SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

x[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Thirteen Weeks Ended ~~July~~October 2524, 2004

o[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 0-28930

ROADHOUSE GRILL, INC.

(Exact Name of Registrant as Specified in its Charter)

Florida		65-0367604
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
(State or Other Jurisdiction ofIncorporation or Organization)		(I.R.S. Employer Identification No.)

2703-A GATEWAY DRIVE, POMPANO BEACH, FL 33069

(Address of Principal Executive Offices and Zip Code)

Registrant’s telephone number, including area code (954) 957-2600

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


Title of Each Class		Name of Each Exchange on Which Registered


NONE		NOT APPLICABLE

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

COMMON STOCK, PAR VALUE $0.03 PER SHARE ~~(Title of Class)~~

(Title of Class)

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

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[X No] oNo [ ]

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x[X ] No o[ ]

The number of shares of the registrant’s common stock outstanding as of ~~September~~December 97, 2004 was 29,220,663.

DOCUMENTS INCORPORATED BY REFERENCE

None.

~~Table~~FORM of10-Q THIRTEEN ~~Contents~~WEEKS ENDED OCTOBER 24, 2004

FORM 10-Q THIRTEEN WEEKS ENDED JULY 25, 2004

INDEX

	~~Page~~		Page
PART 1 FINANCIAL INFORMATION
PART 1	FINANCIAL INFORMATION
Item 1. Financial Statements:
Item 1.	Financial Statements:
Condensed Consolidated Balance Sheets as of July 25, 2004 (unaudited) and April 25, 2004		4
	Condensed Consolidated Balance Sheets as of October 24, 2004 (unaudited) and April 25, 2004			4
Condensed Consolidated Statements of Operations for the Thirteen Weeks Ended July 25, 2004 and July 27, 2003 (unaudited)		5
	Condensed Consolidated Statements of Operations for the Thirteen and Twenty Six Weeks Ended October 24, 2004 and October 26, 2003 (unaudited)			5
Condensed Consolidated Statement of Changes in Shareholders’ Equity for the Thirteen Weeks Ended July 25, 2004 (unaudited)		6
	Condensed Consolidated Statement of Changes in Shareholders’ Equity for the Twenty Six Weeks Ended October 24, 2004 (unaudited)			6
Condensed Consolidated Statements of Cash Flows for the Thirteen Weeks Ended July 25, 2004 and July 27, 2003 (unaudited)		7
	Condensed Consolidated Statements of Cash Flows for the Twenty Six Weeks Ended October 24, 2004 and October 26, 2003 (unaudited)			7
~~Notes to Condensed Consolidated Financial Statements~~	Notes to Condensed Consolidated Financial Statements	8		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3. Quantitative and Qualitative Disclosures about Market Risk		38
Item 3.	Quantitative and Qualitative Disclosures about Market Risk			32
Item 4. Controls and Procedures		38
Item 4.	Controls and Procedures			32
PART II OTHER INFORMATION
PART II	OTHER INFORMATION
Item 1. Legal Proceedings		39
Item 1.	Legal Proceedings			34
Item 2. Changes in Securities and Use of Proceeds		39
Item 2.	Changes in Securities and Use of Proceeds			34
Item 3. Defaults Upon Senior Securities		39
Item 3.	Defaults Upon Senior Securities			34
Item 4. Submission of Matters to a Vote of Security Holders		39
Item 4.	Submission of Matters to a Vote of Security Holders			34
Item 5. Other Information		39
Item 5.	Other Information			34
Item 6. Exhibits and Reports on Form 8-K		40
Item 6.	Exhibits and Reports on Form 8-K			35
SIGNATURES		41		36
Section 302 Certification of CEO
Section 302 Certification of CFO
Section 906 Certification of CEO
Section 906 Certification of CFO

PART 1 FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ROADHOUSE GRILL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

~~JULY~~OCTOBER 2524, 2004 and APRIL 25, 2004

(Dollars in thousands, except per share data)

	July 25, 2004			April 25, 2004
	October 24, 2004			April 25, 2004
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,~~262~~328		$	1,181
Accounts receivable, net of allowance for doubtful accounts of $180 and $178 at July 25, 2004 and April 25, 2004, respectively		197			257
Accounts receivable, net of allowance for doubtful accounts of $185 and $178 at October 24, 2004 and April 25, 2004, respectively		245			257
Income tax receivable		69—			69
Inventory		1,~~010~~006			1,024
Prepaid expenses		1,~~204~~296			1,273
Total current assets		3,~~742~~875			3,804
Property & equipment, net of accumulated depreciation of $55,779 and $54,221 at July 25, 2004 and April 25, 2004, respectively		48,200			49,512
Property & equipment, net of accumulated depreciation of $51,318 and $54,221 at October 24, 2004 and April 25, 2004, respectively		29,076			49,512
Asset held for sale		800			800
Intangible assets, net of accumulated amortization of $827 and $816 at July 25, 2004 and April 25, 2004, respectively		1,835			1,846
Intangible assets, net of accumulated amortization of $838 and $816 at October 24, 2004 and April 25, 2004, respectively		1,824			1,846
Other assets		~~1,517~~910			1,352
Total assets	$	5636,~~094~~485		$	57,314
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	43,~~450~~344		$	4,557
Accrued expenses		76,~~989~~800			76,~~033~~710
Restructuring accrual		~~159~~157			159
Unearned revenue		1,~~913~~986			~~540~~863
Current portion of long-term debt		42,~~500~~211			4,448
Current portion of capital lease obligations		1,~~059~~640			1,119
Total current liabilities		2016,~~070~~138			17,856
Long-term debt		274,~~158~~481			28,218
Capital lease obligations		43,~~048~~794			4,279
Other non-current liabilities		2,195			2,153
Long-term portion of unearned revenue		2,606			225
Total liabilities		53,471			52,506
Other non-current liabilities		2,176			1,928
Total liabilities		29,195			52,506
Shareholders’ equity:
Common stock $0.03 par value. Authorized 35,000,000 shares; issued and outstanding 29,220,663 shares		877			877
Additional paid-in capital		55,972			55,953
Accumulated deficit		(5449,~~226~~559	)		(52,022	)
Total shareholders’ equity		27,~~623~~290			4,808
Total liabilities and shareholders’ equity	$	5636,~~094~~485		$	57,314

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

ROADHOUSE GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THIRTEEN AND TWENTY SIX WEEKS ENDED ~~JULY~~OCTOBER 2524, 2004 AND ~~JULY~~OCTOBER 2726, 2003

(~~Dollars~~Unaudited, dollars in thousands, except per share data)

	July 25, 2004			July 27, 2003
	Thirteen Weeks Ended						Twenty Six Weeks Ended
	(Unaudited)			(Unaudited)
	October 24, 2004			October 26, 2003			October 24, 2004			October 26, 2003
Total revenues	$	3230,~~871~~409		$	3633,~~225~~395		$	63,280		$	69,620
Operating expenses:
Cost of restaurant sales:
Food and beverage		1110,~~874~~816			1211,~~896~~686			22,690			24,582
Labor and benefits		10,~~703~~176			1110,~~794~~885			20,879			22,679
Occupancy and other		8,~~535~~370			8,~~159~~574			16,905			16,733
Pre-opening expenses		—			~~119~~1			—			120
Total cost of restaurant sales		3129,~~112~~362			3231,~~968~~146			60,474			64,114
Depreciation and amortization		1,~~600~~418			1,~~808~~816			3,018			3,624
General and administrative expenses		1,~~653~~598			1,~~672~~629			3,251			3,301
Total operating expenses		34,365			36,448
Restructuring charge		—			(96	)		—			(96	)
Operating loss		(1,494	)		(223	)
Total operating expenses		32,378			34,495			66,743			70,943
Other expense:
Operating loss		(1,969	)		(1,100	)		(3,463	)		(1,323	)
Loss on sale/disposal of fixed assets		(3	)		(6	)
Other income (expense):
Interest expense, net		(707	)		(843	)
(Loss) gain on sale/disposal of fixed assets		(5	)		50			(8	)		44
Total other expense		(710	)		(849	)
Gain on extinguishment of debt		7,102			—			7,102			—
Loss before income taxes		(2,204	)		(1,072	)
Interest expense, net		(461	)		(827	)		(1,168	)		(1,670	)
Income tax benefit		—			—
Total other income (expense)		6,636			(777	)		5,926			(1,626	)
Net loss	($	2,204	)	($	1,072	)
Income (loss) before income taxes		4,667			(1,877	)		2,463			(2,949	)
Basic net loss per common share:
Income tax		—			—			—			—
Net loss	($	0.08	)	($	0.04	)
Net income (loss)	$	4,667		$	(1,877	)	$	2,463		$	(2,949	)
Diluted net loss per common share:
Basic net income (loss) per common share:
Net loss	($	0.08	)	($	0.04	)
Net income	$	0.16		$	(0.06	)	$	0.08		$	(0.10	)
Weighted average common shares outstanding		29,220,663			29,220,663
Diluted net income (loss) per common share:
Weighted average common shares and share equivalents outstanding — assuming dilution		29,220,663			29,220,663
Net income (loss)	$	0.16		$	(0.06	)	$	0.08		$	(0.10	)
Weighted average common shares outstanding		29,220,663			29,220,663			29,220,663			29,220,663
Weighted average common shares and share equivalents outstanding — assuming dilution		29,220,663			29,220,663			29,220,663			29,220,663

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

ROADHOUSE GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE ~~THIRTEEN~~TWENTY SIX WEEKS ENDED ~~JULY~~OCTOBER 2524, 2004

(~~Dollars~~Unaudited, dollars in thousands, except share data)

	Common Stock				Additional Paid-in		Accumulated
					Additional Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance April 25, 2004		29,220,663	$	877	$	55,953	$	(52,022	)	$	4,808
Net loss		—		—		—		(2,204	)		(2,204	)
Net income		—		—		—		2,463			2,463
Vesting of stock options		—		—		19		—			19
Balance July 25, 2004		20,220,663	$	877	$	55,972	$	(54,226	)	$	2,623
Balance October 24, 2004		29,220,663	$	877	$	55,972	$	(49,559	)	$	7,290

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

ROADHOUSE GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~THIRTEEN~~TWENTY SIX WEEKS ENDED ~~JULY~~OCTOBER 2524, 2004 AND ~~JULY~~OCTOBER 2726, 2003

(Unaudited, dollars in thousands)

	July 25, 2004			July 27, 2003
	October 24, 2004			October 26, 2003
Cash flows from operating activities:
Net loss	$	(2,204	)	$	(1,072	)
Net income (loss)	$	2,463		$	(2,949	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization		13,~~600~~018			13,~~808~~624
Restructuring charges		—			(96	)
Stock option expense		19			—
Net loss on sale/disposal of fixed assets		3			6
Net loss (gain) on sale/disposal of fixed assets		8			(44	)
Cash used for reorganization items		(4	)		(46	)
Gain on extinguishment of debt		(7,102	)		—
Cash used for reorganization items		(6	)		(120	)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable		60			(57	)
Decrease in accounts receivable		12			21
Decrease in income tax receivable		—69			~~598~~663
Decrease (increase) in inventory		14			(49	)
Decrease in inventory		18			101
Decrease (increase) in prepaid expenses		69			(96	)
(Increase) decrease in prepaid expenses		(23	)		657
(Increase) in other assets		(186	)		(24	)
Increase in other assets		(83	)		(58	)
(Decrease) in accounts payable		(107	)		(226	)
(Decrease) increase in accounts payable		(1,213	)		115
(Decrease) in restructuring accrual		—			(15	)
Decrease in restructuring accrual		(2	)		(44	)
Increase in unearned revenue		1,~~369~~950			~~1,323~~676
Increase in accrued expenses		1,006			298
Increase (decrease) in accrued expenses		261			(511	)
Net cash provided by operating activities		1,639			2,448
Net cash (used in) provided by operating activities		(611	)		2,035
Cash flows from investing activities:
Purchases of property and equipment		(260	)		(783	)
Net proceeds from sales of property and equipment		20,574			626
Net cash used in investing activities		(260	)		(783	)
Purchases of property and equipment		(616	)		(1,121	)
Net cash provided by (used in) investing activities		19,958			(495	)
Cash flows from financing activities:
Repayment of long-term debt		(118,~~008~~444	)		(12,~~054~~703	)
Payments on capital lease obligations		(~~290~~756	)		(~~392~~754	)
Net cash used in financing activities		(119,~~298~~200	)		(13,~~446~~457	)
Increase in cash and cash equivalents		81			219
Increase (decrease) in cash and cash equivalents		147			(1,917	)
Cash and cash equivalents at beginning of period		1,181			2,956
Cash and cash equivalents at end of period	$	1,~~262~~328		$	31,~~175~~039
Supplementary disclosures:
Interest paid	$	~~663~~1,049		$	~~842~~1,668
Income taxes paid	$	—		$	25

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

ROADHOUSE GRILL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

Roadhouse Grill, Inc. (the “Company”) was incorporated under the laws of the state of Florida in 1992. The principal business of the Company is the operation of full service specialty restaurants. The Company has also granted franchises and licenses to operate restaurants under the “Roadhouse Grill” name. The Company opened its first restaurant in Pembroke Pines, Florida (the greater Ft. Lauderdale area) in 1993. As of ~~July~~October 2524, 2004, there were 69 company-owned Roadhouse Grill restaurants, 34 of which are located in Florida and the balance of which are located in Alabama, Arkansas, Georgia, Louisiana, Mississippi, New York, North Carolina, Ohio and South Carolina.

The Company operates on a fifty-two or fifty-three week fiscal year. Each fiscal quarter consists of thirteen weeks, except in the case of a fifty-three week year, in which case the fourth fiscal quarter consists of fourteen weeks.

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

See the Company’s Annual Report on Form 10-K for the fifty-two weeks ended April 25, 2004 for a summary of significant accounting policies.

(3) LIQUIDITY

The Company’s material financial commitments relate principally to its working capital requirements and its obligations to make operating and capital lease and term loan payments. As of ~~July~~October 2524, 2004, total minimum annual payments required under the Company’s note and lease obligations, including interest thereon, were $1716.27 million. ~~See~~(see the discussion below regarding the Company’s total contractual cash obligations). In addition, capital requirements relating to the opening of new restaurants have in the past been (and may in the future be) significant.

The Company did not open any new restaurants during the thirteen weeks ended ~~July~~October 2524, 2004. The Company opened one new restaurant during the ~~fiscal~~ fiscal year ended April 25, 2004 at a total cost of approximately $1.8 million, of ~~which~~ $0.4 million of which was expended during the fiscal year ended April 25, 2004. The Company does not currently have any additional Company-owned restaurants under development for fiscal year 2005. At this time, it is expected that the cash required to develop new restaurants beyond fiscal 2005, if any, will be funded from operations. Should cash from operations be insufficient for future expansion, and additional capital through debt and equity sources be unavailable, there can be no assurance that the Company will be able to open additional restaurants.

