number of license agreements are scheduled to expire in the years indicated: 2003 - fourteen; 2004 - twenty-two; 2005 - nine; 2006 – six; 2007 - twelve. Franchisees typically apply for and receive new license agreements.

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Design Development. Our restaurants are primarily located in freestanding buildings seating between 90 to 250 customers. We employ an on-going system of prototype development, testing and remodeling to maintain operationally efficient, cost-effective and unique interior and exterior facility design and decor. The current prototype packages feature modern, distinctive interior and exterior layouts that enhance operating efficiencies and customer appeal.

System Development. We opened four Company-operated restaurants in 2002 and seven in 2001. In 2001, nine formerly franchised restaurants were converted to Company-operated stores. Five Company-operated restaurants were sold to franchisees during the same period. Seventeen new franchised restaurants opened during 2002 and twelve new franchised restaurants opened in 2001. Two Company-operated restaurants were closed in 2002 and three were closed in 2001. Eighteen franchised restaurants were closed in 2002 and nine were closed in 2001. We also opened two Sage Hen Cafes located in St. Louis Park, MN and Deerfield, IL in 2001. These restaurants were closed during 2002.

Research and Development. Each year, we develop and test a wide variety of products in our 3,000 square foot test kitchen in Memphis, Tennessee. New products undergo extensive operations and consumer testing to determine acceptance. While this effort is an integral part of our overall operations, it was not a material expense in 2002, 2001 or 2000. In addition, no material amounts were spent to conduct consumer research in 2002, 2001 or 2000.

Significant Franchisees. As of December 29, 2002, three franchisees, otherwise unaffiliated with the Company, owned 92 of the 343 franchised restaurants and bakeries. These franchisees operated 41, 29 and 22 restaurants, respectively. 38 of these restaurants were located in Pennsylvania, 26 were located in Ohio and the remaining 28 were located across Wisconsin, Nebraska, Florida, Tennessee, New Jersey, Minnesota, South Dakota, Maryland, Kentucky, New York, Virginia, North Dakota, South Carolina and Michigan. During 2002, we earned net royalties and license fees of $2,435,000, $1,853,000 and $1,592,000, respectively, from these franchisees.

Franchise Guarantees. In the past, we have sponsored financing programs offered by certain lending institutions to assist franchisees in procuring funds for the construction of new franchised restaurants and to purchase and install in-store bakeries. We provided a limited guaranty of funds borrowed. Our obligation under these agreements expired during the first quarter of 2002.

During 2000, we entered into a separate agreement to guarantee fifty percent of borrowings up to a total guarantee of $1,500,000 for use by a franchisee to remodel and upgrade existing restaurants. As of December 29, 2002, $3,000,000 in borrowings were outstanding under this agreement of which $1,500,000 were guaranteed by us.

Service Fee Agreements. Our predecessors entered into arrangements with several different parties which have reserved territorial rights under which specified payments are to be made by us based on a percentage of gross sales from certain restaurants and for new restaurants opened within certain geographic regions. During 2002, we paid an aggregate of $2,694,000 under such arrangements. Three such agreements are currently in effect. Of these, one expires upon the death of the beneficiary, one expires in the year 2075 and the remaining agreement remains in effect as long as we operate Perkins Restaurants and Bakeries in certain states.

Source of Materials. Essential supplies and raw materials are available from several sources, and we are not dependent upon any one source for our supplies and raw materials.

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Patents, Trademarks and Other Intellectual Property. We believe that our trademarks and service marks, especially the mark “Perkins,” are of substantial economic importance to our business. These include signs, logos and marks relating to specific menu offerings in addition to marks relating to the Perkins name. Certain of these marks are registered in the U.S. Patent and Trademark Office and in Canada. Common law rights are claimed with respect to other menu offerings and certain promotions and slogans. We have copyrighted architectural drawings for Perkins restaurants and claim copyright protection for certain manuals, menus, advertising and promotional materials. We do not have any patents.

Seasonality. Our revenues are subject to seasonal fluctuations. Customer counts (and consequently revenues) are generally highest in the summer months and lowest during the winter months because of the high proportion of restaurants located in states where inclement weather adversely affects customer visits.

Working Capital. We ordinarily operate with a working capital deficit since funds generated by cash sales in excess of those needed to service short-term obligations are used by us to reduce debt and acquire capital assets. At December 29, 2002, this working capital deficit was $18.1 million.

Competition. Our business and the restaurant industry in general are highly competitive and are often affected by changes in consumer tastes and eating habits, by local and national economic conditions and by population and traffic patterns. We compete directly or indirectly with all restaurants, from national and regional chains to local establishments. Some of our competitors are corporations that are much larger than us and have substantially greater capital resources at their disposal. In addition, in some markets, primarily in the northeastern United States, Perkins and FICC operate restaurants which compete with each other.

Employees. As of December 29, 2002, we employed approximately 10,700 persons. Approximately 350 of these were administrative and manufacturing personnel and the balance were restaurant personnel. Approximately 41% of the restaurant personnel are part-time employees. We compete in the job market for qualified restaurant management and operational employees. We maintain ongoing restaurant management training programs and have on our staff full-time restaurant training managers and a training director. We believe that our restaurant management compensation and benefits package compares favorably with those offered by our competitors. None of our employees are represented by a union.

