**FORM 10-Q**

 

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC  20549**

 

**ý****Quarterly ReportVoluntarily Filed Pursuant to Section 13 or 15(d) of the Securities andExchange Act of 1934**

 

For the Quarterly Period Ended   **July 2, 2003**

 

**Commission File Number    333-62775**

 

**BERTUCCI’S CORPORATION**

(Exact name of registrant as specified in its charter)

 

| **Delaware**                                                                       |   | **06-1311266**                           |
|------------------------------------------------------------------------------------|--------|------------------------------------------|
| (State or other jurisdiction of  incorporation or organization)                    |   | (I.R.S. Employer  Identification Number) |
|                                                                               |   |                                     |
| **155 Otis Street, Northborough, Massachusetts**                                   |   | **01532-2414**                           |
| (Address of principal executive offices)                                           |   | (Zip Code)                               |
|                                                                               |   |                                     |
| Registrant’s telephone number, including area code:  **(508)  351-2500** |

 

Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports),and (2) has been subject to the filing requirements for the past 90 days.

 

| Yes   ý |   | No   o |
|-----------------------------|--------|-----------------------|

 

Indicate by check mark whether the registrant is anaccelerated filer (as defined in Rule 12b-2 of the Exchange Act).

 

| Yes   o |   | No   ý |
|------------------------|--------|----------------------------|

 

2,963,674 shares of theregistrant’s Common Stock were outstanding on August 14, 2003.

 

 

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BERTUCCI’S CORPORATION

 

FORM 10-Q

 

TABLE OF CONTENTS

 
| PART I:        | FINANCIAL INFORMATION |
|----------------|-----------------------|
|           |                  |   |
|           | Item 1.               |   Financial  Statements: |
|           |                  | 1) | Consolidated Balance Sheets July 2, 2003 (Unaudited) and January 1,  2003 |
|           |                  |   |   |
|           |                  | 2) | Consolidated Statements of Operations For  the 13 and 26 Weeks Ended July 2, 2003 (Unaudited) and July 3, 2002  (Unaudited) |
|           |                  |   |   |
|           |                  | 3) | Consolidated Statement of Changes in  Stockholders’ Equity for the 26 Weeks Ended July 2, 2003 (Unaudited) |
|           |                  |   |   |
|           |                  | 4) | Consolidated Statements of Cash Flow for  the 26 Weeks Ended July 2, 2003 (Unaudited) and July 3, 2002 (Unaudited) |
|           |                  |   |   |
|           |                  | 5) | Notes to Consolidated Financial Statements  (Unaudited) |
|           |                  |   |   |
|           | Item 2.               |   Management’s Discussion and  Analysis of Results of Operations and Financial Condition |
|           |                  |   |   |
|           | Item 3.               |   Quantitative and Qualitative  Disclosures about Market Risk |
|           |                  |   |   |
|           | Item 4.               |   Controls and Procedures |
|           |                  |   |   |
| PART II:       | OTHER INFORMATION     |
|           | Item 1.               |   | Legal Proceedings |
|           | Item 2.               |   | Changes in Securities and Use of Proceeds |
|           | Item 3.               |   | Defaults upon Senior Securities |
|           | Item 4.               |   | Submission of Matters to a Vote of Security  Holders |
|           | Item 5.               |   | Other Information |
|           | Item 6.               |   | Exhibits and Reports on Form 8-K |
|           |
| SIGNATURES     |
|           |
| CERTIFICATIONS |
|                |                       |  |  |  |

 

2

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PART  I: FINANCIALINFORMATION

Item 1.  FINANCIAL STATEMENTS

 

**BERTUCCI’S CORPORATIONCONSOLIDATED BALANCE SHEETS**(In thousands, exceptshare data)(Unaudited)

 
|                                                                                                                                                                               |   | **July 2,  2003** |    | **January 1,  2003** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|----------------------|--------|
| **ASSETS**                                                                                                                                                                         |   |              |    |                 |   |
| Current Assets:                                                                                                                                                                    |   |              |    |                 |   |
| Cash and cash equivalents                                                                                                                                                          |   | $                 | 12,105  |                 | $      | 13,133 |   |
| Restricted cash                                                                                                                                                                    |   | 2,229             |    | 2,468                |   |
| Accounts receivable                                                                                                                                                                |   | 1,002             |    | 1,733                |   |
| Inventories                                                                                                                                                                        |   | 1,260             |    | 900                  |   |
| Prepaid expenses and other  current assets                                                                                                                                         |   | 1,942             |    | 1,995                |   |
| Total current assets                                                                                                                                                               |   | 18,538            |    | 20,229               |   |
|                                                                                                                                                                               |   |              |    |                 |   |
| Property and equipment, at  cost:                                                                                                                                                  |   |              |    |                 |   |
| Land                                                                                                                                                                               |   | 767               |    | 2,468                |   |
| Buildings                                                                                                                                                                          |   | 1,393             |    | 6,671                |   |
| Capital lease – buildings                                                                                                                                                     |   | 3,831             |    | —               |   |
| Leasehold improvements                                                                                                                                                             |   | 62,628            |    | 57,130               |   |
| Furniture and equipment                                                                                                                                                            |   | 41,063            |    | 36,660               |   |
|                                                                                                                                                                               |   | 109,682           |    | 102,929              |   |
| Less - accumulated  depreciation                                                                                                                                                   |   | (34,371           | )       | (31,555              | )      |
|                                                                                                                                                                               |   | 75,311            |    | 71,374               |   |
| Construction work in  process                                                                                                                                                      |   | 1,726             |    | 1,830                |   |
| Net property and equipment                                                                                                                                                         |   | 77,037            |    | 73,204               |   |
|                                                                                                                                                                               |   |              |    |                 |   |
| Goodwill                                                                                                                                                                           |   | 26,127            |    | 26,127               |   |
| Deferred finance costs,  net                                                                                                                                                       |   | 3,746             |    | 3,714                |   |
| Liquor licenses                                                                                                                                                                    |   | 2,441             |    | 1,763                |   |
| Other assets                                                                                                                                                                       |   | 479               |    | 385                  |   |
| Total Assets                                                                                                                                                                       |   | $                 | 128,368 |                 | $      | 125,422 |   |
|                                                                                                                                                                               |   |              |    |                 |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                          |   |              |    |                 |   |
|                                                                                                                                                                               |   |              |    |                 |   |
| Current Liabilities:                                                                                                                                                               |   |              |    |                 |   |
| Current portion of other  long-term obligations                                                                                                                                    |   | $                 | 92      |                 | $      | — |   |
| Accounts payable                                                                                                                                                                   |   | 8,322             |    | 7,986                |   |
| Accrued expenses                                                                                                                                                                   |   | 12,153            |    | 13,532               |   |
| Total current liabilities                                                                                                                                                          |   | 20,567            |    | 21,518               |   |
| Other long-term  obligations, net of current portion                                                                                                                               |   | 4,638             |    | —               |   |
| Restaurant closing  reserve, net of current portion                                                                                                                                |   | 1,096             |    | 1,857                |   |
| Deferred gain on  sale-leaseback transaction                                                                                                                                       |   | 2,167             |    | —               |   |
| Deferred rent                                                                                                                                                                      |   | 3,070             |    | 2,849                |   |
| Senior Notes                                                                                                                                                                       |   | 85,310            |    | 85,310               |   |
| Total liabilities                                                                                                                                                                  |   | 116,848           |    | 111,534              |   |
| Commitments and  contingencies                                                                                                                                                     |   |              |    |                 |   |
| Stockholders’ equity:                                                                                                                                                         |   |              |    |                 |   |
| Common stock, $.01 par  value Authorized - 8,000,000 shares, Issued -  3,666,370 shares, Outstanding - 2,963,674 and  2,978,955 shares, respectively |   | 37                |    | 37                   |   |
| Less treasury stock -  702,696 and 687,415 shares, respectively,   at cost                                                                                                    |   | (8,178            | )       | (8,088               | )      |
| Additional paid-in capital                                                                                                                                                         |   | 29,004            |    | 29,004               |   |
| Accumulated deficit                                                                                                                                                                |   | (9,343            | )       | (7,065               | )      |
| Total stockholders’ equity                                                                                                                                                    |   | 11,520            |    | 13,888               |   |
| Total Liabilities and  Stockholders’ Equity                                                                                                                                   |   | $                 | 128,368 |                 | $      | 125,422 |   |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