8 During the thirteen weeks ended October 24, 2004, the Company’s primary sources of working capital were proceeds from the sale and leaseback of eleven locations (see discussion below and Note 4),

~~Table of Contents~~8

DuringTable the thirteen weeks ended July 25, 2004, the Company’s primary sources of working capital were cash provided by operations and the sale of food and beverage credits (see Note 8). During the fifty-two weeks ended April 25, 2004, the Company also collected $0.6 million in federal income tax refunds. Further, the Company filed for approximately $0.1 million in additional federal and state income tax refunds during fiscal year 2004. These additional tax refunds were collected subsequent to July 25, 2004. Contents

Oncash ~~August 6,~~provided ~~2004,~~by ~~the~~operations ~~Company closed a transaction with Sovereign~~and ~~Roadhouse~~proceeds ~~LLC,~~from ~~a wholly-owned subsidiary of Sovereign Investment Company, (“Sovereign”) involving~~ the sale ~~and leaseback~~ of ~~eleven~~food ~~restaurant~~and ~~properties that~~beverage ~~were~~credits ~~previously~~(see ~~owned~~Note 9). ~~The~~During ~~sale price for~~ the ~~eleven properties was $21.8~~ ~~million.~~fifty-two ~~The~~weeks ~~Company~~ended ~~used $18.1~~April ~~million~~25, of2004, the ~~net~~Company ~~proceeds~~also ~~from~~collected ~~the property sale to pay expenses related to the transaction and to repay~~ $240.6 million of ~~secured~~in ~~debt,~~federal ~~which~~income ~~was~~tax ~~repaid~~refunds. atFurther, athe ~~discount~~Company ~~(resulting~~filed infor ~~a gain on extinguishment of debt of~~ approximately $7.0.1 million). ~~The~~in ~~remaining~~additional ~~net proceeds~~federal ~~from~~and ~~the~~state ~~sale~~income oftax ~~approximately~~refunds ~~$3.6 million~~during ~~will~~fiscal year be2004. ~~used~~These ~~for~~additional ~~working capital,~~tax ~~including~~refunds ~~new~~were ~~marketing~~collected ~~initiatives~~during ~~to promote~~ the ~~Company’s existing~~thirteen ~~restaurants.~~weeks ~~See~~ended ~~Note~~October 24, ~~9 for information regarding the sale/leaseback transaction~~2004.

~~The~~On ~~Company~~August 6, ~~has~~2004, ~~experienced~~the ~~significant~~Company ~~cash~~closed ~~flow~~a ~~problems~~transaction inwith ~~the past and~~Sovereign ~~may~~Roadhouse ~~suffer~~LLC, ~~from~~a ~~cash~~wholly-owned ~~flow~~subsidiary ~~problems~~of inSovereign ~~the~~Investment ~~future. The~~ Company ~~believes that~~, ~~its~~(“Sovereign”), ~~ability~~involving tothe ~~generate~~sale ~~cash~~and ~~from~~leaseback ~~operations~~of iseleven ~~dependent~~restaurant ~~upon,~~properties that ~~among~~were ~~other things,~~previously ~~demand~~owned. ~~for~~The ~~its~~sale ~~products,~~price afor ~~continued~~the ~~commitment~~eleven toproperties ~~providing~~was an$21.8 ~~excellent~~million. ~~dining~~The ~~experience~~Company ~~for~~used ~~its~~$18.3 million ~~customers,~~of the ~~development~~net ~~and implementation~~proceeds offrom ~~successful~~the ~~marketing~~property sale ~~strategies,~~to ~~the~~pay ~~cost~~expenses ~~levels~~related ofto ~~its various~~the ~~food~~transaction ~~products,~~ and ~~its continuing efforts~~ to ~~reduce~~repay ~~its~~$24.6 million ~~operating~~of ~~costs.~~secured ~~The~~debt, ~~Company~~which ~~implemented~~was ~~revenue~~repaid ~~enhancement~~at ~~programs~~a ~~including~~discount ~~the implementation~~(resulting ofin a ~~new~~gain ~~menu~~on extinguishment ~~with~~of ~~enhanced~~debt ~~menu~~of ~~items in June~~$7.1 ~~2003~~million). The ~~Company~~ ~~also~~remaining ~~has~~net ~~taken,~~proceeds ~~and~~from ~~continues~~the sale toof ~~take,~~approximately ~~steps to control its costs~~$3. ~~There~~5 million ~~can~~are bebeing noused ~~assurance~~for ~~that~~working ~~these~~capital ~~initiatives~~(see ~~will be effective in~~Note ~~generating~~4 ~~profits~~for orinformation ~~producing~~regarding ~~sufficient~~the ~~cash~~sale/leaseback ~~flows to fund operating requirements, including debt repayments and lease obligations~~transaction).

~~Capital~~The ~~requirements~~Company ~~relating~~has toexperienced ~~the~~significant ~~implementation~~cash offlow problems in the ~~Company’s~~past and ~~business~~may ~~plan~~suffer ~~have~~from ~~been~~cash ~~and~~flow ~~will~~problems ~~continue~~in tothe ~~be significant~~future. IfThe ~~cash~~Company ~~generated~~believes that ~~from~~its ~~the~~ability ~~Company’s~~to ~~operations~~generate ~~and~~cash ~~other~~from ~~possible~~operations ~~sources~~is ~~described~~dependent ~~above~~upon, ~~are~~among other ~~insufficient~~things, todemand ~~fund~~for ~~the~~its ~~Company’s~~products, ~~financial~~a ~~commitments~~continued ~~and~~commitment ~~working~~to ~~capital~~providing an ~~requirements~~excellent ~~(including~~dining ~~amounts~~experience ~~required~~for toits ~~support~~customers, ~~future~~the ~~growth)~~development and implementation of successful marketing strategies, the ~~Company~~cost levels of its ~~will~~various ~~have~~food products, and its continuing efforts to ~~obtain~~reduce ~~additional~~its ~~financing~~operating costs. ~~There~~The ~~can~~Company beimplemented norevenue ~~assurance~~enhancement ~~that~~programs including the ~~additional~~implementation ~~debt~~of ~~and/or~~a ~~equity~~new ~~financing~~menu ~~will~~with beenhanced ~~available~~menu onitems ~~terms~~in ~~acceptable~~June 2003. The toCompany ~~the~~also ~~Company~~has taken, orand atcontinues ~~all~~to take, steps to control its costs. There Incan ~~the~~be ~~event~~no ~~the~~assurance ~~Company~~that ~~were~~these toinitiatives will be ~~unable~~effective toin ~~secure~~generating ~~needed~~profits ~~additional~~or ~~financing,~~producing ~~the~~sufficient ~~Company~~cash ~~might~~flows ~~have~~ to ~~significantly~~fund operating ~~curtail~~requirements, ~~its~~including ~~operations~~debt repayments and lease obligations.

9 Capital requirements relating to the implementation of the Company’s business plan have been and will continue to be significant. If cash generated from the Company’s operations and other possible sources described above are insufficient to fund the Company’s financial commitments and working capital requirements (including amounts required to support future growth), the Company will have to obtain additional financing. There can be no assurance that additional debt and/or equity financing will be available on terms acceptable to the Company, or at all. In the event the Company were to be unable to secure needed additional financing, the Company might have to significantly curtail its operations.

~~Table of Contents~~9

TheTable following table summarizes the Company’s future contractual cash obligations for the remainder of fiscal year 2005, each of the next four fiscal years and thereafter as of July 25, 2004 (dollars in thousands). See Note 4 for further information regarding these obligations. Operating lease commitments include estimated common area maintenance expenses. Contents

	2005		2006		2007		2008		2009		Thereafter		Total
Long term debt:
Principal	$	3,440	$	4,683	$	4,688	$	4,034	$	3,008	$	11,805	$	31,658
Interest		1,738		2,045		1,730		1,405		1,154		1,252		9,324
Total		5,178		6,728		6,418		5,439		4,162		13,057		40,982
Capital lease debt:
Principal		821		1,054		1,089		415		331		1,397		5,107
Interest		290		343		267		220		190		418		1,728
Total		1,111		1,397		1,356		635		521		1,815		6,835
Operating leases		6,616		8,104		7,171		6,580		5,941		28,889		63,301
Other commitments		521		442		74		—		—		—		1,037
Total	$	13,426	$	16,671	$	15,019	$	12,654	$	10,624	$	43,761	$	112,155

The following table summarizes the Company’s future contractual cash obligations for the remainder of fiscal year 2005, each of the next four fiscal years and thereafter as of October 24, 2004 (dollars in thousands) (see Note 5 for further information regarding these obligations). Operating lease commitments include estimated common area maintenance expenses.

Other commitments represent minimum amounts due to certain vendors under contractual agreements. Amounts reflected above could change as additional commitments may be made, cancellation provisions may be exercised by the Company or by its creditors, or agreements may be modified as warranted by changes in business or operational needs. Amounts due under long term debt agreements may be accelerated to the extent the Company realizes excess cash flow as described in Note 4. As described above and in Note 9, on August 6, 2004, the Company executed a sale and leaseback of eleven of its restaurant properties. As a result of this transaction, the Company’s minimum annual note and lease obligations have been reduced by approximately $1.7 million for each of fiscal years 2005 through 2009 and total obligations thereafter have increased by approximately $33.8 million.


	2005		2006		2007		2008		2009		Thereafter		Total
Long term debt:
Principal	$	1,096	$	2,259	$	2,075	$	1,239	$	17	$	6	$	6,692
Interest		163		243		128		20		1		—		555

Total		1,259		2,502		2,203		1,259		18		6		7,247
Capital lease debt:
Principal		1,140		1,054		1,105		404		339		1,392		5,434
Interest		168		290		229		198		168		358		1,411

Total		1,308		1,344		1,334		602		507		1,750		6,845
Operating leases		5,765		10,833		9,958		9,421		8,835		75,779		120,591
Other commitments		347		442		74		—		—		—		863

Total	$	8,679	$	15,121	$	13,569	$	11,282	$	9,360	$	77,535	$	135,546

10 Other commitments represent minimum amounts due to certain vendors under contractual agreements. Amounts reflected above could change as additional commitments may be made, cancellation provisions may be exercised by the Company or by its creditors, or agreements may be modified as warranted by changes in business or operational needs. Amounts due under long term debt agreements may be accelerated to the extent the Company realizes excess cash flow as described in Note 5. As described above and in Note 4, on August 6, 2004, the Company executed a sale and leaseback of eleven of its restaurant properties. As a result of this transaction, the Company’s minimum annual note and lease obligations have been reduced by approximately $1.7 million for each of fiscal years 2005 through 2009 and total obligations thereafter have increased by approximately $33.8 million.

~~Table~~(4) ASSET ~~of Contents~~SALE/LEASEBACK

~~The~~On ~~following~~August 6, ~~table~~2004, ~~summarizes~~the onCompany closed a ~~pro~~transaction with Sovereign Roadhouse LLC, a wholly-~~forma~~owned ~~basis~~subsidiary ~~(as~~of ifSovereign, involving the sale- and leaseback ~~transaction~~of ~~had~~eleven ~~occurred~~restaurant onproperties ~~July 25,~~that ~~2004)~~were previously owned. The sale price for the ~~Company’s~~eleven ~~future~~properties was $21.8 million. The properties are being ~~contractual~~leased ~~cash~~under ~~obligations~~lease ~~for~~agreements ~~the~~that ~~remainder~~extend offor ~~fiscal~~20 years and include four five-year ~~2005,~~renewal ~~each~~options. The Company used approximately $18.3 million of the ~~next~~net ~~four~~proceeds ~~fiscal~~from ~~years~~the sale to pay expenses related to the transaction and ~~thereafter~~to repay as$24.6 million of ~~July 25~~secured debt, ~~2004~~which ~~(dollars~~was inrepaid at a discount (resulting ~~thousands~~in a gain on extinguishment of debt of $7.1 million). The net gain from the debt repayment is reflected in the Company’s Condensed Consolidated Statement of Operations for the thirteen weeks ended October 24,

	2005		2006		2007		2008		2009		Thereafter		Total
Long term debt:
Principal	$	1,743	$	2,254	$	2,069	$	1,228	$	—	$	—	$	7,294
Interest		254		241		126		18		—		—		639
Total		1,997		2,495		2,195		1,246		—		—		7,933
Capital lease debt:
Principal		821		1,054		1,089		415		331		1,397		5,107
Interest		290		343		267		220		190		418		1,728
Total		1,111		1,397		1,356		635		521		1,815		6,835
Operating leases		8,393		10,600		9,677		9,137		8,549		75,763		122,119
Other commitments		521		442		74		—		—		—		1,037
Total	$	12,022	$	14,934	$	13,302	$	11,018	$	9,070	$	77,578	$	137,924

11 Table of Contents

~~Table~~2004. The Company also realized a gain on the sale of ~~Contents~~the properties of approximately $1.7 million, which is recorded as unearned revenue in the accompanying Condensed Consolidated Balance Sheet and will be recorded as a reduction of occupancy and other expense over the life of the leases. The remaining net proceeds from the sale of approximately $3.5 million are being used for working capital.

(45) LONG-TERM DEBT

As of ~~July~~October 2524, 2004, the Company’s long-term debt was comprised of the following items (amounts in thousands):

	Non-current		Current
	Portion		Portion
Secured note due Finova Capital Corporation bearing interest at 9%. Monthly payments of $274 are based on a 11-year amortization with a balloon payment due after eight years in October 2010. Note is secured by various inventory, trademarks, property and equipment.	$	18,028	$	1,581
Unsecured note due various entities affiliated with CNL bearing interest at 5%. Monthly payments of $58 are due through October 2007.	$	1,019	$	612
Secured note due Finova Capital Corporation bearing interest at 5%. Monthly payments of $65 are due through October 2010. Note is secured by various property and equipment.		3,101		517
Unsecured note due Corsair Special Situations Fund (a member of the Company’s Board of Directors is affiliated with the Corsair Special Situations Fund) bearing interest at 5%. Monthly payments of $104 are due through October 2007.		2,370		1,099
Secured notes due U. S. Mortgage LLC primarily bearing interest at LIBOR plus 1.75%. Monthly payments of approximately $13 are due through 2010 on this note. Note is collateralized by one property.		684		136
Other unsecured notes due various parties bearing interest at 5%. Monthly payments of $40 are due through September 2009.		1,092		500
Unsecured note due various entities affiliated with CNL bearing interest at 5%. Monthly payments of $58 are due through October 2007.		1,175		604
Total long-term debt	$	4,481	$	2,211
Unsecured note due Corsair Special Situations Fund (a member of the Company’s Board of Directors is affiliated with the Corsair Special Situations Fund) bearing interest at 5%. Monthly payments of $104 are due through October 2007.		2,650		1,085
Other unsecured notes due various parties bearing interest at 5%. Monthly payments of $56 are due through October 2010.		1,520		577
Total long-term debt	$	27,158	$	4,500

The carrying amount of property and equipment and asset held for sale used as collateral was ~~approximately~~zero ~~$46.2 million~~ and approximately $47.4 million at ~~July~~October 2524, 2004 and April 25, 2004, respectively.

The debt agreements resulting from the Company’s 2002 bankruptcy proceedings may require prepayments of principal to the extent the Company generates excess cash flow from operations, as defined in the agreements.

12 On August 6, 2004, the Company executed a sale and leaseback transaction involving eleven of the restaurant properties that were previously owned. The net proceeds of the transaction were used, in part, to repay $24.6 million of debt, including all of the debt previously owed to Finova Capital Corporation and U. S. Mortgage LLC. See further discussion at Note 4.