Regulation. We are subject to various federal, state and local laws affecting our business. Restaurants generally are required to comply with a variety of regulatory provisions relating to zoning of restaurant sites, sanitation, health and safety. No material amounts have been or are expected to be expensed to comply with environmental protection regulations.

We are subject to a number of state laws regulating franchise operations and sales. Those laws impose registration and disclosure requirements on franchisors in the offer and sale of franchises and, in certain cases, also apply substantive standards to the relationship between franchisor and franchisee. We must also adhere to Federal Trade Commission regulations governing disclosures in the sale of franchises.

Federal and state minimum wage rate laws impact the wage rates of our hourly employees. Future increases in these rates could materially affect our cost of labor.

Segment Information. We have three primary operating segments: restaurants, franchise and manufacturing. See Note 15 of Notes to Financial Statements for financial information regarding each of our segments.

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Item 2. Properties.

The following table lists the location of each of the full-service Company-operated and franchised restaurants in the Perkins system as of December 29, 2002. The table excludes one limited service Perkins Express located in Utah.

Number of Restaurants

Most of the restaurants feature a distinctively styled brick or stucco building. Our restaurants are predominantly single-purpose, one-story, free-standing buildings averaging approximately 5,000 square feet, with a seating capacity of between 90 and 250 customers.

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The following table sets forth certain information regarding Company-operated restaurants and other properties, as of December 29, 2002:

	(1) In addition, we lease eleven properties, ten of which are subleased to others and one of which is vacant. We also own six properties, four of which are leased to others and two of which are vacant.
	(2) Our principal office is located in Memphis, Tennessee, and currently comprises approximately 50,000 square feet under a lease expiring on May 31, 2013, subject to renewal by us for a maximum of 60 months. We also own a 25,149 square-foot manufacturing facility in Cincinnati, Ohio, and lease two other properties in Cincinnati, Ohio, consisting of 36,000 square feet and 120,000 square feet, for use as manufacturing facilities.
	(3) The average term of the remaining leases is seven years, excluding renewal options. The longest lease term will mature in approximately 39 years and the shortest lease term will mature in less than 1 year, assuming the exercise of all renewal options.

Item 3. Legal Proceedings.

We are a party to various legal proceedings in the ordinary course of business. We do not believe that these proceedings, either individually or in the aggregate, are likely to have a material adverse effect on our financial position or results of operations.

Item 4. Submission of Matters to Vote of Shareholders.

Not applicable.

[Intentionally Left Blank]

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PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters.

     (a)  Market information.

No established public market exists for our equity securities.

     (b)  Holders.

As of December 29, 2002, there was 1 Stockholder of record.

     (c)  Dividends.

There were no dividends declared or paid during 2002 or 2001.

[Intentionally Left Blank]

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Item 6. Selected Financial Data.

THE RESTAURANT COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA
(In Thousands, Except Number of Restaurants)

(a)	Net of current maturities of $9,489, $1,030, $971, $942 and $1,229.
(b)	Excludes two Company-operated Sage Hen Cafes and one franchised Perkins Express.
(c)	“EBITDA” represents net income (loss) plus (i) net interest, (ii) depreciation and amortization, (iii) provision for (benefit from) disposition of assets, (iv) asset write-down, (v) recapitalization costs, (vi) cumulative effect of change in accounting principle, (vii) loss due to bankruptcy of franchisee, (viii) going private transaction costs, (ix) loss from discontinued operations, (x) provision for minority interest and (xi) provision for (benefit from) income taxes. We have included information concerning EBITDA in this data table because we believe that such information is used as one measure of our historical ability to service debt. EBITDA should not be considered as an alternative to, or more meaningful than, earnings from operations as determined in accordance with generally accepted accounting principles or other traditional indications of our operating performance.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

GENERAL

The following management’s discussion and analysis describes the principal factors affecting the results of operations, liquidity and capital resources, as well as the critical accounting policies of TRC. This discussion should be read in conjunction with the accompanying audited financial statements, which include additional information about our significant accounting policies and practices and the transactions that underlie our financial results.

The key factors that affect our operating results are comparable restaurant sales, which are driven by comparable customer counts and check average, and our ability to manage operating expenses such as food cost, labor and benefits and other costs.

Except as otherwise indicated, references to years mean our fiscal year ended December 29, 2002, December 30, 2001 or December 31, 2000.

[Intentionally Left Blank]

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RESULTS OF OPERATIONS

Overview:

Our 2002 results reflect a solid performance in spite of the continued challenges we face due to the overall soft economic climate and continuing political uncertainty. We are confident that through our continued cost control and restaurant management efforts that we are poised for long-term growth when the economy, particularly the tourism and hospitality sectors, recovers and experiences sustained growth. The following table sets forth all revenues, costs and expenses as a percentage of total revenues for the periods indicated for revenue and expense items included in the consolidated statements of operations.

Net income for 2002 was $2.2 million versus a net loss of $696,000 in 2001 and net income of $4.0 million in 2000. Pre-tax income for 2002 included a loss of $2.2 million related to asset dispositions and write-downs. Pre-tax loss for 2001 included a loss of $374,000 related to asset dispositions and write-downs. Pre-tax income for 2000 included a loss of $1.5 million related to asset dispositions and write-downs.

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Year Ended December 29, 2002 Compared to Year Ended December 30, 2001

Revenues:

Total revenues increased 2.6% over 2001 due primarily to increased restaurant food sales.