3

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**BERTUCCI’S CORPORATIONCONSOLIDATED STATEMENTS OFOPERATIONS**(In thousands, exceptshare and per share data)(Unaudited)

 
|                                                               |   | **Thirteen  weeks ended** |   | **Twenty-six  weeks ended** |   |
|--------------------------------------------------------------------|--------|---------------------------|--------|-----------------------------|--------|
|                                                               |   | **July 2,2003**           |   | **July 3,2002**             |   | **July 2,2003** |   | **July 3,2002** |   |
|                                                               |   |                      |   |                        |   |   |   |   |   |
| Net sales                                                          |   | $                         | 47,587 |                        | $      | 41,307 |   | $ | 90,261 |   | $ | 77,990 |   |
|                                                               |   |                      |   |                        |   |   |   |   |   |
| Cost of sales and expenses:                                        |   |                      |   |                        |   |   |   |   |   |
| Cost of sales                                                      |   | 11,019                    |   | 9,351                       |   | 20,480 |   | 17,674 |   |
| Operating expenses                                                 |   | 28,418                    |   | 25,268                      |   | 54,893 |   | 46,713 |   |
| General and administrative expenses                                |   | 2,856                     |   | 3,049                       |   | 6,035 |   | 6,042 |   |
| Closed restaurant expenses                                         |   | —                    |   | 175                         |   | — |   | 175 |   |
| Depreciation, amortization, deferred rent and pre-opening expenses |   | 3,272                     |   | 2,593                       |   | 6,235 |   | 4,897 |   |
| Total cost of sales and expenses                                   |   | 45,565                    |   | 40,436                      |   | 87,643 |   | 75,501 |   |
| Income from operations                                             |   | 2,022                     |   | 871                         |   | 2,618 |   | 2,489 |   |
|                                                               |   |                      |   |                        |   |   |   |   |   |
| Interest expense, net                                              |   | (2,498                    | )      | (2,392                      | )      | (4,896 | ) | (4,789 | ) |
| Loss before income tax benefit                                     |   | (476                      | )      | (1,521                      | )      | (2,278 | ) | (2,300 | ) |
|                                                               |   |                      |   |                        |   |   |   |   |   |
| Income tax benefit                                                 |   | —                    |   | 532                         |   | — |   | 805 |   |
|                                                               |   |                      |   |                        |   |   |   |   |   |
| Net loss                                                           |   | $                         | (476   | )                           | $      | (989 | ) | $ | (2,278 | ) | $ | (1,495 | ) |
|                                                               |   |                      |   |                        |   |   |   |   |   |
| Basic and diluted loss per share                                   |   | $                         | (0.16  | )                           | $      | (0.33 | ) | $ | (0.77 | ) | $ | (0.50 | ) |
|                                                               |   |                      |   |                        |   |   |   |   |   |
| Weighted average shares outstanding - basic and diluted            |   | 2,975,298                 |   | 2,978,955                   |   | 2,977,126 |   | 2,978,955 |   |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

4

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**BERTUCCI’SCORPORATIONCONSOLIDATED STATEMENT OF CHANGESIN STOCKHOLDERS’ EQUITY**(In thousands, exceptshare data)(Unaudited)

 
|                                      |   | **Common  Stock**     |   | **Treasury  Stock** |   | **Additional  Paid-In  Capital** |     | **Accumulated  Deficit** |   | **Total  Stockholders’  Equity** |   |
|-------------------------------------------|--------|-----------------------|--------|---------------------|--------|----------------------------------|----------|--------------------------|--------|---------------------------------------|--------|
|                                      |   | **Number of  Shares** |   | **Amount**          |   | **Number of  Shares**            |     | **Amount**               |   |
|                                      |   |                  |   |                |   |                             |     |                     |   |                                  |   |   |   |   |   |
| Balance January 1, 2003                   |   | 3,666,370             |   | $                   | 37     |                             | (687,415 | )                        | $      | (8,088                                | )      | $ | 29,004 |   | $ | (7,065 | ) | $ | 13,888 |   |
| Purchase common stock shares for treasury |   | —                |   | —              |   | (15,281                          | )        | (90                      | )      | —                                |   | — |   | (90 | ) |
| Net loss                                  |   | —                |   | —              |   | —                           |     | —                   |   | —                                |   | (2,278 | ) | (2,278 | ) |
|                                      |   |                  |   |                |   |                             |     |                     |   |                                  |   |   |   |   |   |
| Balance July 2, 2003                      |   | 3,666,370             |   | $                   | 37     |                             | (702,696 | )                        | $      | (8,178                                | )      | $ | 29,004 |   | $ | (9,343 | ) | $ | 11,520 |   |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