~~Table of Contents~~11

InTable April 2004, the Company executed the credit agreement relating to the secured note due Finova Capital Corporation. Such note bears interest at 9% and matures in October 2010. In accordance with the terms of the credit agreement, the Company is required to comply with various financial and non-financial covenants including limitations on capital expenditures and new indebtedness. As of July 25, 2004, the Company was in compliance with the terms of the credit agreement. Contents

~~On August~~ (6, 2004, the Company executed a sale and leaseback transaction involving eleven of the restaurant properties that were previously owned. The net proceeds of the transaction were used, in part, to repay $24.6) ~~million~~COMMITMENTS ~~of debt,~~AND ~~including all of the debt previously owed to Finova Capital Corporation~~CONTINGENCIES ~~and U. S. Mortgage LLC described above. See further discussion at Note 9.~~

~~(5) COMMITMENTS~~CLASS ACTION SUIT AND ~~CONTINGENCIES~~SEC INFORMAL INVESTIGATION

~~CLASS~~ On ~~ACTION~~April 10, ~~SUIT~~2002, ~~AND~~a ~~SEC~~purported ~~INFORMAL~~class ~~INVESTIGATION~~action complaint alleging violations of federal securities laws was filed in the United States District Court for the Southern District of Florida against the Company, the then chairman of the Company’s board of directors, and the Company’s president and chief executive officer. This action (the “Action”) was styled: Sears v. Roadhouse Grill, Inc, et al., Case No. 02-CV-60493. On April 4, 2003, the court heard arguments on a motion to dismiss and dismissed the amended class action complaint. The plaintiffs filed a second amended class action complaint on May 5, 2003 naming only the individual defendants and not the Company. The individual defendants filed a motion to dismiss the second amended class action complaint on June 4, 2003, to which plaintiffs responded. The court heard oral arguments on the matter on October 30, 2003 and in March 2004 the second amended class action complaint was dismissed. No further actions have occurred in regards to this matter since the second amended class action complaint was dismissed and, as such, the Company believes that it will have no liability in regard to this matter.

OnGUARANTOR ~~April 10,~~OF ~~2002,~~EQUIPMENT ~~a purported class action complaint alleging violations~~LEASES ~~of federal securities laws was filed in the United States District Court for~~ ~~the Southern District of Florida against the Company, the then chairman of the~~ ~~Company’s board of directors, and the Company’s president and chief executive~~ officer. This action (the “Action”) was styled: Sears v. Roadhouse Grill, Inc, et al., Case No. 02-CV-60493. On April 4, 2003, the court heard arguments on a motion to dismiss and dismissed the amended class action complaint. The plaintiffs filed a second amended class action complaint on May 5, 2003 naming only the individual defendants and not the Company. The individual defendants filed a motion to dismiss the second amended class action complaint on June 4, 2003, to which plaintiffs responded. The court heard oral arguments on the matter on October 30, 2003 and in March 2004 the second amended class action complaint was dismissed. No further actions have occurred in regards to this matter since the second amended class action complaint was dismissed and, as such, the Company believes that it will have no liability in regard to this matter.

OnThe ~~August 3,~~Company ~~2001,~~is the ~~Securities~~guarantor ~~and~~of ~~Exchange~~equipment ~~Commission~~leases ~~(“SEC”)~~for ~~informed~~three restaurants that are owned by one of its franchisees, Roadhouse West G.P., two of which are currently closed. In addition, the Company believes that itother ~~intended~~parties tohave also ~~conduct~~guaranteed anthese ~~informal~~obligations. ~~investigation~~Roadhouse ~~regarding~~West ~~the restatement~~G.P. is currently in default of the ~~Company’s~~payment ~~audited~~terms ~~financial~~of ~~statements~~the ~~for~~operating ~~the~~leases, ~~fiscal~~and ~~years~~recently filed a petition ~~ended~~under ~~2000~~Chapter 11, ~~and~~which ~~1999~~has ~~and~~now been converted into a Chapter 7 proceeding. The balance of the ~~first~~remaining ~~three~~lease ~~fiscal~~payments ~~quarters~~due was approximately $1.0 million as of ~~fiscal~~October 24, ~~2001~~2004. The ~~Company~~ ~~cooperated~~leases ~~fully~~are ~~with~~collateralized by the ~~SEC~~leased equipment and, atcertain ~~this~~leasehold ~~time,~~improvements. The Company cannot predict the outcome of the proceedings but believes that ~~this~~any potential liability will be mitigated by ~~matter~~the factors described above and, accordingly, has ~~been~~provided ~~concluded~~no reserve for any possible obligations that may arise relating to these proceedings.

~~GUARANTOR~~OTHER ~~OF EQUIPMENT LEASES~~AGREEMENTS

The Company is ~~the~~a ~~guarantor~~party ofto ~~equipment~~various ~~leases~~agreements ~~for~~relating ~~three~~to ~~restaurants~~services ~~that~~performed ~~are~~at ~~owned by one of~~ its ~~franchisees, Roadhouse West G~~restaurants.~~P.,~~ ~~two~~Such ofagreements ~~which~~ are ~~currently~~ ~~closed.~~generally Infor ~~addition,~~periods ~~the~~of ~~Company believes that other parties have~~one ~~also~~year ~~guaranteed~~or ~~these~~less ~~obligations.~~and ~~Roadhouse~~none ~~West G.P. is currently in default~~ of ~~the~~these ~~payment terms of the operating leases~~agreements, ~~and recently filed a petition under Chapter 11~~individually, ~~which~~require ~~has now been converted into a Chapter 7 proceeding. The balance of the remaining lease~~ payments ~~due was approximately $1.0 million~~that aswould ofbe ~~July 25,~~material ~~2004.~~to ~~The leases are collateralized by~~ the ~~leased equipment and certain leasehold improvements. The~~ Company’s ~~cannot~~financial ~~predict~~position ~~the~~or ~~outcome~~results of the proceedings but believes that any potential liability will be mitigated by the factors described above and, accordingly, has provided no reserve for any possible obligations that may arise relating to these proceedingsoperations.

13OTHER

~~Table~~ The Company is a party to certain legal proceedings arising in the ordinary course of ~~Contents~~business. While it is not possible to predict or determine the outcome of any of these proceedings, the Company does not believe that any liability resulting from these proceedings will have a material adverse effect on the Company’s financial position, results of operations or its business.

~~OTHER AGREEMENTS~~12

TheTable Company is a party to various agreements relating to services performed at its restaurants. Such agreements are generally for periods of one year or less and none of these agreements, individually, require payments that would be material to the Company’s financial position or results of operations. Contents

~~OTHER~~(7) CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

~~The~~Please ~~Company~~see isthe aNotes ~~party~~ to ~~certain~~Consolidated ~~legal~~Financial ~~proceedings~~Statements ~~arising~~ in the Company’s ~~ordinary~~Form ~~course~~10-K offor ~~business. While it is not possible to predict or determine~~ the ~~outcome~~fiscal ofyear ~~any~~ended ~~of these proceedings~~April 25, ~~the~~2004 ~~Company~~for ~~does not believe that any liability resulting from these proceedings will have~~ a ~~material~~full ~~adverse~~discussion ~~effect on~~of the Company’s ~~financial~~related ~~position,~~party ~~results of operations or its business~~transactions.

(68) ~~CERTAIN~~NET ~~RELATIONSHIPS~~INCOME ~~AND~~(LOSS) PER ~~RELATED~~COMMON ~~TRANSACTIONS~~SHARE (“EPS”)

~~Please~~Basic ~~see~~net ~~the~~income ~~Notes~~(loss) per tocommon ~~Condensed~~share ~~Consolidated~~equals ~~Financial~~net ~~Statements~~income in(loss) divided by the ~~Company’s~~ ~~Form~~weighted ~~10-K~~average ~~for~~shares outstanding during the ~~fiscal~~period. ~~year~~The ~~ended~~computation of ~~April 25,~~diluted ~~2004~~net ~~for~~loss aper ~~full~~share includes dilutive common stock equivalents in the ~~discussion~~weighted ofaverage shares outstanding. The reconciliation between the computations ~~Company’s~~is ~~related~~as ~~party~~follows ~~transactions.~~(dollars in thousands, except per share data):

(7) NET LOSS PER COMMON SHARE (“EPS”)


	Thirteen Weeks Ended						Twenty Six Weeks Ended
	October 24, 2004						October 24, 2004
	Net Income		Shares		Amount		Net Income		Shares		Amount
BASIC EPS
Net income available to common shareholders	$	4,667		29,220,663	$	0.16	$	2,463		29,220,663	$	0.08
EFFECT OF DILUTIVE SECURITIES
Stock options		—		—		—		—		—		—

DILUTED EPS	$	4,667		29,220,663	$	0.16	$	2,463		29,220,663	$	0.08

~~Basic~~Options ~~net~~to ~~loss~~purchase ~~per~~1,395,000 shares of common ~~share~~stock ~~equals~~at ~~net~~a ~~loss~~weighted ~~divided~~average exercise byprice ~~the~~of ~~weighted average~~$0.36 ~~shares~~per share were outstanding during the ~~period.~~thirteen ~~The~~and twenty ~~computation~~six ofweeks ~~diluted~~ended ~~net loss~~October 24, ~~per~~2004, ~~share~~but ~~includes~~were ~~dilutive~~not ~~common~~included ~~stock equivalents~~ in the ~~weighted~~ ~~average~~computation ~~shares~~of ~~outstanding.~~diluted ~~The~~EPS ~~reconciliation~~because ~~between~~ the ~~computations~~options’ isexercise asprice was greater than ~~follows~~the ~~(dollars~~average inmarket ~~thousands,~~price ~~except~~of ~~per~~the ~~share~~common ~~data):~~shares.

	Thirteen Weeks Ended July 25, 2004
	Thirteen Weeks Ended								Twenty Six Weeks Ended
	Net Loss			Shares		Amount
	October 26, 2003								October 26, 2003
BASIC EPS
	Net Loss			Shares		Amount			Net Loss			Shares		Amount
Net loss available to common shareholders	$	(2,204	)		29,220,663	$	(0.08	)
BASIC EPS
EFFECT OF DILUTIVE SECURITIES
Net loss available to common shareholders	$	(1,877	)		29,220,663	$	(0.06	)	$	(2,949	)		29,220,663	$	(0.10	)
Stock options		—			—		—
EFFECT OF DILLUTIVE SECURITIES
DILUTED EPS	$	(2,204	)		29,220,663	$	(0.08	)
Stock options		—			—		—			—			—		—
DILUTED EPS	$	(1,877	)		29,220,663	$	(0.06	)	$	(2,949	)		29,220,663	$	(0.10	)

~~Options to purchase 1,395,000 shares of common stock at a weighted average~~13 exercise price of $0.36 per share were outstanding during the thirteen weeks ended July 25, 2004, but were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares.

14 Table of Contents

~~Table~~ No options to purchase shares of ~~Contents~~common stock were outstanding during the thirteen and twenty six weeks ended October 26, 2003.

	Thirteen Weeks Ended July 27, 2003
	Net Loss			Shares		Amount
BASIC EPS
Net loss available to common shareholders	$	(1,072	)		29,220,663	$	(0.04	)
EFFECT OF DILUTIVE SECURITIES
Stock options		—			—		—
DILUTED EPS	$	(1,072	)		29,220,663	$	(0.04	)

(9) ADVANCE SALE OF FOOD AND BEVERAGE CREDITS

NoIn ~~options~~June 2003, tothe ~~purchase~~Company ~~shares~~entered into an agreement with a loyalty and rewards company (the “Rewards Company”) involving the discounted advance sale of ~~common~~food ~~stock~~and ~~were~~beverage ~~outstanding~~credits to be used at its restaurants. As part of the agreement, during fiscal 2004, the Company received $2.3 million in exchange for the credits, which was recorded in the Condensed Consolidated Balance Sheet as unearned revenue. The amount of the discount provided to the Rewards Company relating to the sale of food and beverage credits is recognized as advertising expense (which is included in occupancy and other) in the Condensed Consolidated Statement of Operations as the credits are used at the restaurants. Throughout the term of the agreement, the Company and the Rewards Company share in the proceeds of credit card transactions resulting from use of the credits by members of the Rewards Company. As of October 24, 2004, all food and beverage credits sold to the Rewards Company under the original agreement have been used. In June 2004, the Company renewed the agreement with the Rewards Company. Under the current agreement, the Company expects to receive $3.0 million in exchange for the sale of additional food and beverage credits, of which $1.5 million was received upon execution of the renewed agreement, $1.0 million was received during the thirteen weeks ended ~~July~~October 24, 2004 and $0.5 27million is expected to be received in fiscal year 2006. As of October 24, ~~2003~~2004 and April 25, 2004, the unearned revenue related to this program was $2.2 million and $0.4 million, respectively.

(810) ~~ADVANCE~~IMPACT ~~SALE~~ OF ~~FOOD AND BEVERAGE CREDITS~~HURRICANES

In ~~June~~August and September ~~2003~~2004, a number of the Company’s ~~entered~~restaurants ~~into~~were impacted anby ~~agreement~~Hurricanes ~~with~~Charley, aFrances, ~~loyalty~~Ivan and ~~rewards~~ ~~company~~Jeanne ~~(the~~which ~~“Rewards~~initially ~~Company”) involving~~ hit the ~~discounted~~state ~~advance sale~~ of ~~food~~Florida and ~~beverage~~also ~~credits~~impacted tocertain beother ~~used~~southern atstates. ~~its~~The hurricanes ~~restaurants.~~caused Asdamage ~~part~~to certain of the Company’s properties and resulted in ~~agreement,~~the ~~during~~temporary ~~fiscal~~closure ~~2004,~~of a number of the Company’s ~~received $2~~restaurants.~~3 million~~ inThe ~~exchange~~hurricanes ~~for~~also impacted customers during the ~~credits,~~six weeks over which isthe ~~recorded~~storms inhit, with their focus being on the ~~Condensed~~storms ~~Consolidated~~(and ~~Balance~~where ~~Sheet as~~they ~~unearned~~might ~~revenue.~~hit) ~~The~~and ~~amount~~not ofon ~~the~~normal living, ~~discount~~including ~~provided~~casual todining. ~~the~~It ~~Rewards Company~~is ~~relating~~not possible to measure the ~~sale~~full impact of ~~food~~the hurricanes and ~~beverage~~their ~~credits~~effect ison ~~recognized~~customers ~~as advertising~~who ~~expense~~were ~~(which~~preparing isfor ~~included~~storms, restoring indamaged ~~occupancy~~property and ~~other)~~recovering infinancially ~~the~~from ~~Condensed Consolidated~~storm ~~Statement~~related ofcosts. However, ~~Operations~~in astotal, the ~~credits~~Company ~~are~~lost ~~used~~an ataggregate ~~the~~of 192 days of restaurant ~~restaurants.~~sales ~~Throughout~~due ~~the~~to ~~term~~restaurant ofclosures ~~the~~resulting ~~agreement,~~from the ~~Company~~hurricanes ~~and~~during the ~~Rewards~~ ~~Company~~thirteen ~~share~~weeks inended ~~the~~October 24, ~~proceeds~~2004. ofThe ~~credit~~total ~~card~~decline ~~transactions~~in ~~resulting~~sales from ~~use of~~ the prior ~~credits~~year byfor ~~members~~those ofdays impacted by the ~~Rewards~~hurricanes ~~Company~~was approximately $1.3 million. ~~The~~Excluding ~~Company~~these ~~believes~~days for those restaurants that were impacted by the ~~members~~hurricanes, ofsame restaurant sales for the ~~Rewards~~thirteen ~~Company~~weeks ~~were~~ended ~~predominantly~~October 24, ~~not~~2004 were ~~current~~3.8% ~~customers~~less ofthan the ~~Company’s~~ ~~restaurants~~comparable atperiod ~~inception.~~in Infiscal ~~June~~ 2004. Also, ~~the~~as ~~Company~~a ~~renewed~~result ~~the~~of ~~agreement~~these ~~with~~hurricanes, the ~~Rewards~~ Company. ~~Under~~incurred ~~the~~losses ~~current~~including ~~agreement~~property damage, ~~the~~lost profits ~~Company~~from restaurant closures, lost food product, and additional expense ~~expects~~regarding tocleanup ~~receive~~and $3other items.~~0 million~~ inThe ~~exchange~~Company ~~for~~has ~~the~~filed ~~sale~~insurance ofclaims under ~~additional~~its ~~food~~property ~~and~~insurance policy for these losses. The insurance policy ~~beverage~~includes ~~credits~~deductibles, of which ~~$1.5 million~~will ~~was~~be ~~received~~applied ~~upon~~to ~~execution~~each ofhurricane. ~~the~~These insurance ~~renewed~~claims ~~agreement~~are currently being processed. As of ~~July 25,~~the ~~2004~~date ~~and~~of ~~April 25~~this filing, ~~2004~~ the ~~unearned revenue~~net ~~related~~amount toof ~~this~~proceeds ~~program~~that ~~was~~will ~~$1.5 million~~ultimately ~~and~~be ~~$0.4 million,~~received ~~respectively~~from the Company’s insurance carrier has not been determined.