Food sales at Company-operated restaurants increased 2.9%. The increase is primarily the result of sales from twenty stores opened or acquired since the beginning of 2001 partially offset by ten stores that were either closed or sold to franchisees since the beginning of 2001. Comparable restaurant sales decreased 2.1% primarily due to a decrease in comparable customer visits of 4.5%, partially offset by a 2.4% increase in check average.

Revenues from Foxtail increased approximately 1.8% over 2001 and constituted 10.0% of our total 2002 revenues. In order to ensure consistency and availability of our proprietary products to each restaurant in the system, Foxtail offers cookie doughs, muffin batters, pancake mixes, pies and other food products to Company-operated and franchised restaurants through food service distributors. Additionally, it produces a variety of non-proprietary products for sale in various retail markets. Sales to Company-operated restaurants are eliminated in the accompanying statements of operations. The increase noted above can be attributed to growth in sales outside of the Perkins system.

Franchise and other revenues, which consist primarily of franchise royalties and initial license fees, decreased 2.9% from the prior year. Royalty revenues decreased due to a decrease in comparable sales and a decline in the number of average franchise restaurants. Initial franchise license fees increased as a result of seventeen franchise restaurants opening in 2002 versus twelve in 2001.

Costs and Expenses:

Food cost:

In terms of total revenues, food cost decreased 0.4 percentage points from 2001. Restaurant division food cost expressed as a percentage of restaurant division sales decreased 0.6 percentage points. The current year decrease was primarily due to menu price increases and a net decrease in commodity costs.

The cost of Foxtail sales, in terms of total Foxtail revenues, increased approximately 0.3 percentage points, as a result of increased raw materials costs. As a manufacturing operation, Foxtail typically has higher food costs as a percent of revenues than the Company’s restaurants.

Labor and benefits:

Labor and benefits expense, as a percentage of total revenues, increased 0.4 percentage points over 2001. Increased workers’ compensation costs, a moderate increase in wage rates and a slight drop in productivity impacted restaurant labor and benefits. Foxtail labor and benefits decreased due to improvements in plant efficiencies.

Federal and state minimum wage laws impact the wage rates of the Company’s hourly employees. Certain states do not allow tip credits for servers which results in higher payroll costs as well as greater exposure to increases in minimum wage rates. In the past, the Company has been able to offset increases in labor costs through selective menu price increases and improvements in labor productivity. However, there is no assurance that future increases can be mitigated through raising menu prices or productivity improvements.

As a percentage of revenues, Foxtail labor and benefit charges are significantly lower than the Company’s restaurants. If Foxtail were to become a more significant component of the Company’s total operations, labor and benefits expense, expressed as a percent of total revenue, would decrease.

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Operating expenses:

Operating expenses, expressed as a percentage of total revenues, decreased 0.4 percentage points from 2001 to 2002.

Restaurant division operating expenses expressed as a percentage of restaurant sales, decreased 0.4 percentage points. The decrease is primarily the result of decreased utility cost due to the drop in natural gas prices. Also, store pre-opening expenses were lower due to the fact that the Company opened fewer stores in 2002 as compared to 2001.

Foxtail expenses, expressed as a percentage of Foxtail revenue, increased 0.3 percentage points. The increase is primarily due to increased transportation and storage costs.

Franchise division operating expenses, expressed as a percentage of franchise revenues decreased 1.4 percentage points compared to the prior year. Expenses under franchise service fee agreements, investment spending for advertising in select franchised markets, and franchise settlements drove the decrease.

General and administrative:

General and administrative expenses declined to 9.1% of total revenues in 2002 from 9.4% of total revenues in 2001. The decrease is primarily attributable to the impact of selected administrative workforce reductions.

Depreciation and amortization:

Depreciation and amortization decreased approximately 9.6% from 2001 due to the cessation of goodwill amortization and the increase in total revenue.

Interest, net:

Net interest expense decreased from 5.5% to 5.3% of revenues. The decrease is the result of reduced average borrowings and lower variable interest rates on the Company’s revolving line of credit.

Provision for/Benefit from disposition of assets:

During 2002, the Company recorded a net gain of $493,000 related to the disposition of assets.

Asset write-down:

The Company recorded charges totaling $2.7 million to write down the carrying value of the two Sage Hen properties and two Company owned restaurants to their estimated fair values.

Other:

Other income decreased approximately $658,000. This decrease is primarily due to the termination of 8 leases and subleases at the end of 2001 on properties leased to a franchisee.

Provision for/Benefit from income taxes:

The benefit from income taxes in 2002 was $179,000. Our effective tax rate was (9.0)% in 2002, 56.6% in 2001 and 31.8% in 2000. The (9.0)% effective tax rate in 2002 was higher than in 2001 due to the fact that we had positive pretax income in 2002 versus a pretax loss in 2001. The 2002 effective tax rate was favorably impacted primarily by credits resulting from excess FICA taxes paid on server tip income that exceeds minimum wage. The effective tax rate is lower than the statutory U.S. federal tax rate and the 2001 effective tax rate primarily due to the utilization of these credits. For 2003, we expect the effective tax rate to be approximately 32.4%. The actual rate, however, will depend on a number of factors, including the amount and source of operating income.

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Year Ended December 30, 2001 Compared to Year Ended December 31, 2000

Revenues:

Total revenues decreased 1.7% over 2000 due primarily to decreased restaurant food sales.