5

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**BERTUCCI’SCORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOW**(In thousands)(Unaudited)

 
|                                                                                      |   | **Twenty-six weeks ended** |   |
|-------------------------------------------------------------------------------------------|--------|----------------------------|--------|
|                                                                                      |   | **July 2, 2003**           |   | **July 3, 2002** |   |
|                                                                                      |   |                       |   |   |   |
| Cash flows of operating  activities                                                       |   |                       |   |   |   |
| Net loss                                                                                  |   | $                          | (2,278 | ) | $ | (1,495 | ) |
| Adjustments to reconcile  net loss to net cash provided by (used in) operating activities |   |                       |   |   |   |
| Depreciation and  amortization                                                            |   | 5,216                      |   | 4,792 |   |
| Deferred rent                                                                             |   | 221                        |   | 145 |   |
| Change in deferred taxes                                                                  |   | —                     |   | 2,705 |   |
| Closed restaurant charge                                                                  |   | —                     |   | 175 |   |
| Amortization of gain on  sale-leaseback                                                   |   | (29                        | )      | — |   |
| Gain on sale of property                                                                  |   | —                     |   | (235 | ) |
| Changes in operating  assets and liabilities                                              |   |                       |   |   |   |
| Inventories                                                                               |   | (360                       | )      | (71 | ) |
| Prepaid expenses and  accounts receivable                                                 |   | 784                        |   | 612 |   |
| Accrued expenses                                                                          |   | (1,776                     | )      | (3,652 | ) |
| Income taxes payable                                                                      |   | 26                         |   | (3,707 | ) |
| Accounts payable                                                                          |   | 336                        |   | (2,182 | ) |
| Other                                                                                     |   | (150                       | )      | 42 |   |
| Total adjustments                                                                         |   | 4,268                      |   | (1,376 | ) |
| Net cash provided by (used  in) operating activities                                      |   | 1,990                      |   | (2,871 | ) |
|                                                                                      |   |                       |   |   |   |
| Cash flows for investing  activities                                                      |   |                       |   |   |   |
| Additions to property and  equipment                                                      |   | (10,178                    | )      | (8,407 | ) |
| Proceeds from sale of  property                                                           |   | —                     |   | 413 |   |
| Purchase of stock for  treasury                                                           |   | (90                        | )      | — |   |
| Acquisition of liquor  licenses                                                           |   | (123                       | )      | — |   |
| Net cash used in investing  activities                                                    |   | (10,391                    | )      | (7,994 | ) |
|                                                                                      |   |                       |   |   |   |
| Cash flows for financing  activities                                                      |   |                       |   |   |   |
| Net proceeds from  sale-leaseback transaction                                             |   | 7,177                      |   | — |   |
| Promissory note payments                                                                  |   | (40                        | )      | — |   |
| Decrease (increase) in  restricted cash                                                   |   | 239                        |   | (895 | ) |
| Principal payments under  capital lease obligations                                       |   | (3                         | )      | — |   |
| Net cash provided by (used  in) financing activities                                      |   | 7,373                      |   | (895 | ) |
|                                                                                      |   |                       |   |   |   |
| Net decrease in cash and  cash equivalents                                                |   | (1,028                     | )      | (11,760 | ) |
| Cash and cash equivalents,  beginning of period                                           |   | 13,133                     |   | 23,235 |   |
| Cash and cash equivalents,  end of period                                                 |   | $                          | 12,105 |   | $ | 11,475 |   |
|                                                                                      |   |                       |   |   |   |
| Supplemental Disclosure of  Cash Flow Information                                         |   |                       |   |   |   |
| Cash paid for interest                                                                    |   | $                          | 4,809  |   | $ | 4,528 |   |
| (Refunds received) cash  paid for income taxes                                            |   | $                          | (26    | ) | $ | 196 |   |
| Capital lease entered into  during period                                                 |   | $                          | 3,821  |   | $ | — |   |
| Promissory notes issued in  exhchange for rights and settlements of liabilities           |   | $                          | 941    |   | $ | — |   |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

6

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**BERTUCCI’SCORPORATIONNotes To Consolidated FinancialStatements**July 2, 2003(Unaudited)

 

*1.  Basis of Presentation*

 

The unaudited consolidatedcondensed financial statements (the “Unaudited Financial Statements”) presentedherein have been prepared by Bertucci’s Corporation and include all of itssubsidiaries (collectively, the “Company”) after elimination of inter-companyaccounts and transactions, without audit, and, in the opinion of management,reflect all adjustments (consisting of normal recurring adjustments) necessaryfor a fair statement of the interim periods presented.  The accompanying unaudited interimconsolidated financial statements have been prepared in accordance withaccounting principles generally accepted in the United States of America forinterim financial information and pursuant to the rules and regulations of theSecurities and Exchange Commission for reporting on Form 10-Q.  Accordingly, certain information andfootnote disclosures required for complete financial statements are notincluded herein.  It is suggested theUnaudited Financial Statements be read in conjunction with the consolidatedfinancial statements and notes included in the Company’s 2002 Form 10-K.  The operating results for the thirteen ortwenty-six weeks ended July 2, 2003 may not be indicative of the resultsexpected for any succeeding interim period or for the entire year endingDecember 31, 2003.

 

Certain reclassifications havebeen made to prior year financial statements to make them consistent with thecurrent year’s presentation.

 

*2.  Recent AccountingPronouncements*

 

InJune 2001, the FASB issued Statement of Financial Accounting Standard (“SFAS”)No.143, *Accounting for Asset RetirementObligations*.  This Statement addresses financial accounting andreporting for obligations associated with the retirement of tangible long-livedassets and the associated asset retirement costs.  This Statement appliesto all entities.  It applies to legal obligations associated with theretirement of long-lived assets that result from the acquisition, construction,development and (or) the normal operation of a long-lived asset, except forcertain obligations of lessees.  The adoption of this statement on January3, 2003 did not have a material impact on the Company’s financial position orits results of operations.

 

InApril 2002, the FASB issued SFAS No. 145, *Rescission of FASB Statements No. 4, 44, and 64,Amendment of FASB Statement No.13, and Technical Corrections*. Theadoption of SFAS No. 145 requires gains and losses from extinguishment of debtno longer be classified as extraordinary items, but rather be classified aspart of other income (expense) on the Company’s consolidated statement ofoperations. Any such gains or losses, classified as extraordinary items inprior periods, will be reclassified in future financial statement presentationsupon the adoption of SFAS No. 145.  Theadoption of this statement on January 3, 2003 did not have a material impact onthe Company’s financial position or its results of operations.

 

InJune 2002, the FASB issued SFAS No. 146, *Accountingfor Costs Associated with Exit or Disposal Activities*. SFAS No. 146supersedes Emerging Issues Task Force (“EITF”) No. 94-3, *Liability Recognition for CertainEmployee Termination Benefits and Other Costs to Exit an Activity (IncludingCertain Costs Incurred in a Restructuring)*. SFAS No. 146 eliminatesthe provisions of EITF No.  94-3 thatrequired a 

 

7

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liabilityto be recognized for certain exit or disposal activities at the date an entitycommitted to an exit plan.  SFAS No. 146requires a liability for costs associated with an exit or disposal activity tobe recognized when the liability is incurred. SFAS No. 146 is effective for exit or disposal activities that areinitiated after December 31, 2002.