~~(9) ASSET SALE/LEASEBACK~~14

OnTable August 6, 2004, the Company closed a transaction with Sovereign Roadhouse LLC, a wholly-owned subsidiary of Sovereign, involving the sale and leaseback of eleven restaurant properties that were previously owned. The sale price for the eleven properties was $21.8 million. The properties are being leased from Sovereign under lease agreements that extend for 20 years and include four five-year renewal options. The Company used approximately $18.1 million of the net proceeds from the sale to pay expenses related to the transaction and to repay $24.6 million of secured debt, which was repaid at a discount (resulting in a gain on extinguishment of debt of approximately $7.0 million). The net gain from the debt Contents

repayment will be reflected in the Company’s condensed consolidated financial statements in the second quarter of fiscal 2005. The Company also realized a gain on the sale of the properties of approximately $1.5 million, which will be recorded as a reduction of occupancy and other expense over the life of the leases. The remaining net proceeds from the sale of approximately $3.6 million will be used for working capital, including new marketing initiatives to promote the Company’s existing restaurants.

The following represents a proforma presentation of the Company’s condensed consolidated balance sheet as of July 25, 2004 as if the asset sale and leaseback had been completed as of July 25, 2004 (dollars in thousands):

	Unaudited			Unaudited					Unaudited
	Balance, as			Pro forma					Balance, Pro
	Reported			Adjustments					forma
Assets
Cash and cash equivalents	$	1,262		$	3,608		(1	)	$	4,870
Accounts receivable		197								197
Income tax receivable		69								69
Inventory		1,010								1,010
Prepaid expenses		1,204								1,204
Total current assets		3,742			3,608					7,350
Property and equipment		48,200			(19,012	)	(2	)		29,188
Asset held for sale		800								800
Other intangible assets		1,835								1,835
Other assets		1,517			(504	)	(3	)		1,013
Total assets	$	56,094		$	(15,908	)			$	40,186
Liabilities and Shareholders’Equity
Accounts payable	$	4,450							$	4,450
Accrued expenses		7,989								7,989
Restructuring accrual		159								159
Unearned revenue		1,913		$	76		(4	)		1,989
Current portion of long-term debt		4,500			(2,306	)	(5	)		2,194
Current portion of capital leases		1,059								1,059
Total current liabilities		20,070			(2,230	)				17,840
Long-term debt		27,158			(22,094	)	(5	)		5,064
Capital lease obligations		4,048								4,048
Other non-current liabilities		2,195			1,443		(4	)		3,638
Total liabilities		53,471			(22,881	)				30,590
Common stock		877								877
Additional paid-in capital		55,972								55,972
Accumulated deficit		(54,226	)		6,973		(6	)		(47,253	)
Total shareholders’ equity		2,623			6,973					9,596
Total liabilities and equity	$	56,094		$	(15,908	)			$	40,186

Notes to pro forma balance sheet:

	(1)		Reflects the net cash proceeds received from the sale of the 11 properties, comprised of gross proceeds of $21,750, net of debt prepayments of $16,923 and transaction expenses of $1,219.
	(2)		Reflects the book value of the 11 sold properties as of July 25, 2004.
	(3)		Represents the unamortized capitalized loan costs as of July 25, 2004 relating to the debt that was paid from the net proceeds of the sale that will be written-off in the second quarter of fiscal year 2005.
	(4)		Represents the current and non-current portions of the deferred gain that would have been recognized as of July 25, 2004 if the sale/leaseback had occurred at that date. The deferred gain from the sale will be recorded as a reduction of occupancy and other expense over the 20-year term of the lease.
	(5)		Represents the current and non-current portions as of July 25, 2004 of the debt that was paid from the net proceeds of the sale.
	(6)		Represents the gain that would have been recognized as of July 25, 2004 from the discounted prepayment of debt. This gain will be recognized in the second quarter of fiscal year 2005.

The following represents a proforma presentation of the Company’s condensed consolidated statements of operations for the thirteen weeks ended July 25, 2004 as if the asset sale and leaseback had been completed as of the beginning of the period (dollars in thousands):

	Unaudited			Unaudited					Unaudited
	Balance, as			Pro forma					Balance, Pro
	Reported			Adjustments					forma
Total revenues	$	32,871							$	32,871
Restaurant operating expenses:
Cost of restaurant sales:
Food and beverage		11,874								11,874
Labor and benefits		10,703								10,703
Occupancy and other		8,535		$	550		(1	)		9,085
Pre-opening expenses		—								—
Total cost of restaurant sales		31,112			550					31,662
Depreciation and amortization		1,600			(201	)	(2	)		1,399
General and administrative expenses		1,653								1,653
Total operating expenses		34,365			349					34,714
Operating loss		(1,494	)		(349	)				(1,843	)
Other expense		(710	)		510		(3	)		(200	)
Gain on extinguishment of debt		—					(4	)		—
Loss before income taxes		(2,204	)		161					(2,043	)
Income tax		—					(5	)		—
Net loss	($	2,204	)	$	161				($	2,043	)

Notes to pro forma statement of operations:

(1)		Reflects the operating lease expense that would have been recognized during the thirteen weeks ended July 25, 2004 if the sale/leaseback had been executed at the beginning of the period.
(2)		Represents the depreciation expense relating to the sold properties of $181 and amortization expense relating to the capitalized loan costs associated with the prepaid debt of $20 that was recognized during the thirteen weeks ended July 25, 2004 that would not have been recognized if the transaction had been executed at the beginning of the period.
(3)		Represents the interest expense relating to the prepaid debt that would not have been incurred if the transaction had been executed at the beginning of the thirteen weeks ended July 25, 2004.
(4)		Note that as a result of the discounted payoff of debt from the use of a portion of the net proceeds of the asset sale, the Company will recognize a gain on extinguishment of debt of approximately $7.0 million. This gain will be recognized in the second quarter of fiscal 2005.
(5)		Note that no federal or state income taxes will be incurred directly as a result of the asset sale due to the use of net operating loss carryforwards. The Company may incur federal alternative minimum tax (“AMT”) in fiscal 2005 based upon the total taxable income earned including the gain on the asset sale. However, due to the use of AMT loss carryforwards, AMT, if any, would be expected to be minor.

(10) SUBSEQUENT EVENTS

In August and September 2004, a number of the Company’s restaurants were impacted by Hurricanes Charley and Frances, which initially hit the state of Florida and also impacted certain other southern states. The impact of these hurricanes resulted in damage to several of the Company’s properties and the temporary closure of a number of the Company’s restaurants. However, all of the Company’s restaurants are currently open and operating. The amount of damage sustained by the properties and business lost from interruption of operations has not yet been determined. However, management believes that these losses will be covered under the Company’s property insurance policy, which includes business interruption insurance coverage, subject to the policy deductible of approximately $100,000 per event.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

IMPACT OF HURRICANES

In August and September 2004, a number of the Company’s restaurants were impacted by Hurricanes Charley, Frances, Ivan and Jeanne which initially hit the state of Florida and also impacted certain other southern states. The hurricanes caused damage to certain of the Company’s properties and resulted in the temporary closure of a number of the Company’s restaurants. The hurricanes also impacted customers during the six weeks over which the storms hit, with their focus being on the storms (and where they might hit) and not on normal living, including casual dining. It is not possible to measure the full impact of the hurricanes and their effect on customers who were preparing for storms, restoring damaged property and recovering financially from storm related costs. However, in total, the Company lost an aggregate of 192 days of restaurant sales due to restaurant closures resulting from the hurricanes during the thirteen weeks ended October 24, 2004. The total decline in sales from the prior year for those days impacted by the hurricanes was approximately $1.3 million. Excluding these days for those restaurants that were impacted by the hurricanes, same restaurant sales for the thirteen weeks ended October 24, 2004 were 3.8% less than the comparable period in fiscal 2004. Also, as a result of these hurricanes, the Company incurred losses including property damage, lost profits from restaurant closures, lost food product, and additional expense regarding cleanup and other items. The Company has filed insurance claims under its property insurance policy for these losses. The insurance policy includes deductibles, which will be applied to each hurricane. These insurance claims are currently being processed. As of the date of this filing, the net amount of proceeds that will ultimately be received from the Company’s insurance carrier has not been determined.

FORWARD LOOKING STATEMENTS

This report contains “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements concern expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Statements preceded by, followed by, or that include the words “believes,” “expects,” “anticipates,” or similar expressions are generally considered to be forward-looking statements. Specifically, this report contains forward-looking statements regarding, among other matters, our strategies, plans, objectives, expectations, future market position, operations, cash flow, margins, revenue, profitability, restaurant-level economics, liquidity and capital resources.

Forward looking statements contained in this report are not guarantees of future performance and involve certain risks, uncertainties and assumptions, all of which are difficult to predict. We wish to caution readers that certain important factors have affected in the past and may affect in the future our actual results, and such factors could cause actual results to differ significantly from those expressed or implied in any forward looking statement contained in this report. Important factors that could cause actual results to differ materially from those expressed or implied by the forward looking statements in this report include, but are not limited to, the following:

• Our having sufficient working capital to meet our future operating and capital requirements; • Our ability to comply with the terms of our debt instruments, operating leases and capital leases; • Our ability to increase our sales and manage our labor costs, food costs, other restaurant costs and corporate expenses, and our ability to operate our business on a cash flow positive and profitable basis; • Our ability to acquire an adequate supply of food products at acceptable prices, and events that affect the availability and pricing of food products (such as instances of mad cow disease); • Our ability to recruit, train and retain qualified management personnel and to obtain a sufficient number of qualified restaurant employees; • Trends in consumer preferences, tastes and eating habits and competition for consumer dollars, both from restaurants similar to our restaurants and from restaurants generally; • The level of competition from restaurants that operate in the markets in which we operate; • U. S. domestic economic conditions and the impact of international conflicts on domestic economic conditions; • The impact of seasonality on our business, resulting from having 34 of our 69 Company-owned restaurants in Florida; • Our exposure to the impact of hurricanes and other tropical storms as a result of the heavy concentration of our restaurants in the southeastern United States; • Our ability to maintain financial and accounting controls, management controls, and adequate reporting systems and procedures; • Increases in interest rates; • The future relisting of our common stock on a recognized securities market and the development of a market for our common stock; • Our ability to develop our restaurant concept and business beyond our existing configuration of restaurants, including the availability of financing to support future growth, our ability to find suitable locations for new restaurants and the costs associated with opening new restaurants; and • To the extent that we decide to further franchise our restaurant concept, our ability to locate suitable franchisees in markets which we do not serve (both nationally and internationally) and the ability of those franchisees to develop, open and successfully operate restaurants in those markets.

• U. S. domestic economic conditions and the impact of international conflicts on domestic economic conditions;

• The impact of seasonality on our business, resulting from having more than half of our restaurants in Florida;

• Our ability to maintain financial and accounting controls, management controls, and adequate reporting systems and procedures;

• Increases in interest rates;

• The future relisting of our common stock on a recognized securities market and the development of a market for our common stock;

• Our ability to develop our restaurant concept and business beyond our existing configuration of restaurants, including the availability of financing to support future growth, our ability to find suitable locations for new restaurants and the costs associated with opening new restaurants; and

• To the extent that we decide to further franchise our restaurant concept, our ability to locate suitable franchisees in markets which we do not serve (both nationally and internationally) and the ability of those franchisees to develop, open and successfully operate restaurants in those markets.

The forward looking statements contained in this report reflect our current view about future events and are subject to risks, uncertainties and assumptions. The important factors described above, as well as the factors described elsewhere in this report, could cause the assumptions underlying our forward looking statements to be incorrect and thereby cause our actual results to differ materially from those expressed in or implied by our forward looking statements. We undertake no obligation to revise any of the forward looking statements contained in this report, which speak only as of the date hereof. Readers of this report are therefore cautioned not to place undue reliance on these forward looking statements.

~~GENERAL~~16

We operate, franchise and license high-quality full-service casual dining restaurants under the name “Roadhouse Grill.” As of July 25, 2004, there were 69 company-owned Roadhouse Grill restaurants, 34 of which are located in Florida and the balance of which are located in Alabama, Arkansas, Georgia, Louisiana, Mississippi, New York, North Carolina, Ohio, and South Carolina. We also have 11 franchised or licensed restaurants.

GENERAL

We operate, franchise and license high-quality full-service casual dining restaurants under the name “Roadhouse Grill.” As of October 24, 2004, there were 69 company-owned Roadhouse Grill restaurants, 34 of which are located in Florida and the balance of which are located in Alabama, Arkansas, Georgia, Louisiana, Mississippi, New York, North Carolina, Ohio, and South Carolina. We also have 11 franchised or licensed restaurants.

During the last few years, our restaurant business has been hampered by heavy debt, which caused, in part, our 2002 Chapter 11 proceeding. We have also been unable to increase restaurant sales due to economic conditions, our lack of funding to adequately market our restaurants and a very competitive restaurant market. Further, we have experienced food cost increases arising from adverse market conditions, only a portion of which we have been able to pass on to our customers. All of these factors have caused us to report significant net losses during the last few years.

During the last year, we have revamped our menu, made additional investments in the recruiting and training of our restaurant managers and directors of operations, entered into a long-term program with a loyalty and rewards company that we believe will help to market our restaurants, taken steps to reduce our costs and attempted to pass a portion of the increased food costs on to our customers, all in an effort to return our company to profitability. There can be no assurance that these efforts will produce their desired results.