Food sales at Company-operated Perkins Restaurants decreased 2.5%. The decrease can be attributed to a decline in comparable restaurant sales of 2.5% and the fact that fiscal 2001 contained 364 days compared to 366 days in the year ending December 31, 2000. The decline in comparable restaurant sales was due to a decrease in comparable customer visits of 3.0%, which was partially offset by a 0.5% increase in check average. The increase in check average is the result of menu price increases of 1.4% partially offset by increased discounting and sales mix shifts. Sales from two new Sage Hen Cafes opened during 2001 partially offset the decrease.

Revenues from Foxtail increased approximately 2.4% over 2000 and constituted 10.1% of the Company’s total 2001 revenues. The increase in Foxtail revenues is attributable to growth in the number of franchise stores in the Perkins system and increased external sales.

Franchise and other revenues, which consist primarily of franchise royalties and initial license fees, decreased 1.5% from the prior year. Initial franchise license fees decreased as a result of twelve franchise restaurants opening in 2001 versus 25 in 2000. Royalty revenues increased due to a higher number of average franchise restaurants offset by a decrease in comparable sales in franchise restaurants.

Costs and Expenses:

Food cost:

In terms of total revenues, food cost increased 0.3 percentage points from 2000. Restaurant division food cost expressed as a percentage of restaurant division sales also increased 0.3 percentage points. The current year increase was primarily due to a net increase in commodity costs and the promotion of lower margin entrees. The increase was partially offset by certain menu price increases.

The cost of Foxtail sales, in terms of total Foxtail revenues, decreased approximately 1.2 percentage points, as a result of stable commodity costs, an increase in sales of higher margin products and improved manufacturing efficiencies.

Labor and benefits:

Labor and benefits expense, as a percentage of total revenues, was flat compared to 2000. An increase in restaurant labor and benefits was offset by a decrease at Foxtail. A moderate increase in wage rates and a slight drop in productivity impacted restaurant labor and benefits. A decrease in group health program costs partially offset the increase. Foxtail labor and benefits decreased due to improvements in plant efficiencies and a decrease in Foxtail’s worker’s compensation program costs.

Operating expenses:

Operating expenses, expressed as a percentage of total revenues, increased 1.5 percentage points from 2000 to 2001.

Restaurant division operating expenses expressed as a percentage of restaurant sales, increased 1.9 percentage points. The increase related to several factors, the largest of which was the increased cost of natural gas in the first quarter of 2001 combined with severely cold temperatures during the same period. New store opening expenses increased due to the opening of seven new Company-operated restaurants in 2001 compared to four in the prior year. We also increased spending on media advertising in several markets and invested in certain supply and repair expenses as we focused on improving the image of our restaurants.

Foxtail expenses, expressed as a percentage of Foxtail revenue, decreased 0.1 percentage points. The majority of this decrease is due to reduced freight costs.

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Franchise division operating expenses, expressed as a percentage of franchise revenues increased 1.4 percentage points compared to the prior year. Expenses under franchise service fee agreements, investment spending for advertising in select franchised markets, and bad debt expense drove the increase. Franchise opening costs decreased due to the opening of 13 fewer restaurants than in the prior year.

General and administrative:

General and administrative expenses rose to 9.4% of total revenues in 2001 from 9.1% of total revenues in 2000. An effort to improve core training for restaurant management through development of a classroom-based training school, non-recurring charges related to staff reductions, costs associated with the development of Sage Hen Cafe and general increases in the cost of administrative support drove the increase. Reduced levels of incentive compensation costs partially offset these items. The remainder of the rise in costs as a percentage of revenue is due to the decline in revenues.

Depreciation and amortization:

Depreciation and amortization increased approximately 2.9% over 2000 due to the Company’s continuing program to upgrade and maintain existing restaurants and the net addition of eight Company-operated restaurants during the year.

Interest, net:

Net interest expense increased from 5.4% to 5.5% of revenues due to the drop in total revenues. An increase in interest charges on the Senior Discount Notes was offset by a decrease in interest expense associated with capital lease obligations. The impact of higher average borrowings on the Company’s line of credit was offset by the decline in short term borrowing rates. Prior to November 15, 2001, interest accreted on the Senior Discount Notes on a compounding basis. On November 15, 2001 the Company elected to begin accruing cash interest on the Senior Discount Notes.

Provision for/Benefit from disposition of assets:

During 2001, the Company recorded a net gain of $1.1 million related to the disposition of assets. This amount includes a loss of $132,000 related to discontinued development of certain sites and a net gain of $1.2 million related to the sale of seven properties, five of which were Company-operated restaurants sold to a franchisee.

Asset write-down:

The Company recorded charges totaling $1.5 million to write down the carrying value of three properties to their estimated fair values, and to write off the carrying amount of certain intangibles related to the expected future royalty income of franchised restaurants acquired by the Company in December 2001.

Other:

Other income decreased approximately $188,000. This decrease is primarily due to the termination of nine leases and subleases on properties leased to franchisees or third parties. Of the nine properties, six are now Company-operated restaurants formerly leased or subleased by a franchisee, one was disposed of through a lease termination and two are owned and held for sale. The decreases were partially offset by rental income from a vacant property subleased during 2001.

Provision for/Benefit from income taxes:

The benefit from income taxes in 2001 was $907,000. The 2001 benefit reflects the benefit derived from the net loss before income taxes and the utilization of income tax credits, which primarily result from excess FICA taxes paid on server tip income that exceeds the minimum wage.