 

In December 2002,the FASB issued SFAS No.  148, *Accounting for Stock-Based Compensation - Transition and Disclosure, anamendment of SFAS No 123*.  ThisStatement amends SFAS No. 123, *Accountingfor Stock-Based Compensation*,to provide alternative methods of transition for a voluntary change to the fairvalue based method of accounting for stock-based employee compensation.  In addition, this Statement amends thedisclosure requirements of SFAS No. 123 to require prominent disclosures in bothannual and interim financial statements about the method of accounting forstock-based employee compensation and the effect of the method used on reportedresults.  The disclosure requirements ofSFAS No. 148 were adopted on January 3, 2003.

 

In January 2003,the FASB issued FASB Interpretation No. 46 (“FIN 46”), *Consolidation of Variable InterestEntities, an Interpretation of ARB No. 51*.  FIN 46 requires certain variable interest entities to beconsolidated by the primary beneficiary of the entity if the equity investorsin the entity do not have the characteristics of a controlling financialinterest or do not have sufficient equity at risk for the entity to finance itsactivities without additional subordinated financial support from otherparties. FIN 46 is effective for all new variable interest entities created oracquired after January 31, 2003.  Forvariable interest entities created or acquired prior to February 1, 2003, theprovisions of FIN 46 must be applied for the first interim or annual periodbeginning after June 15, 2003.  TheCompany did not create or acquire any variable interest entities during thetwenty-six weeks ended July 2, 2003. The  adoption of this statementin the first quarter of 2003 did not have a material impact on the Company’sfinancial position or results of operations.

 

In May 2003, the FASB issuedSFAS No. 150, *Accounting for Certain Financial Instruments with Characteristics ofboth Liabilities and Equity*. The Statement requires an issuerclassify financial instruments within its scope as a liability. Many of thoseinstruments were classified as equity under previous guidance. SFAS No. 150 iseffective for all financial instruments entered into or modified after May 31,2003. Otherwise, it is effective on July 1, 2003. The adoption of SFAS No. 150is not expected to have a material impact on the Company’s financial positionor results of operations.

 

*3. Restaurant Closing Reserves*

 

Restaurant closing reserves wereestablished as part of the acquisition of Bertucci’s.  These reserves were related to estimated future lease commitmentsand exit costs to close 18 Bertucci’s locations.  In 2001, the Company accrued an additional $4.2 million relatedto selected locations (all of which had been closed), consisting of estimatedlease commitments and certain exit costs. It was originally expected the Company would be able to exit theselocations, sublease the locations or otherwise be released from the relatedleases.  However,  due to market conditions, the Company hasbeen unable to sell, sublease or exit certain of these leases.  In June 2002, the Company closed onerestaurant and recorded a charge of $236,000 primarily related to estimatedlease termination costs.  In March 2003,the Company terminated a lease for one of its closed locations in exchange forissuing a promissory note of $455,000 payable in varying installments through2010.  The note does not bear interest,accordingly the Company imputed interest on the note and recorded the obligation at its present value of$386,000 in other long-term obligations in the accompanying balance sheet.

 

8

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Activity within thereserve was as follows:

 
|                                           |   | **Twenty-six  weeks ended** |   |
|------------------------------------------------|--------|-----------------------------|--------|
|                                           |   | **July 2,  2003**           |   | **July 3,  2002** |   |
|                                           |   |                        |   |   |   |
| Balance, beginning of the year                 |   | $                           | 2,499  |   | $ | 3,351 |   |
| Payments charged against reserve               |   | (396                        | )      | (443 | ) |
| Promissory note issued                         |   | (386                        | )      | — |   |
| Balance, end of period                         |   | $                           | 1,717  |   | $ | 2,908 |   |
|                                           |   |                        |   |   |   |
| Current portion (included in accrued expenses) |   | $                           | 621    |   | $ | 903 |   |
| Noncurrent portion                             |   | 1,096                       |   | 2,005 |   |
|                                           |   | $                           | 1,717  |   | $ | 2,908 |   |

 

*4.  Loss perShare*

 

The number of shares used to calculate diluted loss per share for theperiods ended July 2, 2003 and July 3, 2002 exclude the effect of 671,244 and740,473 outstanding stock options, respectively, as the options areanti-dilutive.

 

*5.  Income Taxes*

 

The Company recognizes deferredtax assets and liabilities for the expected future tax consequences of eventsthat have been included in the financial statements or tax returns.   Additionally, the Company is required toconsider both negative and positive evidence in determining if a valuationallowance is required on a quarterly basis. The fiscal year 2002 loss and the Company’s current plan for continueddevelopment of Company owned restaurants will burden pre-tax profits because ofthe recognition of pre-opening costs and initial year inefficiencies associatedwith new restaurants.  As a result,management recorded a full valuation allowance for its deferred tax assets inthe fourth quarter of 2002 and recorded an allowance in each quarter of 2003for the tax benefits associated with the current period’s losses.

 

*6.  Stock-BasedCompensation*

 

The Company has elected to account forstock-based compensation using the intrinsic value method with disclosure ofthe effects of fair value accounting on net income and earnings per share on apro forma basis.  No stock-basedemployee compensation cost related to stock options is reflected in net loss,as all options granted had an exercise price equal to, or in excess of, themarket value of the underlying common stock on the date of grant.  The following table illustrates the effecton net income and earnings per share if the company had applied the fair valuemethod.

 
|                             |   | **Thirteen  weeks ended** |   | **Twenty-six  weeks ended** |   |
|----------------------------------|--------|---------------------------|--------|-----------------------------|--------|
|                             |   | **July 2,  2003**         |   | **July 3,  2002**           |   | **July 2,  2003** |   | **July 3,  2002** |   |
| Net loss, in thousands           |   |                      |   |                        |   |   |   |   |   |
| As reported                      |   | $                         | (476   | )                           | $      | (989 | ) | $ | (2,278 | ) | $ | (1,495 | ) |
| Pro Forma                        |   | $                         | (637   | )                           | $      | (1,021 | ) | $ | (2,599 | ) | $ | (1,559 | ) |
|                             |   |                      |   |                        |   |   |   |   |   |
| Basic and diluted loss per share |   |                      |   |                        |   |   |   |   |   |
| As reported                      |   | $                         | (0.16  | )                           | $      | (0.33 | ) | $ | (0.77 | ) | $ | (0.50 | ) |
| Pro Forma                        |   | $                         | (0.21  | )                           | $      | (0.34 | ) | $ | (0.87 | ) | $ | (0.52 | ) |

 

9

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*7.   Sale ofProperties*

 

Inthe first quarter of 2002, the Company sold land adjacent to a restaurantpreviously sold.  The property had acarrying value of approximately $179,000 and sold for $413,000.  The gain is included in operating expensesin the consolidated statement of operations for the twenty-six weeks ended July3, 2002.