~~RECENT EVENTS~~SALE/LEASEBACK

On August 6, 2004, wethe Company closed a transaction with Sovereign Roadhouse LLC, a wholly-owned subsidiary of Sovereign, involving the sale and leaseback of eleven restaurant properties that were previously owned. The sale price for the eleven properties was $21.8 million. The properties are being leased ~~from Sovereign~~ under lease agreements that extend for 20 years and include four five-year renewal options. WeThe Company used approximately $18.13 million of the ~~net~~ net proceeds from the sale to pay expenses related to the transaction and to ~~repay~~ ~~approximately~~repay $24.6 million of secured debt, which was repaid at a discount (resulting in a gain on extinguishment of debt of ~~approximately~~ $7.01 million). The net gain from the debt repayment ~~will~~is be reflected in ~~our~~the ~~condensed~~Company’s accompanying Condensed ~~consolidated~~Consolidated ~~financial~~Statement ~~statements~~of inOperations for the ~~second~~thirteen ~~quarter~~weeks ofended ~~fiscal 2005~~October 24, 2004. We The Company also realized a gain on the sale of the properties of approximately $1.5 7 million, which is recorded as unearned revenue in the accompanying Condensed Consolidated Balance Sheet and will be recorded as a reduction of occupancy and other expense over the life of the leases. The remaining net proceeds from the sale of approximately $3.65 million ~~will~~are be being used for working capital~~, including new marketing initiatives to promote our existing restaurants~~. ~~See Note 9 of Notes~~ ~~to Condensed Consolidated Financial Statements.~~

OVERVIEW

Our revenues are derived primarily from the sale of food and beverages. During each of the thirteen weeks ended ~~July~~October 2524, 2004 and October 26, 2003, restaurant sales generated from lunch and dinner amounted to approximately 27% and 73% of restaurant sales, ~~respectively,~~ ~~as compared to 26% and 74%,~~ respectively~~, for the thirteen weeks ended July 27, 2003~~. Restaurant sales of food and beverages accounted for approximately 91% and 9%, respectively, of total restaurant sales in ~~the~~each ~~first fiscal quarter~~ of ~~2005 and 90% and 10%, respectively, in~~ the ~~first~~second fiscal ~~quarter~~quarters of ~~2004.~~2005 ~~Franchise~~ and ~~management fees during~~2004. ~~the~~Franchise ~~thirteen weeks ended July 25, 2004~~ and ~~July 27, 2003 accounted for less~~ ~~than 1% of our revenues.~~

2217

management fees during the thirteen weeks ended October 24, 2004 and October 26, 2003 accounted for less than 1% of our revenues.

Restaurant operating expenses include food and beverage, labor, direct operating and occupancy costs. Direct operating costs consist primarily of costs of expendable supplies, marketing and advertising expense, maintenance, utilities and restaurant general and administrative expenses. Occupancy costs include rent, real estate and personal property taxes and property insurance. Certain elements of our restaurant operating expenses, including direct operating and occupancy costs and to a lesser extent labor costs, are relatively fixed.

Of our 69 currently operating company-owned restaurants, one was opened in June 2003. Further, we closed one restaurant as of July 27, 2003 in conjunction with the sale of the related leasehold and we sold a second restaurant in April 2004. No additional company-owned restaurants are currently expected to be opened in fiscal year 2005.

CRITICAL ACCOUNTING POLICIES

Our accounting policies are more fully described in our Annual Report on Form 10-K for the fifty-two weeks ended April 25, 2004. As disclosed therein, the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of our Condensed Consolidated Financial Statements.

PROPERTY AND EQUIPMENT

We account for long-lived assets in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We regularly review the performance of our individual restaurants to identify possible under performing operations that should be assessed for possible impairments of long-lived assets. In that regard, we recorded significant impairment charges during fiscal 2004 and depending on the success of our efforts to increase sales, we may take additional charges in the future if our sales at several of our restaurants do not increase to forecasted levels in future periods. As part of this analysis, management considers factors that have in the past and may continue in the future to impact operating results. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

2318

INTANGIBLE ASSETS

We account for intangible assets in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”. As of ~~July~~October 2524, 2004, we had unamortized goodwill in the amount of $1.5 million and unamortized identifiable intangible assets in the amount of $0.3 million. In accordance with SFAS No. 142, goodwill, which relates to the prior acquisition of two individual restaurant operations, is subject to an annual impairment test based on its fair value and no amortization of goodwill is recorded. As of October 2624, ~~2003~~2004, the date on which we completed our last annual goodwill impairment test, we determined that we had no impairment of goodwill. We will continue to assess the value of our goodwill in ~~fiscal 2005 and~~ future periods in accordance with applicable accounting rules. Other intangible assets, which have been determined to have a finite life, are being amortized over their useful lives.

USE OF ESTIMATES

The preparation of the Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Amounts reported in our Condensed Consolidated Financial Statements that are based, in part, on the use of estimates include reserves relating to the collectibility of accounts receivable, insurance reserves relating to claim costs required to be funded by us, the recoverability of deposits and other prepaid items, estimated accrued property taxes and other accrued liabilities for which actual invoices have not yet been received and the liability for unredeemed gift certificates and gift cards. Various assumptions and other factors underlie the determination of these significant estimates. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial techniques. We constantly re-evaluate these significant factors and make adjustments to estimates where facts and circumstances dictate.

We believe that the assumptions and other factors used to determine these estimates are reasonable and that, with the exception of insurance reserves relating to claim costs required to be funded by us, changes in these assumptions would not have a material impact on our financial position or results of operations. In regard to insurance reserves, recorded liabilities are based upon an estimate of the total amount that may be paid to settle claims required to be funded by us and incurred through the balance sheet date, including consideration of amounts paid-to-date in relation to the individual claims, an analysis of the loss development on all reported claims, potential legal or other related costs and any stop loss limits applicable under our insurance policies. Such reserves are subject to change based upon any development that occurs in relation to the outstanding claims subsequent to the preparation of the Condensed Consolidated Balance Sheet. As of both October 24, 2004 and October 26, 2003, total recorded insurance reserves were $1.6 million, which are included in accrued expenses on the accompanying balance sheet.

24 In addition, asset impairment charges, restructuring charges, and the restructuring accrual are primarily based on estimates of the market value of assets of which we plan to dispose and the amount of future cash flows estimated to be realized relating to impaired assets that are anticipated

to be utilized in our operations in the future or expenditures estimated to be used to settle the outstanding obligations. Such estimates are also affected by the time interval required to dispose of ~~July 25~~assets to be sold. The assumptions used, ~~2004~~particularly in regard to estimates of future cash flows to be realized relating to impaired or potentially impaired assets, are critical in assessing a potential impairment and, ~~July 27~~if any, ~~2003~~estimating ~~total~~the ~~recorded~~amount ~~insurance~~of ~~reserves~~the ~~were $1~~impairment.~~8 million,~~ These ~~which~~assumptions ~~are~~require ~~included~~consideration and projection of future trends in ~~accrued~~key operating ~~expenses~~ratios and the timing and impact of possible changes in operations relating to specific assets. Changes in these assumptions could have a material impact on the ~~accompanying~~timing and amount of possible asset impairments and ~~balance~~therefore ~~sheet~~on our results of operations.

~~In addition, asset impairment charges, restructuring charges, and the~~20 restructuring accrual are primarily based on estimates of the market value of assets of which we plan to dispose and the amount of future cash flows estimated to be realized relating to impaired assets that are anticipated to be utilized in our operations in the future or expenditures estimated to be used to settle the outstanding obligations. Such estimates are also affected by the time interval required to dispose of assets to be sold. The assumptions used, particularly in regard to estimates of future cash flows to be realized relating to impaired or potentially impaired assets, are critical in assessing a potential impairment and, if any, estimating the amount of the impairment. These assumptions require consideration and projection of future trends in key operating ratios and the timing and impact of possible changes in operations relating to specific assets. Changes in these assumptions could have a material impact on the timing and amount of possible asset impairments and therefore on our results of operations.

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated the percentage relationship to total revenues of certain statements of operations data.

STATEMENTS OF OPERATIONS DATA:


	Thirteen Weeks Ended						Twenty Six Weeks Ended
	October 24,			October 26,			October 24,			October 26,
	2004			2003			2004			2003
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of restaurant sales:
Food and beverage		35.6			35.0			35.9			35.3
Labor and benefits		33.5			32.6			33.0			32.6
Occupancy and other		27.5			25.7			26.7			24.1
Pre-opening expenses		—			—			—			—

Total cost of restaurant sales		96.6			93.3			95.6			92.0
Depreciation and amortization		4.7			5.4			4.8			5.2
General and administrative expenses		5.3			4.8			5.1			4.7
Restructuring charge		—			(0.3	)		—			(0.1	)

Total operating expenses		106.6			103.2			105.5			101.8

Operating loss		(6.6	)		(3.2	)		(5.5	)		(1.8	)
Other income (expense):
Loss (gain) on sale/disposal of fixed Assets		—			(0.1	)		—			—
Gain on extinguishment of debt		23.4			—			11.2			—
Interest expense, net		(1.5	)		(2.5	)		(1.8	)		(2.4	)

Total other income (expense)		21.9			(2.4	)		9.4			(2.4	)
Income (loss) before income taxes		15.3			(5.6	)		3.9			(4.2	)
Income tax		—			—			—			—

Net income (loss)		15.3	%		(5.6	)%		3.9	%		(4.2	)%

	Thirteen Weeks Ended
	July 25, 2004			July 27, 2003
Total revenues		100.0	%		100.0	%
Cost of restaurant sales:
Food and beverage		36.1			35.6
Labor and benefits		32.6			32.6
Occupancy and other		25.9			22.6
Pre-opening expenses		—			0.3
Total cost of restaurant sales		94.6			91.1
Depreciation and amortization		4.9			5.0
General and administrative expenses		5.0			4.6
Total operating expenses		104.5			100.7
Operating loss		(4.5	)		(0.7	)
Total other expense		(2.2	)		(2.3	)
Loss before taxes		(6.7	)		(3.0	)
Income tax		—			—
Net loss		(6.7	)%		(3.0	)%

The following table sets forth for the periods indicated certain restaurant data.:

RESTAURANT DATA:

	Thirteen Weeks Ended					Twenty Six Weeks Ended
	July 25, 2004		July 27, 2003
	October 24,		October 26,			October 24,		October 26,
Company-owned restaurants:
	2004		2003			2004		2003
Beginning of period		69		70
Company-owned restaurants:
Opened		—		1
Beginning of period		69		70			69		70
Closed		—		(1	)
Opened		—		—			—		1
End of period		69		70
Closed		—		—			—		(1	)
Franchised and licensed restaurants:
End of period		69		70			69		70
Beginning of period		11		9
Franchised and licensed restaurants:
Opened		—		1
Beginning of period		11		10			11		9
Closed		—		—
Opened		—		—			—		1
End of period		11		10
Closed		—		—			—		—
Total restaurants:
End of period		11		10			11		10
Beginning of period		80		79
Total restaurants:
Opened		—		2
Beginning of period		80		80			80		79
Closed		—		(1	)
Opened		—		—			—		2
End of period		80		80
Closed		—		—			—		(1	)
End of period		80		80			80		80

2722

THIRTEEN WEEKS ENDED ~~JULY~~OCTOBER 2524, 2004 (“FISCAL YEAR 2005 ~~FIRST~~SECOND QUARTER”) ~~COMPARED~~ COMPARED TO THE THIRTEEN WEEKS ENDED ~~JULY~~OCTOBER 2726, 2003 (“FISCAL YEAR 2004 ~~FIRST~~ SECOND QUARTER”)

Total revenues. Total revenues decreased $3.30 million, or 9.1%, from $3633.24 million for Fiscal Year 2004 ~~First~~Second Quarter to $3230.94 million for Fiscal Year 2005 ~~First~~Second Quarter. This decrease is primarily attributable to alost revenues resulting from the hurricanes (estimated to be approximately $1.3 million), a reduction in sales generally at comparable restaurants, ~~offset~~(including sales indirectly lost due to ~~some~~the ~~extent~~impact byof the hurricanes on customer dining ~~opening~~habits ofduring ~~two~~the ~~new~~six ~~restaurants~~weeks inover ~~April~~which ~~and~~the ~~June 2003~~four storms occurred) and the closing of two restaurants in July 2003 and April 2004 as a result of the sale of the related property interests. ~~Sales~~For the same reasons, sales at comparable restaurants for Fiscal Year 2005 ~~First~~ Second Quarter decreased 7.27% compared with sales for Fiscal Year 2004 ~~First~~Second Quarter. Removing the estimated impact of ~~This~~the hurricanes, same restaurant sales for the thirteen weeks ended October 24, 2004 were 3.8% below those for the comparable period in fiscal 2004. This decrease results from a reduction in customer headcount, partially offset by an increase in check average resulting from the menu price changes implemented in October 2003 and May 2004 as discussed below. Management believes that the decrease in headcount is ~~primarily~~also attributable to increased competition from new restaurants in many of the markets in which our restaurants operate, ~~the~~and the impact of our financial condition and lack of working capital on our ability to invest in our restaurants and engage in expanded marketing initiatives~~, and the positive impact on sales realized from the introduction of a new menu during Fiscal Year 2004 First Quarter~~. A ~~restaurant~~ restaurant is considered comparable after its first 18 months of operation. ~~Sales from~~ ~~the two restaurants opened in April and June 2003 totaled $0.8 million during the thirteen weeks ended July 25, 2004, compared to $1.0 million during the thirteen weeks ended July 27, 2003.~~ Sales from restaurants closed in fiscal year 2004 were $0.23 million in Fiscal Year 2004 ~~First~~Second Quarter. The Company did not open or close any ~~company~~ Company-owned ~~and operated~~ restaurants during Fiscal Year 2005 ~~First~~Second Quarter.

Food and beverage. Food and beverage costs decreased $1.0.9 million, or 7.87%, to $1110.98 million for Fiscal Year 2005 ~~First~~Second Quarter from $1211.97 million for Fiscal Year 2004 ~~First~~Second Quarter. As a percentage of revenues, food and beverage costs increased by 0.56% to 3635.16% for Fiscal Year 2005 ~~First~~Second Quarter from 35.60% for Fiscal Year 2004 ~~First~~Second Quarter. The decrease in dollars is attributable to the reduction in revenues. The increase as a percentage of revenues is primarily attributable to ~~the significant~~ increases in beef, dairy and produce ~~prices as well as the impact of the new menu (introduced in June~~ ~~2003) on produce and other food costs~~prices. The increase in meat and dairy costs, that began in March 2003 and was further negatively impacted by the Mad Cow Disease scare which closed the Canadian border from exporting any beef products, has continued to have a significant adverse impact on food costs. During October 2003, in response to the continued increased beef prices, we modified our menu pricing on certain items. This increase averaged approximately 3% based on the ~~current~~ sales mix at the time of the increase. We also implemented changes in our menu, including price changes on certain items, in May 2004 that represented an additional average price increase of approximately 3% based on the ~~current~~ sales mix at the time of the increase. In addition, we have attempted to reduce our overall food costs by featuring lower food cost, generally non-beef, menu items in our advertising materials and through commitments to purchase meat products at fixed prices in certain instances in which market conditions ~~appeared~~appear to indicate an expected rise in prices. Management cannot project the period over which the existing prices will continue to exist and when or if food costs will decline (as a percentage of revenues) to the historic levels that previously existed. However, although there can be no assurances, we will continue to evaluate and implement changes designed to reduce food costs.

28 Labor and benefits. Labor and benefits costs decreased $0.7 million, or 6.4%, to $10.2 million for Fiscal Year 2005 Second Quarter from $10.9 million for Fiscal Year 2004 Second Quarter. As a percentage of revenues, labor and benefits costs increased to 33.5% for Fiscal Year

~~the~~2005 ~~historic~~Second ~~levels~~Quarter ~~that~~from ~~previously existed~~32.6% ~~However,~~for ~~although~~Fiscal ~~there~~Year ~~can~~2004 Second Quarter. The beincrease noas ~~assurances,~~a wepercentage ~~will~~of ~~continue~~revenues is due to ~~evaluate~~the ~~and~~impact ~~implement~~of ~~changes~~the ~~designed~~decline in torevenues ~~reduce~~and ~~food~~the ~~costs~~fixed nature of a significant portion of labor and benefits.