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CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to adopt accounting policies and make significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In many cases, there are alternative policies or estimation techniques that could be used. We maintain a thorough process to review the application of our accounting policies and to evaluate the appropriateness of the estimates that are required to prepare the financial statements of a corporation. However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and the receipt of new or better information.

Revenue Recognition:

Revenue at Company-operated restaurants is recognized as customers pay for products at the time of sale. The earnings reporting process is covered by our system of internal controls and generally does not require significant management judgments and estimates. However, estimates are inherent in the calculation of franchisee royalty revenue. We calculate an estimate of royalty income each period and adjust royalty income when actual amounts are reported by franchisees. Historically, these adjustments have not been material. We provide for estimated losses for revenues that are not likely to be collected. Although we maintain good relationships with our franchisees, if average sales or the financial health of significant franchisees were to deteriorate, we may have to increase our reserves against collection of franchise revenues.

Insurance Accruals:

We are self-insured up to certain limits for costs associated with workers’ compensation claims, property claims and benefits paid under employee health care programs. At December 29, 2002 and December 30, 2001, we had total self-insurance accruals reflected in our balance sheet of approximately $2.6 million.

The measurement of these costs required the consideration of historical loss experience and judgments about the present and expected levels of cost per claim. We account for these costs primarily through actuarial methods, which develop estimates of the undiscounted liability for claims incurred, including those claims incurred but not reported. These methods provide estimates of future ultimate claim costs based on claims incurred as of the balance sheet date. Other acceptable methods of accounting for these accruals include measurement of claims outstanding and projected payments.

We believe the use of actuarial methods to account for these liabilities provides a consistent and effective way to measure these highly judgmental accruals. However, the use of any estimation technique in this area is inherently sensitive given the magnitude of claims involved and the length of time until the ultimate cost is known. We believe that our recorded obligations for these expenses are consistently measured on a conservative basis. Nevertheless, changes in health care costs, accident frequency and severity and other factors can materially affect the estimate for these liabilities.

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Long-Lived Assets:

The restaurant industry is capital intensive. We have approximately 65% of our total assets invested in property and equipment. We capitalize only those costs that meet the definition of capital assets under generally accepted accounting principles. Accordingly, repairs and maintenance costs that do not extend the useful life of the asset are expensed as incurred.

The depreciation of our capital assets over their estimated useful lives, and the determination of any salvage values, requires management to make judgments about future events. Because we utilize many of our capital assets over relatively long periods (20 – 30 years for our restaurant buildings), we periodically evaluate whether adjustments to our estimated lives or salvage values are necessary. The accuracy of these estimates affects the amount of depreciation expense recognized in a period and, ultimately, the gain or loss on the disposal of the asset. Historically, gains and losses on the disposition of assets have not been significant. However, such amounts may differ materially in the future based on restaurant performance, technological obsolescence, regulatory requirements and other factors beyond our control.

Due to the fact that we invest a significant amount in the construction or acquisition of new restaurants, we have risks that these assets will not provide an acceptable return on our investment and an impairment of these assets may occur. The accounting test for whether an asset held for use is impaired involves first comparing the carrying value of the asset with its estimated future undiscounted cash flows. If these cash flows do not exceed the carrying value, the asset must be adjusted to its current fair value. We periodically perform this test on each of our restaurants to evaluate whether impairment exists. Factors influencing our judgment include the age of the restaurant (new restaurants have significant start up costs which impede a reliable measure of cash flow), estimation of future restaurant performance and estimation of restaurant fair value. Due to the fact that we can specifically evaluate impairment on a restaurant by restaurant basis, we have historically been able to identify impaired restaurants and record the appropriate adjustment.

During 2002, we determined that impairment existed with respect to the two Sage Hen Café restaurants and to two Company owned restaurants. This determination was made based on our projections that the future cash flows of these restaurants would not exceed the present carrying value of the assets. Accordingly, we recorded an impairment charge of approximately $2.7 million to adjust the assets of these restaurants to net realizable value.

We utilize operating leases to finance a significant number of our restaurant properties. Over the years, we have found these leasing arrangements to be favorable from a cash flow and risk management standpoint. Such arrangements typically shift the risk of loss on the residual value of the assets at the end of the lease period to the lessor. As discussed in “Capital Resources and Liquidity” and in Note 5 to the accompanying audited financial statements, at December 29, 2002, we had approximately $75 million (on an undiscounted basis) of future commitments for operating leases.

The future commitments for operating leases are not reflected as a liability in our balance sheet because the leases do not meet the accounting definition of capital leases. The determination of whether a lease is accounted for as a capital lease or an operating lease requires management to make estimates primarily about the fair value of the asset and its estimated economic useful life. We believe that we have a well-defined and controlled process for making this evaluation.

We have approximately $31.7 million of intangible assets on our balance sheet resulting from the acquisition of businesses. New accounting standards adopted in 2002 require that we review these intangible assets for impairment on an annual basis and cease all goodwill amortization. The adoption of these new rules did not result in an impairment of our recorded intangible assets. The annual evaluation of intangible asset impairment requires the use of estimates about the future cash flows of each of our reporting units to determine their estimated fair values. Changes in forecasted operations and changes in discount rates can materially affect these estimates. However, once an impairment of intangible assets has been recorded, it cannot be reversed.