 

Inthe first quarter of 2003, the Company completed a sale-leaseback transactionon three restaurant properties for $7.2 million in cash (net of fees ofapproximately $300,000).  The propertiessold included land and buildings at three locations which the Company agreed tolease back for a 20-year period with total contractual lease obligations ofapproximately $16.7 million.  Theportion of the contractual obligation relating to the buildings is recorded atits net present value of $3.8 million (at inception) as an obligation under acapital lease, and is included in other long-term obligations in theaccompanying balance sheet.  The landportion of the obligation is classified as an operating lease, requiring futurepayments to be classified as operating expenses.  The gain on the sale of these properties of approximately $2.2million has been deferred and will be recognized over the 20-year term of theleaseback.

 

*8.  Other Long-TermObligations*

 

Duringthe second quarter, the Company issued a promissory note in the amount of$555,000 to acquire rights to a liquor license over a 10-year period.

 

10

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Item2.             MANAGEMENT’SDISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

The following discussionshould be read in conjunction with the consolidated financial statements ofBertucci’s Corporation, (the “Company”) and the notes thereto included herein.

 

### **General**

 

The Company is an operator offull-service, casual dining restaurants in the northeastern United States.  The Company’s wholly owned subsidiary,Bertucci’s Restaurant Corp. owns and operates a restaurant concept under thename Bertucci’s Brick Oven Pizzeria®. In July 1998, the Company completed its acquisition of Bertucci’s RestaurantCorp.’s parent entity, Bertucci’s, Inc., a publicly-owned restaurant companyfor a purchase price, net of cash received, of approximately $89.4 million (the“Acquisition”).   The Company financedthe Acquisition primarily through the issuance of $100 million of 10 3/4%senior notes due 2008 (the “Senior Notes”). The Acquisition included 90 Bertucci’s restaurants and one Sal &Vinnie’s restaurant.  Since 1999, theCompany closed the Bertucci’s test kitchen restaurant in Wakefield,Massachusetts and closed seventeen under performing Bertucci’srestaurants.  In December of 2000, theCompany also closed the Sal and Vinnie’s restaurant located in Massachusetts.

 

As of July 2, 2003 the Companyowned and operated 86 full-service, casual dining, Italian-style restaurantsunder the name Bertucci’s Brick Oven Pizzeria® located primarily in New Englandand Mid-Atlantic United States.

 

### **Results of Operations**

 

The following table setsforth the percentage relationship to net sales, unless otherwise indicated, ofcertain items included in the Company’s consolidated statements of operations,as well as certain operating data, for the periods indicated:

 

**STATEMENTS OF OPERATIONS DATA**(Percentage of NetSales)

 
|                                                                 |   | **Thirteen weeks ended** |   | **Twenty-six weeks ended** |   |
|----------------------------------------------------------------------|--------|--------------------------|--------|----------------------------|--------|
|                                                                 |   | **July 2,  2003**        |   | **July 3,  2002**          |   | **July 2,  2003** |   | **July 3,  2002** |   |
| Net sales                                                            |   | 100.0                    | %      | 100.0                      | %      | 100.0 | % | 100.0 | % |
|                                                                 |   |                     |   |                       |   |   |   |   |   |
| Cost of sales and  expenses:                                         |   |                     |   |                       |   |   |   |   |   |
| Cost of sales                                                        |   | 23.2                     | %      | 22.6                       | %      | 22.7 | % | 22.7 | % |
| Operating expenses                                                   |   | 59.7                     | %      | 61.2                       | %      | 60.8 | % | 59.9 | % |
| General and administrative  expenses                                 |   | 6.0                      | %      | 7.4                        | %      | 6.7 | % | 7.7 | % |
| Closed restaurant expense                                            |   | —                   |   | 0.4                        | %      | — |   | 0.2 | % |
| Depreciation,  amortization, deferred rent, and pre-opening expenses |   | 6.9                      | %      | 6.3                        | %      | 6.9 | % | 6.3 | % |
| Total cost of sales and  expenses                                    |   | 95.8                     | %      | 97.9                       | %      | 97.1 | % | 96.8 | % |
|                                                                 |   |                     |   |                       |   |   |   |   |   |
| Income from operations                                               |   | 4.2                      | %      | 2.1                        | %      | 2.9 | % | 3.2 | % |
| Interest expense, net                                                |   | (5.2                     | )%     | (5.8                       | )%     | (5.4 | )% | (6.1 | )% |
| Loss before income tax  benefit                                      |   | (1.0                     | )%     | (3.7                       | )%     | (2.5 | )% | (2.9 | )% |
|                                                                 |   |                     |   |                       |   |   |   |   |   |
| Income tax benefit                                                   |   | —                   |   | 1.3                        | %      | — |   | 1.0 | % |
|                                                                 |   |                     |   |                       |   |   |   |   |   |
| Net loss                                                             |   | (1.0                     | )%     | (2.4                       | )%     | (2.5 | )% | (1.9 | )% |
|                                                                 |   |                     |   |                       |   |   |   |   |   |
| **Restaurant  Operating Data:**                                      |   |                     |   |                       |   |   |   |   |   |
| Increase in comparable  restaurant sales (a)                         |   | 4.0                      | %      | 7.1                        | %      | 5.2 | % | 3.8 | % |
| Number of restaurants:                                               |   |                     |   |                       |   |   |   |   |   |
| Restaurants open, beginning  of period                               |   | 82                       |   | 74                         |   | 80 |   | 74 |   |
| Restaurants opened                                                   |   | 4                        |   | 1                          |   | 6 |   | 1 |   |
| Restaurant closed                                                    |   | —                   |   | (1                         | )      | — |   | (1 | ) |
| Total restaurants open, end  of period                               |   | 86                       |   | 74                         |   | 86 |   | 74 |   |

----

(a)                                  TheCompany defines comparable restaurant sales as net sales from restaurants openat least one full fiscal year.

 

11

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**ThirteenWeeks Ended July 2, 2003 Compared to Thirteen Weeks Ended July 3, 2002**

 

*Net Sales*. Total company net sales increased by $6.3 million, or 15.2%, to $47.6million during the second quarter 2003 from $41.3 million during the secondquarter 2002.  The increase wasprimarily due to a $1.6 million (4.0%) increase in comparable restaurant salesand a $4.8 million increase in sales from thirteen restaurants opened sinceJanuary 2002, partially offset by a $197,000 decrease due to one restaurantclosed at the end of the second quarter of 2002.  Comparable Bertucci’s restaurant dine-in guest counts decreased1.3% for the quarter as compared to the second quarter of 2002.  Bertucci’s comparable restaurant dine-insales increased 5.1% for the quarter as compared to the second quarter of 2002mainly as a result of a 2.1% increase in menu prices and menu mix shift.  Comparable Bertucci’s restaurant carry-outand delivery sales increased 0.4% for the quarter as compared to the sameperiod in the prior year, primarily from a 3.0% increase in average transactionpartially offset by 2.5% decrease in transaction counts.