~~Labor~~Occupancy and ~~benefits~~other. ~~Labor~~Occupancy and ~~benefits~~other costs decreased $10.12 million, or 92.3%, to $108.74 million for Fiscal Year 2005 ~~First~~Second Quarter from $~~11.~~8.6 million ~~for~~ for Fiscal Year 2004 ~~First~~Second Quarter. As a percentage of revenues, ~~labor~~occupancy and ~~benefits~~other ~~costs~~was ~~were~~27.5% 32for Fiscal Year 2005 Second Quarter versus 25.67% for ~~both~~Fiscal Year 2004 Second Quarter. The decrease in dollars is primarily attributable to a decrease in marketing expense, offset to some extent by increased rent as a result of the sale/leaseback of 11 properties during the Fiscal Year 2005 Second ~~First~~ Quarter. ~~and~~Marketing expense for Fiscal Year 2005 Second Quarter was $0.5 million, compared to $1.0 million for Fiscal Year 2004 ~~First~~Second Quarter. The increase as a percentage of revenues is primarily attributable to the relatively fixed nature of certain occupancy and other costs, including rent and property taxes, compared to reduced revenues. See “Outlook” below for a discussion of future occupancy costs as a result of the recently completed sale/leaseback of 11 properties.

~~Occupancy~~Depreciation and ~~other~~amortization. ~~Occupancy~~Depreciation and ~~other~~amortization ~~costs~~expense decreased ~~increased~~ $0.34 million, or 3 22.72%, to $81.54 million for the Fiscal Year 2005 Second ~~First~~ Quarter from $81.28 million for the Fiscal Year 2004 ~~First~~Second Quarter. As a percentage of revenues, ~~occupancy~~depreciation and ~~other~~ ~~was~~amortization 25expense decreased 0.97% ~~for~~to 4.7% ~~Fiscal~~from ~~Year 2005 First Quarter versus 22~~5.64% ~~for~~during ~~Fiscal~~these ~~Year 2004 First Quarter~~periods. The ~~increase~~decrease, both in dollars and as a percentage of revenues, is ~~primarily~~due ~~attributable~~ to ~~increased~~certain ~~advertising~~equipment ~~and~~becoming ~~insurance~~fully depreciated ~~expense,~~during ~~offset~~the toperiod, ~~some~~the ~~extent~~sale byand ~~reductions~~leaseback inof ~~direct~~12 ~~operating~~properties ~~expense~~including ~~and~~the ~~utility~~corporate ~~expense.~~headquarters ~~Marketing~~building ~~expense~~during ~~for~~these ~~Fiscal~~periods, ~~Year~~and ~~2005~~asset ~~First Quarter was $1.0~~impairments ~~million,~~recorded ~~compared~~in tofiscal ~~$0.6 million~~year ~~for Fiscal Year~~ 2004 ~~First~~that ~~Quarter.~~reduced ~~The increase as a percentage of revenues is further impacted by~~ the ~~relatively fixed~~carrying ~~nature~~value of ~~rent~~our property and ~~property~~equipment, ~~taxes~~offset ~~compared~~ to ~~reduced~~some ~~revenues.~~extent ~~See “Outlook”~~by ~~below~~depreciation ~~for a discussion~~ of ~~future~~additional ~~occupancy costs as a result of the~~assets ~~recently completed sale/leaseback of 11 properties~~purchased.

~~Depreciation~~General and ~~amortization~~administrative. ~~Depreciation~~General and ~~amortization~~administrative ~~expense decreased~~costs ~~$0.2 million,~~were ~~or 11.1%, to~~ $1.6 million for both the Fiscal Year 2005 ~~First~~ ~~Quarter~~and ~~from $1.8 million for the Fiscal Year~~ 2004 ~~First~~Second ~~Quarter~~Quarters. As a percentage of revenues, ~~depreciation~~general and ~~amortization~~administrative ~~expense~~costs ~~decreased~~increased 0.15% tofrom 4.98% ~~from~~for ~~5.0%~~Fiscal ~~during~~Year ~~these~~2004 ~~periods.~~Second ~~The~~Quarter ~~decrease,~~to ~~both~~5.3% infor ~~dollars~~Fiscal ~~and~~Year as2005 aSecond ~~percentage~~Quarter. ofThe ~~revenues,~~increase ~~is due to depreciation expense being discontinued on idle facilities and equipment~~ as a ~~result~~percentage of ~~closing~~revenues ~~restaurants,~~is ~~certain equipment becoming fully depreciated during~~ the ~~period,~~result ~~the sale and leaseback~~ of the ~~corporate headquarters building, and asset impairments recorded in~~ ~~fiscal~~relatively ~~year~~fixed ~~2004~~nature ~~that reduced the carrying value~~ of ~~our~~general ~~property~~ and ~~equipment,~~ ~~offset~~administrative tocosts ~~some~~compared ~~extent~~to ~~by depreciation of additional assets~~reduced ~~purchased~~revenues.

~~General~~Gain ~~and~~on ~~administrative.~~extinguishment ~~General~~of ~~and administrative costs were $1~~debt.~~7 million~~ ~~for~~During ~~both~~ the ~~Fiscal~~thirteen ~~Year~~weeks ~~2005~~ended ~~and~~October 24, 2004, ~~First~~we ~~Quarters.~~recognized As a ~~percentage of~~$7.1 million ~~revenues,~~gain ~~general~~relating ~~and~~to ~~administrative~~the ~~costs~~repayment ~~increased~~of ~~0.4% from 4.6% for~~debt ~~Fiscal~~at ~~Year~~a ~~2004~~discounted ~~First~~amount ~~Quarter~~resulting tofrom ~~5.0%~~the ~~for~~use ~~Fiscal~~of ~~Year 2005 First Quarter. The increase as~~ a ~~percentage~~portion of ~~revenues is~~ the ~~result~~net proceeds of the ~~relatively~~sale/leaseback ~~fixed nature~~ of ~~general~~11 ~~and~~properties. ~~administrative~~See ~~costs~~further ~~compared~~discussion ~~to reduced revenues~~above.

29 Interest expense, net. Total interest expense decreased $0.3 million, or 37.5%, to $0.5 million for Fiscal Year 2005 Second Quarter from $0.8 million for Fiscal Year 2004 Second Quarter. The decrease was primarily due to the reduction in outstanding debt resulting from debt payments made between these periods, including the early payment of debt from the proceeds of the sale/leaseback transaction.

Income taxes. We did not recognize a tax liability relating to the operating income for Fiscal Year 2005 Second Quarter due to the existence of federal and state income tax loss carryforwards. We did not recognize a tax benefit relating to the operating loss for Fiscal Year

~~Interest~~2004 ~~expense,~~Second ~~net.~~Quarter ~~Total~~because ~~interest~~management ~~expense~~believes ~~decreased~~that ~~$0.1 million,~~it ~~or 12.5%,~~is tonot ~~$0.7 million~~likely ~~for~~that ~~Fiscal Year 2005 First Quarter from $0.8 million for~~all ~~Fiscal~~of ~~Year~~our ~~2004~~deferred ~~First~~tax ~~Quarter.~~assets ~~The~~will ~~decrease~~be ~~was~~realized ~~primarily~~in ~~due to~~ the ~~reduction~~ ~~in outstanding debt resulting from debt payments made between these periods~~future.

~~Income~~TWENTY ~~taxes.~~SIX ~~The~~WEEKS ~~Company~~ENDED ~~did~~OCTOBER ~~not~~24, ~~recognize~~2004 a(“FISCAL ~~tax~~YEAR ~~benefit relating to the operating loss for either Fiscal Year~~ 2005 ~~First~~FIRST ~~Quarter~~AND ~~or Fiscal Year 2004~~SECOND ~~First~~QUARTERS”) ~~Quarter~~COMPARED ~~because~~TO ~~management~~THE ~~believes~~TWENTY ~~that~~SIX itWEEKS isENDED ~~not~~OCTOBER ~~likely~~26, ~~that~~2003 ~~all of its~~(“FISCAL ~~deferred~~YEAR ~~tax~~2004 ~~assets~~FIRST ~~will~~AND beSECOND ~~realized in the future.~~QUARTERS”)

Total revenues. Total revenues decreased $6.3 million, or 9.1%, from $69.6 million for Fiscal Year 2004 First and Second Quarters to $63.3 million for Fiscal Year 2005 First and Second Quarters. This decrease is primarily attributable to the lost revenues resulting from the hurricanes (estimated to be approximately $1.3 million), a reduction in sales generally at comparable restaurants (including sales indirectly lost due to the impact of the hurricanes on customer dining habits during the six weeks over which the four storms occurred) and the closing of two restaurants in July 2003 and April 2004 as a result of the sale of the related property interests. For the same reasons, sales at comparable restaurants for Fiscal Year 2005 First and Second Quarters decreased 7.5% compared with sales for Fiscal Year 2004 First and Second Quarters. Removing the estimated impact of the hurricanes, same restaurant sales for the twenty six weeks ended October 24, 2004 were 5.6% below those for the comparable period in fiscal 2004. This decrease results from a reduction in customer headcount, partially offset by an increase in check average resulting from the menu price changes implemented in October 2003 and May 2004 as discussed below. Management believes that the decrease in headcount is also attributable to increased competition from new restaurants in many of the markets in which our restaurants operate and the impact of our financial condition and lack of working capital on our ability to invest in our restaurants and engage in expanded marketing initiatives. A restaurant is considered comparable after its first 18 months of operation. Sales from restaurants closed in fiscal year 2004 were $0.9 million in the Fiscal Year 2004 First and Second Quarters. The Company did not open or close any Company- owned restaurants during the Fiscal Year 2005 First and Second Quarters.

Food and beverage. Food and beverage costs decreased $1.9 million, or 7.7%, to $22.7 million for Fiscal Year 2005 First and Second Quarters from $24.6 million for Fiscal Year 2004 First and Second Quarters. As a percentage of revenues, food and beverage costs increased by 0.6% to 35.9% for Fiscal Year 2005 First and Second Quarters from 35.3% for Fiscal Year 2004 First and Second Quarters. The decrease in dollars is attributable to the reduction in revenues. The increase as a percentage of revenues is primarily attributable to increases in beef, dairy and produce prices. During October 2003, in response to the continued increased beef prices, we modified our menu pricing on certain items. This increase averaged approximately 3% based on the sales mix at the time of the increase. We also implemented changes in our menu, including price changes on certain items, in May 2004 that represented an additional average price increase of approximately 3% based on the sales mix at the time of the increase. In addition, we attempted to reduce our overall food costs by featuring lower food cost, generally non-beef, menu items in our advertising materials and through commitments to purchase meat products at fixed prices in certain instances in which market conditions appear to indicate an expected rise in prices. Management cannot project the period over which the existing prices will continue to exist and when or if food costs will decline (as a percentage of revenues) to the historic levels that previously existed. However, although there can be no assurances, we will continue to evaluate and implement changes designed to reduce food costs.

Labor and benefits. Labor and benefits costs decreased $1.8 million, or 7.9%, to $20.9 million for Fiscal Year 2005 First and Second Quarters from $22.7 million for Fiscal Year 2004 First and Second Quarters. As a percentage of revenues, labor and benefits costs increased 0.4% to 33.0% for Fiscal Year 2005 First and Second Quarters from 32.6% for Fiscal Year 2004 First and Second Quarters. The increase as a percentage of revenues is due to the impact of the decline in revenues and the fixed nature of a significant portion of labor and benefits.

Occupancy and other. Occupancy and other costs increased $0.2 million, or 1.2%, to $16.9 million for Fiscal Year 2005 First and Second Quarters from $16.7 million for Fiscal Year 2004 First and Second Quarters. As a percentage of revenues, occupancy and other was 26.7% for Fiscal Year 2005 First and Second Quarters compared to 24.1% for Fiscal Year 2004 First and Second Quarters. The increase, both in dollars and as a percentage of revenues, is primarily attributable to increased rent as a result of the sale/leaseback, offset to some extent by reductions in insurance expense. The increase as a percentage of revenues is further impacted by the relatively fixed nature of certain occupancy and other costs, including rent and property taxes, compared to reduced revenues. See “Outlook” below for a discussion of future occupancy costs as a result of the recently completed sale/leaseback of 11 properties.

Depreciation and amortization. Depreciation and amortization expense decreased $0.6 million, or 16.7%, to $3.0 million for the Fiscal Year 2005 First and Second Quarters from $3.6 million for the Fiscal Year 2004 First and Second Quarters. As a percentage of revenues, depreciation and amortization expense decreased 0.4% to 4.8% from 5.2% during these periods. The decrease, both in dollars and as a percentage of revenues, is due to certain equipment becoming fully depreciated during the period, the sale and leaseback of 12 properties including the corporate headquarters building during these periods, and asset impairments recorded in fiscal year 2004 that reduced the carrying value of our property and equipment, offset to some extent by depreciation of additional assets purchased.

General and administrative. General and administrative costs were $3.3 million for both the Fiscal Year 2005 and 2004 First and Second Quarters. As a percentage of revenues, general and administrative costs increased 0.4% from 4.7% for Fiscal Year 2004 First and Second Quarters to 5.1% for Fiscal Year 2005 First and Second Quarters. The increase as a percentage of revenues is the result of the relatively fixed nature of general and administrative costs compared to reduced revenues.

Gain on extinguishment of debt. During the twenty six weeks ended October 24, 2004, we recognized a $7.1 million gain relating to the repayment of debt at a discounted amount resulting from the use of a portion of the net proceeds of the sale/leaseback of 11 properties. See further discussion above.

Interest expense, net. Total interest expense decreased $0.5 million, or 29.4%, to $1.2 million for Fiscal Year 2005 First and Second Quarters from $1.7 million for Fiscal Year 2004 First and Second Quarters. The decrease was primarily due to the reduction in outstanding debt resulting from debt payments made between these periods, including the early payment of debt from the proceeds of the sale/leaseback transaction.

Income taxes. We did not recognize a tax liability relating to the operating income for Fiscal Year 2005 First and Second Quarters due to the existence of federal and state income tax loss carryforwards. We did not recognize a tax benefit relating to the operating loss for Fiscal Year 2004 First and Second Quarters because management believes that it is not likely that all of our deferred tax assets will be realized in the future.

OUTLOOK

The following discussion of our future operating results that are not historical statements constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated or implied in the forward-looking statement. Please refer to Pages 4 and 7 of our Annual Report on Form 10-K for the fiscal year ended April 25, 2004, as well as to the other disclosures contained in the Annual Report on Form 10-K and in this Form 10-Q, for further discussion on forward-looking statements and the risks and other factors that could prevent us from achieving our goals and cause the assumptions underlying the forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements.

As of the date of this Quarterly Report on Form 10-Q, the economy has shown recent signs of strengthening, however concerns still exist as to the strength of consumer spending due to the economic downturn and world events, including terrorism and the conflict in the Middle East. Our revenue projections assume that current spending trends do not worsen during fiscal 2005. Actual results in fiscal 2005 could vary significantly as a result of changes in consumer spending and the economy in general.