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Deferred Income Taxes:

We record income tax liabilities utilizing known obligations and estimates of potential obligations. A deferred tax asset or liability is recognized whenever there are future tax effects from existing temporary differences and operating loss and tax credit carryforwards. We record a valuation allowance to reduce deferred tax assets to the balance that is more likely than not to be realized. In evaluating the need for a valuation allowance, we must make judgments and estimates on future taxable income, feasible tax planning strategies and existing facts and circumstances. When we determine that deferred tax assets could be realized in greater or less amounts than recorded, the asset balance and income statement reflect the change in the period such determination is made. We believe that the valuation allowance recorded is adequate for the circumstances. However, changes in facts and circumstances that affect our judgments or estimates in determining the proper deferred tax assets or liabilities could materially affect the recorded amounts.

CAPITAL RESOURCES AND LIQUIDITY

Our primary sources of funding were cash provided by operations, the sale of one restaurant to a franchisee, borrowings under our line of credit and the sale of five non-operating properties. The principal use of cash during the year was capital expenditures and principal and interest payments on debt. Capital expenditures consisted primarily of a building and equipment for one new Company-operated restaurant, equipment purchases for three new Company-operated restaurants, maintenance capital and costs related to remodels of existing restaurants.

The following table summarizes capital expenditures for each of the past three years (in thousands).

Our capital budget for 2003 is $12.7 million and includes plans to open no new Company-operated restaurants. The primary source of funding for these expenditures is expected to be cash provided by operations. Capital spending could vary significantly from planned amounts as certain of these expenditures are discretionary in nature.

As is typical in the restaurant industry, we operate with a working capital deficit since funds generated by cash sales in excess of those needed to service short-term obligations are used to reduce debt and acquire capital assets. At December 29, 2002, this working capital deficit was $18.1 million.

We have a collateralized $40 million revolving line of credit facility (the “Credit Facility”) with a sub limit for up to $5.0 million of letters of credit. The Credit Facility was amended on November 15, 2001 to modify certain terms and conditions and reduce available borrowings from $50 million to $40 million. As a result of the amendment, borrowing rates were adjusted to current market rates. All amounts under the Credit Facility will bear interest at floating rates based on the agent’s base rate or Eurodollar rates as defined in the agreement. All indebtedness under the Credit Facility is collateralized by a first priority lien on substantially all of our assets. As of December 29, 2002, $2.0 million in borrowings and approximately $2.7 million of letters of credit were outstanding under the Credit Facility.

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We have outstanding $130 million of 10.125% Unsecured Senior Notes (the “Notes”) due December 15, 2007. Interest on the Notes is payable semi-annually on June 15 and December 15.

We have outstanding $31.1 million of 11.25% Senior Discount Notes (the “Discount Notes”) maturing on May 15, 2008. The Discount Notes were issued at a discount to their principal amount at maturity and generated gross proceeds of $18 million.

On November 15, 2001, we elected to begin accruing cash interest on the Discount Notes. Cash interest is payable semi-annually on May 15 and November 15. The principal balance of the Notes on December 29, 2002 was $26.9 million. On May 15, 2003, we will be required to redeem $8.4 million in accreted interest of the Discount Notes at a redemption price of 105.625%.

Based on forecasted results of operations, we believe that it is likely that we will not achieve one of our financial ratio requirements for the first quarter of fiscal 2003. We are currently negotiating a modification of this covenant with the Credit Facility lender in order to ensure future compliance. We expect to complete such negotiation during the quarter ending April 20, 2003 and to have the modified covenant effective for the April 20, 2003 measurement date. If we are unable to modify the terms of this covenant and are unable to obtain waivers from the lender for possible future violations of this covenant, the lender could demand payment of the balance of the Credit Facility, which could constitute a default under the Notes and Discount Notes. As of February 23, 2003, no amounts were borrowed and $3.1 million of letters of credit was outstanding with respect to the Credit Facility. If the Credit Facility lender, or the trustee or the holders of the Notes and the Discount Notes demanded repayment, we would seek to refinance the balance of the Credit Facility, the Notes and the Discount Notes with another lender. There can be no assurance that we will successfully modify the terms of the covenant or refinance the balance under the Credit Facility, the Notes and the Discount Notes.

We have contractual obligations and commercial commitments including long-term debt, land lease obligations for Company operated restaurants and office space for corporate operations. The table below presents, as of December 29, 2002, our future scheduled principal repayments of long-term debt and lease obligations (in thousands).

In the past, we have sponsored financing programs offered by certain lending institutions to assist franchisees in procuring funds for the construction of new franchised restaurants and to purchase and install in-store bakeries. We provided a limited guaranty of funds borrowed. Our obligation under these agreements expired during the first quarter of 2002.

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During 2000, we entered into a separate agreement to guarantee fifty percent of borrowings up to a total guarantee of $1,500,000 for use by a franchisee to remodel and upgrade existing restaurants. As of December 29, 2002, $3,000,000 in borrowings were outstanding under this agreement of which $1,500,000 were guaranteed by us.

Our predecessors entered into arrangements with several different parties which have reserved territorial rights under which specified payments are to be made by us based on a percentage of gross sales from certain restaurants and for new restaurants opened within certain geographic regions. During 2002, we paid an aggregate amount of $2,694,000 under such arrangements. Three such agreements are currently in effect. Of these, one expires upon the death of the beneficiary, one expires in the year 2075 and the remaining agreement remains in effect as long as we operate Perkins Restaurants and Bakeries in certain states.