 

*Cost of Sales*.  Cost of sales increased by approximately $1.7 million, or 17.8%,to $11.0 million during the second quarter 2003 from $9.3 million during thesecond quarter 2002.  Expressed as apercentage of net sales, overall cost of sales increased to 23.2% during thesecond quarter 2003 from 22.6% during the second quarter 2002.  The dollar increase was a result of highersales from new restaurants and an increase in comparable restaurant sales.  The percent change was due to menu mix shiftto higher cost items, increases in ingredient costs and new restaurantinefficiencies.

 

*Operating Expenses.*  Operating expenses increased by $3.1 million or 12.5%, to $28.4million during the second quarter 2003 from $25.3 million during the secondquarter 2002.  Expressed as a percentageof net sales, operating expenses decreased to 59.7% in the second quarter 2003from 61.2% during the second quarter 2002. The dollar increase was primarily due to increased labor costsassociated with six additional restaurant openings during the first half of2003 (four additional restaurants opened during the second quarter) compoundedby increased labor, occupancy and insurance costs in comparable restaurantspartially offset by reduced advertising costs. The percentage decrease was primarily due to increased leverage fromhigher sales volume, the impact of a 2.1% increase in menu prices and reducedadvertising costs.  The Company spent$1.2 million less on advertising in the second quarter of 2003 than in thesecond quarter 2002, primarily media and print costs.

 

*General and Administrative Expenses.*  General and administrative expensesdecreased by approximately $193,000, or 6.3%, to $2.8 million during the secondquarter 2003 from $3.0 million during the second quarter 2002.  Expressed as a percentage of net sales,general and administrative expenses decreased to 6.0% in the second quarter2003 from 7.4% during the second quarter 2002. The dollar decrease is primarily due to reduced costs of training andrecruiting new restaurant managers and reduced corporate incentive compensationcosts partially offset by higher benefits costs and travel costs associatedwith new restaurant development.

 

*Depreciation, Amortization, Deferred Rent, and Pre-opening Expenses*.  Depreciation, amortization, deferred rent,and pre-opening expenses increased by approximately $679,000 or 26.2%, to $3.3million during the second quarter 2003 from $2.6 million during the secondquarter of 2002.  Expressed as apercentage of net sales, depreciation, amortization, deferred rent, andpre-opening expenses increased to 6.9% in the second quarter 2003 from 6.3%during the second quarter 2002.  Thedollar increase was primarily due to the higher pre-opening costs during thequarter, depreciation expenses associated with thirteen new restaurants openedsince January 2002, and incremental amortization expense of 

 

12

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approximately $48,000 from thecapital lease portion of the sale-leaseback transaction.  See Note 7 of Notes to ConsolidatedFinancial Statements.

 

*Interest Expense.*  Net interest expense increased by $107,000 to $2.5 million from $2.4million during the second quarter of 2003 compared to the second quarter 2002.Incremental interest expense of approximately $95,000 was incurred in thesecond quarter of 2003 as a result of the new capital lease.  See Note 7 of Notes to Consolidated FinancialStatements.

 

*Income Taxes.* The Company has an historical trend of recurring pre-tax losses since1998 excluding the non-recurring sale of 47 restaurants in 2001.  The Company’s current plan for continueddevelopment of Company owned restaurants will burden pre-tax profits because ofthe recognition of pre-opening costs and initial year inefficiencies associatedwith new restaurants.  During the fourthquarter of 2002 the Company recorded a full valuation allowance for its netdeferred tax asset.  During the secondquarter of 2003, the Company has also provided a full valuation allowancerelating to the tax benefits generated during the quarter (primarily itsoperating losses).

 

**Twenty-SixWeeks Ended July 2, 2003 Compared to Twenty-Six Weeks Ended July 3, 2002**

 

*Net Sales*. Total company net sales increased by $12.3 million, or 15.7%, to $90.3million during the first half of 2003 from $78.0 million during the first halfof 2002.  The increase was primarily dueto a $4.0 million (5.2%) increase in comparable restaurant sales and a $8.6million increase in sales from thirteen restaurants opened since January 2002,partially offset by a $379,000 decrease due to one restaurant closed at the endof the second quarter of 2002. Comparable Bertucci’s restaurant dine-in guest counts were flat for thefirst half of 2003 as compared to the first half of 2002.  Bertucci’s comparable restaurant dine-insales increased 6.4% for the first half of 2003 as compared to the first halfof 2002 mainly as a result of a 2.1% increase in menu prices and menu mixshift.  Comparable Bertucci’s restaurantcarry-out and delivery sales increased 1.6% for the first half of 2003 ascompared to the same period in the prior year, primarily from a 3.8% increasein average transaction partially offset by a 2.2% decrease in transactioncounts.

 

*Cost of Sales*.  Cost of sales increased by approximately $2.8 million, or 15.9%,to $20.5 million during the first half of 2003 from $17.7 million during thefirst half of 2002.  Expressed as a percentageof net sales, overall cost of sales was flat at 22.7% during the first half of2003 compared to the first half of 2002. The dollar increase was a result of higher volumes due to newrestaurants and higher cost of ingredients. The percentage change remained flat as a 2.1% price increase was offsetby menu mix shift to higher cost items and increases in raw ingredient costs.

 

*Operating Expenses.*  Operating expenses increased by $8.2 million or 17.5%, to $54.9million during the first half of 2003 from $46.7 million during the first halfof 2002.  Expressed as a percentage ofnet sales, operating expenses increased to 60.8% in the first half of 2003 from59.9% during the first half of 2002. The increase was primarily due to increased labor costs associated withthirteen additional restaurant openings since January 2002 compounded byincreased labor, occupancy, utilities and insurance costs in comparablerestaurants partially offset by reduced advertising costs.  Furthermore, during the first half of 2002,the Company received the benefit of a $234,900 gain on the sale of land thatwas recorded as a reduction of operating expenses.  However, the Company spent $346,700 less on advertising in thefirst half of 2003 than in the first half of 2002, primarily media and printcosts.

 

*General and Administrative Expenses.*  General and administrative expenses duringthe first half of 2003 were essentially flat to the first half of 2002.  Higher corporate payroll, travel and utilitycosts were offset 

 

13

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by reduced training costsassociated with new restaurant managers and reduced meeting costs.  Expressed as a percentage of net sales,general and administrative expenses decreased to 6.7% in the first half of 2003from 7.7% during the first half of 2002. The percentage reduction was primarily a result of higher sales volumesassociated with a comparable restaurant sales increase and the impact ofthirteen new restaurants opened since January 2002.