~~Recent~~Fiscal ~~events~~2005 revenue. InAs ~~August~~discussed ~~and September 2004~~above, ano ~~number~~additional ofnew ~~our~~ restaurants ~~were~~are ~~impacted~~currently bybeing ~~Hurricanes~~developed ~~Charley~~for ~~and~~fiscal ~~Frances,~~2005. ~~which~~The ~~initially~~existing ~~hit~~69 ~~the state~~Company-owned ofrestaurants ~~Florida~~will ~~and~~qualify ~~also~~as ~~affected~~comparable ~~certain~~restaurants ~~other~~during ~~southern~~fiscal ~~states~~2005. ~~These~~As discussed ~~hurricanes~~above, fiscal 2005 revenues have been significantly adversely ~~resulted~~impacted inby ~~the~~hurricanes ~~temporary~~that ~~closure~~occurred ofin ~~many~~certain of ~~our~~the ~~restaurants~~markets in which we operate, particularly in the state of Florida. ~~All~~Excluding the estimated effects of the ~~our~~hurricanes on the second quarter of fiscal 2005, sales from comparable restaurants ~~are~~declined ~~currently~~during ~~open~~the first and second quarters of fiscal 2005 ~~operating~~compared to the first and second quarters of fiscal 2004 by 7.2% ~~The~~and ~~amount~~3.8%, respectively. Management intended to use a portion of ~~business~~the ~~lost~~net proceeds received from ~~interruptions~~the ofsale/leaseback ~~our~~transaction to invest in additional marketing ~~operations~~for ~~and~~its ~~other~~restaurants, ~~potential~~in ~~impacts~~an ~~from~~effort ~~these~~to improve future revenues. However, the financial impact of the hurricanes ~~has~~as ~~not~~well ~~yet~~as ~~been~~the continued decline in sales ~~determined.~~has ~~The~~required the Company ~~maintains~~to ~~property~~use ~~insurance~~a portion of these proceeds for working capital purposes. Following the sale/leaseback, ~~which~~management ~~includes~~has ~~business~~developed and ~~interruption~~implemented ~~insurance~~certain ~~coverage~~programs including a new local restaurant marketing program, a modified incentive compensation program for its employees and changes in ~~regard~~the tohiring ~~all~~and training of ~~its~~restaurant ~~restaurants,~~employees. ~~subject~~In addition, tomanagement developed a ~~policy~~new ~~deductible~~menu insert that included the introduction of certain ~~approximately~~new ~~$100~~menu items. While management believes that these new programs and changes will improve its operations,~~000~~ ~~per~~there ~~event~~can be no assurance as to whether or how quickly these changes will improve revenues. Based on the above, management currently expects sales at comparable restaurants for the remainder of fiscal 2005 to decrease as compared to the prior fiscal year.

~~Fiscal 2005 revenue. As discussed above, we opened one new restaurant in~~27 April 2003 and an additional new restaurant in June 2003. No additional new restaurants are currently being developed for fiscal 2005. The existing 69 company-owned restaurants will qualify as comparable restaurants during fiscal 2005. As discussed above, fiscal 2005 revenues have been impacted by hurricanes that have occurred in certain of the

~~markets~~ Management inbelieves ~~which~~that weidentifying ~~operate,~~opportunities ~~particularly~~to ~~the~~expand ~~state of Florida, and may be~~its ~~further~~operations ~~impacted~~in byrelation ~~additional~~to ~~adverse~~franchised ~~weather~~restaurants ~~conditions.~~represents Ina ~~addition, sales~~growth ~~from~~opportunity ~~comparable~~and ~~restaurants~~would ~~declined~~require ~~during~~significantly ~~the~~lower ~~first~~capital ~~quarter~~resources offrom ~~fiscal 2005,~~us ~~compared~~than to the ~~first~~expansion ~~quarter~~ of ~~fiscal~~Company-owned ~~2004~~restaurants. ~~Management~~However, ~~currently~~these ~~believes~~initiatives ~~that~~are ~~food~~not ~~and~~expected ~~beverage~~to ~~sales~~generate ~~for~~significant ~~its~~revenue ~~comparable~~or ~~restaurants~~operating ~~for~~profit ~~fiscal 2005~~during ~~will remain relatively flat and may decrease slightly compared to sales in~~ fiscal ~~2004~~2005. ~~This~~Accordingly, revenue anticipated ~~improvement as compared~~ to ~~the~~be ~~reduction~~generated ~~in sales~~from ~~at comparable restaurants of 2.9% experienced between fiscal 2003 and~~royalty ~~fiscal~~fees ~~2004~~ and ~~6.0%~~other ~~reduction~~income ~~experienced between fiscal 2002 and fiscal 2003~~ is ~~projected~~expected ~~based upon the improvements that have recently been implemented that are designed~~ to ~~improve~~be ~~the~~less ~~dining~~than ~~experience~~1% of ~~customers~~total ~~and~~revenues ~~the consistency~~ in ~~operations, as well as the anticipated impact of contemplated~~ ~~marketing initiatives and the menu enhancement and price increase that was implemented in~~ fiscal ~~2004 and in May 2004~~2005.

~~Management~~Food ~~intends~~and tobeverage ~~continue~~costs. Similar to ~~focus~~many ~~efforts~~competing onrestaurant ~~identifying~~concepts, ~~opportunities~~we experienced a significant increase in food and beverage costs during fiscal 2004, ~~2005~~which tohas ~~expand~~continued ~~its~~into ~~operations~~fiscal in2005. ~~relation~~This toincrease was primarily caused ~~franchised~~by ~~restaurants.~~the Weinstances ~~believe~~of Mad Cow Disease that ~~this~~were ~~represents~~reported ain ~~growth~~Canada ~~opportunity~~ and ~~would~~the ~~require~~United States ~~significantly~~in ~~lower~~2003, ~~capital~~which ~~resources~~has ~~from~~had usa ~~than~~significant negative impact on meat and dairy costs. Management has taken actions in an attempt to reduce the ~~expansion~~ impact of these ~~company-owned~~events ~~restaurants.~~including ~~This~~enhancing ~~initiative~~its ismenu, ~~not~~in ~~expected~~part, to ~~generate~~promote certain non-meat ~~significant~~menu ~~revenue~~items, orimplementing ~~operating~~a ~~profit~~menu price increase in October 2003 and May 2004, negotiating arrangements to purchase certain meat products at fixed rates during fiscal 2005 and targeting certain marketing initiatives in an attempt to change our sales mix and increase sales of lower cost food items. ~~Accordingly,~~Management ~~revenue~~cannot ~~anticipated~~predict tothe beduration ~~generated~~of ~~from~~these ~~royalty~~cost ~~fees~~increases ~~and~~or ~~other~~further ~~income~~impacts that may occur as a result of these events. However, it is presently anticipated that ~~expected~~food toand bebeverage ~~less~~costs ~~than~~will 1%remain ofconsistent ~~total~~with ~~revenues~~fiscal 2004 and may increase slightly in fiscal 2005.

~~Food~~Labor and ~~beverage costs~~benefits. ~~Similar~~We ~~to many competing restaurant concepts, we~~ experienced a ~~significant~~decrease ~~increase~~ in ~~food~~labor and ~~beverage~~benefits costs in ~~during~~ fiscal 2004. ~~This~~as ~~increase~~a ~~was~~percent ~~primarily~~of ~~caused~~revenues byas ~~the~~compared ~~instances~~to offiscal ~~Mad~~2003. ~~Cow Disease~~This ~~that~~decrease ~~were~~resulted ~~reported~~from inimproved ~~Canada~~management ~~and~~of ~~the~~hourly ~~United States in 2003~~labor, ~~which~~a ~~has~~decrease ~~had~~in athe ~~significant~~cost ~~negative~~of ~~impact~~providing onmedical ~~meat~~benefits ~~and~~to ~~dairy~~employees ~~costs.~~due ~~Management~~to ~~has~~plan ~~taken~~design changes ~~actions~~implemented in anJune 2003 ~~attempt~~and toa ~~reduce~~decrease in the ~~impact~~cost of ~~these~~workers’ ~~events including enhancing~~compensation ~~its~~insurance ~~menu,~~due ~~in part,~~ to ~~promote~~a ~~certain~~change ~~non-meat~~to ~~menu~~a ~~items,~~guaranteed ~~implementing~~cost ainsurance ~~menu price~~program ~~increase~~ in ~~October~~ January 2003 ~~and~~as ~~May 2004,~~compared ~~negotiating arrangements~~ to ~~purchase~~ ~~certain~~the ~~meat~~significant ~~products~~claims atincurred ~~fixed~~in ~~rates during~~ fiscal ~~2005~~2003 ~~and~~under ~~targeting~~the ~~certain~~previous ~~marketing~~self ~~initiatives~~funded inprogram. anHowever, ~~attempt~~due to ~~change~~the ~~our~~decline ~~sales~~in ~~mix~~revenues ~~and~~during ~~increase~~the ~~sales~~first two quarters of ~~lower~~fiscal ~~cost~~2005 ~~food~~as ~~items.~~compared ~~Management~~to ~~cannot~~fiscal ~~predict~~2004 and the ~~duration~~generally fixed nature of labor and benefits, these ~~cost~~costs ~~increases~~have orincreased slightly ~~further~~during ~~impacts~~the ~~that~~twenty ~~may~~six ~~occur~~weeks ended October 24, 2004 as a ~~result of~~percentage ~~these events~~of revenues. ~~However,~~Management itcurrently isexpects ~~presently~~labor ~~anticipated~~and ~~that~~benefit ~~food~~costs ~~and~~as ~~beverage~~a percentage ~~costs~~of ~~will~~revenues ~~remain~~to ~~consistent~~increase ~~with~~slightly in fiscal 2005 compared to fiscal 2004 ~~and~~due primarily ~~may~~to ~~increase~~the ~~slightly~~decline in ~~fiscal~~ ~~2005~~revenues.

~~Labor~~Occupancy and ~~benefits~~other. WeAs ~~experienced~~ a ~~decrease~~result inof ~~labor~~the sale and ~~benefits~~leaseback ~~costs~~transaction inentered ~~fiscal~~into in August 2004 as(see aNote ~~percent~~4 ~~of revenues as compared~~ to ~~fiscal~~the ~~2003.~~Condensed ~~This~~Consolidated Financial ~~decrease~~Statements), ~~resulted~~we ~~from~~will ~~improved~~incur ~~management~~additional ofrent ~~hourly~~expense ~~labor,~~in afiscal ~~decrease~~2005 inof ~~the~~approximately ~~cost~~$2.2 million. ofPartially ~~providing~~offsetting ~~medical~~this ~~benefits~~increase towill ~~employees due to plan design changes~~be ~~implemented~~reduced incosts ~~June 2003~~as ~~and~~ a ~~decrease~~result inof the ~~cost~~expected conversion of ~~workers’~~certain ~~compensation~~equipment ~~insurance~~leases ~~due~~from tooperating aleases ~~change~~ to acapital ~~guaranteed~~leases ~~cost insurance program~~ in ~~January 2003~~fiscal as2005. ~~compared~~Due to these factors, and the ~~significant~~fixed ~~claims~~nature ~~incurred~~of incertain ~~fiscal~~occupancy ~~2003~~and ~~under~~other ~~the~~expenses, ~~previous~~management ~~self~~presently ~~funded~~expects ~~program.~~occupancy ~~Management~~and ~~currently~~other ~~expects~~expenses toas ~~realize~~ a ~~slight~~percentage of ~~decrease~~revenues into ~~labor~~increase ~~and~~approximately ~~benefit~~two ~~costs~~percent in fiscal 2005 ~~of up to 0.5% of revenues~~ compared to fiscal 2004 ~~due primarily to the continued efficient management of hourly labor~~.

Occupancy and other. As a result of the sale and leaseback transaction entered into in August 2004, we will incur additional rent expense in fiscal 2005 of approximately $1.7 million. In addition, we intend to use a portion of the net proceeds from this transaction to invest in additional marketing for our restaurants. Management has also recently implemented cost cutting initiatives in regards to a number of the component areas included in occupancy and other expenses. Due to these factors, as well as the reduced costs expected to be incurred as a result of the conversion of certain equipment leases from operating leases to capital leases in fiscal 2005, management presently expects occupancy and other expenses to remain relatively flat or possibly increase slightly as a percent of total revenues in fiscal 2005, compared to fiscal 2004.

Pre-opening expenses. As discussed above, no additional new restaurant openings are currently planned for fiscal 2005. As a result, pre-opening expenses are not anticipated to be significant in fiscal 2005.

Depreciation and amortization. Management currently expects that total depreciation and amortization expense will decline in fiscal 2005 as compared to fiscal 2004 due to the sale and ~~leaseback transaction entered into in August~~ ~~2004 and due to the volume of assets that have or will become fully depreciated~~ ~~during fiscal 2004 and fiscal 2005.~~

~~General and administrative expenses. General and administrative expenses~~28 have declined over the last two years due to cost control initiatives and a reduction in legal and professional expenses. Also, during fiscal 2004, we made additional investments in training for our store managers and in our regional supervisors in order to improve the oversight of restaurant operations and enhance the effectiveness of operational improvements. As a result of these continued investments as well as the increase in rent expense to be incurred in fiscal 2005 resulting from the transaction executed in December 2003 relating to the sale and leaseback of the corporate headquarters building, management currently expects that our general and administrative expenses will increase slightly compared to fiscal 2004.

Total other expense. Based on the current debt and capital lease obligations outstanding, the significant debt payments made in fiscal 2004, and the debt payments made in connection with the recent sale and leaseback transaction, we presently anticipate that total other expense, which is primarily comprised of interest expense, will decrease significantly in fiscal 2005 and will range between $1.3 million and $1.5 million in fiscal 2005.

Income tax (benefit) expense. Due to the existence of federal and state income tax loss carryforwards, we do not currently anticipate that any significant income tax expense or benefits will be recorded or realized in fiscal 2005.

leaseback transaction entered into in August 2004 and due to the volume of assets that have or will become fully depreciated during fiscal 2004 and fiscal 2005.

General and administrative expenses. General and administrative expenses have declined over the last two years due to cost control initiatives and a reduction in legal and professional expenses. Also, during fiscal 2004, we made additional investments in training for our restaurant managers and in our regional supervisors in order to improve the oversight of restaurant operations and enhance the effectiveness of operational improvements. As a result of these continued investments as well as the increase in rent expense to be incurred in fiscal 2005 resulting from the transaction executed in December 2003 relating to the sale and leaseback of the corporate headquarters building, management currently expects that our general and administrative expenses will increase slightly compared to fiscal 2004.

Total other expense. Based on the current debt and capital lease obligations outstanding, the significant debt payments made in fiscal 2004, and the debt payments made in connection with the recent sale and leaseback transaction, we presently anticipate that total other expense excluding the gain recognized on extinguishment of debt in the second quarter of fiscal 2005, which is primarily comprised of interest expense, will decrease significantly in fiscal 2005 and will total approximately $1.5 million in fiscal 2005.

Income tax (benefit) expense. Due to the existence of federal and state income tax loss carryforwards, we do not currently anticipate that any significant income tax expense or benefits will be recorded or realized in fiscal 2005.

LIQUIDITY AND CAPITAL RESOURCES

Our material financial commitments relate principally to our working capital requirements and our obligations to make operating and capital lease and term loan payments in accordance with the terms of our agreements. ~~See~~ (see Note 3 4 to the Condensed Consolidated Financial Statements for a description of ~~our~~ our current outstanding debt and capital and operating lease obligations). As of ~~July~~of October 2524, 2004, total minimum annual payments required under our note and lease obligations, including interest thereon, were $1716.27 million.