We are a wholly owned subsidiary of RHC. The common shares of RHC not owned by Mr. Smith are subject to an option to require RHC to redeem the shares at any time after December 22, 2004 at fair market value (the “Put”). As of October 6, 2002, these shares represented 30% of the outstanding common stock of RHC. RHC has a management fee agreement dated as of December 22, 1999, with BancBoston Ventures, Inc. (BBV) whereby BBV provides certain consulting services to RHC. In consideration for these services, a fee of $250,000 accrues annually and is payable by RHC on December 22, 2004.

Additionally, RHC issued 50,000 shares of non-voting preferred stock on December 22, 1999. The preferred stock is mandatorily redeemable for $1,000 per share (the “Liquidation Value”) plus all accrued but unpaid dividends, if any, on December 22, 2006. Preferred dividends of 8% per annum of the Liquidation Value of each share are payable quarterly. As of October 6, 2002, approximately $12,358,000 of in-kind dividends had been paid through the issuance of additional shares of preferred stock. Assuming a continuation of in-kind dividends, the redemption price on December 22, 2006 is estimated to be $87,044,000. The holders of preferred stock are entitled to be paid in cash the Liquidation Value of each share of preferred stock before any payments are made to any holders of common stock. The preferred stock is redeemable at our option at any time prior to the mandatory redemption date at the Liquidation Value plus a redemption premium as specified in our Charter. The redemption premium is 3% through December 21, 2002 after which the preferred stock is redeemable at par.

RHC has no material assets other than its investment in us. Our ability to pay dividends to or make distributions to RHC in order to redeem common or preferred shares or pay the management fee to BBV is restricted under our senior notes and the Credit Facility. Therefore, we may need to recapitalize or refinance all or a portion of our obligations on or prior to maturity.

Our ability to make scheduled payments of principal of, or to pay the interest or liquidated damages, if any, on, or to refinance, our indebtedness, or to fund planned capital expenditures will depend on our future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based upon the current level of operations, we believe that cash flow from operations and available cash, together with available borrowings under the Credit Facility, will be adequate to meet our liquidity needs for the foreseeable future. We may, however, need to refinance all or a portion of the principal of the Discount Notes and the Notes on or prior to maturity. There can be no assurance that we will generate sufficient cash flow from operations, or that future borrowings will be available under the Credit Facility in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs. In addition, there can be no assurance that we will be able to effect any such refinancing on commercially reasonable terms or at all.

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ACQUIRED RESTAURANT OPERATIONS

Prior to December 3, 2001, we leased or subleased eight restaurant properties to a franchisee in Denver, Colorado. The franchisee operated an additional three restaurants leased from unrelated third parties. In the third quarter of 2001, the franchisee was in default under the franchise license agreements on its eleven properties and in default under its leases with us. Two of the restaurants leased from third parties and one of the properties owned by us were closed subsequent to the end of the third quarter. We earned royalty revenues from this franchisee totaling $575,000, $653,000 and $629,000 for 2001, 2000 and 1999, respectively. Additionally, we earned lease and sublease income from the eight properties we controlled totaling $591,000, $660,000 and $770,000 for 2001, 2000 and 1999, respectively.

On December 3, 2001, we terminated our leases on the eight restaurants leased or subleased to the franchisee, assumed the lease on one restaurant leased from a third party, and terminated our license agreements on all eleven properties. We also acquired the furniture, fixtures, equipment and operations of eight of the restaurants and continued to operate them as Perkins restaurants. One of the restaurants was subsequently closed in January 2002. All amounts owed to us as of December 3, 2001, under our license and lease agreements were deducted from the purchase price of the restaurants.

SYSTEM DEVELOPMENT

We opened four new Company-operated restaurants and seventeen franchised restaurants in 2002. We plan to open no new Company-operated restaurants and up to twelve franchised restaurants in 2003. There are currently five area development agreements requiring six franchised restaurants to be opened in 2003 and 2004.

MANAGEMENT’S OUTLOOK

We believe that the economy will continue to be adversely impacted by political and economic uncertainties that existed in 2002. We are introducing a new menu for 2003 that contains an updated, more contemporary look and places a greater emphasis on lunch and dinner entrees. In order to improve customer counts, we are introducing certain value-oriented promotions targeting specific demographics. During 2003, we will continue focusing on managing restaurant costs and providing quality food and service on a consistent basis.

NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations,” was issued in June 2001. SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for us on December 30, 2002. We have evaluated the effects of adopting this statement and have determined that it will not have a material effect on our results of operations or financial position.

SFAS No. 145, “Rescission of Financial Accounting Standards Board (“FASB”) Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections,” was issued in April 2002. SFAS 145 rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt,” and an amendment of that statement, FASB No. 64, “Extinguishments of Debt Made to Satisfy Sinking Fund Requirements,” and requires that gains and losses from the extinguishment of debt be classified as extraordinary items only if certain criteria are met. SFAS 145 also amends SFAS No. 13, “Accounting for Leases,” to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS 145 is effective for us on December 30, 2002 and implementation will not have a material effect on our results of operations or financial position.

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SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” was issued in June 2002. SFAS 146 addresses the financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (“EITF”) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS 146 is effective for exit and disposal activities that are initiated by us after December 31, 2002 and will be applied on a prospective basis.

FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” was issued in November 2002. This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of this Interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements in this Interpretation are effective for our financial statements ending December 29, 2002 and are incorporated herein.