 

*Depreciation, Amortization, Deferred Rent, and Pre-opening Expenses*.  Depreciation, amortization, deferred rent,and pre-opening expenses increased by approximately $1.3 million or 27.3%, to$6.2 million during the first half of 2003 from $4.9 million during the first halfof 2002.  Expressed as a percentage ofnet sales, depreciation, amortization, deferred rent, and pre-opening expensesincreased to 6.9% in the first half of 2003 from 6.3% during the first half of2002.  The dollar increase was primarilydue to the higher pre-opening costs during the first half of 2003 anddepreciation expenses associated with thirteen new restaurants opened sinceJanuary 2002.  See Note 7 of Notes toConsolidated Financial Statements.

 

*Interest Expense.*  Net interest expense increased by $108,000 to $4.9 million from$4.8 million during the first half of 2003 compared to the first half of2002.  The incremental indebtednessprimarily associated with the new capital lease resulted in incremental interestexpense of approximately $95,000 in 2003 versus 2002. See Note 7 of Notes toConsolidated Financial Statements.

 

*Income Taxes.* The Company has an historical trend of recurring pre-tax losses since1998 excluding the non-recurring sale of 47 restaurants in 2001.  The Company’s current plan for continueddevelopment of Company owned restaurants will burden pre-tax profits because ofthe recognition of pre-opening costs and initial year inefficiencies associatedwith new restaurants.  During the fourthquarter of 2002 the Company recorded a full valuation allowance for its netdeferred tax asset.  During the firsthalf of 2003, the Company has also provided a full valuation allowance relatingto the tax benefits generated during the first half of 2003 (primarily itsoperating losses).

 

# **LiquidityAnd Capital Resources**

 

Netcash flows provided by operating activities were $2.0 million for the firsthalf of 2003, $4.9 million more than the $2.9 million used during the firsthalf of 2002.  As of July 2, 2003, cashand cash equivalents of $14.3 million consisted of $11.2 million of short-terminvestments ($2.2 million of which is restricted, see below) and the remainderin operating cash accounts.

 

TheCompany’s 2003 capital expenditures were $10.2 million through July 2, 2003compared to $8.4 million for the comparable prior year period.  Thecapital expenditures for 2003 were primarily comprised of $7.5 million for newBertucci’s restaurants and $2.7 million for remodels and maintenancecapital.  In the first quarter of 2003,the Company completed a sale-leaseback transaction on three restaurantproperties.  This transaction generated$7.2 million in cash and increased the Company’s cash contractual obligationsover the next twenty years by $16.7 million.

 

TheCompany believes that the cash flow generated from operations, the proceedsfrom one additional sale-leaseback transaction not yet closed and current cashon hand should be sufficient to fund its debt service requirements, leaseobligations, balance of the year capital expenditures of approximately $6.0million and other operating expenses through 2003.  While the Companyexpects to be able to service its debt, the lack of short term borrowingavailability may impede growth.

 

Asof July 2, 2003, the Company had $90.0 million in consolidated indebtedness,$85.3 million pursuant to the Senior Notes, $3.8 million related to the capitallease portion of the sale-leaseback transaction, and $902,000 of promissorynotes.  The Company has a $3.0 million (maximum) Letter of CreditFacility.  As 

 

14

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ofJuly 2, 2003, this facility is collateralized with $2.2 million of cashrestricted from general use in support of $2.2 million of outstanding lettersof credit.

 

TheCompany’s future operating performance and ability to service or refinance theSenior Notes will be subject to future economic conditions and to financial,business and other factors, many of which are beyond the Company’scontrol.  Significant liquidity demands will arise from debt service onthe Senior Notes.

 

Asof January 1, 2003, the Company had contractual obligations as follows: 

 

PaymentsDue by Period(Dollars in Thousands)

 
|                                                         |   | **Total** |    | **Less than 1  year** |   | **1 - 3 years** |   | **4 - 5 years** |   | **After 5 years** |   |
|--------------------------------------------------------------|--------|-----------|---------|-----------------------|--------|-----------------|--------|-----------------|--------|-------------------|--------|
| Contractual Obligations:                                     |   |      |    |                  |   |            |   |            |   |              |   |
| Operating Leases                                             |   | $         | 118,098 |                  | $      | 13,660          |   | $               | 39,266 |              | $      | 20,321 |   | $ | 44,851 |   |
| Senior Notes                                                 |   | 85,310    |    | —                |   | —          |   | —          |   | 85,310            |   |
| Closed restaurant reserve,  net of sublease income estimated |   | 2,499     |    | 642                   |   | 1,347           |   | 255             |   | 255               |   |
| Total Contractual Cash  Obligations                          |   | $         | 205,907 |                  | $      | 14,302          |   | $               | 40,613 |              | $      | 20,576 |   | $ | 130,416 |   |

 

Contractual obligationsexecuted subsequent to January 1, 2003:

 

PaymentsDue by Period(Dollars in Thousands)

 
|                  |   | **Total** |   | **Less than  1 year** |   | **1 - 3 years** |   | **4 - 5 years** |   | **After 5 years** |   |
|-----------------------|--------|-----------|--------|-----------------------|--------|-----------------|--------|-----------------|--------|-------------------|--------|
| Operating Leases      |   | 14,717    |   | $                     | 614    |            | $      | 3,220           |   | $                 | 2,026  |   | $ | 8,857 |   |
| Capital Leases        |   | 9,346     |   | 391                   |   | 1,218           |   | 851             |   | 6,886             |   |
| Promissory Notes      |   | 941       |   | 82                    |   | 122             |   | 137             |   | 600               |   |
| Total new obligations |   | $         | 25,004 |                  | $      | 1,087           |   | $               | 4,560  |              | $      | 3,014 |   | $ | 16,343 |   |
|                       |        |           |        |                       |        |                 |        |                 |        |                   |        |  |  |  |  |  |

 

As mentioned above, the Companyentered into a sale-leaseback transaction for three properties.  The land portion is classified as anoperating lease and the building portion is classified as a capital lease.  In addition, the Company executed operatingleases during the first half of 2003 for three future restaurant openings.

 

## **Impact ofInflation**

 

Inflationary factors such as increases in labor, foodor other operating costs could adversely affect the Company’s operations.  The Company does not believe inflation hashad a material impact on its financial position or results of operations forthe periods discussed above.  Managementbelieves through the proper leveraging of purchasing size, labor scheduling,and restaurant development analysis, inflation will not have a material adverseeffect on income during the foreseeable future.  There can be no assurance inflation will not materially adverselyaffect the Company.

 

15

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**Seasonality**

 

The Company’s quarterly resultsof operations have fluctuated and are expected to continue to fluctuatedepending on a variety of factors, including the timing of new restaurantopenings and related pre-opening and other startup expenses, net salescontributed by new restaurants, increases or decreases in comparable restaurantsales, competition and overall economic conditions.  The Company’s business is also subject to seasonal influences ofconsumer spending, dining out patterns and weather.  As is the case with many restaurant companies, the Companytypically experiences lower net sales and net income during the first andfourth quarters.  Because of thesefluctuations in net sales and net loss, the results of operations of anyquarter are not necessarily indicative of the results that may be achieved fora full year or any future quarter.