During the ~~thirteen~~twenty six weeks ended ~~July~~October 2524, 2004, our primary sources of working capital were ~~cash~~proceeds of the sale/leaseback of 11 properties, cash provided by operations and proceeds from the sale of food and beverage credits (see Note 89 to the Condensed Consolidated Financial Statements). During the fifty-two weeks ended April 25, 2004, we also collected $0.6 million in federal income tax refunds. Further, we ~~have~~ filed for approximately $0.1 million in additional federal and state income tax refunds in fiscal year 2004, which we collected ~~subsequent~~during tothe ~~July 25~~twenty six weeks ended October 24, 2004.

On August 6, 2004, we closed a transaction with Sovereign Roadhouse LLC, a wholly-owned subsidiary of Sovereign Investment Company (“Sovereign”), involving the sale and leaseback of eleven restaurant properties that were previously owned. The sale price for the eleven properties was $21.8 million. The properties are being leased ~~from Sovereign~~ under lease agreements that extend for 20 years and include four five-year renewal options. We used approximately $18.1 3 million of the net proceeds from the property sale to pay expenses related to the transaction and to repay ~~$24.6 million of secured debt,~~ ~~which was repaid at a discount (resulting in a gain on extinguishment of debt~~ ~~of approximately $7.0 million). The net gain from the debt repayment will be~~ reflected in our condensed consolidated financial statements in the second quarter of fiscal 2005. We also realized a gain on the sale of the properties of approximately $1.5 million, which will be recorded as a reduction of occupancy and other expense over the life of the leases. The remaining net proceeds from the sale of approximately $3.6 million will be used for working capital, including new marketing initiatives to promote our existing restaurants.

~~We expect that our primary source of working capital for future periods~~29 ~~will be cash flow from operations, net proceeds from the sale/leaseback, additional advance sales of food and beverage credits and possible additional debt and/or equity financing.~~

We have experienced significant cash flow problems in the past. We believe that our ability to generate cash from operations is dependent upon, among other things,

~~demand~~$24.6 million ~~for~~of ~~our~~secured ~~products~~debt, awhich ~~continued~~was ~~commitment~~repaid toat ~~providing~~a andiscount ~~excellent~~(resulting ~~dining~~in ~~experience~~a ~~for~~gain ~~our~~on ~~customers,~~extinguishment ~~the~~of ~~development~~debt ~~and~~of ~~implementation~~$7.1 million). ~~of successful~~The ~~marketing~~net ~~strategies,~~gain from the debt ~~cost~~repayment ~~levels~~is ofreflected in our ~~various~~Condensed ~~food~~Consolidated ~~products,~~Statement of ~~and~~Operations ~~our~~for ~~continuing~~the ~~efforts~~thirteen toweeks ~~reduce~~ended ~~our~~October 24, ~~operating costs~~2004. We ~~implemented revenue~~also ~~enhancement~~realized ~~programs~~a gain ~~including~~on the ~~implementation~~sale of athe ~~new~~properties ~~menu~~of ~~with enhanced~~approximately ~~menu items in June~~$1.7 ~~2003~~million, ~~and~~which ~~menu~~is recorded ~~price~~as ~~increases~~unearned revenue in ~~October 2003~~the ~~and May 2004.~~accompanying WeCondensed ~~also~~Consolidated ~~have~~Balance Sheet ~~taken,~~ and ~~continue~~will tobe ~~take,~~recorded ~~steps~~as toa ~~control~~reduction ~~our costs.~~of ~~There~~occupancy ~~can~~and beother noexpense ~~assurance~~over the ~~that~~life ~~these~~of ~~initiatives~~the ~~will~~leases. beThe ~~effective~~remaining ~~in generating~~net ~~profits~~proceeds orfrom ~~producing~~the ~~sufficient~~sale ~~cash flows to fund operating~~of ~~requirements,~~approximately ~~including~~$3.5 million ~~debt~~are ~~repayments~~being ~~and~~used ~~lease~~for ~~obligations~~working capital.

We expect that our primary source of working capital for future periods will be cash flow from operations, additional advance sales of food and beverage credits and possible additional debt and/or equity financing.

We have experienced significant cash flow problems in the past. We believe that our ability to generate cash from operations is dependent upon, among other things, demand for our products, a continued commitment to providing an excellent dining experience for our customers, the development and implementation of successful marketing strategies, the cost levels of our various food products, and our continuing efforts to reduce our operating costs. We implemented revenue enhancement programs including the implementation of a new menu with enhanced menu items in June 2003 and menu price increases in October 2003 and May 2004. We also have taken, and continue to take, steps to control our costs. There can be no assurance that these initiatives will be effective in generating profits or producing sufficient cash flows to fund operating requirements, including debt repayments and lease obligations.

Capital requirements relating to the implementation of our business plan have been and will continue to be significant. If cash generated from our operations and other possible sources described above are insufficient to fund our financial commitments and working capital requirements (including amounts required to support future growth), we will have to obtain additional financing. There can be no assurance that additional debt and/or equity financing will be available on terms acceptable to us, or at all. In the event we are unable to secure needed additional financing, we may have to significantly curtail our operations or forgo growth opportunities.

34 We did not open any new restaurants during the twenty six weeks ended October 24, 2004. We opened one new restaurant in fiscal year 2004 at a total cost of approximately $1.8 million, of which $1.4 million was expended prior to April 27, 2003 and $0.4 million was expended in fiscal year 2004. We do not currently have any additional new restaurants under development for fiscal year 2005. At this time, it is expected that the cash required to develop new restaurants beyond fiscal 2005, if any, will be funded from operations. Should cash from operations be insufficient for future expansion and additional capital through debt and equity sources be unavailable, there can be no assurance that we will be able to open additional restaurants. Capital requirements relating to the opening of new restaurants have in the past and, to the extent we elect to open new restaurants, may in the future be significant.

The following table summarizes on a pro-forma basis (as if the sale-leaseback transaction had occurred on July 25, 2004) the Company’s future contractual cash obligations for the remainder of fiscal year 2005, each of the next four fiscal years and thereafter as of July 25, 2004 (dollars in thousands). See Note 4 for further information. Additionally, operating lease commitments include estimated common area maintenance.

	2005		2006		2007		2008		2009		Thereafter		Total
Long term debt:
Principal	$	1,743	$	2,254	$	2,069	$	1,228	$	—	$	—	$	7,294
Interest		254		241		126		18		—		—		639
Total		1,997		2,495		2,195		1,246		—		—		7,933
Capital lease debt:
Principal		821		1,054		1,089		415		331		1,397		5,107
Interest		290		343		267		220		190		418		1,728
Total		1,111		1,397		1,356		635		521		1,815		6,835
Operating leases		8,393		10,600		9,677		9,137		8,549		75,763		122,119
Other commitments		521		442		74		—		—		—		1,037
Total	$	12,022	$	14,934	$	13,302	$	11,018	$	9,070	$	77,578	$	137,924

We did not open any new restaurants during the thirteen weeks ended July 25, 2004. We opened one new restaurant in fiscal year 2004 at a total cost of approximately $1.8 million, of which $1.4 million was expended prior to April 27, 2003 and $0.4 million was expended in fiscal year 2004. We do not currently have any additional new restaurants under development for fiscal year 2005. At this time, it is expected that the cash required to develop new restaurants beyond fiscal 2005, if any, will be funded from operations. Should cash from operations be insufficient for future expansion and additional capital through debt and equity sources be unavailable, there can be no assurance that we will be able to open additional restaurants. Capital requirements relating to the opening of new restaurants have in the past and, to the extent we elect to open new restaurants, may in the future be significant.

SUMMARY OF CASH FLOWS

Cash ~~provided~~used byin operating activities during the ~~thirteen~~twenty six weeks ended ~~July~~ 25October 24, 2004 was $10.6 million, compared with $2.40 million provided by ~~operating~~ operating activities during the ~~thirteen~~twenty six weeks ended ~~July~~October 2726, 2003. The primary use of cash during the twenty six weeks ended October 24, 2004 was payment of accounts payable. The primary sources of cash for each period were the net cash generated from operations and cash received from the advance sale of food and beverage credits under the program with the loyalty and rewards company as well as collection of income tax refunds during the ~~thirteen~~twenty ~~weeks~~six weeks ended ~~July~~October 2726, 2003.

Cash ~~used~~provided inby investing activities during the ~~thirteen~~twenty six weeks ended ~~July~~ October 2524, 2004 was $020.30 million, compared to $0.85 million used in investing activities during the ~~thirteen~~twenty six weeks ended ~~July~~October 2726, 2003. ~~Cash~~Sources ~~used~~of incash provided by investing activities induring each period consisted of proceeds from sales of property and equipment. Cash used by investing activities during each period consisted of purchases of property, plant and equipment.

Cash used in financing activities during the ~~thirteen~~twenty six weeks ended ~~July~~ October 2524, 2004 was $119.32 million, compared to $13.45 million used during the twenty ~~thirteen~~six weeks ended ~~July~~October 2726, 2003. Cash used in financing activities in each period consisted of repayments of long term debt and capital lease obligations, including early debt payments from proceeds of the sale/leaseback transaction during the twenty six weeks ended October 24, 2004.

CAPITAL EXPENDITURES

The Company did not open any new restaurants during the ~~thirteen~~twenty six weeks ended ~~July~~October 2524, 2004. The Company opened one new restaurant during the ~~fiscal~~ fiscal year ended April 25, 2004 at a total cost of approximately $1.8 million, of of which $0.4 million was expended during the fiscal year ended April 25, 2004. The Company does not currently have any additional Company-owned restaurants under development for fiscal year 2005. At this time, it is expected that the cash required to develop new restaurants beyond fiscal 2005, if any, will be funded from operations. Should cash from operations be insufficient for future expansion, and additional capital through debt and equity sources be unavailable, there can be no assurance that the Company will be able to open additional restaurants.

SEASONALITY AND QUARTERLY RESULTS

Our operating results fluctuate seasonally because of our geographic concentration. Of the 69 restaurants currently owned and operated by us, 34 are located in generally residential or light commercial areas in Florida. Our restaurant sales generally increase from November through April, the peak period of the Florida tourism season, and generally decrease from May through October. In addition, because of our present geographic concentration, our results of operations may be materially adversely affected by a decline in tourism in Florida, downturns in Florida’s economy or by hurricanes or other adverse weather conditions in Florida. To offset this seasonal trend and to attempt to reduce the decline in sales during the off-season, we run special promotions for our customers, incentive contests for our employees and otherwise focus marketing initiatives to increasing sales during these periods.

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promotions for our customers, incentive contests for our employees and otherwise focus marketing initiatives to increasing sales during these periods.

In addition to seasonality, our quarterly and annual operating results and comparable unit sales may fluctuate significantly as a result of a variety of factors, including the factors described above in Forward Looking Statements.

IMPACT OF INFLATION

The primary inflationary factors affecting our operations include food, beverage and labor costs. Labor costs are affected by changes in the labor market generally and, because many of our employees are paid at federal and state established minimum wage levels, changes in such wage laws affect our labor costs. In addition, most of our leases require us to pay taxes, maintenance, repairs and utilities, and these costs are subject to inflationary pressures. We believe that inflation rates, which have been low in recent periods, have not had a significant impact on our food and labor costs. There is no assurance that low inflation rates will continue or that we will have the ability to control costs in the future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness which is subject to interest rate changes in the United States and Eurodollar markets. We do not currently use, and have not historically used, derivative financial instruments to hedge against such market interest rate risk. ~~At July 25, 2004, we had~~Changes ~~approximately $0.8 million~~ in variable rate indebtedness outstanding, representing approximately 2% of our total outstanding indebtedness. Such indebtedness was repaid in full in August 2004 from the proceeds of the sale-leaseback (see Note 4 to the Condensed Consolidated Financial Statements). Changes in market interest rates, either increasing or decreasing rates by up to ten percent, would have no material impact on our results of operations.

Certain of the food products purchased by us are affected by commodity pricing and are, therefore, subject to unpredictable price volatility. These commodities are generally purchased based upon market prices established with vendors. The purchase arrangement may contain contractual features that limit the price paid by establishing certain floors and caps. We do not use financial instruments to hedge commodity prices because our purchase arrangements help control the ultimate cost paid. Extreme changes in commodity prices and/or long-term changes could adversely affect us. However, changes in commodity prices would ultimately affect our competitors as well as us. We expect that in most cases increased commodity prices could be passed through to our consumers via increases in menu prices. From time to time, competitive circumstances could limit menu price flexibility, and in those cases margins would be negatively impacted by increased commodity prices.

This market risk discussion contains forward-looking statements. Actual results may differ materially from the discussion based upon general market conditions and changes in domestic and global financial markets.

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Securities Exchange Act Rules 13a-15(b) and 15d-15(c). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~July~~October 2524, ~~2004,~~ our disclosure controls and procedures were effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) required to be included in this report. There were no changes in our procedures during the thirteen weeks ended July 25, 2004 ~~that have materially affected~~, ~~or are reasonably likely to materially affect,~~ our ~~internal control over financial reporting.~~

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disclosure controls and procedures were effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) required to be included in this report. There were no changes in our procedures during the thirteen weeks ended October 24, 2004 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are a party to certain legal proceedings arising in the ordinary course of business. While it is not possible to predict or determine the outcome of any of these proceedings, we do not believe that any liability resulting from these proceedings will have a material adverse effect on our financial position, results of operations or business. See Note 5 of6 ~~Notes~~ to ~~Condensed~~the Condensed Consolidated Financial Statements.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~There were no changes in securities during the thirteen weeks ended July 25, 2004~~None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

~~There were no defaults upon senior securities during the thirteen weeks ended July 25, 2004~~None.

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

~~No actions were submitted to a vote of our shareholders during the first quarter of fiscal 2005~~None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)

Exhibits.

Exhibit
Number		Description
31.1		Certification by Chief Executive Officer under Section 302 of Sarbanes-Oxley.
31.2		Certification by Chief Financial Officer under Section 302 of Sarbanes-Oxley.
32.1		Certification by Chief Executive Officer under Section 906 of Sarbanes-Oxley
32.2		Certification by Chief Financial Officer under Section 906 of Sarbanes-Oxley

40 (b) Reports on Form 8-K. None.

~~Table of Contents~~35

SIGNATURES Table of Contents

~~Pursuant to the requirements of Section 13 or 15(d) of the Securities~~SIGNATURES ~~Exchange Act of 1934, the registrant has duly caused this report to be signed~~ ~~on its behalf by the undersigned, thereunto duly authorized, on this 9th day of~~ ~~September, 2004.~~

~~ROADHOUSE~~ Pursuant ~~GRILL~~to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ~~INC.~~the ~~By:~~registrant ~~/s/~~has ~~Michael~~duly C.caused ~~Brant~~this ~~Michael~~report C.to ~~Brant~~be ~~Executive~~signed on ~~Vice~~its ~~President~~behalf ofby ~~Finance~~the ~~and~~undersigned, ~~Chief~~thereunto ~~Financial~~duly ~~Officer~~authorized, ~~(Principal~~on ~~Financial~~this ~~Officer)~~7th day of December, 2004.

41 ROADHOUSE GRILL, INC. By: /s/ Michael C. Brant Michael C. Brant Executive Vice President of Finance and Chief Financial Officer (Principal Financial Officer)

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