In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46 (“FIN46”), “Consolidation of Variable Interest Entities (“VIEs”), an interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to improve financial reporting of special purpose and other entities. In accordance with the interpretation, business enterprises that represent the primary beneficiary of another entity by retaining a controlling financial interest in that entity’s assets, liabilities, and results of operating activities must consolidate the entity in their financial statements. Prior to the issuance of FIN 46, consolidation generally occurred when an enterprise controlled another entity through voting interests. Certain VIEs that are qualifying special purpose entities (“QSPEs”) subject to the reporting requirements of SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities,” will not be required to be consolidated under the provisions of FIN 46. The consolidation provisions of FIN 46 apply to VIEs created or entered into after January 31, 2003, and for pre-existing VIEs in the first reporting period beginning after June 15, 2003. If applicable, transition rules allow the restatement of financial statements or prospective application with a cumulative effect adjustment. In addition, FIN 46 expands the disclosure requirements for the beneficiary of a significant or a majority of the variable interests to provide information regarding the nature, purpose and financial characteristics of the entities. The Company does not believe that the adoption of FIN 46 will have a material adverse impact on the Company’s financial statements.

SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, an Amendment of FASB Statement No. 123,” was issued in December 2002. The Statement amends FASB No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. FASB No. 148 is effective for our financial statements ending December 29, 2002. However, implementation does not have a material effect on our results of operations or financial position.

IMPACT OF INFLATION

We do not believe that our operations are affected by inflation to a greater extent than are the operations of others within the restaurant industry. In the past, we have generally been able to offset the effects of inflation through selective menu price increases.

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IMPACT OF GOVERNMENTAL REGULATION

A majority of our employees are paid hourly rates as determined by Federal and state minimum wage rate laws. Future increases in these rates could materially affect our cost of labor. We are subject to various other regulatory requirements from Federal, State and local organizations. The Occupational Safety and Health Administration, the Food and Drug Administration, the Environmental Protection Agency and other governmental agencies all maintain regulations with which we are required to comply.

SEASONALITY

Our revenues are subject to seasonal fluctuations. Customer counts (and consequently revenues) are generally higher in the summer months and lower during the winter months because of the high proportion of restaurants located in states where inclement weather adversely affects customer visits.

CHANGE IN ACCOUNTING REPORTING PERIOD

Effective January 1, 2001, we converted our financial reporting from a calendar year basis to thirteen four-week periods ending on the last Sunday in December. The first quarter includes four four-week periods. The first, second, third and fourth quarters of 2002 ended April 21, July 14, October 6, and December 29, respectively.

FORWARD-LOOKING STATEMENTS

This discussion contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations that are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those contemplated by the forward-looking statements. Such factors include, but are not limited to, the following: general economic conditions, competitive factors, consumer taste and preferences and adverse weather conditions. We do not undertake to publicly update or revise the forward-looking statements even if experience or future changes make it clear that the projected results expressed or implied therein will not be realized.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk. We currently have market risk-sensitive-instruments related to interest rates. We have no significant exposure for changing interest rates on the Notes and Discount Notes because the interest rates are fixed. We have outstanding long-term debt (exclusive of capital leases) of $158.9 million and $172.8 million at December 29, 2002 and December 30, 2001, respectively. Market risk for fixed-rate, long-term debt is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in interest rates and amounts to approximately $6.6 million as of December 29, 2002 and $6.4 million as of December 30, 2001. The underlying fair values of our long-term debt were estimated based on quoted market prices or on the current rates offered for debt with similar terms and maturities. Currently, derivative instruments are not used to manage interest rate risk.

We have in place a $40.0 million line of credit facility that matures on January 1, 2005. All borrowings under the facility bear interest at floating rates based on the agent’s base rate or Eurodollar rates. We had $2.0 million outstanding under the line of credit facility at December 29, 2002. While changes in market interest rates would affect the cost of funds borrowed in the future, we believe that the effect, if any, of reasonably possible near-term changes in interest rates on our consolidated financial position, results of operations or cash flows would not be material.

Commodity Price Risk. Many of the food products and other operating essentials purchased by us are affected by commodity pricing and are, therefore, subject to price volatility caused by weather, production problems, delivery difficulties and other factors that are beyond our control. Our supplies and raw materials are available from several sources and we are not dependent upon any single source for these items. If any existing suppliers fail, or are unable to deliver in quantities required by us, we believe that there are sufficient other quality suppliers in the marketplace that our sources of supply can be replaced as necessary. At times we enter into purchase contracts of one year or less or purchase bulk quantities for future use of certain items in order to control commodity-pricing risks. Certain significant items that could be subject to price fluctuations are beef, pork, coffee, eggs, dairy products, wheat products and corn products. We believe that we will be able to pass through increased commodity costs by adjusting menu pricing in most cases. However, we believe that any changes in commodity pricing that cannot be offset by changes in menu pricing or other product delivery strategies would not be material.

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Item 8. Financial Statements and Supplementary Data.

THE RESTAURANT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands)

The accompanying notes are an integral part of these consolidated statements.

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THE RESTAURANT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)

The accompanying notes are an integral part of these consolidated balance sheets.

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THE RESTAURANT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER’S INVESTMENT
(In Thousands)

The accompanying notes are an integral part of these consolidated statements.

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THE RESTAURANT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)