 

# **Critical AccountingPolicies**

 

The following discussionaddresses the Company’s most critical accounting policies, which are those mostimportant to the portrayal of the Company’s financial condition and results,and require significant judgment.

 

*Property and Equipment*

 

Property and equipment aredepreciated on a straight-line basis over the estimated useful lives of theassets.  The useful lives of the assetsare based upon the Company’s expectations for the period of time that the assetwill be used to generate revenue.  TheCompany periodically reviews the assets for changes in circumstances which mayimpact their useful lives.

 

*Impairment of Long-Lived Assets*

 

The Company reviews propertyand equipment for impairment when events or circumstances indicate it might beimpaired. The Company tests impairment using historical cash flows and otherrelevant facts and circumstances as the primary basis for its estimates offuture cash flows.  This processrequires the use of estimates and assumptions which are subject to a highdegree of judgment.  In addition, atleast annually, the Company assesses the recoverability of goodwill and otherintangible assets related to its restaurant concepts. These impairment testsrequire the Company to estimate fair values of its restaurant concepts bymaking assumptions regarding future cash flows and other factors.  If these assumptions change in the future,the Company may be required to record impairment charges for these assets.

 

*Self-Insurance*

 

The Company is self-insured forcertain losses related to general liability, group health insurance, andworkers’ compensation.  The Companymaintains stop loss coverage with third party insurers to limit its total exposure.  The self-insurance liability represents anestimate of the ultimate cost of claims incurred as of the balance sheetdate.  The estimated liability is notdiscounted and is established based upon analysis of historical data andactuarial estimates, and is reviewed by the Company on a quarterly basis toensure that the liability is appropriate. If actual trends, including the severity or frequency of claims, differfrom the Company’s estimates, the Company’s financial results could beimpacted.

 

*Closed Restaurant Reserve*

 

The Company remains primarilyliable on approximately 14 leases for closed restaurants. Management reviewsthe specifics of each site on a quarterly basis to estimate the Company’s netremaining liability over the remaining lease term. Certain locations havesubtenants in place while others remain vacant. Estimates must be made offuture sublease income or lease assignment possibilities. If subtenants default

 

16

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on their subleases or projectedfuture subtenants are not arranged, actual results could differ from theCompany’s estimates, thereby impacting the Company’s financial results.

 

**Forward-LookingStatements**

 

All statements other thanstatements of historical facts included in this Quarterly Report on Form 10-Q,including, without limitation, statements set forth under “Management’sDiscussion and Analysis of Financial Condition and Results of Operations”regarding the Company’s future financial position, business strategy, budgets,projected costs and plans and objectives of management for future operations,are forward-looking statements.  Inaddition, forward-looking statements generally can be identified by the use offorward-looking terminology such as “may,” “will,” “expect,” “intend,”“estimate,” “anticipate” or “believe” or the negative thereof or variationsthereon or similar terminology. Although the Company believes that the expectations reflected in suchforward-looking statements will prove to have been correct, it can give noassurance that such expectations will prove to have been correct.  Factors including those set forth herein, aswell as those set forth in the Company’s Form 10-K filed with the Securitiesand Exchange Commission (“SEC”) on March 28, 2003 and other filings with theSEC may affect such expectations. Investors are cautioned not to place undue reliance on theseforward-looking statements, which speak only as of the date hereof.  The Company undertakes no obligation topublicly release any revisions to these forward-looking statements to reflectevents or circumstances after the date hereof or to reflect the occurrence ofunanticipated events.

 

# **Item3.  QUANTITATIVE AND QUALITATIVEDISCLOSURE ABOUT MARKET RISKS**

 

The Company has no exposure to specific risks related to derivatives orother “hedging” types of financial instruments.

 

# **Item 4.CONTROLS AND PROCEDURES**

 

The Company has establisheddisclosure controls and procedures to ensure material information relating tothe Company, including consolidated subsidiaries, is made known to the officerswho certify financial reports and to other members of senior management and theBoard of Directors.

 

a)              *Evaluation ofdisclosure contro1s and procedures.*  Our management, with the participation of ourprincipal executive officer and principal financial officer, has evaluated theeffectiveness of the design and operation of our disclosure controls andprocedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e)**under the SecuritiesExchange Act of 1934. as amended) as of the end of the period covered by thisQuarterly Report on Form 10-Q. Based on this evaluation our principal executiveofficer and principal financial officer concluded these disclosure controls andprocedures are effective and designed to ensure the information required to be disclosed in our reports filedor submitted under the Securities Exchange Act of 1934 is recorded, processed,summarized and reported within the requisite time periods.

 

b)             *Changes ininternal controls.*  There was no change in our internal controlover financial reporting as defined in Rules 13(a)-15(f) and 15(d)-l5(f) underthe Securities and Exchange Act of 1934, as amended) identified in connectionwith the evaluation of our internal control performed during our last fiscalquarter which materially affected, or is reasonably likely to materiallyaffect, the Company’s internal control over financial reporting.

 

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PART II: OTHER INFORMATION

 

Item 1. LEGAL PROCEEDINGS

The Company is involved in various legal proceedings from time to timeincidental to the conduct of its business. In the opinion of management, anyultimate liability arising out of such proceedings will not have a materialadverse effect on the financial condition or results of operations of theCompany.

 

Management is not aware of anylitigation to which the Company is a party that is likely to have a materialadverse effect on the Company.

 

Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

None

 

Item 3.  DEFAULTS UPON SENIOR SECURITIES

None

 

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

None

 

Item 5. OTHER INFORMATION

None

 

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

None

 

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SIGNATURES

 

Pursuant to the requirements ofthe Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned thereunto duly authorized.

 

 
|   |             | BERTUCCI’S CORPORATION               |                         |
|--------|------------------|-------------------------------------------|------------------------------|
|   |             | (Registrant)                              |                         |
|   |             |                                      |                         |
|   |             |                                      |                         |
| Date:  | August 14,  2003 |                                      | By: /s/ Benjamin R. Jacobson |   |   |
|   |             | Chairman  of the Board of Directors,      |                         |
|   |             | Chief  Executive Officer, Treasurer       |                         |
|   |             | (Principal  Executive Officer)            |                         |
|   |             |                                      |                         |
|   |             |                                      |                         |
| Date:  | August 14,  2003 |                                      | By: /s/ Kurt J. Schnaubelt   |   |   |
|   |             | Chief Financial Officer,                  |                         |
|   |             | Senior Vice President - Finance and       |                         |
|   |             | Administration (Chief Accounting Officer) |                         |
|        |                  |                                           |                              |  |  |  |  |

 

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